Poverty reduction

Chapter 8: Community-Driven Rural Development, Poor Districts and Poverty Eradication

Issues

Since PM Instruction 001 (March 2000) and PM Instruction 010 (June 2001) are fundamental to the Government’s approach to rural development, and since rural development is fundamental to poverty reduction, it is important to review again briefly their main provisions.

Instruction 001 redefines central-local relations by establishing provinces as strategic planning units, districts as programme and project planning and budgeting units and villages as the main focus for programme and project implementation. Provinces are expected to formulate their own 5-year strategic plans and corresponding budgets, consistent with the national 5-year socio-economic development plan, the NPEP and the fiscal framework. In turn, districts are responsible for their planning and budgeting processes, again in accordance with the national and provincial plans and fiscal framework. In addition to being the implementing units for programmes and projects, villages are responsible for revenue collection based on production. Much more easy to calculate production of paddy field than on swidden fields.

Pressions accrues des IA au niveau district et resettlement a la botche.

Villages must also collect data on their socio-economic conditions and classify themselves by one of three categories: well-off, self-sufficient and poor. Further, villages must monitor the impact of development on household income improvement and poverty reduction.

Instruction 010, “Concerning the Establishment of a Plan for the Eradication of Poverty”,

provides an official definition of poverty:107

•Poor households are those with insufficient income to secure a minimal food ration of 2,100 calories/capita/day, equivalent to 85,000 kip/capita/month.

•Poor villages are those where more than 51 per cent of the households are poor and have limited access to schools, health facilities, roads and clean water.

•Poor districts are those where more than 51 per cent of the villages are poor and 40 per cent have no access to schools, health, or clean water and 60 per cent have no access to roads.

An essential policy underpinning this instruction is that “grass roots levels should take initiatives in poverty alleviation (through development) in their own areas”. Rural development, therefore, is at the centre of the Government’s development and poverty eradication efforts.

In particular, the “focal development area approach” targets both remote areas where poverty is endemic and areas with growth and development potential. Development is addressed in an integrated manner, by opening up access to remote areas, stabilising shifting cultivation, facilitating economic activities in a increasingly market-oriented context, improving livelihoods through access to social services and integrating all the regions of the country into a dynamic national economy. The focal development area approach concentrates rural development in clusters or zones (khet/tasseng), where a wide range of activities (agriculture, social services, institutional capacity building, infrastructure and markets) are undertaken in a synergistic manner to boost household income and eradicate poverty. 107 See Part II, Chapter 3.

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Under PM Instruction 013 (May 2002), the Ministry of Agriculture and Forestry is responsible for planning and co-ordinating rural development in the Lao PDR. This follows from the importance that agriculture plays in the lives of most rural people, and the importance of a comprehensive approach to rural development in raising agricultural productivity. As shown by the LECS 2 data, improved agricultural performance is dependent upon better road and market access and access to productive land, irrigation, extension (technology/information) services and – over the longer-term – to education and health services. The Government has concluded that rural development and improved agricultural performance must be addressed comprehensively and in an integrated manner.

At the same time, regional differences call for distinct approaches, especially respecting the differing needs and circumstances of the lowlands (along the Mekong corridor) and upland areas. The lowlands have better transportation infrastructure and are able to access markets. This has spurred commercialisation of the agricultural sector. Further, better access to and quality of education, health and other services (e.g., credit, electricity and telecommunications) has led to a cycle – whereby increased agricultural productivity enables people in the lowlands to invest in themselves and their livelihoods, thereby greatly reducing poverty and opening up new income opportunities. Improvements in their circumstances, including much reduced infant and child mortality rates, has encouraged family planning and lower fertility rates, with the result that the dependency ratio has also fallen sharply. 108

In contrast, the uplands are locked in a vicious circle of poverty. The mountainous terrain has made it difficult and costly to provide all-weather roads. Consequently many villages are isolated and lack access to markets and services available in most lowland areas. Irrigation is limited and shifting cultivation is widely practised. Subsistence farming is still the norm for most households, leaving little if anything for investment for a better future. These two different realities (upland and lowland agriculture) are reflected in planning for rural development. The rural development strategy for the lowlands is directed to facilitating markets and supporting private sector initiatives, whereas the Government’s strategy for the uplands is more proactive in assisting farmers in seeking out new opportunities and helping them to realise these opportunities.109 In both cases, however, the Government’s strategy is highly sensitive to livelihood systems, particularly with regard to the paramount need of poor rural households to secure their food supplies.

