Ecuador - First and Second Small Scale Enterprise Credit Projects

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7885 PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC and 2221-EC) JUNE 29, 1989 Operations Evaluation Department This document has a restricted distribution and may be used by recipiems only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalents Currency Unit = Sucre (SI.) Average Exchange Rates 1981 US$1 = S/. 25.0 1982 US$1 = S/. 30.0 1S83 US$1 = S/. 44.1 1984 US$1 = S/. 62.5 1985 US$1 = S/. 69.6 1986 US$1 = S/. 122.8 1987 US$1 = S/. 195.0 Acronyms and Abbreviations BCE - Banco Central del Ecuador (Central Bank of Ecuador) BNF - Banco Nacional de Fomento (National Development Bank) CENAPIA - Centro Nacional para la promocion de la Pequena Industria y la Artesania (National Center for Promotion of SSEs and Artisans) CFN - Corporacion Financiera Nacional (National Finance Corporation) DFI - Development Finance Institution ERR - Economic rate of return FIs - Finance Intermediaries FOPINAR - Fondo de Fomento para la Pequena Industria y la Artesan' (Development Fund for SSEs and Artisans) FOPEX - Fondo de Promocion de Exportaciones (Export Development Fund) FRR - Financial rate of return MICIP - Ministerio de Industrias, Comercio, Integracion y Pesca (Ministry of Industry, Commerce, Integration and Fisheries) PCR - Project Completion Report PFIs - Participating Financial Intermediaries PPAM - Project Performance Audit Memorandum QR - Quantitative Restrictions SSEs - Small-Scale Enterprises SSC - Small-Scale Credit TA - Technical Assistpnce TCC - Technical Coopcration Committee Fiscal Yesr January 1 - December 31 FOR OFF USE ONLY THE WORLD BANK Washngton. D.C. 20433 USA opwatmm [V~austwn June 29, 1989 MENDRANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECTs Project Perfornance Audit Report on Ecuador First and Second Small-Scale Enterprise Credit Projects (Loans 1879-EC and 2221-EC) Attached, for information, is a copy of a report entitled *Project Performance Audit Report on Ecuadort First and Sjond Small-Scale Enter- prise Credit Projects (Loans 1879-EC and 2221-ECil prepared by the Operations Evaluation Department. Attachment 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. ALL ONLY PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) TABLE OF CONTENTS Page No. PREFACE ..., .......................... ........................... i BASIC DATA SHEET .................................................. iii EVALUATION SUMMARY ................................................ vii PROJECT PERFORMANCE AUDIT MEORANDUM I. BACKGROUND ................................................. 1 The Economy .............................................. 1 Project Objectives and Design ............................ 2 II. PROGRESS IN MEETING STATED OBJECTIVES ...................... 5 III. FOPINAR'S AND PFIS' OPERATIONAL AND FINANCIAL PERFORMANCE ................................................ 6 Operations ............................................... 6 Financial Performance .................................... 8 IV. FINDINGS AND LESSONS ....................................... 10 Overall Findings ......................................... 10 Sustainability ........................................... 10 Bank Acceptance of Government Objectives ................. 11 Lessons to be Learned .................................... 13 ANNEXES 1A FOPINAR: Income Statements, 1984-1992 (constant Sucres) ... 15 1B FOPINAR: Income Statements, 1984-1992 (constant US$)....... 16 2A FOPINAR: Balance Sheets, 1984-1992 (constant Sucres) ...... 17 2B FOPINAR: Balance Sheets, 1984-1992 (constant US$) ......... 18 3A FOPINAR: Cash Flow Balance, 1986-1992 (constant Sucres) ... 19 3B FOPINAR: Cash Flow Balance, 1986-1992 (constant US$) ...... 20 This document has a restricted distribution und may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLE OF CONTENTS (cont'd) Page No. PROJECT COMPLETION REPORT I. INTRODUCTION ............................................... 23 Bank Lending Activity for the SSE Sector .................. 23 Economic Environment and Sectoral Performance ............. 23 Financial Sector .......................................... 24 Manufacturing Sector and SSE .............................. 25 II. PREPARATION AND APPRAISAL OBJECTIVES ....................... 26 Loan Preparation .......................... ........ 26 Major Issues Discussed During Loan Preparation and Negotiations ........................................... 26 Appraisal Objectives ..................................... 28 III. UTILIZATION OF LOAN PROCEEDS ............................... 28 Resource Transfer ........................................ 28 Lending Characteristics Under Loans 1879-EC and 2221-EC .. 29 Size and Type of Subloans ................................ 30 Sectoral Distribution .................................... 30 Geographic Distribution .................................. 30 Impact of Subprojects .................................... 31 IV. INSTITUTIONAL DEVELOPMENT .................................. 32 The Institution: FOPINAR ................................ 32 Management and Organization .............................. 33 Staffing and Staff Training .............................. 34 Accounting, Auditing and Reporting ....................... 35 Procurement .............................................. 35 Project Monitoring and Role of Financial Intermediaries .. 36 Subproject Appraisal ..................................... 36 Subproject Supervision ................................... 37 Subproject Processing Time ............................... 37 Promotion ................................................ 38 Operations ............................................... 38 Interest Rates ........................................... 39 V. FINANCIAL PERFORMANCE ...................................... 40 Financial Position and Results ........................... 40 Portfolio Quality ... ......................... 41 VI. TECHNICAL ASSISTANCE ....................................... 41 VII. CONCLUSIONS .............................. 43 TABLE OF CONTENTS (cont'd) Page No. PCR ANNEXF9 1. FOPINAR: Characteristics of Subprojects Financed Under Loan 1879-EC ....................................... 47 2. FOPINAR: Characteristics of Subprojects Financed Under Loan 2221-EC ........................................ 48 3. FOPINAR: Economic Characteristics of Subprojects Financed Under Loan 1879-EC ............................... 49 4. kOPINAR: Financial Characteristics of Subprojects Financed Under Loan 1879-EC ................. .50 5. FOPINAR: Economic Characteristics of Subprojects Financed Under Loan 2221-EC ............................... 51 6. FOPINAR: Financial Characteristics of Subprojects Financed Under Loan 2221-EC ............................... 52 7. FOPINAR: Loan Distribution by Economic Sectors (Loans 1879-EC and 2221-EC) .............................. 54 8. FOPINAR: Organizational Chart .............................. 55 9. FOPINARt Staff Time Distribution ........................... 56 10. FOPINAR: Staff Time Distribution by Activity and Region 57 11. FOPINAR: Operations by Financial Intermediaries (Loan 1879-EC) ............................................ 59 12. FOPINAR: Oper&tions by Financial Intermediaries (Loan 2221-EC) ...................... .60 13. FOPINAR: Supervision by Size of SSE and Region............. 61 14. FOPINAR: Summary of Operations 1981-87 .............6......62 15. FOPINAR: Operations by Size of SSE and Size of Loan 1981-87 .................................................. 63 16. FOPINAR: Total Operations by Economic Sector 1981-87 ...... 64 17. FOPINAR: Total Operations by Region 1981-87 ............... 65 18. FOPINAR: Total Operations by Financial Intermediaries 1981-87 .................................................. 66 19. FOPINAR: Interest Rates 1981-87 (Loans 1879-EC and 2221-EC) ................................................. 67 20. FOPINAR: Income Statement 1981-87 .......................... 68 21. FOPINAR: Asset Distribution 1981-87 ....................... 69 22. FOPINAR: Balance Sheets 1981-87 ............................ 70 23. FOPINAR: Key Financirl Indicators 1981-87 ................. 71 24. FOPINAR: Technical Assistance Projects 1982-87 ............ 72 25. FOPINAR: Technical Assistance by Activity and Participant ................... . .............. 76 MAP PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) PREFACE 1. This is a Project Performance Audit Report (PPAR) of the Bank's first two small scale enterprise (SSE) credit projects in Ecuador (Loans 1879-EC and 2221-EC). Loan 1879-EC, for US$20 million, was approved on June 19, 1980, became effective on April 30, 1980, and closed on December 31, 1984. Loan 2221-EC, for US$40.6 million, was approved on December 16, 1982, became effective on July 25, 1983, and closed on June 30. 1987. The proceeds of the two loans were channelled on behalf of the borrower, the Government of Ecuador, through the Central Bank (BCE) to the account of a fund within the Corporacion Financiera Nacional (CFN) -- the Fondo de Fomento de la Pequena Industria y Artesania (FOPINAR) -- specializing in lending to SSEs. The CFN had operated a small fund lending to SSEs since 1964. The first Bank project strengthened and expanded this fund. FOPINAR operates by discounting approved loans to SSEs made by participating banks and development finance companies, collectively referred to as participating financial intermediaries (PFIs). 2. The Project Performance Audit Report consists of a Project Perfor- mance Audit Memorandum (PPAM) prepared by the Operations Evaluation Depart- ment and a Project Completion Report (PCR) prepared by Country Department IV, Latin America and the Caribbean Region. The PPAM is based on the attached PCR, the Staff Appraisal and President's Reports, loan documents, Board discussion, economic, industrial and financial sector reports, material in the project files, discussions with Bank staff, special studies, and discussions in Ecuador with FOPINAR officials, financial institutions, and government and private agencies dealing with SSEs. The wholehearted support of all those contacted, and particularly of the Director and staff of FOPINAR, is gratefully acknowledged. 3. Tte PCR establishes that the two loans were highly successful in meeting their objectives, both in terms of lending targets and institution- building, but notes that interest rates to final borrowers were not, despite strong Bank efforts, adequately adjusted to allow for rising levels of inflation. The PPAM elaborates on the economic context for the two projects, noting that unsatisfactory public sector financial, debt, trade, industrial and interest rate policies significantly undermined the poten- tial contribution of the two loans to Ecuador's economic development. It also questions some Government objectives in promoting lending to SSEs. 4. Following standard OED procedures, copies of the draft PPAR were sent to the Government and the Borrower. No comments, however, were received. - iii - PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) BASIC DATA SHEET (in millions of US$) LOAN POSITION (Amounts in US$ Million) As of Jan. 81. 1989 Original Disbursed Cancelled Repaid Outstanding Loan No. 1879-EC 20.00 20.00 - 6.98 18.07 Loan No. 2221-EC 40.60 40.57 0.08 6.20 84.87 CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (Amount* in USS million) (Loan 1879-EC) FY81 FY82 FY88 FY84 FY86 Estimated 0.7 6.4 15.9 19.6 20.0 Actual - 12.1 19.0 19.4 20.0 Actual as N of Appraisal (3) - 1895 119x 995 100% Date of Final Disbursement: August 14, 1985 (Loan 2221-EC) FY88 FY84 FY85 FY86 FY87 Estimated 9.6 24.8 84.6 40.6 40.6 Actual - 19.4 81.1 87.6 40.6 Actual as X of Appraisal (X) - 78X 90% 98% 100% Date of Final Disbursement: December 21, 1987 - iv * PROJECT DATES Loan 1879-EC Original RevisedActual Board Approval 06/19/0 06/19/80 Loan Agreement 10/81/90 10/81/90 Effectiveness 02/01/81 04/01/81 Final Subproject Submission 12/81/88 12/81/83 Closing Date 12/81/84 12/81/84 Loan 2221-EC Original RevisedfActual Board Approval 12/16/82 12/16/82 Loan Agreement 02/28/88 02/28/88 Effectivene** 05/26/83 07/26/83 Final Subproject Submission 12/81/85 12/81/86 Closing Date 06/80/88 06/80/87 STAFF INPUTS (staff weeks) (Loan 1879-EC) FY79 FY80 FY61 FY82 FY88 FY84 FY85 FY88 FY87 FY86 Total Preappraisal 19.0 85.8 - - - - - - - - 54.8 Appraisal - 58.8 - - - - - - - - 58.8 Negotiations - 12.0 - - - - - - - - 12.0 Supervision - 0.9 11.8 15-0 2.6 0.8 0.6 0.8 0.1 8.0 89.5 Other - 0.4 - - - - - - 0.4 Total 19.0 102.4 11.8 16.0 2.6 0.8 0.6 0.8 0.1 8.0 160.0 (Loan 2221-EC) FY82 FY88 FY64 FY85 FY86 FY87 FY88 Total Preappraisal 24.5 * * * - - - 24.5 Appraisal 24.6 6.6 - - - - * 81.8 Negotlations - 10.7 - - * - 10.7 Supervision - 4.0 8.8 5.2 18.8 5.4 6.1 45.8 Other 2.0 1.1 8.1 Total 51.0 22.6 8.8 5.2 18.8 6.4 8.1 114.9 m MISSION DATA (Loan 1879-EC) No. of NO. of Staff Date of Month/Year Weeks Persons Weeks Report Identification 06/78 8 8 9 09/29/76 Pro-Appraisal 09/79 & 4 12 10/25/79 . Pro-Appraisal follow up 10/79 2 2 4 11/21/79 Appraisal 11/79 8 8 9 06/28/60 Post-Appraisal 02/80 1 1 1 02/14/80 Post-Appraisal 04/80 1 1 1 06/28/80 Supervision 08/80 2.6 2 5 23/22/80 Supervision 05/81 2 1 2 06/10/81 Supervision 07/81 1 1 1 07/30/81 Supervision 10/81 2.5 2 5 11/18/81 (Loan 2221-EC) Identification 10/81 8 3 9 11/16/81 Pre-Appraisal 02/82 2 8 6 01/29/62 Appraisal 08/62 8 8 9 11/16/82 Supervision 02/88 1 1 1 08/19/88 Supervision 06/88 0.6 2 1 07/07/88 Supervison 09/8 1 1 1 09/14/68 Supervision 07/64 1 1 1 08/07/84 Supervision 08/86 2 2 4 06/14/86 Supervision 11/86 La 2 1 2 12/16/88 Completion 01/68 2 1 2 04/15/68 OTHER PROJECT DATA Borrower: Republic of Ecuador Executing Agency: Corporacion Financiers Na-lonal (CFN) Follow-on Project: Third Small-Snale Enterprise Credit Loan 2673-EC Amount : US880.0 million Approval Date: 08/27/88 L Combined supervision with Loan 2678-EC. - vii - PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SKALL-bCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) EVALUATION SUMMARY Introduction 1. In early 1979, in order to meet the objectives of the then new Government, Ecuador's National Finance Corporation (CFN) began seeking resources to expand the operations of a fund that it had operated since 1964 to channel credit to small-scale enterprises (SSEs). In 1980, a strengthened and expanded Fund, subsequently titled Fondo de Fomento para la Pequena Industria y la Artesania (FOPINAR), was established in CFN as a permanent second-tier financial institution, with it own staff and finan- cial resources and separate accounts. The first Bank loan (1879-EC) became effective on April 1, 1981. Under its terms, approved loans to SSEs by a network of banks and development finance institutions (participating finan- cial :Atermediaries or PFIs, could be discounted with FOPINAR at rates and spreau, dependent upon the size of the enterprise and the term of the loan. A second, similar loan (2221-EC) became effective on July 25, 1983. Objectives 2. The main objectives of the two projects were to create, develop and sustain an institution which, working through the PFis, would consti- tute an efficient mechanism for channelling funds to SSEs and, using this mechanism, to fill a major gap that existed in SSEs' access to term financing. Additional objectives were to: restructure and reorient tech- nical assistance to SSEs; create employment; encourage entrepreneurship; expand the use of local resources; improve income distribution; and foster regional economic dispersion and development (para. 6). Implementation Experience 3. As a consequence of the combined effects of (1) the scarcity of funds -- particularly term funds -- resulting from low, government-con- trolled interest rates on deposits, (2) the availability of implicitly heavily subsidized credit under the Bank loans, and (3) the creation of a highly efficient distribution mechanism in FOPINAR and the PFIs, disburse- ments under the first project were at twice the anticipated pace. The second loan was at first also disbursed more quickly than expected. It was fully committed by mid-1986, six months later than originally expected, and was quickly followed by a third project, approved in April 1986 (para. 22). FOPINAR was able, through effective promotion and training, to - viii - secure a high degree of participation on the part of the PFIs, with 20 banks and eight private DFIs discounting subloans under the first project and 26 banks and ten DFIs eoing so under the second (para. 16). Results 4. The two projects were successful in meeting virtually all their objectives. FOPINAR has become stronger and more mature, developing into an efficient, competently staffed, and highly regarded institution able to process a high volume of subloans, provide suitable training to PFIs, and carry out effective loan supervision (paras. 13, 14). The PFIs' capacity to allocate credit on the basis of comprehensive project appraisals and to carry out effective supervision has been substantially enhanced (paras. 17, 18). The funds flowing to SSEs under the two projects have helped fill the gap that existed in SSE subproject term financing (para. 13). Processing times have been reduced and efforts are under way to reduce them still further by further regionally decentralizing FOPINAR's operations (para. 18). Project objectives in terns of employment creation, the pro- portion of subloans going to micro-enternrises, and the regional dispersion of subloans, have been met or exceeded (paras. 23, 24). FOPINAR's finan- cial performance has been fully satisfactory. At the end of 1987, arrears (at 3Z) on the PFIs' FOPINAR-financed portfolios were far below the average for the same institutions' overall portfolios (para. 21). 5. Unfortunately, the success of th two loans in project terms does not mean that they were an unqualified success in overall economic terms. Interest rates on subloans to SSEs, reflecting at first the existence of a system of administered low interest rates, directed credit and credit rationing, and, subsequently, interest ceilings on variable rate loans, continuing substantial flows of directed credit, serious market irperfec- tions and continued credit rationing, were inadequately responsive to rising inflation. As a result, interest rates to final borrowers at times became heavily negative, resulting in large real resource transfers from lenders to borrowers. A large part of these implicit subsidies (including those to SSEs under the two Bank loans) was paid for by the Government, largely out of the proceeds of what proved to be excessive levels of for- eign borrowing (paras. 15, 19, 20, 27). Negative real interest rates also strongly discouraged domestic resource mobilization and provoked capital flight. Moreover, industrial development in Ecuador has been fostered by high tariffs and wide-ranging quantitative restrictions favoring the growth of an inefficient manufacturing sector oriented heavily towards import substitution. However, while credit provided to SSEs under the two loans went mainly into what are in nominal terms four of the most heavily pro- tected sectors of manufacturing, detailed analysis in a general equilibrium context indicates that effective rates of protection in those sectors were not in fact excessive, ranging between 20 and 30Z. Nonetheless, some of the employment created -- mainly in relatively low-wage, low-capital inten- sity, low-productivity enterprises -- may not have been in Ecuador's longer-run economic growth and development interests, even though it miti- gated some of the unemployment consequences of other Government policies. - ix - Sustainability 6. Lending to SSEs is unlikely to be indefinitely sustainable on the basis of heavy Government subsidies financed by foreign borrowing and domestic credit creation. Intcrest rates to savers that mobilize more domestic resources and foster the reversal of capital flight, and rates to final borrowers that cover a much higher proportion of both real borrowing costs and apex organization and PFI spreads will eventually be required. Under such conditions, FOPINAR might still be able to play a useful role in assuring adequate SSE access (at market rates) to long term funds (para. 29). Findings and Lessons 7. The Bank's SSE loans were well designed and executed projects that were carried out within a framework of macroeconomic and sectoral policies that substantially undermined their effectiveness (para. 26). Interest rate controls and subsidies added to Ecuador's subsequent debt and infla- tion problems, hindered the mobilization of domestic resources, encouraged capital flight, and led to considerable misallocation of capital. Inappro- priate trade and exchange rate policies fostered inefficient, inward- oriented production, exacerbated Ecuador's balance of payments diffi- culties, and hindered the country's recovery from the adverse external economic shocks of the 1980s (paras. 1-5). While the projects had bene- ficial social and economic effects (para. 32), these represented, in part, mitigation of the undesirable consequences of other Government policies. The implication is that there are important inconsistencies in government policies and that basic changes are required before there can be signifi- cant improvement in the economic effectiveness of Bank lending to SSEs (paras. 27, 28). 8. The projects' successful preparation, design and execution under- line the importance oft (1) placing the apex unit within an institutional setting permitting it adequate autonomy to operate flexibly and effi- ciently; (2) taking measures to attract and retain good staff; (3) pro- viding adequate spreads to PFIs, adapting to their procedures, and providing competitive interest rates to final borrowers; (4) delegating authority and responsibility from the central unit to regional offices and properly trained PFI officers; (5) carrying out frequent and careful super- vision at all levels; (6) applying lessons from one project to the design of the next; (7) making use of the existing banking network (via the pro- vision of adequate incentives) rather than atterp.ting to create a parallel system for distributing credit; and (8) carrying out adequate prior research and attempting to ensure that those who will implement the project participate as a team in its preparation and design (para. 33). 9. The uncertain economic success of the two projects indicates the overriding importance of ensuring that: (1) the Government's actual or expected mix of financial, debt, monetary, exchange rate, trade, industrial and tax policies provide an adequate foundation for the project's economic succoss, thereby avoiding the risk of the Bank's project lending's - X - implicitly underwriting continuing poor policies; (2) Government commitment to suitable policies, with support, where required, of a policy loan package, be a prerequisite of future SSE loan commitments; (3) continued adherence to explicit policy targets (e.g., specific minimum real interest rate levels) be couditions of continued disbursement; and (4) Government economic objectives for SSE lending be evaluated in the context of the Government's overall economic policy mix with a view to determining whether basic policy changes might be more effective means of achieving them (para 34). PROJECT PERFORMANCE AUDIT MEMORANDUM ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) I. BACKGROUND The Economy 1. 