Audit of USAID/Bolivia"s Chapare regional development project no. 511-0543

The audit covers the period 1983-12/90. In 1986, A.I.D. decided to curtail planned activities to develop electricity and roads infrastructure because of the danger that such improvements might assist narcotics traffickers. This decision was reversed in late 1990 due to the success of interdiction efforts in the Chapare. Nonetheless, due to the 1986 decision, progress in establishing alternative cropping has been delayed by as long as 3 years, agro-industries have not been developed, and farmers do not have ready access to markets. Coordination with other donors has been inadequate. For example, the road construction banned by A.I.D. in 1986 continued under the auspices of the UN Development Program. Coordination among agencies implementing subprojects has also been weak. The credit component has been disappointing, with only 10% of eligible farmers currently participating. Loan delinquency rates are also high. Problems include, inter alia, the high interest rate, farmers" lack of legal documentation, and the requirement that recipients live within 3 km of an all-weather access road. The Mission has not ensured that project plans are submitted on a timely basis or that annual plans included input from TA personnel. Mission inventory control and monitoring systems (including monitoring of Government of Bolivia counterpart contributions) also need improvement. Despite the Mission"s objection that the draft audit overemphasized the project"s problems, the auditors insisted that these problems relate directly to the project"s purpose: farmers without credit and access to markets are not likely voluntarily to reduce their production of coca.