G OV E R N A N C E and ANTICORRUPTION A S S E S S I N G R E S U LT S I N P R O J E C T S
http://gacinprojects
This study is one in a series of papers that describe project-level approaches to governance and corruption October 2010issues, identify their results, and draw lessons that other task teams may be able to use.
Case Study 2 This study looks at two of the innovative GAC mitigation measures introduced in a rural poverty reduction project. First, to cope with the challenge of monitoring more than 35,000
The Andhra Pradesh Rural Poverty Reduction Project: Multistakeholder Project Monitoring and Community-based Procurement
villages, the project included a multistakeholder supervision approach based on sharing, learning, and innovation. Community monitoring had tangible results, increasing recovery rates from 60 percent to 95 percent of the project’s investment fund. And second, because small and marginal
The Project The Andhra Pradesh Rural Poverty Reduction Project (APRPRP) is one of the largest multisector, community-based projects the Bank is supporting in the developing world. Its central objective is to reduce rural poverty in all its forms and to enable the rural poor, particularly the poorest of the poor, to improve their livelihoods and quality of life. To this end the project facilitates small-group organization and selfmanagement within rural communities, with a particular focus on women. The design also envisages increasing financial access for poor people by attracting private sector interest to this potentially large but overlooked market.
farmers lacked access to the market and power to negotiate prices, the project introduced community-based procurement. This initiative was very effective at raising farmers’ incomes, creating employment for the rural poor, and increasing
Diagnosis of the Problem The project aimed to serve more than 800,000 self-help groups and their federation in 35,000 villages across the state, with a supervision budget of only US$75,000. The project team, whose capacity to monitor developments and identify challenges was limited by distance and time constraints, needed innovative ways of sharing monitoring and supervision roles and responsibilities with local partners. To address this challenge, the project team introduced a decentralized, community-based, multistakeholder supervision approach based on sharing, learning, and innovation.
G OV E R N A N C E and ANTICORRUPTION women’s participation,
leadership, and technical skills in the rural market.
Lack of access to the market, lack of power to negotiate prices because of extreme poverty, and the daily challenge of meeting minimum subsistence needs had made small and marginal farmers in rural Andhra Pradesh vulnerable to unfair terms of trade. Procurement done from distant markets or through village-level traders and aggregators
A S S E S S I N G R E S U LT S I N P R O J E C T S
http://gacinprojects
This study is one in a series of papers that describe project-level approaches to governance and corruption issues, identify their results, and draw lessons that other task teams may be able to use.
GOVERNANCE and ANTICORRUPTION ASSESSING RESULTS IN PROJECTS
Table 1 APRPRP Mitigation and Results at a Glance Conditions at entry
GAC mitigation measures
Results
• CDD approach • Low supervision budget • Very many self-help groups • Women’s groups • Elite capture and political patronage • Lack of access to the market, lack of power to negotiate prices, lack of credit of small farmers • Supplier collusion
• Decentralized, community-based, multistakeholder supervision approach based on sharing, learning, and innovation • Community-managed procurement centers
• Recovery rates increased from 60% to 95% of the project’s investment fund • Between 2003–2006, cumulative turnover above US$120 million and 450,000 tons, and current turnover from dairying surpasses US$34 million • Increase of US$58 in income in one agricultural season for marginal farmers on maize • US$400 of additional wage income for employees of each procurement center generated over a three-month period
resulted in exploitation. Moreover, poor farmers from far-off villages did not receive remunerative prices because of the long distance to the market yards, nontransparent transactions at the yards, and increase in transaction costs for smallholders who could not aggregate their produce. Because smallscale farmers could not access formal sources of credit, they remained indebted to traders for inputs, and even if their land produced well, nearly half of their income was devoted to the interest payments on loans and the revenue lost from accepting low unit prices for their produce from traders. To address this challenge, the project created communitybased procurement centers.
by SOCHURSOD, was designed to capture and monitor qualitative information on processes like the following: participatory identification of the poorest people; organization and promotion of self-help groups (SHGs); development of bookkeeping and self-monitoring skills within selfhelp groups and village organizations; federation of self-help groups into village organizations and of village organizations into distric- and blocklevel organizations; sensitization of community and business leaders about the needs of the poorest, out-of-school children, and individuals with disabilities; and development of links between village and district organizations and bankers.
