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PRSP Honduras Nicaragua The Impact of Poverty Reduction Strategies on the Rural Sector in Honduras and Nicaragua Study carried out by Trócaire for the International Fund for Agricultural Development (IFAD) Prepared by Jennifer Cornally (PRSP Officer - Trócaire Central America) Tom Crowley (Independent Consultant - Honduras) Sally O'Neill (Regional Director - Trócaire Central America) Translation by Mathieu Deprez Final Draft, Tegucigalpa, May 2004 Acknowledgements The authors would like to thank the various actors from government, civil society and the international community interviewed during the course of this study for their time and valuable insights into the PRSP process in Honduras and Nicaragua. Thanks are also due to Yolanda Rodriguez for her support in carrying out primary and secondary research in Nicaragua. 2 Abbreviations ACI International Cooperation Agencies (Non-governmental) AECI Spanish Agency for International Cooperation AMHON Association of Municipalities of Honduras AMULEON Association of Municipalities of León Norte AMUNIC Association of Municipalities of Nicaragua ASONOG Association of Non-Governmental Organisations (Honduras) CAFTA Central American Free Trade Agreement CCER Civil Coordinator for the Emergency and Reconstruction COCOCH Coordinating Committee of Peasant Organisations in Honduras CODA Agricultural Development Advisory Board CODED Departmental Development Committee CODEL Local Development Committee CODEM Municipal Development Committee COFEMUN Feminist Network of University Women CONPES National Council for Economic and Social Planning COSUDE Swiss Development Cooperation CPSC Civil Society Commission for Participation DHS Demographic and Health Survey DFID Department for International Development (British Cooperation) EU European Union FAO Food and Agriculture Organisation FCR Rural Credit Fund FHIS Honduran Fund for Social Investment FISE Social Investment Fund FONAC National Convergence Forum FOPRIDEH Honduran Federation of Private Development Organisations FOSDEH Social Forum on External Debt and Development of Honduras FSS Supplementary Social Fund FTAA Free Trade Area of the Americas G15 Donor Group (Honduras) GDP Gross Domestic Product 3 GISN South-North Advocacy Group GTI Inter-institutional Technical Group GTS Follow-up Technical Group HDI Human Development Index HIPC Heavily Indebted Poor Countries HIV/AIDS Human Immunodeficiency Virus / Acquired Immunodeficiency Syndrome IADB Inter-American Development Bank IBIS Danish NGO IEN Institute for Nicaraguan Studies IFAD International Fund for Agricultural Development IFI International Financial Institution IHCAFE Honduran Coffee Institute IMF International Monetary Fund INA National Agrarian Institute INAM National Institute for Women (Honduras) INE National Institute of Statistics (Honduras) INGES Institute for Social Research and Management INIM Nicaraguan Institute for Women JICA Japanese Cooperation KFW Financial Agency of the German Government LMDSA Law for the Modernisation and Development of the Agricultural Sector LSMS Living Standards Measurement Survey NDP National Development Plan NGO Non-Governmental Organisation OCAHDENAS Honduran Peasant Organisation for Sustainable Development ODI Overseas Development Institute WTO World Trade Organisation PAAR Programme for the Administration of Rural Areas PACTA Access to Land Programme PAI Support Programme for the Implementation of the SGPRS PMRTN Master Plan for Reconstruction and National Transformation 4 PRAF Family Welfare Programme PRGF Poverty Reduction and Growth Facility PRODDEL Programme for Decentralisation and Local Development PROHECO Honduran Programme for Community Education PRONADEL National Programme for Local Development PRONADERS National Programme for Sustainable Rural Development PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper PSIA Poverty and Social Impact Analysis SAG Secretary for Agriculture and Livestock SGPRS Strengthened Growth and Poverty Reduction Strategy SWAP Sector-Wide Approach UCA Central American University UNAT Technical Support Unit UNDP United Nations Development Programme UNICEF United Nations Children’s Fund USA United States of America USAID US Agency for International Development UTC Union of Peasant Workers WB World Bank 5 Content Preface 8 Executive Summary 10 1. Introduction to the Honduran and Nicaraguan Poverty Reduction Strategy Process 16 1.1 Introduction 16 1.2 The Formulation of the PRSP in Honduras and Nicaragua: Key Issues 17 1.3 The Current Status of the PRSP in Honduras and Nicaragua 20 2. Understanding Rural Poverty in Honduras and Nicaragua 22 2.1 Introduction 22 2.2 Evolution of the Understanding of Poverty 22 2.3 The Poverty Diagnostic in the Honduran PRS 23 2.4 The Poverty Diagnostic in the Nicaraguan