Document of The World Bankdocuments1.worldbank.org/curated/en/343181468256483204/... · 2016. 7. 16. · Micro- and SME finance 5 Ports, waterways and shipping 20 13 Vocational training

Document of The World Bank

Report No: ICR00001797

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-38260)

ON A

CREDIT

IN THE AMOUNT OF SDR 20.5 MILLION (US$ 28.06 MILLION EQUIVALENT)

TO THE

REPUBLIC OF HONDURAS

FOR A

ENHANCING COMPETITIVENESS: TRADE FACILITATION AND PRODUCTIVITY IMPROVEMENT PROJECT

June 20, 2011

Finance and Private Sector Development Central America Country Management Unit

Latin America and the Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 17, 2011)

Currency Unit = Lempiras

1.00 = US$0.053 US$ 1.00 = 18.89 Lempiras

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance Strategy CDPC Comisión de Defensa y Protección de la Competencia (Commission for the

Defense and Protection of Competition) CITE Centro de Innovación y Tecnología (Innovation and Technology Center) CITEAT Centro de Innovación y Tecnología para Artesanía y Turismo (Innovation

Technology Center for Crafts and Tourism) CITEMM Centro de Innovación y Tecnología para Madera y Mueble (Innovation

Technology Center for Wood and Furniture) CITEX Centro de Innovación y Tecnología para Textiles (Innovation Technology

Center for Textiles) CNCA Consejo Nacional para la Calidad (National Quality Council) CNPP Comisión Nacional de Protección Portuaria (CNPP) COHEP Consejo Hondureño de la Empresa Privada (Honduran Council on Private

Enterprise) CSAE Comité de Simplificación Administrativa para Empresas (Committee for

Administrative Simplification for Businesses) DB Doing Business DCA Development Credit Agreement DEI Dirección Ejecutiva de Ingresos (Executive Directorate of Revenues) DGPC Dirección General de Protección al Consumidor (Consumer Protection

Directorate) DR-CAFTA Dominican Republic – Central America Free Trade Agreement FDI Foreign Direct Investment FIDE Fundación de Inversión y Exportaciones (Foundation for Investment and

Exports) FPD Finance and Private Sector Development ICA Investment Climate Assessment IFC International Finance Corporation INCAE Instituto Centroamericano de Administración de Empresas (Central American

Institute of Business Administration) INFOP Instituto Nacional de Formación Profesional (National Vocational Training

Institute)

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IPC Instituto Politécnico de Centroamérica (Central American Polytechnic Institute)

ISRs Implementation Status Reports LCSPT Latin American and Caribbean Procurement Unit (World Bank) M&E Monitoring and Evaluation MIGA Multilateral Investment Guarantee Agency MSMEs Micro, Small, and Medium Enterprises OHA Oficina Hondureña de Acreditación (Honduran Accreditation Office)

OHN Organismo Hondureño de Normalización (Honduran Standards Organization) PAD Project Appraisal Document PDO Project Development Objective PHRD Japan Policy and Human Resources PIU Project Implementation Unit QAG Quality Assurance Group (World Bank) SEPA Sistema de Ejecución de Planes de Adquisiciones (Online Procurement Plan

System) SERNA Secretaria de Recursos Naturales y Ambiente (Ministry of Natural Resources

and the Environment) SMEs Small and Medium Enterprises WB World Bank WEF World Economic Forum

Vice President: Pamela Cox

Country Director: Carlos Felipe Jaramillo

Sector Manager: Lily Chu

Project Team Leader: Thomas Haven

ICR Team Leader: Sunita Varada

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HONDURAS Enhancing Competitiveness: Trade Facilitation and Productivity Improvement Project

CONTENTS

1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 3. Assessment of Outcomes .......................................................................................... 14 4. Assessment of Risk to Development Outcome ......................................................... 24 5. Assessment of Bank and Borrower Performance ..................................................... 24 6. Lessons Learned ....................................................................................................... 28 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 29 Annex 1. Project Costs and Financing .......................................................................... 31 Annex 2. Outputs by Component ................................................................................. 33 Annex 3. Economic and Financial Analysis ................................................................. 40 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 41 Annex 5. Beneficiary Survey Results ........................................................................... 44 Annex 6. Stakeholder Workshop Report and Results ................................................... 45 Annex 7a. Borrower Comments on Draft ICR ............................................................. 46 Annex 7b. Summary of Borrower's ICR ....................................................................... 52 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 65 Annex 9a. List of Supporting Documents .................................................................... 66 Annex 9b. Documents in the Project File of the PAD .................................................. 67

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A. Basic Information

Country: Honduras Project Name:

Enhancing Competitiveness: Trade Facilitation and Productivity Improvement Project

Project ID: P070038 L/C/TF Number(s): IDA-38260

ICR Date: 06/22/2011 ICR Type: Core ICR

Lending Instrument: SIL Borrower: REPUBLIC OF HONDURAS

Original Total Commitment:

XDR 20.50M Disbursed Amount: XDR 18.67M

Revised Amount: XDR 18.67M

Environmental Category: B

Implementing Agencies: FIDE- Fundacion para Inversiones y el desarrollo de exportaciones

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 03/20/2003 Effectiveness: 07/23/2004 07/23/2004

Appraisal: 05/19/2003 Restructuring(s): 07/17/2007 03/03/2009 03/19/2010

Approval: 10/21/2003 Mid-term Review: 09/18/2006 07/03/2006

Closing: 09/30/2008 12/31/2010 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Unsatisfactory

Government: Moderately Unsatisfactory

Quality of Supervision: Satisfactory Implementing Moderately Satisfactory

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Agency/Agencies: Overall Bank Performance:

Moderately SatisfactoryOverall Borrower Performance:

Moderately Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

Yes Quality at Entry (QEA):

Satisfactory

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Moderately Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

General industry and trade sector 35 40

General public administration sector 20 35

Micro- and SME finance 5

Ports, waterways and shipping 20 13

Vocational training 20 12

Theme Code (as % of total Bank financing)

Export development and competitiveness 24 22

Legal institutions for a market economy 13

Micro, Small and Medium Enterprise support 13 21

Other financial and private sector development 25 26

Regulation and competition policy 18

Trade facilitation and market access 25 13 E. Bank Staff

Positions At ICR At Approval

Vice President: Pamela Cox David de Ferranti

Country Director: Carlos Felipe Jaramillo Jane Armitage

Sector Manager: Lily L. Chu Susan G. Goldmark

Project Team Leader: Thomas Edward Haven Marialisa Motta

ICR Team Leader: Sunita Varada

ICR Primary Author: Sunita Varada

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F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The development objective of the project is to increase the productivity of the Honduran private sector, thereby improving Honduras. competitiveness . The immediate objective of the project is to improve Honduras investment climate and its local firms capacity to export in order to prepare Honduras to take advantage of trade opportunities under existing and new Trade Promotion Agreements. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : PDO indicator eliminated in March 2010 restructuring. Project evaluated on intermediate indicators.

