The Impact of the Poverty Alleviation Fund, Nepal (PAF-N)
Lessons to be learnt from the Poverty Alleviation Fund[1]
by; Nahakul K.C.
1. Introduction:
What is PAF-N?
Poverty Alleviation Fund, Nepal is a programme
created by the Government of Nepal to reduce extreme poverty in Nepal and to
build a democratic, just, equitable and sustainable society. It is also part of
the governments overall strategy to achieve Sustainable Development Goals of
the United Nations.
Initially established by an ordinance in 2003, PAF
Nepal has been governed by an Act since 2006. PAF is therefore an autonomous,
independent and professional organization governed by a separate law.
PAF is an umbrella institution and works through
Partner Organizations (POs), such as community-based organizations (CBOs),
civil society organizations (CSOs), NGOs, private sector, and local government
agencies - Village Development Committees (VDCs)/ District
Development Committees (DDCs). An 12 members governing
board, chaired by the Rt. Honorable Prime Minister, is responsible for policy
guidance and programme approval.
2. Key Approaches:
Targeting the Poorest ( Antodaya): For PAF, the last household
in the local socio-economic hierarchy is the first on PAF’s priority list. To achieve this,
PAF uses an inclusive bottom-up approach rather than an exclusive top-down
approach.
The first approach is geographically based
and targets underserved districts and VDCs and within these the target
groups. The second approach,
which is not geographically based, provides financial support to organizations
representing target groups for programs to address their needs or to
initiatives with particular innovative ways of addressing the needs of the
target population.
Social Inclusion (Samabeshi): PAF is in line with the
government’s top priority of inclusive development. This requires the proportionate
participation of different categories of households, and the equitable
involvement of those previously alienated from the development mainstream. Dalit,
Janajati, women and other disadvantaged households below poverty level
are groups who have historically received far less than a proportionate share
of development resources, but are now targeted by PAF.
Transparency (Pardarshita):
All the activities of PAF, including those of its partners and the COs, are
transparent. Transparency is promoted through social and public audits. . Regular auditing mechanisms are used at the CO’s
level.
Demand Driven (Mang Anusar): PAF recognizes that the
best judge of how a household will lift itself out of poverty is the household
itself. Hence, the final decision on what activity to choose lies with the
household.
Direct Payment (Sojhai Bhuktani): PAF believes that
people are empowered, if they can make economic decisions and transactions by
themselves. So, PAF involves it’s
clients in direct procurement.
Community
Institutions:
PAF works with Community Organizations (COs). Over 27, 000
COs are currently receiving support from the national poverty alleviation
programme and this directly benefits 675,000 poor households or a population of
3,000,000 individuals.
Empowerment: PAF uses a demand led
community-driven development (CDD) approach to empower poor and marginalized
groups to drive their own development. PAF seeks to improved living conditions,
livelihoods and empowerment amongst the poor with particular attention to those
who have traditional been excluded by reason of gender, ethnicity, caste and
location.
Partner Organizations as
Facilitators;
Based on the eligibility criteria set by PAF, qualified and eligible Partner Organizations (POs) are selected from among Community-Based Organizations (CBOs), Non Governmental Organizations (NGOs), Private Sector Organizations (PSOs), and Local Government Organizations for social mobilization, technical assistance, and capacity building activities. The partner organizations carry out social mobilization and capacity building for the community organizations and facilitate the community organizations in preparing proposals and implementing the sub-projects.
Based on the eligibility criteria set by PAF, qualified and eligible Partner Organizations (POs) are selected from among Community-Based Organizations (CBOs), Non Governmental Organizations (NGOs), Private Sector Organizations (PSOs), and Local Government Organizations for social mobilization, technical assistance, and capacity building activities. The partner organizations carry out social mobilization and capacity building for the community organizations and facilitate the community organizations in preparing proposals and implementing the sub-projects.
Participation and Self-help groups;
Under
PAF, the selection of beneficiaries is done through a participatory social
assessment followed by social mapping in the community. During project planning
and design stage, communities themselves carry out resource mapping, project
demand collection, project feasibility/market studies, procurement planning,
among others. At the project implementation stage, the community performs
procurement of goods and labors by procurement sub- committee, management and
monitoring of works by monitoring sub-committee, account keeping, asset
management by account sub-committee, and volunteer labor contribution and cash
contribution are provided for the execution of income generating and
infrastructure schemes.
