Module 12 - Brazil: Empowering Rural Communities for Poverty Reduction

Northeast Brazil contains the single largest concentration of rural poverty in Latin America. The region covers 1.6 million square kilometers, comprising nine states and part of a tenth, with a population of 45 million, about 28 percent of Brazil’s total population. About 16.8 million people live in rural areas of the Northeast, some 64 percent in extreme poverty. While socioeconomic development and the Human Development Index (HDI) have made impressive gains in some Northeast states since the 1990s, poverty remains severe, especially in rural areas. Poor rural families have limited access to land, markets, financial services, and basic socioeconomic infrastructure. Rates of adult illiteracy and child malnutrition remain high. The poor natural resource base and recurrent drought exacerbate the problem of poverty. The overall result is a region widely characterized by poor social conditions and agriculture of low productivity, with modest use of inputs and slow technology adoption.

Project Objectives and Description

The World Bank has supported rural development and poverty reduction in Northeast Brazil since the mid-1970s. The emphasis shifted successfully from a set of rural and agricultural development objectives implemented through a traditional, centralized, integrated rural development model, to poverty reduction objectives based on decentralization, matching grants, participation, and ownership. The era of CDD started with a small, successful pilot component of the Northeast Rural Development Program (NRDP) in 1985, whereby investment resources were transferred directly to community associations. Activities were financed through a Fund for Community Support covering three “lines” of operation: (1) mobilization and organization of producers and communities; (2) productive subprojects, including agricultural production, agroprocessing, and handicrafts; and (3) investments for use by the larger community, mainly for basic infrastructure such as electricity and water.

This component became the template for a radical program reformulation of NRDP (R-NRDP), which was virtually paralyzed by fiscal crises, overly centralized management, and complexity/coordination issues. The NRDP projects were transformed entirely into a community-based development program, drawing on and scaling up the successful, original pilot component and dropping all other activities. R-NRDP covered not only families with productive assets but all members of poor rural communities, based on a matching grant mechanism linked to beneficiary contributions to subproject costs. These matching grants were provided directly to community associations to finance small-scale subprojects identified by the association in a participatory manner. Two delivery mechanisms were initially established for screening, approving, and implementing community subprojects. First, under the state community schemes (PACs), rural communities submitted subproject investment proposals directly to their State Technical Unit (STU), which screened and approved proposals and released funds directly to communities. Second, under the pilot municipal community schemes (FUMACs), subprojects identified and prepared by rural communities were presented to project-created, participatory Municipal Councils for approval. The Councils themselves screened and submitted subprojects to the STU for subsequent financing.