Value quantitative or Qualitative)

Date achieved Comments (incl. % achievement)

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Reduction of time to start a business by 40% Value (quantitative or Qualitative)

80 days in Doing Business 2004



Date achieved 10/21/2003 12/31/2010 11/03/2010 Comments (incl. % achievement)

Over 100% achievement of target.

Indicator 2 : Reduction of time spent dealing with construction licenses Value (quantitative or Qualitative)




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Target not included in Board approved document. Over 90% of target achieved.

Indicator 3 : Increase in volume of cargo handled by Puerto Cortes Value (quantitative or Qualitative)

7.0 million tons moved in one year

7.7 million tons moved in 2009

8.2 million tons moved in 2009


Target not included in Board approved document. Over 100% achievement of target.

Indicator 4 : Number of micro, small, and medium businesses using Innovation Technology Centers financed by the project

Value (quantitative or Qualitative)

0 30 231



Indicator 5 : Number of new jobs created through foreign direct investment


365 in 2004

Cumulative 2005-2009: 10,000 new jobs

Cumulative 2005-2009: 5,815 jobs


Target not included in Board approved document. Over 50% of target achieved

Indicator 6 : Increase in number of laboratory tests accredited according to international standards (with project support)


0 20 77



Indicator 7 : Increase in number of firms obtaining quality certifications (large firms and MSMEs monitored separately; with project support)


0 15 Large: 23, MSMEs:87



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Indicator 8 : Number of SMEs receiving training through Project-financed courses


0

cumulative: 200 in coffee and bean sectors

cumulative: 394 in coffee and bean sectors



Indicator 9 : Number of public and private training centers strengthened with project support Value (quantitative or Qualitative)

0 4 15



Indicator 10 : Increased investment (local and foreign) in the areas selected as pilots for the local competitiveness initiative


0

Other donor financing mobilized: US$2.95 million; Increased investment: US$1.19 million

Other donor financing mobilized: US$2.94 million; Increased investment: US$1.1 million


Target not included in Board approved document. Over 90% of target achieved.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 12/05/2003 Satisfactory Satisfactory 0.00 2 06/08/2004 Satisfactory Satisfactory 0.00 3 11/30/2004 Satisfactory Satisfactory 1.00 4 04/25/2005 Satisfactory Satisfactory 4.55 5 09/13/2005 Satisfactory Satisfactory 4.60 6 11/21/2005 Satisfactory Satisfactory 5.02 7 06/11/2006 Satisfactory Satisfactory 6.24 8 11/28/2006 Satisfactory Satisfactory 6.87 9 05/15/2007 Satisfactory Satisfactory 9.35

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10 12/19/2007 Satisfactory Satisfactory 13.81 11 05/28/2008 Moderately Satisfactory Moderately Satisfactory 15.88 12 12/19/2008 Moderately Satisfactory Moderately Satisfactory 19.22

13 05/22/2009 Moderately

Unsatisfactory Moderately Satisfactory 21.49

14 12/08/2009 Moderately

Unsatisfactory Moderately Satisfactory 23.66

15 05/25/2010 Moderately Satisfactory Moderately Satisfactory 25.62 16 12/25/2010 Moderately Satisfactory Moderately Satisfactory 28.81

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

07/17/2007 N S S 10.61 Changes to some project activities resulting primarily from mid-term review

03/03/2009 N MS MS 20.83

Clarified the inclusion of constructions of the national metrology laboratory and the CITEAT in the legal agreement. Modified Project Agreement monitoring indicators.

03/19/2010 N MU MS 24.58

Partial extension of closing date to December 2010, primarily because of the seven month pause in project activities due to political events.

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal At appraisal (May 2003), Honduras had a GNP per capita of US$860, a high incidence of poverty, and low social indicators. Economic growth had been low and variable for over 30 years, and between 1997 and 2000, per capita GDP growth was negative 1.6 percent (largely due to the effects of Hurricane Mitch). In its 2002-2006 Strategic Plan, the Honduran Government had made economic growth and employment generation one of its key pillars, since low productivity and economic growth were major challenges of the economy. The objectives under this pillar included improving the investment climate, increasing private sector productivity, increasing labor productivity, and promoting innovative applications of technology with a special focus on micro, small, and medium enterprises (MSMEs) and firms operating in industries with high comparative advantages. The project covered the areas proposed under this pillar. The project design was aligned with the 2003 World Bank Country Assistance Strategy (CAS). The CAS emphasized that the overriding challenge for reducing the country’s poverty and inequality rates in the long term was to break the cycle of low and narrowly-based economic growth. Among the six pillars featured in the CAS, the project was most closely aligned with the one that called for accelerating equitable and sustainable growth. Given these priorities, the rationale for the project was that long-term economic growth will not only depend on the country’s macroeconomic stability, but also on increasing private investment, providing support to MSMEs, assisting firms operating in high-growth potential industries, and helping the Government take advantage of new opportunities from the Dominican Republic – Central America Free Trade Agreement (DR-CAFTA).

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The development objective listed in the project appraisal document (PAD) differs from the one listed in the Development Credit Agreement (DCA). The objective in the PAD is: “The development objective of the proposed project is to increase the productivity of the Honduran private sector, thereby improving Honduras’ competitiveness and economic growth, which will in turn increase employment and reduce the poverty and inequality levels. The immediate objective of the project is to improve Honduras’ investment climate and its local firms’ capacity to export in order to prepare Honduras to take advantage of trade opportunities under existing and new Trade Promotion Agreements.” The DCA states: “The objective of the Project is to improve the Borrower’s investment climate and local firms’ capacity to export in order to prepare the Borrower to benefit from trade opportunities under existing and new trade promotion agreements by: (a) supporting policy and legal reforms; (b) strengthening existing institutions and creating new institutions to improve competitiveness; (c) providing advisory services and financial support to MSMEs and to firms operating in the most dynamic local industries to facilitate access to export markets and productivity improvements;

