US FOREIGN AID OVERVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R000901210012-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 22, 2016
• Document Release Date: June 7, 2010
• Sequence Number: 12
• Publication Date: March 8, 1985
• Content Type: MEMO

Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
USAID review completed
National Intelligence Council
MEMORANDUM FOR: Director of Central Intelligence
NIC 01262-85
8 March 1985
Acting National Intelligence Officer for Economics
SUBJECT: US Foreign Aid Overview (U)
1. The Administration is requesting X4.9 billion in foreign aid for
FY86 net of economic assistance to Israel.
o $1.7 billion is programmed for development
assistance-grant aid for 900 or so bilateral efforts
in agricultural development, health, education, etc.
o X2.8 billion (excluding Israel which was budgeted for
$1.2 billion in FY85) is targeted for economic support
fund assistance (ESF)--balance of payments support for
countries of strategic interest.
2. The FY86 package reflects a continuation of modest shifts in the
direction of aid that have taken place over the last four years.
-- An increasing share of funds is going for strategic
assistance as compared to project-related development
aid.
-- There is a geographic shift in aid away from Asia
toward Central America, South America, and the
Caribbean.
-- The private sector initiative program (PRE) is
targeted for increased funding, although the
total--$40 million--remains small.
The Director of Central Intelligence
Washington, D.C. 20505
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
SUBJECT: US Foreign Aid Overview
3. Despite these changes, the overall package shows the myriad of
constraints that limit the flexibility to target foreign aid.
The individual country items in the development aid
section become deeply entrenched almost from inception
and hence are difficult to reprogram. Programs for
immunization, oral rehydration, housing, etc., once
begun, of course, develop strong constituencies.
Egypt and Israel still take up around half of the
strategic ESF funding. When other large, strategic
countries such as Pakistan and the Philippines are
added, there is little flexibility for new initiatives
without increasing the overall request.
4. The PRE, which was set up in 1982, is targeted to focus on
projects such as capital market development, establishment of small
venture funds, investment in small business, and technology transfer,
over the next three years. The PRE effort seems to be bogged down for a
lack of good ideas on how to use even the modest funds available. At
present, the major onus for country-specific ideas falls on A.I.D.
personnel in the field who likely find it easier to plug gaps in health
care and to deliver food than to be creative in developing new business
opportunities.
5. The enclosed tabs include:
A. A listing of Development Assistance and Economic
Support Funds trends, FY83 to FY86; a chart of development
assistance by category; and trends in development
assistance (exclusive of economic support funds) by region.
B. A listing of Economic Support fund trends by
country, FY83 to FY86.
C. The FY86 Latin America-Caribbean program overview.
D. The FY86 Bureau for Private Enterprise overview.
Attachments:
Tabs A-D
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
SECRET
SUBJECT: US Foreign Aid Overview
Acting NIO/Econ
Distribution:
Original -
. 1 -
1 -
1 -
1 -
1 -
Addressee
Executive Registry
A/NIO/Econ
NIO/AL~
NIO/AL
NIO/AL
Chrono File (w/o tabs)
Econ File
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
AGENCY FOR INTERNATIONAL DEVELOPMENT
PROGRAM TRENDS: FY 1983 - 1986
(in thousands of dollars)
TAB A
-
FY 1983
ACTUAL
------------
FY 1984
ACTUAL
-----------
FY 1985
ESTIMATE*
------------
I
FY 1986
PROPOSED
-----------
Functional Development Assistance:
Agriculture, Rural Dev. & Nutrition
725,804
723,137
769,738
797,352
Population Planning ................
214,877
242,364
287,119
250,017
Health.. ................
~
139,536
128,195
243,250
146,427
Child Survival
Fund**
~
-
25,000
[25,000]
Education & Human Resources
Dev....
114,160
120,698
188,001
183,533
Selected Development Activities....
144,997
137,545
214,340
223,071
Science and Technology***..........
10,000
9,999
12,000
[13,000]
Sahel Development Program****......
--
--
--
80,500
Private Enterprise Revolv.Fund*****
--
--
--
[20,000]
---------
---------
---------
---------
SUBTOTAL, Functional Accounts........
1,349,374
1,361,938
1,739,448
1,680,900
Grants, included above............
920,988
955,963
1,374,981
1,355,317
Loans, included above .............
428,386
405,975
364,467
325,583
Sahel Development Program****........
92,044
106,619
106,839
Private Enterprise Revolt'. Fund*****
--
12,000
18,500
*****
American Schools & Hospitals Abroad..
20,000
30,000
30,000
10,000
Miscellaneous Prior Year Accounts....
1,533
--
1,142
--- I
International Disaster Assistance....
103,248
207,478
99,025
25,000
SUBTOTAL, DA Program funds...........
---------
1,566,199
---------
1,718,035
---------
1,994,954
---------
1,715,900
Operating Expenses ...................
Foreign Service Retirement
356,983
375,260
396,435
390,694
and Disability Fund******..........
36,537
40,620
41,864
35,562
TOTAL, A.I.D. Development Assistance
1,959,719
2,133,915
2,433,253
2,142,156
Economic Support Fund*******.........
2,911,462
---------
3,146,166
4,213,223
2,824,000
TOTAL, A.I.D. ECONOMIC ASSISTANCE....
4,931,181
---------
5,280,081
---------
6,646,476
_________
4,966,156
------------------------------------------------------------------------------------
* Includes proposed supplementals -- Disaster Assistance for Africa
** Child Survival activities included within Health Account in FY 1986.
*** Requested in Selected Development Activities account in FY 1986.
**** Requested under Functional Accounts beginning in FY 1986.
***** Requested under Functional Accounts; transferred to separate account
for subsequent obligation.
****** FY 1986 level reflects amendment proposed for later transmittal to increase
retirement-eligible age and reduce requirements for Retirement Fund
from 543,122,000 to 535,562,000.
******* FY 1984 ESF level excludes 510 million transferred to Peacekeeping Operations
FY 1985 ESF level includes 515 million transferred from Functional Accounts
for Zimbabwe.
(525,000,000) and Foreign Service Retirement Fund (51,302,000.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
FY 1986 Development Assistance
Allocation By Functional Account
Energy/Private Voluntary
Agencies/Other (13.3%)
Education (11.0%)
Health/Child
Survival (8.7%)
SAH EL (4.8%)
Population (14.9%)
Agriculture (47.3%)
..~.
