Rural Poverty in Are PRSPs Combating - ParticipatoryMethods · R7313 Combating Rural Poverty 9/8/04...

Are PRSPs CombatingRural Poverty inHonduras and Nicaragua?Lessons for a New Generation of PRSPs

POLICY BRIEFING - AUGUST 2004

Final Cover 9/8/04 10:01 AM

COVER PHOTO: Iris (14) from Santa Marta in Northern Nicaragua. Iris works on a coffee plantation, earning less than a $1 a day for 10 hours work.

This briefing has been produced by Trócaire, the Irish Catholic Agency for World Development. Trócaire is a member of CIDSE and Caritas Internationalis.

For futher information please contact:

Caoimhe de Barra Policy and Advocacy Coordinator Trócaire Maynooth Co. Kildare IrelandTel: 00353 1 629 3333Fax: 00353 1 629 0661Email: [email protected]

Final Cover 9/8/04 10:01 AM

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ContentsExecutive Summary 2

1 The PRSP Process inHonduras andNicaragua: Overviewand Current Status 3

2 The Poverty Diagnosticin the Honduran andNicaraguan PRSPs 4

3 Rural DevelopmentPolicy in Hondurasand Nicaragua 6

4 Implementation ofthe Poverty ReductionStrategies 11

5 Conclusions andRecommendations 17

Acronyms

ASONOG Association of Non-GovernmentalOrganisations

CAFTA Central American Free TradeAgreement

CCER Civil Coordinator for the Emergencyand Reconstruction

COFEMUN Feminist Network of University Women

CONPES National Council for Economic andSocial Planning

CSO Civil Society Organisation

FOSDEH Social Forum for Debt andDevelopment in Honduras

GISN South-North Advocacy Group

HIPC Highly Indebted Poor Countries

IFI International Financial Institutions

IHCAFE Honduran Coffee Institute

IMF International Monetary Fund

NDP National Development Plan

NGO Non-Governmental Organisation

PACTA Access to Land Programme

PRGF Poverty Reduction and Growth Facility

PRONADERS National Programme for SustainableRural Development

PRS Poverty Reduction Strategy

PRSP Poverty Reduction Strategy Paper

PSIA Poverty and Social Impact Analysis

SGPRS Strengthened Growth and PovertyReduction Strategy

SME Small and Medium Sized Enterprises

SWAp Sector Wide Approach

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ExecutiveSummary1

Poverty and vulnerability areconcentrated in rural areas in Hondurasand Nicaragua. Inequality is a key causeof poverty in both countries,manifested in rural areas throughlimited access of the poor to land,inequity in its distribution and in theprovision of public services, includingproductive support services,infrastructure and social services.

Although the PRSPs in both countries recogniseinequality as an important determinant ofpoverty, they fail to adequately address inequityin the distribution of income and resources as ameans of reducing poverty. The overriding focusof the PRSPs is improved productivity andcompetitiveness in the agricultural sector inorder to increase exports, economic growth andintegration into global markets. This approach iscombined with complementary measures forsmall landholders and the provision of basicpublic services and social protection to reducepoverty.

Sector Wide Approaches (SWAps) are beingdeveloped in both countries to facilitateimplementation of the PRSPs, coordinationbetween all actors and donor alignment. Thefocus of the Sectoral Agricultural Policiescurrently being defined is similar to that of thePRSPs.

Given the absence of an approach that harnessesthe potential and addresses the obstacles facedby small producers, civil society, particularlypeasant organisations, and donors have a keyrole to play in promoting a genuine pro-ruralpoor focus in these policies.

Civil society and local authorities in bothcountries have been developing regional andlocal poverty reduction plans in an effort toensure a pro-poor focus in the PRSPs. However,the governments have not yet accepted theseplans and it is uncertain how they are to bearticulated and included in the official PRSPs andthe SWAps.

The impact of the PRSPs to date in reducingrural poverty has been disappointing. Poorpeople do not see any change in their situationand key issues such as land reform, theenvironment and gender equity are not beingadequately addressed.

Low implementation levels is due, among otherthings, to delays in reaching a PRGF agreementwith the IMF. This highlights a fundamentalweakness of the PRSP approach: itsimplementation depends on external resources,which underscores the need for greaterownership of the strategies and a commitmenton the part of governments to pro-poorbudgets.

The PRSP process in both countries has beenmarked by the absence of grass-rootsorganisations and the poor themselves. In orderto bring about a more inclusive process moreresources need to be allocated to capacitybuilding for CSOs, peasant organisations andrural women’s groups on the PRSP, economicliteracy, participatory planning, monitoring andevaluation and advocacy skills.

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1 This Policy Briefing draws on an in-depth study into the impact of the PRSPs on therural sector in Honduras and Nicaragua carried out by Trócaire for the InternationalFund for Agricultural Development (IFAD) during the period September 2003 – January2004. For further information see full report at www.trocaire.org (policy and advocacysection).


1. The PRSPProcess inHonduras andNicaragua:Overview andCurrent Status Honduras and Nicaragua reachedDecision Point within the HIPC IIinitiative in 2000 and the final PRSPsfor both countries were approved bythe International Financial Institutions(IFIs) in the autumn of 2001.

Honduras was originally expected to reachCompletion Point in July 2002 but this has beenpostponed due to the government’s inability tocomply with the IMF’s macro-economicconditions, particularly those relating to thefiscal deficit, set out in the last Letter of Intentof October 2001. A new PRGF was finally agreedin February 2004 and the country is expected toreach Completion Point in early 2005.

Completion Point for Nicaragua was alsodelayed due to non-compliance with IMFconditions in 2001 but a Poverty Reduction andGrowth Facility (PRGF) was agreed in December2002 and Nicaragua reached Completion Point inJanuary 2004.

Under the HIPC II initiative, the estimated totalnominal debt service relief for Honduras isUS$900 million, which represents a reduction ofapproximately 18% in the net present value ofdebt. Nicaragua will benefit from a greateramount of debt relief, nominally estimated to beUS$4.5 billion, representing a reduction of 72%of the net present value.

In both countries, the depth and quality ofparticipation in the formulation of the PRSPswas weak, leading to the main civil societycoordinating networks (Interforos in Hondurasand the Civil Coordinator for the Emergency andReconstruction (CCER) in Nicaragua2) carrying

out their own consultations at local level todevelop an alternative civil society PRSP in aneffort to influence the official documents.3

However, their efforts had minimal impact onthe final PRSPs.

Discussions around macro-economic policieswere off-limits to civil society on the groundsthat they lack the capacity to participate in thisarea. Given the limited technical capacity ofgovernments themselves to negotiate macro-economic issues as well as the restrictionsimposed by the IFIs in this area, the ability ofcivil society to influence macro-economicdecisions is even more limited.

National economic policy is still determined bythe IFIs, the PRSPs are subordinate to the IMF’sPoverty Reduction and Growth Facility (PRGF)and in both countries the PRGF has underminedpoverty reduction efforts. The lack of opendiscussion and debate in this area offundamental importance undermines the notionof ownership which is supposed to underpin thePRSP approach.

Honduras and Nicaragua are in their third yearof implementation of the PRSP. The Hondurangovernment has produced one Progress Report,which was made available in March 2003 andsubject to numerous revisions before beingapproved by the IFIs in February 2004. TheNicaraguan government has produced twoProgress Reports, dated November 2002 andJanuary 2004, and has drawn up a new NationalDevelopment Plan (NDP) to strengthen the pillarrelating to economic growth of the originalPRSP.