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(d) financing small scale initiatives to improve productivity of selected areas by upgrading local infrastructure, promoting business innovation and use of technology; and (e) increasing MSMEs’ access to training and advisory services.” This report will utilize the development objective listed in the legal agreement, since this version was legally binding. Key Performance Indicators At appraisal, the project development outcome indicator was: “Improvement in Honduras’ ranking in the World Economic Forum’s Competitiveness list, from 75th (in 2003) to 65th (in 2008). This improvement should be driven mainly by an improvement in Microeconomic Competitiveness ranking (Business environment and Companies Performance), for which the goal is that Honduras should move from 78th (in 2003) to 65th (in 2008).” The PAD states that the plan was to replace the outcome indicator with a figure from the Investment Climate Assessment (ICA), which was to be completed soon after project approval. The new indicator was to be easier to monitor and more directly related to project interventions. The original Project Agreement listed the following monitoring indicators: Reduction of business registration time by 40% Reduction of business registration cost Reduction of unit cost and increase in volume of cargo handled by Puerto Cortés Number of Micro, Small, and Medium Businesses using Innovation Technology Centers

(CITEs) financed by the project Increase in FDI diversification following implementation of the Investment Promotion

Strategy financed by the project Increase in the number of laboratories accredited by international institutions Increase in the number of firms obtaining quality certifications (large firms and MSMEs will

be monitored separately) Increase in the number of firms requesting training by INFOP Improved quality of INFOP courses (as assessed by the firms attending the courses) Increase investment (local and foreign) in the areas selected as pilots for the local

competitiveness initiative Other output indicators were detailed in Annex 1 of the PAD. The original project included over 40 indicators, which, for the most part, did not include quantitative targets.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO did not change over the course of the project. In 2008, efforts were made to replace the outcome indicators from the World Economic Forum (WEF), as foreseen in the PAD. The WEF’s Competitiveness ranking was not directly related to project activities and the Microeconomic Competitiveness index was no longer tracked by the WEF. The Ease of Doing Business (DB) ranking was chosen as a replacement for the WEF rankings, and this change was

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formalized through a restructuring in March 2009. A new indicator from the ICA was not used (as suggested in the PAD) since there was no ICA survey that would fall close to the end of the project and capture project impacts. The DB ranking was considered an improvement since project activities affected 3 of the 10 sub-indices that make up the ranking. Moreover, the scope of the Doing Business indicator was similar to the WEF’s Microeconomic Competitiveness ranking. This change was considered a refinement of the original outcome indicator, rather than a material change to it. However, the DB ranking was also imperfect, since it only reflected a limited number of project activities and was dependent on many factors outside of the project scope. After the 2009 restructuring, guidance from the Finance and Private Sector (FPD) network cautioned against using the Doing Business ranking as an outcome indicator because it is highly dependent on the performance of other countries. Further efforts were made to identify an outcome indicator or indicators that captured the PDO and were directly linked to project activities, however none could be found. As a result, a restructuring in March 2010 eliminated the DB ranking as the outcome indicator. The restructuring specified that the project would be evaluated based on the performance of the component indicators included in the Project Agreement. The final revised Project Agreement, after the fourth amendment, contained the following monitoring indicators: Reduction of time to start a business by 40% Reduction of time spent dealing with construction licenses Increase in volume of cargo handled by Puerto Cortes Number of Micro, Small, and Medium Businesses using Innovation Technology Centers

(CITES) financed by the Project Number of new jobs created through foreign direct investment (FDI) promotion activities Increase in the number of laboratory tests accredited according to international standards Increase in the number of firms obtaining quality certifications (large firms and MSMEs

monitored separately) Number of SMEs receiving training through Project-financed courses Number of public and private training centers strengthened with Project support Increased investment (local and foreign) in the areas selected as pilots for the local

competitiveness initiative

1.4 Main Beneficiaries The target population for the project was three broad groups, as identified in the PAD. The first was the private sector in general that was expected to benefit from reduced costs of doing business, improved technology and skills, and increased export opportunities. The second group more specifically identified MSMEs and firms operating in high-growth potential sectors (maquila, tourism, forestry, and agro industries). This group was specifically targeted through the local competitiveness activities. The third group identified was selected government institutions that were expected to benefit in a number of ways. Among the benefits expected for government institutions were the creation of new institutions, such as the National Quality

4

Council, and increased public-private collaboration on competitiveness themes. The targeted beneficiaries did not change over the course of project implementation.

1.5 Original Components (as approved) The project had 6 components: 1. Improving key elements of Honduras’ investment climate. This component consisted of 3

subcomponents: (a) Reducing firms’ anti-competitive behavior and improving consumer protection; (b) Reducing time and cost of administrative procedures; and (c) Improving the quality and reducing costs of infrastructure and logistics.

2. Promoting private sector innovation. This component also consisted of 3 subcomponents: (a) Supporting the creation of three Innovation Technology Centers (Centros de Innovación y Tecnología, CITEs); (b) Promoting higher value FDI and linkages between foreign and local firms; and (c) Developing a National Quality System and raising firms’ awareness of the importance of quality certifications.

3. Improving skills of the labor force. The original project design foresaw various types of support for the National Vocational Training Institute (Instituto Nacional de Formación Profesional, INFOP), including a review of its existing structure and support for its reorganization. The component was also to develop standards and curriculum to certify private firms that provide training and give matching funds to firms that train their workforce and develop in-service training.

4. Local competitiveness: improving economic development in selected pilot areas. This component was designed to pilot local competitiveness strategies in four locations (only Copan Ruinas was identified during project appraisal). The design called for developing local competitiveness and economic development plans through a participatory process, assessing local infrastructure deficiencies, capacity and institution building to enhance the business environment, and financing project coordinators in the selected pilot areas and evaluation studies.

5. Consensus building on broad themes related to competitiveness. This component was designed to: (a) identify target segments and existing competitiveness initiatives and develop a communications campaign; (b) support development of a competitiveness training program for journalists; and (c) finance evaluation studies to assess results of this component.

6. Strengthening the project implementation unit. This component was to finance the creation of the project implementation unit, the costs of specialists and consultants to support it, operational expenses, training and equipment.

1.6 Revised Components Although the six main components remained the same in general over the course of the project, changes were made to several subcomponents and a few activities were removed. These changes were made to maximize project resources and impacts. Most changes were incorporated after the mid-term review with the third amendment, as seen in Table 1.

