empowering the poor community-based environmental & financial management in adilabad district,...
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EMPOWERING THE POOR
Community-Based Environmental & Financial Management in Adilabad District, India
CFI Project Goals
MAJOR GOALS Identify rural development investments strategies
that have a sustainable impact on target populations & environments
Minimize transaction costs to maximize effectiveness of development investments
Secure rights over assets for the beneficiary group Empower tribal women Identify Incentives and projects that support
community-based natural resource management
cont. CFI Project Goals
OPERATIONAL GOALS Assess how Self Help Groups (SHGs) and SHG
federations can sustain and expand benefits from IFAD project investments
Explore how community-based watershed restoration projects can provide environmental service payments for the rural poor
Evaluate the potential of SHGs to receive and manage environmental service payment contracts
Examine how environmental service payments are being utilized and reinvested
Challenges in Adilabad
Heavy tribal dependence on natural resources High poverty area High levels of illiteracy (up to 85% among tribals) Growing land and resource pressure from migrants Increasing tribal landlessness Lack of rights to forest resources Rampant illegal logging Degradation of upland watersheds
The Gond Tribals of Adilabad
Program Timeline
1994: IFAD begins support to Andhra Pradesh Participatory Tribal Development Project through Integrated Tribal Development Authority (ITDA)
$25 million budget for natural resource restoration and development, small-scale irrigation, reforestation, and soil & water conservation - $12 million for small scale credit & community institutions building (SHGs)
1995-2000: 500 SHGS formed in Adilabad District 2000: IFAD begins contracting with SHG for small projects 2001: World Bank funds DPIP creating Velegu and SHG
Federations 2003: IFAD-APPTDP ends
Participatory Research Design
PARTICIPATORY RESEARCH METHODS In-depth Interviews
-IFAD
-Integrated Tribal Development Agency (ITDA)
-Dhan Foundation
-Velegu
-SHG leadership & members
-Community members
cont. Participatory Research Methods
Group discussions with SHGs Process documentation of SHG federation
meetings Spatial analysis of the increase in SHGs and
cluster patterns
cont. Participatory Research Methods
Research Sites
-2.5 million people
-High proportion of tribal people (Gond, Lambada, and Kolam)
-Heavy dependence on forests
-Critical watersheds
cont. Participatory Research Methods
Case Study Sites
-SHG formation in Pittabangaram Village
-SHG clusters in the Movad Valley
-SHG federation of Kerimeri Sub-district
-SHG federation in Indravelli Sub-district
Study Areas in Adilabad District
cont. Participatory Research Methods
Research Process
Jun - Aug 2002 Research Design
Sep 2002 – Aug 2003 Data Collection
May – Dec 2003 Analysis & Report Development
Oct 2003 – Jan 2004 Film Production
Institution Building Process
SHG FORMATION (6-12 months)
(catalyzed by ITDA, Velegu, and the Dhan Foundation)
-8 to 18 women form an SHG
-Develop a common vision & identity leaders
-Start a savings account & begin contributing
-Develop basic accounting system
-Undertake project & market activities
cont. Institution Building Process
SHG CLUSTER DEVELOPMENT (12-24 months)
-Meeting of SHGs (2-12) within walking distance
-Form an SHG Cluster Executive Committee
-Register as cooperative society
-Open a joint bank account
-Participate in training program
-Bid on joint projects
cont. Institution Building Process
SHG FEDERATION DEVELOPMENT (24-56 months)
- Velegu and Dhan hold meetings of SHG and SHG clusters in Kerimeri and Indravelli Sub-districts in June 2001
- Sub-District SHG federations have 100 to 120 SHGs - Election of office bearers and federation accounts opened- Member SHGs pay monthly dues for federation activities- Federations are registered under the Indian Trust Act of 1882
Cont. Institution Building Process
-Federations functions:-Provide training support to SHGs-Represent SHGs with local
government, rural banks, line agencies and other organizations
-Address social issues (e.g. mass weddings, etc.)
