World Bank Urban Reconstruction Loan to Nicaragua, 1979
Between 1976 and 1980, The Development GAP was contracted by the World Bank's Urban Projects Department to work in seven countries. Having encouraged the Bank to select implementing organizations with close connections to local, affected populations, The Development GAP was asked to identify, develop and appraise the income-generating components of project loans in four of those countries: El Salvador, Nicaragua, Guatemala and Ecuador.
Nicaragua is a good, while also noteworthy, example of those efforts. In 1977, with a popular challenge to the increasingly repressive Somoza-family dictatorship intensifying, The Development GAP identified a non-governmental savings-and-loan cooperative, FUNDE, as the most effective and apolitical organization to design and implement a nationwide credit program. When President Somoza demanded that the Bank work only with agencies of his government, the Bank supported the selection of FUNDE and refused to advance with any of the project's three components. The issue and stalemate became moot in late 1978, when open warfare erupted in the north of the country, culminating in the victory and government takeover by the Frente Sandinista in July 1979.
When the new government requested an emergency urban loan from the Bank's low-interest credit arm, IDA, to help reconstruct housing and the transport system and to regenerate economic activity primarily in the half dozen cities badly damaged by the war, The Development GAP returned to Nicaragua with a World Bank team in September with the responsibility for the design with Nicaraguan institutions of a quick-disbursing credit program for small and micro enterprises and commercial cooperatives. Through close consultation with the impressive youth who had taken over and were managing the bankrupt municipalities, as well as with the Ministry of Industry and Commerce and the new banking system, The Development GAP was able to help shape a credit program, modeled in part on the efforts of the NGO, INPRHU, that could rapidly assist the national recovery undertaking.
The linked document includes a description of the proposed Nicaragua urban reconstruction project, including the enterprise rehabilitation component, and the expeditious recommendation by the Bank's president, Robert McNamara, to the Bank's Board for its approval in November. Subsequently, the enterprise loan program, intended to disburse all the credits within 24 months, in fact re-lent the available funds twice more during that time period, leading a Bank evaluation to call it one of the Bank's most successful loan programs. It should serve as an example of what can be achieved through the active participation of local populations and the organizations that represent their interests.
Having observed the work of The Development GAP on World Bank missions, Urban Projects director Kim Jaycox asked The Development GAP to work directly with him and expand our geographical reach in identifying effective implementing organizations with broad-based outreach. To this end, The Development GAP undertook exploratory missions to Brazil and Cameroon. Since that time, it has become more common for the Bank and other aid institutions to work directly with civil-society organizations or in conjunction with representative public agencies.
Nicaragua is a good, while also noteworthy, example of those efforts. In 1977, with a popular challenge to the increasingly repressive Somoza-family dictatorship intensifying, The Development GAP identified a non-governmental savings-and-loan cooperative, FUNDE, as the most effective and apolitical organization to design and implement a nationwide credit program. When President Somoza demanded that the Bank work only with agencies of his government, the Bank supported the selection of FUNDE and refused to advance with any of the project's three components. The issue and stalemate became moot in late 1978, when open warfare erupted in the north of the country, culminating in the victory and government takeover by the Frente Sandinista in July 1979.
When the new government requested an emergency urban loan from the Bank's low-interest credit arm, IDA, to help reconstruct housing and the transport system and to regenerate economic activity primarily in the half dozen cities badly damaged by the war, The Development GAP returned to Nicaragua with a World Bank team in September with the responsibility for the design with Nicaraguan institutions of a quick-disbursing credit program for small and micro enterprises and commercial cooperatives. Through close consultation with the impressive youth who had taken over and were managing the bankrupt municipalities, as well as with the Ministry of Industry and Commerce and the new banking system, The Development GAP was able to help shape a credit program, modeled in part on the efforts of the NGO, INPRHU, that could rapidly assist the national recovery undertaking.
The linked document includes a description of the proposed Nicaragua urban reconstruction project, including the enterprise rehabilitation component, and the expeditious recommendation by the Bank's president, Robert McNamara, to the Bank's Board for its approval in November. Subsequently, the enterprise loan program, intended to disburse all the credits within 24 months, in fact re-lent the available funds twice more during that time period, leading a Bank evaluation to call it one of the Bank's most successful loan programs. It should serve as an example of what can be achieved through the active participation of local populations and the organizations that represent their interests.
Having observed the work of The Development GAP on World Bank missions, Urban Projects director Kim Jaycox asked The Development GAP to work directly with him and expand our geographical reach in identifying effective implementing organizations with broad-based outreach. To this end, The Development GAP undertook exploratory missions to Brazil and Cameroon. Since that time, it has become more common for the Bank and other aid institutions to work directly with civil-society organizations or in conjunction with representative public agencies.