Provincial enterprise development

The project will establish a capital fund for lending to businesses, undertake a Provincial Private Enterprise Development (PPED) program, and upgrade the institutional capabilities of the Haitian Development Foundation (HDF) and other implementing organizations. The capital fund, to be managed by a Fund Management Group (FMG) within the HDF, will provide financing, through intermediate financial institutions (IFI"s) such as the Banque de Credit Immobilier (BCI) and Societe Financiere Haitienne de Developpment (SOFIHDES), for small, medium, and microenterprises, mainly at the provincial level, as well as for larger projects with a substantial provincial impact, especially in regard to employment generation. Loans from the fund will be of three types: (1) onlending to microenterprises through an IFI; (2) risk sharing, whereby the fund will share the risks of a loan or undertaking with an IFI; and (3) direct lending for provincial projects for which no IFI co-sponsor can be found. Additionally, Mennonite Economic Development Associates will conduct a pilot activity comprising 35-40 loans to test the feasibility of mortgage lending to families with an income of $300/month or less. The PPED component, which will be constituted as a new operational unit within the HDF, will aim to extend to provincial entrepreneurs services comparable to those available in the capital, e.g., market information, production TA, and assistance with documentation requirements for credit, licenses, and incorporation. PPED will include: (1) baseline studies of the investment climate in 6 provincial centers; (2) an outreach activity offering services such as data gathering, field work, information assessment to Port-au-Prince-based private firms and financial institutions wishing to extend operations to the provinces; and (3) assistance to entrepreneurs in planning and presenting proposals to potential investors (e.g., commercial banks or development organizations) via pre-feasibility, feasibility, and follow-up analyses, help in negotiating loans with banks, etc. To promote the PPED concept in the business and financial communities, at least 2 meetings of a "National PPED Forum" will be held each year. The PPED program is expected to create $2 million in new investment in provincial enterprises, resulting in some 2,500 new jobs. Project institutional support will operate out of the FMG and will encompass long- and short-term TA, as well as short-term in-country and U.S. training to the staffs of HDF, FMG, and participating IFI"s and NGO"s. This component will also finance several formal studies on such themes as financial sector analysis, loan demand and risk analysis, alternative financial instruments (e.g., risk sharing), and financial policies.