Small and medium industry development

Final evaluation covers the period 10/01/75-12/15/78 and is based on interviews with implementing agency and A.I.D. personnel. While the project, implemented by the Colombian Government-owned Corporacion Financiera Popular (CFP), achieved its purpose, the TA program was markedly less successful than the credit component. The expected amounts of confidence, community, professional, and production marketing credit were lent, but the exact distribution among the four credit lines varied somewhat from targets. Regionally, Bogota accounted for 25% of all credit, while Cartagena received only 2%; the overall distribution of loans reflected the pattern of Colombia"s industrial development. Analysis of loan portfolio information shows that the 9.4% default rate was normal; community credit to cooperatives was the most difficult to recoup; Cartagena had the highest default rate (48.8%); and that the high default rate for confidence credit (9.3%) was closely related to borrowers" lack of adequate collateral. In the future, the administrative and technical ability of small entrepreneurs should be judged and TA supplied before loans are made. Contributing to the default rate were fluctuating prices, occasionally weak CFP financial analyses and borrower administrative abilities, insufficient or weak collateral, and lack of continuous credit follow-up by the CFP. Under the TA program, the CFP conducted 207 training and motivation short courses, seminars, and training sessions for 3,441 managers; provided consultant services to 499 firms and accounting assistance to 463 firms; distributed 6,000 pamphlets monthly; and answered 512 requests for technical information. The TA program was hindered, however, by a 6-month start-up delay, high turnover of personnel, a lack of post-seminar follow-up, the absence of a long-range TA plan, and the CFP"s use of funds for salaries rather than TA activities. The evaluation concludes that the TA needs of small entrepreneurs were so great that dispersing the TA effort produced little impact; TA should have been made available to industrialists outside the loan program; and CFP loan supervision should have been complemented by TA.