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2 Interforos and the CCER are independent networks of civil society organisationscreated after Hurricane Mitch to coordinate civil society’s contribution to thereconstruction process.

3 Interforos (2000), Estrategia de Combate a la Pobreza, and CCER (2001), LaNicaragua que Queremos.


2. The PovertyDiagnostic in theHonduran andNicaraguanPRSPs2.1 Poverty and Rural PovertyLevels in Honduras andNicaragua4

The Honduran Poverty Reduction Strategy (PRS)uses four methods to measure poverty and toidentify the poorest 80 municipalities in thecountry for the prioritised implementation ofthe strategy.5 All four methods indicate thatpoverty is highest in rural areas. The percentageof households at national level living below thepoverty line in 1999 was 66%, of which 48%lived in extreme poverty, while in rural areas75% lived in poverty and 60% in extremepoverty. Similarly, 48% of households at nationallevel had unsatisfied basic needs in 1999, whilethis figure rose to 58% in rural areas.

The Nicaraguan Strengthened Growth andPoverty Reduction Strategy (SGPRS) uses theConsumer Index to guide the implementation ofthe strategy in 32 priority municipalities.According to this method in 1998 47.9% ofhouseholds at national level lived in poverty and17.3% lived in extreme poverty. In rural areas,these figures rise to 68.5% and 28.9%respectively.

However, the Consumer Index tends to reveallower levels of poverty in Nicaragua than theIncome Distribution and Unsatisfied Basic Needsmethods. For example, in 1998 72.6% ofNicaraguans were poor and 44.7% extremelypoor according to the Unsatisfied Basic Needsmethod and 60% lived in poverty and 33.5% inextreme poverty according to income levels. Thishighlights the need to combine the methodsused to measure poverty so as to ensure that thePRSP genuinely targets the poor.

2.2 Key Causes of Poverty andRural Poverty in Honduras andNicaraguaPoverty in Honduras and Nicaragua is theresult of an exclusionary political, economicand social model, manifested in high levels ofinequality in the distribution of income andwealth and in access to productive assetscoupled with low levels of democraticparticipation by the poor. The inefficient andnon-transparent use of resources, unfavourabletrade terms and a high foreign debt havecontributed to exacerbating the povertysituation in both countries. The list belowhighlights the most important determinants ofpoverty specific to rural areas:

• Limited access to land and insecurity in landtenure and use;

• Inadequate access to support services forproduction and marketing of produce(infrastructure, credit, technical assistance,irrigation, etc);

• Poor access to and low quality of socialservices (education, health, water andsanitation, housing);

• Few sources of employment;• Environmental degradation;• Gender inequality.

2.3 Rural Poverty Analysis inthe Honduran and NicaraguanPRSPsOverall, both PRSPs attribute poverty to pooreconomic performance due to the incompleteadoption of macro-economic and structuraladjustments, inefficiency in markets and lowcompetitiveness.

2.3.1 The Honduran PovertyDiagnosticAlthough set within a neo-liberal perspectivewith a strong emphasis on growth, theHonduran PRS also makes an explicit linkbetween economic growth, inequality andpoverty and captures all of the determinants ofrural poverty highlighted above.

The PRS argues that the adjustment andstabilisation measures of the 1990s had apositive, albeit limited impact on economicgrowth but acknowledges that growth did notlead to a significant reduction in poverty. It isrecognised that the high level of inequality inthe distribution of income and wealth and in

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4 All statistics are taken from the Honduran and Nicaraguan PRSPs.

5 Percentage Living Below the Poverty Line; Unsatisfied Basic Needs; Prevalence ofUnder-nourishment amongst First Grade School Children; and the HumanDevelopment Index.


access to productive assets has prevented thepoor from benefiting from economic growth.

In this respect issues of land concentration,insecurity in land tenure and land use,inadequate access to infrastructure and supportservices in rural areas are addressed. Thediagnostic also recognises that inequity in theprovision of social services has furtherexacerbated inequality and poverty in ruralareas and acknowledges the vicious circle of:poverty - environmental deterioration -increased poverty and vulnerability.

Overall however, poor economic growth isattributed to low productivity andcompetitiveness in all sectors of the Honduraneconomy due mainly to the incompleteimplementation of structural and macro-economic adjustments. The most importantmeasures proposed to increase economic growthinclude further opening up the economy to theinternational market and the completion ofstructural and macro-economic adjustments.

This approach is promoted in spite of the factthat the PRS itself acknowledges that some neo-liberal policies have not benefited or have had anegative impact on poor people, particularlysmall producers of basic grains.

The PRS also highlights the low level ofdemocratic participation by the poor,deterioration of cultural values, an oversizedstate apparatus and an inefficient and politicisedpublic sector as factors that contribute topoverty in the country.

Downsizing and privatisation are promoted asthe solution to problems in the public sector,with very little analysis provided of the benefitsand drawbacks of this approach or of its realimpact on the poor. This is a criticism repeatedlymade by civil society who insist on Poverty andSocial Impact Analyses being carried out prior toimplementation of such reforms.

While the poverty diagnostic in general, and theanalysis of rural poverty in particular, is relativelystrong, with an explicit link made betweeneconomic growth, inequality and poverty, thefailure of the Honduran PRS is that subsequentchapters do not set out the necessary measuresto tackle inequality.

2.3.2 The Nicaraguan PovertyDiagnosticIn contrast to the Honduran PRS, the NicaraguanSGPRS presents a rather superficial analysis ofpoverty, highlighting its various dimensions,which can be interpreted as determinants and insome cases effects of poverty. They include highlevels of unemployment, insecurity in relation toproperty rights, low levels of access to basicinfrastructure, high birth rates, low educationalattainment, low quality and difficult access tohealth services, and vulnerability.

It is acknowledged that these determinants andeffects of poverty are particularly acute in ruralareas but an analysis of issues specific to ruralareas is absent from the diagnostic. Only slightmention is made of the importance of access toland, with the focus being primarily on insecureproperty rights, and practically no mention ismade of inadequate access to support servicesfor production and marketing.

While inequality in the distribution of incomeand levels of consumption, together with otherstructural issues, are mentioned as factors thatinfluence poverty, practically no analysis isprovided of these factors and the SGPRS placesspecial emphasis on the economic collapse of the1980s as the main reason for high levels ofpoverty in the country.

2.3.4 The Treatment of Gender inthe Poverty Diagnostics Gender is not treated as a cross-cutting issue ineither of the poverty diagnostics. Women arementioned mainly in sections dealing withhealth and education, while some information isalso provided on their participation in the labourmarket and on income differences between menand women. Issues such as access to land, credit,technical assistance and housing etc. for ruralwomen are not dealt with.

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3. RuralDevelopmentPolicy inHonduras andNicaragua 3.1 IntroductionThe Honduran and Nicaraguan PRSPs propagatea model of agricultural and rural developmentthat involves the promotion of economicgrowth, further liberalizing the market andincreasing exports.

The promotion of exports is combined withcomplementary measures to support small-holder agriculture and the provision of socialservices to improve the situation of thoseexcluded from the dominant growth model.

