IMPROVEMENTS ARE NEEDED IN AID"S ASSISTANCE PROGRAM IN CAPE VERDE

480 Title II, Rural Works, Primary and Non-Formal Education, Sal Desalination and Power, and Mindelo Desalination. Audit report covers the period 1/75-6/80 and is based on review of program records, site visits, and interviews with Government of Cape Verde (GOCV) and A.I.D. officials. All five projects have suffered from insufficient A.I.D. oversight and planning. For example, in the P.L. 480 Title II project: $2.1 million worth of commodities were provided without a binding Transfer Authority; $789,000 of sales proceeds were improperly used to defray storage and distribution costs; the GOCV failed to make detailed records available for audit review; GOCV storage facilities have been inadequate; and considerable quantities of donated food have been re-exported due to lack of coordinaton by the international donor community. Furthermore, the Country Development Officer/Bissau (CDO/B) has not converted the assistance from Emergency Relief status to a regular development program as required. The Rural Works Project has used the $3.9 million provided to defray local currency costs to cover payroll costs, and has failed to maintain proper time and attendance records. The Primary and Non-Formal Education project is behind schedule, as the GOCV cannot fulfill conditions precedent related to construction; yet the GOCV is proceeding with construction of two schools under an informal reimbursement arrangement with no limit set on total costs. As for the desalination projects, their viability is in question, for both will require large GOCV subsidies. It is recommended that the CDO/B: evaluate P.L. 480 Title II distribution and ensure that funds are deposited and expended in accordance with Transfer Authorizations; certify that storage facilities are adequate prior to call-forward; consider the availability of other-donor commodities and of surpluses in other food categories in weighing GOCV requests for P.L. 480 corn; and reassess the Sal project"s economic feasibility, ensuring continued GOCV support after termination of A.I.D. assistance.