Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
ECUADOR
FY 1997 FY 1998 FY 1999 Actuals Estimate Request Development Assistance.............. $8,850,000 $7,800,000 $10,855,000 Child Survival and Disease.......... $3,032,000 $1,000,000 $1,450,000 Economic Support Funds*............. $300,000 $1,000,000
* LAC Regional request for FY 1999 includes $1,200,000
Introduction
The U.S. national interests in Ecuador are: the preservation of political stability and peace in the region, in view of the confrontation between Ecuador and Peru in 1995, and the current peace negotiations; the strengthening of democratic institutions in order to reduce threats to the democratic process such as the critical one that resulted in the demise of the Bucaram administration; the improved management of natural resources to secure a sustainable environment; the protection of human health and stabilized population growth to consolidate the advances made over the past decade; and curbing drug trafficking and money laundering resulting from Ecuador´s strategic location between Colombia and Peru.
The Development Challenge
Ecuador remains one of the least developed countries in South America. According to the United Nations Development Program (UNDP), Ecuador is ranked 72nd among all 175 countries, and 21st among the 33 countries in the LAC region. Four million Ecuadorians, about 35% of the population, fall under the poverty line; of these, 1.7 million about 15% of the population, live in extreme poverty. Real per capita GDP growth has averaged only about one percent since 1990. Real wages remain 23% below 1986. Income distribution is among the worst in the Andean region. Ecuador is a "key" biodiversity country with numerous habitats of unique biological value and suffers one of the world`s highest rates of deforestation. Uncontrolled pollution poses a serious health threat to all Ecuadorians. A still high population growth rate of 2.3% and poor health conditions contribute to economic dislocations as the increasing population finds no outlet for employment. Democracy remains weak and fragile, as demonstrated by the political crisis of 1997. Corruption is endemic at all levels and seriously erodes Ecuadorian society. It has caused several negative effects, for example: the Ecuadorian electorate has lost faith in the political class and views the democratic process with skepticism; domestic and foreign entrepreneurs are skeptical about investing in Ecuador; and corruption in the tax administration and customs service (also the most visible) are particularly damaging to the country´s economy. The 1995 border conflict with Peru drained the economy of resources that would otherwise be available for social investment.
In 1997, Ecuador´s external debt increased by $440 million, to a new total of US $15.1 billion. The Government of Ecuador (GOE) could not renegotiate its Paris Club debt (including U.S. debt) during the year, because it could not take adjustment measures as a basis to negotiate a stand-by Agreement with the International Monetary Fund (IMF).
To address the above development constraints, USAID assistance has played an important role in strengthening key nongovernmental organizations (NGOs) and civil society organizations and improving their sustainability. These groups have promoted critical policy and legislative reforms in environmental conservation, health and family planning, the rule of law, good governance, and improved access to credit by microentrepreneurs. USAID resources are planned to gradually decline in Ecuador, with the mission moving to limited status in 1999 and assistance phasing out over the medium-term. Prior to the close-out, much remains to be done in order to stabilize democracy and improve the social and economic well being of the poorest segments of society.
Other Donors
USAID provides 2.5% of donor assistance to Ecuador and ranks eighth among donors. The bulk of donor funding is provided by the Inter-American Development Bank (industry, environment, education, microenterprise, democracy strengthening, and health), the World Bank (industry, environment, education, health, potable water, and democracy strengthening), Japan (energy and health) and Spain, with portions also provided by Germany, the United Nations and Italy. USAID assistance plays a catalytic role in helping other donors to design and implement their substantial assistance. For example, through dialogue and coordination with the IDB and the World Bank in the area of administration of justice, USAID/Ecuador has been able to involve these two major donors in this area. They both have now significant activities and resources devoted to improve the workings of the justice system in Ecuador.
FY 1999 Program
The USAID program will focus on strengthening and making sustainable USAID more successful NGO partners in the strategic areas of biodiversity conservation, pollution prevention, family planning and MCH, strengthening democracy and civil society, improved transparency and governance and strengthening microenterprises. These NGOs will continue to influence the GOE to make the reforms needed to improve the quality of life of its people. Specifically, through FY 1999, USAID will:
. Work to promote the conservation of biodiversity in selected protected areas by strengthening the technical and institutional capacity of NGOs and civil society active in biodiversity conservation and by supporting the design and implementation of sound natural resource management plans in and around selected protected areas.
. Through partner organizations in the public and private sectors, seek to prevent the health hazards caused by uncontrolled industrial and other emissions, particularly in low-income areas that neighbor industrial zones in Ecuador's major urban centers.
. Assist in the development of models for targeting public sector (Ministry of Health) resources to the poor; decentralization and deconcentration of health care at the local level; alternative financing schemes; quality improvement, and sustainability in private sector provision of family planning services.
