ECUADOR

	FY 1998 Actuals	FY 1999 Estimate	FY 2000 Request
Development Assistance	$7,800,000	$11,578,000	$11,551,000
Child Survival & Disease Fund	$1,000,000	$1,950,000	$550,000
Economic Support Funds	$1,000,000	$1,200,000	$1,500,000

Introduction

Several U.S. national interests are served through assistance to Ecuador: the preservation of political stability and peace in the region; the strengthening of democratic institutions in order to reduce threats to democracy and democratic processes; the improved management of natural resources to secure a sustainable environment; the protection of human health and the stabilization of population growth; and, the reduction of drug trafficking and money laundering resulting from Ecuador's strategic location between Colombia and Peru.

The Development Challenge

Ecuador remains one of the poorest, least developed countries in South America. An estimated 56% of the population, or about six million people, live in poverty. Of these, roughly two million live in extreme poverty, i.e., they could not meet their basic nutritional requirements even if their entire incomes were spent on food. Among the rural population, poverty affects approximately 75% of the population in the highlands and on the coast, and 90% in the Amazon region. As a result of continued poor macroeconomic performance over the past two decades, social indicators have worsened and poverty has become even more widespread. In 1998, Ecuador's per capita growth was negative, with an economic growth rate of less than one percent and a population growth rate of two percent. The inflation rate for 1998, the highest in the region, was 43.4%. Stagnant economic growth, compounded by the lack of domestic and foreign investment, has led to a further deterioration in employment levels. In 1998, 12% of the economically active population was unemployed, the highest unemployment rate in the country's history. Underemployment stands at 42% and real wages remain 26% below 1986 levels. Additionally, income distribution in Ecuador is among the worst in the Andean region, with roughly 80% of the income share of GDP accruing to approximately 20% of the population. Combined, these factors, in the recent past, have put Ecuador's fragile democracy at risk. Weak democratic institutions, particularly judicial, have permitted endemic and widespread corruption to occur. This has fueled discontent among the country's poor majority and led to significant increases in crime rates, particularly on the coast. Moreover, Ecuador's status as a "key" biodiversity country, with numerous habitats of unique biological value, is seriously threatened as the landless poor seek to meet their economic needs through unsustainable methods.

Ecuador's fiscal deficit now stands at six percent, one of highest in the LAC region. This, combined with the lack of a coherent macroeconomic reform program, has seriously impeded efforts to achieve a Stand-by Agreement with the International Monetary Fund (IMF), and has effectively blocked the renegotiation of Paris Club Debt (including U.S. debt) in the amount of $468 million. The problem of pervasive and endemic tax evasion, particularly by the wealthy, is further straining relations with the IMF and the international financial community. Recent attempts to address this (by substituting the income tax with a one-percent tax on financial transactions) has further strained relations with the IMF and created greater uncertainty nationally and internationally about the future of the economy, as well as Ecuador's ability to address the daunting economic and social challenges it now faces. In sum, Ecuador will be hard pressed to generate the level of resources needed to close the financing gap for 1998. After servicing the country's external debt (which remains at $15.1 billion and requires a debt service equal to 40% of the national budget), military expenditures and federal salaries, little or nothing will be left in 1999 for badly needed social sector investments, particularly in education and health.

The election of President Jamil Mahuad in July 1998 brought room for optimism that socio-economic challenges can be effectively addressed. President Mahuad was elected on a platform of modernization and stability. During his first 100 days in office, peace was achieved with Peru, ending over a one-and-a-half century border dispute. This singular event permitted the country to regain some of the respect and recognition it had lost from the international community. Mahuad also eliminated gas and electric subsidies, while maintaining popular support. Additionally, the new Ecuadorian Constitution, effective in August 1998, contains fundamental principles that permit greater efficiency in government and that afford greater protection of individual citizens' rights, thus offering a new framework for addressing institutional weaknesses.

USAID assistance is at a crossroads, having played a seminal role in promoting critical policy and legislative reforms in the areas of environment, health and family planning, rule of law, good governance, and economic growth (microenterprise development). USAID will fully phase out its economic growth and health and family planning activities in FY 2000 and focus on the environment, judicial reform, and anti-corruption activities. An emerging challenge will also be targeted support for the Ecuador-Peru peace accords. USAID will provide a leadership role in key sectors and will implement activities that will serve as models for replication and/or expansion by the Government of Ecuador (GOE) with the support of other, major donors.

