Evaluation of the Dominican Development Foundation's program for the development of microenterprises (PRODEME)

Special evaluation covers the period 1981-84 and is based on document review and interviews with officials from FDD, the contractor, AID/W, USAID/DR, and U.S. and Dominican institutions, and with clients. FDD has extended assistance to 247 small enterprises, created 370 new and strengthened 2,240 other jobs, and had 14,880 indirect beneficiaries, versus respective targets of 250, 500, 1,860, and 12,660. Credit and TA characterized by self-help and group collaboration has reached over 350 "solidarity groups" of the smallest entrepreneurs, 87% of whom are street vendors. Management and TA to microentrepreneurs has helped increase their monthly sales by some 20% and the number of full-time workers by 1.5 employees per enterprise; clients have asked for more training in accounting, marketing, and product design. Unexpected program effects were the formation of two autonomous associations to help microentrepreneurs. Effective TA was provided to the FDD as well as to beneficiaries by a resident advisor from ACCION/AITEC, although project experience makes the wisdom of full institution-building TA questionable. Several factors have hampered FDD's lending. Funding arrived in tranches and did not always correspond to needs, slowing credit approval. Dominican economic problems created difficulties for FDD and businesses (in fact, no new loans are going out at this time; efforts are being focused on existing loans and their required follow-up assistance). Structural deficiencies reducing FDD's cost-effectiveness and flexibility included centralized decisionmaking; weak intra-FDD communication; lack of differentiation between fixed capital and working capital loans; lack of a shortened approval process for follow-up loans; and a disbursal method which limited clients' use of loan funds. FDD abandoned the advisor's monitoring/reporting system after his departure and compiles no regular data on its portfolio status or cost-effectiveness. Finally, women as a group were not addressed in the project design and have had limited access to credit. Recommendations are included.