Final report : evaluation of the Bangladesh industrial promotion project

The project has funded five different programs: (1) Project Implementation and Analysis Group (PIAG); (2) Small Industry Credit Insurance Scheme (SICIS); (3) International Executive Service Corps (IESC); (4) Business Advisory Services Center (BASC); and (5) Bangladesh United States Business Council (BUSBC). All the components except the BUSBC suffered from interruptions and unusually long bureaucratic delays. Although the project was signed in 1989, not more than four assignments were completed under the IESC until 1992. PIAG did not have a resident chief technical adviser until 1993. Some of these delays are due to domestic political turmoil and the election and installation of a new government as well as the 1991 cyclone and Gulf War. The project encountered more bureaucratic problems with the Bangladesh government than other USAID projects implemented about the same time. In one respect, the delays were fortuitous because they allowed implementation to coincide with a wave of reforms initiated by the newly elected government"s New Industrial Policy Act. Despite delays, the project (particularly the PIAG and IESC components) has helped to promote the development of private sector industry and to increase local and foreign investment in the Bangladeshi private sector. At the microeconomic level, it appears that TA from IESC volunteers and government policy reforms advocated by PIAG have contributed to $3 million in new investment and increased employment through 1,600 jobs that would not have otherwise occurred. The PIAG component has contributed to the policy reform debate through the production of eight major policy reports, several shorter papers, memoranda on policy issues, and the first issue of a quarterly review of policy reform issues, and the organization of three major policy issue workshops and a number of fora for key persons. The SICIS program has not been very effective. No private sector bank has applied to the program, and those banks strong enough to qualify have not expressed much interest. It should be noted, however, that the financial sector system in Bangladesh is in the midst of a difficult reform and transition process. Only about one-half of the local private sector banks are financially strong enough to qualify for the SICIS. However, SICIS did motivate the government to offer a loan guarantee program of its own through nationalized commercial banks. As of December 1994, the IESC program has fielded 34 volunteer executives, who have provided more than 1,960 person days of TA to Bangladeshi private sector enterprises. Most of these enterprises report strong satisfaction with assistance received and positive improvements in productivity as a result of implementing recommendations made by IESC volunteers. The BASC component has made only marginal contributions to small enterprises, although it has trained 787 people (including 151 women) in 243 organizations. It has also carried out 11 consulting assignments, and sponsored 38 training events, including seminars, fora, and a catalog exhibition. The Bangladesh United States Business Council was not a very successful venture. It was not able to cover its annual operating costs. In 1990, it had between 26 and 33 dues-paying members. The BUSBC produced some promotional publications, a short video, and brief investment opportunity studies that were provided to interested inquirers. It organized two short investment missions to the United States. The shortfall in project accomplishments can be explained mainly by (1) lack of support from the new government and (2) USAID"s inability to respond and adjust to the changes in the government"s level of interest and support. Lessons learned are as follows. (1) Implementation may have gone more smoothly if the project had been formally linked to the ISAC-2 agreement between the Bangladesh government and the World Bank. (2) Industrial sector reform and assistance to small enterprises are two different problems, and little appears to have been gained by trying to tackle them both with a single project design. (3) No project component is sustainable and none should be expected to become self-sustaining. The Mission"s Project Review Committee is correct to assume that a newly created NGO such as BASC will not be able to achieve financial sustainability unless there is compelling evidence to the contrary. In the future, the Mission should use project designs that avoid creating new entities and use already viable private sector organizations.