Project assistance completion report : agro-industrial development project (532-0081)

Component 1 helped capitalize the ACB's Agro-Industrial Development Fund for projects submitted by private entrepreneurs through commercial banks (CB's). Implementation was hampered by the ACB's insistence that it review CB assessments of loan applications, which the CB's regarded as an intrusion into the banker-client relationship. Based on recommendations made by Checchi and Co. - which provided TA and ACB staff training and prepared pre-investment feasibility studies - USAID/J simplified the loan procedures and strictly limited ACB's role in loan approval. In all, the 5 participating CB's executed 24 loans for $4,950,164 - of which the Government of Jamaica (GOJ) provided $3,178,041 - for horticulture and food processing activities; the funding proved timely for Jamaican horticulture, which developed simultaneously with the project. Component 2 provided, during a critical period in the GOJ's agricultural diversification effort, a core staff and operational support to Agro 21's IP program for high value crops suitable for cultivation on marginally productive sugar holdings. Under a complex and ambitious Strategic Planning Program, Agro 21 prepared analyses of sub-sectors and commodities, enlisting for this effort the services of various local experts, the Ronco Consulting Corp., and the U.S. Department of Agriculture. Overall, Agro 21 commissioned 15 sub-sector profiles, 12 targeted studies, and 3 pre-feasibility studies. The Program, which as a whole established an information base for IP activities and institutionalized a capacity to generate that information, began and ended with a series of reports describing the investment potential of select import substitution commodities. (The specific commodities studied by Agro 21 are identified in the report.) The project also upgraded the computerized geographic information system of the Ministry of Agriculture's Rural Physical Planning Unit. Project experience reinforces the need for careful and realistic project design. The six amendments and the slow disbursement rate indicate that the project was overdesigned and overfunded. This is especially true of component 1, which overestimated private sector demand for long-term agro-industrial credit and failed to anticipate the problems posed by an investment environment in which even preferential interest rates ranged from 14.5% to 19%. Also, the ACB Fund, may not have been the best way to deliver credit in a country undergoing austerity and structural adjustment programs.