Document of The World Bank Report No: 19867-PE PROJECT APPRAISAL DOCUMENT ON A PROPOSED LEARNING AND INNOVATION LOAN IN THE AMOUNT OF US$5.0 MILLION TO THE REPUBLIC OF PERU FOR AN INDIGENOUS AND AFRO-PERUVIAN PEOPLES DEVELOPMENT PROJECT January 5, 2000 Environmentally and Socially Sustainable Development Sector Management Unit Latin America and Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective October 1999) Currency Unit = Soles (S/) S/1.00= US$ 0.29 US$ 1.00 = S/3.46 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AIDESEP Interethnic Association for the Development of the Peruvian Jungle (Asociaci6n Interetnica de Desarrollo de la Selva Peruana) ADECAP Peruvian Association for the Defense and Development of Peasant Communities (Asociaci6n de Defensa y Desarrollo de las Comunidades Campesinas del Perui) CAI Multisectoral Commission of Indigenous Affairs (Comisi6n Multisectorial de Asuntos Indigenas) CAS Country Assistance Strategy COFIDE Development Finance Corporation (Corporaci6n Financiera de Desarrollo) CONAM National Environmental Council (Consejo Nacional del Ambiente) CONAP National Amazon Confederation of Peru (Confederaci6n de Nacionalidades Amazonicas del Peru) COOPOP Popular Cooperation (Cooperaci6n Popular) CTAR Regional Administration Transitory Committee (Comisi6n Transitoria de Administrati6n Regional) FEAS Project for Strengthening Agricultural Extension (Proyecto para Fortalecer la Extensi6n Agricola) FONCODES National Fund for Social Compensation and Development (Fondo Nacional de Compensaci6n y Desarrollo Social) GDP Gross domestic product GEF Global Environmental Facility Vice President: David de Ferranti, LCRVP Country Director: Isabel Guerrero, LCC6C Sector Director: John Redwood, LCSES Task Manager: Juan Martinez, LCSES GOP Government of Peru ICR Implementation Completion Report IFAD International Fund for Agricultural Development INIA National Agrarian Research Institute (Instituto Nacional de Investigaci6n Agraria) INRENA National Natural Resources Institute (Instituto Nacional de Recursos Naturales) lIP Indigenous Institute of Peru (Instituto Indigenista Peruano) LCSES Environmentally and Socially Sustainable Development Sector Management Unit, Latin America & Caribbean Region (World Bank) LIL Learning and Innovation Loan MAG Ministry of Agriculture (Ministerio de Agricultura) MEF Ministry of Economy and Finance (Ministerio de Economia y Finanzas) MTR Midterm review NGOs Nongovernmental organizations OPDs Decentralized Public Organisms (Organismos Pblicos Descentralizados) PAR Repopulation and Development of Emergency Zones Support Program (Programa de Apoyo al Repoblamiento y Desarrollo de Zonas de Emergencia) PETT Special Project for Land Titling (Proyecto Especial de Titulacion de Tierras y Catastro Rural) PRES Ministry of the Presidency (Ministerio de la Presidencia) PROMUDEH Ministry for Women and Human Development (Ministerio de Promocion de la Mujer y del Desarrollo Humano) PRONAA National Nutritional Assistance Program (Programa Nacional de Asistencia Alimentaria) PRONAMACHCS National Project for the Management of Watershed Basins and Soil Conservation (Programa Nacional de Manejo de Cuencas Hidrograficas y Conservaci6n de Suelos) SENASA National Agrarian Sanitation Service (Servicio Nacional de Sanidad Agraria) SETAI Technical Secretariat of Indigenous Affairs (Secretaria Tecnica de Asuntos Indigenas) SINAMA National Environmental System (Sistema Nacional del Medio Ambiente) SOE Statement of Expenses TG Technical Group TOR Terms of Reference (Terminos de Referencia) ZF Zonal Forum PERU INDIGENOUS AND AFRO-PERUVIAN PEOPLES DEVELOPMENT PROJECT CONTENTS Page A. Project Development Objective 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Learning and Development issues to be addressed by the project 4 4. Learning and innovation expectations 5 C. Project Description Summary 1. Project components 6 2. institutional and implementation arrangements 7 3. Monitoring and evaluation arrangements 10 D. Project Rationale E. Summary Project Analyses 1. Economic 10 2. Financial 10 3. Technical 11 4. Institutional 11 5. Social 12 6. Environmental assessment 13 7. Participatory approach 13 F. Sustainability and Risks 1. Sustainability 2. Critical risks 14 G. Main Loan conditions 1. Effectiveness conditions 15 2. Other 15 H. Readiness for Implementation 16 I. Compliance with Bank Policies 16 Annexes Annex 1: Project Design Summary 17 Annex 2: Detailed Project Description 22 Annex 3: Estimated Project Costs 24 Annex 4: Cost Benefit Analysis Summary 25 Annex 5: Financial Summary 26 Annex 6: Procurement and Disbursement Arrangements 27 Annex 7: Project Processing Schedule 32 Annex 8: Documents in Project File 33 Annex 9: Statement of Loans and Credits 34 Annex 10: Country at a Glance 36 Annex 11: Project Implementation Plan 38 Annex 12: Areas de Intervencion - Aspectos Operativos 40 Annex 13: Social Assessment 46 Annex 14: Legislative Framework for Indigenous Peoples of Peru 55 MAPS IBRD 30574 - Density and Diversity of the Indigenous Population IBRD 30327 - Afro-Peruvian Peoples Distribution IBRD 30575 - Poverty Map PERU Indigenous and Afro-Peruvian Peoples Development Project Project Appraisal Document Latin America and Caribbean Region LCSES Date: January 5, 2000 Team Leader: Juan Martinez Country Manager/Director: Isabel M. Guerrero Sector Manager/Director: John Redwood Project ID: P060499 Sector(s): SY - Other Social Sector Lending Instrument: Learning and Innovation Loan (LIL) Theme(s): SOCIAL DEVELOPMENT Poverty Targeted Intervention: Y Project Financing Data 1 Loan E Credit El Grant El Guarantee l Other (Specify) For Loans/Credits/Others: Amount (US$m): 5.0 million Proposed Terms: Variable Spread & Rate Single Currency Loan (VSCL) Grace period (years): 5 Years to maturity: 17 Commitment fee: 0.75% Front end fee on Bank loan: 1.00% ftinancing PIan, Source . _ca_ Fore_ Total Government 1.30 0.20 1.50 IBRD 4.40 0.60 5.00 IDA BENEFICIARIES 0.20 0.00 0.20 Total: 5.90 0.80 6.70 Borrower: GOVERNMENT OF PERU Responsible agency: PROMUDEH CAI/SETAI (Secretaria Tecnica de Asuntos Indigenas) Address: Jir6n Camana N° 616 - Lima 1, Peru Contact Person: William Toro, Vice-Minister and Jorge Vega, Secretary General Tel: 511-428-5467 Fax: 511-426-3920 Email: wtoro@lima.promudeh.gob.pe Estimated disbursements ( Bank FYIUS$M): FY n 2000 2001 2002 Annual 1.0 2.5 1.5| Cumulative 1.0 3.5 5.0 Project implementation period: 3 years Expected effectiveness date: 03/01/2000 Expected closing date: 12/31/2002 OCS PAD F-fl Odobr,S. I A: Project Development Objective 1. Project development objective: (see Annex 1) The project objective is to strengthen indigenous and Afro-Peruvian communities and organizations so that they can design and implement community development sub-projects, better articulate their proposals, and effectively utilize services offered by the State and other sectors within civil society by promoting innovative methods through a "learning by doing" process. The project will be implemented in five pilot zones and involve a gender-sensitive methodology with the active participation of indigenous and Afro-Peruvian women's organizations. The project will achieve its objectives through: (a) the strengthening of the organizational, institutional, technical and entrepreneurial capabilities of indigenous and Afro-Peruvian communities and organizations, as well as participating government agencies; (b) the preparation of community development sub-projects based on participatory designs, and organization of technical proposals with the required pre-investment studies; and (c) the implementation of sub-projects with financing from the funding agencies. 2. Key performance indicators: (see Annex 1) a) Number of strengthened and trained indigenous and Afro-Peruvian communities and organizations that advance from lower to higher levels of institutional capacity; b) Number of indigenous and Afro-Peruvian organizations that are operating as project implementers; c) Number of indigenous and Afro-Peruvian women and women's organizations actively involved in project implementation; d) Number of agreements between indigenous and Afro-Peruvian organizations and funding agencies, between SETAI and indigenous and Afro-Peruvian organizations, and between SETAI and other governmental sectors and NGOs; e) Number of diagnostics and development plans completed in the five pilot zones; f) Five Zonal Forums established; g) Monitoring and evaluation system established; h) Proposal of comprehensive legal framework for the development of indigenous peoples, prepared in consultation with indigenous peoples organizations. B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 1 6796-PE Date of latest CAS discussion: 07/22/97 The proposed project supports the CAS objective of reducing poverty and extreme poverty by building the capacity of indigenous and Afro-Peruvian communities and organizations to foster their own development. The project is the first World Bank social sector loan exclusively targeting indigenous and Afro-Peruvian peoples. Although overall poverty has decreased in Peru, rates of extreme poverty have remained high among Peru's indigenous peoples. In addressing this problem, it is important to respect regional and ethnic sociocultural factors and to include indigenous and Afro-Peruvian groups in community and local organizational development. This will enable indigenous and Afro-Peruvian peoples to take development into their own hands in accordance with their own sociocultural norms and thereby attack poverty more effectively. In addition, the project will contribute to the four other important strategic areas supported by the CAS: education, health, rural development, and human capital development. In helping to foster responsive and - 2- efficient public sector involvement in poverty alleviation for indigenous and Afro-Peruvian communities, this project will also provide useful lessons that can be used to formulate a national strategy for indigenous and Afro-Peruvian development that can be applied to other sectors and government agencies. 2. Main sector issues and Government strategy: Sector Issues: The main socioeconomic and legal issues identified during consultations with indigenous and Afro-Peruvian peoples of the coast, Sierra, and Amazon regions that the project will confront are: a) A lack of economic options in the Sierra region has resulted in large-scale migration to the coast and urban areas. This migration has not reduced poverty nor improved the well-being of indigenous and Afro-Peruvian peoples as a whole. b) An inconsistent legal and institutional framework towards indigenous peoples that guarantees them neither secure access to their land nor the control over the use of natural resources and traditional knowledge. c) A persistent disparity between urban/rural and indigenous/non-indigenous poverty. While there has been some reduction in rural poverty in recent years, most economic gains have occured in urban areas. This has led to a higher concentration of poverty in rural compared to urban areas. Almost 50 percent of the poor and 60 percent of the severe poor in Peru lived in rural areas in 1997, whereas more than two-thirds of the total population lives in urban areas. In addition, the indigenous population is falling further behind the non-indigenous population in terms of poverty. Indigenous peoples were 40 percent more likely to be poor than the non-indigenous population in 1994 and 49 percent more like to be poor in 1997 (see Poverty and Social Developments in Peru, 1994-1997). d) A significant gender disparity in the levels of poverty, income-generating potential, and community decision-making roles. Past efforts to extend technical and other assistance to indigenous populations in Peru have tended to overlook the gender dimension of poverty, and gender considerations have not been adequately taken into consideration in project preparation. The productive, reproductive, and community-wide gender roles, responsibilities, and constraints of both individuals and communities must be taken into account to ensure the greatest degree of success and equity in the development process within the context of the indigenous and Afro-Peruvian communities and their self-defined needs. Government strategy In 1996 the Peruvian government created the Ministry of Women and Human Development (PROMUDEH), which seeks to establish, implement, and promote strategies for the inclusion of vulnerable groups in the development process. PROMUDEH recently created a Multisectoral Commission for Indigenous Affairs (CAI), composed of representatives from the public sector and indigenous organizations to promote better coordination between the demands of indigenous peoples and the services offered by State agencies. CAI seeks to provide the GoP with a unit that will allow different ministries and agencies within the government to coordinate development efforts for the indigenous peoples of Peru. This will help avoid repeating past experiences in which development efforts were duplicated or contradicted by different government bodies. The commission's purpose is also to increase indigenous peoples participation in project design and implementation. The Technical Secretariat for Indigenous Affairs (SETAI) is a permanent part of the new organizational structure of PROMUDEH. One of the Bank's conditions for lending for an indigenous and Afro-Peruvian peoples project was to have the GoP provide a position of greater stature to this division dealing with indigenous and Afro-Peruvian affairs. SETAI was allotted powers that provide it with the capacity to orient, coordinate and articulate policies and multisectoral actions for the human development of indigenous and Afro-Peruvian populations. In addition, SETAI has proved to be an innovative technical secretariat charged with promoting participatory development. Rather than initially providing indigenous and Afro-Peruvian peoples with direct financing for sub-projects, SETAI will facilitate the process of meeting the demands and requests of their communities and organizations. The goal is for indigenous and - 3 - Afro-Peruvian communities and organizations to have the capacity to design, develop, and manage their own development initiatives and projects, providing these communities with a greater sense of ownership and empowerment in managing their own development, and helping to reduce the need for direct interventions by State entities. Financing will be provided by cooperating agencies following the methodology of this project. Both CAI and SETAI will help develop and strengthen the organizational capacity of Peru's indigenous and Afro-Peruvian peoples, thereby enhancing their ability to take development into their own hands, increasing their self-sufficiency, and improving their ability to achieve sustainable economic growth. This project, as well as the proposed Indigenous Management of Protected Areas in the Peruvian Amazon project, which will be submitted to the Global Environmental Facility (GEF) for financing, fits within this strategy of institutional strengthening and capacity-building. By training communities and organizations to efficiently design and implement projects that respond to the self-defined needs of their communities, the Bank is supporting an effective system for working with partners at the grassroots level in Peru. Based on this project's successes, the Bank will be able to help the GoP create a modus operandi for promoting projects that address the needs articulated by communities and organizations rather than providing top-down development options based on the perceptions of outsiders. This project will facilitate the implementation of current and future Bank projects as well as other projects for indigenous peoples by (a) providing communities and organizations with the capability of presenting proposals and implementing community development sub-projects, and (b) providing an effective example of grassroots community development sub-projects that can be replicated by the Bank, the Peruvian government, and other institutions. The project will also support revision of the existing indigenous legal framework as well as development of additional legislation for Peru's indigenous peoples. The legislation will be based on standards set forth in ILO Convention 169 (ratified by Peru), and other international instruments such as the draft United Nations Declaration on the Rights of Indigenous Peoples, the Organization of American States' American Declaration of the Rights of Indigenous Peoples, and consultations with the indigenous peoples of Peru. The legislation's main components will focus on (a) self-definition of indigenous peoples of Peru, (b) collective land tenure rights that are inalienable and imprescriptible, (c) autonomous privileges of indigenous communities and their role in local political structures, (d) ownership and access to natural and other resources and intellectual property rights, and (e) cultural patrimony. 3. Learning and Development issues to be addressed by the project Rural areas in the Coast, Sierra and Amazon regions have long been considered extremely impoverished, yet these regions are rich in cultural and natural resources. The extraction of natural resources (minerals, petroleum, and high-value wood products) and the unplanned occupation of rural areas have caused heavy environmental degradation, including a serious loss of biodiversity. While the majority of the rural population did not benefit substantially from the use of their natural resources, they have borne the effects of the associated environmental impacts. In most cases even the measures to mitigate these impacts, such as the establishment of protected areas, were taken without consultation and participation from local communities. This project will test promising methods of building communities' institutional capacity so that they can participate more effectively in their own development and derive greater benefit from the sustainable economic use of their resources. Many past development efforts by the Peruvian government have relied on a top-down approach, thereby failing to address the self-defined needs of indigenous and Afro-Peruvian peoples. One strategy of this project is to promote the active participation of indigenous and Afro-Peruvian peoples, making them - 4 - designers and implementers of projects with multi-sectoral financing and in coordination with SETAI. Another strategy is to directly strengthen the organizational structure of indigenous and Afro-Peruvian peoples. Strengthening and empowering indigenous and Afro-Peruvian communities and organizations to design, implement, and manage projects is expected to give them a greater sense of ownership in the development process and reduce the need for direct interventions by State entities. Historically, women have been underrepresented in formal and informal decision-making processes at virtually all levels of society and have not participated fully in the development process. Yet women are usually the primary care providers for children, have significant community-wide responsibilities, and are often directly involved in productive activities. In the past the Peruvian government's development programs have not taken into account the gender dimension of poverty. A third strategy of this project will be to promote greater gender equity across all levels of indigenous and Afro-Peruvian society, as well as greater sensitivity to gender issues in the development efforts of the Peruvian government. This project is being prepared in coordination with a proposed GEF grant for Indigenous Management of Protected Areas in the Peruvian Amazon. Even though both projects are being prepared as independent interventions, their objectives are highly complementary. The proposed GEF project would finance (a) participatory identification and establishment of approximately five new protected areas in the Peruvian Amazon, (b) development of management plans and committees to allow local indigenous communities to manage the protected areas, (c) promotion of projects for sustainable use of biodiversity resources, and (d) monitoring and evaluation (biological and social). Of the five zones of intervention identified by GEF/INRENA, two coincide with those identified for implementation of this project. The Peruvian government and the Bank have selected the following strategy for the Indigenous and Afro-Peruvian Peoples Development Project: (a) beginning with an investment of US$5 million through a Learning and Innovation Loan (LIL), build capacity and manage risks (using innovative methods) with the goal of building organizational, administrative, technical, and entrepreneurial capacity to initiate the more ambitious phases of the program that will follow; (b) support and advance this indigenous peoples development initiative and attempt to foster both actions and multisectoral coordination in order to design the legal framework for indigenous affairs; (c) respond to the proposals of representatives from indigenous and Afro-Peruvian peoples for capacity building in organizational, technical, administrative and entrepreneurial skills for community self-development through a process of "learning by doing"; (d) recognize that the LIL is the first phase of a long-term program, and that if the LIL results are successful, a second phase may be financed; and e) the LIL would complement the planned GEF operation by strengthening the organizational capacity of indigenous organizations involved in the management of the communal reserves to be financed in the Amazon region, in the two coinciding intervention zones (Sira and Santiago-Comaina). 