Other Donors

USAID provides about 12% of donor assistance to Ecuador and ranks fourth among multi- and bilateral donors. The bulk of other donor funding (grant and loan) is provided by the Inter-American Development Bank (industry, environment, health, education, microenterprise and democracy), the Andean Development Corporation (infrastructure and banking), the World Bank (industry, environment, education, health, potable water and democracy), Japan (energy and health) and Spain (transportation and telecommunications). USAID assistance plays a catalytic role by influencing the planning, design and implementation of other donor programs and by leveraging the significant assistance they are able to provide. For example, through dialogue and coordination with the IDB and the World Bank in the area of administration of justice, USAID has successfully engaged these two key donors in a complementary and sustainable manner that will significantly improve the attainment of U.S. national interests in Ecuador, by encouraging the creation and expansion of an NGO fund accessible to key civil society organizations. Similarly, it is highly likely that the IDB will devote substantial investments to continuing education reform and microenterprise development activities initiated by USAID.

FY 2000 Program

In FY 2000, the USAID program will focus on key activities in the strategic areas of environment, democracy, health and family planning, and microenterprise development. USAID partners, largely non-governmental, will work with the GOE to ensure that needed reforms are adopted and implemented. Specifically, USAID will:

• Promote biodiversity conservation models that will be replicated by the GOE and other donors;
• Identify appropriate technologies for preventing the health hazards caused by uncontrolled industrial and other emissions;
• Support the decentralization and deconcentration of health care administration, alternative financing schemes, quality improvement measures, and the long-term, financial sustainability of health and family planning services;
• Promote a more fair and effective criminal justice system that increases access and public legal defense and reduces systemic and deep-rooted corruption; and,
• Provide assistance to expand opportunities and participation by low-income groups through increased access to financial services by microentrepreneurs throughout the country.

ECUADOR

FY 2000 PROGRAM SUMMARY
(in thousands of dollars)

USAID Mission Director: Hilda M. Arellano

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
SO 1 - Biodiversity conserved in selected pro-tected areas & buffer zones - DA	---	---	3,300	---	---	---	3,300
SO 2 - Increased use of sustainable FP/MCH services - DA - CS	--- ---	6,800 550	--- ---	--- ---	--- ---	--- ---	6,800 550
SO 3 - More effective and fair criminal justice system - DA - ESF	--- ---	--- ---	--- ---	1,451 1,500	--- ---	--- ---	1,451 1,500
SpO 1 - Improved capacity of public and private insti-tutions to prevent pollution - DA	---	---	---	---	---	---	---
SpO2 - Increased access to financial services by micro-entrepreneurs. - DA	---	---	---	---	---	---	---
Totals - DA - CS - ESF	--- --- ---	6,800 550 ---	3,300 --- ---	1,451 --- 1,500	--- --- ---	--- --- ---	11,551 550 1,500

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ACTIVITY DATA SHEET

PROGRAM: Ecuador
TITLE AND NUMBER: Biodiversity conserved in selected protected areas and their buffer zones, 518-SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $3,300,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2003

Summary: With only two percent of South America's geographical area, Ecuador contains numerous habitats of globally and regionally outstanding biological value. This environment, however, is seriously threatened, since Ecuador has the highest population density, the third highest population growth, and one of the lowest per capita GNP incomes in South America. Ecuador suffers the highest rate of deforestation among the Amazonian countries (1.2% or over 200,000 hectares per year) as a result of agricultural expansion by landless poor, timber extraction, and petroleum production. The purpose of this Strategic Objective (SO) is to conserve the biodiversity in selected protected areas and their buffer zones and to develop models for replication throughout Ecuador. With the replication of these models by the Government of Ecuador (GOE) and other donors, ultimate beneficiaries will be the majority of the nation's poor, especially women, children and Ecuador's indigenous communities who directly depend on sustainable use of natural resources.

Key Results: Key intermediate results will be a strengthened capacity of targeted nongovernmental organizations (NGOs) and civil society organizations (CSOs) active in biodiversity conservation; the adoption of economically viable natural resources management (NRM) practices; and key policies and legal frameworks introduced and/or implemented to conserve biodiversity. It is estimated that total funding for conservation activities implemented by key partners (NGOs/CSOs) will have increased from $1.1 million in FY 1997, to $3.8 million in FY 2003 and that the administrative and financial capabilities of these partners will have been significantly strengthened. By the end of FY 2003, 30.9% of households in partner communities will have adopted conservation practices, as opposed to 3.2% in FY 1996.