. Given that civil society organizations (CSOs) in Ecuador are demonstrating a growing ability to promote change, to demand a more responsive and accountable government, and to provide needed services, especially for poverty groups, work to increase the capabilities of NGO partners to protect and promote the civil and political rights of citizens; and to influence public policies and programs in areas consistent with Agency policy objectives.
. Work to increase accountability of public officials and promote consensus for specific reforms related to corruption and state modernization. This will be achieved, among other mechanisms, through mass media campaigns and technical assistance to selected NGOs/CSOs to prepare analysis and studies that will enable these groups to develop and present specific reform proposals and to lobby for such reform proposals.
. Provide assistance to expand opportunities and participation by low-income groups in a growing market economy through increased access to financial services by microentrepreneurs throughout the country, especially women, and thereby improve their income and general living standards.
ECUADOR
FY 1999 PROGRAM SUMMARY
($000s)
USAID Strategic and Special Objectives Economic Growth and Agriculture Population and Health Environ-ment Democracy Human Capacity Develop-ment Human-itarian Assistance Total SO 1 - Biodiversity conserved in selected pro-tected areas & buffer zones.
- DA
3,100
3,100
SO 2 - Increased use of sustainable FP/MCH services.
- DA
- CSD
5,505
1,450
5,505
1,450SO 3 - Civil society streng-thened in the areas of justice and education.
- DA
1,000
1,000
SpO 1 -Improved capacity of public and pri-vate institu-tions to pre-vent pollution.
- DA
500
500
SpO 2 - Increased access to financial ser-vices by micro-entrepreneurs.
- DA
750
750
SpO 3 - Improved transparency and govern-ance in target governmental institutions.
- ESF*
Totals
- DA
- CSD
750
5,505
1,450
3,600
1,000
10,855
1,450
* LAC Regional request includes $1,200,000 attributed to Ecuador democracy special objective
USAID Mission Director: Thomas L. Geiger
ACTIVITY DATA SHEET
PROGRAM: ECUADOR
TITLE AND NUMBER: Biodiversity Conservation, 518-SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $3,100,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2003
Purpose: Biodiversity conserved in selected protected areas and their buffer zones. This will be achieved through strengthened capacity of targeted NGOs and CSOs active in biodiversity conservation; the adoption of economically viable natural resource management (NRM) practices; critical scientific and socio-economic information better incorporated into NRM plans and policies which affect biodiversity conservation; and key policies and legal frameworks introduced and/or implemented to conserve biodiversity.
USAID Role and Achievements to Date: Ecuador's biodiversity is one of the richest in the world. With only two percent of South America's area, Ecuador contains numerous habitats of globally and regionally outstanding biological value. This environment, however, is seriously threatened, since Ecuador has the highest population density and one of the lowest per capita GNP incomes in South America, and ranks third in population growth. Ecuador suffers the highest rate of deforestation among the Amazonian countries (200,000 hectares per year) as a result of colonization and resultant agricultural expansion by poor people seeking to meet their economic needs, timber extraction, and petroleum production.
With USAID support, some critical steps towards improved natural resource management and biodiversity protection have recently been taken. Of particular significance is the development of the national legal framework which enables the demarcation of community lands, while the paralegal program has trained and assisted local people in community laws and legal advocacy on issues such as land titling and natural resource access rights. A policy that prohibits the commercial use of trees from areas which are not covered by an approved natural resources management plan has reduced the pace of deforestation. Ecuadorian NGO partners have been created and strengthened. Activities in the Cotacachi-Cayapas Ecological Reserve (RECC) and the Cayambe-Coca Ecological Reserve (RECAY) are strengthening secondary-level organizations to test and extend models of sustainable biological resource use. Agroforestry/garden plots have been implemented in communities in the buffer zone. Commercialization activities are now showing significant strides with the community forestry initiatives assisting local communities in the RECC buffer zone to obtain an increase in profits from sustainable forestry operations, ecotourism, cheese making, and handicraft activities. "Guardaparques comunitarios" are bolstering the weak park protection system with assistance from USAID partners and second-level organizations. The Galapagos Marine Reserve has been designated as a protected biological area. Relations between scientists at the research station and local fishermen in Galapagos have improved so that they are jointly discussing and trying to resolve issues related to marine reserve management and a new law for the Galapagos Islands has been presented to the Ecuadorian Congress for approval.
Host Country and Other Donors: Host country and NGO contributions to achieve the strategic objective total over $2 million. Parallel contributions include World Bank and IDB funds exceeding $28 million. The World Bank, through its Global Environmental Facility, is financing a biodiversity protection project which complements the activities which USAID supports in the Galapagos and in the RECC and RECAY. In addition, the IDB is financing a feasibility study which may lead to a loan of up to $50 million for natural resources management and biodiversity protection activities in the Galapagos Islands. Although USAID provides only a small portion of total donor assistance in this sector, USAID environmental activities are leading edge and provide the foundation for subsequent projects by other donors. For example, the IDB is capitalizing on the solid waste management and quarantine studies previously supported by USAID in the Galapagos.