-Resolve conflicts
Indravelli SHGs, Clusters, & Federations
Kerimeri SHGs, Clusters, & Federation
Economic Strategies
JUSTIFICATION FOR WATERSHED MANAGEMENT PROJECTS Reversing watershed deterioration is a high priority in India Over 50% of India’s land area is classified as degraded
watershed Problems include loss of vegetation cover, soil erosion,
declining groundwater levels, decreasing crop productivity, and out-migration
Watershed investment in the mid-1990s was over $500 million Average cost per IFAD village watershed is $4,300 over five
years Fast returns in terms of high crop yields from improved water
capture and higher soil moisture levels can recover costs within 4 years
cont. Economic Strategies
IMPACT OF CONTRACTING WATERSHED RESTORATION THROUGH SHGS
Improved design and location of structures Greater sense of ownership and improved maintenance Better use of improved resources (e.g. seasonal ponds,
woodlots, etc.) Reduced “leakage” of small project funds Improved employee payment 30% contractor’s commission added to SHG savings
Community Banking & Micro-Finance
Rural indebtedness a major cause of poverty Rural moneylenders charge 5% per month
and more for loans Chronic indebtedness leads to loss of
agricultural land, especially among tribals Lack of access to capital constrains small
enterprise initiatives
cont. Community Banking & Micro-Finance
IMPACT OF SHG SAVINGS PROGRAMS
19,500 SHGs involving 200,000 women in Adilabad District have saved an average of $27
SHG members have not only learned to save, but have learned to reinvest
Adilabad SHGs have a default rate of less than 4% with rural banks vs 33% for all borrowers
With good credit ratings, some SHGs have been able to leverage their savings with a 4:1 debt to savings ratio
Dependency on moneylenders is decreasing rapidly while land security is enhanced
Co-operative Marketing
Tribal farmers get low prices for agricultural produce due to:
Use of future harvest as collateral for agricultural input loans from moneylenders
Lack of storage facilities Absence of agro-processing facilities High transaction costs (i.e. up to 9 layers of
traders between the farmer & consumer
cont. Co-operative Marketing
SHGs and SHG clusters are using savings to: Buy soybeans and Lac harvests Establish soybean oil processing facility Intensify Lac production Purchase agricultural inputs at wholesale
rates
cont. Co-operative Marketing
Impact of SHG cooperative marketing initiatives:
Farmer’s soybean income increases 7-8% Farmer is paid 100% at the time of sale Processing adds 20% to soybean value Lac prices increase 3-5 fold
Project Impact
500 SHGs formed in 300 villages, Adilabad District Of the $3.2 million spent on small projects in Adilabad,
$638,000 was for SHG contracts SHGs saved $40,400 from contracts in Indravelli sub-district
and leveraged an additional $76,600 through bank loans SHGs saved $31,967 from environmental service contracts in
Kerimeri sub-district creating a dramatic increase in SHG savings accounts
SHG capital is used for loans for agricultural inputs, rapidly displacing dependence on moneylenders
Reduced reliance on moneylenders is slowing the rate of tribal land sales and landlessness
Risks & Recommendations
CRITICAL RISKS RECOMMENDATIONS
Unsustained political & financial commitment to Velegu
More SHG representatives on Velegu executive committee
Poor inter-agency & program coordination ITDA continues to play coordinating role. Integration of village-level microplan.
Target orientation can rush development of SHGs
Allow time for capacity building
External funders of SHGs may drive their decision making
Strengthen SHG capacity for reviewing proposed action plans
Limited financial management capacity of SHGs
Develop simple accounting procedures for SHGs.
Poor linkages of SHGs with banks Facilitate SHG relationships with rural banks
Corruption among local government administrators & bookkeepers
SHG federations should refer complaints to Velegu’s governing board. SHGs hire bookkeepers.
Constraints to EnvironmentalService Payments to Rural Poor
High transaction costs of emerging international carbon-offset and biodiversity conservation payment systems
Lack of commitment to fund by the private sector Lack of a channel or mechanism to transfer funds to
communities Absence of community capacity to receive and
manage payments Lack of “community-owned” institutions to contract
with external organizations
Advantages of SHG Approach
SHGs enhance community capacity to receive and manage funds from environmental service payments
Contracting directly through SHGs Clusters and Federations dramatically reduces transactions costs for ESP contracts
ESP project contracts empower communities as resource managers and create incentives for sustainable management
ESP projects encourage further investment in resource restoration and development
Recommendations for IFAD
Promote ESP strategies & goals through IFAD’s community institution building, livelihoods, and natural resource projects
Emphasize direct contracting small projects through community-based institutions
Coordinate with bi-lateral and multi-lateral projects to ensure continuity of strategy and support
Build an ESP alliance with major development agencies to facilitate ESP investment by governments and the private sector
THE END
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