SI-DFC

closed

The Small Scale Enterprise Credit Project will assist the Government of Ecuador to develop a more dynamic small scale enterprise (SSE) sector which will help generate employment, improve income and promote regional development. In order to help achieve these objectives, the project will make available a line of credit to the SSE sector of US$33.3 million. CFN will also manage a program of technical assistance to SSEs, and will train staff of interested financial institutions in evaluation and supervision of SSE projects. About 625 subloans averaging US$53,000 are expected to be made to SSEs whose fixed assets are no greater than US$350,000. There is a risk that delays in subloan financing will occur because the administrative mechanism for channelling resources is as yet untested. Agreements satisfactory to the Bank spelling out procedures and responsibilities which are to be signed between Central Bank and CFN and between CFN and each participating intermediary should reduce this risk. Moreover, to minimize further the risk, Bank staff will closely supervise the project, particularly during its start-up, as well as review the CFN-Central Bank administrative mechanism no later than six months after loan effectiveness and revise it if necessary.