By adopting such an approach, neither of thePRSPs pay sufficient attention to the need totackle inequality in the distribution of incomeand wealth and fail to consider the possibility ofgenerating economic growth through a strategythat addresses the obstacles to rural povertyreduction and harnesses the potential of ruralareas. This is the most fundamental weakness ofPoverty Reduction Strategies in countries wherethe majority of people live in rural areas.

In order to understand the implications of thePRSPs for the rural sector, the strategies must belooked at in conjunction with other policies thathave been drawn up in the context of the PRSPprocess.

In Honduras, the Sectoral Plan for Agricultureand Rural Areas in Honduras 2003-2021 gives aclear picture of the overall direction of ruraldevelopment policy. In Nicaragua, anAgricultural and Forestry Sectoral Policy has alsobeen developed, and the government hasformulated a National Development Plan (NDP)to strengthen the weak aspects of the first pillarof the SGPRS relating to economic growth. Thisplan is to be articulated with the SGPRS andconverted into Nicaragua's Second GenerationPRSP.

3.2 Rural Development Policyin the PRS and other OfficialDocuments in Honduras3.2.1 The Poverty ReductionStrategy Owing to the strong analysis of the extent ofpoverty in rural areas provided by the povertydiagnostic, the reduction of rural povertyconstitutes one of the six pillars of the PRS6,within which four specific areas of interventionare presented. However, it is worrying thatcurrently only 10% of the total PRS budget isallocated to rural poverty reduction.

The first area of intervention involves improvingequity and security in access to land throughmarket-based measures, massive titlingprogrammes, land redistribution, legal reformand the modernisation of the cadastre andproperty register.

The second area focuses on establishing ruraldevelopment programmes in vulnerable areasand supporting agro-forestry and artisanactivities.

Improving the competitiveness of the small ruraleconomy is the third area of intervention,focusing on support for business initiatives ofthe reformed sector, ethnic groups and micro-enterprises, improving physical infrastructureand increasing access to support services.

Finally, the PRS aims to improve social conditionsin rural areas, including housing, water andsanitation, the promotion of productivevegetable gardens and food conservationactivities and improved management andcoordination of food aid.

Measures to guarantee more equitable access toand better quality health and education servicesin rural areas are not set out in this pillar.Interventions to expand the coverage andimprove the quality of heath and educationservices in general are set out in the pillardealing with investment in human capital.

There is no integration of a gender focus in themeasures proposed, with measures to benefitwomen limited to the promotion of vegetablegardens and food conservation.

The projects and programmes are outlined ingeneral terms and are not clearly articulated.The PRS is vague in relation to priorities and theselection criteria for beneficiaries and whileoverall indicators are provided, no targets aregiven. For example, no targets are given for the

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6 The six pillars are: (i) increasing economic growth, (ii) reducing rural poverty, (iii)reducing urban poverty, (iv) investing in human capital, (v) strengthening socialprotection and (vi) guaranteeing the sustainability of the strategy.


number of hectares to be titled and the numberof beneficiaries, making it very difficult to pindown what the strategy actually means inreality.

The PRS recognises that economic developmentand the reduction of poverty can only besustained by reducing ecological vulnerabilityand the risk of natural disasters. Environmentaland risk management is thus one of the fivestrategic guidelines underpinning the strategy,with a budget of US$175.4 million to the year2015.

The impact of the fall in coffee prices on therural poor is not mentioned at all in the pillardealing with rural poverty. According to theHonduran Coffee Institute (IHCAFE), coffeeaccounts for between 5-8% annually of thenational GDP and almost 25% of agriculturalGDP. Out of a total of 112,784 coffee producers,more than 80% are small family farmers, whohave seen their livelihoods threatened in recentyears due to the coffee crisis. Given theimportance of coffee to the rural economy, it isworrying that the PRS does not address theissue.

The principal weakness of the PRS approach torural poverty is the absence of a clearly definednational rural development policy. The majorityof the projects and programmes outlinedalready existed prior to the PRS and were simplyincorporated into the strategy without a priordefinition of an integrated approach. Thesources of rural economic growth and strategiesfor promoting them are not identified. It is notclear how small producers fit into the broaderoverall strategy of increasing exports. Thesefailings highlight the need for an integrated,comprehensive approach to tackling ruralpoverty.

3.2.2 The Sectoral Plan forAgriculture and Rural Areas inHonduras 2003-2021The Sectoral Plan for Agriculture and Rural Areaswas drawn up in 2003 and forms the basis forthe development of a Sector Wide Approach(SWAp). The Plan aims to transform theagricultural sector through the promotion ofvertical production chains based on geographicand product specialisation, national brandingand export promotion; and to reduce rural

poverty, principally through the NationalProgramme for Sustainable Rural Development(PRONADERS).

Strengths of the Sectoral Plan include a moreintegrated approach to rural development andthe need for enhanced coordination both withinthe rural sector and between the rural sectorand other sectors. For example, the Planproposes the creation of an Agricultural Cabinetconsisting of various government entities inorder to improve coherence between theactivities of the different state agencies in therural sector. This is an important proposal giventhe profound impact on the rural sector ofpolicies in the finance sector for example.

However, while the policy looks at both sectoraltransformation and poverty reduction, thelinkages between the two are not welldeveloped. Overall, the focus is on increasingproductivity and exports with somecomplementary measures to promotesmallholder agriculture and gender equity.

3.3 Civil Society Efforts toEnsure a Pro-Poor FocusCivil society has been developing participatoryregional poverty diagnostics and povertyreduction strategies in various regions of thecountry. This process is led by FOSDEH7 andASONOG8 with the participation and support ofpeasant and other grass-roots organisations,departmental governors, municipal mayors andrepresentatives of NGOs.

The regional strategies are based on locallyidentified needs, priorities and potential. Theaim is to influence the content of the PRS inorder to ensure a more pro-poor and pro–ruralpoor focus, as well as the implementationapproach of the strategy. This means changingthe current approach of implementing PRSprogrammes in the 80 priority municipalities to anational approach covering the entire country,but with a regional focus that takes into accountregional differences.

Although the government has recognised thevalidity of these regional strategies and theregional approach, it has not yet accepted theseplans and how they are to be articulated withthe PRS and implemented remains uncertain.

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7 The Social Forum for Debt and Development in Honduras. A independent forum ofprivate development organisations.

8 The Association of Non-Governmental Organisations. An association of 11organisations working at regional and national level.


3.4 Rural Development Policyin the Nicaraguan SGPRS andother Official Documents3.4.1 The Strengthened Growth andPoverty Reduction StrategyAs in the Honduran PRS, the overall focus of theNicaraguan SGPRS is increased competitivenessand exports. Rural development is addressed inthe first pillar of the strategy “Broad BasedEconomic Growth and Structural Reform”. Thispillar was criticized for its unclear approach tothe productive sectors, especially small farmersand small and medium sized businesses, a factwhich was recognized by the government in thedocument itself. The improvement of this pillaris now embodied in the National DevelopmentPlan (NDP).

Measures in relation to land include themodernisation of the land registry andlegalisation systems and the development ofnon-acquisition mechanisms to facilitate smallfarmers’ access to land. Particular emphasis isplaced on the importance of security in propertyownership for private investment withinadequate attention paid to the rights of thepoor to land.

