Ecuador

Between 1980 and 1996 the World Bank provided Ecuador with US$140.6 million in financing for small scale enterprises (SSEs) through four loans. The last project clo... Show More + sed in FY96. The principal aim of the SSE projects was to increase substantially the availability of term financing for micro and small firms, while improving the banking system's ability to lend to this sector. The SSE lending took place in the context of a growing dialogue between the Bank and the Government on financial sector and industrial policies. The first two projects were traditional financial intermediary loans, whereas the third and fourth projects included some policy conditionality and were implemented in conjunction with policy based lending designed to encourage the government to liberalize the financial sector and interest rates. The central findings of this study is that the SSE projects did not have a beneficial impact on development effectiveness. These projects, particularly the first three, fell short in all three criteria of relevance, efficacy, and efficiency, and they were not sustainable. They were very costly for the Government of Ecuador, and probably also had regressive distributional effects. The last project, which was approved in 1990, disbursed during a period of stabilization and adjustment, and for the first time, positive real interest rates were achieved. Show Less -