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East Timor
>> Regional Overview >> East Timor Overview ACTIVITY DATA SHEET
PROGRAM: East Timor
TITLE AND NUMBER: Revitalization of the Local Economy, 472-001
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $13,500,000 ESF
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $10,000,000 ESF
INITIAL OBLIGATION: FY 2000 ESTIMATED COMPLETION DATE: FY 2003Summary: East Timor has long been one of the poorest areas in Southeast Asia. Agriculture is the mainstay of the economy, contributing the largest share to GDP, employing almost three-quarters of the workforce, and offering the greatest potential for exports and trade. East Timor's rugged erosion-prone terrain, poor soils, and often unpredictable rainfall have always presented challenges to agriculture. Approximately 30% of households are below the poverty line; life expectancy is 56 years; and only two out of five people are literate. It is important to move beyond humanitarian assistance to restarting economic activities in order to help avoid dependency on donor programs and to focus societal efforts on reconstruction rather than on past conflicts.
Coffee has been the main income earner for farmers since the Portuguese presence in East Timor. Coffee exports accounted for half of agricultural revenues prior to the conflict. Production-primarily of a high quality Arabica hybrid variety organically grown in the upland areas of central East Timor-increased substantially and became a major income earner for small holders. Coffee is one of the few cash crops and foreign exchange earners in East Timor. From the small producer to intermediaries and final crop processing and storage, the coffee sector has survived nearly intact. During the devastating events of August and September 1999, some coffee producers were killed, and thousands of participating families were forced to flee their villages, resulting in a temporary suspension of the National Cooperative Business Association (NCBA) program. The violence came after the harvest and therefore did not affect the basic production regimen employed by East Timor's smallholders.
The USAID-supported NCBA has worked closely with approximately 17,000 coffee farm families (roughly 10% of the population) through a cooperative network, Cooperative Coffee Timor (CCT), producing specialty coffees for export. The program includes production, training, and extension services as well as the development of processing, transport and warehousing facilities. It is the single most important means of providing immediate assistance to large portion of East Timor's farm families.
From the outset, program field staff reported the poor health conditions of the rural population and cited the lack of health care and health maintenance services as serious impediments to sustainable development. As a result, in July 1998 USAID provided additional funding for NCBA, working with CCT, to initiate the "Health Maintenance and Health Care in East Timor" activity to provide basic health services to the rapidly growing number of coffee producing families affiliated with the project. By meeting a minimum delivery level of coffee cherry to the program's processing enterprises, the costs for health services are covered through a deduction of a small percentage of the margins paid to farmers on their coffee sales. Participating coffee farmers and their families are eligible for health services, including prenatal care, well-baby check-ups and vaccines, deliveries attended by trained health care providers, micronutrient supplementation for pregnant women and newborns, and treatment for malaria and tuberculosis.
In the absence of a civil administration (other than the United Nations Transitional Authority for East Timor-UNTAET), local communities in East Timor must assume greater responsibility for the recovery and development of their communities. Through the Office of Transition Initiatives (OTI), USAID supports a community-based stabilization program using small-scale interventions to promote community normalization. These activities focus on gaps in local social services and economic infrastructure. Through these projects, communities are integrally involved in prioritizing their needs; participating in decision-making to allocate donor resources to meet those needs; and implementing funded projects. In addition to promoting local economic recovery, these programs foster participatory processes and democratic principles at the community level and create a climate for new, grassroots political leaders to emerge. Other donors such as the World Bank and United Nations are undertaking similar programs. Thus, OTI's "jump start" activities feed into the longer-term initiatives of these other donors who need a much longer lead time.
Key Results: The NCBA project will be expanded to include an additional 4,000 farmers each year. By the end of the project, the maximum number of coffee farmers who could be reached would be close to 27,000. Assuming approximately 20,000 people are involved seasonally in the coffee trade, a total of over 240,000 people, including family members, will benefit from the expanded project.
