News

09.11.2013

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François

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A pilot program to improve the living standards of the poor in Peru

As in most of the developing countries, the benefits of economic growth in Peru do not benefit all strata of the population which often leads to a two-speed development. It is in this context that social and economical development programs have improved the living conditions of remote people, often excluded from traditional banking system.

The "Peru Graduation Pilot" set up in one of the ten regions supported by the program of the CGAP-Ford Foundation, aims to understand and improve the standard of living and access to finance of these populations. This 24-month project is deployed in 80 communities.

Cochapata village, located in the Andes, is an example of these communities whose isolation in land is accentuated by their linguistic particularism. The high level of child malnutrition, alcoholism, and violence stand even more barriers to the economical development of the center of Peru.

In this context, the CGAP and the Ford Foundation are working in partnership with local organizations to build ten "graduation pilots" in eight countries.
Local organizations are often non-governmental organizations (NGOs) to provide livelihoods to the population and/or microfinance institutions (MFIs) providing to the participants the access to saving services .

In most of the regions concerned, the program involves both quantitative and qualitative studies to measure the effects of the help provided.
In Peru, local partners helping to establish the program are "Plan International" and "Arariwa". They are also supported by studies of "Innovation for Poverty Action".

In a context of widespread distrust against the banks, the intervention of the microfinance institution Arariwa causes among the population a return to confidence for this type of organization.
However, other direct and positive impacts on these populations have been recorded by various studies on the program, such as the global rise in their incomes.
But some effects were also recorded insubstantial. Indeed, both medical and social help, influenced family dynamics by responding to issues as those of anger management issues, improving intergenerational family relationships or the decision-making of households.

Changes in the living conditions of these people are not unique in Peru, but has also been observed in other countries, such as Haiti and Bangladesh, demonstrating the effectiveness of the program in establishing ways to sustainable livelihoods, but also in the social transformation of households.

Franck DeGiovanni, director of the financial section of the Ford Foundation recognizes the success of the operation and began an active campaign in order to convince donors to fund such projects, but also governments to integrate this model into their social protection programs.

Sources : Cgap, Peru Graduation Pilot Gallery

Tags : ford foundation, CGAP, peru, Peru Graduation Pilot, Arariwa, microfinance institution, MicroWorld, financial inclusion

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