Evaluation report : Salvadoran Foundation for Economic and Social Development (FUSADES)

FUSADES is the implementing agency for eight A.I.D. projects: (1) 519-0265, Agricultural Diversification and Agrarian Reform Sector Support; (2) -0287, Industrial Stabilization and Recovery; (3) -0303, Water Management; (4) -0304, Urban Small Business; (5) -0316, Association Strengthening Activities; (6) -0327, Agribusiness Development; (7) -0336, Private Sector Initiatives; (8) -0323 Free Zone Development. As of 9/88, a total of $78.7 million has been authorized for these eight projects. This evaluation, however, focuses not on A.I.D.-supported projects, but on FUSADES programs (usually there is not a one- to-one project-program correspondence). The programs reviewed are: (1) FORTAS (Association Strengthening Activities); (2) DEES (Economic and Social Studies Department); (3) FIDEX (Development of Assembly Industries for Export); (4) PRIDEX (Promotion of Investments and Export Diversification); (5) DIVAGRO (Agricultural Diversification); and (6) PROPEMI (Promotion of Small and Micro Enterprises). The evaluation finds that generally, FUSADES has performed well. Programs such as PROPEMI have contributed to improved private- public sector relationships. Within 5 years, FUSADES has been able to present draft legislation to the Government and see it approved. It has presented an economic rehabilitation strategy to the government and seen much of it become policy. FUSADES has also fostered social consciousness in the private sector. It facilitated the rehabilitation effort following the 1986 earthquake, and it has promoted the establishment of private foundations with social programs in education (FEPADE), housing (HABITAT), and industrial safety (FIPRO). Also, FUSADES-generated nontraditional export growth is substantial and increasing rapidly. FUSADES has demonstrated a capability to expand its personnel and modify its organization as necessary to carry out A.I.D. activities, and there is no reason to believe it cannot conduct some additional activities -- as long as A.I.D. is willing to pay virtually all the costs (as it does now). However, the issue of sustainability has recently been raised by A.I.D., and while FUSADES is trying to respond, e.g., by developing a 5-year plan for reducing costs and generating additional income, it appears that A.I.D. is requiring that cash flow scenarios show full viability by 1992 as a pre-condition to additional grants. Thus, it seems that A.I.D. is applying a higher than usual standard to FUSADES -- which is particularly unfair in the environment (military, political, economic, and social) in which it has had to operate. In sum, FUSADES has become a capable organization dedicated to Salvadoran economic and social development, and A.I.D. should be interested in seeing it have the opportunity to continue playing an important role. (Author abstract, modified)