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Funding new opportunities for micro-enterprise development in Colombia

Coffee associations have attracted young farmers by focusing on creating high-quality products (Asopecam Coffee Producers Association)
Coffee associations have attracted young farmers by focusing on creating high-quality products
Asopecam Coffee Producers Association

By promoting competitive processes that inject funds directly into the hands of small businessmen and women, Colombia's Rural Microenterprise Assets Programme, Oportunidades Rurales, is funding innovation, peace and sustainable development in the Colombian countryside.

Targeting traditionally marginalised communities - indigenous peoples, youth, afro-Colombians and people displaced by violence - the programme focuses on funding technical assistance through competitions, providing financial services and capturing the lessons learned through their knowledge-management programme. "One of the primary objectives is to finance innovations that will be relevant to rural people, especially in the areas of micro-credit, insurance and savings," says Andrés Silva, Director of Oportunidades Rurales.

Made possible through US$20 million in funding from the United Nations' rural poverty agency, the International Fund for Agricultural Development (IFAD), the project has a total price tag of some US$32 million and is targeted to benefit around 50,000 people.

Progress mid-term

The project, set to close in December 2013, is nearing its mid-term review, and thus far the impact data paints a positive picture. Some 3,800 young rural people have taken part in the Financial and Entrepreneurial Education Programme, which is teaching young people the value of savings by providing matching funds of 50 per cent for every peso saved, and by creating training programmes that emphasise business administration, marketing and investment.

Approximately 2,100 grassroots-level initiatives have competed for funds to finance technical assistance; of these, 730 have been awarded grants that will work to build strong businesses from the ground up. The micro-enterprises and technical assistance offered vary widely - from artisans seeking an expert on merchandising to fish farmers looking for help in building an effective holding tank.

"We've found these competitions to be a highly effective tool for transferring assets," says Roberto Haudry, IFAD's Country Programme Manager for Colombia. "Not only are we providing rural entrepreneurs with the capital base they need to take control of their own destiny, we are also working to reduce their risk through micro-insurance schemes."

Oportunidades supports aspiring artisans (Arte-Rami Artists Cooperative)
Oportunidades supports aspiring artisans
Arte-Rami Artists Cooperative

More than that, by helping small business owners tap into the expertise of local technical specialists, Oportunidades Rurales is building a technical base that will be fundamental in ensuring lasting returns for these new enterprises.

Through the public competitions - in which experienced micro-enterprisers serve as the jury and award financing to the project participants - around US$6 million has been transferred directly into the bank accounts of small businessmen and women, and programme reports indicate that the number of people competing for funds is increasing.

Development for peace

Every year an estimated 200,000 Colombians are displaced by violence or natural disasters, creating difficult working conditions for sustained rural poverty alleviation efforts. This said, the government is developing a long-term strategy to reduce poverty and inequality, and contributed US$1.5 million to support young people displaced by conflict.

This funding has been used to help build and support numerous producers' associations like the Association of Young Producers. This fish-farming collective in the far east of the country is based in the town of La Dorada and is run by young people who came to the area after fleeing from violence elsewhere. "These were young people without any future," says Oscar Eduardo Toro, a member of the producers association. "So they got together to create productive projects." The association now has five holding ponds and has seen success in marketing its fish, thanks to the high quality standards and marketing know-how they learned through the Oportunidades programme.

The sustainability challenge

"The principal challenge is one of scale… to be able to go from a pilot project in Colombia to one that constructs supportive policies for rural micro-enterprises [on a broader scale]," says Silva. The primary asset in this sustainability challenge is the people themselves, according to Silva, but working in a transparent and coordinated manner will be essential.

In order to leverage the lessons being generated in the Oportunidades programme, IFAD is also funding "learning routes" through the Regional Corporation for Capacity Building in Rural Development (PROCASUR). This initiative brings visitors - community leaders, development professionals and policymakers - to projects to learn about their successes and struggles.

PROCASUR and its partners have created learning opportunities for some 60 local leaders and technicians in Colombia. Worldwide, the organisation has supported over 40 learning routes in 15 countries in Latin America, Asia and Africa. Themes have included ecotourism, micro-enterprises, rural micro-finance and local development.

IFAD is also looking to scale up its funding in Colombia, with more than US$30 million new funding slated.

Providing opportunities for the next generation is the number one objective for Oportunidades (Pilar Agudelo, IICA)
Providing opportunities for the next generation is the number one objective for Oportunidades
Pilar Agudelo, IICA

Engaging with youth

Over the past year, IFAD has hosted a series of events on the topic of youth entrepreneurship. "These events centred on the willingness of youth to accept risk and the need for increased flows of venture capital to young enterprisers," says Josefina Stubbs, Director of IFAD's Latin America and the Caribbean Division. "Young people taking part in these events also highlighted the need to access markets and play an active role in value chains, the need for better education and dialogue platforms, and the need to extend project interventions beyond associations and also target individuals."

Dayana Rivera Rivas is a young farm promoter from Colombia who is emerging as one of the leading voices in this dialogue on youth. For Rivera, presenting tangible indicators and fostering true partnership are key for any engagement with youth. "We want concrete actions," said Rivera. "After all, being young lasts a short time."

The International Fund for Agricultural Development (IFAD) works with poor rural people to enable them to grow and sell more food, increase their incomes and determine the direction of their own lives. Since 1978, IFAD has invested over US$12.5 billion in grants and low-interest loans to developing countries, empowering more than 370 million people to break out of poverty. Learn more at www.ifad.org.

Written by: Gregory Benchwick

Date published: May 2011

 

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