Mid-term evaluation of the loan and grant to the Siam Commercial Bank, Limited

Special evaluation covers the period 9/82-10/84 and is based on site visits, review of loan files, and interviews with SCB, other bank, USAID/T, and U.S. Embassy Economic personnel. The project's development impact is evident. SCB has disbursed all $4 million in A.I.D. and matching loan funds, reaching 15 enterprises, 5 of which were start-up ventures and 8 small-scale; the average loan was $266,747 and net assets per borrower after the loan were $660,714. (One borrower, medium in size at the time of the loan, now has net assets of over $10 million.) A total of 817 new jobs have been created at an average loan cost of $4,775 (and average total cost of $8,905). Women are the managers of 3 of the firms, participate in the management of at least 3 others, and constitute a significant portion of borrowers' workforces. SCB's flexible and thorough loan management has been commendable; the only major drawback in loan operations is that the firms have had to assume foreign exchange risk. SCB plans to continue the loan program with its own resources. Less successful, however, has been the project's grant component to establish an SCB Business Advisory Service (BAS). SCB has been uncertain as to what function the BAS should have and which activities should be financed under the grant. To date, grant funds have been used only for training of staff members. SCB feels that A.I.D. should add more resources to BAS so that funds will be available to assist borrowers throughout their loan periods. Project cost to the U.S. has been low because the interest rate charged by A.I.D. is only 1% percent below the U.S. Treasury rate. The project has shown that commercial lending is a viable means of private enterprise development, although when dealing with commercial banks, it is critical to understand at the outset their ojectives - especially as related to project objectives - and operational limitations.