Private enterprise development

The following lessons were learned. (1) Positioning USAID in a support role for preexisting private and public sector support institutions can be a viable way of strengthening institution management, decisionmaking, services to client firms, and, ultimately, maximum privatization of essential services. (2) Small and medium-sized enterprise (SME) performance can be significantly improved via coordinated and concerted action by support institutions providing training, TA, and market information. (3) Public and private institutions can work fruitfully together when skill and attention are devoted to dialogue, information exchange, and mutually perceived benefits. (4) Good communications, diplomacy, and tact are essential if each participating support institution is to have both freedom and willingness to provide innovative services to SME"s. If private support institutions are strong, USAID can play a stronger support role and a lesser directing role than is usually the case with other kinds of projects and programs. (5) Financial systems in countries like Guatemala retain strong conservative tendencies. Inducements for lending to riskier, SME"s may require more than loan guaranties. (6) Private sector oriented projects require both conceptual and operational flexibility in order to cope with volatile conditions affecting the sector, including changing economic and political conditions. (7) Good and shared information is a sine qua non for effective collaboration among support institutions, close monitoring of key institutions" activities, and impacts upon client firms. (8) Carefully orchestrated policy dialogue can lead to collegiality among public and private sector institutions and willingness to depart from tradition in streamlining legislation, regulations, and procedures affecting access to market opportunities. (9) Fundamental change requires a lot of time; USAID missions should demonstrate flexibility in estimating the length of large scale private sector support programs. (Author abstract) For evaluation findings, see the abstract of XD-ABC-152-A.