3. Strategies:
The
strategies of PAF will be:
I.
To develop programmes with specific target of
reducing poverty in its areas of operations within a given timeframe;
II.
Promote community based demand driven approach
using rigorous social mobilization techniques in order to reduce poverty by
bringing poor at the center of development and by treating poor as subjects
instead of objects;
III.
Ensure holistic development intervention and
partnership building that guarantees positive impact on the livelihood of the
poor;
IV.
Enable rural people to obtain quality basic
services in cost-effective and sustainable manner with their direct involvement
in identification planning, designing, executing and operating &
maintaining the schemes; and
V.
PAF as an independent, autonomous and a
professional organization sensitive to the needs and aspirations of the poor.
4. Defining Levels of Poverty
PAF defines poverty based on the
level of food sufficiency, as well as criteria set by the communities
themselves. Those with food sufficiency of less than three months are
categorized as ‘hardcore poor’. Those with food sufficiency of more than three
months but less than six months are categorized as ‘medium poor’, while those
with food sufficiency of over six months but less than a year are categorized
as ‘poor’.
5. Major Successes in Reaching the Poor and Addressing
Poverty
5.1
Up-Scaling to Cover More Districts
Using
the above structure and approach PAF has successfully up-scaled its programme
to cover more disadvantaged districts and communities.
Village Development
Committees (VDCs)/Municipalities within the selected districts are prioritized
based on district level poverty information. PAF launches its programs from the
most backward VDCs/municipalities of the district. In this districts, PAF
organizes interactions and hold discussions with various stakeholders in the
districts, including DDC officials, government officials, representatives of
NGOs and donor community, leaders of various political parties, social workers
and eminent personalities, providing orientation to them on PAF’s policy,
strategy, programs and program implementation procedures. They are also
informed about the VDC ranking and interactions and discussions are held on it
as well.
PAF has facilitated
the establishment of around 27,000 Community Organizations (COs) in 55
districts out of 75 districts where it is operating. There are almost 400 local
and national NGOs as partner organization of PAF.
Beginning with the
poorest six districts in 2004, fund has helped a total of 6,75000 beneficiaries’
households,
of which approximately 75 percent are women, and 55 percent come from
communities that have been marginalized traditionally or excluded due to harsh
topography, caste, and ethnicity. It is great success of inclusiveness in
Nepal.
5.2. Contribution
to Poverty Alleviation - Poverty falls to 33.1 percent in six districts:
There are indications
that PAF is contributing to poverty reduction in Nepal. For example, the incidence
of poverty has come down by 17.40 percentage points in the last seven years in
six districts where the Poverty Alleviation Fund (PAF) is operating its
programmes. Poverty rate, on average, stood at 50.7 % of the population in
Doti, Dailekh, Jumla, Rolpa, Rautahat and Humla districts in 2007. That rate
fell to 33.1 per cent in 2014, according to the report, entitled ‘Socio-economic
Changes in PAF Intervention Households in Nepal’, which was prepared by the
Centre for Economic Development, and Administration (CEDA) of Tribhuvan
University (TU) based on survey conducted in 3000 households.
This means that the poverty rate in the six
districts declined at an average of 2.49 per cent per year between 2007 and
2014, as against national average poverty reduction rate of 0.8 per cent per
annum. The national poverty rate stood at 25.2 per cent of the population in
2010-11, as per the National Living Standard Survey conducted by the Central
Bureau of Statistics.
When the survey was conducted, it was
found that per capita consumption had largely gone up in the six districts
where the programmes of PAF were operating, indicating a rise in income level.
According to the report, per capita consumption in the six districts stood at NRs
14,826 per year in the year 2007-08.. The amount went up to NRs 36,440 in
2013-14, marking a rise of 145.78 per cent in the seven-year period, or 20.83
per cent, on average, per year. Between 2003-04 and 2010-11, average per capita
consumption in the country had gone up from Rs. 15,848 per year to Rs. 34,829 —
up 119.76 per cent or 17.10 per cent per year.