. - rr
~ Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
REGIONAL ALLOCATIONS OF DEVELOPMENT ASSISTANCE*
---------------
FY 1983
ACTUAL
------------------
FY 1984
ACTUAL
----------------
FY 1985
ESTIMATE
----------------
FY 1986
REpUEST
--------------
AFRICA
315
22%
340
23%
353 19%
358 21%
ASIA
392
27%
392
26%
442 24%
391 23%
LATIN AMERICA
& CARIBBEAN
329
23?,6
295
20%
504 27%
461 28X
NEAR EAST
44
3?~
52
4%
59 3%
52 3%
INTER-REGIONAL
361
25%
401
27%
485 26%
414 25%
TOTAL
1,441
100%
1,480
100%
1,843 100%
1,676 100%
Includes amounts programmed for Functional Development Assistance accounts
and Sahel Development Program. Inter-Regional amount includes Revolving Loan Fund.
'tote: Details may not add due to rounding.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
ECONOMIC SUPPORT FUND
PROC,'RAM ZRENDS BY OBLIGATION - FY 83-86
(Dollars in Thousands)
FY 1983
FY 1984
FY 1985
FY 1986
Region/Country
Actual
Actual
Estimated
Pro
osed
p
AFRICA
Botswana
10,000
800 d/
10,000
10
000
Chad
0
3,000
5,000
,
10
000
Djibouti
1,986
3,000
3,500
,
5
000
Kenya
30,000
21,000
30,000
,
35
000
Liberia
32,000
35,000
43,000
,
48
000
Madagascar
0
0
3,000
,
3,000
Mauritius
2,000
4,000
2,000
4
000
Mozambique
00
7,000
11,000
,
15
000
Niger
5,000 a/
5,000
5,000
,
7
000
Senegal
5,000
10,000
15,000
,
15,000
Seychelles
2,000
2,000
2,000
2
000
Somalia
21,000
35,000
30,000
,
35,000
Sudan
82,250 a/
120,000
114,000
115
000
Zaire
5,000 a/
10,000
10,457 h/
,
15
000
Zambia
15,483
21,322
15,000
,
22
500
Zimbabwe
60,000
40,000
28,000
,
15
000
So. Afr. Reg'1.
14,393
15,996
23,000
,
30
000
Fund for Economic
Policy Reform
0
0
75,000
,
75
000
Subtotal
2~,1~ a/
333,11 d/
42 ,95 h/
,
461,500
ASIA
Fiji
0
0
0
1
000
Pakistan
200,000
225,000
200,000
,
250
000
Philippines
50,000
50,000
140,000
,
95
000
Thailand
5 800 b/
9 115 e/
5 000
,
5 000
Subtotal
255, 0 b/
2~ e/
345,00
51,
LATIN AMERICA AND
CARIBBEAN
Belize
10,000 c/
0
14,000 i/
4
000
Bolivia
0
0
0
,
10
000
Costa Rica
157,000 a/c/
130,000 f/
160,000
,
150
000
Dominican Republic
8,000
a/
34,00
0
95,000 i/
,
50
000
Ecuador
0
0
0
,
15
000
E1 Salvador
140,000
120,234
285,000 i/
,
210
000
Grenada
0
46,967 g/
8,033
,
0
Guatemala
10,000 c/
0
12,500
25
000
Haiti
10,000 c/
5,096
5,000
,
5
300
Honduras
56,000 a/c/
40,000
147,500 i/
,
80
000
Jamaica
59,350 aT/
55,000
70,000
,
70
000
Panama
0
0
50,000 i/
,
40
000
Peru
0
0
0
,
45
000
Eastern Caribbean
35,000 a/c/
30,820
20,000
,
35
000
LAC Regional
15,000 cr
2
000
2
000
,
2
Cent. Am. Reg'1 (ROCAP) 0
,
0
,
98,000 i/
,200
91
500
,
Subtotal
500,350 a/c/
464,117 f/~/
967,033 i/
833,000
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
' FY 1983
Region/Country Actual
FY 1984
Actual
FY 1985
Estimated
FY 1986
Proposed
NEAR EAST
Cyprus 15,000 a/
15,000
15,000
3,000
Egypt 750,000
852,949 d/
815,000
815,000
Israel 785,000
910,000
1,200,000
k/
Jordan 20,000
20,000
20,000
20,000
Lebanon 9,560 a/
27,765 d/
78,232 ~/
10,000
Morocco 0
7,000
15,000
22,500
Oman 15,000
15,000
20,000
20,000
Poland 0
0
10,000 i/
0
Portugal 20,000
40,000
80,000
80,000
Spain 12,000
12,000
12,000
12,000
Tunisia 5,000
1,500
20,000
22,500
Turkey 285,000 a/
138,500
175,000
150,000
Middle East Regional 12,480
14,004
15,000
22,000
Subtotal 1,929,040 a/
2,053,718 d/
2,475,232 i/~/
1,177,000 k/
OTHER
Institute for Democracy 150
p
p
0
Italy 0
10,000 d/
0
p
Oceanographic Research 1,100
1,100
1,000
1
500
Subtotal 1,250
11,100 d/
1,000
,
1,500
2,972,552 a/b/ 3,146,168 d/e/ 4,213,222 h/i/ 2,824,000 k/
Note: Numbers are rounded.
cr f~/ ~T
a/ Includes obligations from the FY 1983 supplementals as follows: Niger $3
million; Sudan $12.25 million; Zaire $5 million; Costa Rica $32 million;
Dominican Republic $8 million; Honduras $30 million; Jamaica $5 million;
Eastern Caribbean $6 million; Cyprus $10 million; Lebanon $9.56 million; and
Turkey $40 million.
b/ Includes $.8 million of the $5 million transferred from State's Migration
and Refugee Account for anti-piracy activities in the Gulf of ZY,ailand.
c/ Includes $149 million from .the FY 1982 CBI Supplemental distributed as
follows: Belize $10 million; Costa Rica $75 million; Guatemala $10 million;
Haiti $10 million; Honduras $3 million; Jamaica $2 million; Eastern
Caribbean $24 million; and LAC Regional $15 pillion.
d Includes deobligation/reobligations as follows: Botswana $.8 million; Italy
$10.0 million from Syria pipeline; Lebanon $.557 million; and Egypt $102.949
million.
e/ Includes $4.115 million of the $5 million transferred in FY 1983 from
f/
3/
State's Migration and Refugee account for anti~iracy activities in the Gulf
of Thailand.
Includes $60.0 million made available from FY 1984 supplemental funds from
PL 98-396.
Transfers of $40.0 million from the FY 1983 no-year supplemental for Lebanon
and $15.0 million deobligated from the Syria pipeline were made to Grenada.
Of the combined total, $46.967 million was obligated in FY 1984 and $8.033
million will be obligated in FY 1985.
1
1
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
h/ Includes estimated deobligation/reobligation of $.457 million.
i/ Includes $290.5 million made available from FY 1984~supplemental funds
from PL 98-396 as follows: for Central America--Belize $10.0 million, E1
Salvador $90.0 million, Honduras $72.5 million, Panama $30.0 million, and
Central America Regional (ROCAP) $28.0 million; Other--Dominican Republic
$50.0 million and Poland $10.0 million, for the Zablocki Clinic (of which
$6.0 million was obligated through the American Schools and Hospitals
Abroad).