Improved forest management will greatly benefit the rural poor, for they depend heavily on non-timber forest products (NTFPs) to supplement their incomes and enhance their livelihoods.

For those living in remote, mountainous areas, as much as 40-60 per cent of household income is derived from NTFPs. Firewood is a vital energy source. Over-harvesting of NTFPs by outside traders, over-harvesting of the forests themselves, and the relentless pressure for more agricultural land are combining to deplete the natural resource base. Forestry and agriculture are closely interrelated, for healthy forests secure the land base and regulate the water flows, and thereby protect the soils and nurture agricultural crops. Properly managed, forests can be a renewable resource, providing NTFPs, sustainable forestry revenues, and a variety of agro-forestry opportunities for rural people. For this reason, conservation of the forests is fundamental to protecting the agricultural base and improving the lives of rural people. 108 The dependency ratio is the ratio of non-working age population (children below age 15 and people above age 64) to the working age population.

109 As elaborated upon in Chapter 1, Part IV.

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In this spirit, and as described more fully in Chapter 1, Part IV, the Government is reviewing both its forestry policy and the land-forest allocation programme. Population pressures on scarce arable land has resulted in shortening the swidden cycle, leading to loss of soil productivity and increased labour needed to deal with weeds that flourish on the depleted soils. Shifting cultivation is being practised on progressively less productive land. For some, resort to opium cultivation is a coping strategy to offset declining rice crops, with disastrous effects for the social fabric. Upland farmers urgently need help in making the transition to intensive farming methods, whereby three hectares of land per household can yield good livelihoods on a sustainable basis. The Government’s priorities in the 47 poorest districts will address this need. Opportunities for higher value crops and livestock husbandry are developing.

The improving road network throughout the Lao PDR and trade liberalisation with neighbouring countries offers the possibility of diversifying from subsistence farming into cash crops and other agricultural products. As noted above, this is already happening in the lowlands. Upland areas must have the same opportunity. The Northern Region of the Lao PDR is of particular concern, as it has the highest incidence of poverty and faces the greatest challenges in overcoming remoteness and lack of access to markets and services. However, even in the north there is increasing evidence of the transition to more modern agricultural methods and practices.

Despite its weaknesses, the agricultural sector has a strategic advantage, for the Greater Mekong Subregion110 has a population approaching 300 million with a growing demand for more protein and other food products. This very large market could become a significant consumer of rice, livestock, vegetables and other farm produce from the Lao PDR. Further, exports of NTFPs, handicrafts, and agro-forestry products (e.g., cardamom, benzoin, paper mulberry) could contribute substantially to improving household incomes. Ethnic diversity adds to the mix of opportunities, for each has their unique strengths. For example, the Tai Dam are experts at sericulture, the Hmong are experts at cattle raising, the Khmou have detailed knowledge of forests, and the Akha have expert knowledge of herbal medicines. This local knowledge will be incorporated into rural development programmes and projects.

In the Lao PDR, rural poverty is directly linked to access to resources and to the availability of social services. Resource access includes availability and tenure of land, forest and non-forest timber resources, livestock security, and access to agricultural inputs (credit and irrigation services) and markets. Needed social services include education and health services, clean water and sanitation.

Based on the poverty analysis described in Part II, the Government’s rural development strategy addresses essential development constraints, including:

Inadequate infrastructure.
Limited and poorly developed human resources.
Poor health conditions.
Inadequate potable water and facilities.
Poor agricultural support and delivery services.
Limited access to inputs and markets.
Lack of medium and short term credit.

110 The Greater Mekong Subregion includes Cambodia, Lao PDR, Myanmar, Thailand, Vietnam and Yunnan Province of the People’s Republic of China.

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In addressing these constraints, the Government is encouraging and facilitating a strong community-based approach. Planning therefore involves a highly participatory process. As indicated by the poverty analysis, the Government’s main task is to enhance the conditions that enable people to take charge of their destinies. The Government’s rural development strategy has thus two major components: improving access to essential factors of development, and a comprehensive, poverty-focused planning process at the district level to ensure that all initiatives are mutually self-supporting and complementary.

Improving access essentially means improving people’s access to:

Production inputs and sustainable natural resource management technologies (‘supply– side’).
National and regional markets through physical (roads and trade facilitation) and institutional linkages (‘demand-side’).
Human resource and community institutional development.
Social services development.
Rural finance mobilisation.
There are close interrelationships among these five factors or pillars. Human resource and community institutional development, social service development and the mobilisation of rural finance are preconditions, or catalysts, for successful initiatives on the supply and demand side.

