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Implementation Completion Report (ICR) Review - Enterprise Rehabilitation & Development Project


  
1. Project Data:   
ES Date Posted:
07/31/2000   
PROJ ID:
P000464
Appraisal
Actual
Project Name:
Enterprise Rehabilitation & Development Project
Project Costs(US $M)
 15.2  5.45
Country:
Central African Republic
Loan/Credit (US $M)
 11.3  5.45
Sector, Major Sect.:
Financial Sector Development,
Finance
Cofinancing (US $M)
 0  0
L/C Number:
C2254      
   
Board Approval (FY)
  91
Partners involved
 
Closing Date
12/31/1998 12/31/1999
         
Prepared by: Reviewed by: Group Manager: Group:  
Kevin N. Lumbila
Alice C. Galenson Ruben Lamdany OEDCR

2. Project Objectives and Components:

a. Objectives
The project's objectives were to promote and finance viable private enterprises with a view to increasing output, employment and income by: (a) supporting the creation of new and rehabilitation of existing enterprises; (b) helping implement the financial sector reform program, emphasizing both institutional and policy aspects; (c) improving financing terms by emphasizing market responses and providing business advisory services and training; (d) strengthening investment promotion; and (e) supporting micro-enterpreneurs.

b. Components
The project had originally five components consisting of: (1) an apex line of credit (US$ 7.7 million); (2) a micro-enterprise development program (US$ 3.4 million); (3) technical assistance (US$ 2.5 million); (4) a training program (US$ 0.9 million); and (5) project preparation and other studies (US$ 0.7 million). Only three of the components were launched after considerable delays: the apex line of credit, the capacity building and the assistance to micro-enterprises.

c. Comments on Project Cost, Financing and Dates
The credit, for US$ 11.3 million, was approved in May 1991. It was expected to be effective in October 1991 but effectiveness was delayed until February 1992. Disbursements under the Credit were suspended between April and June 1997 and again in December 1998 due to army mutinies and the subsequent political instability. An undisbursed balance of US$ 5.85 million was canceled and the project was formally closed on December 31, 1999.


3. Achievement of Relevant Objectives:

The project failed to achieve its principal objective due to the prevailing economic and social conditions. Signed in July 1991, the Credit 's components did not become operational until August 1994, 5 months after the original date foreseen for the mid-term review. Apex Line of Credit: none of the five investment proposals to the apex unit obtained financing. The single application that reached the approval stage at CAADE had several informational gaps and was returned for further information. The apex line of credit was suspended in July 1995 as no funds were ever lent. Capacity Building: (a) Training Program: the Bank characterized this component as a failure in its supervision mission of August 1995 because of the sluggish development and implementation of programs by the responsible institution; and (b) Studies: No conclusive actions resulted from several studies conducted to develop the business environment. Assistance to Micro-Enterprises: Building on good results obtained through the piloting experience of the managing NGO, the micro-credit component distributed 6,255 loans for a total of more than US$ 2 million (of which 42% went to women) with a recovery rate of 90%. However, demand fell in 1994, and management of the component was shifted to the Government, where malpractice and fraud occurred.

4. Significant Outcomes/Impacts:

No significant outcome/impact was apparently achieved.

5. Significant Shortcomings (include non-compliance with safeguard features):

The inability to make use of the apex line of credit seriously undermined the outcome of this project.
6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
Highly UnsatisfactoryHighly Unsatisfactory
Institutional Dev.:
NegligibleNegligible
Sustainability:
Highly UnlikelyHighly Unlikely
Bank Performance:
UnsatisfactoryUnsatisfactory
Borrower Perf.:
Highly UnsatisfactoryUnsatisfactory
    The responsibility of this outcome should be shared equally by the Government and the Bank. They both embarked on a complex project where the Bank did not sufficiently assess the economic and political risks, the degree of government ownership and commitment. The Government did not provide the corresponding level of determination and coordination needed for a project of that complexity. The Government argued that project design and the staff selection were unilaterally decided by Bank experts without due consultation.
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

To ensure Government's ownership and commitment the Bank should have worked closely with Government officials in the design of this project.This project shows also that informal institutions like NGOs (VITA) can achieve better results than formal ones because of their direct contact with the grassroots.

8. Audit Recommended?  No

          Why?  

9. Comments on Quality of ICR:

The ICR is of satisfactory quality. It managed to provide a substantial amount of information despite the fact that most of the project files were destroyed during army mutinies.

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