Description: USAID will continue ongoing activities in the protected and buffer zone areas of the RECC and RECAY. Ecuadorian partner NGOs will carry out the types of activities being currently developed and tested in and around protected areas in additional communities. The NGOs will develop coalitions of community groups, local governments and private enterprises that will be better able to influence GOE policy and achieve economic sustainability of natural resources while preserving Ecuador's biodiversity. Key activities include forest management, land demarcation and titling, and the development of income-producing ventures based on non-wood forest products and efforts to strengthen forest dwellers' (including indigenous and Afro-Ecuadorians) claims to land and resources, and to prepare them to enter into productive partnerships with the commercial sector. Steps will continue toward the establishment of an endowment and clear criteria for the use of water-user fees for the management and protection of the RECAY, which is the major source of water for the greater metropolitan Quito area. Support will be continued to the Charles Darwin Foundation in the Galapagos for the conservation and preservation of the islands' marine reserves and their exotic species. This will also promote the issuance of a special law to protect the Galapagos ecology and biodiversity, which, when passed and implemented, will have positive impacts on both biological/ecological and urban components of the islands' ecosystems. Special attention will be paid to conflict resolution/mediation among the parties interested in the use of the Galapagos' natural resources, including the local population and tourism operators.
Beneficiaries: Ultimate beneficiaries are the majority of the nation's poor, especially women, children and Ecuador's indigenous communities who directly depend on sustainable use of natural resources.
Principal Contractors, Grantees, or Agencies: USAID works principally with NGOs in implementing planned activities. Key partners include PVOs CARE/Ecuador, The Wildlife Conservation Society, The Nature Conservancy, and the Charles Darwin Foundation. Both CARE and The Nature Conservancy have developed strong working relationships with Ecuadorian partners (e.g., Ecociencia, Jatun Sacha, Consejo para la Conservación e Investigación las Aves, Fundación Antisana, Fundación Ecologica Rumicocha, Fundación Arco Iris, and Fundación Natura) which in turn work with local partners, e.g., community groups and indigenous organizations, to carry out the planned activities. In addition, specific activities are being undertaken in collaboration with the U.S. Department of the Interior and the Peace Corps.
Major Results/Indicators: Baseline (1996) Target (2003) Households in selected protected areas and 3.2% 30.9% their buffer zones adopting improved NRM practices. Hectares in selected protected areas and 70,000 1,402,000 their buffer zones under implemented NRM plans.See footnote 1 Increased number of hectares under legal 10,000 300,000 title outside of selected protected areas. Key policies, legal frameworks and enforcement 5 (1997) 18 (2002) mechanisms prepared, modified, and introduced at the appropriate government level to improve biodiversity conservation.
ACTIVITY DATA SHEET
PROGRAM: ECUADOR
TITLE AND NUMBER: Family Planning and Health, 518-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $5,505,000 DA; $1,450,000 CSD
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000
Purpose: Increased use of sustainable family planning (FP)/maternal child health (MCH) services. This will be achieved through increased sustainability of FP NGO partners; improved quality and access of family planning services; improved quality and access of MCH services; and increased sustainability of health NGOs.
USAID Role and Achievements to Date: Both infant and maternal mortality are high in Ecuador, especially among the rural and peri-urban poor and indigenous groups. In recent years, the economic and political crises facing Ecuador's public health system have severely jeopardized efforts to sustain trends towards acceptable levels of population growth and maternal and child mortality. Over the long term, USAID strategic assistance in health and population has focused primarily on expansion of coverage through the public and private sectors. However, harsh budgetary constraints faced by the Government of Ecuador (GOE) and its Ministry of Health (MOH), where nearly all its budget is now used to pay salaries and administrative costs, make it impossible for the MOH to maintain programs in family planning and maternal and child health. As a result, these programs have become dependent on external support. Merely increasing the budgets for public sector health programs is clearly insufficient to address the country's health problems. A major health reform effort is needed, with a focus on targeting, coordination, decentralization, alternative financing schemes, human resource capacity, and quality improvement. USAID NGO partners have demonstrated significant successes in achieving health reform actions at the local and provincial level, providing sustainable models, as well as policy analyses and studies relevant for national level change.
In the family planning and population field, USAID continues to be the major donor and therefore a critical actor in achieving reduced fertility, increased contraceptive use to prevent unwanted pregnancies, and improved women's health. USAID NGO partners have reached ever higher levels of cost recovery, while remaining focused on providing access to the less affluent and underserved populations of women.
Description: Activities in family planning will be concentrated in support of the network of forty-one private clinics operated by USAID two Ecuadorian NGO partners. USAID funding of a large portion of these organizations' operations will enable them to achieve near 100% self-reliance, plus build up a sustainability fund, derived from program income, which should ensure their viability at current levels of service for another 10-15 years. This will preserve the major investment of USAID of the past three decades, provide critical FP and MCH services to underserved populations and ensure a continued major role for the private sector.
