MODULE 8
Using the Information

Having undertaken extensive consultations with villagers, the challenge is now for mission members to draw implications and apply them to project design, implementation or evaluation. This section outlines some of the possible applications of the information obtained from local institutional analysis.

Application to poverty reduction strategies and programmes (PRSPs)

Poverty reduction strategies and programmes need to identify and tackle the root causes of poverty - not just the symptoms. Different categories of stakeholders are likely to have contrasting views on the root causes of poverty and how to address them. Each line ministry has its own slant on poverty. The view of community members is likely to differ from that of the line ministries. Often the view of poor households differs from that of community leaders, and women from men. Poverty cannot be addressed only through improvements in health, education and infrastructure, without reference to the ways that the poor make a living and the factors that make them vulnerable to shocks. Poverty reduction efforts need to be grounded in an understanding of the livelihood systems of the poor and their sources of vulnerability. When all households in a community are exposed to the same shock, why do some households fall into poverty and others do not? What are the factors that enable non-poor households to withstand the shocks without falling into poverty? Which types of livelihood strategies are useful for reducing exposure to risk? Which types of assets are most important for overcoming shocks? How did the non-poor acquire these assets? What is preventing the poor from acquiring the same assets? What are the opportunities for widening the poor's access to the assets - whether natural or physical or financial or human or socio-political - that help people to reduce their vulnerability to shocks? What role can local institutions play in reducing vulnerability? Local institutions at community level can be enabling or disabling of poverty-reduction efforts, depending on the local power configuration and the degree of elite dominance.

Application to community-driven development (CDD)

Development is community-driven when ordinary citizens are capable of identifying and prioritizing their own needs and planning and implementing local initiatives, largely on their own - with minimal external support. Community members mobilize locally available resources to match outside funds from government or donors to finance small, locally-initiated projects selected from a menu of eligible activities. Development is said to be "fully" community-driven when community members select what activities to implement, receive the matching funds directly, select who is to implement the project, monitor implementation, and evaluate the contractors' performance.

CDD is expected to contribute to poverty reduction in several ways: (a) by increasing the supply and improving the condition of basic community-level infrastructure such as primary schools, rural health facilities, drinking water; (b) by building capacity at community level to identify and implement small projects; (c) by increasing the supply of service-providers - public, NGO and private - able to respond to community demand for infrastructure and (d) indirectly, by simulating multiplier effects in the local economy, while diversifying the sources of support for community-based organizations.

CDD programmes differ in the relative importance given to building local capacity at community level. The World Bank tends to be concerned with meeting targets for fund disbursement, while ensuring good quality of works, proper financial management, and full respect of Bank financial management and procurement guidelines, as well as social and environmental safeguards. For IFAD, on the other hand, the main thrust is to build capacity for communities to do it themselves with minimal dependency on government or donor projects. Delivery of infrastructure is important, but grassroots institutional development is the cornerstone of its CDD strategy.

Donors also differ in the relative importance given to political, administrative and fiscal decentralization in the context of CDD. Some programmes aim at building capacity for delivery of basic public infrastructure primarily at the lowest level of the public administration, which may correspond to the district or municipality (or the French equivalent, the commune). Some projects channel the funds through elected citizens' representative councils at district level, others through the public administration and others through apex organizations of CBOs or NGOs.

A challenge for CDD is to distinguish between different levels of public infrastructure corresponding to different domains. The domain of the "district" or "municipality" may be primary schools and health posts and markets and feeder roads serving the entire district territory, whereas the domain of the community may be drinking water and kindergartens and farm-to-market tracks. Many donor projects are working on building capacity for CDD at the level of a district or municipality or "commune", which is a territorial unit encompassing many separate villages and hamlets, each of which constitutes a "community" in its own right. There also is a need to consider smaller community-level projects and to avoid confusing the two domains.

CDD approaches are expected to contribute more to poverty reduction at community level than infrastructure provided in a top-down manner. However, there is always a risk that if decentralized controls are too lax, local elites could capture resources intended for the poor. Analysis of local institutions can help project planners to assess the likelihood that devolution of decisions on the use of public funds from the central ministries to the district or municipality or community level will lead to greater equity. It can also help to determine what should be the respective roles of village development committees, common interest groups and elected district citizens' representative councils in identifying priorities, approving sub-project proposals, mobilizing the local contribution, selecting contractors, monitoring construction, certifying completion and evaluating performance.

