Promoting small and medium - sized business in Chad : the VITA private enterprise project

External interim evaluation covers the period 1/84-9/87. Despite extremely difficult economic conditions, the project has achieved some of its objectives and is an important element in Chad's modest financial sector. A well managed and staffed professional institution has been created that is now the chief source of term credit for small and medium businesses. The project has also created enterprises and jobs, assisted in war reconstruction, provided goods and services, and generated income. As of 9/87, some 169 loans totaling about $590,000 have been made for such undertakings as vegetable and fruit truck farms, purchase of plows, tailor shops, refrigeration repair facilites, automobile repair, private schools, metal fabrication, and pharmacies. However, the project now faces 3 significant financial problems: (1) declines in loan applications and in total loan volume, (2) operating costs which increasingly exceed loan volume, and (3) worsening repayment performance. The cause of these problems seems to be the 1986-87 economic slowdown and the decline in the number of sound projects after the initial surge associated with war reconstruction. Recommendations for solving the financial problems are to: (1) increase publicity for the program, (2) provide loans in new geographic areas, (3) increase average loan size and repeat loans to successful borrowers, (4) undertake joint lending with commercial banks, (5) become the credit arm for other PVO's and donors, (6) raise interest rates, (7) introduce fees for TA, (8) reduce staff, and (9) persuade the Government of Chad to provide office space and utilities. It is recommended that project termination be considered if these financial problems are not alleviated by the third quarter of 1988. If they are alleviated, A.I.D. must determine if continued support is warranted even though the project will not become financially self-sustaining in the foreseeable future.