4. Learning and innovation expectations I1 Economic a Technical 1 Social Z Participation E Financial Z Institutional Z Environmental D Other - 5 - C: Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): 1. Institutional Strengthening of Institutional 2.00 29.9 1.00 20.0 SETAI and the Multisectoral Development Commission of Indigenous Affairs (CAI). This component will finance minor office supplies and equipment, Technical Group (TG) staff, operating costs, training, studies, workshops, Geographic Information System (GIS) software, and exchanges with other institutions working on capacity-building of indigenous and Afro-Peruvian peoples. 2. Capacity Building of Indigenous and Multi Sector 2.33 34.8 1.95 39.0 Afro-Peruvian Peoples Communities and Organizations. This component will provide training in (a) participatory planning, preparation, implementation and maintenance of community sub-projects, (b) financial management and administration, (c) management of entrepreneurial and income-generating activities, (d) cultural patrimony, and (e) development of community human resources, including organizational, technical, and legal training reinforcement. 3. Technical Assistance and Legal Multi Sector 0.41 6.1 0.37 7.4 Reforms. This component will provide technical assistance to revise the legal framework regarding indigenous peoples, and finance consultation workshops for the development of such a legal framework (see Annex 14). -6 - 4. Information and Awareness Multi Sector 0.29 4.3 0.26 5.2 Campaign. This component will provide training to State agencies and civil society representatives regarding indigenous and Afro-Peruvian culture, rights, issues and proposals, in addition to Information, Education and Communication (IEC) programs, in the five pilot zones. 5. Community Development Other Social 1.21 18.1 1.00 20.0 Sub-projects. This component will Secto. finance (a) feasibility and pre-investment studies; (b) preparation of technical proposals; (c) promotion of meetings between State agencies, such as the OPDs in PROMUDEH, to agree on financial resource allocation; and (d) identification of innovative community sub-projects through a participatory "learning by doing" process in accordance with the Operational Manual. 6. Project Management: Monitoring Multi Sector 0.41 6.1 0.37 7.4 and Evaluation procedures will be used in accordance with quantitative M&E Bank procedures for procurement, disbursement, accounting and finances, and to monitor the implementation and impact of the training and community development sub-projects, analyzed separately by gender. Total Project Costs 6.65 99.3 4.95 99.0 Front-end fee 0.05 0.7 0.05 1.0 Total Financing Required 6.70 100.0 5.00 100.0 2. Institutional and implementation arrangements: Project Minagement (a) National Level. CAI and SETAI, which were created by supreme decree in November 1998, are part of the Ministry of Women and Human Development (PROMUDEH) and will have broad responsibility for execution. CAI will establish a technical working group (by date of effectiveness) with representation of indigenous peoples to assist in providing policy guidance for project implementation. A technical group (TG) operating within SETAI will be financed by the project. -7 - The TG will consist of a project coordinator, an administrator and a technical follow-up specialist at the national level. It will have one zone coordinator in each zone and follow-up specialists in the two Amazonian and two Andean zones. SETAI/TG will have overall project implementation, management, coordination, and supervision responsibility. The TG will submit a project implementation action plan for CAI approval. Local consultants (lawyers, social scientists, biodiversity specialists, etc.) will also periodically be employed for selected tasks. A project implementation manual containing details about project implementation procedures and processes is being developed. (b) Regional level. The project will be implemented at the pilot level in five key zones, with a zonal forum (ZF) formed in each zone with the existing organizations in each selected region. The ZFs will be composed of representatives of indigenous and Afro-Peruvian organizations in accordance with the project Operations Manual. The ZFs will select the zone coordinators, while the follow-up specialists will be designated by SETAI (see Annex 12). The zone coordinator will design and manage proposed activities at the local level, supervising the delivery of goods and services in their zone. The follow-up specialist will visit communities participating in training activities. The follow-up specialist will play an integral role in providing an overall perspective of how the communities are putting into practice what they are learning from specific training courses. In addition, the follow-up specialist will develop a perspective on the participating communities, their progress in relation to one another as well as how successes in one community can be transferred to another. The ZF will be supported by SETAI/TG. The zone coordinator and follow-up specialist will reside in the project area throughout the project period to work alongside the ZF and coordinate with SETAI/TG in making investment decisions together with implementation supervision activities, including training the ZF and the zone coordinator in accounting, procurement, management, and administrative skills. The ZF will recommend community development sub-projects for cooperation and financial agreements with state entities (particularly the OPDs in PROMUDEH). The ZF and SETAI will identify NGOs and other private sector institutions for training and/or consulting activities. Implementation ArrangementsThe implementation arrangements include two types of activities described in the components: (a) Capacity building of indigenous and Afro-Peruvian communities and organizations. In each zone a diagnostic will be conducted to assess training needs and determine the organizational capacity of participating organizations and communities involved in the project. The organizations and communities will be classified into one of three levels of competency, and those with a higher capacity will be used to train and assist organizations in their zone that have a lower capacity. Based on this assessment, NGOs, municipalities, state entities and communities with higher institutional capacity will be identified to be contracted by SETAI to carry out needed training activities. All technical activities will be reflected in a zonal implementation action plan to be submitted to CAI for review and approval. Monitoring and evaluation will be a constant activity during the training implementation to improve training activities and determine impact. Within each region and at the national level, the executing agencies (communities, NGOs, municipalities, OPDs, etc.) and communities involved in providing training will meet at regular intervals to compare methodologies as well as successful and unsuccessful experiences. This process will provide an opportunity to combine different success strategies and allow the ZF to adapt and modify its training strategy based on the evolving "best practices". (b) Community development sub-projects. Existing community development projects in different - 8 - stages of development as well as newly proposed sub-projects focused on the following issues can be implemented with financing from cooperating agencies: productive projects, ethno- and eco-tourism, natural resource management, training, microenterprises, etc. After the ZF selects the sub-projects, a consultant will develop a participatory action plan, as well as pre-investment studies and technical proposals, and along with SETAI/TG, will seek financial assistance and approval from State agencies, such as the OPDs in PROMUDEH. SETAI will enter into agreements with cooperating agencies under the terms and conditions specified in the operational manual. Communities and organizations that are operating at the highest level of competency will be able to directly implement sub-projects. However, communities and organizations that have lower competency ratings will need to work with an approved NGO or with a higher level community or organization to implement their sub-projects. Following completion of the project, a report will be submitted to the ZF by the beneficiary community or organization. Operational Manual The outline of the project operational manual contains detailed implementation arrangements, and was agreed upon with SETAI and MEF during the appraisal mission. It will include, inter alia, a description of (a) criteria for selection of beneficiaries, (b) a project financing model, (c) selection criteria for projects that include goods and services, (d) contractual procedures, including a detailed description of the division of responsibilities between the ZF and SETAI/TG, (e) standard terms of reference (TORs) for the team to be hired by SETAI as the technical group for project implementation, (f) functional procedures, (g) procurement arrangements, including sample letters of invitation, procedures for evaluation, sample contracts for consulting services, and monitoring and evaluation and reporting requirements, (h) administrative arrangements, (i) financial management arrangements and resource flows (including auditing requirements). Separate annexes for each zone will be created for qualitative measures if necessary. This will allow flexibility in each zone to test different methods for monitoring qualitative measures. (j) selection criteria for organizations that will develop the training activities in each pilot zone, (k) definition of the productive and service projects, and 1) composition and selection criteria of ZF members. Community sub-projects would require (a) specific performance and impact objectives and indicators, and (b) detailed provisions for the financing and execution arrangements through financial agreements with cooperating agencies and grant agreements with beneficiaries. A sample Project Implementation Plan is presented in Annex 11. The SETAI/TG would present biannual draft operating plans to the Bank for review. Procurement and DisbursementProcurement arrangements take into account the three-year implementation period. Both equipment and consulting service contracts are expected to be very small. Most of the funds are earmarked for consulting and training contracts. However, given the remote geographic location of most of the communities and their cultural environment, the technical assistance to be contracted is expected to include only a few commercial consulting firms. The project's strategy is to form partnerships with qualified local agencies (OPDs in PROMUDEH, NGOs, municipalities, state agencies) already working in the project areas who are familiar with the respective communities. Detailed procurement arrangements and disbursement understandings have been agreed with SETAI/TG and will be reflected in the project Operational Manual. Annex 6 contains a summary of the arrangements covering goods and technical assistance. Accounting, financial reporting, and auditing arrangementsThe financial administration of the project will be conducted by the General Administration Management of PROMUDEH, which has qualified staff to record and report both for internal and external purposes. The financial and accounting reports will be coordinated with SETAI and its technical group. In addition to the Ministry's accounting system, a project-specific financial management system satisfactory to the Bank will be established prior to -9- effectiveness. The project financial management system will be strengthened within 18 months in the manner detailed in Annex 6. External audits in accordance with the terms of reference acceptable to the Bank will be conducted annually, and the opinion and related statements will be presented to the Bank within six months of the end of the fiscal year (details in Annex 6). 3. Monitoring and evaluation arrangements: Traditional methods for monitoring and evaluation would be modified for this project. While quantitative measures would be used to determine compliance with Bank procedures for procurement, disbursement, and accounting, qualitative measures would be used by the different community sub-project zones to monitor and evaluate the capacity-building process. Additionally, attention will be given to disaggregate monitoring and evaluation data by gender, where appropriate' Potentially, each zone could have different systems to follow up on program implementation and provide inputs for M&E of qualitative measures. At the same time there would be a constant effort to evaluate the M&E process in a participatory manner with the beneficiaries, determine which methods function best, and propose modifications. Some of the ideas proposed for this innovative M&E process include community participatory monitoring and a learning methodology. SETAI/TG will be responsible for monitoring progress against specific performance and impact indicators including the participation of indigenous and Afro-Peruvian communities and organizations. Indicators will be designed to allow sufficient time for testing, learning, and adjustment. The TG will be in charge of designing and implementing indicators and the M&E system within the first twelve months of project implementation. Regular reports will be presented to CAI. The indicators will also include detailed progress benchmarks that will cover training impacts at the community level, institutional arrangements, community involvement and participation, and sustainability. The indicators will be disaggregated by gender in cases where this information would help enhance the performance of the project. The indigenous and Afro-Peruvian communities participating in the project will provide SETA1/TG with biannual beneficiary reports summarizing implementation progress and utilization of funds. An independent technic?l audit of the physical execution of community sub-projects and diagnostic assessments will be conducted after the first year of activities and in subsequent years. D: Project Rationale [This section is not to be completed in a LIL PAD. Rationale should be implicit in paragraph B: 3.] E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (supported by Annex 4): [For LIL, to the extent applicable] O Cost benefit NPV=US$ million; ERR= % * Cost effectiveness O Other (specify) To be determined as part of the end-of-project impact assessment. 2. Financial (see Annex 5): NPV=US$ million; FRR= % [For LIL, to the extent applicable] To be determined as part of the end-of-project impact assessment. - 10 - 3. Technical: [For LIL, enter data if applicable or 'Not Applicable'] A detailed analysis of indigenous and Afro-Peruvian communities, elaborated by the Technical Secretariat for Indigenous Affairs, forms the project's beneficiary targeting mechanism. Pilot communities have been selected to participate based on poverty and density of indigenous and Afro-Peruvian peoples. 4. Institutional: a. Executing agencies: PROMUDEH was created in October 1996 with one of its principle objectives being indigenous peoples development. Traditionally, indigenous peoples affairs were the responsibility of the Indigenous Institute of Peru (Instituto Indigenista Peruano). PROMUDEH has demonstrated its commitment to continue working within a multisectoral perspective with indigenous peoples by creating SETAI through a supreme decree in November 1998. The LIL will provide a participatory framework for helping SETAI determine an appropriate strategy for indigenous peoples development. The success of SETAI's strategy for indigenous peoples development will depend on the organizational capabilities of indigenous organizations and other sectors involved. It is expected that through this project SETAI will gain a higher profile by proving itself as an agency capable of meeting the objectives set forth in the LIL and executing innovative strategies that will promote the conditions and abilities of indigenous peoples toward their own self-defined development. b. Project management: SETAI will form a technical group (TG) to implement the project, which includes a project coordinator (with social and anthropological expertise), administrator, and a zone coordinator and follow-up specialists in each of the five pilot zones. SETAI/TG will be in charge of day-to-day project operations, including finances, contracting, procurement, field monitoring, and supervision. The concerns and challenges of the TG are similar to that of SETAI. As stated above, the success of the project relies on the participation of indigenous and Afro-Peruvian leaders, communities and organizations. In the context of the LIL, the TG will need to constantly evaluate its strengths and weaknesses and adjust its operations accordingly. c. Multisectoral Commission of Indigenous Affairs (CAI): CAI will be responsible for reviewing and approving the implementation action plan presented by the TG and SETAI. CAI will hold periodic meetings to review the project's technical, financial and accounting reports, and will act as directive committee for the project. d. Indigenous representation: Indigenous peoples will be represented in CAI as indicated in the supreme decree (November 1998). At this level of participation, the indigenous communities and organizations will be decision-makers, reviewing and approving the implementation action plans for the project as well as following-up implementation activities at the community level. As a condition of effectiveness, CAI will establish a technical working group with indigenous representation. Indigenous Organizations Various indigenous organizations have been involved in the project design. The Asociaci6n Interetnica de Desarrollo de la Selva Peruana (AIDESEP) and the Asociacion de Desarrollo Campesino del Peri (ADECAP) have provided information and recommendations on project preparation. AIDESEP operates at the national level, working with regional federations and community organizations in the Peruvian Amazon. ADECAP is a regional organization that works in the departments of Huancayo and Huancavelica. Both organizations have focused on providing political representation for their constituents. The strength of AIDESEP is that they have provided access to policy dialogue for indigenous peoples of the Amazon at the national level. They work with government agencies and international donors as well as multinational corporations working in the Peruvian Amazon. However, due - 11 - to a lack of financial resources they have not been able to maintain a continuous presence in and communication with the communities with which they work. ADECAP is located in Huancayo and focuses most of its work in the field, thus avoiding the dilemma of losing a constant presence with the organizations they represent. In the process they have not focused on community development projects. Francisco Congo is an NGO that works with Afro-Peruvian communities. Their primary focus has been fighting discrimination. While they have extensive contact with the Afro-Peruvian communities and their leaders, they have yet to design a multisectoral approach toward development in Afro-Peruvian communities. However, local organizations that work with the above organizations have tremendous experience and capabilities in implementing community-based development projects (health, education, tourism, etc.) 5. Social: Projects have great potential for success when they are participatory in nature during the entire process, from the identification and design stage through to execution and ex-post evaluation. For this project, extensive social assessment and legal analysis from the sector work on indigenous and Afro-Peruvian peoples of Peru have provided the guidelines