1970-82 Developments. The start-up of petroleum production in 1972 led to a massive expansion in Ecuador's exports, a sharp acceleration in GDP growth, large increases in Government revenues, and ready public and private sector access to external financing at low real rates of interest based on widely shared expectations of secularly rising oil prices How- ever, as public oil revenues rose, non-oil revenues fell, so that the mas- sive increase taking place in Government spending between 1973 and 1982 was financed almost entirely by external borrowing. The external debt rose from 14Z of GDP in 1970 to 37Z in 1982 but the latter figure understates the true debt burden since the Government kept the exchrnge rate fixed at 25 sucres to the dollar from 1970 to 1982, with the result that, by 1982, it had become heavily overvalued in real terms. Oil-driven growth, coupled with rising revenues and the availability of ample external funds, per- mitted the Government to pursue ill-advised financial, investment, trade, exchange rate, and interest rate policies, yet the economy still experi- enced more rapid growth than in the 1960s. Manufacturing, heavily pro- tected and promoted through tax and other concessions, was limited by public policies to the small (and, since 1982, slowly growing) domestic market and thus to small-scale, inefficient operations. Agriculture and export industries were implicitly, and in some cases explicitly, discrim- inated against. The Government also pursued a policy of subsidized low interest rates and Central Bank-directed credit, at the cost of reducing overall domestic resource mobilization, provoking capital flight and adding heavily to its debt. 2. Post-1982 Developments. After 1932, declining real oil prices, rising interest payments on the external debt, and the much-reduced avail- ability of external financing from commercial sources forced cutbacks in public spending and sharply reduced the growth of real GDP, despite still increasing oil production. Ecuador also had to contend with serious floods in 1983 and a major earthquake in 1987, both of which disrupted production and exports. GDP growth averaged only 2.1% over 1982-87. Except for the three years 1983-85, the Government experienced serious difficulties in bringing the public sector deficit under control. This obliged it not only to continue to borrow heavily from external sources but to resort to domes- tic credit creation to finance portions of the deficits, thereby giving rise to irregularly accelerating inflation. The CPI increase climbed from 16% in 1982 to about 90% in early 1989. -2- 3. Despite Ecuador's radically altered circumstances since the early eighties, the Government has also been slow to modify its other policies. Its initial response to Ecuador's balance-of-payments difficulties was to impose a range of quantitative import restrictions. These were intensified between 1982 and 1984, with the number of affected items rising from 634 to 1,234. A significant and sustained real excbange rate adjustment was post- poned until late 1985. Until 1986, interest rates in the formal financial sector were fixed at levels far below the rate of inflation. The resulting implicit subsidization of interest rates continued to be financed out of external borrowing and domestic credit c.eation. 4. With Bank support in the form of a March 1986 Industrial Finance Project, the Government from 1985 on introduced a number of financial and trade policy changes. In August 1985, interest rates on certificates of deposit issued by banks and DFIs, as well as on non-rediscounted loans, were decontrolled and allowed to be determined by market forces. In August 1986, savings deposit rates were also liberalized. These measures significantly increased domestic resource mobilization. However, there is still no automatic link to market rates on loans funded by the central bank (BCE) and the international institutions and through forced investments by banks. Further, ceilings on adjustable rate bonds and loans inhibit the mobilization of longer-term resources. Again, despite the fact that bank savings deposit rates are now market-determined, they have remained nega- tive in real terms, implying substantial market imperfections. Since, with negative real interest rates, demand has exceeded supply, credit -- and particularly term credit -- has been rationed, with access by large firms heavily favored over that for small. 5. On the trade policy side, again with support from the Industrial Finance Project, the Government in April 198r and January 1986 removed a number of import prohibitions. However, quantitative restrictions (QRs) still covered over 25Z of manufactured items in 1988. Further, while the level and dispersion of industrial tariffs were reduced in January 1986, they remain high. The average tariff on manufactured imports was 36Z in 1988 but effective protection was far higher. Project ObJectives and Desi. 6. The initial project (Loan 1879-EC) -- the Bank's first in support of SSE lending in Ecuador -- was intended to create an institution which, working through participating financial intermediaries (PFIs), would estab- lish an efficient mechanism for channelling resources to eligible small- scale enterprises (SSEs), defined as private enterprises, mainly in manu- facturing, having fixed assets (excluding land and buildings) of no more than US$350,000 equivalent. It was intended to: fill the major gap that existed in the availability of term financing to SSEs; help restructure and reorient technical assistance to the sector; and contribute to the Govern- ment's objectives of encouraging entrepreneurship, increasing employment, expanding the use of local resources, improving income distribution, en- couraging the regional dispersion of industry, and promoting regional development. Employment creation in the SSE sector was expected to be achievable at a low investment cost of US$8,700 equivalent per job (in 1978 prices). The second project (Loan 2221-EC) was intended to provide cortin- uing support for the objectives pursued in the first and to develop the SSE sector further. The mechanism for channelling funds under both projects to SSEs was to be an expanded and restructured Small Industry and Artisan Development Fund (FOPINAR), located within the National Financial Corpora- tion (CFN). CFN had been operating such a fund, with a low volume of lending activity, since 1964, but without full-time staff and without clear policies and procedures. CFN was to assign a special unit to administer the Fund and execute the projects. 7. Financing Arrangements. Under the terms of *he first project, the Central Bank, as the Government's fiscal agent, was to transfer the pro- ceeds of the Bank loan (US$20 million) to a project account for the SSE Fund set up by CFN at the Central Bank. The Government was to deposit US$6 million in the account, which, together with about US$4 million in existing assets, would make a total of US$10 million in public sector counterpart funding to the Bank's US$20 million. The Central Bank was to onlend the sucre equivalent proceeds of the Bank's loan to CFN on the same terms. The Government -- the legal recipient of the loan -- assumed the exchange risk. It was agreed that the Central Bank, for a small fee, would serve as dis- bursement and collection agent for the Fund, rediscounting subloans sub- mitted by PFIs following FOPINAR's apprc-al. 8. FOPINAR was to channel project resources through PFIs to SSEs in accordance with policies and procedures acceptable to the Bank. Any bank or financial institution entering into a participation agreement with CFN satisfactory to the Bank was to be eligible to participate. The Fund's revenues were to be used to finance administrative costs, grants for SSE technical assistance (TA), increases in FOPINAR's capital, and loan inter- est payments. 9. The total amount of investment financed was expected to be US$37.5 million, of which the Bank loan would cover the project's foreign exchange component (about 53Z). The Government and CFN were to provide US$10 mil- lion, the PFIs, US$3.3 million, and the beneficiaries, US$4.2 million. Under the second loan, total SSE investment was expected to be US$83.4 million, with the Bank loan providing US$39.8 million, Government contri- butions to CFN, US$10 million, PFIs, US$5.6 million, and SSE beneficiaries, US$28 million. 10. Over two-thirds of the subloans under the first loan were expected to be for amounts under US$40,000. The PFIs were to be responsible for preparing the subprojects. Those involving loans of over US$150,000 (the "free limit") would require the prior approval of FOPINAR, which would calculate financial and economic rates of return (FRR and ERR) on the sub- projects involved. Subloans fot more than US$250,000 would require prior Bank approval. The maximum subloan size was to be US$300,000. Conditions under the second loan remained largely the same, but the PFI free limit was raised to US$200,000; thus ERR and FRR calculations were required only for loans over US$200,000. Only projects with economic rates of return over 151 were to be financed. Based on FOPINAR's satisfactory performance under the first loan, Bank review of loans above US$250,000 was no longer -4- required under the second. The average subloan size under the second proj- ect was expected to be US$45,000. Under both projects, ex post review of loans under the free limit approved by PFIs was to be cnrried out by FOPINAR. 11. Spreads and Interest Rates. Spreads and interest charges under the two projects were estimated at appraisal as follows: Loan 1879-EC Percent p.a. FOPINAR blended resource cost 5.7 (US$20 m. from Bank at 8.5Z;/a US$10 m. from Govt. at 0.0) FOPINAR spread 3.7 FOPINAR average discount rate 9.4 Average PFI spread 5.6 Average PFI lending rate 15.0 Expected inflation rate 14.5 Implicit real interest rate to final borrower 0.4 Loan 2221-EC FOPINAR blended resource cost 9.6 (US$40 m. from Bank at 12.0%; US$10 m. from Govt. at 0.0%) FOPINAR spread 3.0 FOPINAR average discount rate 12.6 Average PFI spread 4.9 Average PFI lending rate 17.5 Expected inflation rate 15.5 Implicit real interest rate to final borrower 1.7 /a The rate of interest specified in the Loan Agreement was 8.25% p.a. Under the first loan, in order to encourage lending to the smallest enter- prises, a low discount rate of 6Z was allowed to PFIs by FOPINAR for sub- loans to firms with fixed assets (excluding land and buildings) of less than US$25,000 equivalent. These firms, in turn, were to pay 12? p.a. interest on these subloans to the PFI. Larger firms would pay PFIs up to 16% p.a. interest, depending on the term of the subloan. Under the second loan, a discount rate of 92 p.a. was allowed to PFIs for subloans to firms - 5 - with fixed assets (excluding land and buildings) of less than US$22,000 equivalent. These firms were to pay interest at 152 p.a. Larger firms were to pay up to 192 p.a. interest, depending on the term of the subloan. Under the second loan, provisions were made for review and adjustment of interest rates during the implementation of the project, so that interest rates to final beneficiaries could be maintained at positive levels. 12. The expectation was that, under the first loan, about 625 subproj- ects would be financed, creating 4,300 new jobs at an average cost of US$8.700 equivalent per job. This compared with US$23,000 equivalent per job in the case of larger firms. The project would develop FOPINAR, enabling it to promote, assist and finance SSEs more aggressively. The capability of the Ministry of Industry, Commerce and Integration (MICIP) and the Small Industry Federation tc provide technical assistance to SSEs was also to be strengthened. Financial intermediaries' capacity to pro- mote, evaluate and supervise term lending to SSEs would be improved. Under the second loan, 1,200 subprojects were expected to be financed, creating about 6,000 new jobs at an average cost per job of US$12,600 equivalent (in 1981 prices). This compared with an average of US$62,000 equivalent in the case of larger firms. Institution-building would continue in FOPINAR, while CFN's capacity to manage its financial resources would be strength- ened by the installation of computerized accounting and financial systems, together with appropriate staff training. FOPINAR would continue to exe- cute a technical assistance program for SSEs, including those applying for subloans, notably in the preparation of subloan applications. II. PROGRESS IN MEETING STATED OBJECTIVES 13. The objectives of the two loans were summarized in paragraph 6. Overall, the two projects were exceptionally successful in meeting them. The PCR provides an extensive discussion (paras. 4.01-4.17) of FOPINAR's institutional development, noting that it has become a stronger and more mature institution, highly regarded by both PFIs and SSEs. Its management of SSE projects has been satisfactory, providing adequate professional capacity to review, approve and process the growing volume of loan applica- tions. FOPINAR's professional staff are young, well-trained and of high quality, while staff turnover, following an earlier period of difficulty, is now low. FOPINAR's advanced, computerized management information sys- tem provides management with: daily reports on cash balances; current discount commitments; monthly financial statements; and analyses of proj- ects, including analyses by size, type, location, and generation of employ- ment. FOPINAR has consolidated related functions and responsibilities, upgraded key middle management so as to enhance their career prospects within FOPINAR and permit improvement in professional salary schedules, and increased the degree of regional decentralization. FOPINAR's organiza- tional structure, comprising three units -- evaluation, loan preparation, and training and supervision -- has served it well, although adjustments will be required to enable FOPINAR to handle current and future levels of operation. FOPINAR has contributed to filling the gap in the term fi- nancing of SSE projects; it has encouraged PFIs to allocate credit on the basis of comprehensive project appraisals; it has provided technical assis- tance to PFIs '.n the form of external training programs relating to project - 6 - appraisal, preparation and supervision; and it has helped some SSEs to irprove their product quality, design and marketing. Nevertheless, unmet needs for both credit and technical assistance -- and for coordinating the technical assistance efforts of the various public agencies -- re]Lin. 14. Intensive Bank/Government discussions during preparation of the first project aimed at establishing a solid footing for the SSE Fund were successful in securing an appropriate venue (within CFN) for its operations and in establishing separate accounts and clear-cut relationships per- mitting an adequate degree of operating autonomy. However, a still out- standing issue is the allocation of an equitable share of CFN's general and administrative costs to FOPINAR. The Bank believes that the costs imputed to FOPINAR should correspond to the value of the services actually provided to it by CFN and not represent an overall allocation of CFN's overhead based on CFN's and FOPINAR's portfolios; this would lead to a lower amount being allocated, increasing FOPINAR's profitability. 15. Achievement of Sector Policy Objectives. While no spec.fic sector policy objectives were sought as conditions under the two loans, the Bank tried under the second loan to ensure that interest rates to the final borrowers were positive in real terms by allowing for adjustable rates. However, adjustment delays meant that real interest rates to final bor- rowers remained negative. In its macroeconomic and sectoral dialogue with the Government and in its policy-based lending (paras. 5 and 6 above), the Bank has continuously sought a competitive exchange rate and stricter pub- lic sector financial policies, as well more liberal, market-sensitive trade, pricing and interest rate policies, with some success. Nonetheless, as noted, trade policies remain highly prote-tionist. While financial markets have been partly liberalized, the Central Bank at the end of 1987 still funded 25% of private sector credit. Difficulties in securing ade- quate, positive savings deposit rates in the banking system continue to inhibit domestic resource mobilization. Credit rationing, implying eco- nomically inefficient credit allocation, persists. At the macroeconomic level, large public sector deficits, an increasing external debt burden, domestic financing of part of the deficits via monetary expansion leading to inflation, exchange volatility, business uncertainty, and capital flight remain serious problems. III. FOPINAR'S AND PFIS' OPERATIONAL AND FINANCIAL PERFORMANCE Operations 16. Participation by PFIs. The two projects were successful in involving two-thirds or more of the banks and DFIs in discounting subproj- ect loans to SSEs with FOPINAR (PCR, para. 4.11). The banks financed 77Z of the subprojects under the first loan, accounting for 54.1% of total credits. Under the second loan, the banks -'nanced 905Z of the subprojects, accounting for 85Z of total credits. The aiminished role of the DFIs under the second loan reflected their weakening financial position, the exclusion from eligibility of Financiera Manabi, and the reduced availability of external funds. The state-owned National Development Bank (BNF), spe- cializing in lending to micro-enterprises, was the largest bank lender, -7 - accounting for 582 of all subloans (23Z of total credit) under the first loan and 83Z of subloans (502 of total credit) under the second. 17. Appraisal Pr,cedures. The PCR notes (para. 4.13) that current appraisal procedures for FOPINAR subprojects are well-developee and fully meet Bank standards for project evaluation. Responsibility for project appraisals and determining the creditworthiness and financial viability of applicants for subloans below the free limit for PFIs has rested with the PFIs. Economic and financial rate of return (ERRs and FRRs) for all loans above the free limits, calculated by FOPINAR using acceptable procedures, revealed satisfactory ex ante ERRs and FRRs (PCR, Annexes 3, 4, 5 and 6). ERRs and FRRs were not calculated and reported for the majority of subloans falling below the PFI free limits. 18. Supervision, Subloan Processing and Promotion. PFI supervision of subloans has generally concentrated on those in arrears (PCR, para. 4.14). The PFIs must provide FOPINAR with semi-ar-nual supervision reports. The quality of these has improved and now is generally satisfactory. Super- visions of subprojects by FOPINAR, initially inadequate, increased from 149 under the first loan to 371 under the second (PCR, para. 4.15). In 1986, FOPINAR created a separate supervision ur.4t with extra staff and now uses nearly 70Z of its st&ff years for supervision. Further efforts are needed to identify factors leading to future repayment problems and to strengthen the ability of PFIs to focus on the development impact of subprojects rather than on the borrower's collateral. FOPINAR has, however, strength- ened the appraisal and supervision capabilities of PFIs. FOPINAR'S exces- sive data requirements and redundant discount applications initially implied long processing times (three to 'ix months between appraisal and loan signing) but a Bank-FOPINAR agreement to simplify procedures reduced processing times under the second loan (PCR, para. 4.16). However, it remains an issue that is being addressed by FOPINAR'S delegating more responsibilities to its branch offices. The PCR correctly notes that fur- ther promotional efforts on behalf of SSEs need to be made by FOPINAR, which is still perceived as a source of fixed-asset financing and has achieved little success in fostering the mobilization by PFIs of additicnal resources for SSE lending. 19. Interest Rates. The initial structure and levels of interest rates on FOPINAR loans and subsequent changes therein are discussed in the PCR in some detail (paras. 4.21-4.23 and Annex 19). Subloans financed by FOPINAR were made at interest rates that remained fixed for the life of the loan. Initial FOPINAR lending rates and spreads, implying average interest rates to final borrowers that were barely positive in real terms, clearly involved a large element of subsidy (as did the general structure of inter- est rates established by the Monetary Board, with which FOPINAR rates were in line). In SSE lending through FOPINAR, the expected subsidy represented the difference between the real lending rate implicit in FOPINAR's bor- rowings and the barely positive expected real lending rate to final borrowers, plus FOPINAR's spread, plus the aver4ge spread of the PFIs. (This subsidy was in the region of 122 under the first loan and 92 under the second.) The Government's assumption of the exchange risk represented an additional subsidy. - 8 - 20. With rising inflation in Ecuador after 1982, two issues became important. First was the need for the Monetary Board, which was respon- sible for monetary policy, to adjust nominal interest rates upwards to allow for rising rates of inflation. Delays in adjusting nominal rates meant that real interest rates charged to final borrowers became iacreasingly negative, increasing the size of the implicit subsidy to the final borrower. In 1983, for example, the GDP deflator rose 482, while (fixed) lending rates to final borrowers on new FOPINAR-financed loans rcse only to the 16 to 21% range. The second concern was that principal and interest payments under earlier loans at lower (fixed) interest rates were being still more heavily subsidized. The PCR notes the strong efforts m&de by the Bank to secure at least initially positive real interest rates to final borrowers of FOPINAR funds. However, with rising inflation, even the attainment of this objective would only have eliminated part of the Govern- ment subsidy. Financial Performance 21. FOPINAR's financial position and operating results have been fully satisfactory (PCR, paras. 5.01-5.05 and Annexes 20-23). FOPINAR's total assets and loan portfolio grew at average annual rates of 72.3? and 75.1?, respectively, orer 1981-87, partly reflecting high inflation. Net income rose from 2.2Z of average assets in 1982 to 2.6? in 1987, while administra- tive expenses declined from 3.9Z of average assets in 1981 to a low 1.8% in 1987. Reflecting ths very strong rise in FOPINAR's borrowing and lending activity, long-term loans rose from US$12.2 million to US$27.2 million, while liabilities (about 80? long-term) rose from US$6.8 million to US$31.3 million.1 FOPINAR's good financial results were in part the consequence of its insulation from exchange risk on the one side and credit risk (borne by the PFIs) on the other, although credit risk did not, under the circumstances, turn out to be a significant problem. At the end of 1987, only 3? of the PFIs' FOPINAR-financed portfolios were in arrears, compared with an average 10? for the overall portfolios of the same institutions. 22. Use of Bank Funds. Bank lending to the SSE sector in Ecuador has totalled US$90.6 million, of which US$60.6 million was disbursed under the first and second loans. The utilization of the latter amount is described in detail in the PCR (paras. 3.01-3.14 and Annexes 1 & 2). In part ti.e consequence of pent-up, unsatisfied demand for term credit on the part of SSEs, the first loan was disbursed at twice the anticipated pace. After becoming effective on April 1 1981, it was fully committed by mid-1983. The second loan was also disbursed at first at an unexpectedly rapid pace, was fully committed by mid-1986 (six months later than originally 1/ Updated FOPINAR income, balance sheet, and cash flow data for 1984-88 (in constant 1988 sucres and dollars) are attached (Annexes 1-3). They indicate that, as the Bank's third SSE loan became fully disbursed in 1988, FOPINAR's total assets, while rising in current sucre terms by 30?, declined in constant terms by 19.4? from 1987 levels. Long-term loan assets in constant terms fell 21.6? and net profits in constant terms 18.8?, while FOPINAR's equity declined from US$3.9 million (1988 dollars) in 1987 to US$3.0 million in 1988. - 9 - expected), and closed in June 1987. It was quickly followed by a third project, approved in April 1986. More (and thus smaller average size) subprojects were financed under the two projects than anticipated: 651 under the first loan and 3,111 under the second. 23. Sixty-three percent of subproject loans under the first project and 702 under the second were made to micro-enterprises and Lrtisans with assets of less than US$25,000 equivalent. Seventy-eight percent of the first loan and 85? of the second financed the acquisition of fixed assets, with the remainder going for working capital and small amounts of technical assistance. About three-quarters of the first loan and four-fifths of the second financed expansions, with the balance financing new SSEs. Most of the loans under the two projects were for terms under three years. About three-quarters of the subprojects and two-thirds of the credit under each loan were accounted for by four manufacturing subsectors: textiles and garments, metallic products, food products, and wood products. Seventy percent of subprojects under the first loan and 762 under the second were located in rural areas, taus meeting the Government's objective of fos- tering regional industrial dispersion. 