LAC SME Program The core objective of the LAC SME Program will be to promote private sector development through support to SMEs with the aim of fostering job creation and reducing poverty in the host countries.      The program will develop projects that can lead to the creation of replicable models with the establishment of strong partnerships between donors, the government, the local private sector, and other relevant actors, with IFC as the catalyst.    The program will focus its efforts on implementation activties in the following core areas:    -  Supporting the development of clusters in specific sectors    	- in Bolivia - wood, tourism, llama, wool, quinoa, textiles   	- in Peru - tourism, textiles, white maize   	- in Honduras - wood, tourism, and ornamental plants   	- in Nicaragua - tourism and wood-    Improving the business enabling environment by supporting selected government red tape reduction initiatives (e.g. registration and licensing simplification);   -  Improving the capacity of financial institutions to better serve the SME market;-     -  Linkage programs to be developed around IFC investments, where the SME Department''s linkages team would work to build the capacity of small and medium business to provide inputs and services to larges companies;-     Special Programs  - depending on donor support, a number of additional activities with innovative foundations, NGOs, universities etc. are envisaged.  This will include support to microfinance institutions for capacity building, training, roll-out of new technologies, i.e. mobile ATM machines with thumb print identification, and SME development programs to link micro rural producers into urban and export markets    The program will be executed with the benefit of the best practices available from other project development facilities and the Private Enterprise Partnership (PEP) model that implements technical assistance to SMEs in the former Soviet Union countries.    IFC''s Role:        IFC has taken the lead in designing and fund-raising for the program, and once established, the World Bank Group SME Department in close collaboration with the IFC LAC regional Department will manage the program on behalf of IFC and other donors.  IFC''s role will be to transfer best practice in the thematic areas envisaged for support and to use the experience accummulated in SME development through other PDFs and the PEP to support SMEs development in program countries.  IFC can also draw upon its strategic partnership with best practice partners ( for eg, FUNDES, ACCION, SEAF)  in areas ranging from business development services, SME finance to the enabling environment to develop cutting edge programs using these "best practice partners" experience worldwide.  Additionally, as part of the WBG, IFC is uniquely placed to create synergies between ongoing policy reform aimed at private sector development work supported by Bank PSD projects and  activities aimed at supporting SMEs.     Development Impact   :           The majority of the private sector firms in the region are SMEs and many operate in the informal sectors, largely due to the numerous constraints they face that are common across countries.  The program will help to address these constraints, promote robust SME sectors in these countries and foster much-needed job creation, which are essential requirements for poverty reduction in the region. Where applicable, prior to  each project''s commencement, IFC will take a baseline measure which will be used to assess the development impact throughout the life of the project as measured by its contribution to inter alia: market development, demand driven business development services, improvements in the business environment, increase in value added exports and local sales, and economic and social welfare (increased employment, poverty reduction).     IFC currently operations eight PDFs worldwide, which have provided high impact, targeted assistance to thousands of SMEs in diverse regions.  The program will build upon the experience and knowledge-base that has been accummulated in these operations.  It will benefit from the facilities-wide strengthening program now underway, which places more focus on cost recovery, domestic capacity building, sustainability, a broader range of service offerings, partnership, donor exit arrangements and metrics.    The program will also draw on the PEP model that IFC has established in former Soviet Union countries.  The Partnership has demonstrated that its technical assistance programs have shown positive results in creating job and in increasing local income, building financial market, improving corporate governance and environmental practices, and shaping legislation aimed at improving the investment climate.