Evaluation of the promoting financial investments and transfers (PROFIT) project

Evaluation covers the period 9/91-6/96. PROFIT staff have identified 79 opportunities for subproject activities in the commercial sector. Of those, 28 subprojects were developed. Given the project's financial orientation, PROFIT staff used their expertise to prepare a careful "Due Diligence" analysis of each potential investment and the final investment document. Currently, there remain 10 active subprojects after two ended prematurely. Seven of the 10 involve investments (both loan and equity) -- $5.4 million from PROFIT, $17.3 million from its partners. Of the other three active subprojects, one is run with a grant and two are primarily TA. The subprojects are being carried out in seven developing countries (Brazil, India, Indonesia, Kenya, the Philippines, Romania, and Zimbabwe) and the United States. Despite considerable staff effort in identifying and developing subprojects, there are only six promising models among those that are active. These include a commercial company for distributing contraceptives in Brazil; an activity that involves working with pharmacists in Romania to expand information, counseling, and supply of contraceptives; a loan fund for midwives in Indonesia; a low-cost health care plan for workers in the informal sector in the Philippines (with a subsidiary of American International Group [AIG]); a managed health care plan for middle- and lower- income employees in Kenya; and a private sector initiatives program in Zimbabwe. Through its investment subprojects, PROFIT has demonstrated that it is possible to make investments in the private, for-profit sector of FP and health with very good prospects for recovering the principal sum invested, if not actually realizing a return on the investments. PROFIT has also demonstrated that under certain circumstances USAID funds do not have to be granted or given away. However, the project's overall costs appear high for such a low output of subprojects. Through a series of consultancies and assessments, PROFIT has also met a growing need among USAID Missions for help from a business-oriented, financially savvy contractor. For example, a number of sustainability assessments were conducted for NGOs in developing countries. Additionally, PROFIT has accumulated extensive experience in acting as a catalyst in promoting the commercial sector. Given USAID's usual modes of giving grants and working with the public sector and not-for-profit NGOs, as well as the current push for quick results, developing and implementing opportunities in the commercial sector have not been easy. There may be as many lessons to pass on to USAID from PROFIT's unsuccessful efforts as from its promising ones. Lessons learned are that: (1) some key underlying project assumptions were invalid; (2) both USAID and PROFIT underestimated the difficulty of obtaining access to countries and developing subprojects; (3) USAID should have ventured into the world of innovative investments with more modest expectations; (4) while access to funds (e.g., loans) can stimulate private sector providers and investments, there are many reasons why commercial sector groups will engage in FP and reproductive health activities; (5) FP appears to be too narrow a niche among health services to get providers interested in borrowing funds; (6) TA is a critical part of developing investments in FP and reproductive health; and (7) more than 5-7 years are needed to develop an investment (i.e., more than the typical 5-year time frame of USAID-funded subprojects). USAID should provide the additional funds or TA needed to ensure that promising PROFIT models have a chance come to fruition; PROFIT should follow these subprojects carefully to assess what can be learned from them and how they can be expanded or replicated. USAID should study carefully the experience documented by PROFIT and its two predecessor projects. Finally, the evaluation team believes strongly that USAID should continue to pursue work in the commercial sector, taking an R&D approach. in the future. (Author abstract, modified)