Regional rural agribusiness development

Audit report covers the period 2/77-8/82 (certain information has been updated, based on later data) and is based on document review, interviews with project officials, and site visits. Implementation has been slow, with the project extended twice (the second time to 3/31/83); as of 7/82, only $8.8 of $20 million in A.I.D./CABEI funds had been disbursed. (By 3/25/83, all funds had been disbursed). Further, SP developmental impacts have not been evaluated as required; only one comprehensive evaluation has been conducted and CABEI has not implemented all of its recommendations. Although CABEI has financed more than the targeted number of SP"s (111 vs. 50 as of 9/82 and 141 as of 3/83), these SP"s are expected to generate only 5,088 of the targeted 18,500 new jobs. The project has improved CABEI"s capacity for agribusiness financing to only a limited extent, nor has CABEI administered the project in the most effective manner - CABEI assigned a low priority to the project, delayed reorganization plans, had difficulties adapting its procedures to project purposes, did not always follow established SP approval procedures, and bypassed established channels for processing subloans in Costa Rica and Guatemala. In addition, CABEI disbursed (with ROCAP approval) $3.1 million - 17% of project funds - for a rubber tree SP in Guatemala which did not benefit small producers, and the amount of AID/CABEI-financed technical assistance to participating ICI"s - the number of which has expanded to 17 as of 7/82, 21 as of 3/83 - was substantially below that anticipated. Delays in ICI submission of reimbursement requests have also slowed project implementation, as have host country economic and political tensions. In Costa Rica and Guatemala, ICI failure to deal with foreign exchange risks led to the assumption of a large portion of subloan financing by Central Banks and the ICI role has been limited to SP implementation and selection.