Furthermore, food insecurity must be addressed as a first priority, especially for the 47 poorest districts. Without food security for themselves, households have neither the time nor the inclination to engage in activities leading to longer-term improvement of their livelihoods. This concern will be addressed through the comprehensive district development planning system, which, together with improved accessibility, is at the core of the Government’s rural development strategy.

This strategy favours a pro-active focal development area approach, so as to concentrate resources in strengthening and empowering local communities to eradicate their poverty. The five essential pillars of rural poverty eradication and the linkages among them were illustrated in Part I (page 9), as a way of summarising the rural poverty eradication strategy. The demand (markets) and supply (technology, inputs) pillars act as push/pull forces on rural production, while the three other pillars – social services (education, health), empowerment (HRD and participation), and rural finance (credit, investment) – act as facilitators for the process of modernisation and diversification. These five pillars, however, must be bound together by a comprehensive community-driven planning process.

This approach ensures flexibility and adaptation to each particular local situation. Various development activities and initiatives that take place at the district or village levels will become much better integrated, enabling more effective use of limited resources and maximising benefits. This includes activities and initiatives under the village and district development funds 111, private sector initiatives and projects such as the Poverty Reduction Fund (PRF). Activities and initiatives under national programmes (e.g., UXO decontamination and opium eradication) will also now be much better co-ordinated. 111 The share of the investment budget specifically allocated to the 47 poorest districts will be channelled through these village and district development funds. These will enhance the access of resources enabling people to engage in income generation activities. See also Part V of the NPEP.

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The Government’s rural development priorities are directly linked to its poverty eradication targets. By concentrating resources on focal development areas, and more particularly on the 47 specially targeted poorest districts, the Government will ensure economic growth with equity and major gains in poverty reduction.

The major constraints on poverty eradication in the poorest districts include:

•Lack of communications and access to markets.
•Inadequate social services, poor health and low educational levels.
•Linguistic barriers.
•Large families and high dependency ratios.
•Low productivity.
•Inadequate infrastructure including roads and irrigation.
•Lack of extension services and knowledge of new technologies.
•Lack of access to markets and market information.
•Absence of rural credit and veterinary services.

In the 47 districts, accessibility to the five pillars of rural development is very low and hence Government action will favour priority activities linked to each one of them.

Particular emphasis will be given to the following improvements:

•Production capacity (inputs and technology, including improved rice seeds, crop diversification, animal health care, strengthening of the district extension service, and improved operations of existing irrigation systems).

•Rural infrastructure to facilitate access to markets, rural credit, etc.
•Human and village/district institutional development.
•Social services (education, health, clean water, sanitation).

The community-driven, poverty-eradication rural development strategy emphasises that:

Development should be people-centred and the principle of community self-development should be the overarching goal; projects should facilitate the implementation of village development plans.
No physical works should be implemented without prior establishment of participatory beneficiary institutions (e.g. Water-user Associations, Road Maintenance Groups, School Committees, etc.) and provision for O&M expenditures.
Labour-based construction technology, to maximise rural employment opportunities and community sense of ownership.
Food security as a top priority, through rice intensification; irrigation should be peoplecentred and small scale.
Projects should operate within the framework of existing institutions at the district and village level.
Rural financial services should support both short-term lending for farmers and medium term lending for village-based rural enterprises.
Project planning should include both more accurate estimates of the investment costs and provision for recurrent costs.
Institutional capacity building should be incorporated in all projects. Lao PDR – National Poverty Eradication Programme (NPEP)

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Following from these principles, the Government’s rural development strategy banks on the following Community Self-Development Vision:
Capacity building of local institutions, with particular emphasis on empowerment.
A development process that is community-owned and community-supported. Resources will be allocated in accordance with the strategic visions embodied in the planning framework prepared at the community level.
Local plans and institutional empowerment should be preconditions to any external Government or donor-financed assistance for rural development programmes.
The use of external resources should complement, not substitute for, locally provided resources and management.112
Food self-sufficiency as a precondition for activating the rural development process.
A “national innovation system” of research and experimentation, that enables immediate dissemination of successes in rural development so as to enable all farmers to benefit from advances achieved (e.g. village-level vaccination techniques, new forage techniques, etc.113).
The identification of investment priorities for the poorest 47 districts will include the following steps:
Preparation of district profiles, starting with the 47 poorest districts, to identify issues, the status of various factors and a review of present interventions in order to better ensure complementary actions.
Development of participatory district plans to serve as guides for future interventions.
Development of integrated focal area development plans.
Identification of community-based initiatives for priority support.
To help realise this approach, institutional capacity building to strengthen village and district institutions is of utmost importance.