5.3 Findings of the Office
of Auditor’s General (OAG) Nepal:
The Office
of Auditor’s General (OAG) Nepal conducted internal audits to see the impact of
the Poverty Alleviation Programme for Nepal. Periodic performance audits from the
Office of Auditor General have been carried out as usual--together with different
technical audits and sustainability studies of infrastructure schemes. Periodic
beneficiary assessment,-Rotating Fund status and Social Re-assessment are continuing
in order to ensure and update the level of income and livelihood of the community.
Social Audit/Public Hearings are in place and are continuing.
The Auditor
General’s report highlights the PAF programme focused on the reconstruction and/or
renovation of damaged rural infrastructure during the last decade. According to
audits, the poverty level was reduced 31% to 25.4 %. The gap between rich and
poor was reduced from 0.41 to 0.46 among the remote areas and tribal
communities.
A study
report highlights major changes at household income as follows;
More
than 68% of the HHs have increased their income by 15% or more and Average
income at HH level increased by 68.2% (in real term)
Source:
CEDA-TU Report 2012
5.4.
Success at the Community Level - Community Organization (CO) from Bajhang
Receives an Award
Many COs have been successful in
improving incomes and livelihoods with support of PAF and have also
successfully implemented infrastructure subproject which have both social and
economic benefits for their communities. The following is one example.
The Directorate of Agriculture
Marketing, Ministry of Agriculture, Nepal has recognized "Betal Krisak
Samuha", a CO from Melbisaunee-4, Velata, Bajhang with an Award. The group had been recommended for the award
by the District Agricultural Office (DAO)-Bajhang. The Award was for being the best performing
farmer’s groups in high hill category for the year 2015 and included a cash
prize of Rs 10,000 and a certificate.
The President of the CO, Mr Dhanlal
Bhandari took a loan of Rs 60,000 to establish a Vegetables Collection Center
in Khaula. He is providing vegetables to community members at cheaper prices.
He has also paid back the loan taken from his Community Organization.
PAF provided Rs 107, 198 to the
"Betal Krishak Samuha" for vegetable farming and orange cultivation. The
same CO received Rs 744,786 from PAF for drinking water and irrigation schemes.
This included the establishment of an 8,000 liter water tank. The CO members
are now using sprinkle irrigation for their vegetable nursery and are producing
seasonal and off-seasons vegetables. Production is sufficient enough to be sold
at the Vegetables Collection Center.
6. Role of Partners: Government, Donors, POs, and CBOs for success
of PAF Nepal:
PAF’s success can be attributed to good
coordination between PAF partners and each partner effectively carrying out
their own roles and responsibilities as outlined below.
6.1. Role of the Government:
The government’s main role is to
provide policy feedback, oversight and monitoring of PAF program activities at
the central level. Office of Prime Minister and Council of Ministers, Ministry
of Finance, National Planning Commission approves the annual program and budget
of PAF. Office of the Prime Minister and Council of Ministers, Ministry of
Finance, National Planning Commission, Ministry of Cooperatives and Poverty Alleviation
and Ministry of Federal Affairs and Local Development carry out regular
monitoring of the PAF activities and provide necessary feedback and suggestions
for further improvement. Similarly, Office of Auditor General carries out the
financial audit of PAF every year.
6.2.
Role of Donors:
Major
donors of PAF include IDA/World Bank, IFAD and JSDF. However, a lion’s share is
from the World Bank. Their major role is to provide financial support as a
grant as well as technical support for the implementation of PAF program
interventions. Apart from this, World Bank, IFAD and the Nepal Government carry
out regular monitoring of programme activities including periodic supervision
missions.
6.3. Role of Partners:
Partner Organizations (POs) selected by PAF are facilitating
Community Organizations (COs) of the Poor.
Their major role is to perform facilitation, social mobilization,
technical backstopping and monitoring.
The facilitation being carried out by POs are in organizing COs, their
capacity development, planning activities, carryout detailed feasibility,
survey design & estimates, and proposal preparation during preparatory
phase, and provide technical assistance and monitoring feedback support during
implementation phase. As such, 400
Partner Organizations are working with PAF, covering a total of 2,022 VDCs.