USAID will continue working on health sector improvements and reform through activities managed by U.S. and Ecuadorian NGOs, and in coordination with the GOE. These activities will assure: the provision of health services to targeted groups, such as the rural and marginal-urban poor, indigenous populations and adolescents; the availability of alternative health care financing mechanisms; and the decentralization of services and service administration, with increased community participation. Ecuadorian NGOs will provide consensus building seminars, local level health reform models and analytical studies to help guide policy decisions on national health accounts, cost-effectiveness of disease packages, and the targeting of GOE subsidies for MOH services. U.S. NGO sub-grants to municipalities, local NGOs and community organizations are developing a number of viable and replicable models of decentralization, cost recovery, shared risk, insurance schemes, and management improvement in several geographical areas of the country, with a variety of partners such as
municipalities, church organizations, health NGOs, family planning NGOs, local communities, and the MOH. Their efforts to attract other donors and the MOH to support these demonstration sites will ensure financial viability and contribute to replicability.
Host Country and Other Donors: The major donor in this sector is the World Bank, with its $70 million loan for strengthening the MOH, construction of health water and sanitation facilities and a national nutrition program. Limited financial resources also come from the IDB, especially for the Social Security hospital system, as well as from the Government of Japan's hospital equipment donation. UNFPA and UNICEF are major contributors to maternal and child health programs. USAID is among the leading sources of technical assistance along with the Pan American Health Organization and the World Bank. USAID technical assistance and pilot interventions have served as catalysts for leveraging large inputs of World Bank funds. The host country contribution to this strategic objective is $18.6 million from the GOE (including up to $1.5 million for non-project assistance), and $10 million from USAID partner NGOs. Because of the planned FY 2000 phase-out of USAID support in this sector, donor coordination has become a key component of USAID activities, both to leverage additional resources and to coordinate ongoing efforts effectively.
Beneficiaries: Children under five and women of child-bearing age in Ecuador represent 25% to 30% of the country's total population of 11.7 million. USAID-supported programs reach about 425,000 women with reproductive health and family planning services per year. In addition, the children of Ecuador have benefited from improved child survival and primary health care services. During phase two of the Child Survival program (1995-1999), approximately 500,000 women and children will benefit from services developed, improved or expanded with USAID assistance. In addition, the planned policy reforms will benefit all Ecuadorians.
Principal Contractors, Grantees, or Agencies: USAID implements most of its activities through private sector NGOs. In health, these include an Ecuadorian NGO (Center for the Study of Population and Responsible Parenthood) for policy formulation, analysis, promotion and dissemination activities; and CARE, for efforts to develop the capacity of Ecuadorian NGOs and municipalities to implement primary health care demonstration projects with cost recovery. USAID contractors providing technical assistance for this strategic objective include: Abt Associates, The Partnership for Child Health Care Inc. (BASICS), John Snow Inc., Management Sciences for Health, University Research Corporation, and the Center for Development and Population Activities. In family planning, major partners are Ecuadorian family planning NGOs (Ecuadorian Pro Family Association-APROFE and the Medical Center for Family Planning-CEMOPLAF) with some critical inputs on social marketing, operations research and logistics management from The Futures Group, Johns Hopkins University, The Population Council, the Centers for Disease Control, Georgetown University Institute for Reproductive Health, and Association for Voluntary and Safe Contraception.
Major Results Indicators: Baseline Target (2000) Contraceptive Prevalence Rate 56.8% (1994) 60.0% Number of women and children (1-5) 0 women/ 170,000 women/ using improved or expanded MCH 0 children (1995) 434,000 children services per year. Couple Years of Protection (CYP) provided 279,117 (1994) 770,111 by APROFE and CEMOPLAF. Service delivery points with improved/ 3 (1995) 118 expanded packages of MCH services.
ACTIVITY DATA SHEET
PROGRAM: ECUADOR
TITLE AND NUMBER: Civil Society Strengthening, 518-SO03
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $1,000,000 DA
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2003
Purpose: Civil society strengthened in the key democracy enhancing areas of justice and education. This will be achieved through improved capacity of selected civil society organizations (CSOs) to: educate citizens about their rights and responsibilities, with emphasis on women and indigenous groups; conduct policy reform advocacy; and become self-sustaining.
USAID Role and Achievements to Date: Ecuador was the first Latin American country to lead the way from military to democratic rule in 1978. Nevertheless, the government is still characterized by a paternalistic system under which people remain dependent upon government institutions which continually fall short in providing for their needs. More than ever before, Ecuadorians realize there is a crucial need for a strong civil society to step in to promote reforms, demand accountability, and fill the void created by ineffective government institutions. As key intermediaries between citizens and elected officials, civil society organizations, such as NGOs, are uniquely positioned to bring about a more accountable and responsive government.
