Evaluation of the FINCA/Bolivia community revolving fund program

480 Title II proceeds) to create a community credit and capitalization system in rural Bolivia. Special mid-term evaluation covers the period 7/84-6/85 and is based on review of USAID/B and FINCA/Bolivia (Fomento Integral Campesino - a nonprofit organization) documents and interviews with FINCA personnel and 522 members of 12 participating communities. While FINCA has distributed credit rapidly and widely - some $b 2,066.6 million has been lent through 433 community revolving credit funds (FRC"s), benefiting 24,289 rural families (some 87% of which would not have received credit otherwise), vs. goals of 630 communities and 31,000 individuals - it has been less successful in meeting the needs of these communities and families. Only 7% of communities have used the FRC"s for group projects; the remainder have used them to make small individual loans. However, 81% of loan recipients feel the amount was too small and only 26.4% said the loan enabled them to increase production; most do not see the program as a means of future benefit to the community or to themselves. In its haste to get the program underway, FINCA included several communities which did not need the credit (these tend to be the most dissatisfied) and it did not do enough to educate communities about the program. Decapitalization is a serious danger both for FINCA and for the FRC"s. Since only about 50% of recipients want to borrow again, it is likely that many communities will repay FINCA without capitalizing their FRC. FINCA itself has no mechanism to cover losses from delinquency (56% of communities are in arrears), or from inflation (although all loans were indexed to a specific product, repayment being made in this product, inflation has exceeded the increases in the prices of these indexed goods), losses involved in marketing the indexed products, and operating costs (which have been high despite the program"s low-cost decentralized structure) and must rely on donor support. Also, while loans do involve nominal interest costs, real interest has been negative. Recommendations to correct these defects and enable the program to achieve eventual self-sufficiency are made.