6.4.
Role of COs:
Community Organizations (COs) are the crux of PAF program, and
they are always positioned in the driving seat. From inception to the end of
project cycle, COs are the key stakeholder for planning, designing, managing,
implementation, and monitoring of the project intervention.
Prior to the project planning and implementation, COs carry
out community identification of the poor through participatory social
assessment and a community organization comprising of 25-35 HHs is formed. COs thus identified and formed as per PAF
norms through the social assessment, are formally registered with PAF.
Meanwhile, COs open their bank accounts in nearby Bank.
7. Lessons-Learnt
7.1. Meeting Demand without Compromising Sustainability
There is a
high demand for the PAF programme at the grass root level. Communities have
demonstrated their keen interest to participate in the programme and make the necessary
contributions. Demand for the programme is high and it is challenging to
achieve a good balance between rapid implementation and institution building.
Sustainablity requires enhancing the technical capability of the community
organizations. Thus, the challenge is to meet demand without compromising
quality and sustainablity.
Coordinated
efforts targeting effectiveness and sustainability are indepensable and
enhances government ownership while diversifying activities and donors.
Programmes
for urban poor have recently been
introduced. Now, PAF is linking its local level planning for rural and
urban communites through ward citizen forums. Harmonization in Social
Mobilization with other DDC programmes is stressed. This multiplies the
benefits of PAF capacity building when COs access other DDC programmes.
PAF
supported programmes need to be linked to other government, private sector and
civil society institutions to help ensure sustainability post-PAF. Many COs are
now linked with Financial Institutions, Private Sector and Service Agencies for
additional funding of further activities. CO’s informal networks are now
developed at both VDC and District level.
Decentralization can improve the
effectiveness of programme activites. PAF has estbalished contact offices in
every programme district and Portfolio Managers are now stationed at the
distirct level. Decentralizaton is a major policy breakthrough for PAF. A MoU
has been signed with Ministry of Federal Affairs and Local Development to
establish a PAF office within the DDC office in the respective districts.
7.2. PAF Approach and Lessons-Learnt
to Revitalize Livelihoods in Earthquake-affected Communities:
Two earthquakes hit parts of Nepal on April 25th
and May 12th, severely affecting the Central and Western Development Regions.
The disasters caused more than 8,600 deaths and injured over 16,500 people. The
earthquakes caused significant damage to houses, agriculture, transport,
irrigation, and communications infrastructure. The earthquake also triggered
extensive landslides and avalanches causing further damage and disruption to
essential services.
The Post Disaster Needs Assessment (PDNA) of
National Planning Commission of Nepal findings highlights that the earthquakes
caused major damage in the 14 most affected districts, and damage in an
additional 17 districts. This includes damage to approximately 770,000
homes, of which 550,000 have been destroyed. The PDNA report estimates the cost
of reconstruction for household recovery to be US$5 billion, of which the housing
sector was the most severely hit with the cost of reconstruction estimated at
US$3.54 billion, followed by the education sector at US$250 million.
The earthquake has indiscriminately affected both
rural and urban areas.
However, keeping in view of PAF’s mandate, the area
of its focus will be the rural earthquake affected districts.
Divided in different components, the proposed
scheme would cover around 4,900 existing COs in 10 districts where PAF is
already operating and communities and settlements in two of the Major Crisis
Hit Districts.
The Revolving Fund (RF) component will enable
affected COs to resume revolving fund services by reinstating the RF’s
operations to the pre-earthquake level. Earthquake effects on the RFs include:
(i) damages to members’ assets financed by RF with a high likelihood of
inability for the borrowers to repay according to the schedule; and (ii)
damages to cash if kept where physical damages were sustained. There are also
cases of losses and damages of RF records and documents. The component would
recapitalize the affected RFs in almost 1,500 COs according to a clear set of
rules and beneficiary selection criteria.
7. 3. Summary of Lessons-Learnt for Livelihoods:
The major lessons learnt of the livelihoods
programme are as follows;
- Poverty reduction
and improved livelihoods requires effective targeting for Prosperity
Enhancement. From the beginning, PAF-N has been trying to identify and
engage with extremely poor households. However, better off households have
also express interest in joining the program and have become involved.