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Table 1: Revisions to Components

Changes by Component Reason How and When

Change Incorporated

Component 1

Separation of competition and consumer protection agencies

Decision by Borrower (competition law passed first)

Third Amendment, July 2007

Elimination of administrative simplification matching grants

Mechanism unfeasible for government agencies, provided direct support instead


Addition of modernization program for the human resources section of the Executive Revenue Directorate *

Expected to increase efficiency and governance of public sector, added as pilot program


Advisory services to assess and classify the risk of the Borrower’s short, medium, and long-term debt *

Expected to increase efficiency of debt management administrative procedures and improve competitiveness by reducing cost of external financing


Removal of support to create transport regulatory agency

Was no longer a priority of Borrower and Bank agreed was not key to achieving objectives


Removal of studies on needs to concession other ports

Decision by Borrower, no longer a priority Third Amendment, July 2007

Component 2

Removal of support to CITE for textiles Central American Bank for Economic Integration never provided planned financing


Addition of tourism to CITE for crafts Borrower request Fourth Amendment, June 2008

Construction of building to house CITE for crafts and tourism

Was included in original design, but fifth amendment made more explicit

Fifth Amendment, April 2009

Removal of design of industrial sector diversification program in free zones and industrial parks

No longer a priority for Borrower Third Amendment, July 2007

Removal of development of business plan based on sector studies for FDI promotion

Determined that business plan was not necessary - possible to move straight from sector studies to execution of national investment promotion strategy


Construction of a national metrology laboratory

Determined that construction of the lab was critical for developing national quality system. Third amendment had added minor works to this subcomponent but fifth amendment made construction more explicit

Third and Fifth Amendments, July 2007 and April 2009

Component 3

Provision of equipment, training, and technical assistance to public and private training organizations

Original project only included support for the National Vocational Training Institute


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Financing to establish a new Enterprise Management University *

Request from Honduran President, from an agreement with the Honduran Private Enterprise Council


Removal of support for curriculum accreditation and certification of training providers

Legislation needed to certify providers and accredit curriculums had not passed


Matching grants expanded to cover broader range of capacity building for businesses

Original design only covered in-house training


Component 4

Expansion of number of areas where feasibility studies and minor works could be carried out

Original design only allowed this activity in one area, became clear that activity needed in other areas


Support for the operation of the Office of the Presidential Competitiveness Commissioner

Request from Borrower Third Amendment, July 2007

* These items were added to comply with a special request from the Government. Resources were available due to a shift over time in the exchange rate between Special Drawing Rights (SDRs, the currency in which the loan was denominated), and dollars (the currency in which project expenditures were budgeted). The shift in the exchange rate had increased the loan amount in dollars by roughly $2 million at the time of the restructuring in July 2007.

1.7 Other significant changes The project closing date was extended four times. The original closing date was set for September 30, 2008 with an expected implementation period of five years. By June 2008, the project had only disbursed about half of the loan due to a variety of political, legal, institutional, and fiduciary obstacles (see section 2.2). Since by mid-2008 these challenges had been mostly overcome and the pace of implementation had increased, the Bank agreed to extend the project’s closing date to December 2009. In early 2009, a Bank-wide review of lending projects to ensure that they complied with their legal agreements and safeguards policies resulted in some implementation delays. Specifically, a thorough review of the project’s in-progress and planned constructions by safeguards specialists caused some of the construction timelines to be delayed. As a result, the Bank approved a partial extension of the closing date to June 30, 2010 to allow time for the completion of the constructions. Following the Bank-wide “pause” in activities in Honduras in June 2009 (see section 2.2 below), the Bank unilaterally extended those activities set to close in December 2009 to March 2010 to allow time to discuss the matter with the newly elected government. In February 2010, the Bank and the counterparts agreed to extend all project components with remaining relevant activities to December 2010. Funding allocations were changed multiple times throughout project implementation, but the most significant changes occurred with the third amendment in July 2007 (see section 2.2 for information on amendments). With the third amendment, the percentage of expenditures to be financed by Bank funds for most disbursement categories increased from 88 to 93 percent. The amount allocated to works more than quadrupled by project end. Operating costs also almost tripled. The categories allocated to matching grants were decreased considerably. For example

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matching grants related to the CITEs dropped from US $590,000 to US $53,000, due in part to the scaled-back scope of the number of CITEs supported, and matching grants for administrative simplification (US $750,000) were eliminated since it proved to be unfeasible to supply matching grants to government entities (as opposed to the private sector). The original and final disbursement allocations are in Table C in Annex 1. In December 2010, the Bank canceled approximately US$2.72 million of remaining undisbursed loan funds at the request of the Government. The funds were returned to the Honduras IDA allocation, allowing them to be reallocated to other projects in Honduras. The undisbursed funds were largely a result of differences in the SDR/dollar exchange rate. The final disbursed amount in dollar terms (US$28.80 million) was actually greater than the US dollar equivalent of the original loan amount (US$28.06 million).

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry Project design was based on lessons learned from prior work and most major risks were identified. At the time of project design, research and experience with prior projects pointed to a broad cross-sector approach to increasing competitiveness. This approach indicated that addressing a broad range of obstacles to private sector development – from burdensome business registration procedures to lack of adequate training options to inefficient logistics – was necessary. The project was designed specifically to advance the CAFTA complementary agenda. More specifically, project activities were to respond to weaknesses identified that might prevent Honduras from taking full advantage of the new trade agreement. Since the project was expected to respond to a wide variety of issues, the design included a complex set of components and subcomponents. Based on lessons learned, the project specifically avoided employing a cluster approach to prevent creating and growing firms in only a few sectors and “picking winners.” However, the project expected to establish and support CITEs in three specific sectors – wood/furniture, artisan crafts, and textiles. Also, the broader reforms planned in the project did aim to ensure MSMEs benefitted. The design team recognized in the appraisal document that this cross-sector approach would lead to a complex project that would require intensive supervision. Given the project’s complexity and the inclusion of innovative approaches, the design team also recognized that Government commitment and Project Implementation Unit (PIU) capacity were critical requirements to project success. The research and preparation of this project were comprehensive; the PAD includes extensively researched explanations for the inclusion of every activity and includes references to over 30 papers (see Annex 9b for a list of the supporting documents from the PAD). Also, during preparation, a US$225,000 PHRD (Japan Policy and Human Resources Development Fund) grant financed assessments for specific planned activities, such as one on the quality system and another on the CITEs. A Project Preparation Facility (PPF) was utilized effectively to help the PIU meet conditions of effectiveness and advance different technical components of the project. The project appraisal document does not adequately incorporate exogenous risks, such as political transitions and political events, which in fact significantly

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affected project implementation. The Quality Assurance Group’s (QAG) Quality at Entry rating was satisfactory.