The rural development strategy will give highest priority to increasing livestock production. Research and extension services for this purpose will be strengthened, as will the prevention of livestock disease. Again, successful innovations in livestock production and disease prevention will be shared on a nation-wide basis. It will also be desirable to share experiences in identifying the social, economic and environmental factors that enable farmers to modify their traditional practices – especially regarding upland shifting cultivators. Innovation and experimentation will have many dimensions. Promotion of SMEs and increased foreign investment will be important to success of rural development. Also, the development of small towns with strong links to rural areas will be important. To this end, a National Urban-Rural Basic Infrastructure Development Strategy is under preparation; the objective is to fulfil the Government’s request of extending the benefits of urban development to the entire population.

112 PMO Instruction 010, June 2001 on poverty and poverty reduction embodies the principle of community self- development “ …the people themselves will be in charge of their own poverty alleviation, as poverty alleviation is the task of the whole population. 113 CEAT research and experimentation in the Northern region.

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A network of well-structured urban growth centres will greatly contribute to commercialisation of the agriculture sector. It will also enable the Lao PDR to avoid costly errors and to build the country’s development on a sound basis. The district focus for rural development presents a challenge of great complexity. Most importantly, real resources will be transferred to the districts114, to give meaning to empowerment. In addition to improved rural credit services, the Government strongly endorses the establishment of funds for community development. The establishment of the Poverty Reduction Fund (PRF-Decree PM/073) in May 2002 is designed to effectively and efficiently deliver resources to poor villages. The PRF is expected to enable poor communities to assess their own needs and priorities and to determine how best to use resources to maximise social and economic development on a sustainable basis.

The Government expects to have workable community-driven district profiles for all 47 districts within the next 18 months. Broad participation will be promoted to ensure strong community ownership and local transparency and accountability. Extensive facilitation and training will be provided throughout this process, to ensure that poor villagers, including women, participate in decision-making and benefit from project inputs. Many issues still await solutions, which will be identified step-by-step in close co-operation with all stakeholders.

114 For FY 2003-2004, 40 billion kip will be channelled directly to the 47 districts through local funds. See Part V. Lao PDR – National Poverty Eradication Programme (NPEP)

OPIUM

Opium
The National Drug Control Programme addresses a complex problem, for poppy cultivation is both a source of income yet also a source of poverty, especially in the Northern Region of the country.

In 2002, opium production occurred in 67 districts; of these, 32 are among the 47 poorest districts and 45 are among the 72 poor districts. Opium is produced by approximately 50,000 households in about 1,600 villages – mostly in the remote highlands of ten Northern provinces, which account for 90 per cent of total production for the country. The recently released (June 2003) UNODC figures, based upon remote sensing/satellite data and field surveys, indicate that approximately 12,000 ha are under opium cultivation, a 15 per cent decline compared to 2002. 101 Still, raw opium production amounts to approximately 112 metric tons, of which 65 tons (58 per cent) are consumed domestically for addiction, social and medical purposes. Some 47 tons are exported. The Government, in solidarity with the global concern regarding drug elimination, is determined to end the production of opium. Accordingly, the Government has established the Lao National Commission for Drug Control and Supervision (LCDC) within the Prime Minister’s Office. 99 (E.g., Part IV, Chapter 3: Poverty-focused Health Development Plan). 100 Part IV, Chapter 3 provides a summary of the Government’s approach to the HIV/AIDS pandemic. 101 United Nations Office on Drugs and Crime (UNODC), June 2003.

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The Government is well aware of the social and economic benefits to be obtained from eradicating opium cultivation and from the reduction in drug abuse within the country. More than 52,000 people in the areas concerned are drug addicts, with weak health and unable to perform productive activities. They become a burden for other members of the household who have to spend time and money to provide health care and treatment for them. Amphetamine Type Stimulants The Lao PDR is now facing a new drug problem: a serious ATS epidemic.102 Abuse of ATS drugs is mainly an urban problem, but it is spreading to rural areas. ATS use is increasingly common among the student population, and among outside groups. ATS abuse is also becoming a potential factor in the spread of HIV/AIDS.

