Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB831 Project Name BO Rural Space Region LATIN AMERICA AND CARIBBEAN Sector General agriculture, fishing and forestry sector (30%);Sub-national government administration (30%);General transportation sector (20%);Agricultural marketing and trade (20%) Project ID P083051 Borrower(s) BOLIVIA Implementing Agency MACIA: Vice-Ministry of Rural Development of the Ministry of Campesino and Agriculture Avenida Camacho No.1471, piso 2, La Paz, Bolivia Tel (591-2) 220 3980 - 237 4274 Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [X] S 2 [ ] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared April 8, 2004 Estimated Date of Appraisal Authorization January 17, 2005 Estimated Date of Board Approval June 29, 2005 1. Key development issues and rationale for Bank involvement 1. Background: Bolivia is a country with still a large proportion of rural population compared to many other LAC countries (37 %). The great majority of these rural people are poor (96%, with 84% extremely poor 1 ). Since productive activities are an important element of the rural well being 2 , the decreasing trends in productivity of the last decades have severely affected their livelihood situation. Up to now the government has accurately recognized the high correlation between low rural productive activities and poverty, and therefore has placed the need to enhance the productive asset base high in their development programs, particularly the Poverty Reduction Strategy, the National Agriculture and Rural Development Strategy (ENDAR), and the Economic and Social National Plan. This challenge is also at the center of the consultation process with civil society undertaken by the government on the ongoing national dialogue, which this year has particularly been called Dialogo Productivo Nacional. 2. The high priority given to rural production in the national reform program of this administration comes partly from past unsuccessful experience. When the decentralization program in Bolivia was expanded through the Ley the Participacion Popular in 1994, the intention was that local governments - being closer to the rural poor- would have a more effective response in supporting rural production and in improving rural incomes than centrally sponsored schemes. However, for several reasons, this did not occur, and the peasants are claiming now more than ever before for innovative mechanisms to bring support and solutions to their productive needs. Some innovative ideas to promote “municipios productivos” have also been launched during the last years, but given the choice, municipalities keep preferring to allocate resources to social infrastructure instead of productive related investments. Therefore, the challenge to design effective models to support productive activities still remains. 3. This challenge has also been recognized by the donor community, which has allocated to the RD sector more resources within the last years than to any other individual sector in the country. Ironically, 1 2001 Bolivian National Census. 2 For example, almost 60% of the rural poor are involved in at least one agriculture activity Page 2 these resources, although having contributed to local institutional strengthening, support to agriculture institutions and rural infrastructure, have also had limited impact on rural productivity and incomes themselves. The primary reasons for this are (i) lack of integration between infrastructure and services; (ii) poor coordination, programs are dispersed and unidimensional; (iii) primary focus at the municipal level, with little direct assistance to community groups themselves; and (iv) unclear rules to transfer funds for economic purposes directly to community groups. 4. At present, following the social unrest of last October, the Government is looking for althernatives to respond to the unsatisfied needs of the peasants, and particularly in relation to investments to support productive activities. To address this, the government strategies mentioned above encourage multidimensional, decentralized and participatory solutions, based on the development of local economic plans, and the convergence of efforts to support autochthonous productive alliances. These goals provide the framework for this project. 5. Support to the CAS: The project is one of three investment operations presented in the CAS (26838-BO), and it is highlighted as a high-visibility operation to contribute to rural poverty reduction. It is consistent with the CAS intent to support the government’s efforts to promote rural growth, and address issues of exclusion and inequality arising from regional differences in economic conditions and outcomes. The project will address this by increasing the economic opportunities for the rural poor, ensuring equity and strengthening the institutional/organizational context in which the poor operate. Proposed project development objective(s) 6. The project’s objective is to improve the income of poor rural producers (and particularly the ones with indigenous background) in 2-3 selected sub-regions of the country. To achieve this, the project will (i) promote strategic productive alliances between different economic players at the local level, (ii) empower rural producers through the development of self-managed grass-root organizations, (iii) increase access to productive assets and technology, (iv) promote more effective, responsive and accountable service organizations at the local level, and (v) provide an enabling environment for productive alliances and local economic development. Preliminary description 7. Following a rural space approach, the project will operate in 2-3 geographical areas selected during project preparation according to their productive potential and poverty status. In these areas, the project will promote the efficient use of resources through the support to rural productive activities which will have potentiality to be converted into economic returns for poor farmers. Although the final design will be determined during project preparation, possible project components to assist with this are: A. Local Economic Development component: support to the local economic development process and the promotion of strategic productive alliances. It would