24. Economic Impact. Creation of a total of 10,300 new jobs under the two loans was anticipated at appraisal. In fact, about 22,000 were created, at an average cost per job of roughly US$8,700 equivalent under the first loan and US$3,300 eqjivalent under the second. (An implication is that the subloans financed mainly firms using low-capital intensity production methods and offering relatively low-productivity, low-wage employment.) For those projects involving subloans over the PFI free limits, ERRs calculated by FOPINAR ranged from 13 to 75? under the first loan and from 23 to 96? under the second. Very few subloans financed pro- duction for export. Almost 90? of firms under the first loan and 98? of those under the second were engaged primarily in import substitution. Over 90? of firms under the two loans used local raw materials. 25. Technical Assistance. Under the first loan, FOPINAR's operating revenues were used to provide grants for some technical assistance (TA) activities carried out mknly by the National Center for Promotion of SSEs and Artisans (CENAPIA) and the private chambers under the direction of a technical coordinating committee on which FOPINAR was represented. TA to SSEs has aimed at improving accounting and financial analysis, as well as industrial processes, marketing and sales. FOPINAR's own TA role was to provide assistance to the PFIs in project and loan application preparation. Under the second loan, FOPINAR continued to finance grants for TA to SSEs from its earnings; in addition, US$240,000 of the Bank loan was allocated to the upgrading and computerization of CFN's financial management system (PCR, paras. 6.01-6.05, Annexes 24-25). The PCR notes that the grant- financed TA program was reasonably successful and reached 7,220 partici- pants participating in 244 courses or seminars over 1981-87. Nonetheless, very large unmet needs for TA persist, along with the need for better coordination of TA activities. ?OPINAR's own TA in project evaluation to the banks and DFIs was demonstrably highly effective. - 10 - IV. FINDINGS AND LESSONS Overall Findings 26. In terms of design, execution and supervision, the Bank's SSE projects in Ecuador have been highly successful -- possibly the most suc- cessful of all the Bank's roughly seventy SSE projects worldwide. (This said, the achievement of rapid commitment and disbursement of funds coupled with low arrears on repayments must be partly attributed to repressed interest rates and the implicit heavy gcvernment subsidization of subloans to final borrowers, features that made access to credit highly desirable and loans easy to repay.) Unfortunately, lending to SSEs in Ecuador has taken place in an overall environment of lax macroeconomic policies and misguided and interventionist exchange rate, trade and financial sector policies, making it difficult for success of the two projects in technical terms to be unambiguously equated with success in overall economic terms. 27. First, the Government's lax financial management, of vbich heavy implicit subsidization of interest rates was a symptom, added unnecessarily to Ecuador's external public debt burden and contributed to Ecuador's sub- sequent debt service difficulties. Under the two SSE loans, the combined cost of the interest subsidy and the foreign exchange risk assumed by the Government turned out to be extremely heavy. FOPINAR has estimated that, between 1982 and 1987, the Government was obliged to meet 72Z of the debt service obligations arising out of the two loans, in part because of the precipitous decline since late-1985 in the external value of the sucre. The Government's low interest rate policy, in addition to being extremely costly, inhibited the mobilization of domestic resources for investment, misallocated capital, and provoked capital flight. 28. Second, manufacturing in Ecuador was (and remains) heavily pro- tected. The four manufacturing subsectors -- textiles and garments, metallic products, food products and wood products -- receiving about three quarters of the subloans and about two-thirds of the total amounts dis- bursed under the two projects were nominally among the more heavily pro- tected (by both high tariffs and QR9) of the manufacturing subsectors. However, detailed analysis of protection in these subsectors undertaken with the aid of a general equilibrium price model indicates that actual effective rates of protection were rather modest (between 20 and 30Z). Further, most small enterprises either use domestic inputs or have not availed themselves of the provisions of the Small Industry Development Law providing exemptions from import duties on inputs, and thus have not enjoyed the rates of effective protection that were potentially realizable. Nonetheless, the general structure of the manufacturing sector remains distorted by protection and the economic efficiency of the sector is poor. Sustainability 29. Bank lending in Ecuador to SSEs (and via DFC loans, to medium and large-scale enterprises) does not appear indefinitely sustainable on the basis of heavy subsidies to final borrowers provided by the Government. - 11 - The Government has for other reasons experienced continuing, serious diffi- culties in controlling the size of the public sector financial deficit and has been forced as a result to resort to large-scale foreign and domestic borrowing. Any additional foreign borrowing adds to the external debt and exacerbates the already difficult problems of foreign debt service while domestic borrowing via money creation adds to inflation resulting in resource misallocation impairing Ecuador's growth. The long-term viability of thv overall process would be even more suspect if the Government were to continue to pursue inward-looking trade policies and repressive financial policies limiting Ecuador's future economic growth. The long-term sustain- ability of SEE (and other) term lending thus almost certainly requires that domestic interest rates reflect both the international opportunity cost of capital and the domestic costs of financial intermediation. (Full liberal- ization of interest rates would almost inevitably entail, in addition, substantial modification or total elimination of the existing price control regime.) FOPINAR would, in a market-responsive financial environment, be obliged to compete with alternative channels of financial intermediation. Modest operating subsidies could, however, probably be justified in the interests of offsetting the consequences of mutually reinforcing monopolis- tic tendencies in industry and finance. If so, FOPINAR's operations could be sustainable even under a more liberal interest rate regime. Bank Acceptance of Government Objectives 30. The unsatisfactory framework of industrial incentives and the protectionist orientation of trade policies, while critically reviewed by the Bank, did not lead to insistence on policy changes as a condition of lending. These incentives and policies affected the characteristics and orientation of the enterprises receiving credit, thus leading to a less than completely satisfactory overall economic outcome of the two SSE loans. The Bank's initial acceptance of the Government's economic policy framework and objectives partly reflected the unavailability, particularly at the time of the first loan, of in-depth analyses of the industrial and financial sectors. Neither the Government's acceptance of the exchange risk involved in the two loans, nor its implicit subsidization of interest rates, nor its failure to seek an adequate return on its capital contribution to FOPINAR was critically examined. 31. The Government's objectives in promoting SSEs could usefully have been subjected to more critical scrutiny. Government policy might have been better oriented, for example, towards mobilizing additional domestic and foreign resources for investment than towards reducing investment costs per job through the promotion of intrinsically low capital-intensity, low- productivity SSEs. Employment creation -- essentially a task for general policy measures rather than for particular projects -- might have been more effectively pursued by reducing minimum wages in the formal sector, elimi- nating the adverse employment impact of labor stability laws, establishing a more competitive exchange rate, and eliminating tax and tariff induce- ments to excessively high capital-intensity formal manufacturing produc- tion. (The Bank, while favoring these changes, particularly during preparation of the second loan, did not press hard for them.) Neither is it clear that SSEs engaged primarily in inefficient import substitution are to be preferred to larger, more capital-iniensive, higher-wage firms - 12 - engaged in efficient production for export. Finally, the economic merits of regionally diversified, small-scale enterprises are not self-evident; spatial concentration of industry and the emergence of large firms enjoying economies of scale are more typical concomitants of economic growth and development. 32. However, lending to SSEs did produce some economic and social benefits. First, it served to counterbalance discrimination in the banking system against loans to SSEs. Second, it served to make term credit avail- able to SSEs that would otherwise not have been availablo because of the discrimination against term savings inherent Government imposed ceilings on variable rate term savings instruments despite uncer:ainties about future inflation. Third, assistance to SSEs served to bolster competition within manufacturing, which, given the sector's highly protected character, the existence of economies of scale, and the small size of the Ecuadorian market, is inherently prone to monopoly. Fourth, SSE lending fostered the efficient substitution of local resources for imports. Fifth, SSE lending helped create higher-wage employment than would other-eise have been the case for workers unable, under existing policies, to find more highly paid employment in larger, more capital-intensive firms. Finally, the high average ERRs calculated for the roughly 25Z of SSE loans above the PFI free limits indicate that, notwithstanding trade and financial policy distor- tions, many SSE projects were apparently economically well justified. (However, ERRs were not calculated for the bulk of SSE loans, while the v3despread use of QRs and the presence of numerous other price distortions made the calculation of reliable ERRs difficult.)2 2/ In the Region's views, the risk of misallocation of resources, because of distortions in the incentive environment in Ecuador, is less for SSEs than for larger enterprises because: (i) a relatively high percentage of SSEs produce in areas of Ecuador's 2omparative advantage, i.e., labor-intensive resource-based manufacturing, and therefore changes in the policy environment would not affect their production stiucture in a major way; (ii) a reduction in tariffs for final products would affect only marginally the financial justification of SSE investment because of limited product substitutability and because SSEs have no monopoly power to lose as a result of liberalization; and (iii) the elimination of tariff exonerations on imported inputs would not affect the SSEs significantly since they rely mainly on domestically produced inputs. These considerations are corroborated by another indicator. Although shadow prices are difficult to compute in a distorted environment, high ERRs, estimated by FOPINAR for the roughly 25% of SSE subloans above the PFI free limits, suggest that small enterprises ar. relatively less affected by the distortions than large enterprises. The value of these estimates does not seem to be impaired in a major way by the existence of quantitative restrictions which apply most strongly to luxury consumer goods and commodities with which the larger enterprises compete. - 13 - Lessons to be Learned 33. Important lessons are to be learned from the projects' undoubted technical success. First, it is vital to locate the apex unit within a viable institution but with enough autonomy that it can be efficient, flex- ible and unhampered by the larger institution's procedures and priorities. Second, good professional and support staff need to be recruited by the apex unit and retained through the provision of attractive career development opportunities. Third, PF1 spreads need to be adequate, interest rL es charged to final borrowers competitive with those from other sources, and te apex institution's procedures compatible with the PFIs' own procedures. Fourth, delegation of authority and responsibility both to regional offices of the apex unit and to well-trained PFI officers can s, Ad up loan approvals, increase flexibility and improve the quality of appraisals and supervision. Fifth, frequent and careful supervision of borrowers at all levels of a project is essential. Sixth, critical analysis of the results of the previous project should play a central role in preparation for the next. Seventh, there are advantages in using the existing banking facilities, so that the project complements, rather than seeks to supplant, existing services, as done here by providing appropriate spreads to the PFIs. Finally, extensive preparation based on adequate prior research, together with efforts to ensure a high level of participation and team spirit on the part of those who will actually implement the loan, are key to good project design. 34. The following lessons are to be learned from the two projects' incomplete success in economic terms. First, the Government's financial position, debt situation, exchange rate, an. industrial and financial sector policy settings should be carefully assessed at the project iden- tification stage, since they are critical to the overall economic success of industrial sector lending. Second, necessary policy improvements, perhaps supported by policy loans, should be more close'- tied to indus- trial lending project commitments, as in the Bank's 1986 '.-Austrial Finance Project. (However, DFC loans to large scale industrial enterprises would be more appropriate vehicles for the pursuit of trade policy improvements than SSE loans.) Third, more explicit linkages should be in place between continued disbursements and the continued fulfillment of loan conditions. This is important as Government intentions at the time of loan signing quite frequently are changed later, under the pressure of economic and political events, often with the result that the anticipated economic bene- fits of a project are seriously undermined. Finally, Government objectives in seeking project loans, often plausible in their own terms, need to be evaluated in the context of the Government's overall mix of economic poli- cies, with a view to identifying possibly more effective ways of achieving the country's economic growth and employment goals. - 15 - ANNEX 1A FIRST AM SeCO SMALL-SCALE ENfMPRISE CREDIT PROJECTS (LOANW 1879-E AD 1- FDPDIAR: INCOME STATE TS. 1984-1992 (In mi I ion constant Sucre*) Historical aProected Year Ending Dec. 81 I IM IM 19 I M M DEFLATOR 0.803 0.387 0.477 0.617 1.00 1.00 1.00 1.00 1.00 From Loans 715.5 1.105.7 1,275.9 1,655.7 2,252.2 3.483.2 5,073.9 7,476.1 10,626.4 From Investments mJ .1J. 21L2 13..7L --MU .4 -L2 ---=a Total Income 898.7 1,107.0 1,278.2 1,871.9 2,265.9 3,481.6 5.093.3 7,492.3 10,6W8.6 Financial Expenses 8WA 0 1,Sgl 4 1J90- 2,60.7 3E539.7LML MAL 7,M,5 FDIANCIAL MARCIN 406.8 374.9 421.2 497.4 575.5 871.9 1,558.6 2.169.9 3,049.1 Administrative Expensea 43.2 47.5 89.5 76.8 73.9 81.8 89.4 98.4 106.2 Loan Lose Provisions 0.0 0.0 0.0 0.0 45.2 15.0 6.1 6.2 6.2 Indirect Coste 48.5 155.8 174.4 122.0 200.0 216.0 283.8 252.0 272.2 Other Administrative Expenses . . 14sI 63.9 1au Operating Expenses .91. 20 LUA 333. 7. 4lL! 51.g .1 Net Profl t 314.5 1 1 18 22U A1. A J MM I.M.2 2JAM.9 fACc: FDPINAR. - 16 - ANNEX lB PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) FOPINAR: INCOME STATEMENTS, 1984-1992 (In million constant US$) Historical Projected Year Ending Dec. 31 1984 1986 1988 1987 1988 1989 1990 1991 1992 FOREIGN EXCHANGE 435 435 435 436 486 486 435 436 435 INCOME From Loans 1.64 2.54 2.93 8.81 5.18 7.96 11.66 17.19 24.43 From Investments 0.42 0.00 0.01 0.50 0.08 0.04 0.04 0.04 0.03 Total Income 2.07 2.54 2.94 4.80 6.21 8.00 11.71 17.22 24.46 EXPENSES Financial Expenses 1.18 1.68 1.97 8.16 3.89 6.00 8.14 12.24 17.45 FINANCIAL MARGIN 0.93 0.86 0.97 1.14 1.82 2.00 8.57 4.99 7.01 Administrative Expenses 0.10 0.11 0.14 0.18 0.17 0.19 0.21 0.23 0.25 Loan Loss Provisions 0.00 0.00 0.00 0.00 0.10 0.03 0.01 0.01 0.01 Indirect Costs 0.11 0.36 0.40 0.28 0.46 0.50 0.54 0.58 0.63 Other Administrative Expenses 0.00 0.00 0.00 0.00 0.03 0.16 0.30 0.45 0.51 Operating Expenses 0.21 0.47 0.54 0.46 0.77 0.88 1.06 1.27 1.40 Net Profit 0.72 0.40 0.43 0.69 0.568 1.14 2.51 3.72 5.61 Source: FOPINAR. - 17 - ANNEX 2A PROJECT PGFORMANClE AUDIT REPORT FIRST AND SECOND SMALL-SCALE 9STPRISE CREDIT PROJECTS (LOANS 187-ec AO 91-50 FOPIWAR: SALANCE SEETS, 1984-1992 (In million constant Sucres) Historical Proiected Dec. 31 1984 Im JIm 1wl Ji9l W2 Im ! 1322 DEFLATOR 0.303 0.387 0.477 0.617 1.000 1.000 1.000 1.000 1,000 6Aset Current Assets Cash 354.2 45.8 814.1 187.9 157.8 193.2 176.8 131.1 101.3 Current Loans 1,258.9 1,241.8 1,700.2 2,582.4 1,875.0 2,630.8 8,079.8 4,324.1 6,521.3 Interest Receivable 255.3 854.5 887.4 882.7 800.4 633.6 791.7 1.024.5 1,329.9 Other Current Assets 667.4 102.2 451.2 460.5 326.7 328.4 752.9 894.6 849.7 Les Provisions (.01 .25,S) (21 .2 1 15,3 M11 (76.2) (0J 2. ( .I6). Total Current Aets 2,509.1 1.718.0 2,831.9 3,727.3 3,104.8 8,917.5 4,724.5 6,292.0 8,713.5 Long-term Loans 5,IH. ,362. 7,780.6 10.66.4 8,460,1 ,8.8 16,45, X1Z7861 32I0L.9 TOTAL ASSETS 10J080. "JULjjA%A 11Ig.4. 14Z _21,180, I0 07q. A Liabilities and Euity Current LiabilIties 820.6 221.8 1.901.4 1,286.7 566.7 877.3 1,930.5 2,567.1 4.081.1 Long-term Loans 5,674.7 7,852.9 6,8'-4.4 11,408.5 9,682.3 12,112.2 16,477.0 23,142.6 30,793.7 Paid In Capital 1,828.9 1,421.2 1,1583.0 891.4 550.0 350.0 530.0 830.0 550.0 Retained Earnings $26.8 ..7 . .1.7 0 M.9 1,232, 2,., 3,818.4 LJ16. TOTAL EQUITY 2,350.6 2,005.9 1.814.7 1,701.5 1,815.9 1,782.8 2,772.8 4,868.4 6,676.7 TOTAL LIABILITIES AD EAUITY D- 10.080MM6 qiaI2 11-42390.6 1.j64.9 M.JZ 2JI-09 Q 29 A 41.5A1AM5 Sourge: FOPINAR. - 18 - ANEX 2B PRnJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) FOPINAR: BALANCE SHEETS, 1984-1992 (In million constant US1) HistooIcal Projected Dec. 31 1984 1985 1986 1967 1988 1989 1990 1991 1992 FOREIGN EXCHANGE 485 485 486 485 486 485 486 485 485 Assets Current Assets Cash 0.81 0.11 0.72 0.89 0.88 0.44 0.41 0.30 0.23 Current Loans 2.89 2.85 8.91 5.62 4.81 6.05 7.06 9.94 14.99 Interest Receivable 0.59 0.81 0.89 1.84 1.84 1.46 1.82 2.88 8.06 Other Current Assets 1.68 0.28 1.04 1.00 0.75 1.21 1.78 2.06 1.95 Loes Provisions (0.0 (0.06) CO.06) 004 (0.183 (0.168 (0.18 (19m (0 Total Current Assets 5.77 8.95 6.51 8.67 7.14 9.01 10.86 14.46 20.03 Long-term Loans 18.42 19.22 17.89 24.51 19.46 24.95 87.68 54.68 76.49 TOTAL ASSETS 19.19 23.17 24.40 88.08 26.59 83.96 48.69 69.14 95.52 Liabilities and Equity Current Liabilities 0.74 0.51 4.56 2.96 1.80 2.02 4.44 5.90 9.88 Long-term Loans 18.05 18.05 15.67 26.21 22.28 27.84 87.88 68.20 70.79 Paid In Capital 4.19 8.27 2.65 2.05 1.28 1.28 1.26 1.26 1.26 Retained Earnings 1.21 1.34 1.52 1.86 1.76 2.88 6.11 8.78 14.08 TOTAL EQUITY 6.40 4.61 4.17 8.91 8.08 4.10 6.87 10.04 16.85 TOTAL LIABILITIES AND EQUITY 19.19 28.17 24.40 88.08 26.59 88.96 48.89 69.14 95.52 Source: FOPINAR. - 19 - ANNEX 3A moe PANWC MDIT MOT FORST NO SECOND SMU.-SCALE BTMISE CitIT FOJCTS (LOANS 1879- N O2221-E) FDPINA: CASH FURW ALMC. 1901-1992 (In mi IIion constant Sucres) Historical Priected Am IM aI- m M OEFLATOR 0.48 0.62 1.00 1.00 1.00 1.00 1.00 Income free Operations 2,787.4 8,227.2 8,272.5 5,508.0 7,548.1 10,822.6 14,645.2 Current Limbilities BW 401.0 6,440.9 2,974.0 0.0 0.0 0.0 0.0 FM 144.2 322.6 0.0 483.4 483.4 0.0 0.0 Other Income 318. ..5. .. 2.. 2 ..IA. 2 14 Subtotal 6,421.6 11,517.7 6.200.8 6,202.8 8,677.6 10,597.1 14,810.6 Expenses from Operations 8,106.2 7,438.6 8,656.1 6,025.0 8,680.2 11.654.4 15,578.2 Current Lan 2,829.S 8,566.2 1,170.7 660.7 1,038.2 1,838.9 2,162.7 Lang-term Loans 0.0 216.5 1,196.7 1,848.0 2,031.8 2.149.6 2,255.7 Administrative Expenses 156.1 164.0 78.9 81.8 69.4 98.4 106.2 Other Expenses .3,M . ..JILZ ...202. 4 ......hAl .......L1 Subtotal 6,144.7 11.592.7 6.286.2 4,267.2 12,410.9 168.352.4 20.55.4 Net Inflow (Outflow) 276.9 (74.9) 54.2 (2,064.6) (8,788.1) (5,755.8) (6874.6) Opening Cash Balance (from previous period) 87.2 242.8 108.6 167.8 193.2 176.8 131.1 Lang-ters Loans 0.0 0.0 0.0 2,100.0 4,000.0 6,60.0 8,400.0 Interest 0.0 0.0 0.0 0.0 298.8 1.120.4 2,68.0 Closing Cash Balance all 167.2 9 ZJ T.S 11..1 1J. Souse: FOPIR. - 20 - ANNEX 3B PROJECT PERFORMANCE AUDIT REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) FOPINAR: CASH FLOW BALANCE, 1988-1992 (In million constant USS) Historical Projected 1988 1987 1988 1989 1990 1991 1992 FOREIGN EXCHANGE 435 435 435 435 435 435 435 Sources Income from Operations 6.29 7.42 7.52 12.65 17.35 23.73 33.67 Current Liabilities BIRF 0.92 14.81 6.84 0.00 0.00 0.00 0.00 FMO 0.33 0.74 0.00 1.11 1.11 0.00 0.00 Other Incomes 7.22 3.51 0.10 0.50 1.49 0.63 0.38 Subtotal 14.76 26.48 14.48 14.26 19.95 24.386 34.05 Uses Expenses from Operations 7.14 17.10 8.40 11.65 19.95 26.79 35.80 Current Loans 6.38 8.20 2.69 1.98 2.39 4.23 4.97 Long-term Loans 0.00 0.50 2.76 4.24 4.67 4.94 5.19 Administrative Expenses 0.36 0.38 0.17 0.19 0.21 0.23 0.25 Other Expenses 1.27 0.47 0.82 1.06 1.81 1.40 1.14 Subtotal 14.13 26.65 14.34 19.01 28.53 37.59 47.35 Net Inflow (Outflow) 0.64 (0.17) 0.12 (4.75) (8.68) (13.23) (13.30) Opening Cash Balance (from previous period) 0.09 0.568 0.24 0.38 0.44 0.41 0.30 Long-term Loans 0.00 0.00 0.00 4.83 9.20 16.70 19.31 Interest 0.00 0.00 0.00 0.00 0.65 2.68 6.08 Closing Cash Balance 0.72 0.39 0.36 0.44 0.41 0.30 0.28 Source: FOPINAR. - 21 - PROJECT COMPLETION REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) April 19, 1989 Trade, Finance and Industry Division Country Department IV Latin America and the Caribbean Region - 23 - PROJECT COMPLETION REPORT ECUADOR FIRST AND SECOND SMALL-SCALE ENTERPRISE CREDIT PROJECTS (LOANS 1879-EC AND 2221-EC) 1. INTRODUCTION Bank Lending Activity for the SSE Sector 1.01 Bank lending to the Ecuadorian SSE sector has consisted of three small-scale enterprise credit projects, totalling US$90.6 million, the first two of which are reviewed in this report. (The third was approved by the Board on March 27, 1986 (Loan 2673-EC).) All three loans have been channeled through FOPINAR, which was established in 1980 as a permanent second-tier financial institution within CFN. FOPINAR's operational objectives also include financing SSE. Special emphasis is placed on making resources available to the very smallest artisan craft type of operation. FOPINAR is not financing companies which have reasonable access to alternative local or foreign sources of financing on adequate terms. FOPINAR has its own staff, financial resources and separate accounts; it makes loans as a second-tier institution through the network of qualifying financial intermediaries. To date, a fourth SSE loan with overall objectives similar to the earlier projects has been proposed. However, its design incorporates the lessons noted in this PCR, and the experience gained from the third SSE Project. The Bank has also extended five Development Finance Company (DFC) loans to Ecuador totalling US$155.0 million. 1.02 At the request of the Government of Ecuador, the Bank has been associated with FOPINAR since its inception. The first small-scale enterprise credit project (Loan 1879-EC for US$20.0 million) was approved on June 19, 1980, and a second project (Loan 2221-EC for US$40.6 million) was approved on December 16, 1982. The dual implementation period ran from 1981 to 1986. 