Challenge
The project, known locally as Produzir, was financed by the fourth in a series of World Bank loans dating back to 1993. These loans supported community demand-driven operations in Bahia, the largest state in the Brazilian Northeast region. By 2005, Produzir had become one of the state government’s main instruments for improving rural, social, and economic inclusion. Produzir reached the most vulnerable populations, including female-headed households, indigenous groups, and quilombolas (descendants of escaped slaves). It also became an instrument for building local participatory governance and spatial integration in rural areas. Even so, despite several decades of poverty-focused development efforts, in 2005 Bahia still had the highest number of poor households in the Northeast region, including 47 percent of its rural population. Bahia ranked 22nd on the United Nations Human Development Index (HDI) among all Brazilian states, indicating continued deficits in viable productive activity and in health and education services. A high proportion of rural households still lacked piped water, proper sanitation, and electricity, as well as the means of production to move beyond subsistence. Bahia remained a drought-prone state with challenging conditions for rural economic survival and prosperity.
Solution
A focus was placed on International Bank for Reconstruction and Development (IBRD) investments to align more closely to state development strategies and priorities to ensure synergy, avoid duplication, and increase the development effect on poor rural families. Produzir financing of US$54.35 million was to integrate with and complement strategic areas of the state’s Multi-Year Development Plan (2004–07), especially with respect to rural water supply, health, and environmentally sustainable generation of income. Project innovative instruments—both tested and scaled-up successfully under previous, similar projects in Bahia and other Northeast states—included the following:
1. Financing matching grants to organized communities for investments in small-scale socioeconomic infrastructure that were explicitly aligned to improvements in the state’s HDI
2. Targeting 40 percent of this financing to the state’s 100 poorest municipalities (out of a total of 417)
3. Training key state and local stakeholders to ensure that project investments complemented and aligned with other federal and state poverty reduction programs and, through aggressive promotion of partnerships with Produzir, leveraging additional, complementary financing for similar related activities
Additional IBRD financing of US$30.0 million, which was approved in 2009 in response to strong community demand for Produzir, applied the same methodology.
Results
Bank financing with contributions from the state government and beneficiaries during the period of 2006–13 had the following outcomes:
- In aggregate, 258,000 poor rural families in Bahia sought and received project investments. Of these families, 206,000 benefited from water supply and sanitation, tractors, flourmills, and fruit-processing facilities, and the remainder received various other benefits. Water and sanitation (WSS) infrastructure immediately lowered the rates of waterborne diseases in municipalities with poor sanitation conditions: 79 percent of WSS beneficiaries reported better health, 96 percent noted improved drought resilience, and 58 percent said child and elder health was better as a direct result of the project.
- Economic opportunity was generated and strengthened by 785 productive investments. A productive investment is one that produces income to complement rural families’ diversified survival strategy and does not necessarily imply full-time employment.
- Subprojects also improved income generation. Even when the impact of drought and the modest scale of most investments are taken account, the project’s productive activities demonstrated a capacity to increase income.
- Substantial financial leveraging and cross-sector integration took place. Project partnerships with other federal and state poverty programs (for example, in food security, land reform, and reservoirs or cisterns) garnered complementary financing. This financing, which totaled US$207.0 million, benefited another 127,000 families, of which 64,000 received water supply.
- Vulnerable groups were effectively reached. A total of 3,100 indigenous families in 18 municipalities received 25 subproject investments totaling US$1.4 million. Moreover, 844 (31 percent) of all beneficiary associations were led by women. In fact, the project won several won awards at the Bank’s international Voz Mulher (Women’s Voice) competition. Also, 142 agreements were signed in 15 quilombola territories of identity. The agreements benefited 12,500 families with culturally and legally appropriate investments totaling US$4.5 million.
- Improved HDI as a direct outcome of Produzir is difficult to measure, but evidence suggests clear links. For example, HDI longevity outcomes increased from 0.680 in 2000 to 0.783 in 2010. Also, the Institute of Applied Economic Data shows sustained improvement in rural WSS from 2001 to 2009 (from 25 percent to 55 percent). This improvement is more pronounced from 2006 onward, consistent with the project’s intensive investment in this sector.
