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| >> Regional Overview >> Peru Overview | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Data SheetPROGRAM: Peru Summary: Peru continues to face the serious problem of widespread poverty, as nearly 54% of the population is poor and close to 15% is considered extremely poor. USAID provides opportunities to increase economic well-being through income and employment generation activities, while alleviating some of the consequences of extreme poverty such as malnutrition. Activities include a variety of interventions under P.L. 480 Title II food assistance, along with support to microenterprise and small producers, strengthening of non-governmental organizations (NGOs) that provide assistance to the poor, and poverty reduction initiatives in selected economic corridors that link poor districts with growing economic markets in intermediate cities. Consistent with the Mission Performance Plan (MPP) goal of encouraging broad-based economic growth and development in Peru, activities are designed to: increase productivity and market access for microentrepreneurs and small farmers; improve the capacity of the extremely poor; increase access to financial services; and improve policies for broad-based growth. These results reflect USAID's customer focus on microentrepreneurs and other poor people living primarily in the highlands and jungle areas of Peru where poverty is most severe. These activities, which improve the productive capacity of the poor by providing access to finance, education, nutrition, and employment opportunities, are also a key element in USAID's contribution to the Summit of the Americas Plan of Action goal of eradicating poverty and discrimination in the hemisphere. Key Results: In spite of the economic recession and the uncertainty surrounding the April 2000 elections, USAID assistance was directly responsible for the increase of $14 million in sales by microentrepreneurs and small farmers. Other achievements over the past year included the generation of 5,366 jobs and the provision of microcredit loans to over 69,400 microentrepreneurs, the vast majority of whom were women. P.L. 480 Title II activities contributed to reduced chronic malnutrition in targeted communities, and addressed the food security needs of 1.1 million people in over 5,600 communities through interventions focused on the short-term needs of malnourished children and their families, and the medium-term requirements of increasing household revenues to enable families to meet their basic needs. Performance and Prospects Recently published poverty data confirm that the poverty levels in 2000 increased from those reported in 1997, although extreme poverty remained unchanged. Although the Peruvian economy showed a small improvement in 2000, it was held back by the political instability generated by the controversial April 2000 national elections and later the sudden change of the Government of Peru (GOP) administration. Thus, the economy was not able to fully recover from the economic crisis of previous years and the overall economic situation for the poor did not improve. Nevertheless, during FY 2000, more than 3,200 poor microentrepreneurs and small farmers assisted by USAID's microentrepreneurs and small producers support (MSP) activity continued to increase their production and sales. The activity concentrated on efforts that support expanding market linkages with producers of highland and jungle crops, as well as selected manufactured products. Despite the ongoing recession that greatly dampened effective demand, increased sales for these products in 2000, which are directly attributable to the MSP activity, totaled $12.8 million, and the number of full-time jobs generated was 4,456, of which 2,047 were for women. These figures reflect the positive impact of this activity within a negative economic environment. In 2000, USAID completed the establishment of Economic Business Centers (EBCs) in ten economic corridors in the highlands and the jungle. These corridors have a very high concentration of poor people, but also tremendous market potential. To date, six EBCs have assisted small farmers to increase their sales by $1.2 million and have created the equivalent of 910 full-time jobs, almost half of them for women. In addition, the market linkages established with USAID assistance have leveraged nearly $2.4 million in new investments from the local private sector. The provision of financial services is a significant part of USAID's effort to improve the income-generating capacity of the poor. As of December 2000, the USAID-assisted institutions' portfolio was $21.1 million. In 2000, all of USAID's direct credit funds were used to finance anti-poverty lending activities; the funds were used for loans under $400 and had an average repayment rate of 92.5%. In 2002, USAID expects to substantially expand its microcredit portfolio. In addition to direct credit services, USAID continues to provide microfinance assistance through the Consortium of Organizations that Support Small and Micro Enterprises, a local non-governmental organization (NGO) that services 17 NGOs and 10 specialized microenterprise financial institutions with a loan portfolio of $44 million and 77,000 clients. With regard to improving the capacity of the extremely poor, USAID's P.L. 480 Title II activity focused on Peru's rural highland and jungle areas, where levels of poverty and extreme poverty are the highest. Reflecting an increased emphasis on longer-term solutions to food