Other measures include increasing access tocredit within the banking system; formalizingnon-conventional financial intermediation;improving the provision of state rural creditfunds; improving rural infrastructure; supportingnon-agricultural employment in rural areas inorder to increase small company employment,competitiveness and exports; and improvingproductive technology.

There is a discrepancy between the discourse onthe need to support small and mediumenterprises (SME) and the portfolio ofprogrammes and projects. Only 0.2% of the totalbudget for the implementation of the SGPRS forthe first five years was allocated to thiscomponent9 which is worrying given that SMEsare the main source of employment in both ruraland urban areas.

The importance attached to infrastructure isdisproportionately high in comparison to othercomponents, as reflected in budget allocationsfor the first five years: US$107.2 million wasallocated to infrastructure compared to US$7.6million for marketing and US$25.2 million tofinancial and agricultural services. In order forsmall farmers to increase their competitiveness,more importance must be given to the otherfactors that influence rural poverty.

Other interventions in the SGPRS that have animpact on rural areas are the social measurescontained in pillar two of the strategy: “Greaterand Better Investment in Human Capital”, whichemphasises the need to improve the coverageand quality of education and health services inrural areas.

As is the case with the Honduran strategy, themeasures proposed fail to integrate a genderperspective. Furthermore, although thegovernment asserts that practically all of themeasures set out in the SGPRS will promoteequity, including gender equity, no resourceswere allocated to this cross-cutting issue. Amongthe measures to promote gender equity are thepreparation of a national plan for thepromotion of salary equity and a plan to assistrural women.

Environmental vulnerability is treated as a cross-cutting issue encompassing policy measures,institutional reforms and specific programmesand projects to protect natural resources and theenvironment. However, a budget of US$48.5million or only 4.2% of the total budget for theperiod 2002-2005 (US$1149.5 million) is allocatedto the environment.10

Coffee is identified in the SGPRS as one of thefour strategic areas in which competitivenessand exports will be promoted but specificmeasures to address the impact of the coffeecrisis on small coffee producers are not provided.

As is the case in Honduras, the majority ofprogrammes and projects are not new butalready existed before the formulation of theSGPRS, which contributes to the fact that thestrategy does not have an integrated approachto rural poverty reduction and productivedevelopment. The SGPRS is also quite general.While it provides indicators, it does not settargets for them.

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9 Nicaraguan Government (2001), Strengthened Growth and Poverty ReductionStrategy, (Managua), p.149

10 Nicaraguan Government (2001), Strengthened Growth and Poverty ReductionStrategy, (Managua), p.54


3.4.2 The National DevelopmentPlanThe National Development Plan (NDP) waspresented to donors at the Consultative GroupMeeting in October 2003 as Nicaragua’s “SecondGeneration PRSP”. It aims to correct the SGPRSfailure to adequately address economic growthand the productive sectors.

The NDP proposes the development of sevenstrategic sectors in which Nicaragua hascomparative advantages, in geographical areasthat have been defined as having high potential.This will be done through the creation ofclusters, based on foreign investment, inliberalized trade sectors. Public resources wouldbe focalised in these areas in order to meet theneeds of the clusters. This approach isaccompanied by the provision of basic publicservices and social protection in municipalitiesthat have been identified as having low or “no”potential.

Overall, the NDP reflects weakness in thegovernment’s definition of broad basedeconomic growth given that it excludes entireregions, productive categories, small farmers andsmall and medium sized businesses. Neither doesit contain measures of affirmative actiontowards groups that have historically beenexcluded from the development process, such aswomen, indigenous and ethnic groups andpeople with disabilities.

The Plan implies increased inequality anddeepening poverty through further neglect ofrural areas and regions that have low potential -areas that tend to have the highest levels ofpoverty and which should be prioritised by anystrategy attempting to reduce poverty.

At the Consultative Group meeting in 2003, theNicaraguan government made a commitment tocarry out consultations with civil society andother actors at local and national level in orderto strengthen the NDP and articulate it with theSGPRS. The end result, a National DevelopmentStrategy, would represent Nicaragua’s SecondGeneration PRSP. However, these consultationshave not taken place and little is known aboutthe status of the new PRSP, which is supposed tobe made available in August/September 2004.

3.4.3 The Agricultural and ForestrySectoral PolicyThe Agricultural and Forestry Sectoral Policy wasdrawn up in 2003. Given that the Policy is asectoral component of the NDP, the approach isthe same: the development of chains and / orclusters in agricultural and forestry products inwhich Nicaragua has or could developcomparative advantages.

This will be done in six regions based on currentproduction and potential and public investmentwould be focused in these regions in order toincrease efficiency and the impact of activities inthe rural sector.

Again, this approach is combined withcomplementary measures for the promotion ofoff-farm activities, the provision of basic publicservices and social welfare programmes forvulnerable groups in rural areas that have lowpotential.

Although improving gender equity in agricultureand the rural sector is mentioned as an objectiveof the Sectoral Policy, specific information onhow this will be achieved is not provided andapart from this stated objective women are notmentioned elsewhere in the Policy.

The Agricultural and Forestry Policy is a positivestep forward in terms of the promotion of amore integrated approach to rural developmentas opposed to the implementation of isolatedand non-integrated projects. However, the Policyfavours the productive sector that possessescapital and has access to international marketswhile the benefits for medium and especiallysmall Nicaraguan producers would be quitelimited.

3.5 Civil Society and LocalAuthority Efforts to ensure aPro-Poor FocusMany local governments and associations ofmunicipalities, as well as departmental andregional authorities, have drawn up their owndevelopment plans with the participation of civilsociety and grass-roots organisations.

These authorities, along with civil society actorshave come together in a coalition called theSouth-North Advocacy Group (GISN11) and areadvocating for a model of development basedon local potential, which prioritises peasantagriculture, small and medium sized farmers and

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11 The GISN was created in 2003 to advocate for a genuinely pro-poor focus in theSGPRS and the NDP and is composed of national civil society actors, representativesfrom local governments and associations of municipalities, research institutes, theCentral American University and international NGOs.


companies and food security and which is rootedin integral development plans drawn up at locallevel. Consultations must be carried out andgenuine efforts must be made to articulate andinclude these locally developed plans in theSecond Generation PRSP and the Agriculturaland Forestry Sectoral Policy

3.6 The Central American FreeTrade AgreementThe above analysis of the PRSPs and SectoralPolicies clearly demonstrates the countries’commitment to further liberalizing their marketsand to the implementation of free tradeagreements. However, the merits of Free TradeAgreements are accepted with no appraisal ofthe impact of trade liberalization to date on thepoor or the potential impact of futureagreements.

Negotiations for a free trade agreementbetween Central American countries and the US(CAFTA) were completed in December 2003. Thelevel of productivity of poor small farmers is verylow as is their capacity to take advantage of thenew opportunities presented by the opening ofmarkets. It is worrying therefore that inHonduras and Nicaragua plans to mitigate thenegative effects of CAFTA and to ensure thatsmall producers benefit from the agreementhave still not been drawn up. More research intothe implications of CAFTA must be carried outand used to support small producers to mitigatethe threats and avail of the opportunitiespresented by CAFTA.

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4.Implementationof the PovertyReductionStrategies 4.1 IntroductionThe impact of the PRSPs to date in reducingpoverty - and rural poverty in particular - inHonduras and Nicaragua has been disappointing.A fundamental weakness in both countries is thatthe PRSP was initially conceived as a programmefor absorbing debt relief funds and the absenceof these funds due to being off-track with theIMF has compromised the implementation of thestrategies, especially in Honduras.

