# _IFC’s project development facilities_

33. IFC has helped set up a number of project development facilities to, among other things, help entrepreneurs develop project ideas into bankable investment proposals and raise financing for these projects. They are also expected to provide technical assistance, management consulting services, and training. A 1995 review of four such facilities found mixed results. The facilities had helped develop over 240 projects and raise $300m out of the $500m in financing required for the ventures.<sup>21</sup> Most assisted enterprises were SMEs and appeared to do better than comparable enterprises in the same regions.<sup>22</sup> In addition to helping entrepreneurs develop ideas into bankable projects and mobilize funding, these facilities influenced local standards for evaluating and structuring projects and helped to create a demonstration effect by fostering successful enterprises that others then emulated.

34. Despite these outcomes, it has not been established that the facilities produced results that justify the resources put into them. Three of the four facilities fell short of their targets with regard to number of project preparation assignments. In all the facilities, less than half of the completed assignments resulted in investments that were actually carried out. Even for the two more mature facilities, (APDF & CCBAS) only 50 per cent of the assisted ventures appeared viable at the time of the evaluation.

35. The facilities proved to be expensive. Costs per project implemented ranged from $200,000 to $400,000 (i.e., 8-16% of realized investments) and exceeded what clients were willing to pay. Fees covered only a small percentage –from 4% to 27%-of the facilities’ total costs. Low fees resulted in inefficiencies. Many clients had little commitment and abandoned the proposals after facilities had spent considerable resources in preparing them. Over time the facilities had increased fees but these were still low compared to the costs. The evaluation concluded that the facilities would have to continue to rely on donor funding or move away from original mandates and start working with larger firms that could afford higher fees 36. More recent evaluations of project development facilities suggest some improvements in the performance of the facilities. The Mekong Project Development Facility (MEDF) is the latest to be evaluated. MPDF was established in 1996 and covers Vietnam, Cambodia and Laos. It helps SMEs prepare bankable business plans, helps them in approaching financiers, and provides them an array of business advisory services. In addition, it works with providers of business support services and financial intermediaries, helping to build their capacity. In terms of activity, MPDF has surpassed original expectations. By the end of 2001, MPDF had completed 96 financial advisory projects and 13 technical assistance projects, and has helped raise $40.2 million in financing commitments for 96 projects. About two-thirds of surveyed MPDF clients who

> 21 These facilities, with their years of establishment, are Caribbean and Central American Business Advisory Services (CCBAS-1981), African Project Development Facility (APDF-1988), South Pacific Project Facility (SPPF-1991), Polish Business Advisory Service (PBAS-1991). IFC has been the lead sponsor and has provided management and a significant share of the financing for these facilities.

> 22 There may be an element of self-selection bias here since it is likely that better firms have a greater tendency to seek out and/or receive help from such facilities.

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