Project assistance completion report : financial markets development

The project, which was implemented by Arthur Young and Company, was initially expected to provide support in 10 countries, but the number was expanded to 27. A financial markets survey was conducted in each, and various other TA services were provided in most countries. The project demonstrated that financial sector development has enormous potential and that financial market development is necessary to allow developing nation private sectors to become viable economic entities in the global market. However, due to the short-term nature of project TA, the development impact of the project was limited. The following lessons were learned. (1) Financial expertise is especially critical at early stages of local private sector development as USAID Mission staffs often lack knowledge about capital markets. The Bureau for Private Enterprise (PRE) should sponsor regional training programs in capital mobilization and should provide long-term TA and other help needed to strengthen financial markets. (2) Information acquired through the financial markets project was not shared adequately and consistently within PRE and other A.I.D. offices; this resulted in duplication of effort. Heavy personnel turnover at Missions is another factor necessitating consistent ongoing information sharing. (3) Mission buy-ins to A.I.D./W projects work better than IQC"s to promote long-term commitment to financial market development. (4) Capital market development strategies should include attention to the capital requirements of private enterprises, to A.I.D."s ability or inability to fill these requirements, and to involvement in this area by other agencies, international organizations, and financial institutions. A follow-on project, the Financial Sector Development Project (9400014) was initiated in FY89 with Price Waterhouse as primary contractor.