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Center For Economic Growth and Agricultural Development
>> Return to Home Page >> Central Programs >> Global Programs >> Economic Growth and Agricultural Development ACTIVITY DATA SHEET
PROGRAM: Central Programs
TITLE AND NUMBER: Improved access to financial and business development services, particularly to the microenterprises of the poor, 933-001
STATUS: Ending*
PROPOSED FY 2001 OBLIGATIONS AND FUNDING SOURCE: $20,000,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2003Summary: Central Programs managed by the Center for Economic Growth and Agriculture Development (G/EGAD) play a leading role in implementing the Agency's Microenterprise Initiative. The Initiative is a critical element of USAID's economic growth strategy to help the poor increase their incomes, assets, skills and productivity through microenterprise development. Four areas of emphasis are pursued under this Initiative: (1) expansion in the delivery of financial and business development services for microentrepreneurs; (2) improved capability of financial and business development service institutions to strengthen microenterprises; (3) dissemination of microenterprise best practices within USAID and to practitioners and donors active in the microenterprise sector; and (4) increased flow of needed credit from formal financial institutions to microenterprises and small businesses.
Key Results: A key program for implementing the Initiative is the Microenterprise Innovation Program (MIP). The five components of MIP have had wide impact. The Implementation Grant Program has included 59 PVOs and nongovernmental organizations (NGOs) and programmed over $73 million in 33 countries. The Program for Innovation in Microenterprise, a mission co-financing fund, has approved $29.1 million for 48 USAID mission programs including 11 new grants to benefit local NGOs, policy reform and appropriate government actions. MicroServe, a field support mechanism, has provided technical leadership to 24 USAID missions, while the Assessing the Impact of Microenterprise Services program initiated applied research work in a wide range of microenterprise programs. The Microenterprise Best Practices program has an ongoing research agenda that is pushing forward the frontier of microenterprise development. Additionally, the program has conducted groundbreaking research in new product development, micro-insurance, and business development services (BDS) performance measures.
Through the Micro and Small Enterprise Development (MSED) Program, the Agency uses standardized mechanisms such as loan portfolio guarantees to encourage banks and financial institutions to increase credit available to micro and small business enterprises (MSEs) in USAID-assisted countries. Up to 50% of net losses incurred by banks and financial institutions on the principal balance of qualifying loans made to MSEs are guaranteed by USAID through the MSED Program. Both U.S. and local privately owned financial institutions, private voluntary organizations (PVOs) and non-governmental organizations (NGOs) participate in MSED projects.
Performance and Prospects: The results of the Agency-wide Microenterprise Initiative have been impressive. In FY1999, a record 4.5 million poor clients, 2.5 million in Indonesia alone, had active loans from USAID-supported institutions. The loans were valued at $1.5 billion. Sixty-nine percent of the two million active loans managed outside Indonesia were below the Congressionally designated lines for poverty lending - $300 in Africa, Asia and the Near East, $400 in Latin America and the Caribbean, and $1,000 in Europe and Eurasia. Women constitute 70% of worldwide micro-finance clients and loan repayments average 95%. The MSED Program is currently active in 21 countries. Since the inception of the MSED Program, 81 guarantees have been authorized to support lending of a total of $242 million.
Possible Adjustments to Plans: In FY 2001, many of the aforementioned Microenterprise programs will come to an end as new flexible microenterprise mechanisms will provide training, technical assistance and other services in demand by Washington and overseas clients. In addition, the G/EGAD continues to promote the efficient provision of business development services as a complement to microfinance activities. A special round of the Implementation Grant Program in FY 1999 solely for micro-business development services grants and research activities resulted in $2.3 million for grants to six partners. The competition will be continued through FY 2001. The program continues to lead practitioners and other donors in identifying best practices and performance targets. The MSED Program anticipates that the FY 2001 obligation will support $25 million in guarantee commitments, generating up to $50 million in loans.