Performance and Prospects: With USAID support, some critical steps towards improved NRM and biodiversity protection have been taken. Of particular significance is the development of the national legal framework which enables the demarcation of community lands. The paralegal program has trained and assisted local people in community law and legal advocacy on issues such as land titling and natural resource access rights. Partner NGOs have developed coalitions of community groups, local governments and private enterprises that will be better able to influence GOE policy and achieve economic sustainability of natural resources while preserving Ecuador's biodiversity. Ecuadorian NGO partners have been strengthened. Activities in the Cotacachi-Cayapas (RECC), Antisana, and the Cayambe-Coca (RECAY) Ecological Reserves are strengthening secondary-level organizations to test and extend models of sustainable biological resource use. Resource management plans have been completed for 638,100 hectares in and around the ecological reserves. Indigenous communities have received formal, legal title for 24,000 hectares of ancestral lands, also located in and around the ecological reserves. Agroforestry/garden plots have been implemented in communities in the buffer zones. Commercialization activities are now producing significant results as community forestry initiatives are helping local communities in the RECC buffer zone to obtain an increase in profits from sustainable forestry operations, ecotourism, cheese making, and handicraft activities. USAID successfully sponsored the establishment of an endowment fund through water-user fees collected for the management and protection of RECAY, which is the major source of water for greater metropolitan Quito. Community park guards are bolstering the weak park protection system with assistance from USAID partners and second-level organizations. The Galapagos Marine Reserve has been designated as a protected biological area and the Special Law for the Galapagos Islands, which, among other important aspects, prohibits commercial fishing within forty miles of most parts of the islands and empowers local institutions to take the leadership in the affairs of the archipelago, was approved by the Ecuadorian Congress and published in the Official Register. Relations between scientists at the research station and local fishermen in the Galapagos have improved so that they are jointly discussing and working to resolve issues related to marine reserve management. USAID is also assisting the Ministry of the Environment to establish policies, strategies and legislation for sustainable forestry development in Ecuador.

USAID will continue ongoing activities in the protected and buffer zone areas of the RECC and the RECAY to develop replicable models. Ecuadorian partner NGOs will carry out the types of activities currently being developed and tested in and around protected areas in additional communities. Key activities include forest management, land demarcation and titling, and the development of income-producing ventures based on non-timber forest products and efforts to strengthen forest dwellers' (including indigenous and Afro-Ecuadorians) claims to land and resources, and to prepare them to enter into productive partnerships with the commercial sector. Support will continue to the Charles Darwin Foundation in the Galapagos for the conservation and preservation of the Islands' marine reserves and their native and endemic species. Now that the Special Law for Galapagos has been passed, the Ministry of the Environment, in consultation with key groups from the Galapagos, is preparing a set of implementing regulations that will make possible the implementation of the Special Law. Stakeholders will work to revise the Galapagos Marine Reserve Management Plan.

Possible Adjustments to Plans: None contemplated.

Other Donor Programs: Host country, other donor and NGO contributions to achieve the SO total over $2 million. Complementary contributions include World Bank and IDB funds exceeding $28 million. The World Bank, through its Global Environmental Facility, is financing a biodiversity protection project which complements USAID-supported activities in the Galapagos, RECC and RECAY. In addition, the IDB is financing a feasibility study which may lead to a loan of up to $15 million for environmental activities in the Galapagos. Although USAID provides only a small proportion of total donor assistance in this sector, USAID environmental activities are on the cutting edge and lay the groundwork for other, major donors. For example, the IDB is capitalizing on the solid waste management and quarantine studies previously supported by USAID in the Galapagos to expand this activity.

Principal Contractors, Grantees or Agencies: USAID funding is provided principally to U.S. and Ecuadorian NGOs. Key partners include CARE/Ecuador, The Nature Conservancy, and the Charles Darwin Foundation. Both CARE and TNC have developed strong working relationships with Ecuadorian partners (e.g. EcoCiencia, Jatun Sacha, Fundación Antisana, Fundación Ecológica Rumicocha, Fundación Arco Iris, and Fundación Natura) which, in turn, work with local customers, e.g. community groups and indigenous organizations, to carry out planned activities. In addition, specific activities are being undertaken in collaboration with the U.S. Department of the Interior and the Peace Corps.