2.2 Implementation Most components had a successful and efficient implementation, producing a large number of project achievements (see section 3.2). The main causes for this successful implementation were the commitment of the technical staff of the PIU and close Bank supervision. Among the other positive factors that led to successful implementation were: Collaboration with stakeholders. Given the various aims of the project, implementation would not have been possible without the continuous engagement of stakeholders. For example, the project worked closely with municipal governments to implement one-stop-shops to facilitate business processes. In another example, the PIU contracted local staff to work directly with private sector beneficiaries in the local competitiveness component to determine appropriate technical assistance. The local competitiveness component also benefitted from collaboration with other entities, such as the Central American Institute of Business Administration (Instituto Centroamericano de Administración de Empresas, INCAE), that provided technical assistance and additional funding. The project also worked with various private and public training institutes to improve training options in various sectors. Also, for the tourism and craft technology center (Centro de Innovación y Tecnología de Artesanía y Turismo, CITEAT), a public-private board of directors was established that worked directly with the project, particularly in its efforts to ensure the CITEAT’s sustainability. Project amendments/restructurings. The project was amended/restructured to facilitate project implementation, maximize project impact, and respond to Government requests consistent with the PDO. The changes were made primarily to direct project resources toward activities with the greatest potential for impact and proactively respond to changes in Government priorities. Prior to the last restructuring, the project had a "moderately unsatisfactory" rating of its progress toward achievement of the development objective. This rating put the project on a risk list and required a proactive response, which was handled through the final amendment (as discussed in section 1.3). Housing the PIU in the Foundation for Investment and Exports (Fundación de Inversión y Exportaciones, FIDE). Placing the PIU in a non-governmental foundation facilitated more efficient project implementation. There was little turnover of staff, which is often a problem when PIUs are subject to political changes. Also, the PIU was not subject to certain bureaucratic constraints that ministerial PIUs sometimes experience, such as vice-ministerial approval of communications and requests. FIDE was able to attract staff with high technical capacity, which was critical to project successes. World Bank Group collaboration. The project worked closely with counterparts in the Multilateral Investment Guarantee Agency (MIGA) and the International Finance Corporation (IFC) to implement certain components of the project. MIGA played a strong role in establishing the FDI promotion activities. IFC help was critical in easing business processes in seven

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different cities; project funds primarily financed equipment, while the IFC provided technical assistance and software. In contrast to the success factors noted above, some factors—both within and outside of government control—delayed implementation. Factors subject to Government control. In the early years of the project, various issues, primarily related to Government approvals, slowed implementation. The project did not become effective until July 23, 2004, which was six months after the legal agreements were signed. Approval in Congress and publication of its decision in the official newspaper in part delayed effectiveness. The electoral process in 2005 and the new administration’s entering office in 2006 also likely delayed the approval of new legislation upon which the implementation of certain project activities depended. In 2005, an external borrowing constraint that the Government agreed to with the IMF froze project expenditures (for all projects in Honduras) for a few months. Another major delay occurred as a result of the removal from power of President Manual Zelaya on June 28, 2009. This political development led much of the international community to put aid projects on hold. The Bank followed a process consistent with Operational Policy 7.30, which included conducting an assessment of the prevailing situation with respect to the de facto Government. During the assessment period the Bank paused the implementation of the existing portfolio and no new lending was approved. During this period, the PIU was unable to start new activities and had to suspend several others, such as construction works in progress. Project implementation was delayed by about seven months. In addition to delaying project implementation, the political events of 2009 were a setback for Honduras’ competitiveness (in the midst of the global crisis), since among other things, they were detrimental for attracting foreign direct investment (part of Component B of the project). Factors subject to Bank and PIU control. Among other events that significantly affected implementation was a six month delay in producing and approving a satisfactory procurement plan in 2008. In January 2008, the Latin American Procurement team (LCSPT) decided that no “No Objection” requests in Honduras would be cleared until the 2008 procurement plan was entered into the Bank’s new online system (Sistema de Ejecución de Planes de Adquisiciones, SEPA) and approved by them. This policy deviated from the general practice of reviewing and approving “No Objection” requests for activities that had been approved in a prior version of the procurement plan even if a new version of the plan was pending approval. It took several months for a number of relatively minor details in the 2008 procurement plan to be agreed upon between the PIU and the Bank. Moreover, glitches and confusion about how to use the new online SEPA system generated delays. The end result was that project implementation was essentially paralyzed for six months, in large part due to the new LCSPT policy in Honduras (which was not a requirement according to the Bank’s official procurement guidelines).

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Design. As stated in section 1.3, the design had foreseen replacing the original outcome indicator, the WEF ranking, with one that more accurately reflected the project objective. A more appropriate outcome indicator was never found and the March 2010 restructuring eliminated the

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outcome indicator and specified that the project be evaluated based on the performance of the monitoring indicators listed in the Project Agreement. Although the original Project Agreement only included ten monitoring indicators, the PAD foresaw the monitoring of over 40 indicators. These indicators were cumbersome (due to the sheer number) and many were output-based, such as several whose targets were the preparation of plans and studies. Given the variety of project activities, it was difficult to find simplified indicators that adequately reflected component goals. Due to the overwhelming number and complexity of the indicators, in early 2008 the indicators were revised, simplified, and classified into 3 categories: (1) core indicators; (2) indicators tracked for management purposes; and (3) indicators no longer tracked and/or target met. From that point, only the sixteen core indicators were included in the Implementation Status Reports (ISRs). The fourth amendment to the Project Agreement in April 2009 modified the ten official monitoring indicators to match ten of those now included in the ISRs. The indicators were streamlined to respond to management feedback that they should be simpler, more accurately reflect project activities, and provide meaningful information. Therefore, of the 42 indicators, the more outcome based ones were chosen and targets (which were established in the project’s operating manual) were modified for PIU monitoring and included in the ISRs. The new targets took into account the closing date extension to December 2009. The targets were not modified after the closing date was modified to December 2010, given that delays resulting from the political transition essentially prevented seven months of operation in 2009 and early 2010. Implementation and Utilization. The monitoring indicators were the principal base for monitoring and evaluation (M&E) over the duration of the project. The primary source for implementation progress was data collection by the technical staff of the PIU. When possible, the PIU would triangulate the results with data from other sources, such as the Doing Business reports. However, the vast majority of the indicators were solely dependent upon data collection from PIU staff. In the last years of the project, the Bank rated the quality of the information on outcomes in the ISRs as “fair.” The data was monitored regularly and updates were included in quarterly reports submitted to the Bank. The quarterly reports also included information on other outcomes and major obstacles to implementation. This information did inform decision-making and the shifting of resources to ensure the most efficient use of funds. However, the project did not focus on building M&E capacity and only utilized an ad-hoc system for monitoring indicators. Given the temporary nature of the PIU, it was not considered a priority to establish sustainable M&E arrangements. Additionally, it is unclear if a more formal M&E system would have produced different results.

