CDD at the Inter-American Development Bank

3.2 CDD at the Inter-American Development Bank

89 3.2.1 Community-Driven Rural Development at the IDB

68. IDB has been undertaking what it calls community-driven rural development (CDRD). CDRD is defined as an approach that “grants decision-making power to community groups and residents in the design of interventions aimed at improving standards of living and the allocation of resources to achieve

agreed upon goals.” 90 CDRD is a means of providing small-scale infrastructure services, organizing natural and community resources better, empowering the poor, enhancing democratic governance and accountability, and improving the security of the poorest elements of the rural community. Thus, CDRD is a similar concept to CDD, applied to the rural development sector.

69. A recent review of IDB’s work in CDRD found that its CDRD projects were CBD-type interventions. Community participation in the projects tended to be limited to information sharing and consultation rather than empowerment of community organizations. Almost 65% of the projects that were covered in the review had no CDD components, such as M&E or management of resources. Although the remaining projects had CDD components, they were at best weak or indirect. Further, as with the World Bank, the CDRD projects in the IDB also had targeting and coordination problems. Very few projects managed to reach the poorest and most vulnerable, including women and indigenous peoples, despite the explicit intentions to do this, and most projects suffered from a lack of coordination between different stakeholders and implementing agencies.

70. However, the analysis in the review suggested that empowerment-focused participation can result in projects that respond better to the needs of communities, and which are hence more sustainable. Also, the degree of community participation in IDB’s CDRD projects has also increased over time. The projects have evolved from being largely agricultural development programs with a heavy emphasis on crop intensification/diversification to truly demand-driven, single, and increasingly multisector initiatives with significant community participation. The review also found that CDRD projects tend to enjoy high

87 Except Rawlings et al. (2004), in which data were analyzed using “with” and “without” comparisons with control groups that received similar services through alternative means.

88 For instance, operational guidance on safeguards and fiduciary compliance for CDD projects are being provided continuously; programs are now increasingly being designed within the decentralization frameworks of developing member

countries, and almost 30 impact evaluation studies of individual CDD projects are currently underway. See Annex-S of World Bank OED (2005).

89 The description in this section is based on Dahl-Ostergaard et al. (2003), who reviewed a sample of 20 IDB CDRD projects, as well as others by the World Bank in order to provide guidelines for future application of the approach in the IBD. The

review is in many ways similar to this review of ADB experience. 90 Ibid, p.1.

satisfactory ratings when evaluated. The review concludes that CDRD is a potent, albeit difficult instrument to wield effectively.

71. Some of the lessons and recommendations emerging from the review follow. x The degree of community participation in IDB’s CDRD projects should be increased so that the

projects can lead to genuine empowerment. The optimal level of community participation should

be determined by considering the level of installed local capacity for project management and relevant political economy. x Efforts should be made to work with existing CBOs and local authorities, instead of creating parallel structures for project implementation. This would require substantial capacity-building efforts in executing agencies to avoid the coordination failures found in the review.

x CDRD projects should be flexible and project duration should be a function of achievement of objectives rather than termination at a predetermined time. This would allow sufficient time for supervision, technical support, and design adjustment that is required in CDRD initiatives. In this respect, the review recommends the use of the new multiphase loans of the IDB (similar to the World Bank APLs) to support CDRD projects.

x For sustainability purposes, analysis should be made at the feasibility and design phase of a CDRD project to determine whether it is mainly in the public domain (such as rural roads or irrigation works) or private domain (such as natural resource management or livelihood projects for farmers). For the former, one should ensure that the relevant public institutions have the required human, financial, and technical capacities to sustain the initiative after the close of the project. For private domain projects, substantial participation of beneficiaries is required to ensure ownership and sustainability.

x To enhance social inclusion in CDRD projects, specific measures toward gender mainstreaming (such as targets for benefits/training of women) and targeted subprograms for excluded groups (such as indigenous people) should be incorporated in project design.

x Finally, CDRD project design should include measures to improve the enabling environment in terms of policies and institutions that support community-led development and participation. This includes support to human rights policies, pro-poor rural development policies, decentralization strategies, and macroeconomic policies that favor rural development.

3.2.2 Social Investment Funds

72. Like the World Bank, the IDB has also implemented a CDD (and CDRD) approach through the use of social investment funds (SIFs). As described for the World Bank, SIFs basically involve the setting up of a semi-autonomous central government agency that offers grants or microcredit to communities for

a menu of small-scale infrastructure projects, such as schools, health centers, roads, small bridges, and water works. Appropriate line ministries usually support the SIFs to ensure the provision of complementary inputs, while local governments or organized community groups take on the responsibility for O&M of newly created infrastructure.

73. As in the case of the World Bank, SIFs were first used by the IDB as temporary emergency response measures to counter the socioeconomic crises faced by several Latin American countries during structural adjustment programs in the 1980s. Since then, however, they have become permanent and important poverty reduction instruments for the IDB. Their greatest strength has been their ability to adapt to changing needs and requirements. SIFs acted as social safety nets during times of economic downturn, and efficient instruments for construction of community infrastructure and short-term employment generation for local communities in more stable times. They are now increasingly seen as catalysts for institutional strengthening and piloting innovative programs for community development.

74. In 1998, the IDB produced a Strategy Paper for the use of SIFs as instruments to combat poverty, in order to improve the institution’s support to such funds in the future. 91 The IDB set up SIFs in 16 of its

26 member countries in Latin America. In most of these countries, the SIFs involved a series of two or more loans to support particular funds. Interestingly, in nine cases, the SIFs were set up with joint financing from the World Bank. The overall funding for SIFs in IDB up to the time of the strategy paper was just over $1.3 billion, making the average size of individual SIFs about $81 million.

75. The review of IDB’s experience with SIFs as set out in its strategy paper suggests that their biggest success has been their ability to deliver useful projects to underserved areas that have a high concentration of poverty. SIFs have been able to provide much needed infrastructure rapidly and cheaply to many impoverished areas across Latin America and have been perceived by the poor and other citizens

as a sign of good faith and as an effective instrument to tackle poverty. 92 Many SIFs have also used innovative targeting methods, such as poverty mapping, to ensure that their funds reach the poorest regions of their host countries. In terms of efficiency and effectiveness, reviews of SIFs suggest that subproject execution has usually taken less than 6 months, cost overruns are low, administrative overheads are 6–15% (which is less than most government agencies) and project disbursement is generally on time. Finally, although there is very little quantitative evaluation data to assess their impact, beneficiary assessments suggest that SIF subproject investments were operating as planned in most cases.

76. There were weaknesses in SIF performance, as per the strategy paper: M&E of impacts, targeting the poorest in poor regions (since final resource allocation was based on project proposals, which often came from the relatively better-off community members), creating long-term employment and income generation (since most public works for SIF subprojects involved only short-term jobs), and maintenance of public infrastructure, such as water and sewer subprojects (where post-project financial contributions and support from concerned line ministries were lacking).

77. The recommendations in the strategy paper for future support to SIFs in the IDB included (a) greater clarity of SIF objectives within specific country contexts so that the funds support rather than substitute traditional line ministries; (b) increased flexibility in the project menu so that communities have greater choice in deciding subprojects that are most relevant to them; (c) better targeting of the poorest of the poor within communities, through technical assistance in project preparation and pre-assignment of a portion of funds to particular communities and groups; (d) better impact evaluation of poverty and socioeconomic outcomes by allocating a certain portion of project funds for rigorous evaluations; (e) increased emphasis on beneficiary participation and community development in all stages of the subproject cycle; and (f) increasing local ownership and identifying sources for national funding of SIFs to ensure their sustainability after the closure of donor projects.