This study examines the results of the multistakeholder monitoring and the community-based procurement centers.
The monitoring system also involves communities in monitoring themselves. Each level of the federation has a self-management subcommittee that decides on the resources to be allocated for monitoring project activities and plans for them. Subcommittees have also been established for dealing with specific functions: bank linkage subcommittees meet with bank managers to negotiate loans; village-level asset verification subcommittees verify the assets acquired through loans taken out by SHG members (visiting the SHG member in her home to be sure that the loan she has taken out is used for an asset that is of a
GAC Mitigation Measures Process Monitoring
2
Process monitoring—that is, monitoring how project activities are undertaken, and how project inputs are transformed into project outputs and outcomes—was a crucial part of the project strategy. Process monitoring, carried out independently
Case Study 2
The Andhra Pradesh Rural Poverty Reduction Project
Figure 1 Results Chain Diagram
MIS/Project
Process monitoring by SOCHURSOD
Collection, analysis, and presentation of data
Community-based monitoring
Private sector players
Project/Society for the Elimination of Rural Poverty (implementing agency)
Identificationof problem and priority areas
Bank supervision
certain quality and matches the value of the loan); monitoring subcommittees monitor the communitybased organizations to check compliance with prescribed norms and meeting processes; and social action subcommittees identify and address social problems. Moreover, community members have a standardized way of producing and keeping documentation, and they check all records (specific subcommittees audit records regularly). Finally, the village is responsible for verifying the assets of members who have acquired assets from loans by checking a photo of that asset and the member who requested the loan; and a system to address grievances has been set up. The system of subcommittees for monitoring project and communities’ activities is also a disincentive for elite capture and political patronage.
Community-based Procurement Centers The procurement centers—community-managed, decentralized units for storing, assessing, and trading agricultural commodities—address, under a single umbrella, the issues of lack of credit, quality control, aggregation, and market linkage. Each
center aggregates produce from about 500 smallscale, dispersed producers and supplies it directly to the market yard or buyer. The center basically brings the market to the village level, and suppliers (commercial banks, input suppliers, companies trying to source raw materials) do not have to deal with a multitude of smallholders. A network of grassroots functionaries—trained quality controllers, bookkeepers, and storage specialists from within the community—ensures transparency and efficiency in the operation of procurement centers. Market information on price and quality is displayed in the centers and is also available to farmers—even those in remote villages—by mobile phone. Community resource persons (who have undergone training in community procurementrelated issues) use mobile phones to ascertain the latest market price before entering into contracts to purchase farmers’ produce. Quality testing and weighing are transparently conducted by community members, rather than by profit-seeking middlemen. Farmers receive cash payment on the spot, which makes the process more efficient and favorable to the poor. Moreover, in the franchising partnership model, procurement centers are used as forward procurement and marketing agents for
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GOVERNANCE and ANTICORRUPTION ASSESSING RESULTS IN PROJECTS
community organizations. The project provides community members with working capital, which is used for small-scale infrastructure. It also trains the community resource persons in value addition, quality control, bookkeeping, and business skills.
Results The results of this project are very impressive. For example: zz
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The project has mobilized 10.22 million poor women (90% of the poor women in the project districts) into 850,671 SHGs 1 and 35,525 village organizations (VOs). The institutions of poor households have collective internal funds (savings and corpus) of US$805 million and have developed commercial bank linkages worth US$4.3 billion, which means that every US$1 invested by the project has leveraged US$12 from the commercial banks. Progress was made in access to the National Rural Employment Guarantee Scheme, under which 11.90 million poor households were enrolled for job cards, resulting in job creation of 734 million days for 8.10 million households in Andhra Pradesh. There has been a significant decrease in malnutrition and infant and maternal mortality rates among mothers and children participating in the 600 nutrition-cum-day care centers managed by the federations of SHGs.