Past investments in CSO-supported institutional development for the judicial sector are beginning to show concrete results. Citizen awareness and support of needed reforms and depolitization of the judicial system has reached an unprecedented level. The Ecuadorian Congress enacted implementing legislation for the Constitutional Rights Ombudsman and the Constitutional Court, including provisions governing the use of summary proceedings for the first time in Ecuador to assure the guarantee of constitutional rights. Thus, for the first time since the 1979 transition from military rule, the basic legislation for legal protection of constitutional rights is now in place. Further refinements to the Cassation law were made; the framework legislation to oversee the administration of the court system was drafted and introduced to Congress; and a new law on arbitration and mediation was formulated, approved, and is now being implemented. As a result of the computerized case tracking system developed with USAID assistance and installed in the Supreme Court in late 1994, the courts were able to identify the legal situation of prisoners pending trial or sentencing and to take action to release 1,500 prisoners who had already served more than a maximum sentence or for other legal grounds. A redesign of the computerized system was completed in 1996 that will permit more detailed information for tracking cases, analysis of caseload performance by judges and expansion of electronic access to the data base by all courts to be provided with computers under a World Bank loan. Arrangements with new partner NGOs to increase access to justice by women and minority groups were negotiated and got off to a promising start. Mediation is being introduced to Ecuador as a formal option within the judicial process as well as an extra-judicial alternative available in the private sector. Within the judicial system, a USAID supported NGO has taken the lead in introducing the concept as a means of reducing case load. Mediation outside the judicial system is also being promoted by USAID partners.
Description: Activities will continue to improve CSO capacity with respect to policy reform and the role of citizens in a democracy. Programmatic initiatives already underway in the modernization of selected legislation will continue, and assistance will be provided to enhance NGO institutional effectiveness. Promotion of alternative dispute resolution (ADR) will be expanded both as a formal adjunct or option to the judicial process and as a commercial service to the business community, as well as less formal, community-based approaches for conflict resolution with indigenous communities and other organizations working with the poor. Support to the Comisarias de la Mujer for a comprehensive program to increase women's access to a just hearing and treatment of domestic violence cases and to improve services provided to women and children victims of violence will beexpanded. Focused injections of assistance to work with policy advocacy NGOs will be provided in areas of specific developmental interest to USAID. The mechanisms developed in this area will have to be flexible enough to move quickly on priority topics as targets of opportunity become available. NGOs with ample experience in policy advocacy will be assisted in delivering specific policy reform products with clear periodic benchmarks for measuring progress. Better networking among NGOs will improve their capacity to influence public policies and programs. An incentive fund open to competitive process would award grants to NGOs with innovative proposals for bringing about or improving strategic alliances to achieve policy reforms and better programs. The alliances thus encouraged would promote consensus building among NGOs, public sector social service delivery entities, the business community, local governments, community-based organizations, professional associations, and other CSOs.
Host Country and Other Donors: Largely as a result of USAID efforts, the World Bank and the IDB are committed to major assistance programs in the democracy sector. USAID maintains close contact with each of these donors to ensure that our efforts are supportive and not duplicative. The World Bank's program focuses on justice sector infrastructure, court management, alternative dispute resolution, and an NGO fund for justice sector projects. The IDB is providing assistance in selected areas of legal reform, and in judicial and administrative training. Both will involve substantial GOE counterpart involvement. As counterpart to USAID assistance, USAID Ecuadorian partners are expected to contribute $520,000.
Beneficiaries: Ecuador's population as a whole will benefit from this activity. However, much of the activity is intended to directly benefit large segments of the population which traditionally have not had access to the justice system or have not benefited from the application of existing law. These groups include women, minors, indigenous populations, and the poor. CSOs assisted will benefit directly, as their prospects for long-term sustainability will have been enhanced, as well as their ability to affect policy reform.
Principal Contractors, Grantees, or Agencies: Virtually all assistance provided under this Strategic Objective will be channeled through Ecuadorian CSOs, including Centro Ecuatoriano para la Promocion y Accion de la Mujer in coalition with four other Ecuadorian CSOs, Centro sobre Derecho y Sociedad, which has developed working arrangements with two indigenous organizations, Corporación Latinoamericana de Desarrollo, and Fundación Ecuador. Minimal funds will be made available to ProJusticia, the GOE's justice sector coordinating unit, in the area of NGO institutional strengthening.
Major Results Indicators: Baseline (1996) Target Number of cases initiated per year through 25,600 38,000 (2003) Comisarias de la Mujer. Number of active ADR and legal services 4 1,035 (2003) cases per year processed through Alternative Dispute Resolution and indigenous legal clinics. Number of NGO/CSO coalitions formed/ 0 6 (2000) strengthened around key themes/areas of reform in justice and education.
