Increasing Creditworthiness of the Poor by Strengthening GAC Mechanisms: Case of Andhra Pradesh Rural Poverty Reduction Project, India Parmesh Shah Open GAC Council Meeting April 21, 2009
APRPRP: Context Institutional Structure: CBO Federations 22 District Level Federations 1098 Sub-District Level Federations Participation: 10. 1 million members; 850, 000 SHGs, 35, 525 Village Investments: WB - $336 Million; Organizations Public & Private: $4. 8 Billion Expansion: • South Asia Poverty Alleviation Program (SAPAP): 1995 -2000 - 3 districts • APDPIP: 2000 -2006 – 6 districts • APRPRP: 2003 -2009 - 22 districts (full coverage) SHGs 10. 1 million members 850, 671 SHGs
Key Investments in the Project • Institution Building and Social Capital Development • Development of Financial Services for the Poor • Livelihoods Promotion and Expansion through Private Sector Partnerships • Leveraging Information and Communication Technologies for Enhancing Livelihoods • Reducing Vulnerability, Promoting Social Action and Improving Local Governance • Developing Innovative Franchise Model to Provide Insurance Services to the Rural Poor
Institutional Design: Outcome Based GAC Interventions Investments into Systems and Capacity Good Governance Improved Accountability Define minimum G&A Standards Benchmark Improved Outcomes Improved Quality of Service Delivery Measure & Triangulate Strengthened Institutions Increased Creditworthiness Incentivize Feedback
GAC Risk Mitigation: The APRPRP Way Risks Elite Capture Measures Introduced in Program GAC Area Leadership rotation with fixed terms; Decision making through consensus; Performance ratings based on adherence to 5 cardinal principles Governance Poor management Performance rating; Community monitoring and auditing; Intensive training and sensitization; Asset photo documentation Financial Management Supplier Collusion Procurement committees at CBO level; Audited records by Chartered Accounts Poor Grievance Redress Monitoring sub-committees at the VO, MS, ZS levels; Call centers Poorly Targeted Funds Micro-planning; Participatory identification of poor; Funds disbursed publicly Grievance Redress/ Complaints Transparency/ Access to Information
GAC in APRPRP: Lessons Learnt Good Governance = Good Outcomes • Institutionalize transparency, democratize information • Triangulate through performance, transaction and social audits to change behavior • Build in standards, benchmarks and incentives • Improved G&A systems reduce risk perceptions for institutions of the poor attracting other private and public sector investments • Build a culture of good governance beyond Bank projects – Social auditors audited $500 Million in NREGA expenditure; $0. 5 Million returned by corrupt officials; multiplier deterrent effect • Accountable and well governed grassroots institutions takes facilitation, investments, time and patience
Investments Catalyzing Investments through a Good Governance Ecosystem Government of Andhra Pradesh $398 Million World Bank $336 Million Private Sector Commercial Banks $4. 8 Billion Institutional Architecture Based on Principles of Good Governance (Transparency, Accountability and Participation) Impacts 154% Increase in HH Income (2000 -2006) 8. 1 Million People Insured Credit Flow from Banks to Communities: $4. 8 Billion Cumulative Savings: $770 Million 98. 5% safe deliveries; No low birth weight among women who attended the nutrition center. Increasing Credit Worthiness of the Poor, Building Identity and Legitimacy of Poor People’s Institutions
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Five Cardinal Principles Weekly Meetings Good Governance Healthy Book Keeping Regular Repayment Weekly Savings Internal Lending
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