Impact Assessment Baseline Study in Peru Yields Interesting Findings
The last issue of the DOT-COMments newsletter briefly highlighted some of dot-ORGs newest activities related to the Last Mile Initiative. This article provides an update on one such activity, the LMI Impact Assessment.
Under the Last Mile Initiative Impact Assessment activity, dot-ORG was tasked to undertake impact evaluations of LMI projects in close consultation with USAID Missions and the EGAT/OI&E office. The main purpose of the impact evaluations is to gather and share lessons from ongoing projects, help shape ongoing and future activities and contribute to broader knowledge management efforts.
The first LMI country selected for this activity was Peru. A team of researchers from the Instituto de Estudios Peruanos (IEP) in Peru, and the Annenberg School for Communication at the University of Southern California (ASC/USC) was selected to implement the impact assessment activity under dot-ORGs oversight. Data collection in the province of Jauja, within the Department of Junin, took place in December 2005, and the research team (Roxana Barrantes, Anahi Durand, Juan Jose Miranda, Patricia Zarate at IEP, and Hernan Galperin, Raul Roman and Paola Ruchman at ASC/USC) produced a report describing the results of the baseline study.
The report provides useful information (a) for data-driven, evidence-based project planning, (b) to help predict and monitor financial sustainability of project operations, and (c) to identify a yardstick against which we can measure impact at the end of the project cycle.
A mixed-method approach was used to collect baseline data, combining (a) a household survey that collected quantitative data from a probability sample of household heads, and (b) a set of qualitative interviews of relevant institutions and organizations in the area. A total of 400 surveys were completed. In addition, forty-nine qualitative interviews were completed with representatives of five key local sectors (government, health, education, business, associations) in each of the areas to be served by the projects site in Jauja.
In order to measure change over time, two other waves of data collection are scheduled. A second wave of data collection is scheduled for April 2006, and the final data collection is scheduled to take place in September 2006.
- Characteristics of the area served by the project
The first site chosen for the implementation of the LMI project in Peru is Jauja, a province in the department of Junin located just east of Lima. Nine districts in Jauja have been selected to receive telecom services by a newly established micro-telco, Televias Puyhuan. Most of the areas (85%) selected for project implementation are considered urban settlements, though very small ones (typically around 2,000 inhabitants). All but one (Huancas) are district capitals, and all of them are well connected to both Jauja, the province capital, Huancayo, the department capital, and Lima. When this baseline research was conducted in December 2005, the equipment was installed but operations had not started.
- Characteristics of the population & economic activity
The main economic activity in the project area is agriculture. The target population is mostly composed of farmers who grow potato, corn, and artichokes in small size plots. Some also own cattle, and milk production is bought by the local Nestle subsidiary. According to data provided by the National Household Living Standards Survey, the target area does not concentrate poor households when compared to the rest of the region. This is consistent with the research teams results showing that only about 15% of the sample falls below the departmental poverty line (roughly below S/. 200 U$ 58 per month).
- Access to and demand for basic telecommunication services
There is currently no fixed phone service in the LMI implementation area, which explains the strong interest found among the target population for the service. The teams findings reveal that, despite the moderately low median family income in the region, many households are willing to pay up to 7% of their total income for the service, a considerable amount compared to international standards. This means that a sizeable portion of households is willing to almost double their current telephone spending. Even more interest was expressed by representatives from businesses and major educational, health, government, and civil society institutions present in the area, given their need for coordination with clients, members, and other institutions.
However, the teams analysis also reveals that this demand is somewhat weakened by the availability of substitutes. The team found public phones to be readily available in all target districts, mostly located within convenience stores that function as information hubs for the community. These are widely used by household as well as businesses and the personnel from local institutions. While only a minority of households own a cell phone, they also represent a viable alternative, particularly for the higher socioeconomic status population. The findings reveal cell phone penetration to be very significant among local institution personnel (nurses, teachers, association leaders, etc.), who readily combine personal and professional use.
The availability of substitutes represents a challenge to the sustainability of the project's private sector micro-telco operator. The teams findings reveal that, though the business opportunity exists, marketing and pricing will need to be carefully crafted to attract subscribers. In terms of marketing, an emphasis on convenience seems appropriate given that a quarter of the household sample mentioned difficult access as an important reason for not using the phone more often (or at all), a finding that was confirmed in qualitative interviews. In terms of pricing, the contingent valuation analysis revealed a mean willingness to pay for fixed phone service of about S/.20 (U$ 5.8) per month. This is consistent with existing spending patterns for alternatives. At this level, fixed phone service will be priced somewhere between public phone and cell phone services.
- Demand for Internet access and related services
In the case of Internet access and related services, the findings reveal a significantly lower demand among households, though among some institutions (particularly schools, health centers and local governments) the research team found a significant demand for Internet connectivity given the need to improve more complex coordination and information retrieval tasks. The demographic profile of the respondents in particular the age distribution may lead to an underestimation of potential demand. Yet the findings point to a consistent pattern of lack of skills and knowledge about the potential benefits of Internet access that significantly reduces potential demand for residential access, despite the lack of alternatives in most districts.
- Tentative recommendations
Findings indicate that significant efforts must be directed at servicing local institutions (particularly schools and other government offices) as well as other key social actors, where unmet demand is apparent. They also suggest the need for outreach and training efforts to educate the wider population about benefits tied to specific Internet-based information services (e.g., health, business, and employment information). Public shared-access facilities seem better poised to attract significant usage than residential access. As the majority of the population relies on existing media to obtain high-value information, partnering with local radio and newspapers could be a promising strategy to educate the public and develop relevant services.
For additional information, please refer to the complete baseline report and appendix -- research instruments.