Bank Group Contribution
The total project cost—including Bank loans totaling US$84.35 million—was U$216.1 million, 188 percent of the estimated aggregate cost. The cost of individual project components—particularly community investment subprojects—was underestimated at appraisal and was also subject to a strong national inflationary trend in the costs of construction materials, labor, and equipment over the project period. The state government’s contribution was much higher than expected—more than sixfold the original estimate. The contribution was increased by, among other things, Produzir’s intensive resource-leveraging effort, which involved many agencies and poverty programs.
Partners
The Regional Action and Development Company (CAR) within the state’s Secretariat for Development and Regional Integration established partnerships with many federal and state poverty programs and institutions. CAR leveraged financial and technical support from the Land Reform Agency, the Ministry of Agrarian Development (food security), the São Francisco Valley Development Company (water), the Ministry of Social Development (reservoirs and cisterns), and the National Indian Foundation. At the state level, partnerships with the Bahia Family Agriculture Forum, the State Quilombola Council, the State Indigenous Peoples Council, and the Vida Melhor Program supported the project. Two Japanese Social Development Fund grants—R$1.66 million to the National Confederation of Agricultural Workers and US$877,614 to CAR—were also provided by the Bank. The first financed the identification of challenges facing market access for poor rural producer organizations in the Northeast region and implemented 30 investments totaling R$1.7 million in agroprocessing, value addition, and animal husbandry. The second built institutional capacity in quilombola councils and executed small investments in basic infrastructure, production, literacy, and housing.
Moving Forward
Produzir investments are generally sustainable. WSS beneficiaries are trained to manage their systems, and in the case of productive investments, operation and maintenance arrangements are in place with the associations paying into funds or making other acceptable arrangements. On the basis of the Produzir lessons learned, the Bahia Sustainable Rural Development Project (Bahia Produtiva) is being implemented with an IBRD loan of US$150.0 million. Bahia Produtiva shifted its focus from local needs-based productive subprojects to market-driven investments by organized producers and cooperatives (the productive alliances approach) because of opportunities identified in productive value chain analysis and territorial development strategies. In parallel, the poorest segment struggling with food security is benefiting from improving basic social and environmental conditions. These families also benefit from capacity building so that they can engage with markets in the future.
Beneficiaries
Statements by beneficiaries at the project closing workshops:
“No one has done as much for indigenous communities as this government. Indigenous peoples need projects like Produzir to improve their lives. We need more water cisterns. The challenge for country folk is water to produce and drink.”
— Cacique (Chief) Anselmo, Tuxá Indigenous Group, Bahia
“I am here to confirm the success of this sheepherding subproject, which has changed our lives. This is an activity which involves the whole family. I believe that in the future my children and relatives are going to be able to stay in our village. I am sure also that with Bahia Produtiva [the follow-on project], we can successfully advance.”
— Cacique (Chief) Maria do Carmo Quirino, Reserva Aldeia Patiburi, Municipality of Belmonte, Bahia
“Support from Produzir was fundamental for our association to develop beekeeping/honey processing by the local community. These investments by CAR are very welcome in associations which have them and have developed this work. Recently, we were also considered by CAR as a pathway, through the state’s Vida Melhor Program, which will help us a lot with transport and to create dynamism in our beekeeping activity.”
— Pedro Constan, President of the Association of Beekeepers of the Capão Valley, Palmeiras Municipality, Chapada Diamantina Region, Bahia
“We are very blessed through CAR and the World Bank because we work with handicrafts and were marketing our wares from huts which every day we had to stock up and then take down. Through the CAR project, the association received 48 “booths,” and in 2012, the subproject was expanded with another 28 booths. Today we have over 70 booths, and this advance is a reference point for our municipality, because it benefited 70 people directly and another 200 indirectly.”
— Maria de Lourdes Silva, President of the Association of Handcrafters of Caldas do Jorro, Municipality of Tucano, Bahia.