Community Monitoring
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APRPRP developed a culture of accountability and supervision so that communities realize that it is in their own interest to monitor project activities, and they have strong incentives to do so. Communities now have in place a system of incentives built on trust, information-sharing, and peer pressure that has institutionalized governance. The project accountability process works as follows. First, accountability is learned in intensive initial trainings,
when community resource people (women who are seasoned, successful members of the SHGs) train new members about the importance of working together to achieve common goals, teaching them that their own well-being is interconnected with that of other members in the group. Then, accountability becomes a habit. The management of these SHGs is well defined. Each group meeting follows the same agenda, with clear roles for each member (i.e., going to meetings, contributing to savings). A system of sanctions deters members from breaking from meeting procedures. Decisions about who is eligible for a loan are made by consensus after a process of deliberation. Last, accountability is monitored and rewarded. After repeatedly and successfully giving and repaying loans from their own resources, the SHGs become eligible for larger loans from the banks to support livelihood activities. Project management built communities’ capacity to collect and analyze data. Both group formation and capacity building entailed identifying a variety of community activists, facilitators, resource persons, paraprofessionals, and other grassroots actors, and instructing them in important facets of project management. Members of the local community were trained to identify problems and good practices and, in so doing, learn about the operational significance of the processes and indicators being watched. The following are some of the main benefits coming from the project monitoring in Andhra Pradesh.2
A typical SHG comprises 10–15 poor women. The members meet once a week, collect savings, maintain books of accounts, and give loans to their members based on needs. The groups are then federated into village organizations. 2 In October 2005 the APRPRP received the World Bank’s Golden Plough Award for Good Practice in Project Supervision for Agriculture and Rural Development for its innovative application of process monitoring. More specifically, the award was based on the method’s proactivity in identifying and resolving project challenges and focus on achieving development impacts while building government and stakeholder ownership in the project. 1
Case Study 2
The Andhra Pradesh Rural Poverty Reduction Project
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Proactive and adaptive decision-making process. Decision-making that is informed
by constant flows of “real time” guidance and feedback from communities and field-based project staff is decidedly more adaptive, as problems and opportunities are recognized more promptly. Solving problems and replicating successful innovations becomes more proactive: risk-taking becomes more calculated and rational. For instance, when communities identified poor recovery rates by the project’s investment fund as a serious problem, they took it upon themselves to stop all fund disbursements until recovery rates improved. Through their own internal efforts, which took into account the results of monitoring by project field staff, recovery rates quickly increased from 60 to 95 percent, and disbursements were resumed. Moreover, in a demand-driven project, project planners cannot know all the processes that may require monitoring, and the objectives and indicators may change during the life of the project in response to changing circumstances, requiring midcourse adjustments in project implementation. Therefore, it is important to get communities engaged in monitoring processes and helping to fine-tune indicators as the project evolves. The use of participatory methods in monitoring also facilitates immediate sharing of observations. zz
More information available to project management. Using the broader range of
information sources available from internally monitoring participating stakeholders and externally monitoring commissioned agents, project managers are better informed. For instance, each Bank supervision mission is preceded by a community supervision mission, in which trained community members identify problems or good practice and report them to the Bank team. The Bank team then plans its field visits on the basis of these reports, so it can address problems or identify ways to scale up successes. As a result of
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this “auxiliary supervision,” the Bank team has better knowledge of project implementation issues and outcomes than would otherwise have been possible in a project of such size and scope. Better working relationships. With the built-in high levels of consultation, managers and supervision teams are able to form more effective working partnerships with stakeholders. Communication and knowledgesharing between these partners enables a highly responsive form of decision-making, based on more timely and thorough information that makes project implementation more adaptive to changing circumstances. Capacity building and learning. Participation in process monitoring has improved people’s ability to define and articulate their interests and has offered the opportunity to build capacity. Moreover, the monitoring system in Andhra Pradesh is a source of learning and exchange of ideas. For instance, the observations emerging from the external process monitoring are disseminated to the communities and the project staff. After monitoring the functioning of SHGs, the team shares its findings with them and the activists who are responsible for their development.
Community-based Procurement Centers Since 2003 the procurement centers have handled more than 100 commodities with a cumulative turnover above US$120 million and 450,000 tons; and by 2010 they are projected to achieve an annual turnover in excess of US$200 million. The marketing concept has been extended from procuring crops to procuring milk: the project has formed more than 1,200 village-level milk procurement centers and 60 bulk milk chilling units at the subdistrict level. The current turnover from dairying surpasses US$34 million, benefiting more than 100,000 milk producers. More than 2 million SHG members carry out transactions with the procurement centers every year.