1.03 This report examines the impact of these two loans; the institutional development of FOPINAR; the role of participating financial intermediaries (PFIs); and the small technical assistance component included under the second loan; then evaluates the success of the Bank's strategy in the sector. Economic Environment and Sectoral Performance 1.04 After a period of rapid growth during 1974-79, the Ecuadorian economy faltered over the next six years (1980-85), when the two loans were being disbursed. GDP growth, which had averaged 6.6% p.a. between 1974-79, declined to 2.0% p.a. in the period 1980-86. Total exports declined from US$2,806.5 million in 1980 to US$2,590.3 million in 1986. Inflation rates grew from 12.8% to almost 28.0% in the same period. The crisis in the balance of payments was a result of contining and significant public deficits, which were for the most part, externally financed. Fiscal - 24 - difficulties then increased because commercial banks became reluctant to extend further credit to Ecuador and the government was forced to borrow domestically. Petroleum exploration slowed and production stagnated, while highly subsidized prices of petroleum products encouraged rising domestic consumption of petroleum products. 1.05 Factors that adversely affected the industrial sector during the economic crisis were three-fold: (a) sharp increases in interest payments on the large and growing external debt, bringing deterioration of the current account balance of payments; (b) the 1986 collapse of oil prices, negatively affecting both exports and fiscal reserves; and (c) two major earthquakes that hit the northeastern oil-producing region, interrupting oil production and reducing petroleum exports. 1.06 To alleviate this difficult situation, the government took several measures that included instituting the economic adjustment program of 1982-83, reducing current expenditures and public investment, introducing import controls, reducing subsidies on public utilities, and rescheduling its external debt. The sucre was also devalued by unifying the dual official exchange rates at the higher of two previous rates and then devaluating the currency. In 86, the government, in keeping with its economic development philosophy, allowed the exchange rate and most interest rates to float freely. Following the financial crisis of 1982 and the subsequent shift toward a free market and outward export-oriented economy, the Ecuadorian situation began to improve. Ecuador's economy expanded by 3.8 % in 1985 and the public sector deficit was essentially eliminated, enabling the volume of credit available for the private sector to expand substantially. In the near future, the government needs to maintain a competitive exchange rate to permit continued growth in non-oil exports, as well as to continue restraining public sector expenditures and monetary expansion. Of equal importance will be strengthening a financial system that has been badly weakened by a decade of misguided financial policies and imprudence on the part of bankers and their clients. Financial policies to strengthen the financial sector have been already initiated under the first Financial Sector Adjustment Loan (US$100 million approved in December 1987). Finally, additional foreign resources must be found to support the reform process and smooth the adjustment to lower oil prices. Financial Sector 1.07 The Ecuadorian financial system grew rapidly in the 1970s, mainly because bank ownership granted access to the profitable lines of credit of the Banco Central del Ecuador (BCE), the primary lender within the country. Guarantees of foreign loans to the private sector grew rapidly. Starting in 1983 with the decrease in foreign resources and the deterioration in economic conditions, the system suffered grave liquidity problems. Such factors added to the devaluation of the sucre and reduced the ability of borrowers to meet dollar-denominated obligations guaranteed by the banks. The sucre depreciated in real terms by 37% in 1986 and 70% on average over the 1980-83 period. The principal weaknesses of the financial system in Ecuador were the deteriorating portfolio quality of financial intermediaries (FIs), the declining operating efficiency and reduced profitability of banks and FIs, and inadequate supervision of the - 25 - FIs by the Superintendency of the Bank of Ecuador. To alleviate the liquidity crisis, the government carried out the "sucretization" program. In 1983, BCE assumed foreign debt and participating institutions then became obligated to repay BCE in sucres over a period of up to seven years. Since 1986, Ecuador has been under a floating rate system and bars extensive intervention in foreign exchange market. Domestic credit creation is a major policy variable determining monetary growth and the nominal exchange rate. The Government of Ecuador has designed a program to improve the financial sector by: reducing the dependency of FIs on the Central Bank in order to promote better resource allocation and monetary stability; improving the regulatory and supervisory framework for financial institutions; and improving conditions for long-term financing through variable interest rates. The above program is expected to improve the performance of the financial sector in Ecuador significantly and create more efficient resource mobilization and allocation of investment and capital. To achieve this goal, the financial system must pull together an adequate pool of foreign and domestic resources and transform their size, maturity and risk characteristics to satisfy the credit requirements of the domestic economy. Manufacturing Sector and SSE 1.07 The structure of the manufacturing sector remains simple and is still at an early stage of development. Ecuador's manufacturing sector is composed primarily of food processing, textile manufacture, and wood processing. They account for about 75% of the manufacturing value added. The sector has contributed about 18% of GDP in recent years and employed about 15% of the labor force. It is highly dependent upon imports but generates only minimal foreign exchange. With the economic recession, real output in manufacturing value added declined by about 2% in 1983-84. As a result of such a drop in the aggregate demand, together with the sector's high indebtedness, many medium- and large-scale enterprises have experienced financial problems. Despite the recent recession, SSEs have enjoyed some growth due to lower indebtedness and less reliance on imported inputs. 1/ During the last three years, annual real growth rate estimates for SSEs averaged 13% for sales, 17% for profits, and 15% for employment. To grow, develop, and eventually participate in international markets, SSEs need to improve product design and quality and strengthen their marketing skills. Expanded financial resources are required to help SSEs make better use of their installed capacity by financing their permanent working capital needs, the modernizing and balancing of their equipment, and the meeting of their technical assistance needs. 1/ SSEs are defined as firms engaged in industry, agro-industry, fishing, tourism, and related industrial services and marketing activities, with fixed assets of less than US$350,000, excluding land and buildings. - 26 - II. PREPARATION AND APPRAISAL OBJECTIVES Loan Preparation 2.01 In early 1978, at the request of the government, the Bank began the preparatory work for the First Small-Scale Credit Project (SSC) and an associated technical assistance program. To ensure efficient project execution, the Bank explored with the Banco Central de Ecuador (BCE), the Ministerio de Industria, Comercio, Integracion y Pesca (MICEI) and the Corporacion Financiera Nacional (CFN), the prospects for establishing a new facility to handle the entire SSC operation. An agreement was reached in March 1980 between BCE and CFN that established the BCE as a disbursement and collection agency for the project. Project appraisal took place in November/December 1979 and a loan (1879-EC), for US$20.0 million, was approved by the Board on June 19, 1980. The loan was signed on October 31, 1980 but only became effective April 1, 1981 due to delays in the preparation of the Fiscal Agency Agreement, which was to be signed by the government and by the CFN. Since the first SSC project disbursed rapidly (para 3.01) and the demand fcr credit was very high, the Ecuadorian Government requested that a follow-up project be prepared. The appraisal for the Second SSC project (Loan 2221-EC) was carried out in March 1982 and a loan for US$40.6 million, was approved by the Board on December 16, 1982. The loan was signed on February 23, 1983 and only became effective on July 25, 1983 due to government delays in depositing the initial US$5.0 million equivalent counterpart funds into the project account, and in signing the Fiscal Agency Agreement between CFN and the government. Both loans basically comprised the same component: a line of credit in medium- and long-term resources for SSE development in Ecuador. Loan 2221-EC had a small technical assistance component of US$240,000 for improving the overall financial management of CFN. Major Issues Discussed During Loan Preparation and Negotiations 2.02 During preparation of the two loans, adequate measures were discussed and undertaken to address the following issues: (a) Fund for Development of Small-Scale Industry and Artisans (FOPINAR). A major concern at appraisal was the need for a new facility to handle the total SSC operation. A fully integrated, second-tier, rediscount facility was required to perform a range of program promotion, project evaluation, rediscount and loan supervision tasks. Following intensive discussions involving the highest le 3ls of government, CFN and BCE finally signed an agreement in March 1980, under which a second-tier financial institution would be operated by CFN in conjunction with BCE. It would provide part of the financing for term loans made by financial intermediaries to help finance investment projects for small-scale enterprises (para. 4.02). CFN staff prepared a draft organization chart, a staffing plan, and a statement of operating regulations and procedures for FOPINAR's operating unit, based on the agreement reached during negotiations between CFN and the Bank. To facilitate its operations, two subaccounts within the CFN project account were established: a Project Loan Subaccount to channel withdrawals - 27 - from the Bank's Loan account made by BCE to FOPINAR and a Project Management Subaccount to be used for all other transactions of FOPINAR, including disbursement and collection of FOPINAR's loans to financial intermediaries, and payment of staff salaries and other operating expenses. (b) Government Contribution. During negotiation of Loan 1879-EC, the Ecuadorian authorities proposed an amendment to the Loan Agreement involving the timing of the government's contribution to CFN's fund (FOPINAR) as a condition of loan effectiveness. To offset potential revenues lost by CFN as a result of reduced short-term placements in 1981, the government agreed not to pass on the commitment fee to CFN. The amendment was accepted and section 3.02(a) of the Loan Agreement changed to reflect the amendment. Furthermore, to ensure that the government's coutribution would be made on a timely basis, a new clause was added giving the Bank the right to withold authorization for withdrawals from the loan beyond US$10.0 million if the government's installment was not deposited in the fund account before June 30, 1981. (c) Working Fund. During preparation of Loan 2221-EC, FOPINAR requested establishment of a working fund for the project. Justification was based upon FOPINAR's need to finance the cash flow requirements arising from the 45 to 90 day time lag between FOPINAR's disbursement to SSEs and its reimbursement by the Bank through CFN. The request was reiterated by the Ecuadorian delegation during loan negotiation. As a result, Bank approved the inclusion of such fund in the project, and the feature was included in the Loan Agreement (Section 2.02). It was also agreed that, as a condition of loan effectiveness, a Special Account would be established in the Central Bank to hold the full amount of the working fund. The amount available in the Special Account represented an initial deposit of US$3.2 million equivalent (estimated as a two-month share of expenditures covered by the Bank). Payments from the Special Account were made against withdrawal applications prepared and submitted by FOPINAR. (d) FOPINAR Staff. During negotiations of Loan 2221-EC, Bank expressed a desire to improve FOPINAR staffing and expand commitment authority for branch offices operations. FOPINAR presented a new operating regulation which provided an appropriate level of commitment authority for the branch offices. To improve staffing, CFN's general manager began to change management of some CFN branch offices and to remedy the causes of FOPINAR's slower than average discount operations in some regional offices. (e) Technical Assistance. During negotiations, FOPINAR presented a program of technical assistance for SSEs, to be partially funded from net operating revenues earned by the SSC project. The program of technical assistance was found to be in line with Bank agreements. Such program was creative for its type and demonstrated that FOPINAR had made substantial progress in structuring technical assistance operations for SSEs. -28- Appraisal Objectives 2.03 The first loan (US$20.0 million) and the second loan (US$40.6 million) were made in June 1980 and December 1982, respectively. The objectives of the two loans were to (a) support SSE development in Ecuador on a national level; (b) assist the government in generating employment and increasing the use of local resources (or substituting for imports) by building a more dynamic sector; (c) increase the term financing available for SSEs and create, within the financial system, an improved capacity to promote, appraise, and supervise lending. Under the first loan, the Bank expected to provide a structure of interest rates more consistent with the risks and costs involved with SSE lending and an expanding capacity to deliver technical assistance to this sector. In addition, under the second loan, the Bank expected to improve FOPINAR's institutional capacity to operate decentralized SSE loan promotion, discount and supervision facilities and assist the participating financial intermediaries in improving project preparation, appraisal, and supervision techniques. Both Bank loans were also expected to mobilize community resources in provincial areas for the more rapid promotion of new SSE projects, as well as to expand the use of domestic raw materials, since a high perccntage of the inputs used by SSE were expected to be domestic in origin. 2.04 The socioeconomic impact of both projects under review was expected to be substantial. It was estimated that the first loan would help FOPINAR to partially finance 625 new subprojects, generating a total of about 4,300 new direct jobs at an average investment cost per job in the range of US$8,700 (1978 prices). Under the second loan, some 6,000 new direct jobs were expected to be created by approximately 1,200 subprojects at an investment cost per job of US$12,600 (1981 prices). The economic rateb of return on the iavestment subprojects financed under the second loan were expected to be around 30% (paras. 3.11-3.14). 2.05 The extent to which the appraisal objectives, including the specific institution building objectives, were achieved is described and reviewed in the follov:ng chapters. III. UTILIZATION OF LOAN PROCEEDS Resource Transfer 3.01 After a two-month delay due to legal problems, the first loan became effective April 1, 1981. Since effectiveness, FOPINAR's resources were committed and disbursed at twice the pace anticipated. By FY82, disbursements amounted to US$2.1 million, about 189% of the disbursement level anticipated at appraisal. This high disbursement level of US$2.0 million per month reflected the active participation of a large number of financial institutions (para. 4.11) in the project and the current dynamism in the SSEs. The situation continued throughout FY83 and FY84. The loan was fully committed by mid-1983. By this time, the Bank was already processing a repeater loan. The usage rate of Bank Loan 2221-EC was similar to Loan 1879-EC. To accommodate the large backlog of subprojects and to avoid asking FOPINAR to withhold new commitments for - 29 - subprojects, retroactive financing up to US$4.0 million was provided under the second loan. During its first year of operation (FY84), the loan was committed almost 50% more than expected at appraisal and total disbursements were US$19.4 million. Approximately one year from the date of effectiveness, the disbursements of Loan 2221-EC were 70% above disbursement level anticipated at appraisal. This higher level of disbursements reflected the above-average financial soundness of SSEs; their low indebtedness made it attractive for financial intermediaries to lend to them. Following the same trend, loan disbursements in FY86 were US$37.6 million, 93% of the appraisal estimate. The total loan was fully committed by mid-1986, and fully disbursed by the beginning of 1987. The closing date of the loan was extended for one year to June 1987, only to allow time for complete disbursement of some subprojects. 3.02 The full loan disbursement under both projects was due to the fact that only a small proportion of SSEs had access to FOPINAR. FOPINAR's market is still far from saturation. The strong demand for loan resources resulted in the large participation of a great number of financial institutions in the project, in part due to the active promotion of FOPINAR (para. 4.17). The disbursement experience with the two SSC leans was taken into consideration in estimating the implementation speed of the third loan (2673-EC). Lending Characteristics Under Loans 1879-EC and 2221-EC 3.03 FOPINAR financed, through the two Bank's loans, a total of 3,762 subprojects at a total cost of S/. 5,026.7 million (US$57.4 million) 2/ distributed as follows: 651 subprojects with a total cost of S/. 934.1 million (US$18.1 million) 3/ under the Loan 1879-EC and 3,111 subprojects with a cost of S/. 4,092.6 million (US$36.3 million).4/ under the Loan 2221-EC. The targets of both loans were exceeded; the appraisals estimated the financing of 625 subprojects for Loan 1879-EC and 1,200 subprojects for Loan 2221-EC. 3.04 Loan 1879-EC helped finance fixed assets in 509 subprojects (78.2%) for a total of S/. 787.7 million (US$15.3 million) and working capital for 130 subprojects (20.0%) amounting to S/. 145.5 million (US$2.8 million). The balance went for technical assistance. Loan 2221-EC helped finance fixed assets for 2,644 subprojects (84.9%) for a total S/. 3,691.5 million (US$32.7 million) and working capital for 404 subprojects (12.9%) amounting to S/. 394.1 million. The Ualance also was spent for technical assistance. Annexes 1-2 list the characteristics of these subprojects. 2/ At the average exchange rate for the period 1982-1987 when loans were implemented. 3/ At average exchange rate for the period 1982-1985 when loan was implemented. 4/ At average exchange rate for the period 1984-87 when loan was implemented. - 30 - Size and Type of Subloans 3.05 Of the 651 loans granted by FOPINAR under Loan 1879-EC, 409 loans were credits up to S/. 1.0 million and accounted for S/. 143.1 million or 62.8% of the total. Such loans were made to the smallest SSEs, classified as artisan/micro-enterprises, those with assets of less than US$25,000 equivalent. A total of 201 loans (30.9%) were given for subloans size from S/. 1.0 million to S/. 5.0 million and only 42 loans (6.3%) were for subloan size over S/. 5.0 million to S/. 16.0 million (see Annex 1). Thus, loan operations were heavily concentrated on the smallest firms. FOPINAR financed 168 new SSEs (25.8% of the total), the remaining 482 subprojects were for expansion activities. 3.06 The lending trend for small SSEs increased under the Loan 2221-EC. Of the 3,111 loans granted by FOPINAR, 2,190 loans (70.4%) were for loan size up to S/. 1.0 million and 735 loans (23.6%) were for the next loan size up to S/. 5.0 million. As in the first loan, a high concentration of total lending went for 2,476 expansion subprojects (79.6%) and the rest, 635 subprojects (20.4%), for new SSEs. The results show positive promotion (para. 4.17) by FOPINAR in financing the investment projects of small and micro-enterprises as well as in the financing of expansion or modernization of SSEs. 3.07 The Loan 1879-EC shows that 60.4% of the subloans had a maturity up to three years, with only 7.2% of the subprojects having a payment period of over five years (see Annex 1). Under Loan 2221-EC, most of the subprojects (70.7%) had maturities up to three years. This range of maturities was less than expected at both appraisals (6 to 7 years) and reflects the conservatism of the commercial banks zather than any FOPINAR policy to keep maturities short. Sectoral Distribution 3.08 Under the Loan 1879-EC, the textile and garment manufacturing subsector benefitted most, with 172 credits (26.4% of the total). The second largest group of subprojects financed was in the metalic products subsector, accounting for 18.7%, followed by food products (18.3%) and wood products (17.6%). Together, these subsectors account for 76% of the number of subprojects and 65.4% of the total financing. 3.09 As in the first loan, the subprojects under Loan 2221-EC were concentrated in the same industrial groupings. The textile and garments represented 31.4% of the total, wood products accounted for 15.7%, and food and metallic products accounted for 15.1% and 14.9% respectively. All the above subsectors accounted for 77.1% of the subprojects and 66.0% of the total financing. The composition of credits have more than met the objectives of both projects. Geographic Distribution 3.10 Approximately 69.7% and 75.6% of the subprojects financed by FOPINAR under the first and second loans were located in rural areas. Only 18.9% of subprojects were located in Quito and 11.5% in Guayaquil under the Loan 1879-EC. Subprojects under Loan 2221-EC showed similar - 31 - distribution: 16.9% in Quito and 7.6% in Guayaquil. The degree of geographic dispersion exceeded the expectations of the Bank as stated in the project objectives of both loans. The location of credits granted reflected FOPINAR's efforts to enforce a better regional distribution of the subprojects to encourage the participation of regional financial institutions. This was done by establishing FOPINAR branch operations 1, five outlying provinces and supplying adequate professional staff to ruu them. Impact of Subprojects 3.11 Profitability and Efficiency. Economic and financial characteris- tics of the subprojects financed under Loans 1879-EC and 2221-EC are summarized in Annexes 3 to 6. The economic impact of the subprojects financed under both loans can be considered satisfactory in terms of employment creation and the viability of investments. The ex-ante financial and economic rates of return (FRR and ERR) under both loans vary from 15% to 55%. Under Loan 1879-EC, a total of 596 subprojects (91.6%), had FRR up to 15% and 613 (94.2%), had ERR up to 15%. (See Annex 4.) 3.12 FOPINAR came out with an "ex-post" analysis of a sample of SSE projects financed under both loans based on the subloan supervision data, updated for actual performance data obtained during the PCR mission. Based on such data plus data available in the files, FOPINAR calculated the ERR and FRR for a sample of subloans. Under Loan 1879-EC, the ERR ranged from 13.1% to 74.5% and FRR from 16.9% to 59.0%. Under Loan 2221-EC, the ERR ranged from 22.8% to 96.0% and FRR ranged from 17.8% to 99.0%. On an a priori basis, therefore, FOPINAR financed economically sound and efficient subprojects under the first and the second loans. The actual average ERR and FRR for both loans were well within the overall range of 30% estimated during appraisals. Such an average is not high when the labor-intensive nature of SSE operations and their high use of local resources are considered (para. 3.13). 3.13 Impact on Balance of Payments. Firms based on import substitution accounted for 89.1% and 97.9% in the first and second loans respectively. Based on a sample of 39 enterprises from Loan 1879-EC, about 95% of the total used local raw materials as a major component of their products (see Annex 3). A sample of 64 enterprises from the Loan 2221-EC, showed that around 90% used local raw materials. Given the high proportion of textile, food, and wood projects financed, SSEs could use local resources rather than imported raw materials in production (pata. 3.08). The overall results appear to have achieved a positive Impact on the country's balance of payments through the better use of local natural resources and efficient substitution of imports. 