Project assistance completion report (PACR) : microbusiness promotion project, 520-0377

The project was implemented by ACCION International through subgrants to two local PVOs, Fundacion Tecnologica (FUNTEC) and Fundacion para el Desarrollo Integral de Programas Socioeconomicos (FUNDAP). The project achieved its purpose of increasing the incomes of the urban poor. Over 9,000 jobs were generated, and the provision of more than 33,000 loans along with training in credit administration and managerial assistance increased average sales by 25% for 17,000 low-income microentreprenuers, 34.4% of them women. Almost 3,000 participants were able to establish direct linkages with the formal credit system. The project also developed business support committees. FUNDAP and FUNTEC are now among the most technically competent institutions in the microenterprise field; the two PVOs have been integrated into a solid international microbusiness information network, are staffed by a number of experts, and their Board directors are successful entrepreneurs who promote the development of the microentrepreneurial sector. FUNDAP and FUNTEC have obtained more than Q5 million from Guatemala's private banking system for their credit funds, and with branch offices throughout the country are lending more than Q5.5 million a month. The project's rapid expansion into all departments in the country is largely due to prompt repayment of loans. When the project ended, the default rate was only 3.7%. Also to its credit, the project became self-sufficient just 19 months after start-up, and by project end, a 156% self-sufficiency rate had been achieved. The following lessons were learned. (1) In a microenterprise project, it is of utmost importance that implementing PVOs have a Board of Directors that is comprised of successful entrepreneurs who are active within the sector. Such expertise, along with adequate accounting and financial control systems, periodic implementation and financial reports, and annual reports, engenders confidence in the public and private entities with whom the PVOs work and ensures continued collaboration. (2) Microenterprise development programs can rapidly achieve self-sufficiency by providing mostly short-term loans, which allow a rapid rotation of funds. (3) Maintaining a low default rate requires training of credit users, on-the-job management and follow-up training, and a local client base.