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GOVERNANCE and ANTICORRUPTION ASSESSING RESULTS IN PROJECTS
Figure 2 Community Institutional Arrangements First 2 Years: Building Social and Financial Capital for the Poor Accumulating savings, managing money, lending within small groups, accessing credit
Village Organization
Sub-district Federation
District Federation
Commercial banks
e1
as
Ph Self Help Group (SHG)
• • • •
Federates about 20 SHGs Strengthens SHGs Arranges lines of credit to SHGs Social action
• • • •
Federates about 300 VOs Secures links with Govt. depts. Audits VOs Microfinance functions
• Federates about 40 subdistrict federations
10–15 individuals
Pha
se 2
Members of different SHGS from a producer group based on a common activity
Markets, private sector
Year 2 Onwards: Converting Social Capital into Economic Capital Creating assets; developing technical, business, and management skills
Village Organization
Sub-district Federation
• Manages bulk milk chillers • Links to cooperatives, private companies
• Markets • Manages procurement centers • Manages community health fund • Identifies jobs for youth
District Federation
• Interfaces w/ markets • maintains MIS/IT system • Manages community insurance
Source: Rao, et al., “Making Markets Work for the Poor.”
The following are some of the main benefits and results of setting up procurement centers in Andhra Pradesh. zz
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Increased income. The procurement centers
raised farmers’ incomes by helping them to obtain better prices and reduce their marketing costs. The income gain on some commodities such as neem and lac has exceeded 200 percent. A recent impact evaluation of the partnership with APMARKFED3 for maize procurement found that the cumulative additional income generated for farmers across the state in 2005–06 was US$22 million, and marginal farmers benefited the most, with an average increase of US$58 in one agricultural season. Increase in the general market price. The APMARKFED evaluation found that the activity increased the market price of crops by 10 percent and of milk by 15 percent. Employment generation at the local level.
The procurement centers, milk collection centers, and chilling units create employment
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for the rural poor: dairying generated more than 5,000 new jobs at the village and subdistrict levels, and the partnership with APMARKFED created 6,000 new jobs. The APMARKFED evaluation found that each procurement center generated an additional wage income of US$400 over a three-month period for its employees. Cash payment. Unlike traders and middlemen, who make partial payments in cash and offer the balance in the form of inputs and other supplies, the procurement center pays producers in cash at the time of purchase, giving farmers the freedom to source inputs more cheaply. Increase in participation, leadership, and technical skills of women in the rural market.
By managing village enterprises, women are
The impact evaluation assessed the scheme and the lessons drawn from the implementation of the communitybased procurement centers in the first year, looking specifically at maize as the most important crop for the sample farmers. 3
Case Study 2
The Andhra Pradesh Rural Poverty Reduction Project
taking on duties that were previously in the male domain. Women are becoming active players in the rural market as they negotiate with traders and representatives of the private and public sectors. The women have garnered support from village elders and leaders, who in many places collaborate to provide infrastructure and logistics support to the centers. Procurement centers have thus increased women’s mobility and enhanced their decision-making space within the household.
the part of community-based organizations, the participation itself offers an important opportunity to build that capacity. zz
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Lessons Learned Several major lessons have been learned from the APRPRP experience and can be applied in similar environments.
Project Supervision and Communitybased Monitoring zz
A monitoring system under which different layers collect and analyze data is a very effective way for management to have more and better information and to reduce costs.
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Community-based monitoring as a costefficient tool. Given the large geographic and
Multilayered
monitoring
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Community-based monitoring as a capacity-building tool. Just as active
participation in monitoring requires capacity on
of
community
monitoring.
The APRPRP provides precisely the context in which research suggests that grassroots monitoring may be most effective—where villagers inherently have good information about potential corruption and a strong personal stake in minimizing theft of funds. Training. Project management built communities’ capacity to collect and analyze data. That takes time (in Andhra Pradesh, around three years), but the benefits in terms of sustainability outweigh the costs.
