Argentina - Enterprise Export Development Project

 ICRR 10726 Report Number : ICRR10726 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 07/25/2000 PROJ ID : P038883 Appraisal Actual Project Name : Enterprise Export Project Costs 74 48 Development Project US$M ) (US$M) Country : Argentina Loan/ US$M ) 38.5 Loan /Credit (US$M) 25 Sector (s): Trade Cofinancing 0 0 US$M ) (US$M) L/C Number : L3960 Board Approval 96 FY ) (FY) Partners involved : Closing Date 07/31/1998 09/30/1999 Prepared by : Reviewed by : Group Manager : Group : 2. Project Objectives and Components a. Objectives The primary objectives of the project were to help increase the international competitiveness of small and medium enterprises (SMEs) and to improve the performance of export -related public agencies, thus facilitating export growth . b. Components The project had two components : (i) an Enterprise Assistance component (US$ 32.7 million), which consisted of a) a cost- sharing grant scheme to cover up to 50 % of the costs of export-related consulting and other services to improve the international competitiveness of SMEs, and b ) the creation of a "Directory of Consultants and Market Information Suppliers" to ensure easy access to information about export -related services worldwide; (ii) an Institutional Strengthening component (US $5.8 million) to improve the performance of agencies involved in the export process and focused on export procedures, quality control, export promotion policy, and commercial promotion services. c. Comments on Project Cost, Financing and Dates At appraisal, the total project cost was estimated at US $ 74.2 million, of which US$ 38.5 million to be financed by the Bank loan. The project was approved on November 28, 1995. There were some delays and the closing date was extended by about a year to September 30, 1999. The latest estimated project cost was US $ 48 million, of which US $ 25 million was financed by the Bank loan . The remaining US $ 13.5 million of the loan will be cancelled. Bank preparation, supervision and completion costs were 122.7 staff weeks equivalent to US $ 0.54 million. 3. Achievement of Relevant Objectives: The objective of helping to increase the competitiveness of a group of SMEs was substantially achieved . Compared to a control group of similar enterprises not assisted by the program, the assisted enterprises consistently showed that they were more likely to adopt export -oriented measures and had better export performance . However, while the program met its objectives in terms of number and amounts of cost -sharing grants approved, it did not in terms of grants disbursed, largely because the 1999 Brazilian devaluation disrupted the export plans of a number of enterprises. The "Directory of Consultants and Market Information Suppliers " was produced with funds other than those allocated for it under this project . The second objective of improving the performance of export -related public agencies was only partially achieved : while the institutional infrastructure for quality control and for commercial services was strengthened, no progress was made in the areas of export procedures and export promotion policy . 4. Significant Outcomes/Impacts: Argentina needs to broaden its export base and the project made a substantial contribution towards that end, as shown by the Beneficiary Survey results . In addition, the strengthening of the Quality Certification system bodes well for the future development of exports . 5. Significant Shortcomings (including non-compliance with safeguard policies): The grant scheme was managed by a private operator, an arrangement deemed necessary to ensure independence in the approval of grants. However, the respective roles and responsibilities of the private operator and the overseeing project administration unit were not defined as precisely as they could have been, leading to delays . 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Modest Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. 7. Lessons of Broad Applicability: The primary lesson of general applicability is that the management of a publicly financed program by a private entity will only work smoothly if the contract between the Government and the entity is clear and simple . This is true also with regard to the use of a performance -linked incentive scheme in a management contract : it should be clear and concise with realistic targets, so as to avoid excessive emphasis on quantity over quality . 8. Assessment Recommended? Yes No 9. Comments on Quality of ICR: The quality of the ICR is satisfactory . It is an Intensive Learning Model ICR, and its preparation benefited from two stakeholder workshops to discuss the results of the project and the lessons learned from it . The first workshop was with a sample of assisted enterprises and the main executing agency, while the second was with the main as well as secondary executing agencies . A major outcome of the workshops was that SME exporters found the project to have been extremely useful, and strongly supported a follow -up operation. Unfortunately, there is no discussion in the ICR of a follow-up project, which had been envisaged from the beginning, except to say that the IDB is proceeding with financing for a similar scheme (para 43).