IFAD and Peru sign $74.5 million agreement to create rural employment in conflict area

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IFAD and Peru sign $74.5 million agreement to create rural employment in conflict area

Lima, 21 October 2016 – The International Fund for Agricultural Development (IFAD) and the Government of Peru will invest US$74.5 million to create rural employment and entrepreneurial opportunities in the Apurímac, Ene and Mantaro Rivers Valley region (also known as VRAEM), characterized by extreme poverty and conflict.

The financing agreement that allows the Sustainable Territorial Development Project to start was signed today in Lima by Peru’s Minister of Economy and Finance, Alfredo Eduardo Thorne, and Joaquín Lozano, IFAD’s Director for Latin America and the Caribbean, who signed on behalf of IFAD’s President.

The project will benefit 50,000 families in 27 municipal districts in seven provinces of the departments of Ayacucho, Huancavelica, Junín, Apurímac and Cusco. The project area encompasses diverse ecosystems, ranging from the low Amazon rainforest to the high Andean range.

Poverty and vulnerability are very high in the municipalities targeted by the project due to physical isolation, lack of public services, few economic alternatives, further compounded by a history of conflict and drug trafficking in the last stronghold of the Shining Path guerrilla group. Of the total number of people covered by the project, 66 per cent are indigenous and 74 per cent live below the poverty line.

Although Peru has experienced huge economic growth and has reduced its nationwide poverty rate to 22.7 per cent (2014) over the last decade, 46 per cent of the country’s rural population still live below the poverty line. While a modern and competitive agro-export sector has developed along the coast, Sierra and Amazon rainforest populations still depend on traditional, subsistence farming.

“While Peru has made a number of advances in poverty reduction, they also want to ensure they leave no one behind. That’s the reason for this project: helping Peru meet its commitment to the Sustainable Development Goals’ global agenda to end extreme poverty and hunger by 2030,” said Joaquín Lozano.

The project, to be implemented by the Ministry of Agriculture, aims to transform rural people living in poverty into service providers, enabling them, through training and financing, to undertake activities for their communities’ own benefit. It will create job opportunities in the areas of natural resource management and construction, and repair and maintenance of basic rural infrastructure – mainly roads, water harvesting and irrigation schemes.

The project will also strengthen rural organizations so as to enable them to set up farming and non-farming rural enterprises that generate income and additional employment opportunities for their members and their communities. In that regard, special efforts will be made towards boosting access of farmers’ organizations to markets and rural financial services.

Environmental components of this project will help smallholder farmers adapt to, and mitigate, the effects of climate change, building their capacity to manage natural resources sustainably.

Of the IFAD $74.5 million investment, IFAD is contributing $28.5 million; the Government of Peru, $38.7 million; and the beneficiaries will invest $7.2 million themselves, both in cash and kind.

Note to editors

For more information on IFAD’s operations in Peru, please click here. For more information on the Sustainable Territorial Development Project, please click here. To arrange an interview with IFAD spokespeople, please contact:

Juan Ignacio Cortés
Communications Officer for Latin America and the Caribbean - IFAD
Tel: +39 06 5459 2882

Press release No.: IFAD/65/2016

IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided about US$18 billion in grants and low-interest loans to projects that have reached some 462 million people. IFAD is an international financial institution and a specialized United Nations agency based in Rome – the UN’s food and agriculture hub.