Selected Performance Measures:

	Baseline	Target (2000)	Target (2003)
Hectares in selected protected areas and their buffer zones under implemented NRM plans	70,000 (1996)	1,252,000	1,402,000
Increased number of hectares under legal title outside of selected protected areas	10,000 (1996)	150,000	300,000
Key policies, legal frameworks and enforcement mechanisms prepared, modified and introduced to improve biodiversity conservation	6 (1997)	23	27

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ACTIVITY DATA SHEET

PROGRAM: Ecuador
TITLE AND NUMBER: Increased use of sustainable family planning/maternal child health services, 518-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $6,800,000 DA; $550,000 CS
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2000

Summary: Both infant and maternal mortality are unnecessarily high in Ecuador, especially among the rural/urban poor and indigenous groups. In recent years, the economic and political crises facing Ecuador's public health system have severely jeopardized efforts to sustain trends towards acceptable levels of reproductive and child health. Harsh budgetary constraints faced by the GOE and its Ministry of Health (MOH), where most of its budget is now used to pay salaries and hospital operations, make it impossible for the MOH to maintain adequate programs in family planning and maternal and child health. As a result, these programs have become dependent on external support. Merely increasing the budgets for public sector health programs is clearly insufficient to address the country's fundamental health problems. A major modernization/health reform effort by the MOH is underway, with a focus on targeting, decentralization, alternative financing, and quality improvements. In addition, USAID's NGO partners have demonstrated significant successes in achieving health reform at the local and provincial levels, providing sustainable models, as well as policy analyses and studies relevant for national level change.

The purpose of assistance under this SO is to increase the use of sustainable, voluntary Family Planning (FP) and Maternal/Child Health (MCH) services. Children under five and fertile-aged women represent the principal beneficiaries of this SO. By the year 2000, approximately two million women and children will have benefitted from services developed, improved and/or expanded with USAID assistance. Meanwhile, key technical and financial support by the Mission to planned policy reforms by the GOE in the area of modernization, such as administrative decentralization and deconcentration, will impact positively on a large portion of the population.

Key Results: Key results will be the increased sustainability of FP and health NGO partners; and, improved quality and access of FP/MCH services. Cost recovery will permit nearly 100% financial self-sufficiency for Ecuador's two largest FP NGOs (APROFE and CEMOPLAF), and approximately 80% financial self-sufficiency for four, key health NGO partners. Couple years of protection (CYP) provided by APROFE and CEMOPLAF will have increased from 279,117 in FY 1994, to an estimated 494,654 in FY 2000, and the number of service delivery points with improved and/or expanded packages of MCH services will have grown from 3 in FY 1995 to a projected 118 in FY 2000.

Performance and Prospects: In the areas of FP and population, USAID continues to be the major donor and therefore a critical actor in achieving reduced fertility, increased contraceptive use to prevent unwanted pregnancies, and improved women's health, especially through NGO service providers. In FP, activities will focus on support to the network of 41 private clinics operated by USAID's two Ecuadorian NGO partners, thereby preserving USAID's considerable investment over the past three decades and ensuring the continued provision of quality FP and MCH services through the private sector. To achieve the self-sustainability of these programs and to better serve the poor, USAID will assist partners in the areas of cost-effective service delivery, commodity management, effective marketing of products and services, and in the cross subsidization of health and family planning services. Our NGO FP partners have reached ever-higher levels of cost recovery, while remaining focused on access provision to less affluent and under-served populations of women. In 1998, these NGOs reached an average of 79% cost recovery. USAID support for these NGOs through the year 2000 will enable them to achieve nearly 100% financial self-reliance. Additionally, significant increases in a financial self-sustainability fund derived from program income should ensure their financial viability at current levels of service provision for another 10-15 years.

In the health sector, USAID will support reform efforts through activities managed by U.S. and Ecuadorian NGOs and the MOH. These activities will: target the provision of health services to at-risk groups; increase the availability of alternative health care organization and financing mechanisms; and offer models of decentralization of services with increased community participation. Ecuadorian NGOs will provide consensus building seminars, local-level health reform models, and analytical studies to help guide policy decisions in these areas. Working with a variety of partners--including municipalities, church organizations, health NGOs, communities, and the MOH--local NGOs and community organizations are developing viable and replicable models of decentralization, cost recovery, shared risk, and insurance and management improvement schemes throughout the country. Through the expansion of training and technical assistance activities with the MOH, USAID considerably exceeded its MCH targets for both "number of service delivery points improved/expanded", and "number of women and children using these improved/expanded services." USAID support for MOH modernization and reform efforts contributed directly to the development of three pilot decentralization projects, the reorganization and streamlining of the MOH, and indirectly to the leveraging/focusing of World Bank support for these activities.

