In partnership with Canada and Norway
Oil, gas, and mining companies, also called extractive industries, play a key role in Peru by contributing to economic growth and generating income for the government. The National Society of Mining, Petroleum and Energy (SNMPE) estimates that mining and energy investments in the coming years are expected to exceed $35 billion. At the same time, Peruvian law mandates that the central government transfers part of the royalties received from these investments to local governments.
However, many communities living in municipalities receiving royalty transfers remain among the poorest in Peru. More than 40 percent of the 1.5 million inhabitants of these regions live below the poverty line, with more than half a million lacking access to basic services such as water and sewage.
While the royalties received by municipalities represent a great opportunity to lift communities out of poverty, local governments have difficulty translating these resources into projects that deliver tangible benefits to the population. Weak institutions and lack of management skills have led to limited investment capacity, at the local government level. This is underscored by the fact that by the end of 2011 half of the royalties received by the municipalities in Peru remained undisbursed.
IFC aims to strengthen investment capacity in 30 municipalities in eight extractive regions, ultimately benefiting 250,000 inhabitants, by:
- Establishing an investment committee to coordinate and oversee the implementation of investment projects
- Using Municipal Royalty Investment methodology, developed with support from IFC, to systematically identify bottlenecks and weaknesses along the investment cycle
- Using IFC’s Municipio al Dia, a web-based platform that provides information and real-time on-demand advice from experts. More specifically, Municipio al Dia is a joint effort with a prestigious Peruvian think tank (Instituto de Estudios Peruanos) and aims to enhance municipal management by facilitating timely access to reliable information in cost-effective ways that can serve a large number of municipalities throughout Peru
- Building mid-term planning capacity aimed at improving resource allocation to attend basic needs of local communities
Working closely with Peru’s Ministry of Finance and Economics to ensure that IFC tools are applied more broadly and are aligned with national priorities.
Scale-up and Replication
*As of December 2012
Clara Ugarte Perrin | Lima, Peru
5750+2501 / 51-1-611-2501 | CUgarteperrin@ifc.org