Application to community-based natural resource management (CBNRM)

One set of issues regards who - rich/poor, male/female - has a stake in the resources that the government or donor wishes to develop. To what extent do the livelihoods of different categories or stakeholders depend on the resource? Who is likely to be affected by the project -positively and negatively? Who are likely to be winners and losers? Four key questions (the 4-Rs) are: What rights does each stakeholder have over the resource? What responsibilities do they have - to each other, to the general public and to future generations? What are the relationships between different categories of stakeholders? How are the rewards of resource use divided among stakeholders? Are there any conflicts among stakeholders - latent or manifest? What can be done to improve benefits to the poor?

Another set of issues regards the appropriate social unit for managing a resource: what resource management decisions should rest with the community at hamlet or village level? Which will require an apex-organization that includes all villages in a particular watershed, or that includes representatives of sedentary farmers and pastoralists who pass seasonally through the same territory? What institutions already exist that are concerned with natural resource management at each level (hamlet, village, watershed, etc.)? How do the customary institutions interface with the public administration at district or municipal or ward level? What should be the role of customary institutions governing natural resource management at village level relative to those of elected authorities at district level?

Application to client-centred agricultural technology generation and dissemination

Most countries are trying to re-orient existing agricultural research and extension systems to make them more client-responsive. Instead of telling farmers what to do, researchers and extension workers are now expected to listen to farmers and to respond to their clients' felt needs. This reorientation is no simple overnight process. Checklists in Modules 3 and 4 can be used to assess how which levels of the bureaucracy have already adopted a client-centred approach and which have yet to change their way of doing business. For instance, in Indonesia, institutional analysis in connection with a tree crops rehabilitation project revealed that the philosophy of client orientation is well-accepted at district level but it is not yet consistently applied in concrete circumstances. District officials can enunciate the concept of "farmer empowerment" but they are not yet willing to let farmers decide which crops to rehabilitate and how big an area to cut and replant. The officials do not want to let go of their control over crop choice, replanting decisions and planting material. They will only support farmers who have tree crops planted in pure stands in contiguous blocks of at least 25 ha. Once a block is selected for project support, all farmers with tree crops in the same block will be expected to cut and clear all their old trees and to plant new trees that will only come into production 7 years later. Officials are not responsive to farmers' felt need to stagger the replanting over several years, so that they will not lose all of their income. Many farmers prefer to replant on their food crop land and to defer cutting their old trees until the new ones come into production, but the extension services will not allow it.

The reorientation of agricultural research and extension services to make them more client-responsive and farmer-driven is a welcome change. Nonetheless, client-orientation introduces an inherent risk that public research and extension could become too centred on the richest and most powerful farmers, to the detriment of subsistence producers, unless corrective action is taken to ensure a better balance. The commercial farmers have a considerable advantage because they are better able to express themselves, better-organized to lobby for their own self-interests and better-placed to access and influence decisions about which crop-related problems need research and which technologies are of interest. There is a risk that the priorities of the vast majority of subsistence-oriented farmers are neglected and that women farmers are unable to influence the priority-setting process.

A recent innovation (Uganda, Indonesia) has been for extension projects to channel funds directly to "communities" to enable them to hire in public, private or NGO service providers to advise them on crops and enterprises of their choice. Who are the winners and losers when Farmer Fora at sub-county level in Uganda are given control of funds for contracting extension services from different categories of service providers? What has been the experience with farmer participation in setting the agendas of research institutes and in undertaking farmer-managed on-farm trials and demonstrations? How can client-centred technology generation and extension systems become more gender sensitive? How can we ensure that the priorities of subsistence producers are not overshadowed by those of commercially-oriented farmers?

Application to livelihood diversification and enterprise development

Efforts to reduce poverty and vulnerability through livelihood diversification need to start from an understanding of existing livelihood strategies. Most rural households derive their livelihoods from a combination of income sources, such as food crops, cash crops, livestock, off-farm work and migrant remittances. In addition, many households depend on common property resources such as forests, grasslands and fishing grounds for a part of their subsistence. The relative contribution of each income source to livelihoods differs between agro-ecological zones, production systems and ethnic groups. It also differs between rich and poor within communities. Rich households are likely to sell their crops and animals at the time of year when prices are highest and the poor when prices are lowest. The rich are able to add value by processing their products and transporting them to distant markets in search of higher prices, whereas the poor have fewer options for adding value through processing and for selling outside the village.

Enterprise groups can be a way of strengthening poor producers' bargaining power and their access to input and output markets. However, the creation of smallholder enterprise groups needs to be grounded in a good understanding of existing institutions at the local level. What is the relationship between the poor producers and local shopkeepers, transporters and outside traders? Which marketing channels do poor households prefer? Which intermediaries do they trust? What are local attitudes toward group formation for enterprise development and marketing? Are there any existing organizations - formal or informal - that are already involved in processing and marketing? What are farmers' constraints for adding value through processing or for storing their products until the time of year when prices are highest?