Possible Adjustments to Plans: None are contemplated at this time.

Other Donor Programs: Due to the planned FY 2000 phase-out of USAID support in this sector, donor coordination has become a key component of USAID activities. The major donor in this sector is the World Bank, through two large loans: a new $45 million for health sector modernization, emphasizing decentralized health networks; and an ongoing $70 million loan for strengthening the MOH, the construction of health water and sanitation facilities, and a national nutrition program. Limited financial resources also come from the IDB, especially for the Social Security hospital system, as well as from the Governments of Canada, Holland, Belgium and Japan. UNFPA and UNICEF are major contributors to MCH programs. USAID is among the leading sources of technical assistance, along with the Pan American Health Organization (PAHO) and the World Bank. USAID technical assistance and pilot interventions serve as catalysts for leveraging large inputs of World Bank funds.

Principal Contractors, Grantees, or Agencies: USAID implements most of its activities through NGOs. In health, these include an Ecuadorian NGO, the Center for Population and Social Development Studies, which conducts policy analyses, promotes important program activities and disseminates information; and CARE, which is working to develop the capacity of Ecuadorian NGOs and municipalities to implement decentralized health care demonstration projects with cost recovery. Contractors for this SO include: Abt Associates, John Snow, Inc., Management Sciences for Health, University Research Corporation, and the Center for Development and Population Activities. In family planning, major partners are two Ecuadorian family planning NGOs, Association for Ecuadorian Family Well Being (APROFE) and Medical Center for Orientation and Family Planning (CEMOPLAF), with critical inputs related to social marketing, operations research and logistics management provided by Johns Hopkins University (both JHPIEGO and the Population Communications Services Program), The Population Council, and the U.S. Centers for Disease Control.

Selected Performance Measures:

	Baseline	Target (2000)
Contraceptive Prevalence Rate	56.8% (1994)	60.0%
Number of women and children (1-5) using improved or expanded MCH services per year	0 women/ 0 children (1995)	170,000 women/ 434,000 children

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ACTIVITY DATA SHEET

PROGRAM: Ecuador
TITLE AND NUMBER: More Effective and Fair Criminal Justice System, 518-SO03
STATUS: Revised
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $1,451,000 DA; $1,500,000 ESF
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2003

Summary: During the last decade, successive governments in Ecuador demonstrated little political will to reform the country's corrupt and ineffective justice system. The only real impetus for change came from civil society, which was successfully pressing for wider access to justice for vulnerable women's and indigenous groups and advocating important constitutional, legal and institutional reforms. Hence, in FY 1997-1998, the Democracy SO sought to strengthen civil society in its efforts to provide accessible services and to promote reform primarily in the justice sector and secondarily in the education sector. A Good Governance Special Objective (SpO) sought short-term, limited support for Government of Ecuador (GOE) state modernization and anti-corruption activities. With the inauguration of President Mahuad in August 1998, however, there has been a significant improvement in the development environment, with a demonstration of both seriousness and strong political will for judicial reform and for combatting corruption. Furthermore, a justice-oriented Constitution came into effect in August 1998, calling for the creation of new judicial sector institutions such as the National Judiciary Council, now beginning to function. Additionally, an accusatory Criminal Procedures Code is being debated in the National Congress. To accommodate these changes, a new and expanded SO is being developed for FY 1999-2003, which will promote a more effective and fair criminal justice system. This reformulated Criminal Justice SO, if approved, would consolidate selected, priority activities under the previous Civil Society SO and Good Governance SpO, and would support both private and public sector judicial institutions in their efforts, through strategic alliances, to develop and implement priority reforms.

Direct beneficiaries of these activities have been the 30,076 women and 500 indigenous families who annually use the justice services provided by NGOs through state-supported domestic violence centers and privately-run Alternative Dispute Resolution (ADR) clinics located in indigenous communities. Indirect beneficiaries of the constitutional and legal reforms promoted by civil society (such as the Constitutional Court, a more effective accusatory criminal code, and a modern civil code) are the users of the justice system in Ecuador. Under the new SO, direct beneficiaries will also include judicial institutions such as the Supreme Court and the Judiciary Council, law enforcement agencies (e.g. the Prosecutor General's Office and the Judicial Police), and all defendants in criminal cases who will benefit from the strengthening of the public defense system.