include: (a) establishment of demand driven productive alliances: support to “alliance brokers”, information sharing among beneficiaries (including communications strategy), mobilization and screening of interests from potential participants, pre-investment assistance, and evaluation of proposals. (b) support to participatory local economic development planning: local economic development plans (“alliance plans”) would be developed to respond to the compromise undertaken in a productive alliance by all parties involved. The “alliance plan” would describe the investments and activities required to be done (i) by the supply side (groups of producers) and local governments to ensure a Page 3 continuous and good quality supply of products, and (ii) by the demand side to ensure that quality requirements are understood, and fair returns are provided to producers. This subcomponent would also provide the necessary technical assistance and services to prepare alliance plans. (c) technical assistance to the private sector to take up proposals which enable them to increase value added from existing products or develop new enterprises and joint ventures. B. Producer organizations component : a community driven development component to promote local empowerment and productive investments but for farmers participating in productive alliances. It would include: (a) Producer groups and capacity building: development of self-selected and self- managed grass- root organizations (“producer groups”) and the capacity building of their members in technical, managerial and leadership areas, as well as building skills within their organizations to access information and services, negotiate with service providers and be a recognized player within a productive alliance. The subcomponent would encourage development of networks of producer organizations which are able to sustain and take independent initiatives after the project is over. (b) Productive assets and services: support to services, goods and productive infrastructure to rural producers for the implementation of “alliance plans”. The activities to be included would depend on the geographical areas to be supported (and still not defined), but might likely include on-farm infrastructure (irrigation, storage facilities, community centers for product processing, water harvesting structures, etc), soil conservation measures (terracing, land leveling, watershed treatments), goods (equipment, machinery, vet supplies, seeds and other vegetative material, agriculture inputs, etc), and services and technical assistance (in market and marketing, IT, surveys, laboratory tests, insurance, and other technical productive services). The subcomponent would be implemented by the producer groups, and will be subject to cost sharing arrangements. An additional output is the creation of a financing mechanism to support the productive investments made by producer groups. C. Project Management : This component would aim to clarify responsibilities between different agencies and levels of government and increase their capacity in supporting productive investments, and in delivering services to the rural poor. It would include: (a) capacity building and organizational support to establish a project coordinating group at the center and regional level, (b) monitoring and learning (including establishment of a management information system to support communications between the participants of productive alliances, service providers and project authorities), and (c) provision of goods, equipment and incremental operational costs for the coordinating group. 8. The project will complement other rural development projects in Bolivia. It will complement the efforts of the Participatory Rural Investment Project in municipal strengthening, local public investments and compensation policies, and it will build on its experiences to directly finance communities for productive infrastructure investments. The project will also build on lessons of community organization from the Indigenous People LIL, and the importance of getting people closer to markets and other local actors (before investments are made), through the establishment of local productive alliances. Page 4 Potential risks and mitigation 9. The main risks facing the project, and proposed mitigation measures are described below: • Complexity of institutional arrangements: the multidimensional nature the project requires the participation of several government agencies. To ensure this integrati on, the preparation is under the responsibility of a Project Preparation Unit within the Ministry of Agriculture, working under the strategic guidance of an Inter-ministerial Committee. Roles and responsibilities to ensure this coordination during the implementation phase will be further delineated during the preparation phase. • Weak implementation capacity at local level: limited capacity of local producers and their organizations to prepare investment plans and understand and participate in productive alliances will be mitigated through a broad technical assistance and capacity building program (in terms of technical training, financial and administration, and monitoring), and a solid communications strategy. • Productive alliances cannot be materialized, or do not perform as expected: this will be mitigated through the careful selection of “alliance brokers”, the inclusion of productive and institutional criteria in the selection of project area, and the definition of clear “rules of the game” for the preparation, formalization, selection and implementation of the productive alliances. 2. Safeguard policies that might apply With the present design, the project will trigger OP 4.01 (Environmental Assessment), OD 4.20 (Indigenous Peoples) and OP 4.09 (Pest Management). The applicability of other two policies (Involuntary Resettlement – OP 4.12 -- and Natural Habitats OP 4.04), is unlikely at this stage. However, a final decision on this will be determined once preparation is more advanced. 3. Tentative financing Source: ($m.) BORROWER/RECIPIENT 5 INTERNATIONAL DEVELOPMENT ASSOCIATION 20 Total 25 4. Contact point Contact: Ethel Sennhauser Title: Sr. Rural Development Specialist Tel: (202) 458-5289 Fax: (202) 522-3132 Email: Esennhauser@worldbank.org