In both countries, an important obstacle toeffective participation and monitoring of thePRSPs is the lack of specific and clear informationon the projects and programmes that are beingimplemented at local level. There is also a void ininformation in relation to intermediate impactindicators and targets in Honduras.

The Progress Reports produced to date in bothcountries present several weaknesses asinstruments for monitoring and evaluating theimplementation and impact of the PRSPs. Theyare very general and at times incomplete,providing a descriptive account of the measuresimplemented rather than a critical analysis ofthe real impact, problems encountered etc.

In the majority of cases, there are no targets forthe number of beneficiaries of the projects andprogrammes and there is no information on thetargets that have been reached. Budget allocationsto the specific projects are not provided and inonly very few cases is information provided inrelation to the regions or municipalities in whichthe activities were implemented.

4.2 Progress in theImplementation of the PRS inHondurasIn Honduras, the level of financialimplementation of PRS programmes and projectshas been very low with only 54.5% of the totalbudget for 2001 and 42.2% of the budget for2002 implemented. One direct reason for thiswas the country’s off-track status with the IMF,which is estimated to have cost the countryUS$194 million in foregone interim debt reliefand budget support12.

These financial problems were compounded bythe projection of unrealistic growth rates at thetime of the formulation of the PRS, pooreconomic performance due to the worldrecession and the coffee crisis and weakinstitutional capacity to implement the strategy.

Given the absence of HIPC funds for theimplementation of the PRSP, the importance ofusing the PRSP process as a means of leveragingoverall government expenditure and publicpolicies in favour of the poor, rather thanfocusing solely on debt relief funds and the PRSPdocument itself, is beginning to be appreciatedby the various actors.

4.2.1 Impact on the Rural SectorThe impact of the PRS in reducing rural poverty isperceived by peasant organisations to have beenpoor with very little progress made in critical areassuch as improved access to land and technical andfinancial assistance to stimulate production.13

LandThe number of landless peasants in Honduras isestimated at between 100,000 and 300,000.14

The First Progress Report lists a number ofactivities that have been carried out to addressthe issue, including land redistribution, landtitling and the use of market measures such asPACTA,15 giving the impression that progress hasbeen made in this area.

However, land redistribution over the period2001-2002 has actually declined in terms of boththe number of titles given (10,237) and hectaresredistributed (52,680). This is very low incomparison to average annual titling in theperiod 1998-2002 of 18,746 titles and 148,658hectares.16

PACTA was intended to benefit 1,600 familiesbut to date has only benefited 168.17 Theparticipation of banks in the process has been

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12 Oxfam (2003), The IMF and the Millennium Goals: Failing to Deliver for LowIncome Countries, p.19

13 These opinions were expressed by representatives of national peasant networksand local level peasant organisations interviewed during the course of the studyinto the impact of the PRSPs on the rural sector carried out by Trócaire betweenSeptember 2003 and January 2004.

14 Statistics taken from the National Agrarian Insitute’s Memoria 2002, The Networkof Peasant Organisations (COCOCH), PRONADERS and the PRS.

15 Pilot programme for promoting access to land based on market measures fundedby the World Bank and implemented with the support of the FAO.

16 Data calculated on the basis of information from INA (2003) Memoria 2002, andINA (2001) Programas y Proyectos 1998-2001, (INA: Tegucigalpa).

17 PACTA (2003), Informe Trimestral de Actividades Enero – Marzo 2003, p.2


low and peasants are having difficulties inmeeting payments on the land. However, theProgress Report does not provide a criticalanalysis of the difficulties encountered with theprogramme.

Productive Support ServicesAccess to productive support services has notimproved for the majority of small producers.The First Progress Report reveals that the variousprojects within the National Programme forSustainable Rural Development benefited 94,872families (or 569,232 people) in 2002, not a veryinspiring achievement given the high number ofhouseholds living in poverty and extremepoverty in rural areas. According to peasants andpeasant leaders, many proposals presented tothese programmes never materialize, they havedelivered very few results, are politicallymanipulated and lack transparency.

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The distributional impact of the investmentmade in some rural infrastructure projects,which are presented as achievements in the FirstProgress Report, are highly questionable sincethey disproportionately benefit large producers.This is the case for investment made to place9,000 hectares of land under irrigation, with aparticular focus on promoting the production ofexport crops.

Similarly, measures such as writing off theagricultural debt owed by a handful of largefarmers, many of them members of Congress,unjustly subsidize the rich at the expense ofpeasants and medium sized farmers.19

Social ServicesInadequate access to medical services and lowquality of health and education continue to behighlighted by poor rural men and women asfactors that contribute to their vulnerability andaffect their capacity to lift themselves out ofpoverty. The Progress Report only providesgeneral information on measures implementedto expand the coverage and increase the qualityof social services at a national level. Given thatthe information is not disaggregated accordingto urban / rural areas, it is difficult to assess towhat extent the PRS has addressed inequity inaccess to social services in rural areas.

GenderLittle has been implemented in terms ofprogrammes and projects to improve genderequity, gender targets set out in the PRS havenot been met and peasant women do not feelthat progress has been made in increasing theiraccess to land, finance, housing or technicalassistance.20

Some progress is being made at the institutionallevel, with the basis for mainstreaming genderacross government policies set out in theNational Policy for Women, the Plan for Equalityof Opportunities (2002-2007) and in relation tothe agricultural sector, in the Strategy forGender Equity in Honduran Agriculture. Genderdisaggregated indicators are also beingdeveloped.

Nevertheless, much more needs to be done tostrengthen the gender focus in the PRS and tocorrect the strategy’s current tendency topromote the stereotypical role of women.

In this respect, civil society women’sorganisations have a lot to contribute. TheFeminist Network of University Women(COFEMUN) and the Women’s Movement havebeen working with women from grass rootsorganisations in six regions of the country in aparticipatory analysis of the content and impactof the PRS from a gender perspective. They havedrawn up proposals aimed at improving thegender focus of the strategy as well as indicatorsto measure progress. Efforts must be made tosee how these proposals can be incorporatedinto the PRS.

The EnvironmentDespite the commitment set out in the PRS toimproved environmental and risk managementpolicies and practices, five years on fromHurricane Mitch this commitment has not beentranslated into reality and the importanceattached to improved environmental practiceshas declined. Of the funds allocated to thissector, only 12.9% and 35.2% were spent in 2001and 2002 respectively.21 The March 2003 versionof the First Progress Report included a budgetrevision that reduces the amount allocated tothe environment from US$175.4 million toUS$120 million, a reduction of US$55.4 million or32%.22 The final version of the First ProgressReport (January 2004) also includes a completebudget reformulation, but does not providefigures for the environment.

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18 These opinions were expressed in Trócaire-organised workshops with members ofpeasant organisations and networks as part of the above mentioned study(footnote 12).

19 In 2003, 4000 million lempiras (approx US$230 million) in debt was written off tothe benefit of a few large landowners.

20 Expressed by over 170 women from grass-roots organisations in workshops heldwith COFEMUN member organisations in 6 regions of Honduras.