2.4 Safeguard and Fiduciary Compliance Financial management. The financial management (FM) performance of the project was either Satisfactory or Moderately Satisfactory throughout the project life. Similarly, Financial Monitoring Reports (FMRs) and audit reports were submitted in a timely manner and were found acceptable. Audit opinions were unqualified during most of the project life (FYs 2004-2007). The auditors expressed a qualified opinion to the Financial Statements for the years 2008 and 2009 due to FM issues related mostly with minor accounting and internal control issues, which

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were addressed by the project in a timely manner. The audit opinion for the final audit report was unqualified and the auditors confirmed no significant FM issues at project closing. Procurement. Due to the complexity of the project design, the PIU had to manage a complicated and large number of procurement processes spanning consulting services, highly technical goods (e.g. laboratory equipment), works, etc. This complexity also made Bank supervision of procurement processes more difficult; the supervision team reviewed and provided detailed feedback (including identifying irregularities) on a large number of procurement requests throughout the project’s duration. Although PIU procurement was rated satisfactory until end-2007, procurement delays hurt the pace of implementation over the duration of the project. The Bank repeatedly cited capacity issues and gave several suggestions for addressing the problems, including the implementation of quality control measures. There was a lack of supervision within the PIU in ensuring that the most appropriate types of bidding processes were being utilized. An independent procurement review in 2009 found that the PIU did not strictly adhere to Bank policies in many contracts in 2007 and 2008. Although most of the problems found were minor, they demonstrated a lack of quality control. The PIU attempted to implement quality control measures and temporarily hired an international expert to help manage 10 of the largest and most complex contracts, in addition to the staff of 5 already employed in the procurement unit. Although this led to a slight improvement in contracting, the quality of procurement processes remained weak until project-end. The PIU also frequently cited inconsistencies in the application of procurement rules on the part of the Bank in reviewing and approving “No Objection” requests. Those inconsistencies, due primarily to different interpretations of rules from successive Bank procurement specialists that supported the project, created confusion and procurement delays in some cases. Safeguards. Overall compliance with safeguard policies was satisfactory. The original project was classified as a category “C” since although minor works were envisioned in the Local Competitiveness component, no large-scale or significant environmental impacts were expected. During the second order restructuring in 2007, which added small scale works to the project, the project’s classification was changed to “B” and a combined Environmental Report and Environmental Management Plan was prepared. In 2009, in response to Bank-wide concerns on compliance of projects with their legal mandates and with safeguard policies, the Bank team (with assistance from a local social safeguards consultant) undertook a review of all ongoing and planned works as a precautionary measure to ensure that there were no involuntary resettlement risks. The consultant found that there was a risk of resettlement if one of the planned wood-drying ovens was constructed. The Bank and PIU agreed to eliminate this planned construction. No other threats of involuntary resettlement were found and the Involuntary Resettlement safeguard was not triggered. The safeguards review in 2009 also involved an assessment— undertaken with support from a Bank environmental specialist and a local environmental consultant—of potential environmental risks associated with the building constructions. No substantial environmental risks were found, and minor recommendations to avoid any potential risks were incorporated in the construction contracts. For instance, a fence was included around the construction of a wood-drying oven to avoid incursions by unauthorized people or animals.

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Compliance with the Bank’s indigenous policy was satisfactory. A socially inclusive approach was implemented for two project activities – the CITEAT and the building of wood-drying ovens in the Biosfera del Rio Plátano. The original indigenous peoples framework did not provide specifics on how indigenous peoples plans should be created or on actions that should be taken by the PIU to ensure indigenous participation. In 2007, the PIU contracted a consultant to determine potential social impacts of project activities and create an indigenous plan specifically for the two aforementioned activities. The regions where each activity was planned have large indigenous populations. The Bank contracted an independent consultant to evaluate the PIU’s actions to implement and monitor the plan and specifically the results in the Biosfera del Rio Plátano. The consultant found little evidence that the PIU carefully monitored or followed up on the plan in general, but that a participatory and inclusive approach had been implemented in the Biosfera del Rio Plátano in cooperation with the contracted NGO, Rainforest Alliance.

2.5 Post-completion Operation/Next Phase The vast majority of reforms and impacts from project activities will continue after the close of the project. In some cases, the Government has already taken ownership of project activities, such as the reforms to the competition and consumer protection agencies. In other cases, the private beneficiaries, such as matching grant recipients or local competitiveness participants, are leveraging the project’s investments to continue to improve their businesses or to obtain other financing. No Bank follow-up operations are planned at this time, although the Bank is currently operating with an Interim Strategy (due to the political events in 2009), while a new Country Partnership Strategy is under preparation for fiscal years 2012-2015. At project close, questions remained about the sustainability of a few activities, including: the national quality system and the use of the newly constructed metrology lab; the operation of the CITEAT; the use of the building constructed to house the Enterprise Management University in San Pedro Sula; and the operation of the Committee for Administrative Simplification for Businesses. National Quality System and Metrology Laboratory. After some years of delays in Congress, the National Quality Law (whose development was supported by the project) was passed in May 2009. However, due to the political events of June 2009, it was never officially sanctioned or published so did not become effective. Among other things, the law established two important stipulations for the effective functioning of the National Quality System: (1) the creation of an independent Honduran Quality Institute (Instituto Nacional de la Calidad) with its own budget to manage the agencies for metrology, accreditation, and standards (which were created by the project); and (2) legal transfer of the new building (financed by the project) that houses the national metrology laboratory and related quality offices to the Institute. In 2010, the new Government decided to change these two conditions in the as-yet-unpublished law. As of project-end, the latest draft of the changes to the law eliminated the independence of the Honduran Quality Institute, by making it a part of the Planning Ministry. Moreover, the clause transferring the building to the Institute was eliminated. The Bank expressed concerns to the Government that the building only be used for the metrology lab and related offices, as specified in the legal agreement. The Government provided assurances that this would be the case.

