The purpose of this document is to identify the priority areas on which CIDA will focus Phase II (2001-2005) of its Canada-Southern Cone Technology Transfer Fund (TTFund) in Paraguay . It is meant to guide partners in their planning and the CIDA project team in the selection of sub-projects. Priority areas were identified from a review of: 1) stated Government of Paraguay priorities , 2) the work of other donors, and 3) areas in which Canada has a comparative advantage and to which Canada can make a significant contribution over the next five years. This strategy should be read in conjunction with the TTFund Information Guide, when formulating concept papers and proposals.

CIDA's Programming Approach in Paraguay and the Southern Cone

Given the opportunity in 1995 to launch a new program in the Southern Cone, CIDA, in consultation with recipient governments, adopted an experimental approach which would allow Chile, Argentina, Paraguay, and Uruguay to take advantage of Canadian models in their efforts to modernize the state and improve delivery of public services, while promoting increased linkages between Canada and the region. As mentioned in the central document of the information kit, t his programming focus was labelled "technology transfer".

Technology refers to specific Canadian approaches or models which incorporate unique know-how, expertise, or experience. Technology Transfer refers to the sharing of these Canadian approaches with strong, capable partner organizations in the region that can successfully adapt such know-how to meet pressing development challenges.

Technology transfer enables Southern Cone institutions, capable of mobilizing other local partners whose participation is essential if real change is to be implemented , to learn about successful Canadian approaches/models, to adapt these approaches/models to their own cultural and institutional context, and to disseminate the results in the region . For example, a municipality may serve as a lead partner, but they might need to mobilize local community groups, NGOs, the private sector, other levels of government, and local educational institutions to tackle a problem like local watershed management. Technology transfer works in the Cone because Chileans, Argentineans, Uruguayans and, to a lesser extent, Paraguayans have demonstrated the will to tackle development challenges, are sear ching for alternative development models, and have a strong human resource base that enables them to launch or modify programs based on proven Canadian approaches and models. New models or knowledge are created, a hybrid of what was once Canadian and what has become Argentinean, Chi lean, Uruguayan and Paraguayan.

Technology transfer was operationalized through Phase I of the TTFund, which was approved in 1996 , for a total value of $18 million. Under this phase, priorities of the Fund corresponded to the development priorities of the four countries. The difficult socio-economic conditions, the fragility of democracy and the lack of resources and capacities of local partners complicated the implementation of projects in Paraguay. Only two projects (with an average contribution of $750,000) were approved in agriculture and municipal strengthening. Click here for the full project list.

Because Paraguay has few er strong institutions which have the resources and expertise to adapt Canadian approaches to their own development reality, CIDA decided to be more flexible in the management of the TTFund, namely by supporting project development missions to Paraguay, providing local organizations with more sustained support from Canadian partners, through institutional strengthening projects, and accepting to cover some of the local project costs, all the while respecting the spirit of the technology transfer approach.

Paraguay's Development Challenges

Paraguay is the least developed among the four countries supported by the TTFund. An important portion of the population has little or no access to health care (39%), clean water (40%) or education (close to 42% of the population is functionally illiterate). Infant and maternal mortality statistics are high (respectively 39/1000 and 192/100,000) and communicable diseases are still responsible for 11% of all deaths.

Since the end of the dictatorship in 1989, there has been some progress in consolidating democracy, increasing access to education and reforming the State. However, these did not strengthen the country's economy (which relies highly on agricultural exports and is heavily influenced by fluctuating international terms of trade). The living conditions of most of the country's inhabitants did not improve over the last decade. During this period, GDP per capita has decreased and the level of poverty has increased, especially in rural areas where 70% of all poor live. According to IMF statistics (1999), the proportion of individuals living in extreme poverty rose from 21.4% to 26.5%. Women, children and indigenous people are the most vulnerable groups.

Income distribution has also worsened; the highest 20% of households obtains 46% of the national income while the 20% poorest has only 6% ¹ . According to the World Bank, Paraguay's GDP per capita is among the lowest in Latin America ² . There are no safety nets to support the most vulnerable citizens and there are few economic opportunities because financial resources or expertise are lacking. Employment is precarious. Two thirds of the workforce have jobs in enterprise of less than six employees and local enterprises are severely affected by the effects of periodic economic recessions in the neighbouring countries.

