USAID/Guatemala evaluation : private sector development coordination project no. 520-0337

The project was designed to increase the participation of the private sector in nontraditional development programs, with the aim of increasing exports, and was structured such that CAEM had the administrative, financial, and reporting requirements under the grant. CAEM administered the grant to two subgrantees -- Fundacion Tecnologica (FUNTEC) and Fundacion de Desarrollo (FUNDAP) -- and served as the lead organization in nontraditional export promotion development and coordination of the Caribbean Basin Initiative (CBI) export and investment promotion efforts. Following some start-up difficulties, which were understandable given the very different goals and activities of the three organizations involved in the project, the structural arrangement seems to have worked well and overall, and the project was successful in many areas. However, the achievements of the implementing agencies have differed depending on the strengths and weaknesses of each. As coordinator of the overall project, CAEM organized an inter-agency steering committee to supervise the project. Representatives from FUNDAP, FUNTEC, and the International Executive Service Corps participated, although CAEM held the majority of seats on the committee. In general, this mechanism worked well to coordinate very different private sector activities under the project and CAEM was able to work cooperatively with FUNTEC and FUNDAP in administering the project. In fact, field interviews revealed high satisfaction with the administrative role played by CAEM, particularly with the intermediation function with USAID/G. In other areas, CAEM's activities in support of exports and investment promotion were limited by a lack of resources, but contributed to an increase in both jobs and foreign exchange, resulting in significantly greater leveraging of USAlD/Guatemala's resources. The first activity initiated under the FUNDAP component was a community-based integrated development project which sought to promote the principal economic activities of the altiplano region -- ovine production and traditional artisanry. Of the subprojects, this was the most successful in terms of institutional development and impact on the daily lives of the target group. Nonetheless, it generated virtually no foreign exchange and had almost no multiplier effect on the economy. Of the subprojects, only those implemented by FUNTEC could be considered to have been less than optimal, although this judgment is admittedly and necessarily subjective. Nevertheless, FUNTEC is one of the few institutions in Guatemala offering a potential channel for technology transfer. It also offers an important source of human capital as it gathers together a number of private sector entrepreneurs with a wide range of experience in business with the purpose of facilitating the dissemination of technology. In addition to the evaluation of this project, the team was directed to analyze the effectiveness of other microenterprise projects in Guatemala in order to provide USAID/G with recommendations regarding the design of future microenterprise activities. Although it is too early to evaluate several of these projects, the Guatemalan experience reveals that many of these projects have been successful in achieving the desired objectives of income and employment generation. In fact, recent studies have shown that microenterprises have an unrealized profit (and thus employment) potential that could be exploited with adequate credit and technical assistance programs. The evaluation team was comprised of experts in institutional private sector development, micro- and small-enterprise development, artesania, and marketing projects. The team used a straightforward methodology, consisting of interviews with USAID/G staff, interaction and on-site visits with implementing agencies, interviews with recipients of the services, and intensive document review. Approximately three weeks of field work were conducted in Guatemala in August, 1988. (Author abstract)