Farmers leading the way in groundwater development

CGISP Newsletter #1 Winter 2003

Introduction

The Community Groundwater Irrigation Sector Project (CGISP) has been designed within the framework of the Agricultural Perspective Plan (APP) of Nepal (1996-2015) which focuses on poverty reduction and situates groundwater-based irrigation at the heart of the Terai irrigation strategy. It is a seven year initiative that began in 1999 aimed at increasing agricultural productivity through the expansion of groundwater-irrigated agriculture by way of community-managed Shallow Tubewells (STWs) in the Central and Eastern Development Regions. Financed by the Asian Development Bank (ADB) and the Canadian International Development Agency (CIDA), the Project supports the establishment of sustainable, private sector based arrangements for expansion of STWs and the adoption of improved agriculture techniques. The Project is expected to have a direct and positive impact on crop production and farm incomes and will increase rural employment opportunities and reduce poverty. The total number of beneficiaries is estimated at 657,000 in about 110,000 households, 50 percent of whom live below the poverty line and including women farmers.

Big hurdles at the onset

"CGISP has instituted a collaborative approach between a number of stakeholders - governmental, NGOs, banks and the private sector. It has brought a broad range of services to the farmers, including social mobilization, credit, materials, technical support, etc., allowing the small farmer to access irrigation inputs previously out of reach."
CGISP's methodology, including a coordinated approach among several stakeholders, such as government agencies, NGOs, credit institutions and private suppliers, is the first of its kind in Nepal for large-scale groundwater projects. After 20 years of subsidy and supply-driven STW development implemented by the government a common understanding on how to proceed was lacking by the executing agencies. Several senior officials felt irrigation targets could not be met without maintaining subsidies and argued openly against the Project's approach. As a result, in its first three years CGISP suffered many setbacks due to: a lack of ownership by the government; weak coordination between stakeholders; delay in removing subsidies; policy instability regarding subsidies; budget flow problems; and a lack of participating financial institutions (PFIs). CGISP's innovative and new collateral-free approach, involving no subsidies, multi-stakeholders and strengthened cooperation between governmental and non-government partners required a facilitating rather than direct implementing, controlling approach. New ways of working had to be learned, staff had to be trained and the policy makers had to be convinced of the merits of the Project. CGISP had to prove that farmers themselves could organize into groups and associations, arrange for loans, deal directly with the concerned suppliers and drillers and install wells without subsidies and under their own supervision.

Innovative actions taken

In order to assist the Project to take off, Project Management Unit (PMU) of the Department of Irrigation (DOI) and the Canadian Centre for International Studies and Cooperation (CECI)'s Technical Assistance Team took up the challenge through implementing several keys steps, which included:

  1. providing effective social mobilization services though local NGOs to inform farmers how to access collateral-free group guarantee loans, install and run a STW and manage the STW as a group;
  2. providing effective capacity development support to participating financial institutions such as development banks, cooperatives and commercial banks to streamline their lending procedures to reduce the time lag between loan application and STW installation and to extend outreach further into rural areas.
  3. supporting the capacity of line agencies, such as the Groundwater Field Offices, in delivering technical support to the farmers through training of the private sector suppliers, providing technical advice on groundwater potential and assisting drillers; and
  4. providing feedback and organizing field visits for policy makers so that they could understand that the positive effect of the new policy of capital subsidy withdrawal and private sector promotion.

"CGISP has reversed an agency-led supply-driven approach favoring big farmers towards a demand-driven model led by small farmers below the poverty line and the private sector."
After the government finally conceded to eliminate all capital subsidies for STWs, the Project was able to demonstrate that a strong demand existed from farmers as long as credit, training, extension services and infrastructure were provided. Farmers also learned that since installation of the STWs was under their control they could negotiate cheaper rates with the drillers and suppliers. Without construction subsidies, the door was also opened to poorer farmers who in the past never accessed subsidies that ended up with wealthier farmers. The Project also allowed farmers to access loans on demand with very minimal dealings with line agencies. With farmers paying the entire cost of the STW, approximately $600 for the pump, materials and drilling services, they have demonstrated better care for the system than those who were provided from 60-80% subsidized systems in the past. Additional impacts to-date to the beneficiary farmers include: access to credit and direct dealing with the private sector; improved decision making capacity; enhanced knowledge of improved agricultural technologies and cropping patterns (including moving from one to three crops); and improved linkages to service providers through group approach. To-date around 600 farmers groups have installed STWs of which over 50% of the beneficiaries are women. These groups comprise about 3000 households. In the current fiscal year (2002/03) the Project intends to facilitate the installation of up to 2000 STWs.

