Project assistance completion report : Jamaica Agricultural Development Foundation technical support grant (532-0105-G-SS-5175-00)

Project TA complemented local currency funding (from the sale of Title II commodities), which was used to capitalize the JADF. Project goals were achieved, and the JADF -- a private nonprofit institution -- is very successful. JADF went from a deficit of J$865,485 in 1985 to a net operating surplus of J$3.915 million in 2/89. JADF's outstanding agricultural loan portfolio grew from J$1.75 million in 1985 to J$78.1 million in 3/90. As of the latter date, JADF has committed funds to 242 agricultural projects and made an additional 142 loans to rehabilitate the poultry and banana sectors following Hurricane Gilbert in 1988. The project also helped JADF to develop a competent and professional staff and to acquire modern automatic data processing equipment. In addition to its lending activities, JADF conducted and commissioned many studies and developed a market information system. JADF is now in a position not only to handle agricultural investments, but to implement other USAID/J projects. JADF was badly set back by Hurricane Gilbert, since many borrowers suffered heavy crop losses and could not meet loan payments. However, USAID/J decided to channel significant new funding through JADF as a hurricane response, saving the institution from the negative consequences of focusing only on high-risk agricultural lending. Several lessons were learned. (1) Venture capital activities need an environment of corporate openness and strong accounting and financial reporting standards for rapid development. (2) Provision of TA by a financial institution to its clients is a costly exercise which must be funded by grant funds when the capital base is limited. (3) Regularity and predictability of funding flows are critical to a financial institution's overall performance and cost-effectiveness. (4) Similar institutions could be created to invest P.L. 480 local currency generations in other areas, such as education, the environment, etc. (5) Most businesses perceive venture capital as interest-free start-up capital and are unwilling to allow the lending institution to participate in management. (6) Successful foundations need competent Boards of Directors. (7) A well-timed evaluation can be critical in the development of a project. (8) USAID/J's strategy of providing complementary grant-funded TA played a vital role in JADF's survival.