Selection of suitable participating financial institution (PFI) partners is key to the successful implementation of a financial intermediation loan (FIL) project. PFIs that are financially sound, have good track records, and strategic orientation toward small and medium enterprises (SMEs) and strong project ownership—such as those selected under the project—are likely to be effective in implementing FILs for small businesse
State-owned banks are often used for policy lending that target specific sectors offering low interest rates and preferential terms. It is important that during project preparation, financial intermediaries selected are aligned with the market-based approach of FIL projects to avoid crowding out subloans and nonparticipation of selected intermediaries in lending to the target sector.
Road transport projects typically involve a variety of risks during implementation. Formulating appropriate project design and risk assessment during the preparatory phase is critical to minimize start-up and implementation delays. This includes a systematic appraisal of the project’s technical scope and engineering design, project cost and contingencies, environmental and social safeguards, and financial and contractual risks.
In this instance, the executing agency was competent and major issues did not arise. With a less experienced executing agency, the geographic and sectoral scope and range might have proved too challenging without the front-loading of due diligence and screening that a sector project provides.
Careful selection of nongovernment organizations (NGOs) to be engaged in projects will be beneficial particularly for the poor and vulnerable. Implementation of gender equality and social activities was closely linked to NGO performance quality, which varied significantly among the 3 NGOs engaged by the project. The NGO in Biratnagar demonstrates what can be achieved by a well-performing NGO.
A well-defined implementation arrangement, backed by strong leadership and commitment, and highly competent project staff are crucial to project success. The project’s implementation arrangement was well laid out and all relevant entities fulfilled their responsibilities throughout the project. A project management office (PMO) was set up while the project was still being conceptualized, engaging staff with a high degree of competence and professional knowledge. The PMO director stayed with the project from beginning to end, ensuring strong and efficient support and coordination.
The ownership and rationale of policy reforms need to be carefully assessed at appraisal. Strong ownership and consistent government support are critical to the success of program loans. As such, the ownership and rationale of policy reforms should be carefully assessed at appraisal. In assessing ownership, it is important to remember that policy actions affect many stakeholders, both within and outside the government.