security issues, 80% of FY 2000 Title II resources were sold and the income was used to support microcredit and agricultural productivity. These activities directly contributed to improving the incomes and livelihoods of beneficiaries; over $17 million in sales were registered by the four agencies that implement income generation activities. Activities that produced the most sales were cattle raising and marketing, along with potato, barley, and corn production. However, food continued to be directly distributed to address short-term and more immediate needs. Over 94,100 families were provided with temporary employment, and over 283,880 children under five years participated in feeding activities designed to address malnutrition and to improve family health and nutrition practices. Close to 157,100 children graduated from feeding programs and 176,600 families improved their food production practices. It is expected that the Peruvian economic situation will begin to improve, as will the economic prospects for USAID's beneficiaries, by FY 2002. Although MSP will end in 2001, a 12% increase in sales of MSP's client production is expected for that year, which would mean additional sales of $14.5 million. By 2002, all 10 economic service centers will be fully operational and USAID activities will generate a $14.8 million increase in sales and 6,200 new jobs. Title II cooperating sponsors are expected to contribute to an increase in customers' sales of $5.2 million and 5,200 new jobs. Additionally, it is expected that by 2002, 100,000 small farmers and microentrepreneurs will have access to sustainable financial services. In FY 2001, DA funds will be used for: 1) technical assistance and training activities that increase small farmers' productivity ($1,220,000); 2) assistance to microentrepreneurs to increase access to markets and financial services ($3,700,000); 3) other market development services for small farmers and microentrepreneurs ($2,495,000) and; 4) interventions for improving policies for broad-based growth. FY 2002 DA funds will be used to continue assisting small farmers to improve their production quality and to access new markets ($1,200,000) and expand the outreach of financial and non-financial services for microentrepreneurs ($3,200,000). Remaining funds ($1,520,000) will support the provision of a variety of business and production services, including market information, for microentrepreneurs and small farmers in 10 economic corridors, as well as interventions to improve the efficiency of social policies and increase public investments in those economic corridors. Possible Adjustments to Plans: The P.L. 480 Title II activity will develop the final multi-year food assistance plans of our cooperating sponsors through scheduled closeout of the activity in 2008. Given the unanticipated economic conditions in Peru during the past few years, USAID plans to seek a more gradual reduction in Title II resources for the next two years than that which is currently planned. During 2001, USAID is designing a comprehensive microcredit activity that will begin implementation in FY 2002. Other Donor Programs: In 2000, the GOP budgeted over $1 million under its anti-poverty program, a large part of it directed to social infrastructure and feeding projects. Virtually all of the major donor agencies have programs dealing with various aspects of poverty reduction in Peru, with the World Bank and the Inter-American Development Bank being important contributors to the effort. Loans are focused on road rehabilitation, social infrastructure, and water and sanitation projects. The principal venue for cooperation among all donor agencies is the donor coordinating committee for the national poverty forums, which have been held annually over the past three years. In a collaborative effort, 20 bilateral and multilateral donors have brought together key institutional players in a nationwide series of workshops and forums focusing on the provision of basic services for the poor (1999), and employment generation (2000). The discussions generated specific strategic recommendations that are now being either considered or used in the programs developed and carried out by the GOP, NGOs, other development organizations, and recently by the 2001 presidential candidates. The focus of the 2001 forum will be on decentralization. Similarly, it will provide specific recommendations to policy decision-makers and political leaders. Principal Contractors, Grantees or Agencies: Principal implementing U.S. organizations are: Chemonics, Cooperative for American Relief Everywhere (CARE), Catholic Relief Services, Technoserve, and the Adventist Development and Relief Agency International. Peruvian institutions include: The Exporters' Association, the Confederation of Private Business Institutions, Projects in Health, Medicine and Agriculture, and the Consortium of Organizations that Support Small and Micro Enterprises. USAID activities complement the anti-poverty programs of GOP Ministries (Presidency, Promotion of Women and Human Development, and Industries and Commerce). Although no project funds are provided to these ministries, USAID does coordinate closely with them on anti-poverty strategies and approaches to better utilize collective resources and to maximize the impact of all activities. Caritas is an international organization grantee. FY 2002 Performance TablePeru: 527-002Performance Measures:
Indicator Information:
U.S. Financing(In thousands of dollars)
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