Key Results: Key results will be strengthened constituencies and coalitions among public and private institutions participating in priority reforms; the introduction of an accusatory justice system through the adoption of an effective justice sector reform plan and its implementation by leading public sector institutions; and, an improved capacity of government to combat public and private corruption. By the end of FY 2000, the number of domestic violence cases attended will have grown from 25,600 in FY 1996 to 33,000, and the number of ADR services handled from 4 to 654 over this same period. By the end of FY 2003, a new Criminal Procedures Code (currently being debated in Congress) will have been implemented in a minimum of three jurisdictions. In an effort to strengthen the capacity of the Public Ministry to combat corruption, a minimum of one anti-corruption task force, enabling collaboration between the judicial police and prosecutors, will have been established by the end of FY 1999.

Performance and Prospects: Funding has been used to: 1) support the expansion and institutionalization of NGO services in broadening access to justice for women's and indigenous groups; 2) improve the capacity of NGOs to advocate for judicial reforms; and, 3) promote the financial sustainability of the most active and influential justice sector NGOs. In 1998, performance exceeded expectations. Use of services for victims of domestic violence increased from 28,021 to 30,076 clients; use of ADR services for indigenous groups also increased from 389 to 499 families. Other important achievements included the drafting of proposals adopted by the Constitutional Reform Assembly, the introduction for congressional debate of a modern accusatory criminal procedures code, and important reforms in the Mediation and Arbitration Law. Activities in financial sustainability were initiated late in FY 1998, with excellent prospects for significant impact in FY 1999 in at least one of the more important justice sector NGOs. Extensive consultations with new counterparts also indicate excellent prospects for the reformulated SO as regards institutional capacity to investigate and prosecute corruption cases and the development and implementation of priority reforms by leading justice sector public institutions. By FY 2000, an anti-corruption task force will have been created and its staff trained, improving the efficacy of the prosecutorial system and resulting in an increased number of anti-corruption convictions in FY 2003. Similarly, a judicial training plan will have been adopted and implementation initiated in order to ensure the introduction of oral proceedings in at least 35 courts by FY 2003.

Possible Adjustments to Plans: Under the reformulated SO, the strengthened participation of civil society in judicial reform will require support for the formation of strategic alliances for new activities in the area of public defense; greater collaboration between civil society and the public sector in developing an overall reform strategy; and increased civil society organization participation in priority justice reforms. New activities with key public sector institutions will include anti-corruption training and technical assistance for prosecutors, police and judges; extensive technical assistance to the Supreme Court and Judicial Council to strengthen their capacity to plan and implement a judicial reform strategy oriented to the introduction of oral procedures at the trial stage; and support for the training required by judges for the adoption of oral procedures.

Other Donor Programs: The World Bank has an extensive, $10.5 million program in civil justice reform which parallels USAID activities in criminal justice reform. The IDB has a $2.5 million program more directly related to the new SO, including institutional strengthening of the Prosecutor General's office and judicial training. Its program is being coordinated with the USAID program to avoid duplication and to continue and expand pilot efforts. Other, small amounts of assistance are either being provided or are under consideration for financing by the European Community.

Principal Contractor, Grantees or Agencies: Work with the Prosecutor General's Office will be carried out under a joint agreement with the Offices of OPDAT and ICITAP (Department of Justice). Other partners are local NGOs, including the Latin American Development Corporation (CLD), the Center for Social Investigation and Development (CIDES), Esquel Foundation, and the Center for Women's Policy and Action (CEPAM). Public sector partners include PROJUSTICIA (the coordinating body for justice sector reform), the Supreme Court (CSJ), the National Judicial Council (CNJ), the Public Ministry, the Anti-Corruption Commission, and the Judicial Police.

Selected Performance Measures:

	Baseline (1999)	Target (2000)	Target (2003)
Increased number of convictions in anti-corruption cases	Baseline est.	+0%	+300%
Number of courts using oral procedures	0 (1999)	0	35
Increased number of government- supported public defenders	8 (1999)	8	80

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ACTIVITY DATA SHEET

PROGRAM: Ecuador
TITLE AND NUMBER: Improved sustainable capacity of selected public and private institutions to prevent/control pollution, 518-SpO1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: No new funding requested
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2000

Summary: Ecuador's urban growth rate--one of the highest in the hemisphere--is placing increased demands on national and municipal governments for critical environmental services and improved pollution prevention. The largely unmanaged growth in many cities, particularly coastal cities such as Guayaquil, Duran, Machala, Esmeraldas and others, has caused significant increases in both household and industrial contamination, resulting in serious environmental degradation and human health hazards. This environmental degradation affects the quality of life and economic productivity of large segments of the Ecuadorian population. Poor population groups are particularly affected. Living in marginal neighborhoods without access to clean water, adequate sewerage disposal, or garbage and waste collection, they are exposed to serious health risks. The problem of inadequate services is frequently compounded by these communities’ proximity to industrial areas whose pollution goes largely uncontrolled, adding to already high toxicity levels.