ACTIVITY DATA SHEET
PROGRAM: ECUADOR
TITLE AND NUMBER: Pollution Prevention, 518-SPO1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $500,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000
Purpose: Improved sustainable capacity of selected public and private institutions to prevent pollution. This will be achieved through a strengthened local NGO providing technical assistance to local firms, universities, and municipalities on pollution prevention; and technical information disseminated on cleaner production technologies, international trade environmental concerns, and urban
environmental management.
USAID Role and Achievements to Date: Ecuador's urban growth rate, one of the highest in the hemisphere, is placing increased demands on national and municipal governments for critical environmental services and improved pollution prevention. The largely unmanaged growth in many cities, particularly coastal region cities such as Guayaquil, Duran, Machala, Esmeraldas and others, has caused a large increase in both household and industrial contamination resulting in serious environmental degradation and human health hazards. This environmental degradation affects the quality of life and economic productivity of large segments of the Ecuadorian population. Poor population groups are particularly affected. Living in marginal neighborhoods without access to clean water, adequate sewerage disposal, or garbage and waste collection, they are exposed to high health risks. The problem of inadequate services is frequently compounded by these communities' proximity to industrial areas whose pollution goes largely uncontrolled, adding to the toxicity levels found in urban slums.
USAID will continue its limited support to the Ecuadorian NGO Oikos Corporation in order to complete their institutional strengthening and financial sustainability efforts. Oikos Corporation has developed innovative approaches to involve the population in pollution prevention and reduction measures and has been effective in promoting debate at the national level regarding priorities for pollution prevention and control. The cleaner production and energy efficiency strategy which Oikos Corporation uses to implement its activities has been very effective in inducing an increasing number of Ecuadorian industries to adopt cleaner production and energy efficiency practices. The sustainability of the Oikos Corporation activities which USAID plans to support is assured since Oikos Corporation charges a fee for the services it provides to industries and municipalities. In addition, Oikos has in place a sustainability plan which maps out specific steps for reducing their dependence on USAID funding and increasing their own contribution, as well as those obtained from other sources.
Funds have also been provided to enable municipalities to identify and prioritize environmental problems, and find practical, low-cost solutions, seeking the collaboration of the private sector. Models are being developed in selected coastal regional cities and the Galapagos Islands to manage solid waste through concessions with environmental microenterprises. Administrative and accounting strengthening of the municipalities and environmental microenterprises will enable them to generate income that will help to make them sustainable.
Description: The expected timeframe for this Special Objective is through FY 2000. The primary focus during this period will be to ensure the sustainability of past USAID investments in strengthening the technical capabilities of Oikos Corporation by enhancing its abilities for fund raising and income generation. As USAID support is phased out, this final injection of funding is needed to ensure a smooth landing, as partner organizations begin to stand on their own. Oikos Corporation will continue working with various chambers of industries to improve production techniques while reducing pollution
and reducing costs. In addition, follow-on assistance to municipalities in the adoption of improved solid waste management practices will be continued.
Host Country and Other Donors: Oikos Corporation has received small amounts of assistance from other donors for pollution prevention activities, principally UNIDO, UNDP, and IDB. It is anticipated that the USAID-supported program for environmental assessment of industries will be continued by Oikos Corporation with German support. Host country and NGO contributions to achieve the strategic objective results total over $750,000.
Beneficiaries: Ecuador's increasing urban and peri-urban residents who lack access to potable water, sanitary systems and a pollution-free, residential and work environment benefit from these activities.
Principal Contractors, Grantees or Agencies: USAID implements the pollution prevention activities principally through Oikos Corporation. Additional assistance is provided through the U.S. Environmental Protection Agency.
Major Results and Indicators: Baseline Target (2000) Number of industrial plants implementing 2 (1995) 100 cleaner production technologies in their production processes Number of municipalities adopting cleaner 1 (1996) 21 production policies and/or improved solid waste management practices.
ACTIVITY DATA SHEET
PROGRAM: ECUADOR
TITLE AND NUMBER: Microenterprise Assistance and Strengthening, 518-SPO2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $750,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 1999
Purpose: Increased access to financial services by microentrepreneurs, with emphasis on women. This will be achieved through new, licensed, for profit, financial institutions serving the needs of microentrepreneurs; upgraded microcredit delivery systems of selected financial institutions and NGOs; and strengthened institutions implementing village banking programs.
USAID Role and Achievements to Date: Experience worldwide shows that microentrepreneurs represent a vast pool of hardworking people who, given access to minimal resources, can evolve into a formidable force contributing to job creation, poverty alleviation, democratic stability, and economic growth. The World Bank's 1995 Ecuador Poverty Report and other studies on the sector show that in Ecuador, this pool of microentrepreneurs and potential entrepreneurs is over 1.1 million people, who have between 400,000-450,000 microenterprise businesses. Over half are women. USAID has designed these activities to bring quality financial services to the poor, thereby helping them to build stronger enterprises which ultimately improve their incomes and quality of life. Two principal problem areas are targeted: outreach and financial sustainability. Outreach aims at providing large numbers of poor people, especially the very poor and women, access to quality financial services. Financial sustainability refers to the creation and/or strengthening of existing institutions that become independent of continuing inputs from government, international agencies or charitable organizations. There are three main components: technical assistance to strengthen the institutional capability of selected financial institutions; equity investments in selected banks and other, similar financial institutions to expand and facilitate access to financial services by microentrepreneurs; and village banking -- a methodology suited to reach poor women and promote their empowerment through the establishment of banks comprised of 25-30 women who receive very small loans for their income-producing ventures.