and basis for project design (see Annex 13). Three consultations involving indigenous and Afro-Peruvian leaders were held: one with indigenous peoples of the Sierra, one with indigenous peoples of the Amazon basin and one with Afro-Peruvians in culturally diverse communities. As part of the consultation, participants were asked what their present concerns were regarding indigenous and Afro-Peruvian development as well as their vision of the future for their peoples. The suggestions from these consultations were used as the basis for designing this project. This consultation also benefited from the participation of key training institutes and NGOs involved in training delivery in the past. The recommendations emanating from these discussions are incorporated in the design of this project (see the August 1999 Peru Indigenous Peoples Green Cover draft report for further information). Therefore, the proposed project builds on the existing social capital of the indigenous and Afro-Peruvian communities and organizations, particularly in the five zones selected for the project. The approach is proposed here because it offers (a) a flexible opportunity to test different approaches to capacity-building on both the macro and micro level, (b) the opportunity to make changes to Peru's indigenous legal framework in consultation with indigenous peoples, (c) the opportunity for small-scale innovation and experimentation on projects that emphasize demand-driven, community-based initiatives, and (d) the opportunity to adapt relevant State services to indigenous and Afro-Peruvian peoples needs, through the awareness-building and training of State and non-State functionaries at the local, regional and national levels. Community Development Sub-projects While development projects provide aid to communities and organizations for their improvement, they often impose the framework and activities that the project will fund. In this project's case, the communities and organizations involved will have the opportunity to prioritize and implement sub-projects that respond to their own self-defined needs as well as function within the community's structure. In addition, these sub-projects will serve as replicable pilots for application in areas with similar conditions. In doing so, the productive and service sub-projects, designed by the LIL and financed by State and cooperating entities, will have a greater impact in the design and implementation of future projects for the Bank, GoP, and other institutions involved in development. Gender. To promote development in general, it is essential to take into consideration the gender dimension of poverty and the different roles and responsibilities of men and women. The increased participation of women in decision-making processes at the personal, household, and community levels contributes to a greater degree of equity in development as well as a higher chance for success in development projects. Such attention to the gender dimension of poverty, while undertaken within the context of each individual - 12 - culture's norms, maximizes the value of social capital. This project will seek to address the issues of gender and take into consideration the role of women within each community, thus aiming for greater inclusion and enhancing the chances for success as well as helping the Government of Peru to increasingly incorporate gender awareness into its future development programs. Women have been included in the various consultations and their comments and perspectives have helped to form the concepts and components for the LIL. A separate consultation was held with indigenous women representatives of the Sierra and Amazon at which gender-specific issues were raised and specific recommendations were made. Gender considerations should be included in community development sub-projects as a condition for approval by the ZF and channeling by SETAI to financial executing agencies. PROMUDEH, as the state agency charged with promoting the rights and inclusion of women, is fully supportive of the gender-conscious approach to development that is proposed as a strategy of this project. 6. Environmental assessment Environment Category: B This project has been assigned to category B by the environment specialists in the Environmentally and Socially Sustainable Development SMU for the Latin America and Caribbean Region. The major focus of this project will be on capacity building, with a lesser focus on the design and mainstreaming of community development sub-projects. This latter component will promote various activities, including sustainable land use practices. The project would not fund community sub-projects that could be considered environmentally sensitive based on project eligibility criteria to be indicated in the Project Operational Manual. 7. Participatory Approach(key stakeholders, how involved, and what they have influenced or may influence; if participatory approach not used, describe why not applicable): [For LIL, to the extent applicable] a. Primary beneficiaries and other affected groups: The primary beneficiaries will be indigenous and Afro-Peruvian peoples from the Sierra, the Amazon and the coast. The project will strengthen the institutional, organizational, and technical capacities of SETAI and CAI, as well as the capacity of indigenous and Afro-Peruvian communities and organizations to develop and implement sub-projects. There will be technical and educational training to advance the institutional capacity of the communities, while at the same time, the very process of "learning by doing" will contribute to a sense of self-confidence and security amongst the beneficiaries, which will increase their ability to develop new and innovative proposals for social and economic development. The examples set by these communities are expected to provide replicable models for the indigenous and Afro-Peruvian population as a whole. The legal reform and technical assistance component will benefit the indigenous and Afro-Peruvian populations of Peru as a whole by devising a strengthened legal framework regarding indigenous and Afro-Peruvian peoples rights and enabling their participation in its development. - 13 - b. Other key stakeholders: The Government of Peru is a stakeholder in the project in the sense that the project will strengthen the institutional capacity of SETAI and thereby its parent ministry PROMUDEH. In addition, nationally and regionally based indigenous and Afro-Peruvian organizations are stakeholders in the project process. Organizations such as AIDESEP, CONAP, ADECAP, Francisco Congo and AEDENADH have been consulted during the project development phase. The project will also work closely with local actors (NGOs, municipalities, state entities) to offer training programs to communities and in some cases to assist communities in implementing sub-projects. In the case of public entities, institutional strengthening will be obtained through technical assistance and training. Nevertheless, through their direct participation in the field, and sharing with the beneficiaries the project's successes and failures, the public entities will also be able to advance their understanding of indigenous and Afro-Peruvian realities and the opportunities this offers for State support. F: Sustainability and Risks 1. Sustainability. This section is not to be completed in LIL PAD. 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Ratibg Risk Minimization Measure From Outputs to Objective Institutional capacity in participating M Strengthen institutions, communities public-sector agencies, communities, and organizations through capacity and organizations to ensure effective building programs. project implementation and management. Political willingness to pursue revisions S Dated covenant for the submission of of indigenous legal framework. the draft law to Congress by July 2002, and interim monitoring indicators for the preparation of the satisfactory draft and two major consultations. Political will to maintain institutional H Approval of by-laws for the arrangements for project Multisectoral Indigenous Affairs implementation following next national Commission by ministerial decree to be elections. monitored. Government programs will be M Programs will be based on consultations "top-down" and paternalistic. with indigenous and Afro-Peruvian population and will respond to self-defined needs. Community sub-projects will be M Selection process subject to review of innovative and replicable. TG/SETAI based on established selection criteria. From Components to Outputs Respect of Peruvian government for the M Information of project proposals will be development aspirations of indigenous communicated to government. and Afro-Peruvian communities. - 14 - Institutional continuity of SETAI. S Project will provide testing ground for SETAI to prove its worth and agility in promoting indigenous and v Afro-Peruvian peoples development. Training meets the needs of indigenous M Use of diagnostic studying the needs and Afro-Peruvian communities and and desires of indigenous and organizations. Afro-Peruvian peoples for development and capacity building to guide project activities. Community sub-projects will be M Rigorous preparation and review financially and socially viable. process that will assess financial and social viability, in which the executing agency and external financial agency will participate. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects G: Main Loan Conditions 1. Effectiveness Conditiom (a) The Operational Manual will have been adopted; (b) a financial management system acceptable to IBRD will have been established in PROMUDEH; (c) a General Coordinator for the Technical Group with substantial social and anthropological training and acceptable to IBRD will have been selected; and (d) CAI will have established a technical working group with indigenous representation to provide overall policy guidance for project implementation. 2. Other [classify according to covenanit types used in the Legal Agreements.] l.Disbursement Condition For the financing of preparation studies for community development sub-projects, enter into at least 3 agreements with financing agencies. 2. Covenants Submission of draft legal framework to Peruvian Congress by July 2002. - 15 - H. Readiness for Implementation O l. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. Z 1. b) Not applicable. 1 2. The procurement documents for the first six months' activities are complete and ready for the start of project implementation; and a framework has been established for agreement on standard bidding documents that will be used for ongoing procurement throughout the life of LIL Z 3. The LIL's Implementation Plan has been appraised and found to be realistic and of satisfactory quality. IZ 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies 1 1. This project complies with all applicable Bank policies. El 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. 7Jua Martinez Shelton Davis sto May Tearn Leader Acting Sector Director Acting Country Director - 16 - Annex 1: Project Design Summary PERU: Indigenous and Afro-Peruvian Peoples Development Project Iy P-rforance Jetry of Oea ivesv : ndicators NlonitOitng & Eyfation - Cnticq* Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Support the sustained, Reduction of the poverty index Poverty map. Stable government policies in continuous reduction of in indigenous communities favor of indigenous peoples. poverty by maintaining and amongst women. Evaluation reports. economic stability and improving access to basic Number of communities services. promoted from lower to higher level of institutional capacity. Follow-on Development Objective Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: To strengthen indigenous and 100 organizations Annual project reports. Socio-economic recuperation Afro-Peruvian communities strengthened during project of the country. and organizations so that they execution in the five pilot Participatory impact can design and implement zones. evaluations. community development sub-projects, better articulate 5 innovative methods tested their proposals, and effectively and indigenous development utilize services offered by the strategic plans established in State and other sectors within the five pilot zones. civil society by promoting innovative methods through a "learning by doing" process. -17 - Output from each Output Indicators: Project reports. (from Outputs to Objective) component: 1. Institutional Strengthening 50 agreements reached Diagnostics and development Sufficient institutional of SETAI and the between SETAI and plan produced. capacity in participating Multisectoral Commission of indigenous and Afro-Peruvian public sector agencies to Indigenous Affairs (CAI): i organizations. Annual project reports. ensure effective project ncreased institutional capacity implementation. in the GoP to formulate and 15 agreements reached Participatory evaluations and execute policies and programs between SETAI and other technical reports. Willingness of State directed at the indigenous and state institutions. representatives to work with Afro-Peruvian population. indigenous and Afro-Peruvian Project technical group (TG) communities. established, made up of one coordinator, one administrator Political will to maintain and one legal and technical institutional arrangements for follow-up specialist at the project implementation national level, one zone following next national coordinator in each of the 5 elections. pilot zones, and one follow-up specialist in each of the Amazonian and Andean zones. Implementation of an administrative and accounting control system in SETAI during the first year of the project. 25 training events, including workshops, meetings, interchanges with other countries, and international forums. CAI established by March 2000 and with operational work program and by-laws approved by December 2000. - 18 - 2. Increased capacity of 5 diagnostics and development Diagnostic documents and Indigenous and Afro-Peruvian indigenous and Afro-Peruvian plans agreed upon in the 5 development plans. organizations participate in organizations to articulate pilot zones. project activities. their demands for State Constitutional agreements of services. 5 zonal forums created. zonal forums. 5 zonal training diagnostics Training workshop completed and implemented. evaluations. 140 training workshops implemented with 1,000 indigenous and Afro-Peruvian male and female community leaders trained in organizational, technical and business strengthening. 3. Legal framework for Legal standards proposals Legal Standards negotiations Political consensus on the indigenous peoples. created in consultation with in the Peruvian Congress, importance and necessity of indigenous peoples. central government or local policies and programs targeted government. towards indigenous peoples. 20 consultation workshops held with communities Participatory consultations regarding legal aspects. and technical reports. Draft legal framework Approved legal standards. presented to the Bank by December 2001. Reports on revision standards for administrative procedures Revised legal framework implemented. submitted to Congress by July 2002. Workshop evaluations and technical reports. Administrative procedures and technical standards adapted to the demands of indigenous peoples. Inter-institutional zonal technical committees formed for revision of the legal framework. Consulting and technical assistance services provided for revision of legal reforms. - 19 - 4. Greater awareness of the 20 participatory workshops Workshop evaluations. State representatives needs of the indigenous and held for awareness and interested in revising State Afro-Peruvian population. training of 250 state Publication and dissemination services based on demands of representatives from different notes. indigenous and Afro-Peruvian sectors. peoples. 15 workshops held to support zonal technical committees. 26 Information, Education and Communication (IEC) workshops held covering indigenous and Afro-Peruvian peoples culture, rights, problem and proposals. 5. Creation of community 10 workshops held and 120 Participatory evaluations and Sub-projects will be development sub-projects. community sub-project technical reports. innovative and replicable. pre-investment studies completed. Project monitoring reports. Six workshops and multisectoral agreement meetings held regarding financing of community sub-projects. Six workshops and agreement meetings held with cooperating international agencies regarding financing of community sub-projects. 100 of the 120 pre-investment studies implemented as community sub-projects through a "learning-by-doing" methodology. 6. Project management, Participatory monitoring and Operational Plan document. monitoring and evaluation. evaluation system established. Monitoring and Evaluation Plan document. Trimestral progress reports. Annual evaluation reports. - 20 - K.ey pertmiance t!evAMkiy of 0jecIlves I'ntd Ictors MoiAtoring 4 Evaluation Critcal Asumptions Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) 1. Institutional Strengthening $2.00 million Progress reports by executing Willingness of institutions to of SETAI and the agencies. formulate and execute policies Multisectoral Commission of and programs directed at the Indigenous Affairs (CAI). Consultation workshops. indigenous and Afro-Peruvian population. Monitoring reports. Institutional continuity of Annual technical and SETAI and CAI. financial audits. 2. Capacity Building of $2.33 million Diagnostic reports. Training meets the needs of Indigenous and Afro-Peruvian indigenous and Afro-Peruvian Communities and Workshop reports. communities and Organizations. organizations. 3. Technical Assistance and $0.41 million Draft legal framework. Willingness of trained State Legal Reforms. and civil society Workshop reports. representatives to work for indigenous rights. 4. Information and Awareness $0.29 million Progress reports. Respect of Peruvian Campaign. government for the Workshop reports. development aspirations of indigenous and Afro-Peruvian Informative publicity communities. materials. 5. Community Development $1.21 million Project evaluation reports. Financial and social viability Sub-projects. of community sub-projects. Participatory evaluation. 