The purpose of assistance under this Special Objective (SpO) is to improve the sustainable capacity of selected public and private institutions to prevent pollution. Ecuador's increasing urban and peri-urban residents who lack access to potable water, sanitary systems and a pollution-free, residential and work environment, benefit from these activities

Key Results: Key results will be expanded NGO technical assistance to local firms, universities and municipalities on pollution prevention; and, increased dissemination of technical information on cleaner production technologies, international trade environmental concerns, and urban environmental management. It is estimated that the number of firms with environmental technology and related services will have increased from 80 in FY 1996, to an estimated 400 in FY 2000. By the end of FY 2000, some 35 universities will have been provided with the information necessary to initiate cleaner production options through cooperative programs with firms, and information on cleaner production technologies, international trade environmental concerns, and urban environmental management will have been disseminated to some 200 entities. The number of municipalities reached with technical assistance on environment-related policy reform and urban planning at the municipal level will have been expanded from 12 in FY 1996, to an estimated 209 in FY 2000.

Performance and Prospects: Recent efforts have focussed on ensuring the sustainability of past USAID investments, which sought to strengthen the technical, fund-raising and income-generation capabilities of Oikos Corporation, an Ecuadorian NGO active in promoting scientific, technical and educational approaches for environmental management. As USAID support is phased out, this final funding is needed to ensure that partner organizations begin to stand on their own. Oikos Corporation will continue working with various chambers of industries to improve production techniques, while reducing pollution and costs. In addition, Oikos assistance to municipalities in the adoption of cleaner production policies and improved solid waste management practices will continue. Oikos Corporation has developed innovative approaches to involve the population in pollution prevention and reduction measures, and has been effective in promoting debate at the national level regarding priorities for pollution prevention and control. The cleaner production and energy efficiency strategy which Oikos Corporation uses to implement its activities has been very effective in convincing an increasing number of Ecuadorian industries to adopt cleaner production technologies and energy efficiency practices. The sustainability of Oikos Corporation activities supported by USAID is enhanced through user fees Oikos Corporation charges for the services it provides to industries and municipalities. In addition, Oikos has in place a sustainability plan which maps out specific steps for reducing its dependence on USAID funding and increasing its own contribution, as well as those obtained from other sources.

Funds have also been provided to enable municipalities to identify and prioritize environmental problems, adopt practical, low-cost solutions, and to seek the collaboration of the private sector. Models are being developed in selected coastal cities and in the Amazonian region to manage solid waste through concessions with environmental microenterprises. USAID efforts to strengthen the administrative and accounting capabilities of selected municipalities and environmental microenterprises will contribute to their long-term institutional and financial self-sustainability.

Possible Adjustments to Plans: None are contemplated at this time.

Other Donor Programs: Oikos Corporation has received small amounts of assistance from other donors for pollution prevention activities, principally UNIDO, UNDP, and IDB. It is anticipated that the USAID-supported program for environmental assessments of industries will be continued by Oikos Corporation with German and Swiss support. Host country and NGO contributions to achieve this objective results total over $750,000.

Principal Contractors, Grantees or Agencies: USAID implements pollution prevention activities primarily through Oikos Corporation.

Selected Performance Measures:

	Baseline	Target (2000)
Number of industrial plants implementing cleaner production technologies in their production processes	2 (1995)	100
Number of municipalities adopting cleaner production policies and/or improved solid waste management practices	1 (1996)	21

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ACTIVITY DATA SHEET

PROGRAM: Ecuador
TITLE AND NUMBER: Increased access to financial services by microentrepreneurs, 518-SpO2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: No new funding
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2000

Summary: Experience worldwide shows that microentrepreneurs represent a vast pool of hardworking people who, given access to minimal resources, can evolve into a formidable force contributing to job creation, poverty alleviation, democratic stability, and economic growth. The World Bank's 1995 Ecuador Poverty Report and other studies on the sector show that, in Ecuador, this pool of microentrepreneurs and potential entrepreneurs is over 1.1 million people, who have between 400,000-450,000 microenterprise businesses. Over half of these are women. USAID has designed activities to bring quality financial services to the poor, thereby helping them to build stronger enterprises which ultimately improve their incomes and quality of life. Two principal problem areas are targeted: outreach and financial sustainability. Outreach aims at providing large numbers of poor people, especially the very poor and women, access to quality financial services. Financial sustainability refers to the creation and/or strengthening of existing institutions that become independent of continuing inputs from government, international agencies or charitable organizations.