Micro-credit activities were started in FY 1996, with a major USAID contribution to two U.S. PVOs for equity investments in a fully private bank (Banco Solidario) established for the purpose of serving Ecuador's microenterprise sector; and Cooperative Agreements with three U.S. PVOs for the expansion of their village banking programs. In addition, external technical assistance was delivered to strengthen the institutional capability of selected financial institutions. Most notably, this assistance proved vital to the establishment of the above mentioned bank.
Description: Through FY 1999, USAID will continue to provide technical assistance and training to Banco Solidario, CorpoMicro (a microenterprise guarantee corporation) and its network of NGOs, and may invest additional funds in a guarantee trust fund. USAID will also conduct an analysis of the formal banking system with a view toward identifying banks interested in microenterprise lending as a means of significantly expanding sources of credit to the microenterprise sector; provide technical assistance to banks selected; and dialogue with the IDB and the Corporacion Financiera Nacional to discuss the possibility of providing lines of credit to these banks for microenterprise lending. USAID also will provide additional funding to village banking aimed at establishing a network of NGOs with sustainable anti-poverty lending programs.
Host Country and Other Donors: USAID's total $1.9 million equity investment in Banco Solidario played an important catalytic role, leveraging some $3.2 million in additional equity for this bank from other donors, namely the Corporacion Andina de Fomento ($500,000), ProFund ($1.7 million) and Accion International ($1 mililon). Our partner, Seed Capital Development Fund, played a role in obtaining a portion of this financing. The only other large donor in this sector is the IDB, which has
operationalized two lines of credit in the amounts of $16 million and $2.5 million for credit and technical assistance, respectively, through the Corporacion Financiera Nacional. The World Council of Credit Unions indirectly services the microenterprise sector, providing technical assistance worth $500,000 annually to some 18 credit unions, whose members include microentrepreneurs.
Beneficiaries: USAID beneficiaries are low-income Ecuadorians. Special emphasis is placed upon microentrepreneurs in both urban and rural areas. Microenterprises owned by women represent about 50% of the total number of microentrepreneurs (approximately 1.2 million) in Ecuador.
Principal Contractors, Grantees, or Agencies: USAID's assistance to microentrepreneurs is being implemented primarily through U.S. and Ecuadorian NGOs. Technical assistance has been provided by Accion International, CARE, Development Alternatives, and Carana Associates. Equity financing mechanisms for Ecuadorian microcredit financial institutions have been developed with grantees CARE and Seed Capital Development Fund. Village banking activities are undertaken with U.S. PVOs Catholic Relief Services, FINCA and Project Hope.
Major Results Indicators: Baseline (1996) Target (2000) Increase in the number of micro- entrepreneur borrowers assisted by 1,300 men/ 15,000 men/ USAID partner organizations per year, 1,000 women 35,000 women disaggregated by gender.See footnote 2 Increased number of village banks 0 630
ACTIVITY DATA SHEET
PROGRAM: ECUADOR
TITLE AND NUMBER: Good Governance, 518-SPO3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $1,200,000 ESF (attributed under LAC Regional request)
INITIAL OBLIGATION: FY 1997; ESTIMATED COMPLETION DATE: FY 2000
Purpose: Improved transparency and governance in target governmental institutions. This will be achieved through GOE efforts to modernize the state; and strengthened capacity of public prosecutors to investigate and prosecute white collar crime.
USAID Role and Achievements to Date: Pervasive corruption contributes significantly to the growing lack of confidence among Ecuadorians about their political system's ability to deal with issues of good governance. Activities designed specifically to address transparency and good governance issues are new for USAID. However, a number of ongoing activities, most notably those under USAID democracy and economic growth strategic objectives, have contributed to strengthening institutions and/or affecting policy changes that are important pieces in the overall mosaic of improved transparency. For example, the Ecuadorian Congress has enacted with USAID support implementing legislation for the Constitutional Rights Ombudsman and the Constitutional Court. In addition, the USAID LAC Regional Financial Management Improvement Project supported USAID efforts to raise awareness and knowledge about modern anti-corruption measures and techniques. USAID has also assisted the GOE in its efforts to restructure the economy and modernize the state, with a focus on economic reform.
