Parmesh Shah Open GAC Council Meeting April 21, 2009

1. Increasing Creditworthiness of the Poor by Strengthening GAC Mechanisms:Case of Andhra Pradesh Rural Poverty Reduction Project, India Parmesh Shah Open GAC Council Meeting April 21, 2009

2. 1098 Sub-District Level Federations 35,525 Village Organizations SHGs Institutional Structure: CBO Federations APRPRP: Context 22 District Level Federations • Participation: 10.1 million members; 850,000 SHGs, • Investments: WB - $336 Million; • Public & Private: $4.8 Billion • Expansion: • South Asia Poverty Alleviation Program (SAPAP): 1995-2000 - 3 districts • APDPIP: 2000-2006 – 6 districts • APRPRP: 2003-2009 - 22 districts (full coverage) 850,671 SHGs SHGs SHGs 10.1 million members

3. Key Investments in the Project • Institution Building and Social Capital Development • Development of Financial Services for the Poor • Livelihoods Promotion and Expansion through Private Sector Partnerships • Leveraging Information and Communication Technologies for Enhancing Livelihoods • Reducing Vulnerability, Promoting Social Action and Improving Local Governance • Developing Innovative Franchise Model to Provide Insurance Services to the Rural Poor

4. Institutional Design: Outcome Based GAC Interventions Investments into Systems and Capacity Define minimum G&A Standards Improved Outcomes Good Governance Improved Accountability Benchmark Improved Quality of Service Delivery Measure & Triangulate Strengthened Institutions Increased Creditworthiness Incentivize Feedback Feedback

5. GAC Risk Mitigation: The APRPRP Way

6. GAC in APRPRP: Lessons LearntGood Governance = Good Outcomes • Institutionalize transparency, democratize information • Triangulate through performance, transaction and social audits to change behavior • Build in standards, benchmarks and incentives • Improved G&A systems reduce risk perceptions for institutions of the poor attracting other private and public sector investments • Build a culture of good governance beyond Bank projects • Social auditors audited $500 Million in NREGA expenditure; $0.5 Million returned by corrupt officials; multiplier deterrent effect • Accountable and well governed grassroots institutions takes facilitation, investments, time and patience

7. Catalyzing Investments through a Good Governance Ecosystem Investments Government of Andhra Pradesh$398 Million Private Sector World Bank$336 Million Commercial Banks $4.8 Billion Institutional Architecture Based on Principles of Good Governance (Transparency, Accountability and Participation) 98.5% safe deliveries; No low birth weight among women who attended the nutrition center. Credit Flow from Banks to Communities: $4.8 Billion Cumulative Savings: $770 Million 154% Increase in HH Income (2000-2006) 8.1 Million People Insured Impacts Increasing Credit Worthiness of the Poor, Building Identity and Legitimacy of Poor People’s Institutions

8. THANK YOU

9. Five Cardinal Principles Weekly Savings Good Governance Internal Lending Weekly Meetings Regular Repayment Healthy Book Keeping