SGPRS 26 2.5 Conclusion 28 3. Rural Development Policy in Honduras and Nicaragua 30 3.1 Introduction 30 3.2 Rural Development Policy in Honduras 30 3.3 Rural Development Policy in Nicaragua 36 3.4 The International Context 43 3.5 Conclusion 44 4. Implementation of the Poverty Reduction Strategies 46 4.1 Introduction 46 4.2 Progress in the Implementation of the PRS in Honduras 47 4.3 Progress in the Implementation of the SGPRS in Nicaragua 55 4.4 Conclusion 64 5. The Vision and Role of International Cooperation and Civil Society 66 5.1 Introduction 66 5.2 Donor Initiatives to Support Poverty Reduction and Links to the PRSP 66 5.3 Coordination Mechanisms between the Different Actors 70 5.4 Civil Society Initiatives in the Context of the PRSP 73 5.5 Conclusion 77 6 6. Opportunities for IFAD in the PRSP Process in Honduras and Nicaragua 79 6.1 Introduction 79 6.2 Opportunities in relation to Donor Coordination 80 6.3 Opportunities to Contribute to Rural Development Policy 81 6.4 Opportunities to Increase the Value-added of IFAD Projects 83 6.5 Opportunities in relation to other Areas of Support 84 Bibliography 87 Workshops 93 Interviews 94 Tables 1.1 Implementation of the PRSP in Honduras and Nicaragua 2000-2003 16 2.3 Poverty Indicators in the Honduran PRS 24 2.4 Poverty Indicators in the SGPRS 27 4.2a Status of PRS Indicators and Targets 47 4.2b PRS Implementation, 2001-2002, Compared to Original Programming 48 4.3 Nicaragua: Progress of the SGPRS in reaching Intermediate Indicators in 2002 57 Figures 3.2 Rural Development Policy in the 1980s and 1990s (Honduras) 31 4.2 Land Titling (Reformed Sector) Honduras 51 5.2a International Cooperation - Multilateral and Bilateral 69 5.2b Distribution of External Aid across SGPRS Pillars 69 5.2c Distribution of External Aid across Pillar 1 69 7 Preface Nicaragua and Honduras are the second and third poorest countries in Latin America. In addition to being poor they also have high levels of inequality, which means that efforts in recent years to increase economic growth have not benefited the poor. Given that poverty is much more than material deprivation, well-being and human development indicators also reveal a chronic pattern of social exclusion. The rural and agricultural sector has played a key role in the social and economic development of Honduras and Nicaragua. It represents between 25% and 30% of total GDP, contributes to the generation of export revenues, and most importantly it is the main source of employment and income for the rural population. For these reasons, the rural sector and especially agriculture has a central role to play in Honduras and Nicaragua’s Poverty Reduction Strategy Papers (PRSP). The majority of poor people in Honduras and Nicaragua live in rural areas and work in agriculture. However, the rural sector is characterized by a high level of polarization and inequity in the distribution of income and productive resources such as land. The rural regions of Honduras and Nicaragua have the worst indicators in relation to health, education, access to public services and infrastructure, housing and environmental deterioration. In light of this context, an analysis of the impact to date of Poverty Reduction Strategies, introduced three years ago in both countries, is of huge importance. The PRSP approach involves the participatory design of national poverty reduction strategies, that are results orientated with a focus on partnership between the State and civil society in the search for solutions to poverty until the year 2015. Given the high levels of poverty in Honduras and Nicaragua and its commitment to both countries, IFAD has commissioned a study into the impact of the PRSPs on the rural sector and rural development policies in order to identify additional opportunities to support PRSP initiatives and to draw lessons from the process in order to orientate its future interventions in Honduras and Nicaragua. This study was carried out by Trócaire (Irish Non-governmental Development Agency) in Honduras and Nicaragua during the months of September 2003 to January 2004. The methodology used included the systematic analysis of the principal documents produced by the governments, civil society and International Cooperation in relation to the implementation of the PRSPs, as well as the new agricultural and rural development policies drawn up by the Honduran and Nicaraguan governments in the course of 2003. It also included direct interviews with a large sample of the principal actors and stakeholders involved in the formulation, implementation, monitoring and evaluation of the PRSPs. In addition, a series of workshops were held with peasant organisations, interest groups, women’s organisations and indigenous movements in order to their gather their opinions on
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