SACA'S ANTI-POVERTY PROGRAM AFTER ONE YEAR

UNCLAS SAN SALVADOR 001131

SIPDIS

SIPDIS

QUITO FOR D.TITUS

E.O. 12958: N/A
TAGS: ECON EAID ES
SUBJECT: SACA'S ANTI-POVERTY PROGRAM AFTER ONE YEAR

REFTEL: 05 SAN SALVADOR 1626


1. Summary. Torola, a small town on the border with
Honduras, is the poorest municipality in El Salvador, but
also the first to receive targeted assistance from the
Salvadoran Government under Saca's anti-poverty program "Red
Solidaria." At least for the next few years that the
program continues, life for Torola's residents will be
slightly more bearable, but long-term economic growth will
depend on the Salvadoran Government's ability to ensure that
the fruits of other initiatives such as CAFTA-DR and a
possible MCC project are delivered to the poor. End
Summary.


2. Torola, in northern Morazan Department near the Honduran
border, is the poorest municipality in El Salvador. Of the
more than 2,000 residents, 60 percent live on less than
$0.70 a day and nearly 90 percent live on less than $1.50 a
day. More than 55 percent of the houses there have no
access to running water, and more than 84 percent have no
electricity. Destroyed by the civil war, the local economy
is almost exclusively based on subsistence agriculture, but
the land is infertile, requiring farmers to plant 8 or more
acres to achieve yields obtained on 1.5 acres elsewhere in
El Salvador.


3. Torola was the first beneficiary of President Saca's
anti-poverty program "Red Solidaria," launched in March 2005
to provide assistance to the poorest 32 municipalities in El
Salvador, all of which have poverty rates of above 50
percent (Reftel). One axis of the program is a commitment
families make to participate in public health programs and
enroll their children in school in exchange for direct
monetary support of $15-20 month, depending on family size.
The second axis includes improvements in basic
infrastructure such as water, roads, electricity, and
housing. The third includes projects to improve
agricultural productivity and to support microfinancing.


4. The government's Fund for Social Investment in Local
Development (FISDL),working closely with local
nongovernmental organizations, is the implementing agency
for the program. On April 21, 2006, FISDL officials handed
out $15,000 in cash to more than 600 families in Torola, the
fourth such transfer there. Overall, FISDL has provided
more than $500,000 in cash transfers to families in
participating municipalities. Of those families eligible in
Torola on April 21, FISDL excluded only 12 for failure to
send their children to school and 8 for not participating in
public health programs. To date, 15 municipalities have
received at least one transfer, with most having just
received their third. In the other 17, FISDL has not
completed census work to determine which families are
eligible to participate.


5. FISDL officials told emboffs that the program was
already having a positive impact on the people of Torola.
They reported that in the eight months they have been
working there, school enrollment rates are up 30 percent,
while medical consults have increased 200 percent. In the
short term, those achievements are putting additional stress
on the town's social-service infrastructure--for example,
there are not enough classrooms to accommodate the new
students, and medicines are occasionally in short supply.
FISDL officials, working with the Ministries of Health and
Education, report that they are working to overcome these
shortfalls. A Ministry of Health official who attended the
transfer in Torola confirmed that the Ministry was beginning
to concentrate additional resources in participating
municipalities.


6. Families receiving the transfer in Torola told emboffs
that they used their transfers to buy food for their
children. They reported that prior to the program, their
children, including some less than one-years old, ate only
rice and beans. Now, they said, they can afford to buy
milk. Torola is about 8 miles from the nearest paved road,
and there is usually no local market. On transfer day,
there is now a thriving street market offering basic
supplies for sale to families that until "Red Solidaria" had
never held so much money at once ($30-40 every two months).
Vendors told emboffs that business was thriving, and when
asked said that powdered milk was selling well. Emboffs
also noted that ice cream--still a novelty in Torola--was
also a hit. On the infrastructure side, emboffs overheard
FISDL officials and residents discussing a planned
irrigation project and an ongoing electrification project.
So far, FISDL reports spending $6.2 million on such
projects, including some in municipalities where transfers
have not yet been provided.


7. From the date of the first transfer to the last, the
program is scheduled to last three years in each
participating municipality. FISDL officials acknowledge
that may not be enough time to create the economic
opportunities needed to help the poorest of the poor, but
they are hopeful that economic growth spurred by CAFTA-DR
and a potential MCA project will support their efforts. A
baseline survey to measure the effectiveness of "Red
Solidaria" is scheduled for July 2006; other surveys are
planned for the project's mid-point and conclusion.


8. FISDL estimates the program will cost about $150 million
over its existence. The Inter-American Development Bank is
providing $57 million for infrastructure projects, while the
World Bank is extending a $21 million loan that will support
healthcare. [Note: The National Assembly has not yet
approved these loans, and their passage is by no means a
sure thing. End Note.] FISDL reports that the European
Union may provide a $40 million grant as well. The
Salvadoran Government will pay for the rest of the program.


9. Comment: In FMLN governed Torola, Mayor Hector Ventura
was slow to embrace "Red Solidaria." FISDL officials report
that he refused to meet with them the first two times they
visited. Ventura quickly woke up to the political
implications of the program, however, and by the time the
third transfer took place, just before March local
elections, he was side-by-side with President Saca in the
town square witnessing the transfer. In those elections,
Ventura was re-elected by a healthy margin. End Comment.

Please visit San Salvador's Classified Website at
http://www.state.sgov/p/wha/sansalvador/index .cfm.

Barclay