Community-based Procurement Centers zz
system.
programmatic scale of many Bank operations, the efficiencies and time and cost savings achieved through process monitoring suggest the method is well worth replicating elsewhere, and in this sense, the Bank itself is an important beneficiary. The presence of self-monitoring agents that regularly and transparently track such information, as repayment rates and history removes a major category of cost. Where sufficient capacity exists or can be fostered locally, participatory monitoring by stakeholders can enrich the quality of information available to project managers while building ownership among those stakeholders.
Specificity
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Added value of community-based procurement centers. Community-managed,
decentralized units for storing, assessing, and trading agricultural commodities have generated significant economic, gender equality, and other benefits, while integrating the poorest producers with the market. Collective marketing by procurement centers has strengthened village organizations in many ways. First, by generating income and adding to the institutional corpus of funds, the procurement centers serve as a business model for village organizations. Second, members’ participation in the activities of SHGs and village organizations has risen because of the benefits yielded by the centers. Moreover, the successful operation of procurement centers as franchises for public and private partners has changed the perception of the centers’ viability and potential, as they are now considered partners rather than mere recipients for grants. Investing in social capital. There is tremendous social capital in various community organizations managed by women, such as the SHGs and other user groups. Systematic initiatives to build human capital through
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GOVERNANCE and ANTICORRUPTION ASSESSING RESULTS IN PROJECTS
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training in business development, quality control, and market research can enable local institutions to generate significant economic capital and other benefits, while enabling smallscale producers to integrate with the market. This kind of economic empowerment requires significant investments in market-based and management skills for women. Preconditions. The social and economic mobilization of community institutions, building of strong community institutions, and investment in human capital are necessary preconditions for developing procurement centers and helping them achieve scale and sustainability. Role of women. Physical infrastructure like procurement centers can be run more efficiently by women’s organizations, which are more able than traditional men’s organizations to cultivate financial discipline and transparency.
References Galab, S., P. Prudhvikar Reddy, D. Raju, G. K. Mitra, A. R. Venkateswarlu, Nageswar Rao, K. Chandrasekhar, G. Alivelu, and T. V. Kumar, Presentation on Review of World Bank-funded projects: APDPIP and APRPRP, Society for Elimination of Rural Poverty and Department of Rural Development, Government of Andhra Pradesh, September 2008. Rao, K. P., V. Kalavakonda, S. S. Banerjee, and P. Shah, “Making Markets Work for the Poor: Community-Managed Procurement Centers for Small and Marginal Farmers in Andhra Pradesh,” INDIA, Series 1, Note No. 2. World Bank. Andhra Pradesh Rural Poverty Reduction Project (APRPRP), Project Appraisal Document,
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Generic Lessons Learned zz
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Governance and accountability at the center of the project. All of the lessons
and benefits described above are strongly related to the culture of accountability that the APRPRP developed among communities by building trust and sharing information. In this project, governance and accountability are central, not simply external components. Staff continuity. Smooth continuity between task team leaders who work on a project for many years from its inception can be very productive in developing a coherent and innovative strategy. Strong client. Achieving strong results in the field is possible only when the client is strong—that is, when the client has the capacity and willingness to pursue the project’s objectives.
January 2003. http://imagebank.worldbank.org/servlet/ WDSContentServer/IW3P/IB/2003/02/22/000094946_03 020604012854/Rendered/PDF/multi0page.pdf World Bank. Proposed Additional Financing to Andhra Pradesh Rural Poverty Reduction Project (APRPRP), Project Paper, May 24, 2007. http://imagebank.worldbank.org/servlet/WDSContentServer/ IW3P/IB/2007/06/22/000020953_20070622082738/ Rendered/PDF/38719.pdf World Bank. Andhra Pradesh District Poverty Initiatives Project (APDPID), Implementation Completion Report, July 26, 2007. http://imagebank.worldbank.org/servlet/ WDSContentServer/IW3P/IB/2008/08/13/00 0333038_20080813004547/Rendered/PDF/ ICR980P0450490Box327426B01PUBLIC1.pdf
G OV E R N A N C E and ANTICORRUPTION
This study was prepared by Tommaso Balbo di Vinadio under the supervision of Ivor Beazley and with the assistance of Parmesh Shah.
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