Solidarios development fund; assessment of AID grant

Evaluation covers the period 2/80-4/81 and is based on site visits. Solidarios and the NDF's have made substantial progress in their cooperative efforts to promote and finance activities which yield significant socioeconomic benefits for the poor. Although first-year funding was limited to the four strongest NDF's (in Guatemala, Nicaragua, the Dominican Republic, and Mexico); 61% of project funds have been expended to date with additional loans having gone to NDF's in Bolivia, Colombia, Costa Rica, and Quito (Ecuador); and it is expected that by late FY83 all NDF's -- the aforementioned plus those in Guayaquil (Ecuador), Honduras, Trinidad and Tobago, Argentina, and Haiti -- will have received loans. Two NDF's which exemplify the project's successes and difficulties are the Mexican Development Foundation (FMDR), one of the oldest NDF's, and the Uruguayan Institute of Socio-Economic Promotion (IPRU), one of the newest. The FMDR has developed an impressive institutional structure to benefit 100,000 campesinos. Solidarios (i.e., project) funds have given the FMDR greater flexibility and allowed it to develop a successful strategy of using its reserves to guarantee and leverage commercial loans for campesino groups. The IPRU, as typical of NDF's in the Southern Cone, has been impeded by a highly inflationary environment and constant foreign exchange risk, and has been reluctant to quickly develop a large credit program. Nonetheless, A.I.D. funds are filling a critical gap and are allowing the IPRU to help establish and assist rural cooperatives. The project has thus taught that: (1) non-government organizations (NGO's) such as the NDF's can be an excellent vehicle for aid; (2) pushing too rapidly can exacerbate the shortcomings of less experienced NGO's; (3) NGO's lack a constant, reliable source of funds; and (4) the strong demand for credit faced by larger NDF's will require Solidarios to solicit international contributions in the future.