Liberia - Small- and Medium-scale Enterprise Project

Document of LE COPY The World Bank FOR OFFICIAL USE ONLY Repor No. P-2892-LBR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF LIBERIA FOR A SMALL- AND MEDIUM-SCALE ENTERPRISE PROJECT October 29, 1980 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT Currency Unit: Liberian Dollar (L$) US$1: L$1 The US dollar is legal tender in Liberia. FISCAL YEAR Government: July 1 - June 30 Financial Institutions: January 1 - December 31 ABBREVIATIONS ACDB Agricultural and Cooperative Development Bank FMO Netherlands Finance Company for Developing Countries IBRD International Bank for Reconstruction and Development IDA International Development Agency IMF International Monetary Fund LAMCO Liberian American Swedish Minerals Corporation LBDI Liberian Bank for Development and Investment NBL National Bank of Liberia NHSB National Housing and Savings Bank NIC National Investment Commission OAU Organization of African Unity PfP Partnership for Productivity PPF Project Preparation Facility SME Small- and Medium-Scale Enterprise UNDP United Nations Development Program UNIDO United Nations Industrial Development Organization USAID United States Agency for International Development  FOR OFFICIAL USE ONLY LIBERIA SMALL- AND MEDIUM-SCALE ENTERPRISE PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Liberia Beneficiaries: National Bank of Liberia (NBL) and National Investment Commission (NIC). Amount: Special Drawing Rights 3.2 million (US$4.0 million) Terms: Standard Relending Terms: US$3.4 million from the proceeds of the Credit would be relent to NBL, the central bank, at 8.0 percent per annum for fourteen years, including four years of grace. NBL would relend these funds to participating financial institutions at 9 percent for unguaranteed loans or 10 percent for loans covered by NBL's Guarantee Scheme. The participating financial institutions would relend the funds to sub-borrowers for small- and medium- scale enterprises (SMEs) at a rate of at least 13.5 percent per annum. The Government would bear the foreign exchange risk. The balance of the proceeds of the Credit (US$0.6 million) would be made available by the Government to NIC as a grant to finance technical assistance and studies. Project The Project would promote wider participation of Liberians Description: in the economy and stimulate outpue and employment by providing: (a) term resources through NBL to existing financial institutions to finance SMEs, and (b) technical assistance to NIC to develop a capability to promote and assist SMEs. Direct beneficiaries would be small and medium Liberian entrepreneurs; lower income groups would benefit from increased job opportu- nities. Main risks stem from the as yet untested capability of NIC and the unknown extent to which the commercial banks will actually participate in the program. Estimated Costs: The project cost is estimated at US$5.5 million including US$0.5 million in taxes. Foreign costs would be about US$3.5 million or 70 percent of total project costs, net of taxes. Project costs and the proposed financing plan are summarized in the following tables: | This document has a restricted distribution and may be used by recipients only in the performance of | their ofricial duties. Its contenst may not otherwise be disclosed without World Bank authorization.  - ii - Project Cost Estimates: -------(US$000)-------- Local Foreign Total (70%) Investments Small-scale enterprises 330 770 1,100 Medium-scale enterprises 900 2,100 3,000 Sub-total 1,230 2,870 4,100 Technical Assistance Advisory Services (Extension Services) 47 144 191 Advisors (Project Promotion and 78 248 326 Preparation) Short-term consultants 9 32 41 Vehicles and Equipment 44 72 116 Operating Costs 581 107 688 Sub-total 759 603 1,362 Total Cost including taxes 1,989 3,473 5,462 Taxes 474 _ 474 Total Cost net of Taxes 1,515 3,473 4,988 Financing Plan: -------