Regional rural agribusiness development

Post-project PES covers the period 3/80-3/83 and is based on document review and interviews with CABEI and ICI officials. Both project purposes were achieved. Regarding the first, a total of 120 agribusiness subprojects were funded through 19 ICI"s, against respective targets of 50 and 10. Subprojects led to increased rural employment and small farmer income to the benefit of some 20,000 people. The demand for funds grew especially heavy toward the end of the project, in part due to a general situation of poor liquidity in the region. The availability of A.I.D. funds at below market rates enabled ICI"s to hold down borrower costs and therefore increase profits. As to the second purpose, CABEI has established a $20 million revolving agribusiness fund for channeling medium-term, fixed-interest capital to agribusinesses throughout the region. In doing so, CABEI partially reoriented its philosophy, and through continued and improved promotion practices helped ICI"s, whose participation was a key element of the project"s success, overcome their inexperience in agribusiness lending. Both CABEI and ICI now have trained personnel capable of managing their agribusiness lending activities. Although CABEI functioned credibly amidst major regional political and economic uncertainties, the evaluation team proposed that to increase its capability for agribusiness lending CABEI should: streamline loan approval and disbursement procedures; increase TA to sub-borrowers; integrate and upgrade subloan monitoring and evaluation; adjust loan terms to reflect market rates; and promote the program more effectively with ICI"s. Lessons learned are that ICI interest in agribusiness lending can be successfully generated and that project design must allow adequate time for the participating institutions to become familiar and comfortable with new areas.