Other Donor Programs: Under USAID's leadership, the microenterprise programs continue to receive substantial attention from donors, international organizations and NGOs. Donors such as the Inter-American Development Bank, the World Bank, Japan, Great Britain, Canada, Australia, and the European Union are increasing their participation in microenterprise development. The Consultative Group to Assist the Poorest (CGAP), a multi-donor effort which USAID was instrumental in starting, now numbers 27 donors, including the World Bank and the InterAmerican Development Bank as well as many bilateral donors, and has established a strong program of microenterprise development. G/EGAD is spearheading creation of a CGAP working group on market research and product development and is in the lead to establish donor coordination to strengthen African programs. Finally, G/EGAD has played a leadership role in promoting market-driven business development services for microenterprises.
Principal Contractors, Grantees or Agencies: The Center implements the Initiative through private non-profit organizations, contractors, U.S. universities and host country, private NGOs and firms. In 1999, 600 microenterprise development institutions had active funding agreements Agency-wide. The MSED Program implements its activities through formal financial institutions, PVOs, and NGOs. These include banks in Bolivia, Mexico, Guatemala, Sri Lanka, Romania, South Africa, and the Philippines as well as the NGO non-bank financial institutions such as FIE, PRODEM and BancoSol in Bolivia.
Selected Performance Measures: 933-001
Indicator FY 97 (Actual) FY 98 (Actual) FY 99 (Actual) FY 00 (Plan) FY 01 (Plan) FY 02 (Plan) Indicator 1:
Number of active borrowers of institutions supported by G/EGAD/MD programs515,349 887,288 1,145,918 1,200,000 1,250,000A 1,300,000 Indicator 2:
Change in average loan size within an intermediate financial institution (IFI)'s portfolio under loan portfolio guarantee (LPG) coverage, per year, over the five-year term of the guarantee15,600 24,000 8,651 7,600 7,500A 7,500NA Indicator 3
Portfolio at risk of microenterprise institutions - percent6 8 8 10 8 8 Indicator 4
Utilization rate for the entire MSED portfolio - percent29 24 25 50 50 50 Indicator Information
Indicator Level (S)or(IR) Unit of Measure Source Indicator Description Indicator 1: IR Number of active borrowers G/EGAD/MD's IGP and PRIME programs and the Grameen Trust Number of active borrowers of Institutions supported by G/EGAD/MD programs Indicator 2: IR Average loan size by IFI under LPG coverage Quarterly qualifying loan schedules submitted by IFI's Average size of loan or line of credit granted to borrower by IFI under LPG coverage Indicator 3: IR Weighted average of the portfolio at risk (PAR) rate for all institutions supported under the IGP percent G/EGAD/MD's IGP program only Delinquent outstanding balance over 30 or 90 days Indicator 4: IR Utilization rate as of Fiscal Year End (FYE) for the worldwide MSED portfolio percent Contractor reports Amount of total loans outstanding (guaranteed portion) as of FYE as a percentage of aggregate Guarantee Limits (includes direct loan facilities).
* This strategic objective is coming to an end. These types of activities will take place primarily under the new objective 933-010. Some expenditures will occur beyond this fiscal year under this objective.
U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 77,375 DA 66,274 DA 11,101 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 353 SEED 353 SEED 0 SEED 0 FSA 0 FSA 0 FSA 26,598 DFA 19,650 DFA 6,948 DFA Fiscal Year 2000 19,724 DA 12,975 DA 0 CSD 0 CSD 0 ESF 0 ESF 0 SEED 0 SEED 0 FSA 0 FSA 7,586 DFA 3,672 DFA Through September 30, 2000 97,099 DA 79,249 DA 17,850 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 353 SEED 353 SEED 0 SEED 0 FSA 0 FSA 0 FSA 34,184 DFA 23,322 DFA 10,862 DFA Prior Year Unobligated Funds 4,811 DA 0 CSD 0 ESF 0 SEED 0 FSA 3,275 DFA Planned Fiscal Year 2001 NOA * 20,000 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 24,811 DA 0 CSD 0 ESF 0 SEED 0 FSA 3,275 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 121,910 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 353 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 37,459 DFA * Includes $17M in OYB transfers (LAC/5M; AFR/ 9.5M ; ANE/2.5M)
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Last Updated on: May 29, 2002 |