6. Project Management: $0.41 million Monitoring and evaluation Monitoring and Evaluation, reports. - 21 - Annex 2: Project Description PERU: Indigenous and Afro-Peruvian Peoples Development Project By Component: Project Component I - US$2.00 million Institutional Strengthening of SETAI and the Multisectoral Commission on Indigenous Affairs (CAJ) This component will strengthen the Secretariat's institutional capacity to operate on a normative and operational level through training in project and financial management as well as in procurement and disbursement. Specialized training courses, studies, workshops and exchange of experiences with similar institutions in other countries will augment SETAI technical knowledge. In addition, an administration control and accounting system will be put into place. Technical meetings and workshops on indigenous and Afro-Peruvian peoples issues will help guide the work of CAI in unifying and coordinating between different governmental sectors with indigenous and Afro-Peruvian communities of the Coast, Sierra and Amazon. This component will finance consultant services. This component will also fund the Technical Group (TG) responsible for project implementation, as well as minor office equipment and operating costs. Project Component 2 - US$2.33 million Capacity Building! of Indigenous and Afro-Peruvian Or2anizationsThis component will finance training activities for indigenous and Afro-Peruvian community and organization representatives that will focus on the following: (i) participatory planning, preparation, implementation and maintenance of community sub-projects; (ii) financial management and administration; (iii) cultural patrimony, and; (iv) development of community human resources, that include organizational, technical and legal training reinforcement. In each zone, a training diagnostic will be conducted by the Zonal Forums (ZF) to assess training needs as well as to determine the organizational capacity of participating organizations and communities involved in the project, by dividing them into three levels of competency. Using this grading system, communities and organizations with a higher level of competency will then be used to train and assist in community sub-project implementation with other organizations in the same zone operating at a lower level of competency. Based on this assessment, the ZF will identify NGOs and communities with higher capacity levels to be contracted by SETAI to carry out needed training activities: Monitoring and Evaluation will be a constant activity during the training implementation to improve training activities and determine impact. At regular intervals, all NGOs involved in providing training will meet to compare methodologies as well as successful and unsuccessful experiences. This process will provide an opportunity to combine different successful strategies and for the ZFs to adopt and modify the training strategy utilizing these "best practices". The follow-up specialist in each zone will visit communities participating in the capacity building process and evaluate their implementation of the material learned from the capacity building program. In addition, the visits to the different communities will help develop a perspective on the progress of the different communities in comparison to one another as well as to develop a better understanding of how successes from communities can be shared and replicated in others. Project Component 3 - US$ 0.41 million Technical Assistance and LeLal Reforms This project component will support with technical assistance the revision of Peru's existing legislation regarding indigenous peoples and prepare a draft of indigenous peoples law. The foundation for any strategy dealing with Peru's indigenous population must begin by setting forth their legal and constitutional status in a concise and clear manner. Revision of existing legislation will be based upon standards mandated by the International Labor Organization Convention 169, which was ratified by Peru and on the recommendations from consultations held with Peru's indigenous people. One of the greatest problems in reaching development goals is that under the present constitution, properties belonging to indigenous communities do not have the protections previously -22 - assigned which gave inalienable ownership to the comnmunity. The permanency of ownership is ambiguous leading to a conflict between communal and private use of land. Another issue is the question of indigenous autonomy and active participation in their own governance at municipal and other levels of state operations. The legal definition of indigenous peoples is also vague and at times misleading. The current legal definition for indigenous communities in the Sierra highlands is Comunidad Campesina. A more accurate definition related to socio-cultural practices as well as that fits in with terminology and concepts chosen by indigenous people will be used. Doing so will assist in accurately defining who is indigenous and facilitate accurate targeting of these communities for inclusion in the indigenous development effort. The component will finance technical assistance and workshops to prepare the draft on indigenous peoples law for submission to Congress by July 2002. Project Component 4 - US$0.29 million Information and Awareness CampaignThis component will provide training to State and civil society functionaries in the five pilot zones regarding indigenous and Afro-Peruvian culture, rights, issues and proposals, in addition to information, education and communication programs, with the purpose of increasing awareness of indigenous and Afro-Peruvian issues in each region. One of the activities of this component will finance the exchanging of experiences between governments, communities and sectors within Peru and with other countries. Project Component 5 - US$1.21 million Community Development Sub-proiects The objective of this component is to identify innovative community sub-projects through a "learning by doing" approach, which entails a dynamic process of evaluation and adjustments to the sub-projects. Using this practical technique will help to determine which sub-projects and concepts function well and are replicable. Specific preparation of sub-projects would be cofinanced by the beneficiaries, in kind, at an average of 25% of the cost of such services. An additional purpose of this component is to strengthen the technical capacity of the implementing community and organization to carry out sub-projects. Implementation of community development sub-projects would be financed by cooperating agencies in Peru following the requirements detailed in the Operational Manual. Project Component 6 - US$0.41 million Project Management:Monitoring and Evaluation Traditional methods for Monitoring and Evaluation will be utilized. While quantitative measures would be used to determine compliance with Bank procedures for procurement, disbursement and accounting, qualitative measures would be used by the different community sub-project zones to monitor and evaluate the capacity building process. Potentially, each zone could have a different systems to conduct M&E. At the same time there would be a constant effort to evaluate the M&E process in a participatory manner and determine which methods functioned best. Some of the ideas proposed for this innovative M&E process include community participatory monitoring and learning methodology. SETAI/TG would be responsible for monitoring progress against specific performance and impact indicators including the participation of indigenous and Afro-Peruvian communities and organizations. Indicators will be designed to allow sufficient time for testing, learning and adjustment. The indigenous and Afro-Peruvian communities participating in the project will provide the SETAI/TG with bi-annual beneficiary reports for review, summarizing implementation progress and utilization of project funds. An independent technical audit of works, a financial audit, and beneficiary assessments will be conducted after the first year of activities and in subsequent years. - 23 - Annex 3: Estimated Project Costs PERU: Indigenous and Afro-Peruvian Peoples Development Project : p . Institutional Strengthening of SETAI and the Multisectoral 1.80 0.10 1.90 Commnission of Indigenous Affairs (CAI) 2. Capacity Building of Indigenous and Afro-Peruvian 2.01 0.22 2.23 Communities and Organizations 3. Technical Assistance and Legal Reforms 0.40 0.00 0.40 4. Information and Awareness Campaign 0.28 0.00 0.28 5. Community Development Sub-projects 1.04 0.11 1.15 6. Project Management: Monitoring and Evaluation 0.40 0.00 0.40 Total Baseline Cost 5.93 0.43 6.36 Physical Contingencies 0.25 0.03 0.28 Price Contingencies 0.00 0.01 0.01 Total Project Costs 6.18 0.47 6.65 Front-end fee 0.05 0.05 Total Financing Required 6.18 0.52 6.70 - 24 - Annex 4: Cost Effectiveness Analysis Summary PERU: Indigenous and Afro-Peruvian Peoples Development Project Summary of benefits and costs: Under the Community Development Sub-project component, the project will finance the preparation of a range of demand-driven sub-projects which are expected to generate benefits for participating communities. However, their primary purpose is to allow Indigenous and Afro-Peruvian organizations to build institutional capacity for sub-project identification, preparation and implementation under the principle of "learning-by-doing". As it is expected that many sub-projects will be similar to the ones financed under the Sierra-Natural Resources Management and Poverty Alleviation Project as well as the FONCODES project, no separate financial and economic analysis has been carried out. Instead, the results of the financial and economic analysis carried out under the Sierra- Natural Resources Management and Poverty Alleviation Project are expected to give a ballpark figure of the expected economic and financial returns of the sub-projects financed under the project. However, revisions will take place during implementation in order to revise and customize the economic and financial returns based upon the needs and conditions of the areas and sub-projects financed by the LIL. This will be detailed in the Operational Manual and required from the State and cooperating agencies. The monitoring and evaluation will include the evaluation for costs and benefits. Main Assumptions: Cost-effectiveness indicators: - 25 - Annex 5: Financial Summary PERU: Indigenous and Afro-Peruvian Peoples Development Project Implement tion Period e B ~ ~~ Fiscal Year 1 Fiscal Year 2 Fiscal Year 3 Fiscal Year 4 Investrnent 126.0 2,293.9 2,200.2 1,332.0 Recurrent 4.7 237.0 237.2 219.0 TOTAL 130.7 2,530.9 2,437.4 1,551.0 IBRD 75.0 2,000.0 2,000.0 925.0 Government 100.0 550.0 550.0 300.0 Beneficiaries 70.0 80.0 50.0 TOTAL 175.0 2,620.0 2,630.0 1,275.0 - 26 - Annex 6: Procurement and Disbursement Arrangements PERU: Indigenous and Afro-Peruvian Peoples Development Project Procurement Procurement of goods, works and services would be carried out in accordance with, respectively, the Guidelines for Procurement under IBRD Loans and IDA Credits published by the Bank in January 1995 and revised in January and August 1996, September 1997, and January 1999, and the Guidelines: Selection and Employment of Consultants by World Bank Borrowers, published January 1997 and revised in September 1997 and January 1999. Procurement arrangements for the project components are described below and summarized in Table A. SETAI/TG, will have the overall responsibility for procurement activities. Acquisitions and consultant contracts will be processed through the respective administrative Units of PROMUDEH to utilize more fully the existing capacity of the Ministry and to avoid unnecessarily expanding the SETAI/TG. However, this being the first Bank financed project implemented by SETAI, a qualified Procurement/Administrator Consultant will be contracted to assist the SETAI/TG in quality control function and compliance with Bank procedures. An agency capacity assessment has been conducted during appraisal, which shows an acceptable level of organization and staffing of PROMUDEH's administrative area; its results and recommendations are reflected in the proposed arrangements. Goods. Contracts for goods are expected to be very small (I vehicle, 1 launch boat, and 3 computers). Contracts for goods all estimated at less than $50,000 would be awarded through national shopping procedures. Consultants' Services and Training The project would finance technical assistance and consulting services to promote community participation, related training, and design and preparation of sub-projects. It would also finance contracts for core staff in the SETAI/TG, technical specialists, and their participation to national/international seminars. In addition, the project would include training of other Government officials to sensitize them in indigenous and Afro-Peruvian issues. Given the community orientation of the services being financed, it is expected that a major part of the training and technical assistance would be contracted to local or regional NGOs. SETAI/TG has put together a register of qualified NGOs active in the project areas who are reputable, familiar with local conditions and have a presence in the communities. Some of this assistance would be Sole Sourced and other would fall under the Selection Based on Consultant Qualifications method, depending on the resources available in the region and needs of the individual communities. Contracts would be based on standard forms of contract issued by the Bank or, as appropriate, on other standard forms acceptable to the Bank. Procedures and standards for contracting consultants and training services would be outlined in the Operational Manual. Training contracts would include financing of all related training materials, rents, transportation for trainees per diems and other expenses related to carrying out these services. Operating Costs. Operating expenditures would include office supplies, utilities, operation and maintenance of office equipment and vehicles, communication services, transportation and travel expenses for SETAI/TG, and other incremental costs related to the administration of the project in respect to SETAI/TG. Prior Review. Table B summarizes the prior Bank review which represents about 20% of the Loan amount. Although the results of the evaluation capacity of PROMUDEH are acceptable, the standard prior - 27 - review thresholds for consultants are recommended considering that this is PROMUDEH's first Bank experience and its short time of existence (two years). During supervision the Bank will conduct post-review of procurement documentation and will follow-up on the action plan proposed as a result of the capacity assessment. Procurement methods (Table A) See below. Table A: Project Costs by Procurement Arrangements (US$ million equivalent) 1. Works 0.00 () 0) () () (0.00) 2. Goods 0.04 0.06 0.10 o () () (0.04) (0.00) (0.04) 3. Services 4.57 1.29 5.86 () () (4.57) (0.00) (4.57) 4. Miscellaneous 0.34 0.35 0.69 o) () (0.34) (0.00) (0.34) 5. Front-end fee 0.05 0.00 0.05 o) _ () (0.05) (0.00) (0.05) Total 0.00 0.00 5.00 1.70 6.70 (0.00) (0.00) (5.00) (0.00) (5.00) ' Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies " Includes goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to managing the project. - 28 - Prior review thresholds (Table B) See below. Table B: Thresholds for Procurement Methods and Prior Review' .Threshold ProremEntd Prior Review 1. Works 2. Goods <50 National Shopping None 3. Services Firms >100 QCBS Not expected Firms <100 Consultant Qualification US$0.1 Firms <100 Single Source US$0.6 Individual Consultants According to Section V of US$0.3 >50 Consultants Guidelines Individual Consultants According to Section V of None <50 Consultants Guidelines 4. Miscellaneous Operating Costs National Shopping None Total value of contracts subject to prior review: US$1.0 Overall Procurement Risk Assessment Low Frequency of procurement supervision missions proposed: One every 12 months (includes special procurement supervision for post-review/audits) Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance. - 29 - Disbursement Allocation of loan proceeds (Table C) See below. Table C: Allocation of Loan Proceeds _In ¢pen4XC*ego Anomntin4a$u flot n Fnancir==P~er~~nTag 1. Goods 0.04 80% 2. Consulting Services (excluding 3.50 90% consulting for preparation of sub-projects) & Training 3. Consulting Services for Preparation 0.85 100% of Sub-projects 4. Operating Costs 0.32 90% 5. Unallocated 0.24 Total Project Costs 4.95 Front-end fee 0.05 Total 5.00 Use of statements of expenditures (SOEs): A three-year period for loan disbursement is estimated with effectiveness expected in March 2090 and a loan Closing Date of December 31, 2002. An amount of US$50,000 of eligible expenditures made after April 30, 1999, may be financed retroactively from the loan account. Semi-annual plans will be the mechanism for making disbursement estimates and measuring disbursement performance. The allocation of loan proceeds is indicated in Table C of this annex. The Bank loan would finance 90 percent of all eligible project expenditures with the exception of Category I Goods. A Special Account in US Dollars will be established in a commercial Bank, acceptable to the Bank, with an authorized allocation of US$500,000. Most loan funds are expected to be disbursed through SOEs. For all other expenditures, e.g., consultant services over $50,000 with individuals and $100,000 with firms, full supporting documentation will be required. The Special Accounts should be maintained by the depositary bank in a way that satisfies the requirements listed in Annex A of OP 12.2. Bank statements will show all transactions in and out of the account, including amounts advanced and reimbursed by the World Bank, and balance at the end of each month. Under PMR-based disbursement, the maximum amount in the Special Account shall not exceed US$1.0 million. Initially SETAI will follow the traditional disbursement system and intends to move onto LACI as it gains familiarity with this first Bank operation but within 18 months from effectiveness. An action plan has been agreed upon with SETAI to this end. - 30 - Accounting, financial reporting, and auditing arrangementsSETAI/TG will utilize the Administration Department of PROMUDEH, where a financial department headed by a qualified financial officer and sufficiently staffed by an accountant to keep adequate records specific to the project and prepare the financial statements, and auxiliary staff to execute financial operations and provide control over project assets. This system will have a double entry automated accounting system comprising a general ledger and supporting subsidiary records (check register, journal ledger). The account structure used to record expenditures will comprise 3 classifications: the government budget classifications, the component and sub-component of the project document, and cost categories. The automated accounting system will be Y2K compliant and contain the required security features. SETAI/TG through the Administration Department of PROMUDEH will develop and document the detail procedures of all financial operations of the project: cash receipts, disbursements, control over advances, replenishment procedures, account reconciliation and controls, and reporting requirements and include these in the Operations Manual.. For the purposes of carrying out the project, deposits into the Special Account and their replenishments will be made on the basis of cash withdrawals statements based initially on Statements of Expenditure and later with the conversion to LACI they will be based on cash forecasts contained in quarterly Project Management Reports. Each of these reports would show: (i) actual sources and applications of funds for the project, both cumulatively and for the period, and projected sources and applications of funds for the project for the following six-months; (ii) list separately expenditures financed out of the credit during the period covered by the report and expenditures proposed to be financed during the following six-month period; (iii) describe physical progress in project implementation, both cumulatively and for the period covered, and explain variances between the actual and previously forecast implementation targets; and (iv) set forth the status of procurement under the project and expenditures under contracts financed from the credit, for the period covered. In order to begin disbursements, SETAI/TG will have in place by effectiveness both the staff and financial management systems satisfactory to the Bank, which will have undergone an assessment by a Bank Financial Management Specialist and will have either the capacity to produce the quarterly PMR, as required under LACI, or have presented to the Bank a satisfactory action plan to develop this capacity within 18 months. External audits in accordance with the terms of reference acceptable to the Bank will be engaged annually and the opinion with the related statements presented to the Bank within four months of the fiscal year end. In addition to the financial year end audit, four quarterly concurrent audits will be conducted yearly to ensure acceptability of project financial management. All supporting records will be maintained at the project site for at least one year after the completion of the project. - 31 - Annex 7: Project Processing Schedule PERU: Indigenous and Afro-Peruvian Peoples Development Project _jectScbe t P1anned7777c7ual Time taken to prepare the project (months) 6 6 First Bank mission (identification) 11/23/98 11/23/98 Appraisal mission departure 04/19/99 04/19/99 Negotiations 05/05/99 11/01/99 Planned Date of Effectiveness 10/31/99 03/01/2000 Prepared by: PROMUDEH/SETAI Preparation assistance: SETAI staff: Jorge Vega, Director; Elena Conterno, Juan Reategui, Gladis Villa, David Roldan L6pez, Aristides Melendez Llanos, Oscar Rodriguez Brignardello, Nilda Milagritos Chia Lopez, Fernando Alvarado Velarde, Dorothy Hurtado Carranza. Bank staff who worked on the project included: Name Speciality Juan Martinez Task Team Leader Carmen Palaco Nielson Procurement Specialist Martien Van Nieuwkoop Natural Resources Economist Livio Pino Financial Specialist Paul Sisk Financial Specialist Marta Molares-Halberg Country Lawyer and Indigenous Legal Specialist Shelton Davis Sector Manager, LCSES Jerri Dell Gender Specialist Evan Meyer Consultant Karen Berelowitz Consultant Christine Kimes Regional GEF Coordinator Pierre Werbrouck Peru Resident Representative Robert Crown Projects Advisor Carlos Monge Social and Rural Development Specialist Issam Abousleiman Disbursement Officer Augusta Molnar Peer Reviewer (LCSES) Stefano Varese Peer Reviewer (UC Davis Department of Anthropology) - 32 - Annex 8: Documents in the Project File* PERU: Indigenous and Afro-Peruvian Peoples Development Project A. Project Implementation Plan Project Implementation Plan B. Bank Staff Assessments Social Assessment C. Other Economic Sector Work Analysis Amazonian Indigenous Profile Andean