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While the loss of independence of the Institute was not optimal from a technical point of view, the Planning Ministry has committed to providing an adequate budget to maintain the staff and operations of the quality institutions. Since the metrology lab building was just completed at project-end, the quality institutions had not yet taken residence. It is critical that they do so for sustainability of the national quality system. The passage of an adequate version of the National Quality Law is also critical for the sustainability of the system. CITEAT. The original project design assumed that the CITEs would operate as foundations or other types of non-profit institutions with yearly operating budgets. The CITEs were expected to offer full-price services to larger companies and clusters of small companies while MSMEs and individual entrepreneurs would benefit from a declining subsidy from a matching grant fund over three years. The PAD had established a US$300,000 matching grant fund for the CITEAT for this purpose. A limited demand assessment completed during project design indicated that there would be interest from these larger firms and clusters and the PAD had noted that it was unlikely the CITE would become self-sustainable without leading firms committed to using and paying for CITE services regularly. The CITEAT encountered significant delays in getting off the ground, including in obtaining independent legal status (persona juridica) and construction of the building, which was only completed in mid-2010. Although the CITEAT had begun operations by offering training courses before the building was constructed, the building was not equipped and fully functional until the end of the project. Only US$21,450 was spent from the matching grants fund to support micro-entrepreneurs, and the CITEAT was unsuccessful in attracting larger entrepreneurs and clusters of firms that would have paid full price for its services. Had the construction been completed in a timelier manner, the services offered from a fully-equipped CITEAT may have attracted larger leading firms while still receiving some project support. The Bank team regularly highlighted concerns to the Government about the CITEAT’s sustainability given the anticipated lack of stable revenue streams to pay operating costs after the project closed. The project financed a sustainability study that identified potential revenue sources, but at project-end, the CITEAT only had sufficient funding to maintain six employees and other operating costs for about three months. Although the CITEAT staff had several leads on potential funding opportunities, e.g. from other donors and the government, no agreements for sustainable revenue sources had been finalized. The Bank team encouraged the Government to find ways to support the operation of the CITEAT given the significant investment made to date and the high potential of the CITEAT to help MSMEs improve their productivity and product/service offerings. The Government expressed interest in doing so, but without concrete commitments, the future of the CITEAT remains unclear. Enterprise Management University (Universidad Empresarial). The idea for the Universidad Empresarial originated as an agreement between the Honduran President and the Honduran Private Enterprise Council (COHEP), with COHEP implementing the program as part of its existing Universidad José Cecilio del Valle program. For approximately US$1.2 million, the University was constructed on land owned by the Foundation MHOTIVO. In 2009, after the university building had been constructed but before classes were initiated, COHEP sold its shares in the managing foundation for the Universidad José Cecilio del Valle and was not intending on

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implementing the Universidad Empresarial program. The PIU cautioned COHEP that not establishing this program would be in violation of the credit agreement and might require the repayment of the money invested in construction. COHEP then signed agreements with MHOTIVO and FIDE, committing to operate a business training program (Programa de Formación Empresarial) in the building financed by the project. The Bank considered this alternative arrangement to be acceptable, as did the Government. The new training program was just getting off the ground at project-end and consists primarily of a series of seminars during the first stage. COHEP described plans to expand this offering, and the Bank recommended that the Government monitor the program and encourage its expansion to fully take advantage of the investment in the building. In short, the original vision of an Enterprise Management University was never realized, but a scaled back alternative was found. The scope and impact of this alternative will depend on an ongoing commitment from COHEP and the Government to improve and expand the new business training program. Committee for Administrative Simplification for Businesses (Comité de Simplificación Administrativa para Empresas, CSAE). The project supported the establishment of the CSAE with representatives from the Government and the private sector and participation from FIDE. The CSAE and its technical secretariat (also financed by the project) successfully implemented several administrative simplification measures. The Government that entered office in January 2010 passed a law that eliminated the CSAE. At project-end, discussions were underway to replace it with a similar committee called the Council on Administrative Simplification.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation The objectives of the project are relevant to Government priorities and were aligned with Bank assistance strategies. In the 2007-2010 CAS, the project’s objectives fell under one of the four major pillars – Equitable Growth for Employment Generation – which specified the importance of promoting competitiveness. The project was supported by three government administrations—although the transitions caused some delays—and the objectives remained relevant. In 2010, a new Government entered office and set forth a National Plan for 2010-2022 that lists “competitiveness, improved image of the country, and the development of productive sectors” as priorities – all of which were project goals. Although the objectives of the project were relevant to country needs, the wide dispersion of project activities made it difficult to aggregate impacts and assess progress toward achievement of the objectives. Each individual component made important advances, but most were too small to significantly impact the overall project objective. Also, the objective had a strong focus on increasing capacity to take advantage of trade opportunities under new and existing trade agreements. In all likelihood, project activities did increase Honduras’ overall ability to export but few activities specifically targeted this and project indicators did not specifically monitor firms’ capacity to take advantage of trade agreements.

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3.2 Achievement of Project Development Objectives To measure the achievement of the project development objectives, this section looks at the results achieved under each of elements (a) to (e) of the PDO (in the DCA), as well as the monitoring indicators included in Schedule 2 of the Project Agreement (as amended to date) as well as identify major outcomes achieved by the project. Overall, important results were achieved, despite the difficulties in articulating a PDO outcome indicator and recognizing shortcomings in some project activities. Annex 2 provides outputs and ratings by project component as described in section 1.5 and included in Schedule 2 of the DCA. A. Supporting policy and legal reforms (moderately satisfactory) The project supported the approval of three important laws: competition, consumer protection, and the national quality system. For competition, the project supported the preparation of the Competition Protection Law. The project supported the preparation of the consumer protection law as well as its regulation in collaboration with the Ministry of Industry and Commerce (SIC). Both the competition and consumer protection laws have been implemented. The project helped to develop the National Quality Law, which was approved in Congress after much delay in May 2009. Due to the political events of June 2009, the law was never “sanctioned” and did not enter into effect. As of the close of the project, the Government was considering modifications to the law (see section 2.5 for more details). Part A is rated moderately satisfactory, as opposed to satisfactory, since only two of the three laws supported by the project have been implemented. B. Strengthening existing institutions and creating new institutions to improve competitiveness (moderately satisfactory) Key Indicators Baseline (2004) End target

(2010) Actual (2010) Achieved or Not

Reduction of time to start a business by 40%

80 days 15 days 14 days Achieved

Reduction of time spent dealing with construction licenses

199 days (DB 2006)

100 days 106 days Partially achieved (over 90% of target achieved)

Increase in volume of cargo handled by Puerto Cortes

7.0 million tons of cargo

7.7 million tons (2009)

8.2 million tons Achieved

Additional Indicators Set up of Competition Policy Institute

No Competition Policy Institute operating in country

Fully operational Competition Policy Institute

Fully operational and independent Competition Policy Institute

Achieved

Cost to start a business US$670, US$1,522 in min capital

US$720, US$330 in min capital

US$859 in DB 2011, US$318 in min capital (Counterparts measure cost at US$604)

Partially achieved

Time to export 34 days (DB 2006)

17 days 19 days in DB 2011 (Counterparts measure 9 days)

Partially achieved (88% of reduction target achieved)

