ICRR 10233
                                                                                                Report Number : ICRR10233
                    ICR Review
                    Operations Evaluation Department




1. Project Data :
             OEDID:
             OEDID :    C2322
         Project ID :   P006153
      Project Name :    Agro-Export Development Project
            Country :   Bolivia
             Sector :   Agro-industry & Marketing
       L/C Number :     C-2322-BO
  Partners involved :   Govt. of Netherlands, Govt. of the Swiss Federation
       Prepared by :    Madhur Gautam, OEDST
      Reviewed by : Patrick Grasso
    Group Manager : Alain Barbu
       Date Posted : 01/11/1999

2. Project Objectives, Financing, Costs and Components :
Objectives : (i) develop the newly established Bolivian Export Foundation (BEF) as a private, autonomous,
self-financing organization, which would form financially sound, agro -based subsidiaries and joint ventures with
small- and medium-scale entrepreneurs and investors; (ii) introduce improved production, processing, marketing and
management technology to upgrade the capacity of Bolivian producers and exporters to compete in international
markets; (iii) expand agricultural production in an environmentally sound manner; and (iv) generate employment and
capital accumulation in order to improve the income and standard of living of poor farmers, women's groups, and
urban and rural laborers.
Components : The project was to finance: (i) operations of BEF, including its enterprise investment program, initially
expected to consist of five joint ventures and subsidiaries; (ii) the employment of an internationally recruited
management firm of four experts to help the BEF form and manage its enterprises and concurrently train their
Bolivian counterparts to take over the BEF at the end of the fifth year; and (iii) provision of technical assistance by
BEF to its investment enterprises in marketing, financial management and export .
Financing and costs :Project costs at appraisal were US$ 34.6 million equivalent, of which IDA provided US$ 22.5
million, Government of Netherlands US$ 8.9 million and the Government of the Swiss Federation US$ 3.2 million.
Final project costs were US$25.6 million. About US$6.1 million of the IDA credit was canceled at closing .

3. Achievement of Relevant Objectives :
The project only partially achieved its objectives . It helped in the institutional development of BEF as an autonomous
organization with capacity to exploit export potentials and effectively deal with business partners . Its financial
performance, however, has been poor . The project helped introduce new technologies and expand agricultural
production, but the achievements thus far have been limited . A number of the investments have failed; the
remaining enterprises are newly established and it is possible that their export potential has not been fully realized .
The direct impact of the project on employment and income generation has been less than expected . The main goal
of the project, the promotion of sound export -oriented subsidiaries has not been satisfactorily met, as the current
value of the portfolio (estimated at between US$8-12 million) is well below the levels of total investment (US$21.8
million). Only 9 of the original 30 enterprises are still active, and of these, the majority are at varying levels of risk .

4. Significant Achievements :
1. The development of BEF as an autonomous organization with capacity to evaluate business opportunities with
export potential and to deal with aggressive business partners .
2. The introduction of new technology in agro -export production activities, albeit limited .

5. Significant Shortcomings :
The poor quality of BEF's investment portfolio, despite very high levels of management and operational costs, with
no new investments in the pipeline . The project design was deficient in not including any performance monitoring
indicators.
6. Ratings :            ICR                      OED Review                Reason for Disagreement /Comments
               Outcome : Unsatisfactory          Unsatisfactory
     Institutional Dev .: Partial                Modest
         Sustainability : Likely                 Uncertain                 Sustainability depends on the
                                                                           performance of current portfolio and the
                                                                           ability to mobilize funds in the future . The
                                                                           prospects for both are uncertain at this
                                                                           time.
   Bank Performance : Deficient                  Unsatisfactory
      Borrower Perf .: Satisfactory              Satisfactory
       Quality of ICR :                          Satisfactory

7. Lessons of Broad Applicability :
The main lessons emerging from this project are the need to ensure that the project management has the relevant
business, rather than government, experience and that it has the necessary entrepreneurial skills to deal with local
operating environment and business relations . Particular attention should also be paid to the local legal framework
in which a proposed new entity has to operate .

8. Audit Recommended?         Yes     No

9. Comments on Quality of ICR :
The ICR is satisfactory, although a bit terse . There is an inconsistency between the text and the annex tables on the
amount of credit canceled at closing .