3.14 Employment. In addition to their favorable impact on Ecuador's balance of payments, the subprojects generated significant employment. The creation of 10,300 jobs was anticipated at appraisal, 4,300 jobs under the first Loan and 6,000 jobs under the second. The actual numbe- of jobs created was 21,883; 3,633 jobs under Loan 1879-EC and 18,250 under Loan 2221-EC. The average investment cost per job ran about S/. 446,770 (US$8,675) under the first loan, well within the US$8,700 appraisal - 32 - estimate; while S/. 373,541 (US$3,308) under the second loan was lower than the US$12,600 forecast, due to more labor-intensive subprojects financed under the loan. These results met the employment objective envisioned at appraisal. 3.15 Current Status of Subloans. The PCR mission visited a randomly-selected sample of 16 subborrowers. All the enterprises had working capital shortages due to restrictions on commercial bank credits. None of the enterprises had received technical assistance in any aspects of management. For the most paet, the entrepreneurs had overcome, or were in the process of overcoming, these problems through a combination of ingenuity and perseverence. Most of the enterprises had had a very slow loan-approval experience, due to the sharply expanded level of demand in provincial towns, which created system problems that were not fully attended to by the PFIs. Delays in the reimbursement of participating financial intermediaries affected the participation of commercial banks. Some of the enterprises visited had received two FOPINAR's subloans. They felt FOPINAR's interest rate was not too high, and they would have had difficulties sustaining their growth in the absence of FOPINAR's financing. While the original calculations of the financial and economic rates of return appeared justified, the mission observed that these proved to be optimistic on an ex-post basis. This was due to the deterioration of the financial state of the enterprises as a result of accelerating inflation and associated high financing costs as well as the depressed level of demand in domestic and international markets. Cost overruns and unsatisfactory sales performance (due to the competition from contraband) were common issues among subprojects visited. IV. INSTITUTIONAL DEVELOPMENT 4.01 In the first and second loans, the Bank expanded and focused on building tie institutional capabilities of FOPINAR, supporting its efforts to operate regionally decentralized SSE loan promotion, discount and supervision as well as improving project preparation, appraisal, and supervision capabilities of participating intermediaries. This section reviews the institutional developments that have taken place during the implementation of both loans, concentrating on aspects which concern the Bank. The Institution: FOPINAR 4.02 Under the first loan, FOPINAR was established within the CFN as a permanent, secon'd-tier financial institution with its own staff, financial resources, and separate accounts. Since CFN had been authorized to discount loans made by financial intermediaries to small industry under its Organic Law of 1962, the establishment of FOPINAR required no changes in CFN's charter. In May 1980, CFN's Board of Directors approved a Statement of Policies and a Statement of Operating Procedures for FOPINAR, both of which had been previously agreed on with the Bank. These regulations provided guidance to FOPINAR staff in their day-to-day operations and established in detail the procedures which are followed by financial intermediaries in their FOPINAR's operations. FOPINAR was placed in CFN's - 33 - Quito headquarters, as a special fund within the Departmento de Desarrollo (CFN's lending department) having its own Director, its own staff, and its own financial resources held in separate accounts. CFN itself has a well-deserved reputation for being a sound technical institution, and from the start ensured that this should also hold true for FOPINAR. 4.03 Through the successive Bank loans, FOPINAR is becoming a stronger and more mature financial institution, highly regarded by financial intermediaries and SSEs. It contributed to filling the gap in the financing of SSEs projects at the time when the financial system lacked long-term resources to cover the investment needs of SSE. (SSEn generally stand last in the credit line and are often squeezed out of the term-credit market.) To date, FOPINAR has contributed to efficient allocation of resources and has promoted industrial efficiency by encouraging financial intermediaries to make their decisions on the basis of comprehensive project appraisal (para. 4.13). It has become an important source of technical assistance for commercial banks and financial intermediaries by providing external training programs on project appraisal, preparation, and supervision (para. 4.08). FOPINAR's technical assistance program has helped a group of SSEs to improve their product quality, design, and marketing efficiency. FOPINAR's discount rates for financial intermediaries' subloans to SSEs have allowed an adequate but not excessive gross financial spread (paras. 4.21-4.23). Management and Organization 4.04 During negotiation of Loan 1879-EC, a draft organization chart and staffing plan for FOPINAR was presented by CFN and approved by the Bank. Under the plan, FOPINAR's operations were headed by a well-qualified unit chief reporting to CFN's manager of loan operations. CFN provided the unit with trained technical staff from its development and financial departments. In addition to directing project evaluation, supervision, and technical assistance, the unit was in charge of handling and establishing an accounting system and a portfolio managenent and accounting system, as well as a management and information retrieval system. Due to the higher than unexpected growth in lending and the high percentage of rural-based operations under Loan 1879-EC, the Bank recommended that CFN modify FOPINAR's operating procedures and staffing to ensure that regional offices had supervision adequate to maintain efficiency. CFN increased the staffing of each regional office (Guayaquil, Ambato, Cuenca, Manta y Machala) by supplying qualified professional to be responsible for SSE project operations. 4.05 Increasing FOPINAR's capacity to operate a regionally decentralized lending facility was an important administrative objective initiated during 1982. FOPINAR's organization was modified by creating a Project Unit with the responsibility for subloan appraisal, data management, and training of financial intermediaries' staff (para. 4.13). Currently FOPINAR's organization comprises three units: evaluation, loan preparation and training (technical assistance), and supervision. While this organization has served well, adjustments would be required to handle FOPINAR's present and future levels of operation. - 34 - 4.06 FOPINAR's overall management of SSE projects has been satisfactory providing adequate professional capacity to review, approve, and process the growing volume of loan applications. The financial intermediaries had high praise for the overall efficiency of FOPINAR operations. FOPINAR's management information system is quite advanced (computerized and fully operational) and currently provides management with daily reports on cash balances; current discount commitments; monthly financial statements; and analyses of project status including, size, type, location, employment generation. However, the PCR mission found the operational data were not grouped on an individual line of credit basis. The present organization (see Organization Chart, Annex 8) shows that FOPINAR has consolidated related functions and responsibilities, upgraded key middle managment staff and increased the decentralization of staff at the regional offices so that loan processing authority may be transferred to field staff. FOPINAR has developed into a stronger and more mature financial institution. Nevertheless, further interaction between staff at headquarters and the regional offices is needed to improve management efficiency and operational performance. Staffing and Staff Training 4.07 At the time FOPINAR started ics operations in 1981, its staff numbered five professionals and two administrative officials, located in the Quito headquarters. Later, FOPINAR started to experience a high turnover of professionals due to the limited scope for professional growth available to FOPINAR's staff during the initial stages of small-scale operation. Assurances were given by CFN's management that a staffing plan would be prepared for FOPINAR that would allow the SSE fund to be decentralized and expanded. The CFN created six regional branch offices, including the Quito office, with ten additional professional staff trained to promote the overall project, to provide technical assistance to SSEs and to assist rural-based financial intermediaries in learning how to handle project procedures. To comply with Bank recommendations, overall FOPINAR professional staff monitors were upgraded in 1983 to enhance career opportunities within FOPINAR and to allow professional salary schedules to be improved. The high quality of the young, well-trained professional staff and their supervisors now reflects the efficacy of such changes. As a direct result of improved personnel and salary policy, FOPINAR's professional staff turnover was stabilized and FOPINAR was in a position to process the expanding volume of subprojects resulting from its expanded resources under the second loan. 4.08 During implementation of Loan 2221-EC, CFN created two additional regional branches (Loja and Esmeraldas) for a total of eight offices, inclvding its headquarters. As of the end of 1987, FOPINAR staff, including direct and indirect staff, totalled 46: 14 economists, 4 lawyers, 7 engineers, 5 accountants, 10 other professionals and 6 administrative officials. Of this total, 23 professionals worked in the regional offices. Nevertheless, FOPINAR's staff needs to be increased and distributed better to cope with the increased number of operations envisioned. Annexes 9 and 10 show staff time distribution by activity and location. Overall, the staff is of high quality and the majority have good qualifications. - 35 - FOPINAR's institutional objectives include developing the skills of the FOPINAR staff involved in the appraisal and supervision of SSE projects. In 1986, special training programs were developed to help the staff acquire the skills necessary to operate an expanded credit program. During the last two years, FOPINAR has become active in providing good quality training for its staff, especially helping them acquire a knowledge of new evaluation and operating procedures and methodologies. Training has been the responsibility of the Project Unit. Accounting, Auditing and Reporting 4.09 FOPINAR maintained separate accounts from CFN from the beginning of the first loan. FOPINAR's accounting records have been satisfactory. A computer information file was established to receive loan data and a program was written permitting FOPINAR to analyze patterns and impacts of SSE lending. During the PCR mission, it was found that FOPINAR's operational data were not grouped on an individual line of credit basis, making it difficult to assess the impact of each loan. The situation is in the process of being resolved by the reclassification of subloan information. Under both loans, the Bank mission found that assigning indirect costs to FOPINAR was not a very consistent method of cost accounting. Allocation of indirect costs to FOPINAR has been made annually, on the basis of an estimate assumed to reflect an equitable portion of CFN's general and administrative costs. The Bank suggested a cautious approach in determining the indirect costs of FOPINAR so that any subsidization by CFN could be avoided. The Bank believes that costs imputed to FOPINAR should correspond to the real services required by FOPINAR, not a notional allocation of total operating costs based on CNF's and FOPINAR's portfolios. CFN has submitted the FOPINAR's annual budget to the Bank for review, including allocation of indirect costs. In line with Bank requirements, FOPINAR has submitted an annual audit of its accounts and financial statements by an independent auditor (Price Waterhouse & Co.), within the period specified in the Project Agreement. Over the period 1981-87, FOPINAR's audit reports have been unqualified and satisfactory to the Bank. Procurement 4.10. Due to the small average size of the subloans, it has not been practical for ROPINAR and the PFIs to insist on price quotatinns from several suppliers. However, FOPINAR has taken steps to ensure that the prices paid for goods and services by client enterprises are reasonable and suitable for the respective investment projects. A check of documentation for a sample of subprojects from Loan 1879-EC, found some foreign equipment purchased from non-eligible countries, apparently due to a misunderstanding of Bank procedures. After a complete review of all subloans, it was found that the total amount used to finance such equipment was approximately US$30,000 equivalent. FOPINAR informed the Bank about the problem and circulated an instruction to all PFIs clarifying procurement restrictions and also established explicit procedures for procurement of foreign equipment. All other items were procured in accordance with the normal practices for IDF-type projects. - 36 - Project Monitoring and Role of Financial Intermediaries 4.11 A total of 20 banks and 8 private financieras discounted loans with FOPINAR during the Bank's first loan. (See Annex 11.) The banks, led by the Banco Nacional de Fomento (BNF), financed 77% of the subprojects. BNF, the largest and primary development bank in Ecuador, was the most active, supporting 380 operations (58.4%) by providing S/. 214.7 million (22.8% of total credits). Its operations concentrated on the micro-SSEs. Particularly noteworthy is the fact that the regional branch offices of commercial banks financed the majority of commercial bank projects. The financieras, led by Financiera MANABI, accounted for 23% of the subprojects and 45.7% of total credits. Due to FOPINAR's aggressive program of promotion, additional banks and financieras participated in the Bank's second loan. A total of 26 banks and 10 financieras discounted loans with FOPINAR during Loan 2221-EC (see Annex 12). As in the first loan, the banks, led by BNF, accounted for 95% of subprojects and 85.1% of total lending. BNF carried out its duties via a network of 80 branches, widely distributed throughout the country, thus becoming the major intermediary in the FOPINAR program. The financieras, led by Financiera Iberoamericana, accounted for 5% of the subprojects and 14.9% of total credits. 4.12 In both Bank loans all the commercial banks and financieras in good standing with Superintendencia de Bancos were eligible to participate in the FOPINAR program. An additional requirement for participation was maintaining staff zapable of performing project appraisals, processing subloan applications and adequately supervising SSE projects. Subproject Appraisal 4.13 Under the FOPINAR discounting system, PFIs had primary reponsibility foe evaluating the creditworthiness of loan applicants and determining their financial viability before submitting a financing request to FOPINAR. The analysis of subloans at the FOPINAR level was limited to evaluating applications judged to be technically sound, expected to have an economic impact consistent with employment generation and sectoral goals, and to marketing projects. FOPINAR approved 58 and 111 credits respectively under the first and second loans, totals above the free limits 5/ under both loans. FOPINAR calculated ERR for all SSE projects with oa1ns greater than US$100,000 equivalent (see Annexes 3 and 5). To reduce the time and cost involved in the administration of smaller SSE projects, PFIs were permitted to submit applications for discount loans in their own project appraisal format. The system has worked well and the quality of appraisals submitted by the PFIs has been generally satisfactory. Through the two FOPINAR loans, the quality of subproject appraisals has evolved satisfactorily. Its current appraisal procedures are well developed and fully meet Bank standards for project evaluation. 5/ The free limit under first and second loans was US$250,000 and US$300,000 equivalent, respectively. I - 37 - Subproject Supervision 4.14 As a second-tier institution, FOPINAR considers its supervision role to be one of "controlling" the end use of its funds. Thus, according to requirements of the Participation Agreement, supervision of subloans has been carried out by the FPIs, who have generally concentrated on loans in arrears. Consistent with project requirements, the PFIs had established one or more files for each subproject containing credit information, project applications and project appraisals. The files also contained financial and legal documents, letters of credit, and other evidence of dibursement processes. The PFIs must provide FOPINAR with semi-annual supervision reports. The quality of the reports has improved and is generally satisfactory. 4.15 FOPINAR supervised a sample of subprojects based upon different sizes of SSEs, different regimes, and differing branches of industry, to ascertain if its funds were being used for the purposes stated in the subloan submissions (see Annex 13). The number of supervisions increased from 149 during Loan 1879-EC to 371 during Loan 2221-EC. It was not until 1986 that FOPINAR strengthened its supervision efforts by creating the Supervision Unit and adding staff to assist in this function. The Bank mission recommended that supervision follow up not only verify the ultimate use of loan proceeds, but also identify problems confronting the beneficiaries with future repayment problems and/or capabilities. At present, FOPINAR's supervision activities use nearly 70% of its staffyears. The recent computerization of FOPINAR's activities has improved subproject quality control, but there is still need to strengthen the capability of the PFIs, particularly by helping them focus on the development impact of subprojects, rather than simply ensuring collaterals. FOPINAR should rely more upon the PFIs for verification of expenditures. FOPINAR's efforts under the two loans have proved effective in strengthening the appraisal and supervision capabilities of participating intermediaries. FOPINAR, throughout its project units, has also carried on a comprehensive external training program covering project appraisal and supervision for PFIs (para. 6.04). Subproject Processing Time 4.16 Based upon sample of subprojects approved under Loan 1879-EC, it was found that the average total processing time for subprojects, from the submission of the appraisal report to the loan signing, was between three and six months depending on the size of the loans. Several PFIs rightly complained about the difficulties and high costs involved in getting SSEs to comply with the excessive data requirements of FOPINAR and the complex and redundant discount applications. Bank and FOPINAR reached an agreement to simplify discount application procedures and reduce the costs of project preparation by: simplifying procedures for smaller SSEs; using SSEs' actual financial statements and projections in lieu of preparing special financial reports in the FOPINAR's format; and simplifying the project preparation guidelines issued to SSEs. Following FOPINAR's issuance of an improved and simplified preparation and discount application form, the processing time for a subproject during Loan 2221-EC was reduced, the pace of lending to SSEs expanded sharply, and FOPINAR's disbursements accelerated. During the visits made by the PCR mission, the considerable delay in loan signing - 38 - emerged as an issue. To speed up the subproject appraisal process even more, and take advantage of the increased appraisal and supervision capabilities of many of the PFIs, FOPINAR is delegating more responsibilities and authority to its branch offices. Promotion 4.17 FOPINAR promotes its loans through contacts with banks and financial intermediaries, regular visits to SSEs eligible for FOPINAR financing, and seminars to promote FOPINAR's credit program. To achieve wider geographical dispersion, five FOPINAR branch offices were created in 1982-83 (paras. 4.04-4.06) and additional staff were added to the Project Unit. The staff pay frequent visits to banks and financial intermediaries in different regions of the country to help identify subprojects. However, despite current promotional activities, FOPINAR is still perceived as a lender for fixed asset-financing and still needs to provide additional incentives to the financial itermediaries to mobilize more resources on their own and, in turn, provide greater financial assistance to SSEs. The Bank has raised the need for intensified promotional efforts for its lending program with FOPINAR. Operations 4.18 A broad picture of FOPINAR lending is obtained from the analysis of its overall operations (presented in Annexes 14-18). As of December 31, 1987, FOPINAR had approved a total of 6,451 subprojects, representing a total investment of S/. 19,417.3 million. 4.19 FOPINAR's loan approvals grew from S/. 403.6 million (US$16.2 million) in 1981 to S/. 19,417.3 million (US$99.6 million) in 1987. The majority were for loans up to S/. 1.0 million; these accounted for 11.7% of the total amount approved. Loans between SI. 1.0 million and S/. 5.0 million made up 28% of the total number. The value of these loans, however, accounted for 38.2% of the total amount approved, the highest percentage for any size group. Loans approved during the period 1981-87 covered a variety of sectors: food products (15.4%), fishing products (9.6%), metal processing and machine fabrication (9.4%), clothing manufacture (7.4%) and footwear (and other leather products) manufacture (7.5%). Fifty-three of the loans approved were for enterprises holding assets between S/. 1.2 million and S/. 8.0 million, and 26.4% was lent to enterprises having between S/. 8.0 million and S/. 16.0 million in assets. Geographic distribution of the loans was equally diverse; 1,623 loans (41.4%) from the total of 6,451 loans, were in the Quito-Guayaquil area and the remaining 4,828 loans (58.6%) were located in other parts of the country. BNF had highest share of FOPINAR's loans (42.9%), followed by the Banco de Pichincha (38%) and Banco de Guayaquil (3.1%). The very active participation of BNF has been very beneficial, since BNF has the infrastructure to reach SSEs at the smaller end of the spectrum because it has branches located in smaller cities and towns. 4.20 The high level of FOPINAR's activity and the demand for its funds could be attributed to the government's policy of supporting employment- intensive industries as well as those making efficient use of local resources, to the satisfactory growth of SSEs and their difficulties in - 39 - gaining access to commercial financing, the attractive interest rates and terms available under FOPINAR loans, and the increasing efficiency of FOPINAR and the PFIs in preparing and processing projects. Interest Rates 4.21 All subloans financed by FOPINAR have been denominated in sucres and, once a subloan has been made, the interest rate remains fixed for the life of the subloan. PFIs' interest rates are adjusted periodically by the Monetary Council. Traditionally, interest rates have not kept up with inflation levels, hampering private domestic resource mobilization in Ecuador. At the commencement of Loan 1879-EC, when the inflation rate was 12%, FOPINAR's rate structure was 14%, 15%, and 16% (nominal) for term-loans of up to five years, eight years and over eight years respectively, and 12% for loans to micro-enterprises, rates consistent with the maximum allowable and with other Bank operations in Ecuador. on May 1982, interest rates and discount rates at the national level were raised by the Monetary Council, 6, making a major departure from Ecuador's historic low interest rate policy. Consistent with the increase in inflation in Ecuador, interest rates to final borrowers were raised to 10%, 17% and 18% (nominal), and discount rates rose to 12% for financial intermediaries' loans to micro-enterprises and remains at 12%. During the implementation of Loan 2221-EC, additional increases in interest and discount rates were made (Annex 19). 