Likewise, in designing strategies to link smallholders to markets, gender roles need careful consideration. What are the roles of women and men in production, processing and marketing of the product? Who - husband or wife - controls the income from the sale and how do they spend it? Can women retain control over income from products sold far from home? What difference could it make for family livelihoods if women were to lose their power to decide how to spend the money? What could be done to prevent erosion of women's decision making power?

The role of off-farm activities in livelihood systems also varies between rich, middle and poor. The typical off-farm activities of the rural rich tend to be capital-based activities with high returns such as shopkeeping, wholesale trading, money lending and bush taxi services. The typical off-farm activities of the rural poor, on the other hand, tend to be activities with very low returns such as casual farm labour, unskilled construction work, cutting firewood and collecting wild products from the bush. The rich diversify into non-farm activities in search of higher profits, whereas the poor are not driven by the profit motive; they turn to off-farm activities like casual labour and firewood collection as a coping strategy when other income sources fail. The potential for different categories of households to embrace enterprise development depends on their access and control over assets such as land, livestock, equipment, financial capital and labour. Human assets such as income-generating skills, business skills and social assets such as market contacts are equally important. Livelihoods analysis can help to determine which enterprises are within the means of the poor and which are appropriate mainly for the non-poor.

Application to rural service provision

During the 1990s, the international financing institutions put considerable pressures on governments to withdraw from provision of "private goods" such as seeds, fertilizers, production credit, and farm mechanization services to farmers on the assumption that the provision of private goods should be left to the private sector. While this worked adequately for some goods and services that could easily be commercialized, it often happened that the private sector showed no interest in producing goods and services that were not profitable. For instance, the private seed companies only showed an interest in producing and marketing hybrid seeds which farmers need to buy every year. They had little interest to produce and market seeds that farmers could save and replant for 3 consecutive seasons and exchange with neighbours. The private sector was keen to serve the areas with high population, high purchasing power and good market access but was slow to offer services in remote and marginal areas with lower population density and poor purchasing power. The resulting uneven geographic distribution of services led to recognition that the state should continue in the public interest to have a role in addressing market failures, by ensuring availability of seeds of species and varieties that are not commercially interesting to the private seed companies, but well adapted to local tastes and agroecological conditions". The solution has been for the government to outsource production to groups of small farmer contract seed multipliers.

Institutional analysis can be used to develop plans for reforming rural services to make them more client-centred and responsive to local demand. It can be used to analyze the likely impact of reforms on different categories of households. For instance, it can help to identify who are likely to be the winners and losers in cases of privatization of veterinary services or seed production or withdrawal of government from seed supply or from machinery services, and to mitigate possible negative effects. What is the potential for cooperatives and informal producer groups to provide services to their members in competition with the private sector? What is the potential for contracting local NGOs and CSOs as service providers? How can development projects stimulate the market for private service providers? What would happen if funds were channelled directly to communities to enable them to engage service providers?

Key questions include: what should be the respective roles and responsibilities of government, NGOs and private sector in service provision? How can we make rural services more community-centred and responsive to client demands while ensuring adequate voice for the poorest? How can we reconcile cost recovery for services with affordability for the poor? How can we ensure an adequate supply of services to subsistence producers and remote areas on a sustainable basis?

Application to Policy impact assessment

How has trade globalization affected the market for smallholder crops like coffee? What are the implications for mono-cropping of plantation crops versus livelihood diversification for smallholder growers of tree crops? How have policy changes in agriculture and the rural sector during the past decades affected different categories of households? For instance, who were the winners and losers when the commodity parastatals such as cotton boards, coffee boards and rice development corporations were dismantled? Who - if anyone - moved in to provide the services - such as input supply, production credit, pest control, processing and marketing - that were formerly provided by the parastatals? What has been the role of local institutions - traditional and modern - in taking over the input supply, crop financing and crop purchase functions? Dismantling of public support to the sugar industry in Latin America and the Caribbean is currently under discussion. This is expected to affect the livelihoods of tens of thousands of smallholders and farm labourers. Who is likely to win or lose from the changes in policy? What is the likely gender impact?

Who were the winners and losers when governments withdrew from seed production, fertilizer subsidies, crop purchasing and agro-processing in the 1990s? To what extent have private sector service providers moved in to fill the gaps? Why have they not moved in? Is this a case of "market failure"? If so, what role could farmer organizations and community institutions play in overcoming market failures? To what extent is it realistic to expect local farmer groups to take over the functions that government has relinquished and the private sector is wary of taking up?