21 Government of Honduras (2004), Poverty Reduction Strategy, First Progress Reportand Update, p.19.

22 UNAT (2003a), Informe de Avances y Actualización de la Estrategia de Reducciónde Pobreza, Borrador para la Discusión, Marzo 2003, p7, 9 y 25.


4.2.2 PRSP Institutional Framework The most significant output to date in the PRSPprocess in Honduras is the creation ofinstitutional structures and processes to supportthe prioritisation, coordination and funding ofpoverty reduction measures. These structuresprovide for improved coordination withingovernment, between government and donors,and between government and civil society. Theyalso provide for tripartite dialogue.23

Government - Civil Society DialogueThe Consultative Council for the PovertyReduction Fund is an advisory body to the SocialCabinet on the prioritisation of projects to befinanced by the Fund. The Council is composedof representatives from central government,local government, civil society and internationalobservers. This mechanism provides civil society,including representatives of peasantorganisations, with the opportunity to influencepoverty reduction measures in favour of thepoor.

However, in order for members of the Council toeffectively influence decisions in favour ofpeasants and the rural poor, there must beconsistent and effective communication anddialogue on PRS issues between umbrella,national, local and grass-roots organisations.

To date, communication from the local to thenational level has been weak due, among otherthings, to the lack of capacity of grass-rootsorganisations to participate in the process. Thisweakness needs to be addressed so thatdialogue, consensus reaching and the capacity tobring concrete proposals to the Council isimproved.

The effectiveness of civil society members onthe Council in influencing decisions alsodepends on the political will of the governmentto take their proposals into account. This hasnot been the case, particularly in relation toland reform, and has dampened the enthusiasmand willingness of some peasant representativesto participate.

Donor Support, Coordination and TripartiteDialogueDue to varying classifications of internationalsupport, it is difficult to specify the amount offoreign aid available for the PRS in general andfor rural development in particular. However,

rural development now accounts for onlyaround 10% of the total PRS budget.

A structure for the coordination and alignment ofdonor practices with national policies (the G15 –15 bilateral and multilateral donors) has been inplace since 1999 as a result of commitments madeafter Hurricane Mitch. However, coordination andalignment is still proving to be a difficult task dueto the diversity of donor programmes andinstitutional inflexibility.

Thus, the adoption of a Sector Wide Approach(SWAp) is seen as the best means of facilitatingimplementation of the PRS, and ensuringcoordination and alignment. Along with theAgro-Forestry SWAp previously mentioned,SWAps are also being developed in Education,Health, Water and Sanitation and Security andJustice.

Tripartite Sectoral Working Groups are the locusof dialogue around SWAps and the PRS. Effortsmust be made to guarantee the meaningfulparticipation of civil society in these structuresand to ensure that they are used effectively fornegotiating and reaching consensus and not forthe mere exchange of information whichbecame their primary function in the past.

The Working Groups must also strive to ensurecoherence between the PRS and the SectoralPolicies and that a strong pro-rural poor focus isretained within the SWAps. This is not the caseso far with the Agricultural Sectoral Policy, whichpresents peasant organisations with thesignificant challenge of pressing for themodification of the policy.

Decentralization and ParticipatoryMonitoring and EvaluationAfter two and a half years of existence of thePRS in Honduras the mechanisms for theparticipatory decentralized implementation ofthe strategy have yet to be clearly defined. Anadequate, participatory system for monitoringthe implementation of the PRS at local andnational level is also absent.

The regional poverty reduction strategiescurrently being developed by civil society offersignificant opportunities for advancing in theseareas. Civil society has proposed the creation ofregional Consultative Councils to facilitate thearticulation of these regional plans with the PRS,as well as the participatory implementation,monitoring and evaluation of the PRS at locallevel.

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23 The institutional framework is outlined in Chapter 6 of the Poverty ReductionStrategy.


4.3 Progress in theImplementation of the SGPRSin NicaraguaAlthough a higher level of progress has beenmade in the implementation of the SGPRS inNicaragua, implementation also suffered due tothe absence of an agreement with the IMF untilDecember 2002, the need to implement severefiscal measures in order to reach thisagreement24, the adverse internationalenvironment, lower than expected economicgrowth and weak implementation capacity.

4.3.1 Impact on the Rural SectorMonitoring of the SGPRS in 7 municipalitiescarried out by the Civil Coordinator (CCER) in2003 revealed that poor people do not see anychange in their situation as a result of theSGPRS25. Some of the problems that continue toplague rural areas include low levels ofproduction due to the lack of technical andfinancial assistance, few guaranteed outlets formarketing of produce, low prices for produce,high levels of unemployment and foodinsecurity.

The scant information provided in the SecondProgress Report in relation to the rural sectorconfirms that very little has actually been doneto improve the situation.

LandEfforts to address the issue of access to land andinsecurity in land tenure have been minimal.Insecurity in land tenancy continues to beaddressed from the perspective of the impact onprivate investment and not in terms of theimpact it has on the lives of the rural poor. Nomention is made of progress in improving accessto land and land titling in the narrative part ofthe Second Progress Report while in the annexesit is revealed that the process of landdemarcation and titling has commenced in sixindigenous communities on the Atlantic Coast,an uninspiring level of progress after two yearsof implementation of the SGPRS.

Productive Support ServicesIn the area of support services for agriculturalproduction, the Second Progress Reporthighlights the distribution of improved basicgrain seeds and fertilizers to peasants in specific

regions of the country as one of the mostimportant initiatives and asserts that thismeasure helped to attenuate the effects offalling coffee prices. Interventions such as thisreflect the lack of a comprehensive response torural poverty, particularly given the hugeproblems in food security in the poorestmunicipalities of the country.

Other measures listed include a higher level ofcoordination between programmes for theprovision of credit to small producers; theestablishment and consolidation of a network ofintermediaries to improve the provision offinancial services; the electrification of ruralareas; and the implementation of technologyand agricultural education programmes.

Since the report does not provide informationon where these programmes were implemented,the target set for the number of beneficiariesand the target actually reached, it is verydifficult to assess the real impact of theseinterventions on the overall situation of povertyin rural areas. Increased clarity is needed withrespect to programme and project goals,objectives and targets in the Second GenerationPRSP and future Progress Reports.

Social ServicesAccording to the monitoring exercise carried outby civil society referred to above, the rural poorstill suffer from insufficient access to educationand health services and safe drinking water.26

Information on the impact of the SGPRS inreducing inequity in access and improving thequality of social services in rural areas is notprovided in the Second Progress Report.

A descriptive account is provided of themeasures implemented at national level toimprove coverage and quality and there is noanalysis of the impact of these measures.However, an examination of progress in reachingintermediate indicators for health and educationreveals that most progress has been made in theeducation sector, with advances in the healthsector considerably lower.27 Disaggregatedindicators for the rural sector must beincorporated into the next PRSP and futureProgress Reports in order to measure the impactin rural areas.

GenderThe promotion of gender equity has notreceived adequate attention and importantmeasures outlined in the SGPRS had not beenimplemented at the time of publication of theSecond Progress Report, including the plan topromote salary equity and the law for EqualOpportunities for Women. The cross-cutting

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24 These measures included reducing public spending and increasing revenue throughtax reforms, many of which affected consumers.

25 CCER (2003c), Visión del País Julio/Agosto 2003, (Managua).

26 CCER (2003c), Visión del País Julio/Agosto 2003, (Managua)

27 For progress in reaching intermediate indicators, see the Second Progress Report,p.52


issue of equity does not even appear in theSecond Progress Report and no mention is madeof the plan to assist rural women.