4.22 During the rest of the loan FOPINAR's interest rate structure continued to be based upon fixed interest rates. While the official ceilings resulted in slightly positive interest rates in real terms, the latter was negative during the last three years of high inflation. However, FOPINAR continued with fixed interest rates for its outstanding loans. Despite'the limited leverage the Bank has in influencing FOPINAR's interest rate policy, positive changes were introduced under the third loan 7/ to FOPINAR, and the Bank may rightly claim that it helped rationalize interest rates for the SSEs to reflect the cost of funds. 4.23 FOPINAR offers differential spreads to the PFIs. A 6% spread was offered when the ultimate beneficiary was one of the smallest enterprises, i.e., having assets less than S/. 650,000, while the spread decreased to 4%-5% for the SSEs with fixed assets greater than S/. 650,000. The high spreads for PFIs were to compensate for the higher risks and costs associated with loans to the very smallest enterprises and offered 6/ The Monetary Council is in charge of formulating the monetary policies of the country, determining level of interest rates, Central Bank credit, minimum reserve requirements, import deposits and a variety of other factors affecting the balance sheets of financial intermediaries. 7/ Under Loan 2673-EC it was agreed that lending rates would be maintained at positive levels in real terms, and would be reviewed by the government and the Bank every six months. Failure to maintain lending rates at positive level in real terms would give the Bank the right to suspend disbursements. - 40 - financial incentives to PFIs to expand their volume of smallest project financing at longer terms. Nevertheless, such spread was reviewed from time to time to ensure that project objectives were met. These spreads appear to have adequately encouraged participation by most financial intermediaries that work with industry, although the National Federation of SSEs feels that small firms still have some difficulty in gaining access to financing. While such complaints are, and should be, a matter of concern to both the Bank and FOPINAR, the Federation has been unable to document cases where viable subprojects were refused. Both loans have at least met their minimum targets for lending to SSEs (paras. 3.05-3.07). V. FINANCIAL PERFORMANCE Financial Position and Results 5.01 FOPINAR's financial position and results are shown in Annexes 20-23 and are fully satisfactory. Since its inception in 1981, FOPINAR's financial performance has allowed it to maintain a sound financial position based upon low operating costs and an essentially risk-free portfolio. Rapid growth in FOPINAR's total assets, portfolio, and income during 1961-87 were due, primarily, to its dynamic credit expansion. FOPINAR's total assets and loan portfolio grew substantially at about the same rate. The average annual growth rates for the period were 72.3% and 75.1% respectively. On the income side, with the exception of the first year of operation, FOPINAR's net profits during the period 1982-87 rose from S/. 14.7 million (US$0.4 million) to S/. 180.1 million (US$0.7 million), a 6.0% to 18.8% return tn equity. Its net income has provided financing for its technical assistance program. The positive operating results were a direct consequence of the impressive growth of its portfolio. 5.02 As far as expenditures are concerned, finance charges (i.e., interest paid on funds received) increased in relation to average portfolio during the period 1981-87 from 2.2% to 13.4%. The rise in charges was linked to increased borrowing from the Bank. However, FOPINAR's administrative expenses on average total assets decreased during period, from 3.9% to 1.0%, an acceptable level compared with similar institutions elsewhere. 5.03 FOPINAR's total assets show an increase from S/. 386.4 million (US$15.5 million) in 1981 to S/. 8,874.8 million (US$35.5 million) in 1987. An analysis of the balance sheets presented in Annex 22 shows that the most significant asset, the long-term loans, grew rapidly during same period from S/. 304.2 million (US$12.2 million) to S/. 6,808 million (US$27.2 million) due to extensive increase of FOPINAR's borrowing levels. The loan portfolio constitutes approximately 80% of the asset base. Liabilities increased from S/. 170.1 million (US$6.8 million) in 1981 to S/. 7,829.1 million (US$31.3 million) in 1987. The structure of FOPINAR's liabilities remained the same during the period. Approximately 80% were long-term, the result of the policy of using foreign-financed fixed interest resources. - 41 - 5.04 FOPINAR's equity has increased enormously during period 1981-87. At the end of 987, its total equity was S/. 1,046 million (US$4.2 millon) showing a compound annual growth of 30.1% over the initial equity of S/. 216.3 million (US$8.7 million) in 1981. The decrease in US dollar in equity from 1984 was mainly the result of the drastic devaluation (from S/. 68=US$1 in 1984 to S/. 250=US$1 at the end of 1987). FOPINAR's capital structure was still adequate at the end of 1987. The debt/equity ratio of 7.5:1 at the end of the period was due to faster than expected growth of its portfolio and liabilities. Portfolio Quality 5.05 Since the PFIs bear the full credit risk for subloans and are required to repay FOPINAR for principal and interest on due dates, whether or not repayments have been made by the SSEs 8/, FOPINAR has a minimal arrears risk. FOPINAR gathers information on arrears due financial intermediaries for all subprojects financed through its programs. As part of its supervision procedures, FOPINAR receives periodic reports on the status of arrears from the PFIs. As of December 31, 1987, only 3% of the FOPINAR-financed portfolios were in arrears, which compares quite favorably with 10% for the overall portfolio of the same institutions. The only PFI which does not have separate statistics for FOPINAR projects is BNF, which has 11.4% arrears in its overall portfolio, but claims that only a minimal part of its arrears comes from micro-enterprises (FOPINAR projects). It is important to observe that, in general, the levels of arrears for PFIs are very low since, traditionally, small entrepreneurs tn Ecuador tend to be very good payers, even in cases of microenterprises, where the level of real quantities over total debt is low. VI. TECHNICAL ASSISTANCE 6.01 The first loan contained no technical assistance component; this is rather surprising, given that FOPINAR was a new institution and that the loan included the building of an effective technical assistance service to SSEs as an objective (para. 2.03). Particularly noteworthy, however, is that CFN was committed to finance technical assistance for SSEs by making available some operating revenues of FOPINAR as grants. A Technical Cooperation Committee (TCC) was created and approved by the Bank with representatives from the Ministerio de Industrias, Comercio e Integracion (MICEI), Federacion de Camaras de la Pequena Induatria, and FOPINAR. The TCC was in charge of approving programs of technical assistance for SSEs, coordinating their execution, and planning the technical assistance programs and resources for carrying them out. 6.02 During the Bank's supervision of the first loan, a modest but workable first stage of technical assistance was defined. The program was set up to improve accounting procedures and financial analysis, to help SSEs control and supervise their new or expanded operations. In addition, 8/ FOPINAR's collection on accounts due from PFIs are made automatically by BCE in its capacity as a project financial agent. - 42 - a technical assistance program was designed to improve basic industrial processes, marketing and sales. Within this program, FOPINAR must provide assistance to financial intermediaries in the areas of project preparation and loan applications. The Centro Nacional de Promocion de la Pequena Industria y Artesania (CENAPIA), the national technical assistance agency funded by FOPINAR, was selected to develop and conduct some training courses for the SSEs. 6.03 The second loan, on the other hand, provided for a small technical assistance program, with Bank financing of US$240,000 to impr.ve CFN's overall financial management. Through FOPINAR, CFN continued to execute technical assistance on a grant basis for SSEs and financial intermediaries. As in the first loan, the technical assistance was financed exclusively from FOPINAR's earnings. It had a slow start because of CFN's difficulties in negotiating a contract with international consulting firms at an acceptable cost. 6.04 The total number of courses and seminars sponsored by FOPINAR increased rapidly during period 1981-87 from 1 to 75 (Annexes 24-25), as did the number of people receiving training seminars (30 to 2,535). On December 1987, a total of 244 courses and/or seminars had been given by FOPINAR to over 7,220 participants in 144 different locations. Participants included entrepreneurs from small and micro-enterprises and credit officials from PFIs. The courses included: training in the loan evaluation processes; training for small entrepreneurs and artisans to improve their financial skills; training in promotion, marketing and product design for several kinds of SSE product. FOPINAR's cost of technical assistance (Annex 25) increased by more than 1000% during the period 1982-87. It grew from S/. 185.0 thousand (US$6,167) in 1982 to S/. 2,206.0 thousand (US$11,313) in 1987. However, US$ dollar growth was around 83% during the same period, due to high domestic inflation and devaluation in 1984. 6.05 The technical assistance program or FOPINAR was implemented as planned with reasonable success. FOPINAR has developed a program of basic courses in key industrial processes, using several experts from throughout the country with solid experience on different industry technslogies and quality control. A summary of FOPINAR's technical assistance activities appears in Annex 24. FOPINAR has expanded its direct technical assistance to SSEs through its additional branch offices which promote FOPINAR activity and assist PFIs and SSEs in project preparation and supervision. A pilot program for expanded technical assistance has been initiated in coordination with CENAPIA's regional promotion committees, MICEI, local SSE federations, technical schools, and PFIs. The Bank believes FOPINAR is ready to step up its technical assistance to include direct managerial/technological assistance to SSEs. Additional development programs for entrepreneurs are needed, starting on a small-scale, experimental basis. They could address basic skill needs, combining practical administrative skills with concrete technical components, tailot-made for specific SSEs. FOPINAR and CENAPIA could play a significant role in identifying topics and setting geographic priorities. - 43 - VII. CONCLUSIONS 7.01 Overall, the two-tier credits have been reasonably successful in establishing and consolidating an effective system that provides term financing for financially sound and economically efficient investment projects of SSEs. FOPINAR has developed quite rapidly into a respected second-tier institution, which can respond to the shifting needs of its small-scale clientele. The FOPINAR organization has already made a significant contribution to development in Ecuador, and seems well positioned to increase that contribution in the future. 7.02 The Bank played an important role in helping to build FOPINAR into strong and efficient institution. The Bank devoted considerable effort to the preparation, appraisal, and supervision of both projects. Overall, FOPINAR was receptive to Bank recommendations and advice during the implementation periods of both loans. It consolidated its policies, established and implemented adequate procedures, and built up a solid core of well-trained Ecuadorian staff. However, FOPINAR still has to overcome (a) weakness in the areas of project supervision; and (b) follow-up of the economic impact of the subprojects i. finances. By approving the proposed follow-up loan, the Bank could help FOPINAR overcome these weaknesses and further strengthen its institutional capabilities to play an important role in the development of SSEs in Ecuador. /.03 The two loans under review helped to alleviate the scarcity of financial assistance for SSEs and strengthened the institution established to assess them. Throughout both operations, SSEs were helped to maintain production and employment levels by having adequate access to credit and investment resources, and to foreign exchange to cover some production inputs such as machinery, spare parts and critical equipment needs. Both loans were very effective and generated significant employment (para. 3.14), improved the balance of payments (para. 3.13), and promoted regional development (para. 3.10). The rapid growth of the manufacturing labor force during period 1981-87 was a good example of the success of government policy in accelerating employmnt generation and promoting industrial investments within different regions. 7.04 Since the two loans under review were approved, FOPINAR has developed well, becoming successful both financially (para. 5.01) and operationally (para. 4.18). It has made profits and expanded its operation very rapidly (para. 4.11), as well as mobilizing important sources of domestic financing. FOPINAR's present activities go beyond the simple transfer of funds to SSEs to promote project development. This has been achieved by dynamism in management, and the dedication and capacity of its staff. FOPINAR's success has been greatly assisted by stability in its management, as well as having its position as a second-tier institution within the sound National Finance Corporation (CFN), which has helped to protect it against political and other external influences (para. 4.02). 7.05 Although the Bank's main institution-building objectiveo were attained, FOPINAR is still hampered in growth and effectiveness by a few problem areas. These were particularly apparent under the first loan, as might be expected, when FOPINAR was a brand new agency trying to operate - 44- in a fashion previously unknown in the country. Particular areas of weakness included subproject supervision (para. 1.14). The first priority in these areas was to ensure FOPINAR itself was fully competent, so that it could subsequently train and monitor the work of the PFIs. This situation improved consistently under the second loan. With the technical assistance program funded by FOPINAR, such capabilities have been partially transmitted to the PFIs. The last Bank supervision mission found a need to improve communication between the Supervision and Evaluation Units in FOPINAR, and recommended that both activities be performed by the same personnel. 7.06 Under the two projects, FOPINAR contracted additional staff as operations expanded, and was generally responsive to Bank concerns about adequate training for FOPINAR's staff, as well as their number and areas of specialization. FOPINAR had a certain amount of staff turnover, largely because of the limited career growth within the institution. Currently, FOPINAR's salaries and benefits are generally attractive, and turnover is no longer a problem. However, to ensure that FOPINAR can continue to operate efficiently in the face of expanded demand for SSE subloans, FOPINAR staffing will need some adjustments, such as decentralization from headquarters to the regional offices and establishment of additional regional offices within the country. The operational guidelines and procedures for these adjustments have already been discussed and would be included in the next Bank loan. 7.07 The large number of PFIs active under the first loan, and the additional PFIs of the second loan, played a meaningful role in terms of the number of operations and volume of lending. Opening participation to all interested commercial banks and financial companies stimulated competition during the initial phase of project implementation and increased the number and type of users of the credit facilities. However, it also hampered achieving a uniform standard of subproject appraisal and supervision because of the inability of the PFIs with low levels of activity to get adequately organized for SSE lending. Limiting the participation in the credit program to banks/financieras that can guarantee a significant level of lending and meet clearly stated eligibility requirements would facilitate and improve future SSE operations and ensure greater -ompliance with policy objectives. The PFIs have also made progress in subproject preparation, appraisal, and supervision under the two loans, although this progress has been much slower than hoped (paras. 4.11-4.15). The further strengthening of PFIs, so they can operate with more autonomy and eficiency, are objectives proposed in the follow-up loan. 7.08 The characteristics of SSEs in Ecuador (high labor-intensive, limited use of labor, etc.) combined with evidence of their significant contribution to Ecuador's development in recent decades, and given the nature of the current economic slowdown, suggest that SSEs should retain a prominent and dynamic role in the country's economic strategy for the foreseable future. For the country to achieve maximum benefit from SSE sector, a number of constraints (diminution of risk, access to resources at reasonable price, etc.) must be resolved, and latent potential released. As with other sectors, major strides can only be made when the economy as a whole moves ahead at a satisfactory rate, so that demand increases and expectations rise. - 45 - 7.09 Experience of both projects shows that credit is the most important vehicle for accelerating the development of SSEs in Ecuador; certainly entrepreneurs tend to cite it most frequently. But this perception may be misleading. Credit is often mentioned perhaps because it is partially subsidized or perhaps because entrepreneurs are not aware of other problems. A rapid enhancement of credit availability may equally rapidly bring firms up against other limitations, such as the inadequate level of administrative and technical skills in some SSEs or the high cost of labor (para. 3.14). For such firms, credit availability without parallel improvements in labor utilization, and/or reductions in labor costs, will produce a greater reliance on capital-intensive techniques, an outcome inconsistent with the promotion of "appropriate technologies" to create employment. Entrepreneurs perceive labor-substituting machinery as cheaper and better beheved than labor. Credit availability for SSEs can be enhanced in the short-term, but labor market rigidities can only be dealt with in the long run. Today, the reality is that there are no simple ways to assess the full potential of SSEs, either in terms of intrinsic capacity or in terms of exployment-creation. As labor problems seem to affect the largest of small firms most, it seems appropriate that credit enhancement should be focused on the smallest firms (the ones with less than 15 workers). June 1988 Revised: April 1989 - 47 - ANNEX I ECUADOR PROJECT COMPLETION REPORT FOPINAR: Characteristics of Subproiects Financed Under Loan 1879-tC (thousands of sucres) BY SIZE OF APPROVAL NUMBER % AMOUNT % I - 1,000 409 62.81 143,128.74 15.3Z 1,000 - 5,000 201 30.9% 530,919.58 56.8 5,000 - 8,000 40 6.1% 251,731.27 26.9Z 8,000 - 16,000 1 0.22 8,350.00 1.01 651 100.0% 934,129.59 100.01 BY SECTOR FISH 15 2.3% 15,660.90 1.71 FOOD PRODUCTS 119 18.31 202,183.01 21.61 TEXTILES AND GARMENTS 172 26.4% 173,733.82 18.61 WOOD INDUSTRY 82 12.6% 70,997.68 7.6% PAPER PRODUCTS 16 2.5% 37,518.79 4.0 CHEMICAL PRODUCTS 44 6.8% 108,363.60 11.61 NON METALLIC MINERALS 40 6.1% 61,242.79 6.61 BASIC METALLIC MINERALS 3 0.5% 10,533.00 1.11 METALLIC PRODUCTS 122 18.71 163,801.81 17.51 OTHER MANUFACTURING 7 1.1% 8,045.16 0.91 HOTELS AND RESTAURANTS 27 4.1% 74,939.07 8.01 OTHERS 4 0.6Z 7,109.96 0.81 651 100.01 934,129.59 1O.O BY TERM OF LOAN 1 TO 3 YEARS 52 8.01 23,339.20 2.5Z 3 TO 5 YEARS 341 52.4% 330,219.21 35.4% 5 TO 8 YEARS 211 32.41 419,733.69 44.9% 8 TO 10 YEARS 47 7.21 160,837.49 17.21 651 -1-0 934,129.59 100.01 BY TYPE OF PROJECT NEW 168 25.81 394,901.60 42.31 EXPANSION 483 74.21 539.227.99 57.71 651 100.01 934,129.59 100-0% BY END USE WORKING CAPITAL 130 20.0 145,491.71 15.6% PIED ASSETS 509 78.3 787,714.12 84.31 TECHNICAL ASSISTANCE 12 1.7 923.76 0.11 651 100.01 934,129.59 100.01 BY DESTINATION OF PRODUCTION EXPORT 21 44.7% 249,700.00 59.5% IMPORT SUBSTITUTION 25 53.21 162,124.00 38.61 EXPORT/IMPORT SUBSTITUTION 1 2.1% 8.056.00 1.91 4 10O 419,88000 100.01 BY LOCATION QUITO 122 18.7% 272,173.60 29.11 GUAYAQUIL 75 11.5% 170,238.84 i8.25 CUENCA 56 8.6% 41,989.10 4.51 MANTA 10 1.5% 24,591 00 2.6% RESTO DEL PAIS 388 59.7% 425,137.19 45.62 651 100.0% 934,129.59 I6I BY FINANCIAL RATE OF RETURN (M) UP TO 15 596 91.6% 639,760.72 68.5Z 15 TO 20 7 1.0k 43,097.68 4.61 20 To 30 14 2.21 69,582.48 7.41 30 TO 40 15 2.3% 10,250.00 9.7Z ABOVE 40 19 2.9% 91.438.71 9.81 651 100.01 934,129.59 100.01 BY ECONOMIC RATE OF RETURN (Z) UP TO 15 613 94.2% 717,564.14 76.81 15 TO 20 1 0.21 4,454.00 0.51 20 TO 30 9 1.2% 53,758.00 5.81 30 TO 40 14 2.21 80,995.39 8.61 ABOVE 40 14 2.22 77 358.06 8.31 Source: FOPINAR - 48 - ANNEX 2 ECUADOR PROJECT COMPLETION REPORT FOPINAR Characteristics of Subpro!ects Financed Under Loan 2221-EC (thousand. of !ucreU) BY SIZE OF APPROVAL NUMBER % AMOUNT 2 i - 1,000 2,190 70.4% 660,701.78 16.1% 1,000 - 5,000 735 23.6% 1,856,346.86 45.42 5,000 - 8,000 126 4.1% 862,650.73 21.12 8,000 - 16,000 60 1.9% 712,893.87 17.4Z 3,111 100.02 4,092,593.24 10-!* BY SECTOR 13 FISH 202 6.5% 382,254.94 9.32 31 FOOD PRODUCTS 471 15.12 836,526.86 20.42 32 TEXTILES AND GARMENTS 978 31.4% 794,411.06 19.4% 33 WOOD INDUSTRY 488 15.7% 458,878.39 11.22 34 PAPER PRODUCTS 24 0.82 82,470.41 2.0 35 CHEMICAL PRODUCTS 87 2.8Z 323,631.73 7.92 36 NON METALLIC MINERALS 219 7.0% 268,564.85 6.6Z 37 BASIC METALLIC MINERALS 6 0.2% 16,985.36 0.42 38 METALLIC PRODUCTS 463 14.9% 610,422.19 14.92 39 OTHER MANUFACTURING 59 1.9% 58,015.35 1.42 63 HOTELS AND RESTAURANTS - 98 3.22 224,257.12 5.52 OTHERS 16 0.5% 36,174.98 1.12 3,111 Th65 4,092,593.24 100.0% BY TERM OF LOAN 1 TO 3 YEARS 330 10.6% 124,772.28 3.02 3 TO 5 YEARS 1,871 60.1% 1,504,104.42 36.82 5 TO 8 YEARS 813 26.1% 1,901,629.46 46.5% 8 TO 10 YEARS 97 3.2% 562,087.08 13.72 3,111 100.0% 4,092,593.24 10 BY TYPE OF PROJECT NEW 635 20.4% 1,326,638.71 32.42 EXPANSION 2,476 79.62 2,765,954.53 67.62 3,111 100.0% 4,092,593.24 100.0% BY END USE WORKING CAPITAL 404 12.9% 394,137.14 9.62 FIXED ASSETS 2,644 84.9% 3,691,519.10 90.2% TECHNICAL ASSISTANCE 63 2.2% 6,937.00 0.22 3,111 100.0% 4,092,593.24 10.f BY DESTINATION OF PRODUCTION EXPORT 24 26.1% 4,658.72 10.02 IMPORT SUBSTITUTION 58 63.0% 821.72 1.82 EXPORT/IMPORT SUBSTITUTION 10 10.92 40,808.08 88.2% T2- 10 0.02 46,288.52 i00.0r BY LOCATION QUITO 525 16.9% 994,685.50 24.32 GUAYAQUIL 235 7.5% 622,483.28 15.22 CUENCA 324 10.4% 316,352.73 7.7% MANTA 12 0.42 24,834.48 0.6% RESTO DEL PAIS 2,015 64.82 2 134,237.25 52.2% 3,111 4,092,593.24 BY FINANCIAL RATE OF RETURN (2) UP TO 15 2,714 87.22 2,853,671.21 69.72 15 TO 20 4 0.1% 30,900.00 0.8% 20 TO 30 31 1.12 223,660.49 5.52 30 TO 40 35 1.1% 305,285.00 7.5% ABOVE 40 327 10.5% 679,076.54 16.52 3,111 100.0 4,092,593.24 BY ECONOMIC RATE OF RETURN (%) UP TO 15 3,013 96.82 3,245,304.12 79.32 15 TO 20 1 0.0% 4,300.00 0.12 20 TO 30 17 0.52 129,121.94 3.22 30 TO 40 38 1.3% 325,072.82 7.92 ABOVE 40 42 1.42 388 794.36 9.52 3rrr T wm-o Ur Source: FOPINAR - 49 - PROJECT COLETION REPRT PMPINAR: Economic Characterintica of Subgrolect4 Finanetd Under Loan 1679-EC (thouaanda of aucrea) CO6ANY P V TOT8 111 FOREIG % LOCAL 4 CAPACITY DIRECT RAW UTILIZATION JOBS MATERIALS CREATED /R . 9lo Vela Alva~re 5,000.0 12.769.4 127.7 12.641.7 16.9 83.1 46.0 11 13.10 Inductrial MetAlica Cia. Ltda. 4,800.0 9,316.3 93.1 9,223.1 100.0 - 68.0 4 56.60 Santandar Cia. Ltda. 5.000.0 6,363.4 63.6 6,299.7 11.2 88.8 47.0 19 29.50 IdeIa-Inda. Elab. Papel, CarMon 6.250.0 8,902.3 89.0 8.813.2 98.0 2.0 60.0 20 74.50 Etiquotox Cia. Ltda. 6.250.0 10,530.0 947.7 9.582.3 - 100.0 80.0 32 57.10 FILYPARTE 6.088.0 8,088.0 1.60.2 6,227.7 81.6 18.4 36.0 21 28.10 Eliao Gonzalea Alvaroz 4.500.0 6,866.4 68.6 6,797.7 - 100.0 49.0 11 46.00 Central de Hormig6n y Derivadoe 4,000.0 8.100.0 61.0 8,019.0 - 100.0 100.0 4 34.00 Etaalgo Cia. Ltda. 6,000.0 10,500.0 105.0 10,395.0 98.4 1.6 60.0 19 45.90 Serrano Hat. Export Cia. Ltda. 6,000.0 12.874.0 12.874.0 - 4.0 96.0 93.0 29 31.50 Patificio Tomebamba Manzano E. 6,000.0 15,404.0 308.0 15,095.0 - 100.0 100 0 23 36.00 Laroplaat C.A. 6,200.0 21.792.0 217.9 21,574.0 91.7 8.3 88.0 24 24.70 Manufacturan Americana Cia. Ltda. 6.250.0 10,750.0 10,750.0 - 49.3 50.7 - 20 33.30 Laboratoriom Winmor 4.500.0 5.368.3 53.6 5,314.6 35.0 65.0 95.0 3 42.60 Oawaldo Rcojaa-Alfombraa 0.R.M. 4,050.0 4.500.0 4,500.0 - - 100.0 85.0 9 24.30 Induatrian Allmenticia S.A. 4,600.u 5.777.2 57.7 5,719.4 - 100.0 46.0 - 47.60 Conatructora de Mueblea Eepac. 