Indigenous Profile Indigenous Consultation Reports for the Andean, Amazon and Afro-Peruvian Regions Legal Analysis of the Indigenous Peoples Indigenous Peoples, Civil Society and Non-Governmental Organizations Indigenous Peoples of the Frontiers and Ethno-Development Chronology of Peruvian Indigenous-State Relations & Policy *Including electronic files - 33 - Annex 9: Statement of Loans and Credits PERU: Indigenous and Afro-Peruvian Peoples Development Project Difference between expect and actual Original Amount in US$ Millions disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Re\ Number of Closed Projects: 71 PE-PE-39086 1999 GOP URBAN PROPERTY RIGHT 38.00 D.00 0.00 35.03 9.16 0.0c PE-PE-65596 1999 MiNISTRY OF FINANCE FIN SECTR.ADJ.LN II 300.00 0.00 0.00 122.00 -178.00 0.0c PE-PE-54667 1998 GOVERNMENTOF PERU ELNINOEMERGENCYLN 150.00 0.00 0.00 118.23 58623 2.OC PE-PE-40125 1997 GOVERNMENT OF PERU FONCODES II 150.00 0.00 0.00 65.80 60.80 0 0c PE-PE-42442 1997 GOVERNMENT OF PERU SIERRA NATURAL RES. 51.00 0.00 0.00 27.62 -1.36 0.0c PE-PE-8037 1997 GOVERNMENT OF PERU IRRIG. REHAB 85.00 0.00 0.00 62.67 24.48 -2.82 PE-PE-37047 1996 REPUBLIC OF PERU RURAL RDS. REHAB & M 90.00 0.00 0.00 17.62 1552 0.0c PE-PE-8051 1995 SEDAPAL LIMAWAT.PRIVZN 150.00 0.00 0.00 64.21 55.61 0.0C PE-PE-8OSS 1995 GOVERNMENT PRIM.EDUC 14640 0.00 0.00 76 869 76.9 -2.2E PE-PE-8045 1994 GOVERNMENT TRANSP.RHB 150.00 0.00 0.00 13.75 12 72 o oc Total: 1,310.40 0.00 0.00 603.82 13405 -30E Active Closed Projects Projects Total Total Disbursed (IBRD and IDA): 730.11 2,975.35 3,705.46 of wh[ch has been repaid: 0.00 1,240.64 1,240.64 Total now held by IBRD and IDA: 1,344.40 1,734.70 3,079.10 Amount sold: 0.00 18.31 18.31 of which repaid: 0.00 18.31 18.31 Total Undisbursed: 603.82 0.00 603.82 Actual disbursements to date minus intended disbursements to date as projected at appraisal. - 34 - PERU STATEMENT OF IFC's Held and Disbursed Portfolio 3 1 -Jul- 1 999 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1979/83/90/93 Buenaventura 0,00 0.00 1.69 0.00 0.00 0.00 1.69 0.00 1982/92/95 Wiese Leasing 7.27 0.00 1.43 5.71 7.27 0.00 1.43 5.71 1984 Minera Regina 1.71 0.00 0.00 0.00 1.71 0.00 0.00 0.00 1993/94 Yanacocha 2.40 0.00 0.33 0.00 2.40 0.00 0.33 0.00 1993/96 Quellaveco 0.00 11.52 0.00 0.00 0.00 10.30 0.00 0.00 1994 Banco Credito 3.64 0.00 0.00 0.00 3.64 0.00 0.00 0.00 1994 Peru Prvtzn Fund 0.00 0.00 20.00 0.00 0.00 0.00 13.89 0.00 1994 PPF Cayman 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1994196 AFP Horizonte 0.00 0.00 0.23 0.00 0.00 0.00 0.23 0.00 1997 Interbank-Peru 20.00 0.00 0.00 100.00 20.00 0.00 0.00 97.98 1998 agroguayabito 7.00 0.00 1.00 0.00 5.50 0.00 1.00 0.00 1998 Latino Leasing 10.00 0.00 2.50 0.00 10.00 0.00 2.50 0.00 1998 Paramonga 22.00 0.00 0.00 23.00 14.18 0.00 0.00 14.82 Total Portfolio: 74.02 11.52 27.18 128.71 64.70 10.30 21.07 118.51 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic Total Pending Commitment: 0.00 0.00 0.00 0.00 - 35 - Annex 10: Country at a Glance PERU: Indigenous and Afro-Peruvian Peoples Development Project Latin Lower- 918199 POVERTY and SOCIAL America middle. - Peru & Carib. income Development diamond' 1998 Poutlation mid-vear (millions) 24.8 502 908 Life expectancy GNP ner crDnita (Atlas method USSI 2 460 3 940 1 710 GNP (Atlas method. USS billions) 61.1 1 978 1 557 Averacte annual arowth. 1992-98 Poculation (%) 1 7 1.6 1.1 Labor force f%l 2.7 2.3 1.5 GNP Gross Most recent estimate ilatest vear available. 1992-98) per primary capita erlmn Povertv (% of Dooulation below national Dovertv line) 49 Urban Dooulalion (% of total DODulation) 72 75 53 I ife eynectannv at birth fvears) 69 7n 6fi Infant mortalitv (oer 1.000 live births) 40 32 38 Child malnutrition (% of children under 51 8 8 Access to safe water Access to safe water (% of DoDulation) 66 75 75 Illiteracv (%of oooulation ace 15+) 11 13 14 Gross orimarv enrollment (f% ofschool-aae Dooulation) 123 113 103 Peru Male 125 105 Lower-middle-income group Female 171 11n KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1977 1987 1997 1998 Economic ratios' GDP (USS billions) 14.2 23.9 63.8 62.9 Gross doMestic investment/GDP 19.2 21 5 24.6 24.6 Trade Oxsorts of ooodn and services/GDP 15.9 11 0 12 8 12,0 Gross domestic savinos/GDP 12.4 19.7 20 8 19 8 Gross national savinos/GDP .. .. 19 4 18 6 Current account balance/GDP -6.5 -8 3 -5 3 -6.0 Doe Interest oavments]GDP 2.9 0 1 Domestic nvestment Total debt/GDP 64.4 73 1 47.8 51 5 Savings nvme Total debt service/exoorts 53 0 13 3 31.1 27 3 Prasent vanioe of dPbtlGOP 436 f Present value of detttlexnorts . 294.9 Indebtedness 1977-87 1988-9S 1997 1998 1999-03 (averaoe annual orowth) GOP: 17 3 9 77 07 57 -Peru GNP net canita -0.8 2.6 5.4 -3.0 3.7 Lower-middle-income group Fxoorts of ooods and services 0.5 7 0 13.0 2.4 7 9 STRUCTURE of the ECONOMY 1977 1987 1997 1998 Growth rates of output and investment (%) (% of GDP) 40 Anriculiture 15 7 11n3 f 19 7 1 Industrv 34.6 33.4 36.4 36.7 30 Manufacturina 20.8 23.4 22.9 22.0 20 Services 49.7 56.3 56.7 56.3 o Private consumrtion 73.5 70.3 67.5 68.1 .10 13 94 95 96 97 98 General oovernment consumotion 14.1 10.0 11.7 12.1 GDI 1 GDP Imoorts of coods and services 22.7 12.7 16.6 167 1977-87 1988-98 1997 1998 Growth rates of exports and imports (%) (averaoe annual orowtbi Aoriculture 1.9 3.5 3.7 3.6 30 Industrv 1 9 4 4 91 n I f 20 Manufacturino 1.2 3.1 6.0 -3.0 Services 1.4 3.5 6.6 -0.9 10 _ _ _ _ Private ronsiumntion 1 7 2 6 4 1 -n 7 o General oovernment consumotion 1.6 2.6 4.6 2.4 93 94 95 96 97 s8 Gross domestic investment 0.8 8.3 12.7 -0.1 10 ImDorts of ooods and services -0.7 10.0 11.3 -0.1 -Exports '*Imports Gross national oroduct 1.6 4.4 7.3 -1.2 Note: 1998 data are preliminary estimates. - The diamonds show four kev indicators in the countrv (in bold) comoared with its income-arouo averaoe. If data are missino. the diamond will he in.nomniete - 36 - Peru PRICES and GOVERNMENT FINANCE 1977 1987 1997 1998 Inflation t%) Domestic prices (% change) Bo Consumer prices 31.2 85.8 6.5 7.0 60 Implicit GDP deflator 35.7 83.9 8.4 5.4 40 Government finance 20 (% of GOP, includes current grants) Current revenue .. 9.2 14.1 13.8 93 94 95 96 97 99 Current budget balance .. -4.7 2.2 2.9 GDP deflator e CPI Overall surplus/deficit .. -7.9 -0.7 -0.8 TRADE (US$ millions) 1977 1987 1997 1998 Export and import levels (US$ millions) Total exports (fob) .. 2,715 6,813 5,723 ,ooo Copper .. 562 1,096 391 Fishmeal .. 223 1,031 777 o 0F* Manufactures .. 726 2,121 2,032 Total imports (cif) 3,215 8,552 81199 Food .. 438 1.302 1,315 00 Fuel and energy 237 780 579 Capital goods .. 987 3,011 2.760 92 93 94 95 96 97 98 ExDort orice index Il995=100) .. 76 101 86 Imoort orice index (1995=100) . 72 101 98 UtExports Uolmports Terms of tradf (1995=1001 105 10D SR BALANCE of PAYMENTS (US$ millions) 1977 1987 1997 1998 Current account balance to GDP ratio (%) Exports of goods and services 2,131 3,508 8,354 7,531 0 Imports of goods and services 2,687 4,379 10,840 10,530 Resource balance -556 -871 -2,486 -2,999 -2 Net income -423 -1.221 -1,407 -1,454 Net current transfers - .. 485 665 -4 Current account balance -926 -1,974 -3,408 -3,788 1-6 Financing items (net) 971 826 4,401 2,785 Changes in net reserves -46 1,148 -993 1,003 _ Memo: Reserves includinnoold (USSmillions) 398 1.159 11.254 9.971 Conversion rate (DEC. local/USS) 8.38E-8 3.00E-5 2.7 2.9 EXTERNAL DEBT and RESOURCE FLOWS 1977 1987 1997 1998 (USS millons) Composition of total debt, 1998 (US$ millions) Total debt outstanding and disbursed 9,171 17,485 30,496 32,419 lBRD 171 1,214 1,920 2,128 A: 2.128 IDA 0 0 0 0 G: 7,450 _ C 90S Total debt service 1,136 481 2,936 2.452 2.520 lORD 22 50 182 184 IDA 0 0 0 0 Composition of net resource flows Official grants 19 94 222 Official creditors 586 292 963 -1,323 Private creditors 17 79 373 1,772 E: 11,486 Foreign direct investment 54 32 2,005 1,968 F: 7,930 | Portfolio equity 0 0 348 -369 World Bank program Commitments 60 0 507 38 A - i8RO E - SBiteral9 Disbursements 33 63 490 271 B - IDA D- Other multilateral F - Private Principal repayments 10 31 6S 64 G cMF G - Short-term Net flows 23 32 425 207 Interest payments 13 19 117 120 Net transfers 10 13 308 87 Development Economics 9/8/99 - 37 - Annex 1 1 Peru: Indigenous and Afro-Peruvian Peoples Development Project Project Implementation Plan I. Institutional Arrangements Organization Responsible for the Project: Ministry of Women and Human Development (PROMUDEH) Implementation Agreements: The Technical Group (TG) within the Technical Secretariat for Indigenous Affairs (SETAI) will be responsible for project implementation. Responsibilities for the Multisectoral Commission for Indigenous Affairs (CAI): CAI, acting as a directive committee of the project and based on its established by-laws, will provide advice and guidance to SETAI/TG throughout the project implementation process. CAI will specifically review and approve the project implementation action plans which will be executed by SETAI in the five pilot zones along with the indigenous and Afro-Peruvian communities. Participation Arrangements: Zonal Forums (ZF) supported by the SETAI/TG will provide a direct link to participating local community-based organizations in capacity building initiatives, monitoring and evaluation as well as in assisting in preparation of proposals for the community development project "learning by doing" component. A detailed description of organizational structure of the ZFs will be included in the Operational Manual. Role of Bank during project implementation: The project will receive close support from the Task Manager and the Peru Resident Mission in regards to project implementation and supervision. Administrative Arrangements for Project Implementation: CAI and SETAI will create a Technical Group (TG). The TG will present in coordination with SETAI a project implementation action plan to CAI for review and approval. The TG will also administer project resources, prepare, supervise and monitor payments of contracts and consultant services agreements, maintain financial records to be made available to Bank missions and independent auditors, and submit quarterly progress reports detailing planned and actual expenditures which will trigger quarterly disbursements. The following figure shows these arrangements. | SESTAI 0 > ~~~~~~~Commissionon Indigenous s ! < ~~~~~~~~Affairs (CAI) Technical Group Pilot Zones Zone 3 Ze 4el] 38 2. Implementation Schedule The figure below displays the time bound implementation schedule, including monitoring and reporting requirements and end-of-project impact evaluation and strategic design study for follow- on-action. Project Activities 1999 2000 2001 2002 Sept Nov Dec Jan Feb Mar May Dec Mar June Sept Dec Mar June July Establishment of Technical Group X (TG) Selection of TG Coordinator and X Administrator Establishment of 5 Zone Committees X Selection of Zone Coordinators X Zonal Training and Institutional X X Dev. Diagnostics Consolidate training plans X Initiate training program X X X X X X X X Initiate community X X X X X X X X development projects Monitoring and Evaluation X X X X X X X X 39 Annex 12 Areas de Intervenci6n -Aspectos Operativos Introducci6n Las Areas de intervenci6n han sido seleccionadas de acuerdo a la combinaci6n de cinco indicadores especificos: (i) diversidad cultural; (ii) poblaci6n indigena en extrema pobreza por distrito, (iii) articulaci6n territorial de pueblos indigenas por distrito; (iv) recursos naturales; y (v) similares formas y capacidades organizativas. Como resultado se presentan 5 zonas de intervenci6n las cuales seran el area de influencia del Proyecto. Una vez que se seleccionaron las Areas, se llevo a cabo la validaci6n en cada zona. Esta actividad permiti6 Ilevar a cabo un proceso de consultas a informantes calificados de las comunidades y organizaciones. Los aspectos operacionales de implementaci6n del Proyecto por zona seleccionada comprenden las siguientes organizaciones: (a) Establecimiento de un Foro Zonal. En este comite participarAn los representantes de las organizaciones indigenas existentes en cada una de las zonas seleccionadas. SerA un foro permanente de discusi6n de analisis y seguimiento del Proyecto, y que seleccionara al coordinador zonal de acuerdo a los t6rminos de referencia que se aprueben. Coordinador Zonal. El Coordinador Zonal es un profesional que goza del respeto y confianza de las organizaciones y comunidades de la zona. Tendra a su responsabilidad la implementacion de los componentes del Proyecto, sus actividades seran programadas en un Plan Operativo Anual (POA) que es presentado al Foro zonal y a la coordinaci6n del Proyecto, el Coordinador Zonal es parte del Equipo Tecnico (ET) del Proyecto. Metodologia Utilizada 1. Ubicacion de la Poblaci6n Indigena -1.. Diversidad Cultural. Las sub-zonas han sidos dividas en base a caracteristicas etno-culturales y fisiograficas. 1.2 Poblacion indigena en extrema pobreza Identificaci6n de los distritos que se encuentran en los niveles de vida de pobres extremos y muy pobres, considerando los siguientes criterios: Niveles de vida Indice de pobreza Pobres extremos De 29 a 36.99 Muy Pobre De 21 a 28.99 Pobres De 14 a 20.99 Regular De 7 a 13.99 Aceptable De I a 6.99 La metodologia para el calculo del indice es la utilizada por el Ministerio de la Presidencia para la determinaci6n del Mapa de Pobreza del Peru a nivel de distritos, que se ha elaborado tomando como base la informaci6n del Censo Nacional de Poblaci6n y Vivienda, realizado en 1993 y el Censo de Talla a Escolares realizado el mismo afio. 40 1.3 Agrupaci6n de provincias por departamento con mayor poblaci6n indigena y proximidad geografica. Efectuados los pasos anteriores, se seleccion6 por cada departamento las provincias donde existe mayor proporci6n de poblaci6n rural y proximidad geografica. Se configuraron 5 zonas de intervenci6n a traves de la selecci6n de las Areas en que provincias seleccionadas en el punto anterior de diferentes departamentos se encontraban pr6ximas en terminos geograficos. 1.4 Recursos naturales homogeneos. Las areas designadas presentan caracteristicas fisiograficas con similitudes, asi como recursos naturales. 1.5 Similares capacidades organizativas. Existen capacidades organizativas para llevar a cabo la implementaci6n del Proyecto. 2. Poblaci6n con Diversidad Cultural 2.1 Identificaci6n de distritos donde existe diversidad cultural Selecci6n de aquellos distritos que cuentan con comunidades afro-peruanas, segun informaci6n presentada por Asociaci6n Negra de Derechos Humanos y el Movimiento Negro Francisco Congo. 2.2 Agrupaci6n de provincias por departamento con mayor poblaci6n rural y proximidad geografica. Efectuado el paso anterior, se seleccionaron dos provincias en funci6n de la concentraci6n de poblaci6n afro-peruana y su proxiinidad geogrAfica. 11. Aplicaci6n de la Metodologia 1. Cuadro del proceso de selecci6n de las zonas de concentraci6n de poblaci6n indigena El cuadro que se presenta a continuaci6n (Cuadro No. 01) detalla los resultados que se obtuvieron al aplicar la metodologia antes expuesta para la identificaci6n de las zonas de concentraci6n indigena. Los nuimeros reflejados son solo para definir la zona piloto que identifica 5 sub-zonas. El Proyecto se fundamenta en el capital social de las organizaciones existentes en cada zona. 41 CUADRO No. 01 Comunidades Indigenas: Resultados de la Aplicaci6n de Metodologia PROCESO RESULTADO 1. Identificaci6n de distritos, en base al indice * Muy pobres: 798 distritos de pobreza de 21 a 28,99 (muy pobres) e * Pobres extremos: 225 distritos indice de pobreza de 29 a 36,99 (pobres Total: 1023 distritos extremos) 2. Selecci6n de distritos con poblaci6n rural * Muy pobres: 584 distritos igual o mayor al 60%. * Pobres extremos: 211 distritos Total: 795 distritos 3. Selecci6n de provincias con poblaci6n rural * 651 distritos igual o mayor a 15,000 habitantes * 91 provincias 4. Por cada departamento, agrupaci6n de * 350 distritos provincias con mayor poblaci6n rural y de * 15 provincias acuerdo a su proximidad geografica * 10 departamentos 5. Agrupaci6n de provincias de un * 71 distritos departamento con otras provincias de otros * 13 provincias departamentos contiguos con mayor * 09 departamentos poblaci6n rural y en funci6n de su * 04 zonas de intervenci6n proximidad geografica 2. Cuadro del proceso de seleccion de las zonas de concentraci6n de poblaci6n con diversidad cultural El cuadro que se presenta a continuaci6n (Cuadro No. 02) detalla los resultados que se obtuvieron al aplicar la metodologia antes expuesta para la identificaci6n de las zonas de concentracion. 42 CUADRO No. 02 Comunidades Afro-peruanas: Resultados de la Aplicacion de Metodologia PROCESO RESULTADO 1. Identificaci6n de distritos donde existen * 12 distritos comunidades afro-peruanas. * 10 provincias 2. Agrupaci6n de provincias por cada * 2 distritos departamento, con mayor proporci6n de * 2 provincias poblaci6n afro-peruana y de acuerdo a su I departamento proximidad geografica. * I zona de intervenci6n 111. Zonas de Intervenci6n Se configuraron 5 zonas de intervenci6n. La poblaci6n rural presente en estas zonas es de 1.4 millones (datos 1993), lo cual representa aproximadamente el 6% de la poblaci6n total del pais. En el cuadro siguiente (Cuadro No. 3) se presentan las zonas seleccionadas, en tanto que en el Anexo No. 1 al presente documento se presenta el cuadro de detalle de los distritos priorizados. 43 CUADRO No. 03 Zonas de Intervencion ZONA PROVINCIAS TIPO DE COMUNIDADES Zona #I Zona WARI Andinas Departamento Provincia Huancavelica Tayacaja Ayacucho La Mar Huamanga Zona #2 Zona COSTA Chincha Mayoria de Afro- Ica Peruanos Zona #3 Zona QUECIIUA-AYMARA Andinas Departamento Provincia Puno Chucuito Cusco Chumbivilcas Zona #4 Zona MARANON Amaz6nicas Departamento Provincia Amazonas Bagua Condorcanqui Loreto Alto Amazonas San Martin Lamas Zona #5 Zona UCAYALI Amaz6nicas Departamento Provincia Junin Chanchamayo, Satipo Ucayali Coronel Portillo Atalaya TIPOLOGiA PARA LA CLASIFICACION DE LAS COMUNIDADES La tipologia es una aproximacion hipotetica basada en el analisis de fuentes secundarias de informaci6n y aquellos recabados en campo. Durante la implementaci6n del Proyecto, se tienen programadas actividades de diagnostico a nivel de cada una de las zonas seleccionadas para identificar las necesidades especificas de capacitaci6n. Asimismo durante el diagnostico se ratificara la tipologia, la cual serA el punto de referencia para la implementaci6n de los componentes propuestos. TIPO I : Nivel organizacional Avanzado Aspectos institucionales: * Junta directiva comunal funcionando y con capacidad de resoluci6n de conflictos * Organizaciones femeninas coparticipando en la gest6n y direcci6n comunitaria * Participaci6n de delegados de Anexos en la toma de decisiones * Promoci6n constante de nuevos liderazgos en las organizaciones * Servicios sociales basicos satisfechos por iniciativa comunal (salud, educaci6n, energia electrica y agua potable). * Participaci6n de la Sociedad Civil y de organismos del Estado en el desarrollo de la poblaci6n * Comunidad reconocida y titulada. Aspectos empresariales: * Contar con microempresas o empresa comunal funcionando * Manejo tecnico y empresarial de los proyectos productivos de las organizaciones y/o comunidades. * Poseer acceso vial carrozable. * Opcional: Presencia de instituciones puiblicas y/o privadas realizando actividades. TIPO II: Nivel organizacional Intermedio Aspectos institucionales: * Junta directiva comunal organizada. * Organizaciones femeninas interactuando en nuevos roles y funciones comunitarias. * Promoci6n inicial de nuevos liderazgos en las organizaciones. * Contar con servicios de educaci6n, salud y agua potable funcionando. * Participacion de organismos de Sociedad Civil y/o de organismos del Estado en el desarrollo de la poblaci6n. • Comunidad reconocida. Aspectos empresariales: * Haber tenido experiencia en capacitaci6n y/o implementaci6n productiva. * Manejo tecnico y empresarial inicial de los proyectos productivos de las organizaciones y/o comunidades. * Tener acceso vial carrozable. TIPO III: Nivel organizacional de Poca Capacidad Aspectos institucionales: * Junta directiva inactiva. * Falta de capacidad para la resoluci6n de conflictos entre los lideres de las agrupaciones comunales. * Contar con los servicios basicos de educacion y salud (o por lo menos uno de ellos). * Participacion de proyectos especiales focalizados del Estado. Aspectos empresariales: * Ninguno (Detailed information and statistics for areas of intervention are available upon request) 45 Annex 13 Peru: Indigenous and Afro-Peruvian Peoples Development Project Social Assessment Introduction 1. The Social Assessment is based on the findings of a series of studies carried out as part of World Bank non-lending service on the subject of the economic development of indigenous peoples in Peru. The studies were requested by the Peruvian Government's Ministry for Women and Human Development (PROMUDEH) and Ministry of Economy and Finance (MEF) as background for the preparation of a National Plan for Indigenous Peoples Development. The Assessment includes: (a) a summary of key issues, lessons and best practices relating to rural development and poverty alleviation for indigenous peoples; (b) an analysis of current legislation relating to indigenous peoples and their rights; and, (c) a set of recommendations for strengthening the indigenous communities and the "new" institutionality responsible for indigenous affairs. 