~/ Estimated obligations from the FY 1983 no-year supplemental for Lebanon.
k/ Israel to be submitted separately.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
Latin America and Caribbean Program
Strategy and Goals
A. Overview
A.I.D.'s strategy for addressing the problems outlined above is to support
four broad approaches: (1) economic stabilization efforts in the near term,
(2) basic structural reforms to permit a sustained economic recovery along
more efficient lines, (3) efforts to overcome key constraints in the principal
sectors in which A.I.D. is supporting programs promoting greater equity, and
(~) programs to strengthen democratic institutions and human rights.
These approaches place more emphasis on policy reforms and management
improvements than was the case of our programs in the 1970x. They also
require more program assistance than project assistance in the short run. In
addition, they involve more direct assistance to the private sector, both
because the public sector's ability to absorb project assistance is limited by
fiscal constraints, and because many private sector investments will be more
productive in the short and medium terms. Still, the overall program is
largely targeted on the needs of less advantaged populations, particularly by
emphasizing productive employment opportunities as well as access to health
care, education, and other social services- It is a growth-with-equity
strategy designed to bring about broad-based national development and to
strengthen support for democratic institutions.
Given the increasing magnitude of the assistance to the region over the last
several years, A.I.D. has reviewed its capacity to manage, and the region's
capacity to absorb, the increased level of resources. The review has
concluded that the program does not currently exceed absorptive capacity. A
comparison of levels of undisbured balances under A.I.D. programs indicates
that the "pipeline" of undisbursed funds has actually fallen significantly in
relation to annual disbursements. This improvement in part reflects an
increase in the importance of more rapid-disbursing assistance to the private
sector.
1? Stabilization. A.I.D. continues to encourage LAC governments to correct
their macroeconomic disequilibria through stabilization programs. Most have
adopted such programs, and we are encouraged by the success with which some of
them have been implemented. Under these programs A.I.D. has cooperated with
t}ie IMF to provide foreign exchange to help cushion declines in economic
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
activity while countries are laying the groundwork for economic recovery.
These programs also make it possible for countries to reschedule their
external debts, thus further relieving their balance-of-payments constraints.
A.I.D.'s support for stabilization efforts has been made available through ESF
assistance, which provides both an incentive for countries to take action
(through appropriate conditionality) and a means to do so without incurring
unsustainable social and political stress. Our goal is to have the LAC
countries managing their external sectors on a current basis by eliminating
arrearages and the need for further debt reschedulings and by restoring
government fiscal equilibrium. Some countries may not be able to achieve
effective stabilization until 1986. Meanwhile, the need for stabilization
assistance continues to be great. Indeed, significant amounts of such
assistance are essential for preventing a further general decline in living
standards. Increased stabilization assistance, unlike increases in project
assistance of the same magnitude, will not create serious absorptive capacity
problems.
2. Structural Reforms. Economic growth will be faster, more employment-
intensive, and more equitable for countries following a development strategy
based on exports to external markets rather than one built around import
substitution in highly protected domestic or regional markets. Export
expansion provides the foreign exchange needed for imported materials and
capital goods that generate higher productivity and increased living
standards. Small economies with limited markets and narrow resource bases are
especially dependent on imports, and most of the LAC countries we are
assisting are in this category.
The enactment by Congress of the trade provisions of the Caribbean Basin
Initiative (CBI) in 1983 has provided increased export opportunities to this
area, but expansion. of nontraditional exports also requires structural reforms
to correct overvalued exchange rates, eliminate tariff structures that promote
inefficiency and saddle potential exporters with high-cost inputs, and change
policies that artificially overprice labor and underprice capital. Legal sad
institutiorai reforms are also needed to encourage investment. Better
policies and a stable political environment could generate a real growth rate
of nontraditional exports of 20~ e year by the end of the decade. That growth
would significantly increase job opportunities and generate revenues needed to
extend the coverage of social services and to rebuild and expand the
infrastructure required to sustain rapid economic growth-
The main elec~ents of our strategy for achieving export growth and the
associated increases in income and employment are:
continuing our dialogue with cooperating countries on needed policy
reforms and conditioning our assistance on appropriate structural
adjustment;
supporting the greater commercialization of agriculture, the sector
employing the greatest number of people, particularly for small farmers;
increasing the availability of credit for production in agriculture and
industry, particularly small industry, and for exporting;
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
providing technical assistance and training for small business operators;
assisting investment and export promotion and strengthening
private-sector organizations;
assisting in the development of free zones, industrial parks, and other
mechanisms which simplify infrastructure and administrative problems
facing private entrepreneurs; and
financing infrastructure construction and improvements, especially for
stimulating small-farmer production.
3. Overcoming Sectoral Constraints to More Equitable Development. The
labor-intensive pattern of economic growth to be fostered through structural
reforms will help the rural and urban poor through the creation of jobs.
However, targeted programs also are needed to ensure that the benefits of
growth will be widespread. Opportunities for the rural poor can be increased
by providing them with greater access to productive resources, including land
and credit, as well as by eliminating price controls and other disincentives
to production. Improved access to education and health care in both urban and
rural areas, and greater efficiency in the provision of these services, would
enable the poor to take better advantage of employment opportunities. Over
the long term a reduction of population growth rates would make it easier for
countries to meet their goals of reducing unemployment and raising living
standards.
':o address these sectoral constraints, A.I.D. will support programs to:
-- provide access to primary education for at least 90~ of all
school-age children, male and female, in those A.I.D.-assisted countries where
this has aot been achieved (Haiti, Bolivia, E1 Salvador, and Guatemala);
-- expand skills training, vocational training, and higher education
programs to relieve key manpower bottlenecks to increased production and thus
create more jobs both directly and indirectly;
-- improve health conditions, especially in rural areas, through malaria
control efforts, dissemination of oral re hydration therapy, training of nurses
and other health workers, and technical assistance and educational programs in
the field of nutrition, thus lowering infant mortality rates to 75 per
thousand or less and child death rates to less than 7 per thousand by 1988 in
all A.I.D.-assisted countries where this has rot been achieved (Haiti,
Bolivia, Honduras, Peru, and Ecuador);
-- expand access to family planning information and contraceptive
supplies, particularly through private institutions, to help bring about a
reduction of the regional population growth rate from the 1982 level of 2.3~
to 1.9~ by 1988;
-- improve the access of poor rural families to land through support for
colonization, legal reforms to provide secure land titles, and financing for
land purchases;
-- provide better housing for low- and moderate-income families through
technical assistance and Housing Guaranty loans; and
-- assist refugees and displaced persons through programs that provide
health services, educational opportunities, and productive employment.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
4. Democratic Institutions and Human Rights. Economic growth will best '
support U.S. interests in the LAC region if it occurs in an environment in
which governments permit their people to participate freely in local and
national political processes; to form labor unions, cooperatives, and other
voluntary organizations; and to have recourse to a judicial system that will
administer justice fairly and speedily. Although the U.S. Government cannot
dictate to governments how they should structure their political institutions
and processes, we can provide our moral and financial support to those
countries upholding democratic institutions and respecting human rights. A
key element in U.S. economic assistance decisions in each country of the LAC
region will be the degree of commitment of that country to free elections,
independence of the judiciary, and respect for individual rights-
In support of this element of our strategy, A.I.D. will seek to strengthen the
administration of justice through technical assistance, training, and material
support for court systems, criminal investigative agencies, public prosecutors
and defenders, justice ministries, law schools, and bar associations. A.I.D.