4,396.0 8,202.8 1.722.5 6.480.2 - 100.0 83.0 31 66.80 ECOLATEX S. A. 6,000.0 11,274.9 112.7 11.162.1 26.2 73.4 61.0 25 38.80 Honterfa Puerto Balleata 6.250.0 15,000.0 150.0 14,850.0 - 100.0 - 40 36.70 Arical S. A. 4,454.0 6,990.1 S38.8 6,151.2 - - - 28 15.80 Mol inoa Cordi Il era Cia. Ltda. 6.200.0 14,071.5 140.7 13.930.7 - 100.0 87.0 20 34.80 Villas Turfatica* Cabaplan 6,250.0 6,950.0 69.5 6,880.5 - 100.0 - 16 32.50 Eduardo Jome Jurado Oame 5,000.0 13,882.5 138.8 13,743.6 100.0 - 50.0 13 35.50 Expramadera Cia. Ltda. 6.100.0 11,561.2 115.6 11,445.5 - 100.0 100.0 20 48.00 ARMEr Cia. Ltda. 4,504.0 6,964.0 69.6 6,894.3 31.0 69.0 63.0 40 41.90 Marpoles Andinon Cia. Ltda. 6,250.0 7.649.3 78.5 7,770.8 - 100.0 65.0 5 42.60 Estrumet-Eatructuras Tridimena. 4,500.0 9,410.0 2.917.1 6,492.9 - 100.0 50.0 11 25.70 Frituram Andinaa Cia. Ltda. 4,500.0 7,632.0 76.3 7,555.6 - 100.0 77.0 14 38.60 Ouatavo Vancanez 5,000.0 12.860.5 128.6 12,731.8 - 100.0 68.0 11 35.20 Carloi Alvarez . A. 4,920.0 11.987.0 1,318.5 10,668.4 - 100.0 80.0 18 22.90 Extractorgå Tres Esteroa S.A. 6.250.0 12,099.0 3,629.7 8,469.3 - 100.0 80.0 14 39.50 Prefabricedoo del Ecuador S.A. 6,250.0 11,199.0 111.9 11,087.0 - 100.0 92.0 5 34.80 R1DITEX Cia. Ltda. 3,580.3 10.991.7 109.9 10,881.8 - 100.0 82.0 4 46.50 INVMR S.A. 8,000.0 23.037.5 230.8 22,807.1 - 100.0 60.0 18 24.40 Carlos Filamir Emtrada 8,350.0 19,846.9 19.848.9 - - 100.0 75.0 78 61.00 Sinticos Töcnicoe S.A. 7.500.0 17,374.9 173.7 17,201.1 69.1 30.9 88.1 6 27.00 Hernen Vaaconez Sevilla 7,277.6 13.645.9 136.4 13.509.4 - 100.0 96.0 27 41.90 Pico Sanchez Cia. Ltda. 7,045.3 8,545.8 85.4 8,459.9 50.00 50.0 63.3 6 35.40 Ing. Stenio Vera - Centro Vacac. 7.50,0 13.941,4 7.388,9 6.552,4 - 100.0 50.0 _4 28.30 TOTAL 22.l 438218. 23.n . 31 .L43. 713 - 50 - FPINI Pinancial Charqctarkcc ~ i Finaned ~MEr En 179-E TOTAL CDINMD CGWAW moiwr~l~1 PfMALM ä FDACIAL I. AERATE aF APPFAIAL LOM MJTY LOAM TOTAL ATE TI PI0O MPAID OTTAMDC ~tM Ar~.. Cia. Lda. 18.1 1 2,00.0 1,413.c *,913.e 10 100 24 144.6 2,105.3 66.9 091o Vol. Alvarfa 12,79.4 4.000.0 7.769.4 12,709.4 10 04 24 405.0 4.096.0 16.9 Aviagro Cia. Ltda. ö,400.1 .250.0 2,10.1 6,400.1 10 72 12 802.8 8,062.8 132.9 Colombo-5e ~1rina do PIsica 8.80c.4 8.000.0 3.006.4 6.00.4 10 U4 12 120.0 4.9.0 20.7 Ind. Mlica Cia. Ltda. 9,310.0 4,800.0 4.816.6 9316.3 10 00 12 . 41,.0 3.0 61.2 Sentander Cia. Lida. G.3M8.4 S.000.0 1.3U0.4 s,3j0.4 10 84 12 37.0 4.128.0 40.8 Quialpac Cia. Lida. 19.419.0 G,000.0 13.419.0 19.419.0 10 u0 12 840.0 4,000.0 29.5 Rerröl* I.A. 12.621.5 .000.0 6,621.5 12,621.8 10 60 12 24.1 4,78.6 31.0 Euromuablma Cia. Lda. 11600.0 8,7ö0.0 8,ju1.0 11,000.0 10 64 12 481.2 4.743.7 43.9 Multindumtrima Jarasllo 0. 9,44.5 .000.0 844.5 3,4. 10 201 60 270.0 2,480.0 25.9 Multilndusrie Jara;Illo 0. 8,848.3 &.000.0 846.3 3,40.5 10 201 0 270.0 2.480.0 26.9 ID~SA-Ind. Eli6. Papel, Can ,902.3 6.250.0 2.62.8 *,02.* 10 96 24 878.0 8,250.0 54.5 Eiquetes Cia. Lida. 10.0.0 6.250.0 4.210.0 10,00.0 10 72 12 842.5 8.062.8 29.7 FILYPAR *,000.0 0.0 2.000.0 0,008.0 10 9 24 80=.2 8,113.9 22.9 Eliaeo Ganaaen Alvar«a 6^,6.4 4,600.0 2.8&@.4 6,11I.4 10 72 12 406.0 3,48.0 44.4 Central de ~raison y Derivado 6.100.0 4.000.0 4.100.0 0,100.0 10 60 12 360.0 3,240.0 30.2 Etanico Cia. Ltda. 10,500.0 60.00.0 2.700.0 1,000.0 10,800.0 10 10 24 270.0 5.130.0 34.7 Serrno Ht. Export Cia. Ltda. 12.674.0 #,000.0 6,874.0 12.74.0 10 60 6 840.0 4,60.0 40.6 Pastificio Tcmeiba an=o 1.404.0 6,000.0 9,404.0 13,404.0 10 60 10 840.0 4,00.0 82.0 Laropleet C. A. 21.792.0 6.200.0 7,12.0 .444.0 21,792.0 10 102 1 af0.7 5.221.2 17.0 Alfon9a Mejia N0,o. 7,897.0 4,00.0 2.997.0 7,897.0 10 04 24 U01.2 8,a00.0 27.0 Manufacturma Aericana Cia. 10.780.0 6.260.0 4.500.0 10.730.0 10 9 24 878.0 8,280.0 0.0 Camila Velaco do Ravelll-Cooo 6,100.4 4.010.3 2.180.1 6.160.4 10 04 24 200.7 8,20.8 8f.9 Laboratoriae Winar å,68.8 4,600.0 08.8 8,s^0.& 10 60 12 408.0 8,048.0 38.4 Oamaldo Rjaa~Alfoamraa 0.R.M. 4,800.0 4.050.0 480.0 4.00.0 10 60 24 344.8 3.20.8 47.7 Induatris Aliaenticia 8. A. 8.777.2 4.600.0 1,177.2 8.777.2 10 42 6 414.0 0,726.0 41.5 Consatructora de Nueble 0,2.S 4,890.0 8,000.8 0.202.8 10 04 24 895.0 3.660.7 29.2 EMLATEX 11,274.9 6,000.0 4.800.0 774.9 11.274.9 12 120 3e 192.8 5.207.1 81.8 faterin Puerto Usllaeta 15.000.0 0.210.0 7.812.0 1.280.0 15.000.0 12 120 12 241.2 3.348.7 22.2 Arical I.A. 6.990.1 4,44.0 2,113.1 0.990.1 12 04 24 280.6 8,720.0 41.4 Calzado de Seguridad Ind. 10.739.7 4.^10.1 5,71.6 10,79.7 12 94 24 301.1 4,074.0 80.0 Envae Induirial« 1.A. 8,90.0 6.250.0 2.608.0 0.908.0 12 72 12 502.3 8.062.8 34.8 Moline Cordillera Cia. Ltda. 14,071.8 f.200.0 4.000.0 3,671.8 14.071.8 12 64 24 890.8 8,1~9.4 19.6 Villa Turisticsa Cebsplan 6,980.0 0.250.0 700.0 6,980.0 12 120 12 241.2 S.848.7 30.4 Eduardo .Ia Jurado as 138.02.5 8,000.0 ,~.3 1,~2.8 12 64 12 887.8 4,162.8 33.2 Expromaderm Cia. Ltda. 11.01.2 0.100.0 8.461.2 11.681.2 12 9 12 549.0 4,941.0 46.9 ~BT Cia. Ltda. 6,964.0 4.804.0 2,400.0 0.984.0 12 72 24 884.6 8.3 .9 45.4 Mlrmoles Andinos Cia. Lida. 7.8049.8 6,20.0 1,899.8 7,849.8 12 120 30 200.8 8,424.1 52.2 Eatruaei-Etructures Tridle. 9.410.0 4,500.0 8,400.0 1,810.0 9.410.0 12 00 12 4015.0 3,45.0 20.8 Fritura. Andiee Cia. Lida. 7.13.0 4,00.0 2.112.0 1,000.0 7,032.0 12 72 12 247.5 2.227.5 40.1 Carlos A. .alil Selman 10,740.0 6.000.0 4.740.0 10.740.0 12 54 0 540.0 4.110.0 16.0 Gusatvo Vaaconea 12,^00.5 8.000.0 7,000.8 12,800.8 12 96 01 225.0 4,278.0 24.0 Carlos Alvara Sa 11,907.0 4.920.0 7.067.0 11,907.0 12 a4 24 809.9 4.118.0 19.0 Extractorm Trea Estero. S.A. 12,099.0 0.250.0 5,849.0 12,099.0 12 04 12 78.0 8,280.0 35.8 Prefabricadas dal Ecuador 8.A. 11,199.0 .250.0 2.92.0 2.020.0 11.199.0 12 12 24 210.9 8.414.0 29.9 1TAVA s,999.6 8,000.0 999.S 8.999.8 12 120 80 154.2 8.248.7 80.8 RIMT Cia. Ltda. 10,991.7 8,~10.3 7.411.4 10,991.7 12 72 18 250.0 2,971.7 27.1 INV4AR S. A. 23,007.5 8,000.0 6,087.8 9.000.0 24,037.8 1 60 24 860.0 6840.0 31.0 Carlo. Fileir Estrada Vle 19,840.9 ,310.0 8.990.9 8,800.0 19,44.9 15 96 24 125.2 7.389.7 59.0 Sinteticos Teenicoa 17.874.9 7,800.0 9.074.9 17.374.9 10 120 24 295.3 6.454.8 33.0 Harnan Vaaconea Sevill 18.045.9 7,277.6 6.000.0 388.2 18^845.9 10 90 24 32.0 6.167.8 19.5 Pico Sanchez Cia. Ltda. PICOSA 8,548.3 7,048.8 1,00.0 9.48.8 12 120 3s 181.1 6.189.6 47.4 Ing. Stanio V*ra-Centro Vacac. 13.441.4 7.500.0 8.441.4 13.941.4 12 120 24 253-1 6.4988 17.8 TOTAL JM1 2U . 229.O93. M-. . =.840.0 18 0 241.979. - 51 - Pno.æ7 €6.m710 nEPrr PAR Fenaic aeryu areci pin,nced inder LaUn 21-E CPPMAN7 A TOTL t FORE t LOCAL 1 CAPACM7Y J~85 RAM UTILZATIO4 ATED MATIAL E/R Ing Frankl iln ravo Hastaria La 4.000.0 3,779.6 8,779.6 - - - 50.0 15 61.20 Lulu Arcenio flmmen Alwaredo 4,0.0 7~.7 79.4 7,661.2 - 100.0 100.0 14 34.60 Agripanca (Anricola Xnd.) 6,250.0 20000.0 20.0 19.800.0 1.36 98.64 73.12 7 34.50 Rolf wittr-Turim Gslaepao, 5,000.0 6,669.0 2.00.9 4,068.0 - . - 4 85.90 Reeriauntro a.A. ,.000.0 1560.0 18^6 18588.1 100.0 - 85.0 26 28.70 Propitex Cia. 14da. 9,200.0 6.708.7 67.0 6,636.6 - 100.0 62.0 8 37.10 Capas Cia. Ltde. 6,000.0 1,663.0 18.a 18.377.3 90.0 10.0 94.0 17 23.90 Hil., de Fantasi Cia. Lada. 6250.0 18.00.0 141.0 13.464.0 6W.0 87.0 78.0 22 42.90 Cortina, y Viai llag Cia. Ltda. 6.200.0 18,000.0 180.0 17.620.0 - - 53.8 17 36.60 Ideco Cia. Ltda. 5.000.0 9,270.2 92.7 9.177.4 96.7 8.8 65.92 la 33.30 Francieco Molgui" Jarase i to 6000.0 12,126.0 121.2 12,004.7 - - 70.0 - 34.90 Ulpino %uper~o Valdiviso 8,940.1 14,057.8 140.5 138918.7 - 100.0 72.7 19 31.80 Opica Aituries Cia. Lida. 15600.0 8,189.7 61.4 8,00. 46.3 63.7 90.0 15 34.80 Hele Inyectedo. Cia. Lida. 6.000.0 9,543.8 96.4 9,448.& 0.0 0.0 80.0 7 27.50 Ind. Nmc. de Prod. Culinaria 6,200.0 9.077.2 90.7 8,6.4 20.0 60.0 50.4 12 35.80 Hor Proapo Cadea Htäl Ner 6,250.0 10,262.0 102.6 10,1U9.1 - 100.0 57.7 13 27.10 Sebaeian V9ldivie y Luis C. 6,210.0 12,698.0 12,696.0 - - - 85.0 7 35.60 Fabrice Avi le. Cia. Lida. 2,000.0 6,914.0 69.1 6,844.6 - 100.0 6.0 6 84.20 nd. Caaenera Rio 0.la Cia. 6,000.0 13,875.8 8,843.9 10,031.8 - 100.0 100.0 10 44.50 0" a Troya Jaranlo 6,250.0 14.847.9 148.4 14.01.4 - - M6.0 15 41.30 Induaedia Ci4. Lida. 6.250.0 17.250.0 172.8 17.077.8 79.6 20.4 76.0 15 50.90 0eo Llant*r Nacionael S,300.0 4,~0.0 43.0 4.257.0 97.66 2.34 93.0 4 40.40 Caprower 5. A. 6.250.0 20,.0 202.8 20,060.1 100.0 - 87.0 20 65.90 Rodrigo Lae 7.G00.0 12,360.0 12.360.0 - - 100.0 70.0 14 40.80 Carlo* Segoia Val [ejo 7400.0 i,724.0 87.2 1,636.7 83.0 67.0 71.0 7 44.0 Editorial del zuc 8. A. 10,000.0 16,245.6 162.4 16,083.2 100.0 -0 13.0 14 35.20 Capa Cia. Ltde. 4,000.0 1185.0 118.8 11.766.1 90.0 10.0 60.0 - 28.20 Coriel Lamyza Jaimm R. 7.800.0 11,578.0 11.875.0 - - 100.0 97.0 13 39.70 Eu.v:lvula S. A. 10,000.0 16,ä21.0 113.2 16,187.7 12.0 68.0 57.0 24 37.00 Industrial Mederera Tymber 6,600.0 21,849.0 6,831.6 14,817.3 - 100.0 86.60 26 27.30 Dr. Parin Saab And,ory 7,000.0 12.741.0 127.4 12,613.5 89.0 11.0 33.0 15 78.20 Americen de Frigorifica 10,000.0 17,761.8 177.6 17,83.6 69.0 31.0 70.0 17 46.a0 Bee-On Cia. Lda. 10,000.0 18600.0 136.0 1,484.0 - 100.0 100.0 19 53.20 Ind. Conl. de lMquineria IlIMA 18,000.0 25,017.0 250.1 24,766.8 - - 90.0 23 83.40 Hstel La Herrodura Cia. Ltda. 4,801.7 9,243.7 9,243.7 - 14.0 87.0 94.0 8 53.00 Je Luis Zaw A. 7,600.0 14,857.0 14,887.0 - Conat. Conat. 60.0 8 65.00 Mtalea, utnedoo NETAIN 4,000.0 8,29~.0 62.9 8.240.0 50.0 50.0 80.0 7 28.00 bolivar Cherre Cenao 6800.0 12.700.0 12.700.0 - - - 50.0 8 26.80 Maderera Pal 6,000.0 19.766.4 187.9 13,660.4 - - 70.0 15 29.00 Ecuaeerpro 8,000.0 18.140.0 14,38.0 787.0 - - 12 45.30 4l.io Elecro Moreno 7.500.0 12.130.0 121.3 12.008.7 86.0 15.0 49.0 a 34.10 Hotel Zarncey 8,618.9 7.30.2 7.30.2 - - 100.0 45.0 - 29.50 Prciiteve-Productora de Cine 8,000.0 11,50.0 119.5 11,850.5 - - 72.0 12 64.50 Industrien Alienticina (1A~A) 5,400.0 12,494.6 124.9 12.369.6 - - 100.0 - 58.90 Victor Vivanco Obando 7.000.0 24.58.0 12.279.0 12,279.0 - 100.0 - 22 34.70 Templast Induatrial y Coarcial 10,000.0 13.622.7 136.2 13,486.4 - - 60.0 18 33.10 Kasr Cia. Ltda. 7.200.0 9,524.0 95.2 9.428.7 12.0 78.0 65.0 4 44.50 Rotan Cia. Lida. 6,424.6 9.911.8 99.1 9,812.2 2.0 98.0 90.0 5 38.40 I*" Moreira madoa 7,000.0 8,662.6 83.6 8,578.9 - 74.70 4 68.60 C hlibalan, 3.. 10,000.0 24,857.0 4.911.4 19.648.6 5.0 68.0 83.3 11 66.40 Espaedore Anding S.A. 14,880.8 17,891.0 178.9 17.212.1 - 100.0 60.0 12 30.20 C4tej ida. 9,868.1 11,088.1 110.8 10.942.8 - 100.0 91.0 21 47.50 Reoffle del Ecuador SMC 11,685.0 15,996.0 189.9 1,813.0 - 100.0 86.7 20 48.20 Teax-om 10.000.0 1e,080.0 180.8 17.669. 100.0 - 60.0 15 30.70 Manuel Eduardo Paffino 10,000.0 11.970.0 119.7 11,680.9 - 100.0 68.0 4 22.60 Ineufan B.A. 11.600.0 17.244.0 1,724.4 15819.6 36.0 62.0 90.0 7 28.90 Ouraf lee del Ecuador 9,80.0 11,421.0 114.2 11,306.7 - 100.0 67.8 6 30.00 Segundo Celderan Guaean 7.848.0 9,878.0 98.7 9,281.2 - 100.0 68.0 2 34.80 Siato Jorg* Manobanda 0,000.0 10.491.0 104.9 10,386.0 - 100.0 6.7 10 45.40 Fe. de Implamentom Agricols 9,000.0 15,712.4 187.1 18.888.2 100.0 - 100.0 14 38.30 Ju.uates y Enva... .A. 1~O.A 10,000.0 14,000.0 140.0 18,680.0 - - 91.0 6 47.90 End. Moliner& Br*deco 11,870.0 18,878.6 133.7 18,241.9 - 100.0 - 8 45.90 Fabrica da Envaes Utilitarioö 7.000.0 6.602.6 6,602.6 - - - 73.0 8 26.90 Medinea Mderaes Industriale 10.000.0 25,424.6 25,424.6 - - 100.0 100.0 16 34.50 Frionervice S.A. Q.800.0 13,179.0 131.7 13.047.2 - - 75.0 24 42.30 Copap Cia. Ltda. 6,000.0 8,400.0 84.0 8,316.0 90.0 10.0 90.0 16 32.60 Paceee l.A. 7,084.0 8,00.0 83.0 8.217.0 100.0 - 92.0 12 53.40 Ricardo Calderon Vinueza 1390.0 16,447.0 15.447.0 - 100.0 - 80.0 22 48.70 Maroae Andinos 8,000.0 10,708.1 107.0 10,596.0 - 100.0 60.3 4 31.00 Tecniamatria S.A. 16,000.0 25.247.0 232.4 25,014.5 98.0 8.0 100.0 30 46.60 S.A. Sen Pedro 10,000.0 20,887.4 20,837.4 - - 100.0 87.0 160 34.00 Benaval 12.053.5 0,750.1 30.780.1 - - 100.0 80.0 44 48.70 Cemroanera Tierras Firea 6,000.0 7,500.0 75.0 7,425.0 - 100.0 100.0 5 36.20 Hugo Marroquin Ornjalva 5,000.0 18,871.6 158.7 15,712.9 - 100.0 60.0 19 42.70 Abogedo Jaie Puin Plaza 16000.0 89,983.0 399.6 39.583.1 - 100.0 80.0 30 28,30 Segundo Aguirre Calderön 14.430.6 16,977.1 169.7 16,807.4 100.0 - 48.0 15 31.70 Cooperativa de Produccidn Caf 9,247.1 12,346.6 123.4 12,223.1 - 100.0 60.0 10 36.60 Ind. Frigorifica de El Or 1:,000.0 16,134.0 161.8 15,972.6 - 100.0 80.0 4 41.60 Racti Auatro S.A. 4,300.0 8.703.7 4.277.7 1.425.9 60.0 40.0 96.7 29 17.20 Muhetarie Vi li egan Cia. Ltda. S,000.0 6,250.0 6,260.0 - - 100.0 75.0 7 2/ .70 Tojidex 8.A. 1117.7 20,187.0 1.209.4 16,947.5 88.0 12.0 90.0 16 39.70 Marteaia Cia. Ltda. 15200.0 20,088.0 200.8 196587.1 10.0 90.0 85.0 7 35.50 Ind. Qufaica Andina 18,000.0 32.115.1 321.1 31,793.9 100.0 - 50.0 10 52.90 Cotalar 13814.0 26,618.0 266.1 28346.8 37.0 63.0 90.0 24 34.80 Ecuavalvula 6,000.0 19,052.6 19.0852.6 - 83.0 67.0 57.0 7 37.00 Gubicoe l.A. 14,000.0 16.14.0 165.1 16,348.5 - 100.0 75.0 - 60.50 Cameronera de Esclues S.A. 13,065.0 89.765.0 897.6 89,867.3 - 100.0 83.3 11 59.90 Austromer S.A. 18.810.0 89,427.0 894.2 89,032.7 100.0 83.3 11 58.30 Cafesl Cia. Ltda. 8,200.0 18.900.0 756.0 18,144.0 - 100.0 100.0 23 96.00 Induatrial La Andalua C.L. 9,000.0 20,663.6 2,066.4 18,867.8 - 100.0 60.0 20 43.90 Jorge Chavux Aux 9,200.0 89,826.8 8,982.6 35,.43.8 - 100.0 80.0 26 38.50 Ind. Pleyball Ecuatoriane Cia. 6,000.0 12,079.5 9,422.0 2.687.4 50.0 50.0 75.0 4 36.30 Samoo Turemo C. A. 14,000.0 21.852.6 16,389.4 5,463.1 - 8B.0 10 62.70 Ceerora Lae Hadae S.A. 16.000.0 8,438.0 384.3 38,048.6 - 100.0 89.0 15 80.90 Terea Cepedo de Voelaco 7,000.0 8,243.0 8,243.0 - - - 72.0 10 40.20 Segundo Pillejo Lumiquinga 18,778.0 25,776.6 25,776.9 - - - 83.7 17 28.40 Paasol . A. 11,000.0 18,841.7 128.4 18,406.2 - 100.0 66.0 25 34.20 Serysp le 5. A. 7.000.0 17.810.5 .7.10 16.924 100.0 - 100.0 9 41.20 TOTAL 847.2^.0 1.584.205.5 771. . .8.6. 1.412 - 52 - of 2 M~P-NA Financial fharader etttub:e. Pinancd ndor an221- 0T~6 TOTAL EWPINA FI E 11 1 m FIA1 TOFP CIIWANv pimj-r _m FDNWICIAL Dr, AERATE OF APPIAIMAL L.DA miTY LAN4 TOTAL RATE TOM PI0O EAID MSTAWING RETUf4 Ing. Franklin 1r,vo HsterI La 8.779.4 4,000.0 1,779. 6,779.1 12 84 12 240.0 8,860.0 80.3 Luis Arcenlo Romen Alvarado 7 140.7 4,800.0 1,440.7 7,940.7 12 72 12 124.0 å,726.0 4.9 Agr ipance (Agricola Ind.) 20:000.0 G,250.0 ök,m.1 8,416.9 20,000.0 12 72 12 450.0 5.175.0 27.3 Rolf Witt.r-Turiam GIlapagm *69.0 8.000.0 114MI.0 6,649.0 12 120 24 168.7 4.331.2 28.3 Rectiauetro 1.A. 15,690.0 8.000.0 G8,681.0 8,000.0 15.690.0 12 84 12 300.0 4,200.0 35.0 Ind. FASA de Metålem PIa 8,0t6.0 8,250.0 1.786.0 01111.0 12 u0 12 800.0 8,128.0 38.3 Propit48 Cia. Ltd*. 6,703.7 3.200.0 8.50m.7 6709.7 12 102 18 144.0 2.736.0 23.6 Cozs Cia. Ltd.. 1,86.0.0 000 6,7.0 8,66.0 1986.0 12 60 12 540.0 4,880.0 34.1 Hilede Fantasi Cia. Ltd*. 13,600.0 6,250.0 4,000.0 å3380.0 13.600.0 12 102 1 281.2 8,343.7 29.9 Cortinam y Viellos Cia. Ltda. 18,000.0 6,200.0 6,000.0 8.600.0 16.000.0 12 102 18 - 279.0 5.01.0 37.5 Idaco Cia. Ltd*. 9,270.2 8000.0 4 270.2 9,270.2 12 60 12 4M0.0 4,0E0.0 48.9 Fråncico Holguin Jamlo l l 12,128 12,126.0 12 60 540.0 4.860.0 81.1 Ulpiano Ruvrto Valdivia.o 14,057.0 3,940.1 8,117.2 2,000.0 14,087.S 12 66 18 I84.8 8.191.5 28.9 Otica Amturiaa Cia. Ltd&. 6.139.7 m,500.0 2,89.7 6,139.7 12 4 24 297.0 4,683.0 80.8 M el.. Inyec~adoo Cia. Ltde. 9.84.8 6,000.0 a548.8 9,848.8 12 114 30 154.2 8.248.7 25.3 Ind. Nac. de Prod. Culinario. 9,077.2 6,200.0 2:677.2 9,077.2 12 6 12 88.0 8,022.0 88.5 Smor Promno Cadena Hotel Mt r 10,20%.0 8,250.0 4 012.0 10262.0 12 64 24 877.8 5,287.8 28.7 EDAR 11,322.0 8,940.0 8.870.0 11 22.0 1 80 24 445.9 4,905.4 82.9 CAMAVEL 17.00.0 6,000.0 4,250.0 6,70.0 17:000.0 13 48 12 540.0 4,860.0 21.0 Sebatien Valdivieso y Luie C. 12.698.0 6,250.0 6.448.0 12,696.0 13 120 81 120.5 5804.4 24.7 Fabrica Avils Cia. Ltd&. 6.914.0 2000.0 4.914.0 6,914.0 1 72 12 140.0 1,620.0 45.0 CIACO Cooerativå de Prod. 8,000.0 4.800.0 800.0 8,000.0 12 60 12 405.0 8,648.0 46.1 Ind. Cemmronora Rio Oias Cia. 13,65.8 6.000.0 7 378.I 1,378.8 12 72 24 408.0 4,995.0 28.8 Gslo Troya Jaremillo 14,647.9 6,280.0 897.9 14,647.9 1 60 12 492.1 8,132.8 31.8 Oso Liantera Necionel 4,800.0 3 :00.0 1 000.0 4,100.0 1 48 12 297.0 2,673.0 29.2 Capromar S. A. 20 2=3.0 0.250.0 5070.0 8,963.0 20,288.0 1 72 12 393.7 8,251.2 41.4 Rodrigo Lac, 12:360.0 7,800.0 4,^00.0 12.860.0 1 84 24 837.8 8,412.8 29.3 CarlosSegovie Val le 8724.0 7400.0 1,84.0 8.724.0 1 96 24 277.5 6,82.8 39.3 Editorial del Sur 8. A. 16.248.8 10.000.0 8,245.6 16.245.6 1 96 3e 270.0 8,730.0 32.8 Copa Cia. Ltdå. 11,68.0 4,000.0 7568.0 11,68.0 15 84 12 180.0 3.420.0 38.2 Ind. Ecustoriana de Confocc. 11.258.0 6,250.0 8.006.0 2.000.0 11,286.0 1S 120 24 140.8 8,484.8 28.7 Coronol Lomyza Jaim R. 11.75.0 7,800.0 4,078.0 11,878.0 ta 120 se -6.4 'G68.8 27.8 Ecuevalvula 8. A. 16,321.0 10,000.0 ,321.0 16,321.0 15 120 sa 128.8 8,871.4 85.7 Industrial Mederera Tymber 21.849.0 6,600.0 12:957.0 1,2.0 21.a49.0 15 84 12 297.0 5.64.0 25.2 Or. Ferid Saab Andery 12.741.0 7,000.0 M000.0 741.0 12.741.0 18 72 12 378.0 8,922.0 45.5 Aricana de Frigorificas 17,761.8 10,000.0 8,781.8 2,000.0 17.761.8 15 84 12 878.0 ,625.0 42.5 Omet-On Cis. Ltd. 13,600.0 10,000.0 2,600.0 1 .0 1 00.0 15 16 12 321.4 6,678.b 57.0 Tore.. Cepeda de Velaco 9,850.0 8,000.0 4,80.0 9,680.0 15 lj 24 112.8 4,187.8 26.8 Tal ler C.M.T. 18,878.0 9280.0 6.098.0 15878.0 18 84 24 250.8 8,101.4 17.8 Lula Martinez Mposita 11,02.0 89388.0 1101,.0 11,802.0 15 60 12 3ag.9 å,006.5 38.2 TESIWA Cia. Ltd@. 10,800.0 8,000.0 8.00.0 10,00.0 15 102 12 120.0 4.380.0 27.6 lod. Quie. Adhenivom M. Coetcn 25.421.2 15.771.2 6.680.0 8,000.0 25,421.2 15 96 24 238.5 13.957.5 40.7 Ind. Con.t. de Maquinaria 1N~A 25,017.0 16.000.0 9,017.0 25,017.0 1 120 24 180.0 14,199.7 31.6 Hotel La Herradura Cia. Ltda. 9,243.7 4.501.7 4.742.0 9,243.7 1 120 24 75.9 3,975.5 49.0 Jo~* Luis Ze A. 14,857 7,00.0 8,357.0 2,000.0 14,^87.0 1 120 24 126.5 6.623.4 35.0 Met4les Inyectsdos METAIN 5.293.0 4.000.0 1,293.0 8,291.0 15 120 38 S.600.0 30.6 Bolivar Cherrex Ceno 12700.0 6,00.0 8,680.0 2.540.0 12,700.0 1 96 24 148.2 8.703.7 28.4 Medsrera Palme 13:798.4 6,000.0 3.798.4 4,000.0 1,798.4 15 60 12 317.8 8,062.5 32.3 Rocio Carriel de Cedeno 8,88.8 b .1129.8 2.407.0 8,888.5 18 120 12 168.8 S,332.6 42.4 Ecuaerpro 15,140.0 000.0 7,140.0 1,140.0 15 120 24 135.0 7,068.0 21.5 aterial Asfelt.(MAYDECD) 4,00.0 4,000.0 00.0 4,00.0 15 120 24 67.8 3,8:2.8 59.1 Moll no Electro or.n~ 12,130.0 700.0 4,6^0.0 12,130.0 15 96 12 241.0 6,50.9 44.9 Hotat Zarcey 7,980.2 886.9 2,311.2 7,980.2 18 72 12 252.8 4,804.2 42.9 Prociteve-Productora de Cina 11,980.0 8,000.0 2.000.0 1.980.0 11,950.0 15 96 24 10.0 7,020.0 57.7 Industrias Ali.enticir,o (IA~A) 12,494.6 8,400.0 7,094. 12,494. 15 84 24 145.8 4,714.2 27.8 Victor Viv@nco Obando 24,298.0 7,000.0 14.500.0 '.,0".0 24 «58.0 1 84 24 189.0 6.111.0 25.4 Texplast Industrial y Comercial 18,622.7 10,000.0 3,622.7 13622.7 15 84 24 270.0 6.730.0 43.3 Fabrica Nacional de Adheilvos 7.1286.8 6020.0 1,206.3 7126.8 15 60 12 297.9 56.860.1 18.8 Kmasr Cia. Ltde. 9,824.0 7,200.0 2,224.0 9824.0 15 84 12 270.0 6.210.0 42.8 Lauro Ricardo Espinel Perraga 8,048.1 S.000.0 8.046.1 8. 046.1 15 120 24 14.3 4,415.6 18.8 Roxton Cia. Ltdå. 9 911.0 8,424.6 1,406.7 9,911.3 15 60 24 252.7 7,329.4 25.0 Ner7 Moreira Mendoas 862.6 7,000.0 1,e62.8 8,602.6 15 968 278.6 6,024.3 99.0 Calibsa 5.A. 24.557.0 10.000.0 10,887.0 4,000.0 24,887.0 18 120 24 188.7 8,831.2 22.5 ESpecadora Andina 8.A. 17,891.0 14,880.8 8,540.8 17,691.0 18 84 868.5 10,424.6 55.6 Industria Metsl.cenica Quito 9,900.0 6.200.0 3.700.0 9,900.0 1 9 24 139.8 ö,440.8 53.6 Lule 0. Hula Calle 2,900.0 2,000.0 900.0 2.900.0 15 60 12 180.0 1,620.0 24.1 Colteides 11.058.1 9,3&".1 1,657.9 11,058.0 15 60 12 317.0 8,136.8 34.0 Remiflax del Ecuador SCMI 15,993.0 11.86U.0 4,128.0 15,992.0 15 84 24 106.7 10,571.7 43.9 Tex-Don 18,060.0 10,000.0 0.050.0 2.000.0 18,080.0 18 96 24 150.0 8,6^0.0 36.8 manuel Eduardo Pessino 11,970.0 10,000.0 1,970.0 11,970.0 15 120 24 168.7 8,831.2 44.3 Innugn S.A. 17,244.0 11,800.0 8,444.0 17,244.0 15 84 24 106.2 10,.13.4 37.6 Durafle del Ecuador 11.421.0 9,580.0 1.841.0 11,421.0 t 84 24 08.2 8,888.7 44.8 Segundo Calderan uoamn 9,878.0 7,840.0 1,827.0 9,878.0 18 120 12 150.9 6.642.0 26.4 Sista Jorge Månobande Cadeno 10.491.0 8.000.0 2,491.0 10.491.0 18 6 270.0 6,930.0 68.0 Fc9. de Iaplementoe Agricoles 18.712.4 9,000.0 0.712.4 15,712.4 15 120 24 101.2 7.998.7 21.7 Juguete y Envess S.A. X9~l"" 14,000.0 10.000.0 4,000.0 14 000.0 15 84 24 180.0 8,820.0 47.6 Ind. Molinr 8r.desco 18,878.6 11.870.0 2.006.8 135378.6 la 120 18 60.1 9.888.8 48.4 Febrice de Envas.. Utilitårios 9,802.6 7,000.0 2,802.6 9.802.6 15 84 24 126.0 6,174.0 30.5 adins Maderas Industriales 25.424.8 16.000.0 9.424.6 25,424.6 18 120 24 180.0 14.220.0 68.1 Fr*iomrvice I.A. 1a179.0 9Ö00.0 2,176.0 1.808.0 13,179.0 18 120 24 106.8 8,443.1 37.1 Proquiendinoe 8. A. 26,428.4 10,400.0 9.000.0 7,02.4 26,428.4 15 72 12 280.8 8,079.2 25.5 Cops Cia. Ltd*. 8,400.0 6.000.0 2,400.0 8,400.0 18 84 12 188.0 5,285.0 44.1 Indutriae Rambel 6,16.1 8,600.0 1,016.1 6,88.1 15 84 24 49.5 4.900.5 58.6 Pacoma S.A. 80,00.0 7.054.0 1.248.0 8,900.0 15 84 24 8,348.6 87.3 Ricardo Calderon Vinueza 16.447.0 18.900.0 2,467.0 16,447.0 18 84 12 209.7 12,372.3 29.6 Mermoles Andinos 10,703.1 8.000.0 2.708.1 10:703.1 18 120 38 7,200.0 25.0 Tecnieamtriz S.A. 28,247.0 16,000.0 7,247.0 28,247.0 15 84 24 14.400.0 35.8 S.A. San Pedro 20 837.4 10,000.0 10,887.4 20,857.4 15 84 24 90.0 8,910.0 19.0 n*vei 30,780.1 12.06m.8 la698.6 8,000.0 80,780.1 15 120 24 67.6 10,780.3 59.2 Cameronere Tierras Firmm 7,800.0 6,000.0 1,00.0 7,800.0 15 84 24 54.0 5,346.0 73.1 Hugo Narroquin Orijalvå 18,871.6 8.000.0 7.871.6 15,171.6 15 120 24 45.0 6,372.4 38.5 Aboado Jis Puig Pla 89,803.0 16,000.0 1,988.0 10.000.0 39,983.0 15 84 24 144.0 14.286.0 49.9 Segundo Aguirra Caldcr6n 16,977.1 14,480.6 2,848.8 16,977.1 15 120 24 12.987.5 37.2 Cooperativa de Producci6n Café 12.48.6 9,247.1 8,099.8 12,346.6 15 84 12 206.0 8,114.3 60.4 Ind. Frigorifica de El Or 16.134.0 12.000.0 4,134.0 16,134.0 15 120 24 67.8 10,732.3 55.7 Mublerias Villega Cia. Ltd*. 6,250.0 1:000.0 1.250.0 6.250.0 14 48 12 150.0 4,880.0 30.7 …1ーー■■■□国国■■■■■■国園■■■■■国■■■■■国国□■□■■園■■日■■■□■国国国国国国戸い国■国園国■国国国ーー咽国ーー――一 &.7瞥 一一――…一ー一ーーーーーーーーーーーーーーーーーーー～ーーーーーーーーーーーーーー→ー - 54 - ANNEX 7 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Loan Distribution by Economic Sectors (Loans 1879-EC and 2221-EQ Loan 1879-EC A Food 18% B Textile 26% C Wood 13% D Chemical 7% E Non-Metalic 6% F Metalic 19% a IM G Hotels 4% H Others 7% Loan 2221-EC A Fish 7% B Food 15% C Textile 31% D Wood 16% E Chemical 3% F Non-metalic 7% G Metalic 15% H Hotels 3% Others 3% 100% 7" - 55 - ANNEX 8 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Organiza ional Ciart GLKt1m.,lA Dt. FOitaTU SUCURKSALES SuGEKLNCIA DE Y DESARKOLLO AGENCIAS DLdECTOR ) FOPINAR SECRETARIA SEUU10N DE SGUIUN Dt SECIuw Db EVALUAGIO% COPACITACIU Y SUPRVISION PtP. kREiITO -1 Jefe - 1 Jete - 1 Jefe - 5 Asistentes - 3 Asistentes - 2 Asistentes -56- ANNEX 9 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Staff Time Distribution By Activity R a Promotion * Project Evaluation. 1 C* Project Supervision D IIO 'a Statistical Info. .1 X~ 6 Policy Analysis I 9 YC a Technical Assist. 13 0 i Y. * Others By Location II B3 5 9 -a Esmitao lVIa Guayaquil C iX N Cuenca D 3%, . f4anta. * e Ambato P 4 P.'cMachala F1 Wet a Loj a H 2 X a Esmeraldas I 2 X V4 Rio Bamba - 57 - ANNEX 10 Page 1 of- 2 ECUADOR PROJECT COMPLETION REPORT FOPINAR Staff Time Distribution by Activity and Region (LOANS 1879-EC and 2221-EC) (In Persons-Years) ----------------FUI-- -- - - Locition / Name Educ. Title Proot Evil. Sprvsr Statist. FaI.Anal. Tech.Ass. ether TTAL LU!TD HEADQUARTERS Felipe Valdospinos Econ. Dev.VP 0.02 0.05 0.17 Juan Villasis Lawyer Dev.Ass.VP. 0.02 0.05 0.09 0.16 Marcelo Romero Econ. Director 0.24 C.20 0.20 0.05 0.21 0.10 1.00 Fabiln Cerdn Econ. TA Head 0.30 0.10 C.60 1.0c Patric:c Avilis Eng. TA Analyst 0.20 0.10 0.05 4.65 1.00 Jaire Lari Stud. TA Analyst 0.15 0.10 0.20 0.50 0.05 1.00 Hernin Luna Eng. TA Analyst 0.20 0.10 0.05 0.65 1.0 Maria RIos Econ. Eval.Read 0.43 0.60 0.05 0.14 0.1! 