Intercountry technology transfer micro-business support

The PROPESA program has had highly favorable and significant impacts on its clients. In terms of key indicators, it achieved increases in value added as well as in wage rates and employment opportunities. These increases can be attributed to the credit and TA provided by PROPESA, as well as to its strategic planning, use of group loans, staff organization and training, loan policies, frequent visits to borrowers, collection efforts, etc. Additionally, a clientele of much smaller microenterprises has been reached (largely through the introduction of group lending). As an institution, PROPESA has successfully overcome serious loan delinquency problems through the design and implementation of effective loan recovery techniques. On the negative side, PROPESA has not yet been able to demonstrate that it can cover its operating expenses with operating revenues and thus continues to depend on donor funding, thereby implying that the viability and sustainability of PROPESA has not been insured. Overall, however, a comparison of PROPESA"s benefits (the value of the positive impact of its programs) with its costs (the operating losses that it has sustained since beginning operations) yields an extremely favorable result with a rate of return of more than 200%. For the future, PROPESA should seek to increase its access to funding other than that provided by international and national donors. Given the current quality of its portfolio, it may be able to implement creative financing techniques adopted from the formal financial sector through other mechanisms. Similarly, although PROPESA currently is not permitted to accept deposits from the public without becoming a fully regulated financial institution, other mechanisms may exist through which it could mobilize funds from its own borrowers, thereby providing them with valuable liquidity services. (Author Abstract)