Current Government Priorities

The Paraguayan government has a long political, economic and social agenda to fulfill. Since 1999, the Government has announced various objectives and emergency measures to address the country's challenges. Although there was some improvement in the level of exports and modest economic growth (1,8% according to the IDB) in 2000, the country still faces important economic difficulties aggravated by political turmoil. Launched in March 2001, the latest Government program focuses on 3 objectives : 1) improving competitiveness, pursuing investment and production development, 2) fostering human development and alleviating poverty, and 3) implementing State reform. Among the main elements listed as the government priorities are the formation of economic clusters, activities to diversify production and improve the quality system, initiatives for SME's, measures to reduce fiscal deficit, decentralize the administration and reform the banking system as well as programs to improve basic health and nutrition, specifically child care, pregnancy control and the control of epidemic diseases.

Consulting with other donors

Japan and the European countries constitute the largest donors in Paraguay. Taiwan and Korea are also present, investing primarily in infrastructure. At the multilateral level, some United Nations agencies such as Unicef and UNDP as well as the World Bank and the IDB have active programs. Donors are involved in priority areas such as diversification of the economy (agriculture production), SME development, human capital development/health and education, governance and decentralization, strengthening of civil society and democratization, and the environment.

Project proponents interested in submitting an application to the TTFund will be expected to review the specific work of other donors in their respective area of intervention, including the World Bank and the Inter-American Development Bank, to ensure complementarity and synergy between their proposal and the projects of other donors.

Priority Areas

In accordance with the purpose of CIDA's Technology Transfer Fund to build the capacity of Southern Cone partner organizations to modernize the state and deliver public goods and services in a participatory and equitable manner , the following areas have been selected for the 2001-2005 period.

Support to Social Programming

Health. The epidemiological profile in Paraguay combines high rates of infectious and parasitic disease with a high prevalence of chronic degenerative diseases, cancer, and accidents. Among the most important issues are the high levels of maternal and infant mortality, inadequate reproductive and obstetrical health care , the prevalence of Chagas' disease and tuberculosis (almost 80% of indigenous households are infested with vectors of Chagas' disease and the rate of tuberculosis among ind igenous people is ten times the national average) as well as cardiovascular diseases. Improvement of water and sanitation systems is also urgent (around 50% of the population has access to safe drinking water, only 20% of the population has access to waste water treatment systems and waste management is inadequate in most municipalities.)

CIDA will support projects that will improve health services in rural areas. Streng thening primary health care in key areas such as reproductive health, communicable disease, child friendly health and health promotion will be encouraged. The transfer of know-how in health district management, human resource development, health financing and planning and care for marginal and indigenous population will also be supported. Finally, initiatives dedicated to improving equitable access to drinking water, waste water treatment and solid waste management via support to municipal plans will be encouraged.

Education. There is a correlation between poverty and educational attainment. During the last few years, significant progress was made in terms of basic education coverage, notably through the Primary Education Improvement Program launched by the IDB. However, pre-school education coverage continues to be limited and primary and secondary education continue to be of poor quality, characterized by low completion rates (one out of five students complete secondary education). In this context and in accordance with the goals of Paraguay's Education Reform, CIDA will support initiatives dedicated to improving the quality of education with a particular emphasis on the improvement of teacher training and upgrading. Because international organizations such as the IDB and the WorldBank invest important sums in education , CIDA funded projects will have to show specific complementary expertise in order to be cost-effective.

Sustainable Natural Resource and Environmental Management

Environment. Environmental problems in Paraguay are widespread. Deforestation and the destruction of native forests are among the most important issues. Because forests cover 58% of the land and represent a significant economic potential, CIDA will support initiatives dedicated to improve environmental management practices, particularly in the forestry sector. A special emphasis will be put on greater public participation in the sustainable management of resources and on the transfer of technologies and models that can contribute to sustainable economic development.