0.03 1.00 Fernand: Ortiz Econ. Analyst 0.90 0.05 0.05 1.00 Patricia Carrara Stud. Analyst 0.40 0.60 1.00 Jorge Narvaez Econ. Analyst 0.90 (.05 0.05 1.00 J.Carlos Sonzilez Stud. Stat.Ass. 1.00 1.00 Ras4ro Vaca Stud. Stat.Ass. 1.00 1.00 Manuel Alvarez Systems A.alyst 0.05 0.05 Jalio SInchez Lawyer Spn.Head 0.10 0.60 0.30 1.00 Xavier Espinesa Stud. Spn.Analys 0.05 0.80 0.05 0.10 1.00 Pablo Samez Stud. Spn.Analys 0.05 0.80 0.05 0.10 1.00 Gustavo Cevallos En. Sec.St.Dir. 0.33 0.30 Leticia Villareal Acc. Ac.Analyst 1.00 1.00 ka Vivacc Stud. Assist. 0.10 0.10 0.E0 1.00 Paulina Heyuann Secret. Secretary 1.00 1.00 Fosaric Cornejo Secret. Secretary 1.00 1.00 Mar:elo Anaqo nessegr. 1.00 1.00 Sut-Total 1.46 3.05 3.45 1.74 0.60 2.93 4.35 19.59 SUAYAgUIL BRANCH Carlos Carbo. Lawyer Manager 0.02 0.09 0.10 Roberto Barria Enineer Ass.flicager 0.02 0.02 Hushrto Nalias Engineer Analyst 0.10 0.90 0.10 1.00 Luis mcr!ls B.A. Analyst 0.10 0.90 0.10 1.00 Aieich Fa'Lqez Student Ass.Analst 0.10 0.80 0.10 1.00 Carl2s .6pez Student Sp.Analyst 0.20 0.80 1.004 Paola Espir.el Student Sp.Analyst 0.20 0.80 1.00 Ra.Luisa Vuraye Secretary Secretary 1.00 1.00 Sub-Total . 0.72 2.50 1.90 0.00 0.00 0.00 1.00 6.12 CUENCA BRANCH Jose Cuesta Econ. Hanager 0.10 0.20 0.30 Sad" Pesntez Stud. Assistant 0.20 0.20 Sub-Total 0.10 0.40 0.0c 0.00 0.00 0.00 0.00 0.51 PANTA BRANCH Len Celele Econ. Manager 0.02 0.02 0.04 Carsen Saray E:on. Analyst 0.10 0.90 0.10 1.00 Sub-Total 0.12 0.92 0.10 0.00 0.00 0.00 0.00 1.t4 Source: FOPINAR - 58 - ANNEX 10 Phge 2 of 2 ECUADOR PROJECT COMPLETION REPORT FOPINAR Staff Time Distribution by Activity and Region (LOANS 1879-EC and 2221-EC) (In Persons-Years) T-1-"-------FU--T-------- --------- Location / Nams Educ. Title Pronot Evil. Sprvsn Statist. Pol.Aral. Tech.Ass. Other TOTAL -------- -- ------- - ------ - ------ ------ ----- ------ ---- Next Staff Tist AvBATO BRANCH Pa'l: VtSCOE Manager 0.10 0.20 0.30 Da o Veastegai Engineer Analyst 0.10 0.05 0.10 0.05 0.30 Estebar. Hz!in Analyst 0.10 0.40 0.20 0.70 Sub-Total 0.30 0.65 0.30 0.00 0.00 0.05 0.00 1.30 MACHALA BRANCHI Enrique Larrea Manager C.20 0.20 0.10 0.50 Julio Busfos B.A. Analyst 0.70 0.10 0.80 Sub-Total 0.20 0.90 0.20 0.00 0.00 0.00 0.00 1.30 LJA BRACH Ernesto Rodriguez Ledo. Manager 0.20 0.20 0.10 0.50 Jast Ruiz Analyst 0.10 0.50 0.10 0.70 Sub-Total 0.30 0.70 0.20 0.00 0.00 0.00 0.00 1.20 ESNERALDAS BRANCH Luis Eceverria Econ. Manager 0.20 0.50 0.10 0.80 Sub-Total 0.20 0.50 0.10 0.00 0.00 0.00 0.00 0.80 R!0BAMA BRANCH Patricio Paredes Eng. Manager 0.20 0.50 0.10 0.80 Sub-Total 0.20 0.50 0.10 0.00 0.00 0.00 0.00 0.00 GRAND TOTAL 3.60 10.02 6.35 3.74 0.60 2.98 5.35 32.64 32ass 222220 282222 ZU2=2 s 2s2*a :as::: gfnus 882 Susary: 9UIT0 HEADQUARTERS 1.46 3.05 3.45 3.74 0.60 2.93 4.35 19.58 GUAYAQUIL BRANCH 0.72 2.50 1.90 0.00 0.0 0.00 1.00 6.12 CUENCA BROACH 0.10 0.40 0.00 0.00 0.00 0.00 0.00 0.50 MANTA BRANCH C.12 0.82 0.10 0.00 0.00 0.00 0.00 1.04 AMBATO BRANCH 0.30 0.65 0.30 0.00 0.00 0.05 0.00 1.30 MACHALA BRACH 0.20 0.90 0.20 0.00 0.00 0.00 0.00 1.30 LOJA BRANCH 0.30 0.70 0.20 0.00 0.00 0.00 0.00 1.20 ESMERALDAS BRANCI. 0.20 0.50 0.10 0.00 0.00 0.00 0.00 0.80 RIOBAMA BRANCH 0.20 0.50 0.10 0.00 C.00 0.00 0.00 0.90 RAND TOTAL 3.60 10.02 6.35 3.74 0.60 2.99 5.35 32.64 U2ZAMS U2Z132 228a2 2222 Z=agxa amsza 2X*3*3 333VR* Percentages 11.03 30.70 19.45 11.46 1.84 9.13 16.39 100.00 Adjusted Percentages 13.19 36.72 23.27 13.70 2.20 10.92 100.00 a..... us.... 2=... a..... *s.... 223233 CUBAs .....= Source:FOPINAR - 59 - ANNEX 11 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Operations by Financial Intermediaries (Loan 1879-EC) (thousands of sucres) Number of % of Total Institution Operations Credit Disbursement Disbursement Banco de Fomento 380 214,728.9 191,110.m 22.89% Banco del Progreso 3 2,400.0 2,070.0 0.24% Banco Amazonas 3 9,913.4 8,922.0 1.06% Banco del Austro 5 7,520.0 6,768.0 0.81% Banco del Azuay 3 4,697.9 4,210.1 0.50% Banco Continental 8 19,194.0 15,699.6 1.88% Bco. Credito Hipotecario 2 2,500.0 2,250.0 0.26% Banco de Descuento 3 5,610.0 5,049.0 0.60% FILANBANCO 1 3,550.0 3,195.0 0.38% Banco de Guayaquil 13 15,790.8 14,211.8 1.70% Bco. Ind. y Comercial 4 19,094.0 17,184.0 2.04% Banco de achala 1 3,500.0 3,150.0 0.36% Banco del Pacifico 32 84,858.0 76,052.2 9.10% Banco Popular 12 23,794.3 21,415.3 2.56% Banco de Prestawos 15 26,222.0 23,560.0 2.82% Banco La Previsora 1 540.0 486.0 0.06% Banco del Tungurabua 2 7,000.0 6,300.0 0.75% Banco de la Produccion 10 38,978.0 35,080.2 4.25% Caja de Cred. Agricola 2 9,920.C 8,928.0 1.07% Banco de Cooperativas 2 7,180.0 6,462.0 0.77% TOTAL BANCOS 502 506,991.3 452,103.5 54.10% FINANSA 18 50,480.0 45,432.0 5.54% FINANCIERA DE GUAYAQUIL 10 54,350.0 48,915.0 5.85% FINACIERA DEL AUSTRO 15 17,500.0 15,750.0 1.88% FINANCIERA IBEROAMERICA 20 44,953.5 40,458.1 4.84% FINANCIERA ANDINA 6 25,650.0 23,085.0 2.76% AMERAFIN 1 6,250.0 5,625.0 0.67% FINANSUR 15 49,840.0 44,856.0 5.37% FINANCIERA MANABI 64 178,114.9 158,612.6 18.99% TOTAL FINANCIERAS 149 427,138.4 382,733.7 45.90% GRAND TOTAL 651 934,129.7 834,837.2 100.00% Source: FOPINAR - 60 - ANNEX 12 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Operationa by Financial Intermediaries (Loan 2221-EC) (thousands of sucres) Number of % of Total Institution Operations Credit Disbursement Disbursement Banco de Fomento 2,589 2,041,199.0 1,820,- 7.0 49.8% Banco del Progreso 18 31,420.0 28,278.0 0.8% Banco Amazonas 17 44,845.5 40,361.0 1.1% Banco de los Andes 2 2,500.0 2,250.0 0.1% Banco del Austro 13 35,600.0 32,040.0 0.9% Banco del Azuay 16 87,469.8 78,722.8 2.2% Banco Bolivariano 1 970.0 873.0 0.0% Banco Continental 10 53,767.2 46,569.4 1.3% Bco. Credito Hipotecario 1 7,980.0 7,182.0 0.2% Banco de Descuento 1 9,500.0 8,550.0 0.2% FILANBANCO 27 174,553,0 156,937.7 4.3% Banco de Guayaquil 41 137,854.9 124,069.4 3.4% Bco. Ind. y Comercial 13 68,200.0 61,380.0 1.7% Banco de Loja 1 4,000.0 3,600.0 0.1% Banco de Machala 9 27,100.0 24,390.0 0.7% Banco del Pacifico 99 309,938.7 273,223.4 7.5% Banco del Pichincha 7 37,901.0 34,110.9 0.9% Banco Popular 13 54,360.0 48,775.5 1.3% Banco de Prestamos 22 77,210.4 69,489.5 1.9% Banco La Previsora 29 42,912.1 38,525.6 1.1% Banco del Tungurahua 2 9,229.0 8,306.1 0.2% Banco de la Produccion 22 124,069.8 111,446.8 3.0% Caja de Cred. Agricola 2 18,048.1 14,305.9 0.4% Banco de Cooperativas 15 52,750.0 47,475.0 1.3% Banco de America 1 9,280.0 8,352.0 0.2% Banco Consolidado 3 22,550.0 20,295.0 0.6% TOTAL BANCOS 2,974 3,485,208.5 3,110,276.0 85.2% COFIEC 7 31,700.0 28,530.0 0.8% FINANSA 11 44,590.0 40,131.0 1.1% ECUFINSA 4 20,425.0 18,382.0 0.5% FINANCIERA DE GUAYAQUIL 12 87,000.0 78,300.0 2.1% FINACIERA DEL , iTRO 19 39,852.0 35,866.8 1.0% FINANCIERA IBEROAMERICA 44 228,142.0 204,692.8 5.6% FINANCIERA ANDINA. 6 17,500.0 15,750.0 0.4% FINANSUR 26 119,074.0 107,166.6 2.9% FINANCI TA MANABI 4 9,900.0 8,910.0 0.2% FINEC 4 9,204.0 8,283.6 0.2% TOTAL FINANCIERAS 137 607,387.0 546,012.8 14.8% GRAND TOTAL 3,111 4,092,595.5 3,656,288.8 100.0% Source: FOPINAR - 61 - ANNEX 13 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Supervision by Size of SSE and Region Supervision by Size of SSE Size of Enterprise Loan 1879-EC Loan 2221-EC No. Supervision % No. Supervision % Up to S/. 625.000 57 38.26 169 45.55 S/. 0.6 to S/. 1.2 million 22 14.77 60 16.17 S/. 1.2 to S/. 8.0 million 69 46.30 121 32.61 S/. 8.0 to S/. 16.0 million 1 0.67 21 5.67 TOTAL 149 100.00 371 100.00 Supervision by Region Loan 1879-EC Loan 2221-EC Azuay 5 2 Carchi 1 17 Chimborazo - 1 Cotopaxi 1 - El Oro 8 27 Esmeraldas 6 31 Guayas 5 22 Imbabura 25 30 Loja 9 6 Manabi 42 79 Los Rios 3 29 Pastaza - 3 Murana Sanciago 1 Pichincha 34 98 Tungurahua 9 26 TOTAL 149 371 Source: FOPINAR ECUADDR PROJECT COMPLETION REPORT FOPINAR: Summary of Operations 1981-87 Loans 1879-EC and 2221-EC (thousands of Sucres) 1131 I3i 1133 3ll( 1985 1133 ISit Total 1. ANOUIT 1. AOIT 1. ANON? U. AOGIT? I. ANOUIT 1. ANMI 1. AN6IT APROALSI A LOANS 131 403,610.41 550 621,861.15 713 663,195.13 1152 1,T0,81.43 108? 2,043,131.1 I3 112,50.31 I 2,100.10 5,023,911.83 SQOITY IIVISTHEI 320,012.T3 501,511.22 532,305.10 185,215.30 1,193,649.1 75,15.40 310.10 3,415,368.90 CPI 363,103.44 565,048.13 595,5144.4 1,051,642.00 1,821,235.42 181,24.45 2,525.60 4,508,336.80 IF 10,576.95 64,313.25 68,250.52 111,254.11 213,194.26 11,604.13 230.60 518,679.60 if 2I3,181.13 401,649.93 431,414.04 664,835.02 1,023,151.64 66,611.40 3gg.1g 2,882,743.82 01111 LOAIS 31,624.99 105,941.25 94,811.85 120,380.73 161,611.22 3,161.00 532,625.07 DIhBUhhINhITS. LOASs 331,441.75 531,911.56 624,161.37 1,050,417.45 2,162,583.6t 243,161.11 13,185.s0 5,019,634.85 IU00" INVISTNINTS 5,366.05 22,611.1t 119,461.90 254,205.05 435,573.12 1T3,2.99 1,015,235.2 .2,616,300.90 COLCTIONS 331,515.10 566,626.31 512,284.05 9?9,809.16 2,023,166.32 11,531.52 13.69 4,553,162.75 SiAc: FOPINAR - 63 - ANNEX 15 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Operations By Size of SSE and Size of Loan 1981-87 (millions of sucres) Number of Amount of % of Total Operations Loans Disbursement Disbursement Size of SSE a) Micro-SSEs 3,189 1,187.0 1,050.3 9.93 b) 0.1 up to 1.2 million 827 1,222.1 1,098.0 10.38 c) 1.2 up to 8.0 million 2,028 6,367.1 5,629.6 53.22 d) 8.0 up to 21.0 million 407 3,134.4 2,800.0 26.47 TOTAL 6,451 11,910.6 10,577.9 100.00 Size of Loan a) - up to 1.0 million 3,982 1,385.8 1,233.3 11.66 b) 1.0 up to 5.0 million 1,835 4,568.6 4,045.3 38.24 c) 5.0 up to 8.0 million 377 2,595.5 2,309.2 21.33 d) 8.0 up to 21.0 million 257 3,360.7 2,990.1 28.27 TOTAL 6,451 11,910.6 10,577.9 100.00 =uI = Source: FDPINAR ECUADOR PROJECT COMPLETION REPORT FOPINAR: Total Operationa by Economic Sector 1981-87 (thousands of sucres) No. of Loan Sectora Loan. Amount Disbursements 1 Pesca M.E.P. 547 1,133,741 1,015,532 9.60 Productos alimenticios excepto bebidas 764 1,853,264 1,631,212 15.42 Productos alimenticios diversos 152 483,118 423,641 4.00 Industrias de bebidas no alcoholicas 13 49,484 44,536 0.42 Fabricación de textiles 366 896,445 798,943 7.55 Fabricación de prendas de vestir 1,217 875,414 780,580 7.38 Industria del cuero excepto el calzado 83 165,720 148,517 1.40 Fabricación de calzado de cuero 190 159,447 142,077 1.34 Industria de madera y corcho, excepto muebles 241 411,462 367,413 3.47 Fabricación de muebles de madera 722 653,843 582,252 5.50 Fabricación de papel y productos de papel 18 123,067 106,386 1.01 Imprentas, editoriales y anexas 55 210,000 188,994 1.79 Fabricación de substancias quimicas industriales 46 264,642 237,931 2.25 Otros productos quimicos 65 251,548 266,041 2.14 Fab. derivados petroleo, carbón 1 20,000 18,000 0.17 Fabricación de productos de caucho 28 82,492 74,142 0.70 Fabricación de productos de plástico N.E.P. 119 600,350 533,713 5.05 Fabricación de objetos de barro, loza, porcelana 54 112,686 101,238 0.96 Fabricación de vidrio y objetos de vidrio 22 55,933 50,188 0.47 Otros productos minerales no metOlicos 396 556,583 495,691 4.59 Industrias de hierro, acero 10 49,437 44,118 0.42 Industrias de metales no ferrosos 4 5,718 5,146 0.05 Fabricación de productos metálicos 742 1,112,723 991,328 9.37 Construcción de maquinarias y equipo 117 321,152 286,111 2.70 Construcción de aparatos el6ctricos 44 164,165 147,718 1.40 Construcción de material de transporte 27 83,062 74,296 0.70 Fabricación de relojes, aparatos fotográficos, opt. 7 34,242 30,818 0.29 Otras industrias manufactureras 102 133,019 119,176 1.13 Restaurantes 149 399,689 346,654 3.28 Hoteles 106 521,612 453,044 4.28 Comunicaciones 1 2,590 2,331 0.02 Otros 43 124,002 110,159 1.05 TOTAL 6a451 11.910.652 10,577,926 100.00 Source: FOPINAR - 65 - ANNEX 17 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Total Operations by Region 1981-87 (millions of sucres) Number of Amount of % of Total Province Operations Credit Disbursement Disbursement 1. Azuay 679 847.3 756.0 7.15 2. Archipielago Colon 10 71.8 64.5 0.61 3. Bolivar 35 24.8 22.1 0.21 4. Cantar 76 61.7 55.3 0.52 5. Carch' 77 26.0 21.8 0.21 6. Chimborazo 170 210.1 187.3 1.77 7. Cotopaxi 130 217.2 193.6 1.83 8. El Oro 335 428.5 384.7 3.64 9. Esmeraldas 224 305.9 266.9 2.52 10. Guayas 908 3,091.5 2,742.6 25.93 11. Imbabura 455 494.5 433.5 4.10 12. Loja 585 353.9 316.8 2.99 13. Los Rios 413 1,030.4 900.2 8.51 14. Manabi 375 716.0 636.1 6.01 15. Morona 79 58.0 51.9 0.49 16. Napo 62 102.4 90.2 0.85 17. Pastaza 51 65.2 58.1 0.55 18. Pichincha 1,343 3,089.2 2,759.4 26.09 19. Tungurahua 413 692.3 676.9 5.83 20. Zamora 31 24.0 19.9 0.19 TOTAL 6,451 11,910.7 10,577.9 100.00 Source: FOPINAR - 66 - ANNEX 18 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Total Operations by Financial Intermediaries 1981-87 (thousands of sucres) Number of Loan % of Total Institution Operations Amount Disbursement Disbursement 1. Banco de Fomento 4,991 5,162,410 4,533,511 42.86% 2. Banco del Progreso 45 254,532 228,722 2.16% 3. Banco Amazonas 21 62,259 55,189 0.52% 4. Banco de los Andes 5 34,000 30,600 0.29% 5. Banco del Austro 36 123,080 110,772 1.05% 6. Banco del Azuay 44 260,271 232,516 2.20% 7. Banco Bolivariano 4 14,290 12,861 0.12% 8. Banco Continental 42 217,521 192,373 1.82% 9. Bco. Credito Hipotecario 3 10,480 9,432 0.09% 10. Banco de Descuento 5 22,110 19,899 0.19% 11. FILANBAN00 57 480,958 428,419 4.05% 12. Banco de Guayaquil 92 364,246 327,821 3.10% 13. Bco. Ind. y Comercial 36 241,044 216,699 2.05% 14. Banco Internacional 3 34,000 30,600 0.29% 15. Banco de Loja 1 4,000 3,600 0.03% 16. Banco de Machala 14 65,280 58,752 0.56% 17. Banco del Pacifico 238 1,040,501 929,663 8.79% 18. Banco del Pichincha 85 452,845 407,567 3.85% 19. Banco Popular 43 179,766 161,642 1.53% 20. Banco de Prestamos 59 284,748 255,334 2.41% 21. Banco La Previsora 130 461,953 411,136 3.89% 22. Banco del Tungurahua 9 44,751 40,276 0.38% 23. Banco de la Produccion 54 341,523 307,154 2.90% 24. Caja de Cred. Agricola 13 80,977 70,942 0.67% 25. Banco de Cooperativas 47 133,265 119,885 1.13% 26. Banco de America 1 9,280 8,352 0.08% 27. Banco Consolidado 7 67,790 61,011 0.58% 28. COFIEC 11 69,100 62,190 0.59% 29. FINANSA 30 111,064 99,958 0.94% 30. ECUFINSA 9 62,155 55,939 0.53% 31. FINANCIERA DE GUAYAQUIL 25 11.450 145,305 1.37% 32. FINACIERA DEL AUSTRO 50 79,252 71,327 0.67% 33. FINIBEF 83 425,208 382,052 3.61% 34. FINANDES 18 75,950 68,355 0.65% 35. AMERAFIN 2 22,250 20,025 0.19% 36. FINANSUR 48 198,814 178,933 1.69% 37 FINANCIERA MANABI 83 195,974 173,717 1.64% 38. FINAN DE LA REPUBLICA 2 31,351 28,215 0.27% 39. FINEC 5 30,204 27,184 0.26% TOTAL 6,451 11,910,652 10,577,926 100.00% Source: FOPINAR - 67- ANNE 19 ECUADOR PROJECT COMPLETION REPORT FOPUIAR: Interest Rates 1981-87 (Loans 1879-EC and 2221-EC) (thousands of sucres) Disc.uant Mate ~ 1TÉ. MZR0 4 8E 1992 P<ggEa EoPREa tinicio del Prgra=a Fas de 2 & 5 at 1?.0% 12.0 2.n .14.0! pil de i a I at:s ¢.0i 12.: 3.0! 15. Pas de I a 10 als 10.0c 12.0, .0! 16.?! Has de 2 a 10 atu, 6.07. 12.0! - 1.! FEW C @ In ÆrEim F~E Kas e 2 5 aose 12.01 14.01 2.01 le.(' Has de ' a atos 12.01 15.01 2.01 17.t Has de I a 10 ate 12.01 16.0 2.01 12.0 IIICROEDPRESA Has de 2 A 10 aø 6.0 12.0 • o1CIErnRE 30 D 1982 PG'KE.A EffESA Has de 2 & 5 #tos ti.0 '5.0 2.01 17.?! nas de ! 4 e aas 13.01 IU.C 2.0. 19.2 Pas de øi 10 dtt 13.4! 17.0% 2.0 t 9Å. HnisAESA Hai de 2 @ le dt 9.01 15.0! - nas de 2 a 3 atv. 14.01 16.01 2.0 11.ý! Pas de I 1 4 atu 14.! l6.W. 2.0! l .5 as de 4 a 5 atd s 15.0K 17.2 2.c0 -9. " Has 5 a * ats 15.1 1^-.0! 2.0 2t.02 Nas .e I al1 a t 15.: 19.01 :.01 2.0z nas !e 2 a 10 se 10.0 1,0. - .. '* 05'Ji 17M to ÆØ'9A EcmcESA Has de 2 å 6 ats 18.0 2C.0 2.t :.. Pa le 6 * 10 as 19.?! 21.0i m.0 22.3i Pin de 2 1 1 ea 1?.01 !e. •. P22 19 et 19: mA i n!muC Sa In.ciales ruajustables) Has de 2 & 6 at& o 21.01 23.« 2.0: 23.01 as de 6a 10 tt 20.01 23.0 2.0 ...* aRle 21 F~ 9L V R ~m11mRESAS Initialn freajustablesi gas de 2 a 6 as 19.01 23.0! - 23.01 has de 6 o e 1.ft 23.01 - 23.01 MASIDC 12 0E11917 FEUERA I ØRE9RE5S Iniciales fre#jstalesl ,Ha deZ2a 68Dmo 22.0! 26.0! *0 Has de 6 i 10 alog 21.0! 26.0! - 26.2 U0V1E'hIE 3031 1917 PEGUENA ' H!R9ESA lnsciales <reajustab!esi 1as de 2 8 6 ale 24.0. 28.01 2I.?. Has de 6 i 10 au 23.0! 21.0! - 2!. Source: FOPINAR ECUADOR PROJECT COPLETION REPORT FOPINAR: Income Statement 1981-87 (mill ion, of sucres and aillion of USI) Historical Yar ending Dec. 81 191 1982 1983 1984 196 1986 1987 Si- ~! $/- US* 51 -M S. US* 51 US* 51 USII S. t_u FOREIN EXCHAN~E 26." 8.w6 64.82 67.86 96.60 147.68 26.m -Interst on loans 19.34 9.41 6.6 1.82 18.46 2.66 218.16 3.29 427.M6 4.48 68.86 4.12 1,621.59 4.09 Exponses -Financial charge _6.7 6.27 8I.N 1.62 88.76 1.17 149.2 2.2 281: . 2.94 4M.1 _ 2.77 848."6 3.89 C Financiol marg'n 3.69 6.14 26.78 @.U6 74.76 1.88 67.60 1.N 144.6 1.60 199.MI 1.36 178 l1 9.69 Othr Incomo and exse. -Inco. fro invot.s. 9.08 6.82 1.78 9.65 2.M 9.64 5.56 1.12 9.6 6.01 1.16 6.61 129.87 0.62 -Ad. expensgs 7.69 9.36 6.6 6.20 16.79 9.2M 18.16 6.19 16.46 6.19 28.46 6.19 47.41 6.19 -Other Expens.. 9._8 ø._f 7.26 .22 _.U . 14.76 ._22 .19 .62 U.20 .68 75.96 ...1» Total ExpC-'4. 7.59 6.3 13.76 6.41 19.66 6.36 27.1 6.41 78.6 .81 111.68 - .78 128.81 6.49 Total Inc.. 16.94 6.44 82.2 1.67 146.46 2.58 272.3M 4.61 428.46 4.44 669.79 4.18 1,161.46 4.81 Total Expens 14.84 67 47.6 1.48 88.8 1.58 169.61 2.61 864.W 81U 52.46 8.58 971.39 a89 Net ProfIt (Los ) .4 (4.14) 14.76 6.44 57.16 1.96 12.M6 1.62 64.16 0.66 89.86 m .61 1M.87 9.72 .Source: FOPINAR - 69 - ANNEX 21 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Asset Distribution 1981-87 Current Assets Long-term Loans U 889 n L 6888 S U 3080 , C R 28101 c S 1888e tutst II i als 1 1 fill :....si .t.t 81 82 83 84 85t 86 87 YeRRS ECUADOR PROJECT COMPLETION REPORT FOPINAR: Balance Shest. 1981-87 (millions of sucres and aIllIon of USS) Historical Year endin Dec. 81 1961 1962 198 1964 1985 1988 1987 /. .L US$ AL. U_" . US$ S/. S/. S AL .!L. use FOREIGN EXCHANGE 26.96 88.86 64.82 07.65 98.8 147.80 260.0g ASSETS Current As**tW -Cash 45.58 1.82 7.64 0.24 76.94 1.81 167.88 1.56 17.74 6.16 149.88 1.02 168.66 8.41 -Current Loans 27.89 1.12 166.47 8.17 228.96 4.16 886.84 5.01 486.89 4.09 611.61 5.49 1,884.28 5.84 -Interest recel. 7.68 0.28 28.55 6.71 44.26 0.62 77.87 1.14 187.19 1.42 184.78 1.25 359.88 1.44 -Other current asset 1.86 0.67 88.78 1.01 26.77 5.26 2M2.22 2.96 89.55 4.41 215.26 1.40 279.26 1.12 -Less Provialons (7.81) (6.11) (10.96) (0.16) (1.600) (0.97) (14.6) (0.64) Total Current Assets 62.21 8.29 176.84 5.12 627.89 11.6 78.20 11.21 684.67 6.89 1,856.62 9.15 2,666.26 8.27 Long- term loans 804.19 12.17 762.60 22.98 1,129.00 26.76 1,768.64 26.67 8,286.88 88.54 3,711.87 25.14 8,666.53 27.28 Differ charges 6.84 0.68 9.81 0.61 TOTAL ASSETS 886.40 15.48 984.8 28.05 1A757.78 82.86 2 J211. 87.27 8.961.2 40.48 64062.19 84.8 0,874.79 s5.s Liabilities and Equity -Current Liabilities 9.19 0.87 18,87 6.55 226.09 4.68 97.14 1.48 65.68 6.89 948.99 6.41 793.28 8.17 -Long-term loans 10.88 8.48 846.41 19.47 1,212.06 22.82 1,719.42 25.84 8,689.ft 81.49 3,260.48 22.62 7,685.62 28.14 Share Capital 215.98 8.64 262.68 7.59 252.68 4.65 562.88 8.14 58.9W 5.76 6W.W6 8.73 560.11 2.26 Retained Earnings 6.42 6.02 14.68 0.44 71.76 1.A2 169.01 2.86 228.29 2.84 315.62 2.14 495.76 1.96 TOTAL EQUITY 218.36 6.65 267.8 6.68 824.41 5.97 712.24 16.50 776.29 8.64 686.62 5.86 1,645.79 4.18 TOTAL LIABILITIES 88.40 1.40 984.ft 28.65 1.757.70 82.86 24528.0 87.27 8,961.20 4.43 5A62.19 M.8 IL974.9 86.8 AND EQUITY - Source: FOPINAR s ws; : : isi ty i s R * * * { i - - -3s = : a - . 5 . ." :~I a i - --- - - -- Ie - - - . IEPP r -:. "tu- - • eaaeèe **as sUs2 - es - ø * +.5. C = ---'~ -rs - - s. 83- P - - r * øh h 5> 0E 0 # g as • - - ø. - - - 0 . . • • • å 0 ppp - - I, 1 E ' g i~ a' h '0 0e g SS* 3 3 I 3æ g ji -dNE E 4 0- - rf ?0? -- u - - 72 - ANNEX 24 Page 1 of 4 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Technical Assistance Projerts 1982-87 (thousands of sucres) Name of Activity and Agency Total Prolect Finance 1982 Cost FOPINAR Others 1. Primer Programa de Capacitación en Contabilidad Básica para Artesanos. CENAPIA 259.5 60.0 199.5 2. Conformación de la Cooperativa de Ahorro y Crédito. Cámara de Pequeños Industriales de Chimborazo. 182.8 86.0 96.8 3. Procesamiento de la Encuesta a la Pequeña Industria. Asociación Na- cional de Empresarios del Ecuador. ANDE. 90.0 90.0 - 4. Programa sobre Desarrollo Gerencial y Administración de Empresas. Cámara de Pequeños Industriales del Azuay. 463.5 196.5 267.0 5. Programa sobre Actividades de la productividad en la Pequeña Industria. FENAPI y otras. 634.1 134.0 500.1 6. Segundo Programa de Capacitación en Contabilidad Básica para Artesanos. CENAPIA. 138.3 60.0 78.3 7. Conformación de las Cooperativas de Ahorro y Crédito. Cámara de Pequeños Industriales de Pichincha. 441.3 110.0 331.3 8. Encuesta para la Elaboración del Directorio Nacional de Pequeña Industria. FENAPI. 378.0 180.0 198.0 1982 Total 2.587.5 916.5 1,671.0 - 73 - ANNEX 24 Page 2 of 4 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Technical Assistance Projects 1982-87 (thousands of sucres) Name of Activity and Agency Total Proiect Finance 1983 Cost FOPINAR Others 9. Conformación de la Confederación Andina de Pequefia y Mediana Industria. FENAPI 182.0 53.0 129.0 10. Programa de Gestión Tecnológica- Plan de Seguimiento en el Sector Metalmécanico. FENAPI. 508.0 178.5 329.5 11. Construcción del Centro de Capa- citación de Esmeraldas. Cámara c Pequeños Industriales de Esmeraldas. 751.7 250.0 501.7 12. Primera fase del Programa de Capa- citación en comercialización de artes.nias. Coop. de Servicios Educacionales. ILALO. 298.9 128.0 170.9 13. Programa de apoyo a la microempresa del sector suburbano de la ciudad de Guayaquil. CEPESIU. 910.0 350.0 560.0 1983 Total 2,650.6 959.5 1,691.1 1984 14. Segunda Fase del Programa de Capacitación en Comercialización de Artesanlas. Coop. de Servicios Educacionales. ILALO 298.0 128.0 170.0 15. Censo-Encuesta a la Pequefla Industria del Guayas. Cámara de Pequeflos Industriales del Guayas. 1,268.0 200.0 1,068.0 16. Programa de Capacitación para Empre- sarios y Dirigentes de la Pequefia Industria. FENAPI. 345.0 105.0 240.0 1984 Total 1,911.0 433.0 1,478.0 - 74 - ANNEX 24 Page 3 of 4 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Technical Assistance Projects 1982-87 (thousands of sucres) Name of Activity and Agency Total Proiect Finance 1985 Cost FOPINAR Others 17. Programa Integral de Asistencia Técnica, Cámara de Pequedos Industrial3s de Chimborazo 497.0 150.0 347.0 18. Procesamiento del Censo-Encuesta a la Pequefla Industria del Guayds. Cámara de Pequeflos Industriales del Guayas. 680.0 260.0 420.0 19. Encuesta a la Pequefta Industria de Manabi. Cámara de Pequefos Indus- triales de Manabi. 630.0 270.0 360.0 20. Encuesta NLcional a la Pequefía Indus- tria. CENAPIA, SECAP, BNF, CFN, Bco. Central. 9,210.3 748.3 8.462.0 21. Programas de Capacitación a la Micro- empresa de la provincia del Guayas. Fundación E. Espejo. 1,457.0 300.0 1,157.0 22. Programa Integral de Asistencia Técnica. Cámara de Pequedos Indus- triales de Tungurahua. 970.0 250.0 720.0 1985 Total 13,444.3 1,978.3 11,466.0 - 75 - ANNEX 24 Page 4 of 4 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Technical Assistance Projects 1982-87 (thousands of sucres) Name of Activity and Agency Total Proiect Finance 1986 Cost FOPINAR Others 23. Promoción, Investigación, y Capacitación con Microempresas del sector informal urbano de la ciudad de Guayaquil. CEPECIU. 3,490.0 300.0 3,190.0 24. Apoyo y Asistencia Técnica a los Pequefíos Industriales de la zona. Cámara de Pequeflos Industriales de Cotopaxi. 760.0 155.0 605.0 25. Apoyo y Asistencia Técnica a los Pequefíos Industriales de la zona. Cámara de Pequeflos Industriales de Imbabura. 621.6 130.0 491.6 26. Publicaciones a ser distribuidas entre asociados. FENAPI. 720.0 240.0 480.0 27. Cz.pacitación al sector artesanal Instituto Andino de Artes Populares. IADAP. 983.8 159.2 824.6 1986 Total 6.575.4 984.2 5.591.2 1987 28. Impresión de Manual Básico de Contabilidad Subsecretarial de Artesanlas. 470.0 140.0 330.0 29. Programas de Desarrollo y Asistencia Técnica. Cámara de Pequetía Industria de Pastaza. 860.0 200.0 660.0 1987 Total 1.330.0 340.0 990.0 - 76 - ANNEX 25 ECUADOR PROJECT COMPLETION REPORT FOPINAR: Technical Assistance by Activity and Participant (LOANS 1879-EC and 2221-EC) 1981 1982 1983 1984 1985 1986 1987 Total 1. Numbers of Courses and/or Seminars 1 5 17 42 33 71 75 244 2. Number of Locations 1 4 3 36 22 35 43 144 3. Number of Participants 30 157 478 973 821 2,226 2,535 7,220 FOPINAR: Technical Assistance Cost (thousands of sucres) 1982 1983 1984 1985 1986 1987 Total FOPINAR 185 82 510 762 569 2,206 4,314 Source: FOPINAR 胤 一