The Honduras Rural Competitiveness Project will assist rural small-scale producer associations to form alliances with commercial partners and jointly implement with them business plans to expand market access and increase producer incomes.

The project also aims to create employment and improve producers’ ability to compete through increasing market access.

According to Rebeca Patricia Santos, Minister of Finance, the project is aligned with the World Bank strategy to support international efforts to overcome the global food crisis especially in poor countries such as Honduras, that have benefited from the Heavily Indebted Poor Country (HIPC) and the Multilateral Debt Relief Initiative (MDRI) to reduce poverty and achieve the Millennium Development Goals (MDGs).

“The project is designed to include market-oriented, demand driven mechanisms to assist rural farmers to establish partnerships with non-financial and financial alliances,” said Laura Frigenti, World Bank Country Director for Central America. “Through this project, we aim to reach 6,700 small-scale farmers, or approximately 18 percent of targeted farmers in the seven Western departments of Comayagua, Copan, Intibuc, La Paz, Lempira, Ocotepeque, and Santa Barbara,” Ms. Frigenti added.

The project has the following three components:

* Support to Productive Alliances, which includes outreach to rural producer organizations (RPOs), commercial partners and private financing groups to help identify potential business opportunities. This component will also support the development of viable business plans by these producer organizations in alliance with commercial partners.

* Productive Investments, which would provide sub-project grants to co-finance the implementation of approximately 150 feasible business plans.

* Project Coordination, Monitoring and Evaluation, which includes project administration and establishing a participatory monitoring and evaluation system. Data collected under this component will provide baseline project information, as well as both mid-term and final project evaluation

The grand total of funds destined to this project amounts to US$ 51.2 million as counterpart organizations (COSUDE, Rural Producer Organizations, Private Financial Institutions) are contributing to the effort with an additional amount of US$ 20 million.

The Second Road Rehabilitation and Improvement Project is designed to improve the quality of road network and of road management in support of the government’s growth and competitiveness goals through, improved governance and enhanced road management capacity in SOPTRAVI and the Road Fund, improvement in selected road corridors; and extension in the scope of the maintenance of the unpaved road network.

The main components of the project consist of:

* Rehabilitation and Improvement of primary and secondary roads (US$ 50.5 million) + Cucuyagua – Nueva Ocotepeque-El Poy + Nueva Ocotepeque – Agua Caliente + La Esperanza – Camasca + Olanchito – San Lorenzo + El Porvenir – Marale + Sulaco – Empalme de Carretera Yoro

* Maintenance by Micro-Enterprises on the Unpaved Road Network (US$2.5 million)

* Implementation Support (US$ 5 million)

* Institutional Strengthening (US$ 3 million)

The IDA financing for the Road Rehabilitation and Improvement Project has enabled the Government of Honduras to leverage resources from the Central American Bank for Economic Integration (CABEI) who are contributing to its objectives with a loan of at least US$ 15 million; making the total funds destined for this objective US$ 64.60 million.

“Both projects will bring technical and financial support to some of the poorest rural areas of Honduras to brighten the economic prospects of small scale farmers,” said Adrian Fozzard, World Bank Country Manager for Honduras, “The government of Honduras will be able to comply with its long-term objective of rural growth through competitiveness.

Market access for organized small-scale farmers will link them to financial institutions while the rural roads will provide better access to business opportunities.”

The Country Assistance Strategy Progress Report which reviews the mid-term implementation of the Country Assistance Strategy during fiscal period 2007-2010 concludes that the general objectives in the CAS are still valid, with minor adjustments needed to the credit program. The credit program for fiscal years 2008-2010 comprises of a total of US$ 220 million to be divided amongst 7 new investment projects and a Development Policy Credit.

Aside from the two investment projects approved today five additional projects are programmed for approval by the Board of Directors during fiscal years 2009-2010. The following operations are programmed: Development Policy Credit (US$20 million), a Utility Restructuring Project (US$ 30 million), the second stage of the Land Administration Program (US$30 million), support for Public Sector Management reforms (US$ 15 million), a Health Sector Reform Project (US$15 million) and a Third Road Reconstruction and Improvement Project (US$20 million).

he World Bank continues to support the government of Honduras in its struggle to achieve development and social equity for its people. The approval today of these credits and the CAS Progress Report is a demonstration of this support.