Support to Economic Development

Economic Development . Meaningful development of Paraguay's economy, to overcome current difficulties and create jobs, will require diversification of the country's production, improved access to credit and increased skills for its workers. With agriculture accounting for 28% of the GDP and 45% of employment, CIDA will give priority to providing technical assistance to small producers and agricultural cooperatives in order to improve crop production, marketing and processing. Initiatives that will generate employment via the transfer of updated processing techniques will be encouraged. CIDA will also support the development of entrepreneurial skills, especially in the small and family business sector. Support networks for small entrepreneurs as well as measures to facilitate their access to credit will be encouraged. To help develop and diversify food exports, special emphasis will be placed on initiatives supporting the creation of national quality systems, especially through the development of food inspection and certification programs.

Human Rights Protection and Governance

Protection of the Rights of the Child. In its support to social programming, CIDA will put a particular emphasis on children and youth. Individuals under 18 represent 47% of the country's population. Children and adolescents are not only the main victims of the deficiencies of the social services, they also face specific difficulties. A significant percentage of Paraguay's children and adolescents are in need of special protection, being abandoned, physically and sexually abused, in conflict with the law or engaged in some kind of work (one child out of three is forced to work). CIDA's focus will be with child labourers and youth in conflict with the law. Emphasis will be put on initiatives that promote the respect of children's rights, protect children and adolescents in the workplace and prevent child abuse and delinquency.

Governance. The enabling environment for implementing projects to support more advanced public sector policies and more modern management techniques is not positive in Paraguay. The high level of political partisanship, the deficiencies of regulations in important sectors like banking and basic infrastructure as well as the lack of adequate civil service legislation and of accountability of government officials do not, however, justify avoiding interventions in these spheres.

To date, some progress has been achieved to improve fiscal accounts, privatize some public corporations and enact new legislation to decentralize the public administration. CIDA will encourage advances made in those fields and will specifically support initiatives fostering the decentralization of the state, better management of resources and public participation in policy formulation. Decentralization of services in the health and education sectors is one of the key ways to address inequity and poverty in Paraguay. Since municipalities are experiencing mounting pressure to deliver social services and invest in infrastructure, emphasis will be put on assisting those municipalities which demonstrate a minimal level of organization and a commitment to integrate public participation in policy-making.

Cross-Sectoral Themes

All proposals will also be assessed from a gender equality perspective to ensure that sub-projects are designed to contribute, within their scope, toward gender equality and to ensure an equitable participation of women and men in the project as well as shared benefits for them. Addressing gender equality as a cross-cutting theme requires that women's views, interests and needs shape projects as much as men's and a recognition that every policy, program and project affects women and men differently.

Women in Paraguay are more disadvantaged than women in the other countries covered by the TTFund. Figures from the mid-1990s show Paraguay at the bottom of the literacy rates list in comparison to countries in the Southern Cone, with 85,6% literate women (90.3% for men). Some gaps between men and women exist in Paraguay, in spite of the advances made in recent years. There are more women unemployed, there are fewer women in decision making positions and many work in the informal sector ,where earnings are meager, and working conditions are extremely precarious. Women's wages are approximately 77% of that of men. The difference can be blamed on discrimination in hiring practices and on unequal wages. Those employed in the agro- industry are exposed to a number of pesticides that have affected negatively their health.

A lthough there has been an increase in life expectancy at birth (72 years for women, 68 for men) empirical evidence indicates that, far from enjoying better health, women are likely to experience higher morbidity than men and higher levels of disabilities. Their higher morbidity is aggravated by their comparatively poor access to health protection resources and to proper health care services. Total fertility rate is high (4.4 children). The maternal and infant mortality ratios are the highest among the highest in Latin America (192 women die per 100,000 live births, 39 infant die per 1000 live births), moreover, Paraguay has the lowest delivery ratio attended by skilled attendants (66%). Abuse by a husband or intimate partner is the most common form of violence against women; 10% of women reported having been abused in a national study conducted in the 1990s ⁴ .

Expected Results

The following results are expected to emerge.

a. Innovative social programming adopted by Paraguayan partner organizations.

b. Paraguayan public sector reform efforts reinforced by Canadian knowledge.

c. More sustainable and participatory environmental management practices adopted by Paraguayan partner organizations.

d. Enhanced dialogue and cooperation between Canadian and Paraguayan partner organizations.

These results are listed as outcomes of the TTFund. They can be attained only if Canadian and Paraguayan partners, (civil society, the State and the private sector) work closely with each other and other donors . Individual project results are expected to contribute to the achievement of these outcomes. For more information on the Fund's results chain see Annex D of the Information Guide.