IFICOOP [Instituto de Financiamiento Cooperativo] evaluation

Evaluation, which also evaluates the Agricultural Cooperative Development Project (5130277), covers the period 4/75-4/78; no methodology is given. Under these projects, IFICOOP supported worker co-op enterprises, causing its near bankruptcy by 1/77. The government's sale of state-owned enterprises encouraged IFICOOP to help campesino, artisan fisher, and reform sector co-ops acquire such ventures. IFICOOP provided these A.I.D. target co-ops with loan guarantees, operating capital loans, technical advice, and temporary ownership of enterprises until the buyer-cooperative was formed. Problems arose as some ventures failed, the co-op structure complicated management functions, and IFICOOP's loan controls proved inadequate. IFICOOP's 25% delinquency level may indicate poor lending policies or an attempt to help high-risk clients (the rural poor). About 75% of the delinquencies consist of loans to reform sector co-ops that took large credits in 1976 and then suffered from bad crop prices, high input costs, and poor cooperative-level management. The Superintendent of Banks finally appointed a provisional manager for IFICOOP with total control. To solve its cash flow problem, IFICOOP drastically cut its deficit ventures and general operating costs. IFICOOP's inability to solve this crisis alone is inexplicable, as its staff already had identified the problems and remedies and were capable of taking action; a possible explanation is IFICOOP's own cooperative structure. The Superintendent's intervention will probably last until IFICOOP's recovery, which is likely but must be monitored closely. As of 3/78, lending operations have not returned to prior levels. A.I.D. has disbursed no loan funds to the credit fund since 11/77. It is recommended that IFICOOP: determine whether to implement (at its own expense) the evaluation system as currently designed; make firm plans for using the balance of the technical assistance component; and determine the capacity of the co-ops to absorb training.