Morocco - Industrial Export Finance Project

 Industrial Export Finance Project Report No: ; Type: Report/Evaluation Memorandum ; Country: Morocco; Region: Middle East And North Africa; Sector: Financial Sector Development; Major Sector: Finance; ProjectID: P005452 The Morocco Industrial Export Finance project (IEFP), supported by Loans 28060-28067-MOR for US$70 million, was approved in FY87. The loans were closed on December 31, 1995, when US$66 million had been disbursed. The Middle East and North Africa Regional Office prepared the Implementation Completion Report (ICR), which does not include the Borrower’s contribution. The objectives of the IEFP were to: (i) expand the potential for manufactured exports by financing investments in export industries and developing export marketing capabilities; (ii) improve the economic and administrative conditions under which exporters operate; and (iii) strengthen the promotion and appraisal capabilities of financial and other institutions concerned with export expansion. The first objective was successfully achieved. This is indicated by the satisfactory pace of utilization of the Bank loans, the improved value-added in several industrial sectors such as textiles, garments and agribusiness, and the country’s overall success in exporting. However, participating banks failed to recycle funds as the Bank did not properly supervise and assist the process. The second objective was not achieved as the Government was not convinced of the relevance of the policy reforms or the technical assistance intended to help exporters and agencies involved in trade facilitation and export promotion. On the whole, and in spite of some success in strengthening CPME (the Moroccan Center for Export Promotion), the project also failed to achieve its third objective of institutional capacity building. The ICR rates project outcome as unsatisfactory, sustainability as likely, institutional development impact as negligible, and Bank performance as unsatisfactory. OED agrees with all the ICR ratings except sustainability, which it rates as unlikely. The lack of recycling of funds, the absence of institutional reforms and the marginal improvement in the economic and administrative framework for exporters suggest that opportunities for sustainable development were not pursued. This export finance project provides two key lessons. First, when institutional development is central to the successful outcome of a project, this component must be well designed and timely. Second, poor supervision by the Bank is likely to lead to a poor outcome, as evidenced in this project by the borrower’s failure to recycle funds. The ICR is of satisfactory quality. It gives a good account of the project’s strengths and weaknesses. No audit is planned.