2. The objectives of the SA based on the studies were to: (a) generate a body of systematic and reliable information on the demographic, socio- economic and cultural conditions of Peru's indigenous population that would be useful in the preparation, implementation and evaluation of Bank-financed projects and reduce the costs of individual project social assessments; (b) provide recommendations that could assist the Peruvian Government in the improvement of the policy framework and institutional arrangements for indigenous peoples development and eventually lead to thie identification and preparation of a Bank-financed Learning and Innovation Loan (LIL); and, (c) make information available on indigenous development concerns to a variety of interest groups, including indigenous organizations and communities, non-governmental organizations (NGOs), and academic specialists. 3. The studies themselves were initiated by a Working Group comprised of representatives of the Bank and the Peruvian Government. The Working Group included the participation of different governmental sectors, as well as representatives of the private sector, other international donor agencies, indigenous organizations, and NGOs. These organizations reviewed the general Concept Paper for the overall study. Government institutions involved in the initiative included the National Program for River Basin Management and Soil Conservation (PROMANACHCS), the National Fund for Compensation and Social Development (FONCODES), the Peruvian Office for Oil and local government representatives. In addition, two Bank staff members, one from the LAC Region's Environmentally and Socially Sustainable Development Department (LCSES) and the other from the Bank's Resident Mission in Lima, coordinated the multidisciplinary group of Peruvian social scientists who carried out the studies and prepared the consultative workshops with indigenous peoples of the Andean Highlands and Amazon region. 4. The overall initiative was conducted in three phases and designed in light of the central problems of poverty, natural resources degradation and development facing Peru's indigenous population. The first phase was the contracting of a series of studies by a group of Peruvian social scientists on the subjects of: (a) Policies and Laws Towards Indigenous Peoples; (b) Ethnography of the 46 fndigenous Peoples of the Andean Highlands and Amazon Basin; (c) Indigenous Demography; (d) Indigenous Peoples, Civil Society and Non-Governmental Organizations; (e) Border Violence and Indigenous Peoples; and, (f) Migration of Indigenous Peoples and the Afro-Peruvian Populations. Many of the findings of these studies are contained in the first four chapters of this report and the English summaries in the several annexes to the SWA report. 5. The second phase of the study was the design of a Geographical Information System (GIS) on the Peruvian indigenous population, its spatial distribution, and its socio-economic and cultural characteristics. The GIS is to serve as a continuously updated data base to facilitate program planning in the area of indigenous development on the part of Peruvian government, indigenous and non-governmental organizations. Some of the maps that have already been prepared from the GIS are reproduced in this report. 6. The third phase of the initiative was the conducting of two regional consultations with representatives of indigenous organizations and communities, government agencies, the World Bank and other donor agencies. These consultations were held in Cuzco in January 1998 with representatives of Andean and Coastal Indigenous communities and in Iquitos in June 1998 with representatives of Amazonian indigenous organizations. The purposes of the consultations were to gain an "insider" perspective on how indigenous peoples in the various regions of Peru view their own development priorities, alternatives and paths. The findings and recommendations of the consultations are summarized in Chapter V of this report ("Towards a New Strategy of Indigenous Peoples Development") and described in greater detail in two separate reports as well as videos produced on each of the consultations. Main Findings of the Social Science Studies 7. The various social studies conducted for the exercise address the roots of the current political, economic, and social situation of Peru's indigenous peoples. Past development efforts aimed at indigenous peoples have often failed to include their input and frequently have resulted in costly but ineffective programs. Indigenous peoples have remained marginalized in Peruvian society. They have a higher rate of poverty in comparison to the rest of the Peruvian population. In addition, they have less access to social services such as education, health care, and potable water. National political structures, including government organizations and legal structures, often undermine indigenous communal organizations and. land tenure. The current document addresses these issues and seeks to develop an appropriate development strategy guided and originating from indigenous peoples themselves. 8. In order to understand the perspectives which indigenous peoples and their organizations bring to the development process, it is worth mentioning some of the main findings from the social studies. These findings provide a context for the development strategy suggested in the report and include: 9. Demography and Migration . The population of indigenous peoples in Peru is large-at least 40 percent of the total population if calculated with proxies to identify the bilingual or multilingual population and 27 percent or 6.5 million if a strict criteria ofmonolinguism is applied to 1993 census data. The vast majority of rural residents are indigenous people. The indigenous population, whatever criteria is used, is greater in absolute number than the total country population of 1940. While there have been many changes to indigenous identity, a large population in Peru continues to identify itself as indigenous based upon social relations, values, and family ties. An estimated 1.7 million live in registered indigenous communities in the highlands or the Amazon region. Urban migrants from the highlands generally maintain strong links to home communities through remittances and festival participation. 47 10. The Amazon indigenous population is estimated at 237,000 people; it speaks 12 different languages and several dialects; and, it is divided into more than 30 tribal groups. The latter are comprised of some 11 45 censured settlements and dispersed over 60 percent of the hation's land area. Several of these groups are located along the frontier with Ecuador, Colombia. Brazil and Bolivia where they are vulnerable to a variety of problems stemming from border disputes over resources, hegemonic issues and the illicit drug trade. Despite their diversity, the Amazonian natives are also drawn together by common environmental interests. They are often in close interaction with a variety of external agencies, religious missionaries, NGOs and international environmental interests. 1 1. Traditional Knowledge. Although different in the two regions, tradition-al knowledge is important in both present- day Andean and Amazonian cultures. Andean cultural knowledge is highly ritualized and forms part of the oral tradition. The complexity of Andeall knowledge is contained in stories, songs, and myths constructed in maternal languages and conceptual tools which reveal meaningful classification categories about time, space, seeds, plants, etc. Although all members have equal access to knowledge, some family or community members are socially recognized as specialists. Children learn this knowledge as they grow, gain-ing step-by-step more responsibilities in their families and communities. The Andean knowledge is used in the context of daily work and in the physical and spiritual subsistence of rural family life. It is regarded by peasants as an art and devotion to nature and not just a simple response to material needs. Decisions concerning the use of traditional knowledge depends upon a natural division of labor in wliclh all members-- men and women, and including children-- have an equally important role. 12. Amazonian traditional knowledge also has a ritual component, but includes a wide range of productive adaptations to the opportunities and demands of life in the Amazon regIon from huntillg and gathering skills to tropical agriculture, to use of medicinal plants, and knowledge of ecological systems. The historical lack of land pressure in the Amazon has made the system of slash and burn agriculture sustainable and optimizes the use of a given area of land for production. However, current and future demographic pressures on available resources and accessibility to arable land are becoming concerns, particularly regarding availability of game. Traditionally, the native peoples of the Amazon place little emphasis upon the accumulation of material goods and have few material possessions. They raise their children to avoid greed and miserly behavior and as a result theft, within communities, is an extremely rare occurrence. Family possessions are restricted to a canoe, bows and arrows, some cooking utensils and a few tools. Knowledge of plants and animals, chants, myths and legends, and ornamental designs are transmitted orally from one generation to the next. 13. Ethnic Identity and Reaffirmation. The majority of the Amazonian indigenous population continues to live in and use territories that are traditional to the specific tribe or commuLnity to which they belong and, despite acculturation from contact with outsiders, these peoples retain a stronig sense of tribal and place identity. Only a small pertion of the highland indigenous popuiation is still resident in Indigenous Communities that have distinct forims of governance and communal land tenure patterns. Private holders are dispersed among the Indigenous Communities, with varying degrees of identification as Quechua, Mochica, or Aymara. Despite the heavy migration and population loss in the highlands, virtually every district, town, hamlet andCornunidad is represented in Lima, Trujillo, Chimbote, lea, Arequipa and other coastal centers by one or more migrant associations and clubs. Estimates for the numbers of these associations are as high as 9000. These entities and their members provide strong economic support to their home communities and strongly identify as traditional ethnic serranos (highland ethnic or regional character). 14. Land Tenure. There are five types of Indigenous Communities in Peru, which are organized 48 and officially recognized entities holding common title to productive lands. Members of such communities refer to themselves as comuneros. In this report, the terms Indigenous Community, Community and Comunidad(es) are employed in a generic sense to refer to all variations of the category including: * ComunidadIndigena, since 1969 called, Comunidad Campesina , a village level society with a long history of communal organization; and strong socio-cultural values; * Comunidad Nativa usually refers to those communities and tribal groups living iM the Amaz.-o l region; * Cooperativa Agraria de Producci6n (CAP) are multi-community organizations created after 'i,5 1969 land reform; * Grupos Campesinos (GC) are small settlements, usually former hacienda populations organized after the 1969 land reform; and * Sociedades Agrarias de Interis Social (SAIS) were large scale, multi-community organizations created after 1969 to obtain "economy of scale" market advantages. Most of these have been dissolved. 15. As of 1991 there were 4842 registered Comunidades (primarily in the Andean highlands but with a small percentage also on the coast) and 874 Comunidades Nativas. Although recognized in government registries as corporate land holding communities, the full legal entitlement and deeding of the Community properties is slowed either by cumbersome bureaucratic processes. As a result, over half of the Comunidades do not have final titles as much as 30 years after official recognition of their community status. This is a major concern of the Comnunidades and their migrant urban relatives who retain community ties. Without such protection, they fear the loss of their lands either through various forms of political or legal chicanery or changes in the laws, such as the recent constitutional changes of 1993, which permit privatization of community lands. The latter increases the vulnerability of the Comunidades and poses a significant threat to the security of their remaining communal lands. 16. Legal Framework The lack of a consistent legal framework securing indigenous rights presents a severe obstacle for indigenous self-development. Indigenous communities have suffered from past abuse and discrimination, political and social exclusion, lack of respect for the human rights of their members and political violence. Rooted in the colonial legacy, Peruvian national society disrespects the collective rights of indigenous communities and in acknowledging their full rights as citizens. A major concern of the indigenous communities is that the establishment of a legal framework guaranteeing their secure access to land and other natural resources is an essential requirement for successful indigenous development. Another essential step is to ensure the enforcement of these rights-the latter being crucial for the improvement of living conditions. 17. Afro-Peruvian Population. Finally, while not indigenous, either in their world view or in a strictly legal or political sense, the Afro-Peruvian population has suffered similar conditions of historical discrimination and lack of justice and a common sense of identity related to a common historical struggle for basic human and civil rights. The Afro-Peruvian population's primary organizational structure comes from a shared geographical and tribal origin of Congo, Terranovas, Lucumies, and other tribes. These tribal identities and cultures were lost during their years of slavery and later acculturation. During slavery the only legal organization allowed this population was the Cofradias, or religious assemblies. Today, there are an estimated 1.4 million Afro- 49 Peruvians, most of whom are concentrated on the coast and in urban centers. Conditions and Constraints to Indigenous Peoples Development 18. The two regional consultations jointly sponsored by the World Bank and PROMUDEH in January and June 1998 allowed indigenous leaders from the highlands and the Amazon to identify conditions and constraints to indigenous development in Peru. The indigenous leaders particularly highlighted the conventional lack of consultation for development projects aimed at indigenous peoples. As a result, they noted that these projects are often misguided and promote culturally inappropriate and inadequate development strategies. The consultations also emphasized that the high rates of poverty amongst indigenous peoples are tied to the general social marginality of indigenous peoples within Peruvian national society and the economy. 19. To remedy this situation, the indigenous leaders stressed that discrimination against indigenous peoples as well as the recognition and protection of indigenous peoples rights urgently need to be addressed. The traditional land and governance structures of the Indigenous Communities are vulnerable to legal and constitutional reforms that have at times failed to recognize these entities as legal, putting into question their legitimacy. The indigenous leaders also argued that natural resource degradation and the exploitation of these resources by outsiders need to be addressed, and indigenous peoples rights to their lands and resources need to be respected. Furthermore, the organizational and technical capacities of indigenous peoples need to be strengthened. Currently, few partnerships exist between government, NGOs, and indigenous peoples for purposes of poverty reduction and rural development. 20. At a more specific level, the consultations, along with the social science studies and other research, reveal the following about the general conditions and constraints to indigenous peoples development: 21. Poverty and Social Marginality Indicators. Poverty in Peru is a predominantly rural phenomenon with a heavily indigenous cast. A recent World Bank report on poverty in Peru indicates that of all the population groups surveyed in the poverty study, the native-speaking population has the highest relative poverty risk, and this relative risk has increased over the past years - which implies that the native speaking population is falling further behind the Spanish speaking population. The Instituto Indigenista Peruano ranked 81 percent of all registered Comunidades as "extremely poor" or "in misery". Of the poorest 51 provinces, 94 percent are in the highlands and 6 percent in the Amazon basin. Services have not reached these areas in quality or quantity of other regions, especially the more urbanized areas of Peru. 22. Access to Basic Education, Health and Sanitation Services. The main social indicators (such as illiteracy rates, mother and child mortality rates, access to health care, drinking water and sanitation) reveal that the living conditions of indigenous people are significantly worse than those of the non-indigenous population. Education in rural areas, although widespread, is of low quality leading many would-be students to migrate to the cities. Bilingual or culturally- sensitive curricula have limited coverage, and teachers are not well supported even when they genuinely wish to serve. Health services are disproportionately concentrated in urban areas, with the- bulk of rural doctors being young physicians who have a responsibility to complete a mandatory year of rural service. This lack of access to basic services is reflected in high, school drop-out rates; low grade attainment rates; high incidences of diseases related to malnutrition, and; persistence of chronic diseases. 23. Despite their severe living conditions, many indigenous representatives expressed a very positive outlook for the future. One of the most universally expressed desires of indigenous peoples 50 is to gain equitable access to the operations of government and to the basic public and social services offered to other citizens. In the education sector, community leaders unanimously mentioned the frequent lack of cultural appropriateness in teaching methods and course content as one of the most pressing needs. As a result of this, they support the development of bilingual and intercultural education in order to enhance the abilities of students and deal with national society as well as to strengthen their own culture. 24. In the health sector, the majority of modern medical facilities and personnel are concentrated in the largest urban centers, leaving the vast majority of the Andean and Amazonian communities without access to modern health resources. The indigenous peoples desire that their traditional approaches to health problems be appreciated and taken into account in the context of treatment that is offered in their communities. 25. Access to Justice and the Judicial System. In terms of basic services and citizen rights, the indigenous peoples also demand greater access to justice and fundamental legal and administrative reforms. The indigenous quest for equal access to justice is an ancient one. In particular, the titling of land and water rights remains an unresolved issue for many Indigenous Communities. Community leaders express the need to establish simple and transparent procedures that facilitate the process of indigenous land regularization. From the communities perspective, this is a matter of the justice system guarantying their legitimate rights. Based on the long history of past abuse and discrimination and despite numerous improvements within the last 30 years, much remains to be done before indigenous people will consider themselves to be on a par with other Peruvian citizens. 