REGIONAL RURAL AGRIBUSINESS DEVELOPMENT PROJECT

EVALUATION INCLUDED VISITS TO CABEI (CENTRAL AMERICAN BANK FOR ECONOMIC INTEGRATION) HEADQUARTERS, 4 ICI"S (INTERMEDIATE CREDIT INSTITUTIONS), 3 SUBPROJECT SITES AND 2 AID MISSIONS. A LOAN AGREEMENT FOR $15 MILLION AND $5 MILLION IN COUNTERPART FUNDS WAS SIGNED BETWEEN ROCAP AND CABEI ON 2/2/77. THUS FAR, 25 ICI"S HAVE BEEN APPROVED BY CABEI AS ELIGIBLE FOR PARTICIPATION IN THE PROJECT. IN ADDITION, A TOTAL OF 40 SUBPROJECTS HAVE BEEN APPROVED OR ARE UNDER CONSIDERATION BY CABEI. SUBPROJECT IMPLEMENTATION WAS SLOW -- TAKING ON THE AVERAGE 1 YEAR FROM ELIGIBILITY APPROVAL TO THE SIGNING OF COMMITMENT AGREEMENTS. TO SPEED UP THIS PROCESS, CABEI SHOULD EXAMINE ITS REVIEW PROCEDURES, AND SHIFT RESPONSIBILITY FOR FEASIBILITY REVIEW TO THE ICI"S THEMSELVES. MANY ICI"S (AND THEIR SUB-BORROWERS) HAVE SHOWN A NEED FOR SUBSTANTIAL ASSISTANCE IN SUBPROJECT IDENTIFICATION, DESIGN, AND FEASIBILITY ANALYSIS. SINCE SUB-BORROWERS AND THE ICI"S ARE UNLIKELY TO FINANCE SUCH ASSISTANCE, THE AUTHORS RECOMMEND THAT CABEI CHARGE THE ICI"S A CLOSING FEE (2%). EVALUATION TEAM DETERMINED THAT ONLY 6 OF 20 SUBPROJECTS SHOWED A SIGNIFICANT IMPACT UPON FARMERS IN TERMS OF DESIRED SOCIAL IMPACT AND INCOME DISTRIBUTION OBJECTIVES. IN RESPONSE, THE AUTHORS SUGGEST THE FOLLOWING GUIDELINES IN SETTING PRIORITIES FOR SUBPROJECT PROPOSALS. FIRST PRIORITY SHOULD GO TO SUBPROJECTS THAT RAISE THE INCOMES OF SMALL PRODUCERS. SECOND PRIORITY SHOULD BE GIVEN TO EMPLOYMENT GENERATION. ALSO, ANY PROPOSAL IN WHICH CAPITAL COST PER JOB EXCEEDS $5,000 SHOULD BE ELIMINATED. ALTHOUGH THE PP EMPHASIZED THE EXPORT MARKET, ONLY 1 SUBPROJECT, THUS FAR, HAS INVOLVED PRODUCTION FOR EXPORT. DIVISION OF PROJECT RESOURCES HAS BEEN INEQUITABLE. A REVIEW OF PRESENTLY APPROVED SUBPROJECTS AND SUBPROJECTS UNDER CONSIDERATION SHOWED 60% OF THE PROJECT RESOURCES RECEIVED BY COSTA RICA, 27% BY GUATEMALA, 9% BY EL SALVADOR, AND 5% BY HONDURAS. HOWEVER, THE AUTHORS PREDICT THAT IMPLEMENTATION OF THE SUGGESTED TECHNICAL ASSISTANCE PROGRAM WILL CREATE MORE BALANCE AMONG COUNTRIES.