The <i>IoS</i> Christmas Appeal: Ask people what they need and give it to them: it's the only way

Too often, grandiose aid projects are imposed on poor countries without the technical assistance or cash for spare parts to keep them working. Raymond Whitaker reports on a ground-up approach

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If you are finding life hard in the midst of Britain's current cold snap, listen for a moment to Martha Lino: "I have to make difficult decisions when it is the very worst weather," she says. "Do I feed my children or my alpacas? I cannot always feed both."

Ms Lino, 31, lives in Tingabamba in Peru, where temperatures can fall below -20C at night. Until recently her stone and mud hut in the Andes, at more than four times the height of Ben Nevis, higher even than the Matterhorn, had no electricity, sanitation or clean water. No trees grow at this altitude: the only fuel she and her fellow villagers have is the dung from their animals.

Why would anyone choose to live in such conditions? The alpacas are the answer. While the altitude and the cold are tough on humans, they encourage the animals to grow the thickest possible fleece. Once a year they are shorn and the wool is sold to make high-quality clothing in the rich world, but the people of Tingabamba see little of the money. Ms Lino, a single mother – her husband left soon after the birth of their second child – earns barely £3 a week.

Even when there is enough to eat, life is still harsh in the extreme. "Every day when the sun rises I get up too, to make breakfast for the children," she says. "I then have to go and feed my alpacas. [Since] my husband left... I have to do everything alone. I make food for us by cooking on a stove inside our hut. But the air gets filled with black smoke and everything is dirty. The children cough and I suffer from headaches." This is a far worse problem than many realise: each year, more than 1.6 million people – mainly mothers and their children in developing countries – die from smoke inhalation, more than are killed by malaria.

"I used to collect water from the stream just outside our village," Ms Lino adds, "but it is often dirty, and I think we got ill from drinking the water. We do not have toilets... the tradition here has always been to go in the fields. My children had stomach pains or diarrhoea, but what could I do? There was nowhere else to get water."

Martha Lino has spent her whole life in the same basic home, built by her parents before she was born. After sunset at 6pm, the only possible sources of light are candles, kerosene lamps or torches, but these eat up so much of her income that she uses them as little as possible. "I remember much of my life in darkness," she says.

She was describing things as they used to be. Since she was helped by Practical Action, the charity being supported by The Independent on Sunday's Christmas Appeal, Martha Lino and her children now have clean water and air, a toilet and enough electric power to run two lights and a radio, even though they live five hours' walk from the nearest settlement with mains supplies. The cost of these life-transforming changes? Only a little over £600 for Ms Lino's family.

Practical Action, founded 44 years ago on the principles of the celebrated economist, thinker and writer E F Schumacher, worked with the villagers of Tingabamba to build simple bio-sand filters – concrete cylinders filled with layers of sand and gravel that can filter out 99 per cent of the pathogens from contaminated water. "Every day I fill it up, and every day we have good water," Ms Lino says. "My family doesn't get sick any more."

Equally straightforward is the stove, made from mud bricks, mesh and corrugated iron, which not only vents the smoke outdoors but burns fuel more efficiently. "I think of my mother and what she would say of this new stove," Ms Lino says. "We breathe freely now. It is clean and it is fast at cooking." The family also has an "eco-latrine", which turns human waste into compost without using precious water. It cost only £491, but has had a dramatic impact, not merely in health terms but in giving a desperately poor community some measure of dignity.

Practical Action helped Ms Lino to fix a small solar panel on the roof of her home. It feeds power to a battery which lights the hut at night. "I could never have believed we would have electricity in our home, or that it would be provided through the sun," she says.

Each of these changes has had an effect out of all proportion to their cost. Not only can Ms Lino's children now study for longer in the evenings, but she has saved the money she used to spend on candles and kerosene. The new stove has halved the amount of dung needed for cooking, which means she spends less time collecting it from the fields. That, in turn, frees her for more productive tasks, which could include increasing her herd of 15 alpacas and helping to boost her income.

Martha Lino's story illustrates many of the principles guiding Practical Action, whose founding father was one of the first to speak about sustainable development. "Schumacher introduced the concept of small, human-centred, simple technology being an exciting way to lift people out of poverty," says Paul Smith Lomas, the charity's international director.

