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Apurimac: Revenue Management and Mining & Agriculture

Apurimac: Revenue Management and Mining & Agriculture

Apurimac, the second poorest region in Peru - with poverty levels of 56% and extreme poverty levels of 25% - will soon be one of the largest mining districts in the country. The region is sparsely populated and has significant needs, as basic services coverage is very limited. In this scenario, unfulfilled expectations can become a source of discontent that can potentially lead to conflict.

The region’s expected mining development is already having a financial impact. From 2015, around USD125mn have been transferred to subnational governments and annual revenues
of approximately USD275mn are expected in the coming years. These resources represent an opportunity for municipalities to respond to the population’s needs in an effective and transparent manner. However, municipalities should enhance its capacity to invest this money effectively as well as develop a strategic investment approach, more efficient internal procedures, and better trained personnel. Additionally, local leaders could interact more effectively with their authorities and hold them accountable by having access to information about municipal investments.

Agriculture is the second most important economic activity in Apurimac and one of the main sources of jobs and income for the population. In mining areas, farmers are small-scale subsistence producers which face specific challenges: low productivity and access to capital and technical assistance. Apurimac’s complex topography and deficient transport infrastructure inhibit farmers’ access to new markets.

The Initiative

As a response to a Government request and as part of a larger World Bank Group effort, IFC, in partnership with the Canadian Government, is delivering two complementary projects: the Apurimac Revenue Management project that focuses on improving mining revenue governance at the local level through capacity building, and the Apurimac Mining and Agriculture project (called Ayninakuy) that entails developing a collaborative model, which involves private and public partners, to support small scale agriculture in 16 communities .

The Apurimac Revenue Management project is structured  with 2 complimentary delivery mechanisms that aim to enhance the capacity of municipalities to better manage royalty revenues expenditure by providing technical assistance:

  • To municipalities to improve their investment processes so that they can be responsive to the population’s needs, effective and accountable, and
  • To local leaders to enhance their capacity to participate in municipal investment decisions and to demand accountability on the use of resources.

The Apurimac Mining and Agriculture project is based on   a successful government experience implemented by the Ministry of Social Inclusion and, under a collaborative model with public and private institutions, is aimed at supporting farmer families in the following aspects:

  • Improving productivity: by supporting the adoption of agricultural practices through small investments and peer-to-peer capacity building by “Yachachiq” (e.g. micro irrigation systems, family greenhouses, small breeding for guinea pigs)
  • Incorporating nutritional and healthy practices: by promoting the improvement of  housing  facilities  and  by educating families on best nutrition practices (e.g. improved stoves, sinks, learning sessions, etc.)
  • Accessing local markets: by identifying potential local markets that farmers can tap in an organized manner (e.g. training on post-harvesting and marketing, participation in local fairs, promoting linkages with larger buyers, etc.)

IFC’s Apurimac Revenue Management & Mining and Agriculture program was selected as a  top  practice  by  the World Economic Forum. Additionally, the prestigious Peruvian NGO Ciudadanos al Dia, certified two of the practices as Good Practices in Public Management. These recognitions were based on the concrete results that benefited citizens, and the potential to be replicated in other organizations to produce a multiplier effect.

As of September 2017

Apurimac Revenue Management Apurimac Mining and Agriculture
  • 6 municipalities are in a better position to manage their investment resources in a way that is responsive to the population’s needs, effective in cost and time and accountable to the population
  • 6 municipalities have a medium-term investment program that responds to the local population’s needs and that has been validated with local leaders.
  • Over 69% of the municipal investment expenditure is in line with the planned investment.
  • 6 municipalities have adopted transparency practicesthatincluderegularmeetingsofmunicipal authorities with local leaders, accountability meetings, project fairs, answers from mayors to the population’s questions and municipal panels with relevant and understandable information.
  • 30 Municipal decrees adopting the proposed best practices by IFC have been approved ensuring the sustainability of the intervention.
  • 257 small scale irrigation systems have helped farmers increase their productivity by using new technologies for better water and land use.
  • 191 greenhouses are producing vegetables such as spinach, carrots, and onions; and families are incorporating new varieties of food in their dietary consumption.
  • 225 families have improved their housing conditions, separating rooms for children and installing improved kitchens, which reduce smoke contamination and facilitate a better environment for women;
  • Farmers, and particularly women, are selling their vegetables to local markets and small restaurants, generating additional income.

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