Posted November 1997
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Participation in practice / 12
Costs and benefits
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Introduction | People's Participation Programme (PPP)| Project preparation | Forming groups | Group activities | Implementing agencies | Financial component | Group promoters | Participatory training | Monitoring and evaluation | Project sustainability | Costs and benefits | Replicating the PPP approach | Complete Special as a single 121K file
THE COST-EFFECTIVENESS of the participatory approach is, at present, difficult
to determine. This is because economic and social parameters are only partly
adequate in measuring costs and benefits. The assessment of benefits is
however, very important: it indicates economic and financial viability to
government decision makers and planners who see development predominantly
from an economic point of view.
In reviewing costs and benefits, it should be remembered that the very essence
of the participatory approach is promoting the self-reliance of the rural
poor. This implies low and decreasing recurrent costs, and increasing cost-recovery
by the project participants. Although a participatory process needs some
"start-up" external aid, the basic objective is that the process
becomes self-propelling as soon as possible.
Costs of participatory projects
A typical PPP project lasts three years, with a donor contribution averaging
$210,000. This contribution covers most of the total project cost. Since
PPP began in 1982, each participatory project has formed, on average, 90
groups with total membership of 1,098 people. Including group members' families,
total beneficiaries per project were at least 6,588 people.
Total external aid costs averaged, therefore, $63 per year per group member
and less than $11 per beneficiary (i.e. the group member's dependants).
While average cost per participant and beneficiary is high in the initial
phase of the project, it declines rapidly as project staff are trained and
as groups become more self-reliant. Average beneficiary costs in larger
participatory projects would be lower due to economies of scale.
The incremental costs of including participatory elements in a larger project
are low in relation to those of other technical components. Thanks to economies
in administration and coordination, the incremental cost per beneficiary
of including a participatory component would be lower than in smaller scale
PPP projects. Incorporating participatory elements would involve the following
extra costs:
- Financing a small number of locally recruited field workers who act
for a limited period as group promoters (if selected from extension staff,
they will need special training in group formation and action only)
- Inception and training workshops on the participatory approach and procedures,
and yearly follow-up evaluation workshops
- Training for participants and project staff in people's participation,
particularly group dynamics and other topics directly related to group formation
and action
- Participatory socio-economic research and participatory monitoring and
evaluation covering group formation, action, performance and constraints.
The cost of adding these elements would be balanced by the improved design
of the project and, in the long run, by its economic and social benefits.
In some cases, extra budgetary allocations might not be needed to fund participatory
elements - it may be sufficient to reallocate existing funds and staff.
Benefits
A letter from the rural poor
More than 1,200 PPP group members in Sri Lanka and Zambia wrote to FAO in appreciation of the assistance they had received through the People's Participation Programme. "It is impossible to quantify all the benefits we have derived from PPP", said the letter from Sri Lanka, signed by 1,100 small farmers. "Now there is unity among the members of our groups. We work together in land preparation, cultivation of crops, weed control and repairing houses and wells. Thanks to our training programmes, joint purchase and use of inputs and access to credit, our income has increased. There is a marked decrease in alcoholism, gambling and other wasteful habits. We execute health programmes, are tackling our marketing problems and are trying to solve our land ownership problems as well. "We strongly believe that through organized action based on PPP principles, poverty and social injustice can be overcome." The Zambian groups listed similar benefits: access to fertilizer, seed, ploughs and oxen, improvements in farming methods, higher savings and better family nutrition.
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Do the benefits of participation outweigh the costs? There is no easy answer
to this question: the benefits of participation are difficult to assess,
primarily because they take many forms, are often difficult to quantify
or evaluate, and may take several years to manifest themselves.
While data are still fragmentary, there is sufficient evidence to show that
PPP's benefits are significant. These benefits can be measured from two
perspectives, that of individual participants and that of society in general.
Benefits to participants include:
- Increased food production. PPP groups have achieved notable increases
in food crop and meat production. In Ghana, for example, groups' maize output
per hectare is 20 percent higher than that of non-participating farmers.
Similar results have been recorded in Sierra Leone, Sri Lanka and Kenya.
- Higher net family incomes. Although income data is notoriously
difficult to collect, proxy indicators such as high PPP group loan repayment
rates, rising levels of group savings and visible improvements in participants'
housing conditions point towards increased net family incomes.
- Increased employment. Production technologies employed by PPP
groups tend to be low-cost and labour intensive. The most common indicator
of greater rural employment opportunities is the participants' increased
output per hectare, which generates demand for more farm labour.
- Higher rates of saving. Savings mobilized by PPP group members
may appear low to outsiders. But the per capita savings registered in PPP
projects - e.g. $21 in Kenya, $39 in Swaziland and $40 in Zimbabwe - represent
a major achievement by rural people who, previously, had no savings at all.
- Acquisition of new skills. A clear benefit emerging from PPP
evaluations is the acquisition by participants of technical, organizational
and leadership skills. Groups have proven to be an ideal learning environment,
providing opportunities for discussion, problem-solving and the exchange
of new ideas.
Benefits for society as a whole include:
- Creation of "zero-cost" receiving systems. Perhaps
the most important benefit of PPP is the creation of new types of rural
service receiving systems that become self-propelling and require little
or no outside subsidy support. For delivery systems, the provision of financial,
extension and other development services to organized small farmers is more
cost-efficient than traditional methods. For example, group credit and savings
arrangements greatly reduce financial transaction costs to banks, while
higher loan recovery rates produce significant cost-savings for governments.
- Building of rural community infrastructure at low-cost. Groups
in all PPP projects have initiated community improvement activities, from
construction of primary schools to village electrification. Since labour
and most materials for these activities are contributed free of charge by
group members, such infrastructure is built and maintained at minimum cost
to government.
- Strengthening of rural institutions. Many rural institutions,
such as cooperatives, do not function efficiently because members have little
scope for participation in decision making. As PPP groups link up with these
organizations, they stimulate greater participation and improvements in
organizational performance, reducing the need for government support.
