Mid-term evaluation report : private sector agricultural investment project (PRIDA)

External evaluation covers the period 3/83-3/85 and is based on site visits, document review, and interviews with Development Finance Corporation (COFIDE) and bank personnel and with beneficiaries. The project has successfully bypassed traditional impediments to medium-term lending by commercial banks in Peru. Eleven commercial banks have made a total of 92 medium-term agricultural loans, and in all, 22 banks signed lending agreements with COFIDE. The loans were made to good, well-planned operations, many of them to entrepreneurs who have the initiative to develop profitable farming operations, but who could not have launched their farms without a medium-term credit program such as this. Nearly $5 million has been disbursed, far above projections. However, the average loan size ($54,907) is also larger than expected, and it likely that only 300-600 loans, rather than the targeted 1,000, will be made over the life of the project. Also, although initially interest was not being charged at or near market rates, this problem has been resolved. The project has fallen short in training, promotion, and TA. A credit manual prepared by COFIDE for intermediate credit institutions (ICI"s) is more promotional than instructional, no TA program has been established for farm operators, and the seminars and conferences held for ICI personnel were insufficient to create the required understanding of medium- and long-term credit analysis and of project procedures. Two COFIDE personnel were trained in-house, and more in-house training is expected. Most importantly, the Government of Peru (GOP) has not met its commitment to provide counterpart funds to maintain the dollar value of the project loan fund (the project was temporarily suspended in 12/84 for this reason); with elections in progress, this issue cannot be resolved until early in FY86. Nor is it likely the GOP will be able to meet a separate co-financing requirement. Thus, USAID/P must decide whether to continue or terminate project. A major recommendation is to continue the project at a reduced level, eliminating the co-financing requirement and postponing the counterpart funds requirement. It is further recommended that the project target the nontraditional export subsector.