Description: Certain functions of the Ministry of Finance (MOF) are generally perceived as being corrupt and dysfunctional. Corruption in the Ecuadorian Customs Secretariat is one of the most persistent, lucrative, and now highly visible fraudulent practices to be addressed. This activity would support the GOE's National Council for Modernization (CONAM) efforts to create a depoliticized, autonomous, and highly technical customs control system. USAID may finance technical assistance that would review new, draft legislation and otherwise assist CONAM in the design and implement this new system. As with the customs service, the Ecuadorian tax administration is widely viewed as being highly corrupt and inefficient. The administration is overly bureaucratic and centralized. The number of different types and amount of taxes assessed by the government are excessive, as are public and private exonerations. And while most large businesses, accounting for some 80% of total tax revenues, are paying their taxes, medium and small businesses, as well as large numbers of private citizens, are not. This activity would support CONAM's efforts to create a new tax administration which permits increased tax collection. USAID may provide short-term technical assistance needed to review new, draft legislation and to assist CONAM in the design and implement this new tax administration.
Ecuador is far behind other Latin American countries on moving ahead with its efforts to modernize the state. Previous GOE administrations have been unable to mount a coherent public information campaign to build a national consensus on the new role of the state. Efforts of past Presidents have been thwarted by organized resistance from public institutions, unions of public employees, students, and other groups lacking facts concerning privatization or defending perceived self interests. Streamlining of the state bureaucracy and simplifying administrative procedures are crucial to changing the practice of corruption at all levels. USAID will work with CONAM in the design and testing of an effective public information campaign.
Weaknesses in the ability of Ecuador's prosecutor to act decisively in cases involving corruption has contributed both to the spread of corrupt practices and to a weakened respect for democracy among a growing skepticism of its legal system. USAID will provide U.S. expertise to collaborate with the
legislative, judicial, and executive branches in identifying and designing concrete measures to improve the effectiveness of the prosecutorial function in Ecuador. Finally, a special anti-corruption unit would be organized within the Office of the Prosecutor General, in a team approach between prosecutors and investigators trained in modern anti-corruption skills and techniques.
Host Country and Other Donors: Under an existing agreement with the MOF, the IDB is providing grant-funded technical assistance for automating the customs service. USAID currently is coordinating its planned activities to help reform the customs and tax administrations with the IDB. CONAM-led tax and customs reform efforts, as well as its modernization mass media campaign, are being supported through a World Bank loan. Projusticia, an autonomous entity within the GOE, is already implementing assistance from USAID, IBRD and the IDB to reform court administration and for judicial reform. It worked closely with the Supreme Court in the negotiation of the $14.3 million World Bank project to support modernization of court administration and related activities, including pilot mediation facilities within the judicial function. The IDB recently approved a $2 million grant for the development of a judicial training system, further improvements in judicial administration, and the development of implementing legislation. USAID's contribution will serve as a catalyst for other donor funding and should otherwise influence and/or serve to redirect ongoing IDB and IBRD efforts in these areas.
Beneficiaries: Customers include CONAM, the Ministry of Finances, the Office of the Prosecutor General, Fundacion Ecuador, and others, as these not only will implement the activities contemplated herein, but will receive the benefit of USAID-financed technical assistance and training, that may improve national capacity to affect change in the areas covered by this activity. Ultimate customers are the Ecuadorian public at large, who would benefit through a restructured, transparent MOF that may include significantly reduced corruption in the country's tax and customs administrations, as well as increased public investment through improved tax and customs revenue collection. More broadly, the public at large will also benefit from greater understanding of economic restructuring and modernization efforts, and from more effective prosecution of private and public sector corruption cases.
Principal Contractors, Grantees or Agencies: USAID will work with both public and private sector partners. Development partners will include CONAM, the MOF, and the Public Ministry; and Ecuadorian PVOs Fundación Ecuador and Corporación Latinoamericana de Desarrollo. Contracts and/or PASAs could be undertaken with entities such as the Federal Judicial Center, the Department of Justice Office for Professional Development and Training (OPDAT), the National Center of State Courts, the U.S. Customs Service and/or other appropriate sources.
Major Results and Indicators: Baseline (1997) Target (1999) Reforms implemented in key govern- None Reforms implemented ment offices and entities. Special "anti-corruption" unit created None Pilot Unit in full operation in Prosecutor General's office. Number of anti-corruption 8 12 cases brought to trial.
Footnote: 1 Baseline and target for this indicator were revised to more accurately reflect the activities actually being undertaken in each ecological reserve and no longer include the areas of the Galapagos Marine Reserve and the Galapagos National Park where the NRM plan is already in place.
Footnote: 2 Baseline and target for this indicator are significantly reduced from last year's Congressional Presentation as: (1) a key USAID partner and local NGO Fundacion Ecuatoriana de Desarrollo dropped out of the USAID/Ecuador program; and (2) USAID decided not to support through equity investments one of two financial institutions included in USAID/Ecuador planning documents, Financiera Uno, primarily due to the financial weakness of this institution.
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