The Sida-Amhara Rural Development Programme (SARDP) entered its third phase July 1, 2004. Earlier phases concentrated on livelihood improvement through agricultural development. During the early planning of the third phase it was realised that in order for SARDP to adress povery alleviation in a comprehensive way it would be necessary to include also the complex issue of economic diversification: a substantial part of the population in the Amhara region would have to diversify their means of living, including off-farm activities in order to sustain or improve their livelihoods. For this reason, Phase III of SARDP included support to economic diversification, decentralisation and good governance. Since these aspects were new to the Programme, ANRS requested ORGUT in consortium with Scanagri, to plan for those components in a participatory way.