The EnvironmentThe pressure on natural resources due to theeconomic crisis and policies that favour privateinvestment over the protection of naturalresources continue to threaten Nicaragua’senvironment.

The most important advances in relation to thereduction of environmental vulnerability includethe improvement of the legal framework for theprotection of the environment and for theregulation of the exploitation of naturalresources. However, these measures have not yetresulted in a slow-down or reversal of thedeterioration of the environment or in concretesolutions to the environmental crisis.

4.3.2 PRSP Institutional FrameworkIn Nicaragua, progress has also been made in theestablishment of mechanisms to facilitate civilsociety participation, tripartite dialogue andcoordination with donors.

Government - Civil Society Dialogue The National Council for Economic and SocialPlanning (CONPES)28 is the main forum ofdialogue at national level between civil societyand the government. Within CONPES, a sub-committee is responsible for monitoring andauditing the implementation of the SGPRS andfor making recommendations and presentingproposals to the government.

A drawback of the Council in terms of effectiveparticipation of civil society is that thegovernment appoints its members. In 2003,political parties were excluded from the Councilin order to allow for better representation ofcivil society but the number of representativesfrom the private sector was increased and nowaccounts for almost half of the 46 members.

The model of civil society participation atnational level in Honduras, the ConsultativeCouncil for the Poverty Reduction Fund, mayoffer better opportunities for more effectiveparticipation of civil society – even with itsproblems and weaknesses.

Nevertheless, various civil society organisationsare represented in CONPES, including the

National Union of Farmers and the Women’sNetwork. It is important to strengthen the linksbetween grass roots organisations and thenational level representatives of these umbrellagroups in order to ensure that peasant andgrass-roots concerns and proposals reachCONPES and the government.

Donor Support, Coordination, and TripartiteDialogueIn Nicaragua, information on the amount ofdonor support allocated to the different pillarsof the SGPRS is more readily accessible than inHonduras. Given the extent of poverty in ruralareas, it is worrying that a relatively smallproportion of donor support has been allocatedto rural development.

The distribution of external aid across the SGPRSreveals that the first pillar of the strategy,dealing with economic growth, has receivedmost international support. However, within thispillar, the Transport and Communications sectorhas received most support (36%), while the leastsupported component is Local and RuralDevelopment (6%).29

As in Honduras, SWAps are being developed toguide the implementation of the PRSP30 and toimprove coordination between government,donors and civil society. In 2003, the governmentset up four sectoral working groups -Production and Competitiveness, Infrastructure,Health and Education, and Governance - and aglobal working group to coordinate efforts inthe development and monitoring of policies.

Given that these groups are still new, theireffectiveness in increasing dialogue andcoordination between the different actorsremains to be seen. However, concerns havebeen raised about the low level ofrepresentation of civil society. Efforts must bemade to address these concerns and to ensurethe representation of the rural poor in thesestructures.

Decentralization and ParticipatoryMonitoring and EvaluationProgress has been made to facilitate thedecentralized implementation of the strategywith the design of a National System ofCoordination for the ParticipatoryImplementation, Monitoring and Evaluation ofthe SGPRS.

The system should facilitate coordinationbetween government entities and civil society atregional and departmental level in drawing up

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28 A formal body with representation from trade unions, NGOs, Church groups,universities and the private sector

29 Based on information provided by the Inter-American Development Bank (IADB) ina publication entitled “Summary of International Assistance” made available at theConsultative Group Meeting in October 2003.

30 PRSP is used in this instance to refer to the new or Secnd Generation NicaraguanPRSP in order to distinguish it from the original SGPRS


poverty reduction and development plans. Thispresents a challenge for peasant groups to buildtheir capacity and ensure their effectiveparticipation in the decisions taken within theDepartmental Development Committees and inmonitoring and evaluating the implementationof poverty reduction activities.

Experience with the pilot programme for thedecentralized implementation of the strategy,which began in June 2001 in 11 of the 32prioritised municipalities, suggests that manylessons have to be learned in order to improveimplementation at local level.

Monitoring of this pilot programme carried outby the CCER member organisations, with aparticular emphasis on rural areas, revealedserious problems in the execution of theprogramme, including the concentration ofactivities in just one “model” municipality,partial responses to problems, the non-utilization of local resources and the low level of

participation of local governments and civilsociety, with the execution of the programmecentralized in the capital city and lineministries.31

Other problems encountered include the lack ofknowledge about SGPRS programmes andprojects in line ministries at municipal anddepartmental level, among local governments,civil society organisations, and the general publicand the difficulty in accessing information onprojects and programmes.

Overall, the characteristics of the pilotprogramme reveal a welfare approach topoverty reduction rather than one ofempowerment and highlight that what is beingimplemented is not an integral municipaldevelopment strategy in all 11 municipalities.This casts doubts on the effective decentralizedimplementation of the PRSP in the future andunderscores the need for increased efforts in thisrespect.

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31 CCER (2003), Evaluación del avance y la implementación de la ERCERP enNicaragua a dos años de su aprobación, (Managua).


5. Conclusions andRecommendations5.1 Improving the Pro-PoorFocusGiven the absence of an approach that tacklesinequality and reflects the interests of small andmedium sized producers, the formulation ofSecond Generation PRSPs and sectoralagricultural strategies in both countries presentsan opportunity for the promotion of a genuinelypro-poor focus. In order to promote a pro-poorfocus, the following specific issues must belooked at:

Measuring PovertyThe governments must adopt a multidimensionalapproach to measure poverty. This is highlightedin the failure of the Nicaraguan SGPRS to use acombination of methods to identify the poor,leading to municipalities being excluded fromthe strategy which, using other methods tomeasure poverty, would be identified asextremely poor.

Comprehensive Rural PovertyAnalysis and Identification ofPotentialA comprehensive analysis of the specificdeterminants of rural poverty must be carriedout and the driving forces of economic growthin rural areas identified. This should be donethrough a participatory process involvingpeasant representatives, and the rural poorthemselves, including women. The analysis ofwomen’s poverty must be set within the overallpoverty analysis as a cross-cutting issue in orderto contribute to the concrete and practicaltreatment of gender issues in the measures setout to reduce rural poverty.

The participatory analysis carried out by civilsociety and local authorities in collaborationwith the rural poor in both countries, includingthe analysis and proposals provided by women’sorganizations, should be drawn on andintegrated into this national analysis.Participatory fora, linked to policy makingstructures, should be established at local andnational level to facilitate this process.

Comprehensive strategies to promote the drivingforces of economic growth in rural areas mustbe developed, drawing on models of best

practice and successful initiatives implementedby national rural development programmes,peasant organizations and networks, as well asinterventions funded by official donors andinternational NGOs.

LandThe issue of land has virtually disappeared fromthe political agenda in both countries and theunderlying injustices are not being tackled.Land conflicts are ongoing in Honduras andpeasants continue to be murdered withimpunity.

If the issue of inequity in land distribution is notaddressed properly, the current move towardsmore secure land titles will actually legitimiseand promote the further concentration of land,leading to more land conflicts in the future.Given the importance of this issue to humanrights, rural poverty and development,governments must bring equitable landdistribution back on to the political agenda.Donors have an important role to play inencouraging this.

