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The purpose of this paper is to describe and analyze the experience of the Local Development Programme (PRODEL) in Nicaragua. The paper tries to summarize the main lessons learned from PRODEL for urban poverty reduction, community participation, decentralization, financial and institutional sustainability and its implications for development assistance.
The paper starts giving a short view of the situation of urban poverty and the decentralization process in Nicaragua. Afterwards, it describes the background, goals and components of PRODEL. Later on, it assesses its main achievements and limitations. At the end of the paper, a set of conclusions and recommendations regarding PRODEL's experience are indicated.
Given the difficult environment in which PRODEL was established and has operated, the experience suggests that it is possible to set on sound development assistance programmes that can have real impact on urban poverty reduction in a relative short period of time. A mixture and implementation of different components in creative ways has been able to address critical income generation and habitat problems of the urban poor.
The programme shows that if encouraged to participate in decision making processes, the poor can engage in genuine efforts and high levels of cost recovery and define more transparent relations with their local authorities. Financially speaking, it illustrates that a programme can be built with clear defined subsidy and revolving fund schemes and with low levels of administration costs.
PRODEL's experience also illustrates that some risks have to be taken by funding development agencies even if national or local conditions are not at all suitable when a programme starts operations. Close external technical assistance can be provided and a gradual step-by-step approach can be taken to test different options and alternatives. It also illustrates that local governments can play an important enabling role when resources are made available to them and when cost-sharing under clear and transparent rules of the games are established. Amid harsh economic conditions, financial sustainability can be attained. This demands finding and operating through non-conventional financial mechanisms that can promote and implement sound methods of cost recovery. A clear division of functions between specialized agencies (conventional and non-conventional) is also needed.
Moreover, decentralization and urban poverty alleviation programmes have to be articulated together to have a positive effect and to determine long term working relations between authorities and recipient beneficiaries.
Finally, close follow-up by the development agency, including auditing and evaluation is needed. This helps to tune up the capacity of the national institutions to read and to adapt to the changing political environment.
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