Local and Regional Development

This presentation is taken from the outcome assessment of the results and lessons learned of Swedish development cooperation with Nicaragua 2001 – 2008 – for full text and detailed references see document Outcome Assessment 2001-2008.

LOCAL AND REGIONAL DEVELOPMENT

In this section, the results of two major programs are summarised: the Program of Local Development (PRODEL) and the Program for strengthening of capacities of the Autonomous Regions at the Atlantic coast (PROCARIBE). Both programs have been supported in successive phases since the middle of the 1990s and are related to the second theme in the Country Program - “development of new models for better governance in local institutions”. PRODEL is also related to the third theme – “increase of economic opportunities for the poor”. The positive results reported from PRODEL indicate substantial contributions to both themes. There are also similar positive results from municipal projects in PROCARIBE, including clear indications of increased institutional capacities at the regional and municipal levels contributing to the better governance in local institutions.

PRODEL

(2004-2008; 90 MSEK)

The support for local urban development through the Program for Local Development (PRODEL) started in 1994 as a government program by the Institute for Municipal Development (INIFOM) in poor neighbourhoods in five municipal centres. It has gradually been spread to 80 municipalities throughout the country, including rural areas. PRODEL has been supported by Sida in three phases 1994-97, 1998-2003 and 2004-2008, in a total amount of 200 MSEK.

In 2004, PRODEL became an independent Nicaraguan foundation, with the aim of improving the living conditions of low income households in poor settlements and to develop sustainable institutional capacity for itself and its partners to pursue this objective. PRODEL is offering loans to micro-finance institutions aimed at improved housing and increased business opportunities for low-income families in poor communities. PRODEL also contributes to the financing of basic infrastructure in some of these communities. Projects regarding improved drainage channels, latrines, sewerage, water, electricity etc have been implemented in 11 municipalities

Technical assistance is also provided by PRODEL to strengthen the capacity of micro-finance institutions (micro-credits) and municipalities (infrastructure). In the case of infrastructure improvements, costs are shared between PRODEL, the local government and the local community. The Swedish support for the third phase is 90 MSEK.

During the period 2004-2008, PRODEL provided 21,000 households with loans for housing improvements and 34,000 with microenterprise loans. In both cases, there were often consecutive loans to the same household for gradual housing improvements and business development. The loans for housing improvements are also combined with basic technical assistance for the design and implementation of the improvement. 15,000 households have benefitted from local infrastructure projects.

The specific objectives of the third phase of PRODEL included the achievement of financial sustainability and growth of the revolving fund. In this respect targets have not only been met, they have been surpassed, with an annual capitalisation of the revolving fund of 6 % (or more) for each of the years 2004, 2005 and 2006. This means that the fund has already reached financial sustainability at a volume of credits of about USD 18 million. The targets for the period 2004-2008, with regard to number of households benefiting from credits and infrastructure projects, had already been surpassed at the end of 2006. Based on this positive development, Sida decided in 2008 to convert a conditional loan to PRODEL of 60 MSEK to a contribution to the Foundation.

An evaluation of the third phase of PRODEL in 2009 notes that the program has a strong identity, efficient organisation and has contributed important innovations both with regard to credits for housing improvements and participatory communal planning. The innovations and experiences of PRODEL have influenced both the microcredit sector and the municipal planning in Nicaragua, as well as in other countries in Central America. The evaluation further notes that the program is sustainable with regard to the revolving fund. An aspect to be considered in the longer perspective is whether the program must expand its activities outside Nicaragua due to the limited size of the microfinance market in the country. Another aspect for future consideration is the long term financing of the infrastructure component.

PROCARIBE

(2002-2009; 54 MSEK)

Since 1994, Sweden has given support to a program for institutional capacity building in the two Autonomous Regions at the Atlantic coast. The third phase of support covered the period 2002-2006 (45 MSEK) and was followed by a transitory phase 2007-2009 (9 MSEK).

The aim of the support 2007-2009 is to strengthen the management capacities of the regional administrations to enable an effective implementation of the Regional Autonomous System in accordance with the legal framework and regional development plans. Besides support to management, the program includes contributions to priority sectors, such as health, natural resources, environment and territorial demarcation.

The evaluation of the third phase 2005 noted a significant impact of the program with regard to increased capacities at the regional and municipal levels. At the same time there were weaknesses in the design of the program and a lack of coherence between objectives, activities and results. The Program had deviated from its main objective to strengthen the process of autonomy.

A study commissioned by Sida in 2009 on how basic community infrastructure works can trigger livelihood improvements and good governance (comparing experiences of PROCARIBE, PRODEL and another similar program in Guatemala) noted that PROCARIBE during its third phase had generated 600 community works of tangible improvements for the local population in 10 municipalities. Staff, initially subsidised by the program, had been permanently integrated into technical units; the participatory approach applied for community work is still in use.

In 2007, the transition phase of the program was recognised for its innovative and unique model of support from within the institutions and its practical construction of knowledge through “learning by doing”. This had allowed the creation of institutional service units in different governmental areas, such as finance, production and health. In 2008, it was considered as an impact of the Program that the budget and planning secretariats had been reinforced and that increased technical capacity to demand and use financial resources had been achieved. Advances had been made in the regionalisation of the health sector, including the approval of an autonomous health service delivery model. Finally, a comprehensive gender policy had been issued and approved, with participation of civil society organisations.