The EnvironmentThe disastrous consequences of Hurricane Mitch,the impact of which was devastating to thepoor, led to the Honduran and Nicaraguangovernments making commitments to improvedenvironmental practices and policies, enshrinedin the Stockholm Principles and the PRSPs.However, this commitment has not beentranslated into action.

Governments must ensure that SecondGeneration PRSPs and the sectoral policies thatare being developed include an integratedenvironment policy. Donors have a role to playin promoting greater attention to issues ofenvironmental protection and risk managementin order to ensure that this vital issue regains theimportance attached to it in the StockholmPrinciples.

PSIAsThe benefits of neo-liberal macro-economic andstructural adjustments are accepted withoutconcrete evidence of the positive impact of thesepolicies on the poor or an adequate analysis oftheir negative effects. Poverty and Social ImpactAssessments (PSIAs) are urgently required toassess the impact on the poor of critical aspectsof current macro-economic policies andstructural adjustments, rural policies in the PRSPsand the potential impact of the Sectoral Policies

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currently being proposed. These assessmentsshould aim to identify alternative policy optionswhere necessary.

Macro-economic policies must be the product ofdialogue and debate between all stakeholders,including civil society and donors. Their political,economic and social feasibility and theirdesirability in terms of poverty reduction mustbe decided upon after careful analysis of theirpotential impact, determined through PSIAswhere necessary.

Of particular importance is the identification ofrisks and opportunities associated with tradeliberalization and CAFTA for small producers aswell as strategies for protecting them andpromoting their integration into national andinternational markets.

The impact of the coffee crisis on the ruraleconomy and rural poverty requires urgentappraisal and potential ways of dealing with thecrisis must be identified, including planning forimproved quality, adding value, fair trademarketing and reviving the livelihoods of smallscale coffee producers.

Also requiring attention is the inequitabledistribution of public resources in favour of largeproducers e.g. agricultural debt write-offs,inequality in access to credit, productive supportservices and public infrastructure.

Donors can play an important role, inpartnership with government and local actors,including civil society, in carrying out PSIAs. It isimportant that such an exercise include acomponent involving capacity building of localactors to carry out such work in the future.

5.2 Financing the PRSPs The delay in reaching an agreement with theIMF and the funding implications of this in bothcountries illustrates a fundamental weakness ofthe PRSP approach in Honduras and Nicaragua:its implementation depends on external funding.This highlights two key lessons: the role of theIMF as gatekeeper must be changed andnational ownership of the strategies mustincrease so that they are no longer viewed solelyas a condition for receiving debt relief andforeign aid.

Donors can carry out independent research intothe fiscal situation in order to attempt toinfluence the PRGF agreement and to determinewhether or not they should continue providingbudget support if the country goes off-trackwith the IMF.

The governments of Honduras and Nicaraguamust make a commitment to pro-poor budgets.Corruption, misuse and the unjust distribution ofpublic resources in favour of the rich sectors ofsociety must be tackled and serious efforts mustmade to increase transparency andaccountability. Donors can contribute to this bymaking resources available for civil societybudget analysis, monitoring and advocacy work,with a particular focus on the rural sector.

It is worrying that international agencies havereduced their investment in rural povertyreduction in recent years. In Nicaragua, only asmall proportion of international support for theSGPRS was allocated to rural development. Thisis surprising given the international community’scommitment to reaching the MillenniumDevelopment Goals, for which rural povertyreduction is essential given that the largemajority of the poor live in rural areas. Donorsmust increase their commitment to rural povertyreduction in order to improve the impact ofinternational aid and reach the MillenniumDevelopment Goals.

5.3 Donor Support & TripartiteDialogueThe PRS process, SWAps and the TripartiteSectoral Working Groups in both countriesprovide opportunities for increased andimproved donor participation in policy dialogue.Donors should use these mechanisms toadvocate for pro-rural poor policies, not onlywith the national governments but also amongother donors.

Strengthened and accelerated efforts must bemade to maximize the opportunities that thesemechanisms present for aligning programmesand policies with national priorities. This impliesbeing flexible in relation to programmes andentering into dialogue and negotiation with thegovernment and civil society.

Efforts must be made to ensure the effectiveparticipation of civil society and peasantrepresentatives in the tripartite groups and thatthey are used for genuine dialogue andconsensus reaching between all three sectorsrather than the exchange of information.Governments and donors must demonstratepolitical will in this respect and civil society mustimprove its capacity to bring alternativeproposals to the table.

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5.4 ParticipationAlthough the principle of participation is beingestablished, civil society proposals are generallynot taken into account. Peasant representativesfeel that their demand for increased access toland through genuine and just land reform, aswell as access to credit and other supportservices, have gone unheard.

Participation must move beyond consultation toa genuine process of consensus reaching andjoint development of policies. A concrete step inthis direction is the articulation and inclusion inthe official PRSPs of the regional and local plansdrawn up by civil society and local authorities inboth countries. These plans were drawn up inconsultation with the rural poor and reflect theirneeds and priorities.

At national level, governments must allow forgreater participation of peasant representativesin strategic areas such as trade policies. Donorscan contribute to the participatory process byencouraging governments to be open to civilsociety recommendations, highlighting thenegative consequences of the exclusion of civilsociety from the decision-making process, andsupporting the institutionalisation ofparticipatory processes.

In order to improve the capacity of civil societyin general, and peasant organisations andwomen’s groups in particular, to participateeffectively in the PRSP process, donors mustmake more resources available for capacitybuilding initiatives in economic literacy, the PRSP,budget work, participatory planning,monitoring, evaluation and advocacy.

In Honduras, national and international civilsociety have worked together to formulate acommon strategy for strengthening local civilsociety participation. A common fund to supportthe strategy provides a valuable vehicle fordonors to contribute to this process. From theperspective of rural poverty reduction, it isimportant that significant resources are availablefor drawing more local level peasantorganisations and women’s groups into theprocess and for building the capacity of nationallevel peasant organisations and networks tobring concrete proposals, based on consultationwith their constituents, to the political dialogue.

5.5 Decentralization andParticipatory Monitoring andEvaluationEfforts must be accelerated in Honduras in thedesign of an effective model for theparticipatory decentralized implementation ofthe PRS. Civil society’s proposals for the creationof regional consultative councils should beconsidered in the design of this model.

In Nicaragua, it is important that lessons learnedthrough the civil society monitoring exercise ofthe SGPRS be taken into account in order toimprove the future implementation ofNicaragua's new PRSP, ensure that it responds tolocal needs and priorities and includes civilsociety and local governments as partners in theimplementation process.

In order to facilitate monitoring of the PRSPsmore detailed information on programmes,including implementing agencies, location,funding, goals, objectives, indicators, targets andbeneficiaries must be provided. The quality ofinformation provided in future Progress Reportsmust also be improved if they are to serve asgenuine monitoring instruments.

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TrócaireMaynoothCounty KildareIrelandTel: 00353 1 629 3333Email: [email protected]

www.trocaire.org

12 Cathedral Street, Dublin 1. Tel: (01) 874 3874 Email: [email protected] Cork: 9 Cook Street, Cork. Tel: (021) 421 1874 Email: [email protected]: 50 King Street, Belfast BT1 6AD. Tel: (028) 90 808030 Email: [email protected]

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