will also provide assistance to improve the administration of elections. In
addition, activities with a large number of private voluntary agencies will
support the development of democratic institutions and processes by providing
assistance to labor unions, cooperatives, women~s organizations, and other
participatory groups-
The process of democratization in the LAC region will also be supported by a
major new training initiative, the Caribbean and Latin American Scholarship
Program (CLASP), which will provide scholarships for study in the United
States and in the region itself to approximately 7,830 individuals. Of this
number, 7,063 participants are expected to be trained under the Central
American Peace Scholarships project (CAPS) over the next five years, a direct
response to the NBCCA recommendation that more Central Americans be provided
training opportunities in the United States. An additional 3,000 or so
participants will be funded under U.S.I.A. programs, bringing the total to
more than 10,000. Training will focus on priority economic, social, and
political development needs.
FY 1986 Highlights
A program level of $1,293.9 million is proposed for FY 1986 in support of our
objectives in the LAC region. Of this total $869.1 million is destined for
Central America, $270.4 million for the Caribbean, $127.4 million for South
America, and $27.0 million for LAC Regional programs. The paragraphs below
summarize the distribution of these resources among functional categories of
assistance and provide examples of new initiatives proposed for FY 1986.
To contribute to the objectives of economic stabilization and structural Y'
reforms, ESF resources of $833.0 million are requested, primarily for balance- `
of-payments support to assist countries in overcoming continuing foreign
exchange shortages, which are due largely to unfavorable market conditions for'
their major exports and to their reduced access to private capital markets.
ESF assistance is being requested for all twelve countries and three regional
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
programs, a reflection of the depth and persistence of the current economic
crisis in the LAC region. The foreign exchange provided by ESF will help
sustain the flow of imports of raw materials and other inputs needed for
productive business enterprises to maintain and eventually increase their
levels of production and employment. Local currency generations will support
the credit requirements of these enterprises, finance key public service and
infrastructure projects, and bolster the efforts of private voluntary
organizations, cooperatives and similar groups to meet basic needs.
In the Development Assistance (DA) program, for which a total of $460.86
million is proposed, agriculture, rural development, and nutrition activities
account for 41~ of the regional total. The twin objectives of our strategy in
this sector continue to be increasing production and generating the income
needed by poor rural families to meet their basic requirements for food and
other needs. To carry out this strategy our project activities are
concentrated in four program areas: (1) improving agricultural productivity
and diversification through research and technology transfer; (2) stimulating
private sector investment in agribusiness and marketing; (3) expanding access
to resources and influence through commercial land markets and farmer
organizations; and (4) managing natural resources for sustained yields of
:rater, crop production, forest products and grazing. All program resources
provide a backdrop for a continued policy dialogue directed toward achievement
of a competitive agricultural economy, regulated by market forces, that
stimulates increased productivity by small commercial or potentially
commercial farmers served by and supplying a thriving private agribusiness
system.
New activities in FY 1986 include agricultural extension projects in Bolivia,
Panama, and the Caribbean Region; support for the financing of land purchases
by small farmers in E1 Salvador and Guatemala; agricultural marketing projects
in Bolivia and Ecuador; small-scale irrigation projects in Haiti and Honduras;
ar. agricultural sector recapitalization project in Peru; food crop and
nontraditional export crop production projects in the Dominican Republic; and
support for export-oriented agribusiness activities in Central America through
the Latin American Agribusiness Development Corporation (LAAD), which since
1970 has been successfully expanding production and job opportunities for
small farmers and landless workers in the region.
Our population planning programs ($25.5 million, or 5.5~ of the DA program)
emphasize the use of private sector mechanisms. About 70~ of our resources
are planned for private sector programs, both commercial and voluntary. Our
activities stress improved management capacity and enhanced self-reliance.
'+ew activities in FY 1986 include expansion of family planning services in
Jamaica, particularly through contraceptive sales and private sector
ievolvement, consistent with the country's population policy.
In health ($46.9 million, or 10.2; of the DA program), A.I.D. is concentrating
~n assisting countries to expand basic health services by improving the
eificienry of health services delivery through management improvements and
cost recovery for services provided. We are also assisting in the development
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
of private sector channels for health services delivery. In addition, LAC
regional and Central America regional projects focus on the extension of
cost-effective health technologies and provide support to A.I.D. Mission
initiatives in analyses of alternative financing mechanisms for health
services, improved resource allocation, and the supply and distribution of
essential drugs. Anew Health Services Management Improvement project will be
initiated in E1 Salvador, and in Guatemala we will support the establishment
of a self-financing private sector organization that will provide quality
primary health care to poor rural residents. An immunization project will be
initiated in the Dominican Republic, and a new malaria control project xill
begin in Haiti.
Our efforts in education and human resources develo went ($92.3 million, or
20~ of the DA program include partial funding for the major new regional
training initiative (CLASP) described above. In countries where literacy
rates are still low, we will also emphasize the expansion and improvement of
primary education. Elsewhere priority will be given to productive skills
training, management training, and the development of cost-effective outreach
mechanisms. Projects to improve the quality, management and
cost-effectiveness of primary education will be initiated in the Dominican
Republic, Guatemala, and Honduras. Skills training and management training
projects will begin in Jamaica, Panama, Ecuador, Honduras, and the Caribbean
Region.
New selected develo went activities ($107.5 million, or 23.3 of the DA
program will include support for export development programs in Belize,
Bolivia, Peru, and the Central American region; a second loan to the Caribbean
Financial Services Corporation to finance new private sector enterprises and
the expansion of existing ones; and small business development projects in
Belize and Ecuador.
Other U.S. resources which provide support for our objectives in the LAC
region will be made available under the P.L. 480 program, which will provide
much-needed foreign exchange to help the balance of payments. Local currency
generations from the sale of P.L. 480-financed foodstuffs are integrated with
our overall DA. activities and are used as tools in our policy dialogue on
macroeconomic and sectoral policies. The FY 1986 request for P.L. 480
resources is $257.3 million, of which $216 million is for Title I/III and
$41.3 million is for Title II.