26. Traditional Food and Agricultural Production Systems. The traditional agro-ecological productive systems of the indigenous peoples of both the Andean and Amazon regions are recognized by scientists as being highly adapted to the specific ecological constraints of these regions. At the highest altitude of production in the Andean region, animals are grazed and specialized tubers are grown; at the intermediate altitudes grains like wheat, barley, rye, and corn, as well as pulses, such as broad beans, peas, and lentils are sown along with a wide variety of vegetables. Traditional marketing arrangements link these different agro-ecological zones making for a rich diversity of animal, cultivated and craft products moving throughout the Andean geographical zone. 27. Production in the Amazon basin also focuses on a variety of strategies, including a rich horticultural, hunting and gathering and fishing tradition. Traditionally, slash and bum cultivation (the so-called chacra system) has been practiced. Studies have revealed it to be an efficient and sustainable system so long as a plot is used for only a limited period (usually three-to-five-years) and then abandoned for a fresh area, allowing vegetation and thin soil to recuperate. In addition, tropical horticulture requires a large extension of land. Multi-cropping is another characteristic of the system with as many as fifteen different crops inter-cropped, and complementing each other in terms of nutrients used or returned to the soil. This arrangement minimizes plant diseases and insect pests. Another common horticultural system employed along the river banks in the dry season takes advantage of extensive silt deposits left by the seasonal floods. On such open plots, farmers tend to mono-crop or, at least, reduce the number of varieties sown. 28. While much research has been conducted in recent years on the sustainability of these traditional agro-ecological systems, little of it has found its way into conventional rural development and agricultural research and extension strategies. In fact, there has been a growing tendency within the Andean region especially to increase the dependency of the Indigenous Communities on "food aid", particularly under the US AID-sponsored "Food for Peace" or PL 480 Program and the World Food Program. While often well-intentioned, and meant to provide an incentive for such things as 51 community-based reforestation programs, they often undermine traditional forms of production and labor mobilization strategies. 29. Failure of Conventional Rural Development Strategies. The social science studies and the consultations indicated that there has been a significant lack of funding from government and international agencies for projects targeted specifically towards the development of indigenous peoples. The national government and international agencies have made the common mistake of treating indigenous peoples development as a special type of 'poverty issue" and have tended to provide basic social services for purposes of "poverty reduction". Frequently these projects have failed to incorporate into their designs such basic elements, from an indigenous perspective, as indigenous languages, cultural identities, values and worldviews. 30. In addition, indigenous human capital, organizational structures and traditional knowledge and technologies are often ignored; and, sometimes new organizational structures are introduced at the community level that provoke cultural disruption. The overemphasis on asectoral approach of many development projects has also contributed to the fragmentation and disintegration of traditional community structures. The result has been a significant transfer of financial resources to those areas populated by indigenous peoples without a demonstrable and sustainable impact on the well-being of indigenous communities. 31. Petroleum Development and Mining in the Amazon. In the Amazon region, a debate over the activities and social and environmental impacts of petroleum companies has flourished over the last few years. Decisions are being made in the absence of environmental/social regulations, using unclear and inefficient administrative proceedures, and in areas where the state has no or relatively limited presence. . Parties with opposing ideologies toward such developments attempt to resolve conflicts without satisfying or reconciling all stakeholders, and; even in those cases where the petroleum companies and the indigenous communities involved have shown a genuine effort towards an authentically open dialogue, conflicts have generally not been fully resolved. The currently held view is that the active involvement of the state is necessary in order to ensure a just resolution among all stakeholders, with due sensitivity shown to safeguarding the rights of indigenous communities. 32. NGOs and Government Interventions. The above mentioned constraints combined with the relative absence or limitations of the state in community-based, rural development has tended to augment the role that NGOs play within indigenous communities. The focus of NGO work includes education, capacity building, applied research, technical assistance, and publication and dissemination of information about rural communities. Their main areas of operation are in the environment, culture and education, production and credit (creditos yproducci6n), and democracy and justice. 33. Over the past three decades, the involvement of NGOs with indigenous communities has led to mixed results. While some types of NGO-sponsored projects, such as those in the fields of organizational strengthening and support for production systems, have tended to benefit indigenous communities, others have experienced high operating and social and cultural costs. The relative success or failure of these projects appears to depend on the level of participation of the targeted group. Where indigenous populations do not participate, the costs are usually greater than the benefits and vice versa. 34. To overcome the limitations of past govemment interventions, indigenous representatives have recommended to government officials that they integrate the concept of "institutionality" into their policies toward indigenous peoples. By this is meant the formulation of amultisectoral and 52 intersectoral approach addressing indigenous peoples issues in an holistic manner. A multi-sectoral approach can avoid the past organizational divisions of indigenous communities caused by many competing government interventions. An improved coordination among different government agencies is essential to achieving this goal. Towards a New Strategy of Indigenous Peoples Development 35. Communities as Key Development Actors. One of the major recommendations of the regional consultations and a fundamental thesis of this report is the need for the Peruvian government, in collaboration with the international donor community, to introduce a new strategy for indigenous peoples development. The basic building block of this strategy should be the expressed desire for Comunidades to be the focus for indigenous development. As legally recognized entities under the Peruvian constitution, Comunidades have the ability to form direct relationships with government as well as private organizations. Historically, Comunidades have functioned in the interests of indigenous peoples. Despite the fact that many indigenous people have migrated from their Comunidades of birth or residence to urban centers, they still maintain robust contacts, connections and identities with their communities and regions. This does not mean that Comunidades should be exclusively responsible for development, but rather that they should act as the coordinator to work with government, NGOs and smaller indigenous organizational structures and entities. 36. Indigenous Peoples Vision for Future. The indigenous leaders also expressed various goals as part of their vision for their future, with some general themes emerging from both the Andean and Amazonian consultations. Strengthening and building the capacity of indigenous organizations based upon indigenous values and perspectives was seen as fundamental to enabling indigenous peoples to have a clear vision for the future. Part of this capacity building effort, it was argued, should focus on reinforcing sustainable land and natural resources management practices, including the strengthening of traditional land management where feasible 37. The indigenous leaders also envisioned an expanded role for indigenous peoples in the national political process. This would help indigenous peoples voice their concerns and influence policies that affect them. The establishment of a legal framework guaranteeing basic human rights, human dignity, and secure access to land and other natural resources are also essential requirements for successful indigenous development. Social indicators point to a standard of living for indigenous peoples is significantly worse than the rest of the Peruvian population. Improving education with a bilingual focus and providing health care and access to potable water, while respecting traditional medical beliefs and practices, are also seen as essential for improving indigenous peoples standard of living. Community participation and control at all levels of program design, implementation and evaluation are seen as fundamental to the success and efficiency of such programs. 38. Indigenous Economic Development Model. The indigenous leaders also expressed frustrations with current economic development strategies which do not take into account their specific languages, cultures and identities and which tend to perpetuate poverty and exclusion. In particular, the leaders expressed frustration that their communities do not have the same economic opportunities as the rest of the population. One of the reasons for the high rate of migration by indigenous peoples to urban centers is the lack of opportunities in rural areas. 39. Among other things, the indigenous community leaders called for a new model of development that would take into account Peru's great cultural diversity and ethnic and regional identities. From an economic perspective, this might include: (a) the setting up of a "National 53 Indigenous Fund" to promote social investment in indigenous communities; (b) the establishment of partnerships among the private sector, the government, NGOs and indigenous organizations in order to initiate regional development plans and coordinate specific economic development projects; (c) the promotion and establishment of indigenous business, including training programs for indigenous people in business and management skills; (d) the improvement of economic opportunities for indigenous people especially in remote areas, using modem telecommunication technologies; and, (e) the promotion of alternative income generation activities, including community-based ecotourism, cultural heritage and handicraft projects. 40. Partnerships between the State and Indigenous Peoples, Finally, the indigenous leaders recommended that a new type of partnership needs to be forged between the state and indigenous peoples for purposes of indigenous development. The old styles of "paternalism" or "clientalism" are no longer acceptable to a new generation of indigenous leaders, many of whom are better educated than their predecessors and have close links with or are themselves urban residents or migrants. The new strategy must be multi-sectoral in nature and recognize that development and change is a long-term process and must include significant learning, investments in training and capacity-strengthening and adjustments to complex situations and results on the ground. PROMUDEH can play a coordinating role i-n such efforts, but its main functions should be as a normative agency, as an advocate before other sectoral agencies and as a development facilitator for the indigenous communities. 41. In order to build such partnerships for indigenous development, there will be a need for legal reform, but such reform should take place in close consultation and with the active participation of the indigenous communities. There is also the need to develop and maintain a knowledge management system with a sound data base on and about indigenous communities. PROMUDEH has compiled considerable information and this needs to be made available for general use and for access, perhaps through the diffusion of the new information and telecommunication technologies, among the indigenous communities themselves. 42. Communities with the support of the govemment and NGOs also must improve their informational sources, reach agreement on specific and realistic goals, and gain the skills and confidence to deal effectively with the government, the private sector and international agencies. The development of indigenous leadership and membership skills and knowledge are fundamental prerequisites of a new strategy of indigenous development. Empowerment of indigenous peoples and communities for the tasks of self-defined development-that takes into account the rich history and heritage of the indigenous communities-- demands knowledge, respect and skill. In any program, whether it be in health, education or income generation, the program's impact on these domains needs to be evaluated, planned and maximized in a positive way. 54 Annex 14 Peru: Indigenous and Afro-Peruvian Peoples Development Project Legal Annex Legislative Framework for Indigenous Peoples in Peru This review contains the main Constitutional provisions and international conventions ratified by Peri applicable to indigenous peoples and an analysis of the definition and juridical personality of indigenous peoples, and their rights to land and natural resources, both in agricultural lands and in protected areas. 1. Constitutional Provisions The 1993 Constitution of Peru addresses, as matters of concern to indigenous peoples, the ethnic and cultural identity of persons, bilingual and multicultural education, indigenous languages, the legal existence of campesino and native communities, certain property rights and organizational autonomy, as well as the customary law of such communities. Specifically, the Constitution: * Recognizes the ethnic and cultural identity of persons and also protects the ethnic and cultural plurality of the Nation (Articles 2, 19); * Sets forth that the State promotes bilingual and intercultural education according to the characteristics of each zone, preserves the different cultural and linguistic manifestations of the country (Article 17); * Allows, in addition to Spanish as official language, the quechua, aimara and other native languages, in such locations as they are predominant (Article 48); * Recognizes the legal existence and juridical personality of the campesino and native communities (Article 89). The campesino communities are the indigenous groups of the Andean highlands (sierra) who, upon the enactment of the Agrarian Reform Law of 1969', started to be called, and protected, as campesino communities. The indigenous groups of the 2 Amazonia were identified as tribal groups and called, starting in 1974, native communities; * Recognizes the autonomy of the campesino and native communities in their organization, communal work and the use and free disposition of their lands, as well as in economic and administrative matters, within the framework of the law (Article 89); * Recognizes property rights of the communities as imprescriptible, except for cases of abandonment set forth in the Constitution (Article 89). Abandoned lands are deemed by the Constitution to belong to the State and can be sold (Article 88); * Recognizes the customary law of the communities within their jurisdictions, provided they do not infringe the fundamental rights of the person (Article 149). 'Law 17716 Agrarian Reformn Law, Article 115 reads: For purposes of this decree law the Indigenous Communities will be called Campesino Communities. 2 Law 20653, the Native Communities Law of June 24, 1974, article 7. 55 2. International Conventions and other Agreements PerCi ratified the Charter of the Uniited Nations and the Universal Human Rights Declaration in 1959, the International Covenant of Civic and Political Rights and the Covenant of Economic, Social and Cultural Rights in 1978, the Biodiversity Convention, and ILO Convention 169 on Indigenous and Tribal Peo-ples in 1994, concurrently with the entering into force of the 1993 Constitutior. Thus, the noTrns and principles of Il,O Convention 169 are now national legislation, and the Peruvian legal framnework for indigenous peoples should be modified accordingly, as called for by such Conventioni4. This ratification created, however, a legal situation where some rights which should have been protected by the State under the provisions of ILO 169, were eliminated by the new Constitution (for example some of the special protection features of indigenous peoples' rights to lands and natural resources) and others rights which should be reflected in existing legislation (such as a definition of "indigenous peoples" different than that of communities) have not yet been incorporated therein. 3. Defiritions and Juridical Personality (a) Definition and membership Except for the definition of indigenous peoples in ILO Convention 169 there is no definition of indigenous peoples as such in the Constitution or laws of Perui. Article I of ILO Convention makes the Convention applicable to: • tribal peoples in independent countries whose social, cultural and economic conditions distinguish them from other sections of the national community, and whose status is regulated wholly or partially by their own customs or traditions or by special laws or regulations; - peoples in independent countries who are regarded as indigenous on account of their descent from the populations which inhabited the country, or a geographical region to which the country belongs, at the time of conquest or colonization or the establishment of present state boundaries and who, irrespective of their legal status, retain some or all of their own social economic, cultural and political institutions. It also allows for self-ideintification as a criteria for determining the groups to which the Convention applies. The indigenous groups in Peru are designated as campesino (the Andean highlands groups) and native communities. The Campesino Communities are ruled by the Campesino Communities Law (Law 24656) of March 30, 1987, primarily an agricultural development law. The Campesino Communities are defined as organizations of public interest, with legal existence and juridical personality, formed 3 The Constitution was approved by the Congress (Congreso Constituyente Democrdtico) on September 6, 1993 and the Convention was ratified by Legislative Resolution NO 26253 published in El Peruano on December 5, 1993. The Constitution, after approval by referendum, was promulgated on December 29, 1993. 4ILO Convention 169, article 1 states that Governments shall have the responsibility for developing, with the participation of the peoples concerned, actions to protect the rights of indigenous peoples and article 5 calls for the recognition and protection of their values. 56 by families that live and control their specified territories, joined by ancestral, social, economic and cultural links which are expressed in the communal property of the land, the communal work, the mutual assistance, the democratic government and the development of multisectoral activities which have as an objective the fulfillment of the members of the communities and the country.5 The Campesino Communities of the Coast are ruled, in respect of land rights, in addition, by Law 26845 of July 23, 1997. Such are campesino communities whose lands, or the majority of them, are located in the Pacific Ocean coastal areas and not exceeding an altitude of 2000 meters above sea level.6 The Native Communities are ruled by the Native Communities Law ( Law 22175 of May 9, 1978). There is no strict definition of the communities but of its origin. Article 8 of the Native Communities Law,,v states that the native communities originate in the tribal groups of the Amazon forests and are formed by families linked by the following principal elements: language or dialect, cultural and social characteristics, communal and continuous possession of the same territory, with settled or dispersed settlements.7 Thle Civil Code of Per6 refers to the campesino and native communities as traditional organizations of public interest, formed by natural persons and with objectives aimed at the better utilization of its patrimony for the benefit of the community members. Metmbers of the campesino and native communities are, under both legal regimes, those born in the community or which are admitted thereafter in accordance with the By-laws of the communities. After one year of residence outside the community, the membership is lost except for those studying outside the community, with an absence approved by the community or in military service9 This restriction affects the rights of indigenous peoples to follow their own decisions as to membership in an indigenous group. (b) Juridical Personality In addition. to the recognition of the communities set forth in the 1993 Constitution, the Campesino and Native Communities Laws and the Civil Code have provisions setting forth the administrative requirements to be followed to register the communities as such, and as juridical persons. Such administrative requirements are in practice viewed, as validating the existence of the community rather than purely recognizing an existing person. 