Peru - Indigenous and Afro-Peruvian Peoples Development Project (LIL)

Report No. PID8180 Project Name Peru Indigenous and Afro-Peruvian Peoples (@) Development Project Region Latin America and Caribbean Region Sector Other Social Sector Project ID PEPE60499 Borrower(s) Government of Peru Implementing Agency PROMUDEH Environment Category B Date PID Prepared December 14, 1999 Projected Appraisal Date April 19, 1999 Projected Board Date January 16, 2000 1. Country and Sector Background Sector Issues: The main socioeconomic and legal issues identified during consultations with indigenous and Afro-Peruvian peoples of the coast, Sierra, and Amazon regions that the project will confront are: a) A lack of economic options in the Sierra region has resulted in large-scale migration to the coast and urban areas. This migration has not reduced poverty nor improved the well-being of indigenous and Afro-Peruvian peoples as a whole. b) An inconsistent legal and institutional framework towards indigenous peoples that guarantees them neither secure access to their land nor the control over the use of natural resources and traditional knowledge. c) A persistent disparity between urban/rural and indigenous/non-indigenous poverty. While there has been some reduction in rural poverty in recent years, most economic gains have occured in urban areas. This has led to a higher concentration of poverty in rural compared to urban areas. Almost 50 percent of the poor and 60 percent of the severe poor in Peru lived in rural areas in 1997, whereas more than two-thirds of the total population lives in urban areas. In addition, the indigenous population is falling further behind the non- indigenous population in terms of poverty. Indigenous peoples were 40 percent more likely to be poor than the non-indigenous population in 1994 and 49 percent more like to be poor in 1997 (see Poverty and Social Developments in Peru, 1994-1997). d) A significant gender disparity in the levels of poverty, income-generating potential, and community decision-making roles. Past efforts to extend technical and other assistance to indigenous populations in Peru have tended to overlook the gender dimension of poverty, and gender considerations have not been adequately taken into consideration in project preparation. The productive, reproductive, and community-wide gender roles, responsibilities, and constraints of both individuals and communities must be taken into account to ensure the greatest degree of success and equity in the development process within the context of the indigenous and Afro-Peruvian communities and their self-defined needs. Government strategy: In 1996 the Peruvian government created the Ministry of Women and Human Development (PROMUDEH), which seeks to establish, implement, and promote strategies for the inclusion of vulnerable groups in the  development process. PROMUDEH recently created a Multisectoral Commission for Indigenous Affairs (CAI), composed of representatives from the public sector and indigenous organizations to promote better coordination between the demands of indigenous peoples and the services offered by State agencies. CAI seeks to provide the GoP with a unit that will allow different ministries and agencies within the government to coordinate development efforts for the indigenous peoples of Peru. This will help avoid repeating past experiences in which development efforts were duplicated or contradicted by different government bodies. The commission's purpose is also to increase indigenous peoples participation in project design and implementation. The Technical Secretariat for Indigenous Affairs (SETAI) is a permanent part of the new organizational structure of PROMUDEH. One of the conditions of the Bank to the GoP for lending for an indigenous and Afro-Peruvian peoples project was to have the GoP provide a position of greater stature to this division dealing with indigenous and Afro-Peruvian affairs. SETAI was allotted powers that provide it with the capacity to orient, coordinate and articulate policies and multisectoral actions for the human development of indigenous and Afro-Peruvian populations. In addition, SETAI has proved to be an innovative technical secretariat charged with promoting participatory development. Rather than initially providing indigenous and Afro-Peruvian peoples with direct financing for sub-projects, SETAI will facilitate the process of meeting the demands and requests of their communities and organizations. The goal is for indigenous and Afro-Peruvian communities and organizations to have the capacity to design, develop, and manage their own development initiatives and projects, providing these communities with a greater sense of ownership and empowerment in managing their own development, and helping to reduce the need for direct interventions by State entities. Financing will be provided by cooperating agencies following the methodology of this project. Both CAI and SETAI will help develop and strengthen the organizational capacity of Peru's indigenous and Afro-Peruvian peoples, thereby enhancing their ability to take development into their own hands, increasing their self-sufficiency, and improving their ability to achieve sustainable economic growth. This project, as well as the project for Indigenous Management of Protected Areas in the Peruvian Amazon, to be financed by the Global Environmental Facility (GEF), fits within this strategy of institutional strengthening and capacity-building. By training communities and organizations to efficiently design and implement projects that respond to the self-defined needs of their communities, the Bank is creating an effective system for working with partners at the grassroots level in Peru. Based on this project's successes, the Bank will be able to contribute to the GoP a modus operandi for promoting projects that address the needs articulated by communities and organizations rather than providing top-down development options based on the perceptions of outsiders. This project will facilitate the implementation of current and future Bank projects as well as other projects for indigenous peoples by (a) providing communities and organizations with the capability of presenting proposals and implementing community development sub-projects, and (b) providing an effective example of grassroots community development sub-projects that can be replicated by the Bank, the Peruvian government, and other institutions. The project will also support revision of the existing indigenous legal framework as well as development of legislation for Peru's indigenous - 2-  peoples. The legislation will be based on standards set in ILO Convention 169 (ratified by Peru), and other international instruments such as the draft United Nations Declaration on the Rights of Indigenous Peoples, the Organization of American States' American Declaration of the Rights of Indigenous Peoples project, and consultations with the indigenous peoples of Peru. The legislation's main components will focus on (a) self-definition of indigenous peoples of Peru, (b) collective land tenure rights that are inalienable and unprescriptable, (c) autonomous privileges of indigenous communities and their role in local political structures, (d) ownership and access to natural and other resources and intellectual property rights, and (e) cultural patrimony. 