This approach helps to avoid many of the pitfalls of grandiose development schemes which have led to such disasters as the UN and World Bank-financed tube wells in Bangladesh which drew up water laced with arsenic, poisoning millions of people. Too many aid projects introduce inappropriate technology which soon becomes useless because there is no money for spare parts, or because nobody has been trained to maintain the machinery. Mr Smith Lomas, a trained engineer, calls this "the big industrial model for development – it's car factories, it's massive numbers of tractors, it's an emphasis on genetically modified organisms, instead of looking at how we can make enormous improvements with traditional farming practices and organic farming".

Practical Action finds that many of the people it helps are suffering from climate change. In Peru, Bernardino Ferrera says it is good that his new latrine operates without water, "because up here in the highlands we are noticing less rain every year. Some of the springs are drying up, and worse still, we no longer see the snow-capped mountains of our childhood." In Bangladesh, by contrast, flooding is getting worse every year, and the charity is helping local people build houses that keep the annual inundations at bay.

Proving that it takes the issue seriously, Practical Action has cut its own carbon emissions by 30 per cent in the past three years – not easy when it runs more than 100 projects in just over a dozen Latin American, African and south Asian countries. But it cuts down on both international jet travel and administrative costs by ensuring that 99 per cent of its overseas staff are local people. That also helps to avoid any danger of well-meaning but misguided solutions being imposed from abroad.

True to its name, however, when Practical Action develops something that works in one country, it makes sure that the know-how is spread as widely as possible. It runs an internet-based service called Practical Answers, which gives about a million pieces of advice every year on everything from bee-keeping to building a glass-fibre boat. And if local people find they can make money from these innovations, so much the better: the charity believes firmly in looking for market solutions.

In Nepal, Practical Action helped to develop the simple technology that uses animal dung to produce cooking gas, replacing expensive imported liquid petroleum gas. "Biogas is now a mainstream industry there, and we can stand aside," Mr Smith Lomas says. "You can go to the bank and borrow money to build a biogas unit. There are more than 300,000 of them in Nepal, while in Sri Lanka, where we are still promoting the technology, there are only about 30,000."

The charity's approach, based on asking local people what they need and helping them find solutions rather than prescribing to them, means that it often works with the least privileged communities. In Nepal many of its beneficiaries are Dalits, formerly known as "untouchable" under the caste system. Although Practical Action does not specifically target women, in Bangladesh its work with landless people benefits many widows. In Sri Lanka, which is recovering from the 2004 tsunami and a savage civil war, several of its projects help the disabled.

And in Peru, where we met Martha Lino, the charity finds itself working mainly with Quechua-speakers like her, descendants of the Incas who once ruled this land but who have been deprived ever since the Spanish conquest. The Peruvian government declared an emergency earlier this year when temperatures in the Andean highlands fell below -24C, but until Practical Action arrived, no aid organisation had ever reached the alpaca-herding communities of Canchis province, where she lives.

The growing hardships of life in Tingabamba were forcing Ms Lino to think of abandoning the only home and way of life she has ever known. Thanks to the assistance she has received, however, that threat has passed: "I feel we are a different family now," she says. "I never wanted to leave; we are mountain people. Now we can stay here, and my children will have the chance to grow in Tingabamba."

With the support of Independent on Sunday readers, Practical Action can help many more of the world's poorest people in ways that are effective and direct. Rather than simple handouts, your money will work to make people like Martha Lino more resilient and self-sufficient. We hope you will give generously.

Small is beautiful: Schumacher's ideas are more relevant than ever

You may never have heard of E F Schumacher, but the title of his most famous and influential book, Small Is Beautiful, which was published in 1973, four years before he died, is now part of the English language.

Next year is the 100th anniversary of Schumacher's birth in Germany. A Rhodes Scholar at Oxford in the 1930s, he settled in England to escape Nazism, and for 20 years was chief economic adviser to the National Coal Board. He foresaw the formation of Opec and warned of the dangers of over-dependence on oil, but it was his visit to Burma in 1955 that shaped many of his views.

In what he called "a Buddhist approach to economics", Schumacher was among the first to call for sustainable development, rather than the reckless, environment-destroying industrialisation then in vogue. He helped to set up the Intermediate Technology Development Group to find solutions for developing countries – now called Practical Action, it plans to help more than three million people by 2012.

Many of his ideas are relevant in this new age of austerity, such as his questioning of the assumption that consuming more makes you better off.

How your money can help

£17 could provide a family with a new, improved stove.

£28 could pay for training on water sanitation and safe hygiene for four community leaders, who can then share this knowledge.

£38 could supply a family with one 2KW photovoltaic panel system.

£65 could provide one household with a bio-sand filter.