Key results: Key results will be new licensed, for profit financial institutions serving the needs of microentrepreneurs; upgraded microcredit delivery systems of selected financial institutions and NGOs; and, strengthened institutions implementing village banking programs. By the end of FY 2000, at least one, formal financial institution will be serving the needs of microentrepreneurs through credit and savings programs, the quality of financial services by partner financial institutions and NGOs will have improved significantly, and an estimated 754 village banks will have been established against a baseline of 80 in FY 1996.

Performance and Prospects: Micro-credit activities were initiated in FY 1996, with a major USAID contribution to two U.S. PVOs for equity investments in a fully private bank, Banco Solidario, established for the purpose of serving Ecuador's microenterprise sector. Through FY 1998, Banco Solidario improved its delivery of financial services to microentrepreneurs, opening five new branch offices in suburban Quito, Guayaquil and other, smaller cities. USAID equity investments, made through Seed Capital Development Fund (SCDF) and CARE, permitted Banco Solidario to meet its capitalization targets of $18.0 million required by the Superintendency of Banks. As of September 1998, its microcredit portfolio had grown to 13,223 active clients. Village banking activities with our partners Catholic Relief Services, Project Hope and Foundation for International Community Assistance (FINCA) created 146 new village banks, benefiting an additional 5,056 poor women. These partners have continued experiencing significant growth and have moved toward achieving financial self-sustainability. The planned target of 100% self-sustainability by FY 2000 appears realistic. USAID has also conducted an analysis of the formal banking system and has identified several formal, commercial banks interested in microenterprise lending as a means of significantly expanding sources of credit to the microenterprise sector. Technical assistance and training has been provided to selected banks.

Through FY 1999-2000, USAID will continue to provide technical assistance and training to Banco Solidario and will invest through SCDF in an international guarantee trust fund called LA CIF, that will provide loan guarantees to microenterprise borrowers in Ecuador. Building on its analysis of the formal banking sector, USAID will also continue to work with the formal banking system by providing matching funds for technical assistance tailored to individual bank needs, thereby enabling an expansion of this important source of credit to the microenterprise sector. In FY 1999, USAID will also provide additional funding to village banking aimed at establishing a network of NGOs with sustainable anti-poverty lending programs.

Possible Adjustments to Plans: None are contemplated at this time.

Other Donor Programs: USAID´s total $1.9 million equity investment in Banco Solidario played an important catalytic role, leveraging some $3.2 million in additional equity for this bank from other donors, namely the Andean Development Corporation ($500,000), ProFund ($1.7 million) and Accion International ($1 million). A key partner, Seed Capital Development Fund, played a role in obtaining a portion of this financing. The only other large donor in this sector is the IDB, which operates two lines of credit in the amounts of $16 million and $2.5 million for credit and technical assistance, respectively, through the National Financial Corporation. USAID played an important catalytic role, leveraging an estimated $3 million from the IDB to continue its support for the entry of formal, commercial banks into the microenterprise sector. The World Council of Credit Unions indirectly serves the microenterprise sector, providing technical assistance worth $500,000 annually to 19 credit unions, whose members include microentrepreneurs.

Principal Contractors, Grantees or Agencies: USAID´s assistance to microentrepreneurs is being implemented primarily through U.S. and Ecuadorian NGOs. Technical assistance has been provided by Accion International, CARE, Development Alternatives Inc., and Carana Associates. Equity financing mechanisms for Ecuadorian microcredit financial institutions have been developed with CARE and Seed Capital Development Fund. Village banking activities are undertaken with U.S. PVOs Catholic Relief Services, FINCA, and Project HOPE.

Selected Performance Measures:

	Baseline (1996)	Target (2000)
Increase in the number of microentrepreneurs assisted by USAID partner organizations per year (disaggregated by gender)	1,300 men 1,000 women	16,200 men 22,000 women

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