2. Objectives The project objective is to strengthen indigenous and Afro-Peruvian communities and organizations so that they can design and implement community development sub-projects, better articulate their proposals, and effectively utilize services offered by the State and other sectors within civil society by promoting innovative methods through a "learning by doing" process. The project will be implemented in five pilot zones and involve a gender- sensitive methodology with the active participation of indigenous and Afro- Peruvian women's organizations. The project will achieve its objectives through: (a) the strengthening of the organizational, institutional, technical and entrepreneurial capabilities of indigenous and Afro-Peruvian communities and organizations, as well as participating government agencies; (b) the preparation of community development sub-projects based on participatory designs, and organization of technical proposals with the required pre-investment studies; and (c) the implementation of sub-projects with financing from the funding agencies. 3. Rationale for Bank's Involvement n/a for a LIL. 4. Description The project is composed of the following six components: 1. Institutional Strengthening of SETAI and the Multisectoral Commission of Indigenous Affairs (CAI). This component will finance minor office supplies and equipment, Technical Group (TG) staff, operating costs, training, studies, workshops, Geographic Information System (GIS) software, and exchanges with other institutions working on capacity-building of indigenous and Afro-Peruvian peoples. 2. Capacity Building of Indigenous and Afro-Peruvian Peoples Communities and Organizations. This component will provide training in (a) participatory planning, preparation, implementation and maintenance of community sub- projects, (b) financial management and administration, (c) management of entrepreneurial and income-generating activities, (d) cultural patrimony, and (e) development of community human resources, including organizational, technical, and legal training reinforcement. 3. Technical Assistance and Legal Reforms. This component will provide technical assistance to revise the legal framework regarding indigenous peoples, and finance consultation workshops for the development of such a - 3-  legal framework (see Annex 14). 4. Information and Awareness Campaign. This component will provide training to State agencies and civil society representatives regarding indigenous and Afro-Peruvian culture, rights, issues and proposals, in addition to Information, Education and Communication (IEC) programs, in the five pilot zones. 5. Community Development Sub-projects. This component will finance (a) feasibility and pre-investment studies; (b) preparation of technical proposals; (c) promotion of meetings between State agencies, such as the OPDs in PROMUDEH, to agree on financial resource allocation; and (d) identification of innovative community sub-projects through a participatory "learning by doing" process in accordance with the Operational Manual. 6. Project Management: Monitoring and Evaluation procedures will be used in accordance with quantitative M&E Bank procedures for procurement, disbursement, accounting and finances, and to monitor the implementation and impact of the training and community development sub-projects, analyzed separately by gender. 5. Financing Total ( US$m) Government 1.5 IBRD 5 IDA BENEFICIARIES 0.2 Total Project Cost 6.7 6. Implementation The implementation arrangements include two types of activities described in the components: (a) Capacity building of indigenous and Afro-Peruvian communities and organizations. In each zone a diagnostic will be conducted to assess training needs and determine the organizational capacity of participating organizations and communities involved in the project. The organizations and communities will be classified into one of three levels of competency, and those with a higher capacity will be used to train and assist organizations in their zone that have a lower capacity. Based on this assessment, NGOs, municipalities, state entities and communities with higher institutional capacity will be identified to be contracted by SETAI to carry out needed training activities. All technical activities will be reflected in a zonal implementation action plan to be submitted to CAI for review and approval. Monitoring and evaluation will be a constant activity during the training implementation to improve training activities and determine impact. Within each region and at the national level, the executing agencies (communities, NGOs, municipalities, OPDs, etc.) and communities involved in providing training will meet at regular intervals to compare methodologies as well as successful and unsuccessful experiences. This process will provide an opportunity to combine different success strategies and allow the ZF to adapt and modify its training strategy based on the evolving "best practices". (b) Community development sub-projects. Existing community development projects in different stages of development as well as newly proposed sub- - 4 -  projects focused on the following issues can be implemented with financing from cooperating agencies: productive projects, ethno- and eco-tourism, natural resource management, training, microenterprises, etc. After the ZF selects the sub-projects, a consultant will develop a participatory action plan, as well as pre-investment studies and technical proposals, and along with SETAI/TG, will seek financial assistance and approval from State agencies, such as the OPDs in PROMUDEH. SETAI will enter into agreements with cooperating agencies under the terms and conditions specified in the operational manual. Communities and organizations that are operating at the highest level of competency will be able to directly implement sub-projects. However, communities and organizations that have lower competency ratings will need to work with an approved NGO or with a higher level community or organization to implement their sub-projects. Following completion of the project, a report will be submitted to the ZF by the beneficiary community or organization. 