Special Concerns
1. Women in Development (WID). An important aspect of A.I.D.'s assistance
program in the LAC region is the policy of assuring that women are included in
the development process by taking into account the actual and potential impact
on women of our country strategies and programs. In this regard, the LAC
Bureau of A.I.D. has developed a Women in Development (WID) Action Plan to
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
strengthen the emphasis on women~s issues related to development. This plan
includes sensitivity training for A.I.D. personnel, project design/review
guidelines related to WID, an assessment of the impact of WID activities in
the LAC region over the last few years, and a review of the specific program
initiatives required to carry out the increased emphasis on WID concerns.
2. Evaluation. In FY 1984 the LAC Bureau received 79 evaluations from the
field. In FY 1985 the Bureau proposes that 136 evaluations be performed by
the A.I.D. Missions and to carry out itself a number of selected sectoral and
inter-country impact assessments/analyses. Among these evaluations will be
that of a major private sector effort in Haiti begun in FY 1982. In the
Caribbean Regional program, an assessment of the private sector development
plan will continue. In Peru A.I.D. will evaluate its efforts to promote
private sector growth in agriculture. The Agency's efforts to promote policy
reforms will be evaluated by many of the missions. In several countries --
Jamaica, the Dominican Republic, and Costa Rica -- missions will be carrying
out evaluations within the context of the CBI. All these evaluations will
test and analyze the validity of A.I.D.'s efforts to effect needed policy
reforms through project activity. The Burea u s backstopping efforts will
concentrate on the following priority tasks: improving communication and
guidance to the field; advising missions of lessons learned from earlier
evaluations; providing logistical support for mission evaluations, as needed;
and improving the ratio between evaluations planned and evaluations actually
carried out.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
Sanitized Copy Approved for Release 2010/06/07 :CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
Bureau for Private Enterprise Summary
3.2 Present and Future Strate
1985-8'7
The 1985-87 period will be a transitionary one for the
Bureau as it moves from a start-up organization into a "mature"
bureau with a well-defined portfolio and a strategy which
effectively integrates it into the fabric of A.I.D.'s overall
economic development efforts.
This transition phase will include a continuation of our
two-fold mandate and our dual line/staff reponsibilities
(explained under Section 3. Bureau for Private Enter rise:
Evolution of Strategy) as we work to position the Bureau for a
long-term role in A.I.D. which will encompass: 1) continued
experimentation with new programs/projects to incorporate
private enterprise in development; 2) a heavy emphasis on
becoming the technical resource within the Agency which
supports regional bureau and USAID mission efforts to promote
and incorporate private enterprise in development; and 3) the
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
full integration of our investment and grant portfolios in
A.I.D.'s overall development strategy. In this section we will
define our overall strategy for this three year period, while
the following section will focus more specifically on FY 1986.
(1) Elements of the Strategy: Over the 19.85-87 period, our
strategy will include six major elements:
?
?
Product Development
Mission Support
?
Investments
(Revolving Fund)
?
Cooperatives
and Small Business Development
?
Grants
?
Evaluation
Each of these is briefly addressed below.
(i) Product Development: The Bureau will continue work in
the six major product areas which have been the foci of our
activities to date. Once again, they are:
? Policy Dialogue and Change
? Capital Market Development
? Investment Promotion
? Non-Traditional Export Promotion
? Transfer, Adaptation and Commercialization
of Technology
? Training/Entrepreneurship Development
This transitionary phase will see ma 'or Bureau efforts in
policy dialogue and change, and capital market development. We
will continue to support investment promotion programs while
developing a longer-term Bureau (and Agency) strategy for
providing assistance in such efforts. A focus will be
agribusiness investment which includes farmer outreach
services. We also plan to develop and implement a strategy for
Bureau (and Agency) involvement in the commercialization of
technology in LDCs. We will undertake no new initiatives in
non-traditional export promotion, and in training/
entrepreneurship development our efforts will be highly
targeted, undertaken exclusively in conjunction with our
mission support program.
(ii) Mission Support: Our mission support program will
continue to focus on providing assistance in the product areas
outlined above, as we increasingly emphasize our role as a
technical resource for the rest of the Agency. Efforts will
include a 'rollout" of PRE-developed products to support
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
mission program/project development, that is an incorporation
of successful PRE experiments into mission strategies. We will
also develop, with USAIDs in selected countries, integrated
PRE/USAID mission strategies which support private enterprise
development.
(iii) Investments: Our investment strategy during this
transition phase will focus on six major categories:
? Capitalization of IFIs (including
cooperatives) for on-lending to micro-businesses, emphasizing
the use of guaranties available through 1985 under the
Productive Credit Guaranty Program (PCGP-Section 222A of the
FAA);
? Investments which result in the
privatization or divestiture of state-owned agribusiness or
health enterprises;
? Establishment of small venture funds to
finance the development of the technology necesssary to process
and market bio-mass, agricultural waste, or by-products of
agricultural processing;
? Private agribusiness firms with extension
services to small farmers who produce crops for processing and
marketing by the firms; '
? Capitalization of IFIs to fill gaps in host
country capital markets to service small and medium business
expansion, diversification, and export requirements; and
? Health maintenance organizations or other
health outreach provided on a fee for services basis and the
manufacture of health products focusing on poorer sectors of
the population.
(iv) Cooperatives and Small Business Development:
Integrating the cooperative program into the overall Bureau
strategy will be a key objective during our transition phase.
While continuing the core grant support, we will utilize the
vast resources and network of the cooperative movement to
enhance our mission support efforts. New, cooperative-related
initiatives will be incorporated into the Bureau's product
development efforts and, most importantly, the cooperative
development organizations will be used as leverage into small
business support activities. For example, as a way of
promoting capital market development, we will work with credit
unions and other cooperative organizations, encouraging them to
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
develop programs which provide financial and other services to
small enterprises.
(v) Grants: During this period we will not initiate any
new core grant programs as we continue to improve our
ement.of those we currently support,.which are:
manag
International Executive~~~Service Corps (IESC)
. Joint Agricultural Consultative Corporation
(JAC Corp)
Cooperative League of the U.S.A. (CLUSA)
Credit?Union National Association (CUNA)
. Agricultural Cooperative Development
International (ACDI)
? Cooperative Housing Foundation (CHF)
? National Rural Electric Cooperative
Association (NRECA)
? Volunteers for Overseas Cooperative
Assistance (VOCA)
PRE involvement in other major grant activities including the
Institute for Management Education of Thailand (IMET) and the
Technical/Vocational Training Institute of Peru (TECSUP) will
be gradually phased out over this period. We will focus only
on grant projects which will enhance our product development
efforts and which may be utilized in our mission support
program. Similarly, our grant/loan combination projects will
be limited to those where the grant portion provides an
institution building element which is fundamental to project
success. We have found major grant projects to be both
resource and staff intensive and because of Bureau constraints
in these two areas we will not become involved in such
activities without long-term mission management involvement and
financial support.
