| Attacking poverty in Peru
A Chemonics project has helped entrepreneurs in the interior of Peru boost sales of their products by $42 million, helping create more than 20,000 Peruvian jobs.
Jim Riordan, former chief of party of the PRA project and a senior manager in Chemonics’ Latin America and Caribbean division, credits the success to an innovative poverty alleviation approach that creates demand for local products.
“The key to reducing poverty is to generate income,” Riordan said. “For rural entrepreneurs, that means finding people to buy their wares.”
The logic is simple enough. But in many rural areas, donor funds increase the number of entrepreneurs without necessarily raising their incomes.
Challenging conventional thinking about rural development, Riordan and his team focused their attention on “demanders”— urban consumers and large businesses in Peru and beyond.
“By linking small businesses and entrepreneurs with that kind of purchasing power, we wanted to make a dramatic dent in rural poverty,” Riordan said.
The project worked with local producers to showcase red quinoa, a high-protein staple of the Andean diet, at a U.S. restaurant association trade show. The project also brought Peruvian ceramic makers to the High Point Furniture Market in North Carolina, an industry market attracting new products, designs, and vendors.
The result? The Peruvian products were a hit, landing lucrative contracts in the millions of dollars for local businesses and entrepreneurs. That was the dramatic effect Riordan was after, and it prompted USAID to double the project’s lifespan and scope.
Doug Tinsler, who was senior vice president of Chemonics’ Asia division, is now serving as PRA chief of party during this four-year extension period.
The PRA experience is spelled out in a book, co-authored by Riordan, entitled “Attacking Poverty: A Market Approach.” The book was published in Spanish and English by Universidad del Pacifico press.
Although it focuses on Peru, the book offers a model for poverty-reduction activities worldwide. “The development paradigm one brings to a task is essential, as is the willingness to follow that paradigm to its logical consequences,” Riordan writes in the introduction.
“Most of us spend the bulk of our careers running around answering the wrong questions,” he said. “This book is about getting the questions right, about finding the best way to attack poverty.”
“In our case, what we learned is that the place one finds a problem is not necessarily the best place to attack it,” Riordan said.
But Riordan stresses that the book is more than an intellectual exercise.
“Most treatments of poverty are diagnostic, and what decision makers need is strategic,” he said.
The book offers practical suggestions to help policy makers invest in physical and human capital and measure the effects of social spending. Suggestions include improving rural roads to create access to urban markets, removing obstacles to export, and securing land tenure for agricultural producers.
The policy tools and the larger approach are being incorporated into USAID-funded projects elsewhere, a sure sign that PRA is having an impact beyond Peru.
“Through Jim’s book, the PRA experience is helping policy makers in Peru understand and attack poverty; but, as importantly, it is changing the way donors and development practitioners conceive of their projects,” Chemonics President and CEO Ashraf Rizk said. “That’s a critical contribution to our industry, our client, and our counterparts worldwide.”
Building on the PRA experience, a second book focusing on the project’s methodology is due out this summer.
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