Contacts:
In Lima: Sandra Arzubiaga (511) 615-0660 sarzubiaga@worldbank.org In Washington: Patricia da Camara (202) 473-4019
pdacamara@worldbank.org WASHINGTON, April 24, 2007 – The World Bank’s Board of Executive Directors today approved a US$20 million loan for Peru to support economic growth among the rural population in the Andean highlands, or Sierra region. The Sierra Rural Development Project will ensure that rural inhabitants in the Sierra have better economic opportunities by promoting “strategic partnerships” and local economic development through producer-market ties, building food security through subsistence farming, creating off-farm employment opportunities, and strengthening regional governments and local development organizations. “This project is a direct contribution to the development of Peru's rural potential. It seeks to remove long-standing obstacles and inequities that have left 58 percent of the rural population in the Andean highlands in extreme poverty,” said Marcelo Giugale, World Bank Director for Bolivia, Ecuador, Peru, and Venezuela. The Sierra region of Peru includes all areas of the Andes above 2,000 meters, and has a population of 10.6 million, of which about 60 percent (6.3 million) live in rural areas. Most rural inhabitants (roughly three-quarters) are indigenous people, most are poor, and most are dependant on subsistence agriculture. The 2002 National Household Survey conducted by INEI (the National Institute of Statistics and Information) put poverty in the rural Sierra at 82 percent and extreme poverty at about 58 percent. While the rural Sierra has less than 25 percent of Peru’s population it accounts for 54 percent of the extreme poor. Specifically, the project will support the following activities: - Promote rural growth and business opportunities by supporting the design and implementation of subprojects (proposed by groups of small rural produces) to improve their production, market access, and income. This component seeks to implement about 620 rural business subprojects benefiting an estimated 18,600 families, including an increase of at least 25 percent in the profits of participating rural producers.
- Improve food security, nutrition and overall well-being among poor families. This component will support the design and implementation of subprojects to diversify, expand, and improve the production of rural families in areas that have limited access to markets. Examples of possible subprojects include using improved cultivation techniques, soil conservation and water retention methods, optimized input use, and plant protection. As a result of this component, an estimated 35,000 rural families will attain increased and diversified production, greater food security, improved standards of living, and higher income when possible.
- Finance a national Sierra Development Unit (SDU) to prioritize and harmonize government and donor projects and programs, and private-sector investments across all sectors in the Sierra region.
“This project seeks to alleviate poverty in Peru’s Sierra region through a concerted effort to create sustainable and equitable growth, increase human capacity and security, and strengthen local institutions,” said Mark Austin, World Bank task manager for the project. “It will improve the economic conditions of approximately 53,600 rural families in the areas of Apurimac, Ayacucho, Huancavelica, Junin, Huánuco, and Pasco.” The US$20 million, fixed-spread loan is repayable in one year, including 11 years of grace.
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