(vi) Evaluation: With a growing portfolio of highly
innovative and experimental grant and loan projects, we
recognize the critical importance of evaluation as a way to: 1)
identify and correct problems in the design or management of
existing projects; 2) provide useful guidance in the design of
future Bureau projects; and 3) develop and provide guidance to
the rest of the Agency in the development of future private
enterprise related projects. The 1985-87 period will be one of
both intensive and extensive evaluation of projects in the
Bureau's portfolio.
These six elements will constitute our transition strategy
during the 1985-87 period. As we build on the base developed
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
in our start-up phase, we will increasingly emphasize
management of our existing portfolio and improved targeting of
our future program/project and mission support activities.
(2) Implementation: Effective management of both ongoing and
new program/project initiatives will receive considerable
attention from the Bureau during this three year .phase. We
recognize the severe limitations facing the Bureau given its
limited resources, particularly staff, in trying to manage
effectively our overall portfolio. To be successful we must
utilize all available resources, including PRE staff and other
outside resources.
(i) PRE Staff: Effective management of a complex and
growing portfolio of activities will require:
Revolving Fund?bothCinstermseoflproject and fundssmanagement?
? Close coordination between grant activities
(including the Cooperative and other core grant programs) and
mission support efforts to assure complementarity; and
? Effective utilization of the new regional
offices in both the field management of PRE-funded projects and
the implementation of mission support activities.
Whenever possible, but especially with regard to new grant
projects, we will emphasize the need for close mission
management involvement.
(ii) Other Resources: The small size of the Bureau's staff
will require increased reliance on resources external to the
Agency for project design, development and supervision with
overall management guidance provided by the Bureau. The
following represent some of the resources available to help
assure effective project portfolio management:
Grantee organizations (including IESC, JAC
Corp, and the Cooperatives), under general PRE management
guidance, will be expected not only to supervise their own
activities but also to provide increased attention to
supporting USAID missions.
We will continue to use the extensive
resources in the U.S, business community to assist in our
project management efforts, including resources such as the
Conference Board, the Young Presidents' Organization, the
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
National Council for International Health, the U.S. Chamber of
Commerce and others.
? Where appropriate, we will call upon the PVO
community (e-. g. Partnership f of Pro.ductivitx~ ACCION-Aitec,
FMME) and unf-versities to assist us.
? Our utilization of outside contractors and
consultants, IQC firms and 8(a) (minority businesses) will also
increase.
? The Loan Review Board and, soon to be
established, Technology Review Board will be called upon to
help improve our management by their early screening of
potential projects.
While numerous resources (especially external) are potentially
available, the Bureau's task will be to organize them in such a
fashion that facilitates overall management of our diverse
portfolio.
4. FY 1986? Strategy Focus (533.26 million)
FY 1986 will be the second year in our three year
transition phase during which we limit new initiatives,
consolidate major grant activities, focus on improved
management of our existing portfolio, and position the Bureau
for its long-term private enterprise support and
experimentation role in the Agency. This section will address
the Bureau's FY 1986 foci within the six elements of the
overall three-year strategy outlined in the preceding section.
4.1 Product Development (51.0 million)
During FY 1986 we will continue our heavy emphasis on
policy dialogue and change, and capital market development.
Implementation of a focused investment promotion effort will be
initiated as well as our commercialization of technology
strategy. Non-traditional export promotion will be
de-emphasized and training/entrepreneurship development efforts
will be undertaken only in conjunction with mission support
activities.
(1) Policy Dialogue and Change (5300,000): During this
fiscal year we will focus on implementing, in selected
countries and through our mission support efforts, the
policy/guidance we develop in the area of privatization/
divestiture of state enterprises. Early experiences in Costa
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
Rica, Peru, the Philippines and Malawi will result in guidance
prepared by the Bureau which we will implement in 1986
privatization efforts and for which we will encourage
Agency-wide acceptance. In so doing we will collaborate
closely with the rest of A.I.D., in particular the numerous
USAID missions that are becoming involved in this subject area,
and other donors.
We will also play a major role in implementing policy
on A.I.D./IFI relationships which will be better defined
through a Private Enterprise Council sponsored analysis
conducted during 1985. This analysis will result in
recommended guidance on A.I.D./IFI relationships, including a
broad range of IFIs such as development banks, commercial
banks, investment banks, leasing companies, venture capital
firms, export trading companies and other intermediate
institutions which may provide financing and other services to
small businesses.
(2) Capital Market Development 0300,000): Efforts will
continue to focus on strengthening private, host country
institutions, enabling them to mobilize local and international
capital market resources for financing indigenous private
business development and expansion. Our mission support
efforts will also result in capital market development
including, for example, possible assistance in the Philippines
to restructure their venture capital industry, and guidance on
regulating the investment of pension fund assets in Indonesia.
(3) Investment Promotion 0100 000): Evaluations during
1985 of several PRE-supported investment promotion activities
(including our feasibility study financing program) will result
in the development and implementation, largely through our
mission support program, of a Bureau strategy for support to
LDC investment promotion. (The future of the Bureau's
feasibility study financing program will await completion of
the in-depth evaluation which will be conducted during FY
1985.) This strategy will incorporate the valuable lessons
learned from our past efforts, as well as the methodology
developed by SRI International its PRE-funded Investment
Promotion Analysis.
(4) Commercialization of Technology 0200,000): During
1986 we will identify targets of opportunity which will allow
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
us to begin implementation of our strategy developed during FY
1985. Our Technology Review Board will be established and we
will utilize it as a screening mechanism of the potential
opportunities identified.
The implementation of our major HEALTHLink project
with the Program for Appropriate Technology in Health (PATH)
will be in its second full year-of operations. This project is
designed to test whether certain health-related products,
developed in the United States, can be successfully
manufactured and marketed by LDC businesses on a commercial,
for-profit basis. This program focuses on opportunities in
Thailand and Indonesia. If successful, it is an activity that
may be expanded and replicated elsewhere.
(5) Non-Traditional Export Promotion (No Funding
Required): PRE efforts in this area will not focus on new
product development during 1986, but rather, through mission
support, on the "rollout' of existing products, particularly on
the development of free zones to encourage export-oriented
investment. We will actively support, under guidance from the
analysis completed of A.I.D./IFI relationships, the development
of LDC based export trading companies.
(6) Training/Entrepreneurship Development (100,000): PRE
efforts in this area will focus on mission strategy support.