Having non-poor involved trends to divert programmes from the real
interest of the extremely poor households. Inclusion is the key to mainstreaming all
livelihoods activities
- Right balance of
Social and Economic empowerment for livelihoods activities
- Agriculture and
forest based livelihoods activities are more successful
- Capacity development
and technology transfer is key for success
- Poor households
require Intensive and focused support for an extended period of time.
- Access to finance
and small-scale credit through revolving fund supports sustainable
livelihoods. The organization is promoting
financial cooperatives as higher level institutions to do proper fund
management and develop linkages with existing financial institutions.
- PAF Nepal has developed
exit strategies, which involves linking up with higher level institutions
such as CO’s networks at VDC level to serve as a civil society platform
and to develop official linkages with local government bodies.
8. Graduation Strategy:
PAF Nepal is exploring- economic based Higher
Level Institutions (HLIs). Social platform type NGOs/Civil Society, exit from
weak COs and going through line ministries. By doing so, PAF is really looking
into the future model based on the social capital gained and accumulated so
far.
The proposed
Graduation Strategy will promote institutional sustainability and self-reliance
of COs and other types of organizations created with the support of PAF. More
specifically, the strategy will aim at equipping the COs and other
PAF-supported institutions, by the end of the PAF-II closure, with the capacity
to manage their own organizations and activities, and making them capable to
provide services to the members for poverty alleviation and livelihood
improvements on the sustainable basis.
To avoid
long-term dependency on PAF there needs to be an exit strategy which is
transparent and understood by COs, POs and government stakeholders. This
requires an effective assessment system to determine when COs and POs are
mature enough to continue without PAF support.
Participatory
CO graduation assessment and exit from POs is now in place for the
self-propelling and self-sustaining of community organizations. Staff and PO
performance evaluation and performance based incentives need to be introduced
and reward the best performers (CO,PO, Staff). The organization is conducting
CO maturity assessments which helps to identify mature, semi-mature, and COs
that need more support. PAF-N has taken
a major decisions to deputize it’s portfolio
managers to work with local bodies called District Development Committees
(DDCs). These DDCs represent a longer term sustainable system for development
and internalize all poverty alleviation intiatives within local governemnt.
9. Challenges:
The Poverty
Alleviation Fund Nepal is facing major challenges. Which are as follows;
- The April Earthquake increased poverty (2.79
%) in those 23 highly affected districts
- The livelihoods pillars drastically go down when
vulnerability goes high. For example the recent earthquakes and floods of
mid and far west Nepal.
- Funding Gap: The PAF-Nepal may face huge
funding gap beyond 2017. Additional funds are needed to continue all these
highly successful programme activities
- Least Developed Country Graduation. After the
graduation of LDCs, many newly emerging economies may not be able to access
grants. However, this is not
practical in the context of Nepal.
- Remittance based economic growth is not
sustainable. Most youths are abroad mainly in Arabic nations, which are
not a sustainable income source. Youth need economic opportunities within
Nepal.
The
on-going success of PAF will depend on addressing these challenges with the
continued support of PAF partners.
10. References:
- Poverty Alleviation Act 2007; Government of
Nepal
- Operational Manual of Poverty Alleviation Fund
2012
- www.pafnepal.org.np
- Center for Economic Development and
Administration CEDA of Tribhuwan University of Nepal and Poverty
Alleviation Fund of Nepal 2014
- Post Disaster Need Assessment Report; National
Planning Commission. Government of Nepal 2015
- Auditor General Office impact study report
2014
- National Planning Commission of government of
Nepal: PAF Program Evaluation; 2013
- Office Auditor General: Performance Audit
Report 2012
- Overseas Development Institute ODI: CDD /livelihoods projects in fragile and
conflict affected areas of South Asia 2014
Note: This
paper was presented lessons learns of PAF Nepal in to Livelihood Asia Summit
which was organized by ACCESS Development
Services; www.livelihoods-india.org
and www.accessdev.org
on December 10-11; 2015 at Delhi, India.
[1] . This paper was prepared to share
lessons learns of PAF Nepal in to Livelihood Asia Summit which is organized by ACCESS
Development Services; www.livelihoods-india.org
and