7. Sustainability n/a for a LIL. 8. Lessons learned from past operations in the country/sector Rural areas in the Coast, Sierra and Amazon regions have long been considered extremely impoverished, yet these regions are rich in cultural and natural resources. The extraction of natural resources (minerals, petroleum, and high-value wood products) and the unplanned occupation of rural areas have caused heavy environmental degradation, including a serious loss of biodiversity. While the majority of the rural population did not benefit substantially from the use of their natural resources, they have born the effects of the associated environmental impacts. In most cases even the measures to mitigate these impacts, such as the establishment of protected areas, were taken without consultation and participation from local communities. This project will test promising methods of building communities' institutional capacity so that they can participate more effectively in their own development and derive greater benefit from the sustainable economic use of their resources. Many past development efforts by the Peruvian government have relied on a top-down approach, thereby failing to address the self-defined needs of indigenous and Afro-Peruvian peoples. One strategy of this project is to promote the active participation of indigenous and Afro-Peruvian peoples, making them designers and implementers of projects with multi-sectoral financing and in coordination with SETAI. Another strategy is to directly strengthen the organizational structure of indigenous and Afro-Peruvian peoples. Strengthening and empowering indigenous and Afro-Peruvian communities and organizations to design, implement, and manage projects is expected to give them a greater sense of ownership in the development process and reduce the need for direct interventions by State entities. Historically, women have been underrepresented in formal and informal decision-making processes at virtually all levels of society and have not participated fully in the development process. Yet women are usually the primary care providers for children, have significant community-wide responsibilities, and are often directly involved in productive activities. In the past the Peruvian government's development programs have not taken into account the gender dimension of poverty. A third strategy of this - 5 -  project will be to promote greater gender equity across all levels of indigenous and Afro-Peruvian society, as well as greater sensitivity to gender issues in the development efforts of the Peruvian government. This project is being prepared in coordination with a GEF grant for Indigenous Management of Protected Areas in the Peruvian Amazon. Even though both projects are being prepared as independent interventions, their objectives are highly complementary. The GEF project would finance (a) participatory identification and establishment of approximately five new protected areas in the Peruvian Amazon, (b) development of management plans and committees to allow local indigenous communities to manage the protected areas, (c) promotion of projects for sustainable use of biodiversity resources, and (d) monitoring and evaluation (biological and social). Of the five zones of intervention identified by GEF/INRENA, two coincide with those identified for implementation of this project. The Peruvian government and the Bank have selected the following strategy for the Indigenous and Afro-Peruvian Peoples Development Project: (a) beginning with an investment of US$5 million through a Learning and Innovation Loan (LIL), build capacity and manage risks (using innovative methods) with the goal of building organizational, administrative, technical, and entrepreneurial capacity to initiate the more ambitious phases of the program that will follow; (b) support and advance this indigenous peoples development initiative and attempt to foster both actions and multisectoral coordination in order to design the legal framework for indigenous affairs; (c) respond to the proposals of representatives from indigenous and Afro-Peruvian peoples for capacity building in organizational, technical, administrative and entrepreneurial skills for community self-development through a process of "learning by doing"; (d) recognize that the LIL is the first phase of a long- term program, and that if the LIL results are successful, a second phase may be financed; and e) the LIL would complement the planned GEF operation by strengthening the organizational capacity of indigenous organizations involved in the management of the communal reserves to be financed in the Amazon region, in the two coinciding intervention zones (Sira and Santiago- Comaina). 9. Program of Targeted Intervention (PTI) Y 10. Environment Aspects (including any public consultation) Issues : This project has been assigned to category B by the environment specialists in the Environmentally and Socially Sustainable Development SMU for the Latin America and Caribbean Region. The major focus of this project will be on capacity building, with a lesser focus on the design and mainstreaming of community development sub-projects. This latter component will promote various activities, including sustainable land use practices. The project would not fund community sub-projects that could be considered environmentally sensitive based on project eligibility criteria to be indicated in the Project Operational Manual. 11. Contact Points: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 - 6 -  Telephone: (202) 458-5454 Fax: (202) 522-1500 Task Manager Juan Martinez Telephone: 011-506-255-4011 Fax: 011-506-222-6556 Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. Processed by the InfoShop week ending December 17, 1999. - 7 -  Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID) . If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. -8-