10 The requiremrents, as described in a legal study carried out during Project preparation , are as follows: * For the campesino communities the requirements are: (a) that the registration be approved by at least two thirds of the members of the community's General Assembly; and (b) that the Community be in possession of its territory. 5 Law 24656. article 2 6 Law 26845, Law for the Titling of Lands of the Campesino Communities of the Coast, article 3 7Law 22175. article 8. 'Civil Code, article 134. 9Ibid, article 9. '° Final Report (Confidential) Estudio legal para la Politica sobre los pueblos indigenas del Peru by Centro Amazonico de Antropofogiay Aplicacion Practica, November 18, 1998. 57 The President of the Community should submit the request to the competent regional authority with the following documents: (a) copies of the General Assembly's resolution agreeing to the request for registration, approving the by-laws, indicating the name of the community and electing the authorities; (b) a population census; and (c) an outline (croquis) of the communal territory and the boundaries and neighboring properties. After all the steps are followed, the community is registered in the regional Registry of Campesino Communities and, with a copy of such registration, the President of the community can register communities in the Registry of Juridical Persons to fulfil the requirements of article 2026 of the Civil Code. * For the Native Communities the request of recognition is made to the Regional Office of the Ministry of Agriculture. Such Ministry will carry out a socio-economic assessment and a population census before issuing a Resolution granting the personality. The resolution can be registered in the Registry of the Native Communities, which is maintained by the Ministry of Agriculture. The requirements for recognition/registration described above restrict the form of organization that the communities should follow by prescribing a form mostly applicable to the campesino communities of the Andean highlands which was transferred to those in the Amazonia whose cultural backgrounds were quite different, and the possibilities of more culturally appropriate forms of organizations for those in the Amazonia. The Defensoria del Pueblo, a State aitonomous agency, has argued that the procedures being followed by the Ministry of Agriculture for the registration of the personality of campesino and native communities are unconstitutional, by restricting their right to be "recognized". In a recent publications it calls for the concerned authorities to expedite the procedures for recognition of juridical personality, to allow for self identification as prescribed by ILO Convention 169 and that the registration be deemed to "recognize", not to create, ajuridical personality'. The juridical personality granted to the communities is of a civil law nature, and ruled by private, as opposed to public, law. The campesino and native communities are contemplated in the Civil Code next to the associations and foundations. There is no public regime for indigenous peoples', their territories, and their organizational autonomy. (c) Other forms of organizations The campesino communities are authorized to exercise their commercial activities under three different forms of organization: communal enterprises, multicommunal enterprises, and participating as partners in enterprises of the public, associative, or private sectors. The first two are described in the Campesino Communities Law and can be granted juridical status upon their registration in the Juridical Persons Registry of the Public Registries, under the Book of Campesino and Native Communities. t2 4. Rights to Land and Natural Resources 1 See Analisis de la Normatividad sobre existencia legalypersonalidadjuridica de las comunidades nativas in Nosotrosy los Otros Serie, Informes Defensoriales, Informe No. 12, pages 21-22. 12 Law 24656, article 25 and 27. 58 (a) Rights to Land in areas other than Protected Areas The land rights are primarily set forth in the Campesino and Native Communities Laws, the Campesino Land Demarcation and Titling Law, Law 24657, of March 30, 1987, the Law for the Promotion of Investments in the Agrarian Sector, Law 653 of August 1, 1991, the Law for the Private Investment in the Development of the Economic Activities in Lands of the National Territory and of the Campesino and Native Communities, Law 26505 of July 14, 1995 (hereinafter the Private Investment Law), and the Coastal Communities Land Titling Law, Law 25845 of July 23, 1997. Under the Campesino Communities Law the right to land covers the place of residence, rural lands, which could be used for agricultural purposes, natural pastures, as well as buildings and movable goods within the possession of the community. The campesino lands were protected, prior to the enactment of the 1993 Constitution, as inalienable, unattachable and imprescriptible. They 1 3 could, however, be sold by a majority of at least two thirds of the members of the Community These provisions have now been superceded by those of the 1993 Constitution that only maintained the imprescriptible nature, subject to "abandonment". Under article 22 of Law 653 of 1991 after two years of absence of agricultural activity the lands belong to the State and can be claimed by third parties as "abandoned". This provision puts into jeopardy lands that are assigned to "rest" after some type of agricultural/ pastoral activity in accordance with the agricultural management practices of the communities. The areas utilized by the communities for forest activities can only be transferred for use, and no land ownership is granted. The use of the forests is ruled by the provisions of the sector laws which provides that the forests are owned by the State. The State guaranties the integrity of the territorial rights of the Native Communities pursuant to the provisions of the Native Communities Law, (a concept that is restated in the more recent Regulations to the Private Investment Law) and is to demarcate and title such lands. Until the lands are demarcated and titled, they belong to the State, and the State can dispose of them freely. Under the special regime of Title II of the Native Communities Law, the size of the area to be demarcated depends: (a) for sedentary communities, on the area that they occupy, at the time of demarcation, for their cattle raising, collection, hunting and fishing activities; and (b) for migratory communities, on the total area they occupy during their seasonal migrations.Y4 The land demarcation process takes years to finalize and many of the communities still do not have the rights recognized and/or registered.'5 With respect of the native communities in an "initial-contact" status, the second transitory provision of the Native Communities Law sets forth the requirement of reserving for land demarcation areas according to the traditional management of natural resources until such time as the "initial-contact" group can be classified as migratory or sedentary. It has been argued that such "reserves", which are not a category of protected area contemplated in the Peruvian legislation, offer rather limited protection to such groups. 6 13 Campesino Communities Law, article 7. 14 Ibid., article 10. 15 See for example, "El regimen Legal de los Recursos Naturales en el Perui y sus consecuencias para los Pueblos Indigenas de la Amazonia" by Monika Ludescher in Law and Antropology, Vol. 9 (1997) page 237. 16 Ibid, page 237. 59 The Native Communities Law had the protective characteristics of land as inalienable, imprescriptible, and unattachable which were modified by the 1993 Constitution and the Private Investment Law. The abandonment provisions of the Peruvian legislation focus on "agricultural" purposes of land, and it is not clear in the legislation whether uses such as hunting, collection, and forest uses (other than logging) would be deemed agricultural activities that would preclude "abandonment". The rights to land do not extend to the subsoil (minerals and hydrocarbons). The Private Investment Law, as amended in 1996 requires that the owner grant the prior agreement to the exploitation or the applicable right-of-way procedures be concluded]17 The mining or hydrocarbons company is required to pay the land owners prior cash compensation for possible damages. This right would cover compensation for damages but not sharing in the profits of the mineral or hydrocarbon exploitation activities, as called for by article 15 (2) of ILO Convention 169. There is no recognition of the "indigenous peoples territories", and there is not yet in the legal framework a clear recognition of the right of ownership of the lands the indigenous peoples traditionally occupy, for the protection thereof, and for the access to lands they had traditionally used for their subsistence and traditional activities as called for by ILO Convention 16918 The ownership is also, with the recently enacted laws, being assimilated with those of private property of other agricultural lands and are ruled by the civil code, making most of the rights of indigenous peoples of a rather difficult implementation. There is no recognition of lands as a political right of the indigenous peoples. Indigenous peoples feel a special attachment to land that should not be left to the decision of an individual. Additionally, the usual civil code provisions would not allow for the expedite recognition of the ancestral rights of indigenous peoples, to the management of their resources and to autonomous regimes within the boundaries of their territories. (b) Rights to Land in Protected Areas The Environmental Code'9, the Protected Areas Law20 and the Law for the Conservation and Sustainable Use of the Biological Diversity21contain complementary definitions of protected areas. The Environmental Code defines protected areas as the areas of the national territory that the State assigns for scientific research, protection or controlled management of the ecosystems, natural resources and other values.22 Cultural resources such as archeological or historic sites which are part of the environment are recognized and should be managed in a rational and sustainable basis. 23 The Protected Areas Law defines protected areas as the continental and/or marine spaces of the national territory, expressly recognized and declared as such, including their categories and zones, to conserve the biological biodiversity and other values associated with the cultural, scientific and landscape interests, as well as for their contribution to the sustainable development of the country.24 17 Law 26505, article 7. '3 ILO 169, article 13 highlights the importance for the cultures and values of the peoples concerned of their relationship with the lands or territories, and their collective aspects. Ownership and access and the need for Governments to take steps to identify the lands and guarantee ownership and possession rights are contemplated in article 14. 19 Law Number 615 of September 8, 1990 20 Law Number 26834 of June 25, 1997 21 Law 26839 of July 14, 1997 22 Law Number 615 of September 8, 1990, article 51 23 Ibid., article 59 24 Law 26834, at Footnote 20, article I 60 Depending on the authority creating them, the protected areas can be, under the Environmental Code, national, regional and local, the national ones being established by Supreme Decree, the Regional by the resolution of the Regional legislature and the local by the local Council. The management policies applicable to all are set by the National Government while the management belongs to the government creating them. Depending on which authority manages the protected area, the protected areas can be classified as under national, regional or private management. Those in the latter group are called areas de conservaci6n privada. Interested land owners whose lands meet the technical and physical requirements to be declared protected, can request that such lands be so protecteca5. Depending on the nature and objectives of the protected areas, there are several categories contemplated in the Protected Areas Law: (a) Areas of "indirect use" such as for scientific research, and recreational and tourist use, which includes the National Parks, National Sanctuaries, and Historic Sanctuaries, and (b) Areas of "direct use" such as sustainable exploitation and extraction, which include the National Reserves, the Landscape Reserves, the Wildlife Refuges, the Communal Reserves , the Protected Forests, the Hunting Zones (Cotos), and areas of Regional Conservation, each of them being described in article 22 of the Protected Areas Law . As the most relevant for the Project as they can be managed directly by indigenous communities, the Communal Reserves are defined as areas for the conservation of the wild flora and fauna, for the benefit of the surrounding rural populations . The use and marketing of the resources will be under management plans approved and supervised by the authorities and carried out by the beneficiaries, they can be established in areas of agricultural, cattle raising , forestry and conservation uses.26 To date, only one Communal Reserve has been established, the Yanesha Reserve in Paracaz627, and many have been requested but are in the lengthy process of evaluating the land claims/ demarcations. 28 In addition to the Protected Areas, the Ministry of Agriculture can establish Reserved Areas (Zonas Reservadas) in areas in which complementary studies to define the type and extension of the area are required. Under this status the demarcation of the existing communities can proceed so as to finalize the titling process before the protected area is established. Protected areas are, except for the private conservation areas, of the public domain of the State,29and are established permanently. As areas of public domain, ownership cannot be granted and for those that had private property rights prior to the establishment of the area, the management plan of the area will determine the restrictions to the use of the property that might be applicable.30 25 Ibid., article 13 26 Ibid, article 22 g. 27 Resolution 193-88-AC-DGFT - published in El Peruano on May 1, 1988. 28 The INRENA officer I interviewed showed me the maps of the areas being demarcated, all surrounding the prospective indigenous communal reserve of El Cira (to be confirmed). See also Liberaci6n y Derechos Territoriales en Ucayali-Peru WGIA, pages 209-217, describing land demarcation efforts for the future establishment of communal reserves. (Ucayali book). 29 Ibid., article 4 30 Ibid., article 4 61 The State recognizes under the Environmental Code31 the property rights of the ancestral campesino and native communities over the lands that they possess within the protected areas and their buffer zones, and promotes the participation of the communities. In general the Environmental Code states that the exercise of property and other rights within protected areas acquired prior to the establishment of the protected area must be done in harmony with the objectives for which the protected area was created.32 (c) Rights to Natural Resources The 1993 Constitution of Peru sets forth that the natural resources, renewable and non- renewable, are the patrimony of the State and that the law would establish the conditions for their utilization and of their granting to individuals. It contains provisions requiring the State to promote the sustainable use of natural resources and to preserve the biological diversity and natural protected areas natural resources and to support their rational use. 3 The concessionaire of the right to exploit natural resources acquires a real property right to the resources. Under the 1975 Forestry Law34 forests are defined, as a natural resource, as the lands which could primarily be used for forest exploitation, its forests and the components of wild life, thus encompassing the land and the forests together as the natural resource. The State cannot adjudicate dominion rights (full ownership) for lands apt for forestry exploitation or protection, can only transfer the lands for use, and the exploitation of the resource under a concession. Of the different types of forested areas contemplated by the Forestry Law, only the Forests of Free Disponibility and the National Forests could be authorized for logging. The State can do the logging in the National Forests and the private investors, under concessions agreements, in the Forests of Free Disponibility. Under the Law for the Sustainable Use of Natural Resources:35 (a) the campesino and native communities can benefit free of charge and without exclusivity of the natural resources of free access surrounding their lands, to satisfy their subsistence needs and uses with the limitations of rights of others or reservations made by the State. The ancestral uses are recognized provided they do not damage the environment. (b) The campesino and native communities have preference in the sustainable use of the natural resources in their duly titled lands, subject to the rights of third parties and the State. 3' Law 615, at Footnote 19, article 54 32 Ibid., article 53 33 Articles 66,67 and 78 34 Law 21175 of may 13, 1975 35 Law 26821, articles 17 and 18 62 MAP SECTION IBRD 3057 4 -0. )o 78- 760',- 714 720 ,0° ,'s ~PERU w ,t 'DENSITY AND DIVERIT - -- -- - OF THE INDIGENOUS . CLMI- -2s 0~~n POPULATION ,* -0 s- J'.-a 2 TU 8 ' ' - 4 -- t B R A Z I L \, N C A H .. -lo~~~~~~~~~k c - IS f ' j rc; A o '° P A4 C I f I C a t E- :tJ 0 C E A N */ / r-r w -12° U 9;t?. ,.; ;V4 2 MA \12' INDIGENOUS POPUlATION DENfY f4/:f !A, - '. - L 55 v-% 0 P i . ~~~~~~~~~ ~ ~~~~ABANCAY ' s -T 4° i i ~~30 - S0% 7KA r3 ,i Ft P I A C };h- 20 < 30% > , lG.. 10- 20% < ' > f '>^i, ' I - 106 \ ..'. N.z*. ,99% SPANtSH t wfts< - < ; -- d S ,, PU~~~~~~NO ~~ 16 (3 ~DEPARTMENT CAPITALS , ri' _. ' 1° 4* NATIONAL CAPITAl !'AE;IA [ - DEPARTMtENT BOUNDARIES _ A t', i -s NTE_RNATIONAE BOUtAME-' C TbismapwspivvadytheMvplsssnUrs#lsEarG ° 0 100 15) 200 250 MO EGUA c ; sho Cs opfrisnw kqt*, nthe p-ftMeoSoi - LOMER '.. & fo $ 1 ; P>10° 7 ~~~~~~~~~~~~7- 1 . 7t' 712° ' FEBRUARY 2000- IBRD 30327 -00 760~ 740 72' 000 PERU ** ~ ~ - AFRO-PERUVIAN PEOPLES DISTRIBUTION CO0LO0M BI A TMP ECUADOR/ ! 1- - " \~~~~~ IQUITOS~ -40 -~~~~~~~~~~~ 0( U~~~~~~~~~~~~~~~~~~~~~LC ETO Tir. 0 4 0 7 y ROTooo mm1 - H ( Boy A0BYP O -P -t odbk; Meno2 6c- -6" Ns~~~, Ta~otc tombo~~~,eqJ~~O oc C`y /ILAM TYEF -ChiorgoQ OtozcoPA I L..~~~=.'of Cruz / N~AMR~ B * A A ooi0Tig P...yog~~~~~ ChcC?OnacO URZ LHC -RIAD Tbcoche ~ ~ . - H, . M.,,.O 0-; Tir,go .~~0 cm. 60 HeroAz I% AN U C CAV AC O' 0 ScoVcet ol ae f ofroreo . CAYA Y4\ ilopooI 0 HUANUCO~~ ~CUCO( Pa n Moetln00 I o - ooe AANAYI 140 ';IA TJIA \0 0 PAICO~0 ~ Honon RPIERS S~~~~~~~~~~~~~Ol iII Ri& 4 I I I I I ~ ~~~I .r0 oau I'AM EMO DUEG D I Moz S Oo0 180 Groo~~~noyjodgmeMoo thetopoi MeSa o(o-nyt,eQmfto.b.rb. tMALDNADO 18X 800 780 760 7~~ ~ ~~~~~~ ~~40 720 -'CHLI I r z ~ 'HANAEICC I Z C P; IBRD 30575 _oo 800 78° 76°-, 74° 2 lo o ECUADOR 1 COLOMBiAi -2° ,,e .,Js5 @ ° 4 u J % te aUF a / I~~~~~~~~~~~~~~~~o TUBEp iukA-- \ wj - a > '9- - '}t -60 . /' *i*_ 2$ J U N I N W>e -12° LIMA +. '-- MA REDEDt 12- PERU MALDONADO.\ -- POVERTY MAPr IUNAEC3 cuzcc- STANDARD OF LiVING: ;0 BNA :V -14° VERY POOR 7. AYUiACUCH p P K N | AVERAGE < { -* ACCEPTABLE,/ -, i-. , ' { ~AREQwUIPA . .. - DEPARTMENT CAPITALS -- .6 NO ( \ -16° NA:lONAL CAPITAL -,\"1° - -DEPARTMENT BOUNDARIES -.- vg,,. --iNTERNATIONAL BOUNDARiES * Thismap op,oduredby th. Map Nsign Unif.fThe wodcl Bnk. ° 50 100 iS0 200 250M Th. bsund.d.s col-r, d-e-nomtaio and any other inforahnn=;. f.-ti- shon an this mado noti,py, an Ih bportiofTh. Worfddfank KILOMETERS 'a', uj . 1° Grcup, any nt dmnon te legal statusofany ierrit(y or any 1 8° is, reend ra-epart.-of-&uch b-udanes .-. 80, 78' 76' 7f 72 ~~~~~~~~~~~~~~~~~~~~FEBRUARY 2000