Opportunities include assistance to existing advanced
management training/business schools in Peru (ESAN) and
Thailand (ABAC) through a strengthening of curriculum and the
development of "sister" institution relationships with similar
U.S. schools/universities/institutes.
4.2 Mission Support (52.0 million)
A major part of the Bureau's strategy during FY
1986
will be to enhance and increase, while better focusing,
mission support efforts. To accomplish this we will:
our
? Emphasize our role as a technical resource
for USAID missions;
? "Rollout" PRE-developed products in support
of mission program/project development efforts;
? Focus assistance in PRE product areas; and
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
us to begin implementation of our strategy developed during FY
1985. Our Technology Review Board will ue established and we
will utilize it as a screening mechanism of the potential
opportunities identified.
The implementation of our major HEALTHLink project
with the Program for Appropriate Technology in Health (PATH)
will be in its second full year of operations. This project is
designed to test whether certain health-related products,
developed in the United States, can be successfully
manufactured and marketed by LDC businesses on a commercial,
for-profit basis. This program focuses on opportunities in
Thailand and Indonesia. If successful, it is an activity that
may be expanded and replicated elsewhere.
(5) Non-Traditional Export Promotion (No Funding
Required): PRE efforts in this area will not focus on new
product development during 1986, but rather, through mission
support, on the "rollout' of existing products, particularly on
the development of free zones to encourage export-oriented
investment. We will actively support, under guidance from the
analysis completed of A.I.D./IFI relationships, the development
of LDC based export trading companies.
(6) Training/Entrepreneurship Develo ment 0100,000): PRE
efforts in this area will focus on mission strategy support.
Opportunities include assistance to existing advanced
management training/business schools in Peru (ESAN) and
Thailand (ABAC) through a strengthening of curriculum and the
development of "sister" institution relationships with similar
U.S. schools/universities/institutes.
4.2 Mission Support (52.0 million)
A major part of the Bureau's strategy during FY
1986
will be to enhance and increase, while better focusing,
mission support efforts. To accomplish this we will:
our
for USAID missions;
? "Rollout" PRE-developed products in support
of mission program/project development efforts;
? Focus assistance in PRE product areas; and
? ~;mpnasize our role as a technical resource
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
? Develop and implement an integrated
PRE/USAID strategy for private enterprise development in
selected countries.
These are more fully explained below.
(1) Technical Resource: We plan to continue our strategy
of responding to USAID mission requests for PRE assistance in
private enterprise constraints analyses, business problem
solving and program/project development efforts. We will
target our efforts to complement activities underway within
each regional bureau and to ensure effective utilization of our
limited resources we will increasingly require cost sharing on
assistance provided.
(2) 'Rollout' PRE Products: Part of the mission support
effort will be the continued "rollout" of successful
PRE-developed products. Examples include the SRI 'Investment
Promotion Analysis,' The Free Zone Authorities Services, Inc.
'Guide to the Development of Export Processing Zones,' and our
Feasibility Study Financing Program. In addition, our core
grant activities and any new grant initiatives will
increasingly focus on providing support required by missions.
(3) PRE Product Area Focus: All support will fall within
the six product areas in which the Bureau focuses.
(4) Integrated PRE/USAID Strategy: In selected countries
we will 'develop integrated private enterprise development and
support strategies. The first two countries for this effort
will probably be Thailand and Kenya. We will actively
participate in the development of strategy, and assist in both
project development and funding. These will become models for
effective USAID/PRE collaboration which we will endeavor to
replicate with other USAID missions over the long-term.
4.3 Investments (Revolving Fund) ($17.0 million loan*; $760,000
rant)
FY 1986 will see a major emphasis on three of the six
investment priorities outlined for the three year, 1985-87
period. (This does not mean that investments will not occur in
the other three priority areas, however, special attention will
be focused on the three selected.) Where required, feasibility
*-The additional 3.0 million required to reach the $20.0
million authorized level will come from projects jointly funded
with selected USAID Missions. Their respective funding
contributions to these projects (up to 53.0 million) will go
into the Revolving Fund.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
studies to determine project viability and institution building
assistance will be provided on a grant basis. The three
priority areas are:
? Capitalization of IFIs for on-lending to
micro-, small, and medium sized enterprises;
? Establishment of small venture funds for
technology development and commercialization; and
? Support to agribusiness firms with extension
services to small farmers.
These are explained in more detail below:
(1) On-lending to Micro-, Small and Medium Scale
Enterprises: Focus in this area will be on the utilization of
cooperatives as a~means of extending financial and other
services to these enterprises. A cooperative-related project
opportunity has been identified and may be pursued in Panama
utilizing The Cooperative Organization of Latin America and the
Caribbean (COLAC). This would make resources available for
micro-enterprises through the extensive credit union system in
Latin America.
(2) Venture Funds for Technology Development and
Commercialization: Opportunities for pursuing such efforts
appear good in Thailand (in conjunction with our joint,
integrated strategy efforts), India, and with selected U.S.
entrepreneurs undertaking technology development and
commercialization investments which target LDC markets. We
also may consider an expansion to our existing HEALTHLink
project to countries other than those now targeted which are
Indonesia and Thailand.
(3) Agribusiness Firms with Extension Services: This
represents an excellent opportunty for collaboration with USAID
missions, some of which have expressed considerable interest in
this concept as a result of PRE-funded case studies by Business
International on successful projects which had major
agribusiness firms providing support to and serving as the
market for satellite farm operations. Numerous opportunities
have been identified, among them a cocoa nucleus estate project
in Panama, a passion fruit processing operation in Kenya, a
winter vegetable project in the Dominican Republic, and an oil
plant processing facility in Indonesia.
Increased attention will also be focused on portfolio
management to assure effective and timely drawdowns and use of
revolving fund resources on existing projects, while improving
our funds management capability to assure maximum return on all
RF assets.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
q,q Cooperatives and Small Business Development (56.0 million)
While continuing the core grant support, we will
incorporate new cooperative initiatives into the overall Bureau
product area strategy and increasingly utilize cooperatives as
leverage for developing small business support activities. The
current Cooperative Development Organization (CDO) strategy
includes movement, with A.I.D. assistance, toward developing
trade programs, credit and financial systems for micro- and
small enterprise support, and increased capabilities within the
CDOs for development planning. This strategy is based on the
assumption that cooperatives are economic institutions--
businesses--and the services to be provided from national and
international level cooperative organizations should be
business support services. The program has become more
pragmatic and business-oriented, and is taking steps which will
lead to eventual self-sufficiency for many CDO-sponsored
activities.
Through the centrally funded cooperative program, A.I.D. will
continue to give core grant support for six U.S. cooperative
development organizations to pursue new initiatives and to
Drovide a means for small farmers and entrepreneurs to meet
mutual needs in such areas as credit, savings, housing,
storage, purchasing, processing, marketing and electricity.
