Africa Project Development Facility (APDF) evaluation

APDF is a dynamic force in private sector development in Africa, its management visionary and creative, and it is continually developing new programs and initiatives to better serve the African entrepreneur. APDF criteria for screening and processing project proposals are stricter now than 4 years ago, and as a result, the number of completed projects relative to the number of projects identified is increasing. Also, fewer projects are being rejected by financial institutions after receiving APDF feasibility study assistance. APDF's eligibility criteria have remained constant over its life and still seem valid. Nevertheless, APDF has not adhered strictly to the upper project size limitation of $5 million, with 6 projects, or 8% of the total, exceeding the limitation. However, the number of projects exceeding the limitation has decreased over time -- in 1988, the percentage of projects with investment costs exceeding the maximum was 15%. This reflects improved success in refining and targeting activities. Interviews indicate that APDF officers, particularly investment officers in the field, have strong, expanding relationships based on mutual respect and common interests with bilateral funding institutions and with local commercial banks. This is accomplished through regular communication, both informal and formal. Since performance is judged on the number of projects completed, there is a built-in incentive to develop strong relationships with funding institutions. APDF's portfolio is well-diversified by country and by mix of industries. As of June 1991, APDF had successfully completed 87 projects in 21 different countries: over half of the projects were in agro-industry, including fishing; one third were in manufacturing; and the remaining 13% were in service industries. The pipeline contains 194 more projects, equally divided between East and West Africa, encompassing 33 countries. APDF interacts well with, and is highly praised by, other donors active in Africa. There is a high level of synergy, cooperation, and responsiveness to donor concerns. APDF's decentralized organizational structure, with a heavy reliance on the field offices, is effective from both an organizational and cost point of view. APDF staff, especially investment officers in the field, are highly experienced, effective, and well regarded. The level of U.S. firm participation in APDF activities is low. Only 2 of the 87 APDF-assisted investments involved U.S. firms (only 10-15% of total APDF investments involve any foreign private investors). This is due to a number of factors, including the small size of most APDF projects and the requirement that they be majority-owned by an African. A.I.D. should consider other initiatives to increase U.S. firm knowledge and interest in investing in Africa. There has been little use of U.S. consultants; only 7 were employed in 1990 out of a total of 144, and APDF is steadily increasing the number of African consultants used in conducting its feasibility studies. The decreasing use of foreign consultants is a positive development. APDF has been quite successful in providing opportunities for African consultants; over half of those it hires are African, a percentage which will increase even further. APDF has also made an effort to hire Africans as investment officers. Of the 20 professional staff, 9 are Africans -- a figure which has increased over time. Although the overall costs of APDF operations are over $8 million per year, its operations are run efficiently and in a cost-conscious manner. New initiatives in partial cost recovery which were institutionalized in late 1990 are beginning to bear fruit and APDF is improving the monitoring of its activities. It is increasing its operational effectiveness and has introduced better internal measurement and control systems over the past year. Finally, many bilateral assistance programs benefit from APDF in nonquantifiable ways. APDF has become a focal point for lessons learned in private sector development and in the identification of bottlenecks and constraints to the private sector in Africa. The feedback that APDF operations provides to the donor community is invaluable in helping donors design other interventions to help the private sector. (Author abstract, modified)