Stakeholders collaboration

CGISP is a multi-stakeholder project involving the following actors:

  1. The Department of Irrigation (DOI) under the Ministry of Water Resources (MoWR): DOI acts as the executing agency for the project and manages the Project through its Groundwater Division. Under this division a Project Management Unit (PMU) has been formed to oversee the Project's implementation with assistance from the Technical Assistance Team provided by CECI. Field activities are planned and coordinated through Groundwater Field Offices.
  2. The Nepal Rastra Bank (NRB): NRB is the central bank and is responsible for implementing the Project's credit component. Its Micro-Finance Division lends funds to Participating Financial Institutions (PFIs) through its regional branches in the Project area. Two lines of credit, one for STW installation, the other for agricultural production, are made available to farmers through the PFIs.
  3. The Department of Agriculture (DOA) under the Ministry of Agriculture and Co-operatives: DOA assists DOI in the formulation and implementation of an effective agricultural extension program for farmers who receive STW loans. Through its District Agriculture Development Offices (DADOs), DOA mobilizes agriculture technicians to implement the CGISP agriculture extension program in clusters at the grassroots level in coordination with the respective WUAs formed by the Project.
  4. Water Users Groups (WUGs) and Water Users Associations (WUAs): The Project works through clusters which comprise a Village Development Committee (VDC) as a subproject. In each VDC 15 to 80 Water Users Groups (WUGs) are formed and install STWs. The WUGs are assisted to form a Water Users Associations (WUA) in their VDCs. To-date 16 WUAs have been formed and are assisting their WUGs with agricultural extension and road improvement components.
  5. Private sector supplies (PSS): PSS include drillers, materials and pump suppliers and mechanics. They deal directly with the WUGs and WUAs for the construction of the STW and follow-up maintenance. The Project provides formats for supply agreements to the farmers.

Sustainability

It is expected that groups will remain together as long as they derive an economic benefit through their cooperation. Therefore the Project provides support to strengthen WUG and WUA economic activities. Agricultural training is provided to the WUGs and management training provided to the WUAs. It is intended that WUAs will develop support services to the WUGs such as strategic product marketing that would minimize problems of oversupply and increase incomes. WUA's planning, management, service delivery and advisory capacity will be strengthened to advise its members on the quality of inputs like seeds, fertilizer and STW maintenance. WUAs will also be provided with information on how to federate at the district level and how to form cooperatives. To support these initiatives the Project through the CECI Technical Assistance Team will supply services through WUA strengthening specialists (WSS) .

A model approach for government

The Project has demonstrated to stakeholders that inexpensive and readily available credit and quality extension services are effective and the least costly means of developing small scale groundwater irrigation systems. Commercial and development banks have become convinced that lending to farmers through group-based collateral-free arrangements with support from the central bank is a profitable business activity for them and can be sustained in the future. Government has become convinced that an approach led by social mobilization and focused on developing the capacity of farmers leads to longer term development results compared to subsidy-based and supply-driven approaches which were monopolized by larger well-to-do farmers and unable to be sustained. Government has also seen that social mobilization through local NGOs is a reliable and inexpensive way to reach small farmers and organize them to take advantage of the Project's provisions and is committed to this process as demonstrated through its policy of outsource extension services to NGOs in many departments.

The Project has successfully introduced a Demand Based Approach (DRA) into shallow tubewell development in Nepal that is centered on the small farmer. It has promoted and developed the capacity of the private sector to deliver services to farmers and enable them to make informed choices of the types of locally available technologies, such as pump brands, drilling methods, etc. The Project has developed the capacity of financial institutions to provide credit on a collateral free basis minimizing time between the application and reception of the loan. The Project's social mobilization process through local NGOs has expanded the outreach capacity of the executing agency to inform farmers and assist them to plan and develop their groups and associations, bargain with the private sector suppliers and traders, and improving linkages with line agencies.

CGISP has instituted a collaborative approach between a number of stakeholders - governmental, NGOs, banks and the private sector. It has brought a broad range of services to the farmers, including social mobilization, credit, materials, technical support, etc., allowing the small farmer to access irrigation inputs previously out of reach. CGISP has reversed an agency-led supply-driven approach favoring big farmers towards a demand-driven model led by small farmers below the poverty line and the private sector. While it has a long way to go the idea that farmers can lead the way for a mass expansion of groundwater irrigation system in Nepal now seems a good possibility.

For more information and photos on the Project please visit: CGISP Website at http://www.cgisp.org.np

The Community Groundwater Irrigation Sector Project (CGISP) is implemented by the Department of Irrigation (under the Ministry of Water Resources) with technical assistance from CECI and financed by the Asian Development Bank, HMGs, PFIs, farmers and CIDA.