At least 30 civil society organizations will benefit from USAID's in-kind assistance-equipment, supplies, and technical support. This support will enable these organizations to help their communities participate in the rebuilding of their country through employment provision, human rights advocacy and training, voter education, and civil society education. Increased participation of women in political empowerment and decision-making training ensures that all activities involve women beneficiaries as well as men.
Performance and Prospects: In FY 2001, USAID intends to obligate $13.5 million in ESF to stimulate local economic growth.
USAID's NCBA activity has integrated business education and training into its project by providing apprenticeships and starting a business-training program for CCT managers. Although coffee represents the only viable commercial operation at this time, it is recognized that this project has the potential to diversify into other crops such as vanilla and pepper, which will further increase rural farm income. Business training will strengthen the capacity of small entrepreneurs to speed East Timor's economic recovery.
The OTI program seeks to strengthen the democratic nation-building process and assist with economic recovery during East Timor's transition to independence. Support for local organizations engaged in civic education will promote mechanisms for communities to express their views on such issues as the new constitution, government structure, and electoral laws. Support for open discussions on the role of political parties in a democracy will promote an atmosphere of political tolerance and peaceful debate. In-kind assistance for rehabilitation projects (e.g., schools and markets); community-based cooperatives (e.g., rice); and income generating workshops also will be provided. In implementing the community-based stabilization program, USAID partners will coordinate with the representative community council structures that are being established under the World Bank-funded Community Empowerment Program and other organizations sponsoring community-based programs.
Major activities using projected FY 2001 funding include:
In FY 2001, USAID plans to provide $4.0 million in ESF for the NCBA/CCT coffee project to incorporate 27,000 farm families into the project by the year 2003. The benefits of this program include training in basic financial management for coffee cooperatives and micro-businesses and expanded production of high-value export crops. NCBA also will continue to provide health services to villagers, and will coordinate these services with those provided by UNTAET and other donors.
In FY 2001, USAID plans to provide $9.5 million in ESF, in addition to separate OTI funding, to support local economic recovery and strengthen civil society and independent media. This will be achieved through a community-based stabilization program that targets small-scale interventions in support of community normalization by focusing on local services and economic infrastructure.
Possible Adjustments to Plans: The fragility of the operating environment for development and the possibility of instability in the near term might slow project progress or warrant adjustment of on-going programs.
Other Donor Programs: In December 1999, over 50 countries and international agencies pledged $522 million in bilateral and multilateral development and humanitarian assistance over the following three years. In June 2000, donors reaffirmed their substantial pledges for the reconstruction and development of East Timor and the East Timorese national administration. Donors agreed to contribute to two trust funds-a World Bank-administered trust fund for reconstruction projects in all sectors and a second trust fund administered by UNTAET. The second fund contributes to the costs of governance and projects that will build the capacity of the East Timorese to play a leading role in governance and in determining the future direction of the new nation. Decisions regarding the use of both trust funds are made in collaboration with a consultative council of East Timorese representatives. The trust funds are supplemented by bilaterally funded activities in various sectors. Concerted attention on donor coordination will be essential for effective utilization of assistance to address East Timor's vast development needs.
Principal Contractors, Grantees, or Agencies: USAID will work primarily with NCBA on the coffee activity. In the community stabilization activity, USAID's partners are local NGOs, the International Organization for Migration, UNTAET district administrations, and the World Bank.
Selected Performance Measures:
Baseline
(1999)Actual
(2000)Target
(2001)Target
(2002)Number of farmers employed by NCBA/CCT 17,000 19,000 23,000 27,000 Number of health clinics established 3 4 6 6 Number of retail outlets established by small-scale enterprises 0 0 5 35 U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 0 DA 0 DA 0 CSD 0 CSD 18,405 ESF 1,397 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 18,405 ESF 1,397 ESF 17,008 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 195 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 0 DA 0 CSD 13,500 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 0 DA 0 CSD 13,695 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 0 DA 0 CSD 0 CSD 0 CSD 10,000 ESF 0 ESF 42,100 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA
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Last Updated on: May 29, 2002 |