:hose core grants are:
(1) Cooperative Housing Foundation (CHF) (5600,000): The
CHF provides technical assistance to LDC cooperative housing
organizations, and develops methods of involving U.S.
cooperatives in helping to resolve the shelter-related problems
and needs of LDCs.
(2) Cooperative League of the USA (CLUSA)(5930,000): Our
grant helps CLUSA maintain and expand its development expertise
to assist cooperative development in LDCs.
(3) Credit Union National Association (CUNA) ($950,000):_
CUNA helps in the planning and management of LDC credit union
;projects and coordinates the National Association's efforts to
promote credit union growth in LDCs.
(4) National Rural Electric Cooperative Association (NRECA)
(5710,000): The PRE grant permits NRECA to assist LDCs in
~_stablishing rural electric systems and cooperatives to benefit
the rural poor.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
(5) Volunteers for Overseas Coo erative Assistance (VOCA)
0740,000): VOCA provides specialized short-term assistance to
LDC cooperatives and related agencies for the transfer of
essential managerial and technical expertise.
(6) A ricultural Coo erative Develo ment International
(ACDI) ( 780 000): Utilizing our grant, ACDI provides expert
services from U.S. agricultural communities and farm credit
cooperatives to small and medium scale farmers in developing
countries.
In addition to the core grants, A.I.D, will continue to
cost-sharing grants for project activities with U.S, Provide
cooperatives allowing them to initiate programs with
cooperatives in LDCs.
(7) Coo erative Cost-Sharin Grant Pro'ect 0390 000):
This shared cost support enables U.S.
and strengthen the development capabili
tablish
i
r
1
o
t
es
of
their
LDC
y of U.S, cooperatives to
attractpandschannelcadditional develo
sources. A.I.D. has on-going cost-sharedt funding from other
Lakes, League Insurance, the U.S. Feed Gra~nsnCouncil,Land ACDI.
Implementation of three new initiatives will be expanded in FY
1986. These are:
(1) CLUSA International Trade Develo ment Pro ram
0600,000)? CLUSA, working primarily through its international
trade division, will provide technical
trad
assistance and
e-related services to cooperatives and small businesses in
the developing world to assist them in export promotion and
market development efforts. This will be the second year of a
planned three year PRE support
of trade services to LDC cooperativesmand smalldbusinessesrange
(2) Cooperative Financing Facit;*.
work on implementing the findings of the~CD0~fi0nanceWtasklforce
seeking ways to use existing institutions such as cooperative
banks, credit unions and small enterprise lending programs to
meet the credit needs of LDC cooperatives and small businesses
and, in so doing, strengthen and broaden LDC capital markets.
The objective of this initiative is to make constructive uses
of existing institutions, reduce currency exchange costs and
risks, and reach not only cooperatives but also the broader
sector of small enterprise. A
the experimental effort may be potential project to initiate
We will also work with the CDOsptosdevelophincOreased credit
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87MOO539ROOO9O121OO12-3
facilities to reach small entrepreneurs at the lowest level of
the productive economy, thereby expanding LDC capital markets.
These facilities will bring together experience gained over
recent years in uncollaterized lending to individuals and take
advantage of_ the global structure of credit unions as a
delivery system which can become, over time, a global small
enterprise bank. This will expand fhe work begun with COLAC in
pa Hama .
(3) Small Business Development 0150,000): During FY 1966,
the small enterprise sector will be directly addressed through
two major program efforts. The feasibility of an approach to
small business development through small business centers or
associations is being examined and the viability of a program,
in selected countries, will be explored during 1986. We will
try to capitalize on the experiences of small business
development centers in the U.S. and, with adaptation and
modification as required by the host country environment,
transfer this technology to selected LDCs. In addition,
Nationwide Insurance has invested in Global Exchange, Inc. to
work with LDC cooperatives on developing products which have
high export potential. PRE will support this activity which
complements the CLUSA international trade development program.
Other activities for which no additional funding is required in
FY 1986 are:
(1) Development Planning: A CDO study to research
cooperative development methodology and experience has been
completed. This is a priority area with the CDOs and included
an A.I.D.-sponsored week long meeting of international
cooperative leaders to review the results. The CDOs will
produce a comprehensive strategy paper including project
guidelines to facilitate future planning and evaluation and to
;r~aximize program impact.
(2) Farmer-to-Farmer Program: Under Section 406(a)(1) and
(2) of P.L. 480, a Farmer-to-Farmer Program has been authorized
for some time. A.I.D, has been charged with implementing the
program which involves sending U.S. farmers to provide short
term technical assistance to LDC farmers. Pilot programs in
the Caribbean and Latin America are being undertaken by both
'dUCA and Partners of the Americas. An evaluation of their
activities during 1986 will determine the future direction of
the program.
The Bureau is making considerable progress, in a short time
Period, integrating the cooperative program into the overall
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87MOO539ROOO9O121OO12-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
PRE strategy. The new initiatives are quite consistent with
the Bureau's product areas, in particular capital market
development, export promotion and technology transfer. Because
cooperatives represent a vast resource, we intend to utilize
them increasingly in our mission support program and we will
encourage them, as in the case of IESC, to market the services
they can provide directly to USAID missions.
4.5 Grants (56.5 million)
Beyond the cooperative program and our support to the
IESC (56.0 million) and the JAC Corp (5500,000), we plan no
major new core grant activities for FY 1986. By this fiscal
year we should be almost entirely disengaged from major
existing grant projects, especially TECSUP and IMET. As
previously mentioned, any new grant projects will only be
undertaken in direct support of mission strategies and
programs, or to complement (through institution building) our
investment activities.
4.6 Evaluation (Fundin included in ro'ect bud ets)
we include evaluation as a major part of our strategy
because of its critical importance if our overall program
efforts are to have and maintain their credibility. We believe
that an experimental and innovative program is only effective
if the lessons learned are reflected in project re-design and
future programming. A major Bureau Evaluation Plan is
currently under development which will result in several, as
yet undetermined, evaluations of ongoing projects during 1986.
In addition we are and will continue to insist on the
development and inclusion of evaluation plans for all new
projects which receive PRE support.
In sum, our FY 1986 plan calls for:
Product development in selected areas;
PRE-develo ed Mission support which targets on
p products and integrated strategy development with
selected USAIDS;
assistance in threeNareasvandmimproved managementnofutheing
existing portfolio;
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
 Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3
? Leveraging of cooperatives into small
business development, supporting PRE's product areas with the
development of several new initiatives;
? Phasedown of our major grant program,
limiting support to existing core grant activities and projects
in direct support of missions, and grants for institution
building to complement our investments; and
? An emphasis on evaluation to improve
existing projects and guide future project design.
Sanitized Copy Approved for Release 2010/06/07: CIA-RDP87M00539R000901210012-3