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Implementation Completion Report (ICR) Review - (PCN) E-business For Small Business Development Project


  
1. Project Data:   
ES Date Posted:
03/21/2005   
PROJ ID:
P068290
Appraisal
Actual
Project Name:
(PCN) E-business For Small Business Development Project
Project Costs(US $M)
 100.8  0
Country:
Mexico
Loan/Credit (US $M)
 58.4  0
Sector, Major Sect.:
Information technology,
Information and communications
Cofinancing (US $M)
 42.4  0
L/C Number:
L7188      
   
Board Approval (FY)
  4
Partners involved
 
Closing Date
06/30/2008 06/02/2002
         
Prepared by: Reviewed by: Group Manager: Group:  
Kris Hallberg
Catherine Gwin Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
To help increase the competitiveness and growth of micro and small businesses (MSBs) in poor urban areas of Mexico through the adoption of e-business. "E-business" refers to the progressive process of (1) investment in information and communications technologies such as personal computers, other hardware, software, Internet connectivity, and local and wide area networking; (2) their application to individual business processes such as market research, production, finance, and management; and (3) the purchase and/or sale of goods and services between a business and other businesses, households, individuals and/or governments over computerized networks.

b. Components
The project had two components:

(a) Measures to build the demand and supply of e-business services, including (i) an e-business benefits awareness program; (ii) matching grants for business development services including information, training, market access and technology appropriate to MSB needs to adopt e-business solutions, (iii) business centers to provide distance learning, new market access, management tools, and online trading to reduce transactions costs; and (iv) the promotion of new employment of urban at-risk youth through ICT-based training and job placement.
(b) Technical assistance, hardware and software investments to (i) extend internet services to MSBs and to reduce regulations, increase innovation and competitiveness, and (ii) simplify institutional practices associated with business regulations involving registration, operating licenses and inspections, labor and tax registration and renewals via installation of electronic government services.

c. Comments on Project Cost, Financing and Dates
The Mexican Government's policy is to not provide budget additionality to agencies that receive Bank loans. Following loan approval and signing, the Ministry of Communications and Transport reversed its support for the project in late 2003 due to internal budget conflicts, and turned to the Ministry of Economic Development (SE) to execute the project. SE sought current and future funding from the Ministry of Finance (SHCP) to do so. Although SHCP provided funds to meet project expenditure needs for 2004, it did not provide assurances of funding in future years. SE decided not to execute the project, and the Ministry of Communications and Transport requested SHCP to cancel the loan.


3. Achievement of Relevant Objectives:

Not achieved.

4. Significant Outcomes/Impacts:

None.

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

The history of the project reveals a lack of commitment of the executing agency to implementing the project. It is not clear from the PCN whether the Bank shares responsibility for this lack of commitment, e.g., by failing to evaluate and ensure sufficient government ownership before going ahead with the project.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
Not RatedNot Rated
Institutional Dev.:
Not RatedNot Rated
Sustainability:
Not RatedNot Applicable
Bank Performance:
Not RatedSatisfactoryThe PCN provides evidence that the Bank worked to make the project effective and to adapt it to ensure consistency with SE's other small business programs. The project was cancelled due to lack of Government commitment to implement the project, but there is no evidence that the Bank was negligent in its analysis of that commitment when the project was designed and approved.
Borrower Perf.:
Not RatedUnsatisfactoryThere was a lack of commitment on the part of the executing agency (the Ministry of Communications and Transport) to implement the project.
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

Particularly in a country with a "non-additionality" policy toward Bank lending, it is important to be convinced of strong government commitment to the project in order to resist budgetary pressures.

8. Audit Recommended?  No

          Why?  

9. Comments on Quality of ICR:

Satisfactory on balance, but only marginally so: to provide the Borrower's point of view, the PCN should have contained copies of (or at least explicitly referred to) communications between the Bank and the Borrower on the decision to cancel the project. Neither did the PCN draw any lessons for future operations.

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