Strategic Responses
The goal of the opium control programme is to eradicate opium poppy cultivation by the year 2005 through an accelerated rural development programme in the major opium producing districts. In response to both the opium and ATS problems, the Government is preparing a comprehensive Master Plan on Drug Control, comprising a balance between alternative development, demand reduction and law enforcement. Alternative development replaces opium production with alternative income sources and simultaneously develops irrigation, transportation, credit access, health, education and other economic and social services – including improved cropping and livestock production practices. Employment and income opportunities from outside traditional agriculture will be explored, such as forestry derived employment, processing of local products and other value-added activities such as handicraft production and tourism.

Community-based drug demand reduction focuses on the health and economic well-being of the individuals and families using drugs.103 Community-based drug demand reduction seeks to raise community knowledge of the harmful effects of opium and to focus assistance on community efforts to reduce the incidence of new addiction. Efforts will be concentrated on detoxification and community based rehabilitation programmes. With regard to ATS and other drugs, the national demand reduction strategy focuses on prevention and counselling activities, and on treatment and rehabilitation. Law enforcement is a separate national governmental responsibility that operates in parallel with alternative development and community-based demand reduction. The overall programme is implemented by the LCDC in collaboration with UNDCP. Individual projects are executed together with local authorities by UN agencies, bilateral and multilateral agencies, and NGOs.

Policy and programme priorities
The Government is deeply committed to implementing all international conventions and resolutions to which it is party, including the UN goal of eliminating or significantly reducing opium production by 2008. Indeed, the 7th Party Congress (2001) approved targets to eliminate poppy cultivation by 2005.

102 The word ATS has been adopted to refer to synthetic central nervous system stimulant drugs such as amphetamine, metamphetamine and the chemically related ‘ecstacy group’ (MDMA). In the Lao PDR, ATS is mainly metamphetamine and is called ‘ya-baa’ (crazy drug). 103 National Drug Demand Reduction Strategy in the Lao PDR, draft, December 2002. Lao PDR – National Poverty Eradication Programme (NPEP)

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To achieve this target, the LCDC co-ordinates at the central level with all stakeholders in the collection of information, the setting of yearly targets, the preparation of appropriate projects to eliminate poppy cultivation, and the mobilisation of domestic and international resources to finance the projects. In order to achieve the elimination of opium poppy cultivation by 2005, future priorities will focus on the following activities:104

•Provide each locality with the necessary annual budget to implement their opium poppy cultivation elimination plan.

•Continue mobilising funds, domestically and internationally, to support the implementation of rural development projects to replace opium-growing activities.

•Facilitate access to credit for other productive activities, such as animal raising and handicrafts production.

•Facilitate detoxification and rehabilitation programmes and initiatives.

•Continue drug awareness programmes and other initiatives to prevent return to opium poppy growing.

•Facilitate voluntary relocation to areas offering better services and more diversified economic opportunities. An estimated US $68 million will be needed over the next six years in order to carry out investments in the opium growing districts, both for new drug control projects and for other projects that are complementary. In order to eliminate opium cultivation in the 47 poorest districts, investments must be made in the following essential activities:

•Awareness programmes and law enforcement.

•Creation of alternative income sources, giving equal or better returns than possible from poppy cultivation.

•Treatment and rehabilitation for addicts.

•Monitoring action to stop opium cultivation, drug consumption and trade. To implement these activities, a Programme Facilitation Unit (PFU) has been established jointly by LCDC and UNDCP. Also, a National Anti-Drug Trust Fund has been established. A national training and resource unit will be established under the Ministry of Labour and Social Welfare, to develop/provide drug counselling courses. Private enterprises will also be encouraged to establish drug counselling activities. The drug control programme is being mainstreamed into national development priorities.

This includes identifying practical alternative development approaches for improving village livelihoods and linking these to mainstream national development efforts. One of the top priorities of the Government is to provide the necessary social and economic infrastructure and help establish income alternatives so that villagers do not have to resort to poppy cultivation. Simultaneously, this will improve the health status of many people and contribute importantly to poverty reduction.

Annex 3, Table 3.7 provides a list of the completed, on-going and planned projects concerning eradicating poppy cultivation. 104 See also “Five-Year Action Plan to Eliminate Opium Poppy Cultivation in the Lao PDR”, LNCDCS, 2001. Lao PDR – National Poverty Eradication Programme (NPEP)