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The project strengthened several existing institutions as listed below. Ministry of Natural Resources and Environment (Secretaría de Recursos Naturales y Ambiente, SERNA). The Project supported the creation of the National System of Environmental Impact Assessments which decentralized approval of environmental permits, allowing municipal governments to provide these for projects with limited or no environmental impact. The implementation of this system meant that SERNA would only be responsible for projects with larger expected impacts. Staff at SERNA were trained in Business Process Management software and the project financed consultants to help eliminate a backlog of 1,400 requests for permits. Municipal Governments and Chambers of Commerce. Through the administrative simplification component and in collaboration with the IFC, the project helped improve municipal processes for obtaining business operation licenses and construction permits in 6 cities. The project financed the necessary computer and office equipment while the IFC provided technical assistance to develop the software. The support helped establish one-stop-shops in San Pedro Sula and Tegucigalpa. Prior to these improvements, in many of the municipalities, all paperwork was completed by hand. For the commercial registry in Tegucigalpa, the project financed the digitalization of all archived inscriptions to make this information available electronically. These changes were crucial to reducing times and costs for starting and operating a business. National Vocational Training Institute (Instituto Nacional de Formación Profesional, INFOP). The project provided technical assistance to develop a strategic plan for INFOP, but for political reasons, did not implement a planned reorganization of the institute. Executive Directorate of Revenues (Dirección Ejecutiva de Ingresos, DEI). The project financed a human resources modernization program within the DEI. The program included the design and implementation of new standards for contracting personnel, a salary reform, and a new incentives-based compensation program. These improvements were to improve the overall efficiency of the DEI and, therefore, facilitate tax payments. The activity was planned as a pilot and was to be replicated in other civil service entities. In 2011, the Government expects to replicate the program in other sections of the DEI – the Organization for Large Contributors and the Customs group. Puerto Cortés. Direct support to improving the quality and reducing costs at one of the country’s major ports, Puerto Cortés, was the project’s main contribution to infrastructure enhancement. Initial support was US$2.5 million in severance payments to port workers since this was a prerequisite for awarding a concession of the port. In collaboration with the National Port Protection Commission (Comisión Nacional para Protección Portuaria, CNPP), the project focused on increasing the security of the port primarily by providing critical tools for this purpose, such as equipment to identify explosive material and drug-sniffing dogs. The project’s support led to the Port’s attainment of important certifications – Container Security Initiative, Megaports, and one from the International Maritime Organization. The project also supported the creation of several new institutions.

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National Port Protection Commission (CNPP). The project supported the establishment of the CNPP, including funding salaries of initial staff, providing equipment for furnishing the offices, and operating costs. The CNPP now operates with adequate personnel and budget assigned by the Government. The CNPP is responsible for maintaining the international certifications for Puerto Cortés. Committee for Administrative Simplification for Businesses (CSAE). As one of the conditions of effectiveness, the project supported the establishment of the CSAE with representatives from the Government and the private sector and participation from FIDE. The CSAE and its technical secretariat (also financed by the project) successfully implemented several administrative simplification measures. Through project support, the CSAE contributed to the reduction of average time needed to register a property from 36 days in the Doing Business 2006 report to 23 days in 2011, to obtain a construction permit from 199 to 106 days, to export from 34 days to 19 days, and to open a business from 80 (DB 2004) to 14 days. Commission for the Defense and Protection of Competition (Comisión de Defensa y Protección de la Competencia, CDPC). The project provided technical and financial support to start the CDPC. By project-end, the commission was operating with its own budget and with adequate personnel and had resolved 39 cases of economic concentration. The Commission also exceeded the project target of completing 7 sector studies by completing 18. Honduras’ ranking in the “Effectiveness of anti-monopoly policy” jumped 21 spots in the 2007-2008 World Economic Forum Global Competitiveness Report from 105 to 84, which was at least partially due to project support to competition policy. Consumer Protection Directorate (Dirección General de Protección al Consumidor, DGPC). The project supported the DGPC—a new division inside the Ministry of Industry and Commerce (SIC)—in its first months of applying the consumer protection law by financing equipment, a vehicle, and material and events to promote the law. The law that established the DGPC had called for its complete autonomy within a year of its establishment, but this did not occur. Except for the lack of independence from the SIC, the DGPC is operating as planned. National Quality System. The project helped to establish the National Quality Council (Consejo Nacional para la Calidad, CNCA), with representatives from the Government and the private sector with the aim of creating the National Quality System. Under the umbrella of this system, the project helped establish the national organizations responsible for the different aspects of quality: (1) the Honduran Standards Organization (Organismo Hondureño de Normalización, OHN); (2) the Honduran Office of Accreditation (Oficina Hondureña de Acreditación, OHA); and (3) the Honduran Metrology Center (Centro Hondureño de Metrología). Quality institutions from Costa Rica and Mexico assisted in the formation of their Honduran equivalents. The project funded the design, construction, and equipping of the National Metrology Laboratory, following international specifications. Enterprise Management University (Universidad Empresarial). The creation of the Universidad Empresarial to train private sector managers and entrepreneurs was added to the project with the third amendment. The establishment of this university included the construction

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of the building to house the university and assistance in designing the curriculum. The University was expected to contribute to the competitiveness of the private sector by offering concurrent academic and practical professional training. The program was to target professionals and entrepreneurs that were underserved by other training programs. By project close, although a business training program was in place, it was of a smaller scale than the program that was originally envisioned. (See section 2.5 for more details). Transport Regulatory Agency. The project had originally foreseen establishing a Transport Regulatory Agency, but this was dependent on the passage of specific legislation. Early in project implementation, the Government determined that the legislation and agency were no longer priorities. The Government requested that this activity be removed from the project and the Bank agreed it was not necessary for project objectives. Part B is rated moderately satisfactory because three of the indicators were partially achieved and because of shortcomings in establishing the Universidad Empresarial and in sustaining the CSAE. C. Providing advisory services and financial support to MSMEs and to firms operating in the most dynamic local industries to facilitate access to export markets and productivity improvements (satisfactory) Key Indicators Baseline

(2004) End target (2010)

Actual (2010) Achieved or Not

Number of new jobs created through foreign direct investment (FDI) promotion activities

365 10,000* (Cumulative 2009)

5,815 (Cumulative 2009)

Partially achieved

Increase in the number of laboratory tests accredited according to international standards (with project support)

0 20 77 Achieved

Increase in the number of firms obtaining quality certifications (with project support)

Large: 0; MSMEs: 0

15 Large: 23; MSMEs: 87

Achieved

Additional Indicators

Number of laboratories accredited by international organizations (with project support)

0 3 11 Achieved

Matching grants. Matching grants were utilized in three components in order to leverage project resources and encourage firm ownership of subprojects. Matching grants were provided through three separate windows, for quality certifications and accreditations, innovation through CITEs, and capacity building. In certification, matching grants helped 110 firms obtain certifications, such as ISO 9001, ISO 14001, HACCP, and organic certifications – many of which are prohibitively expensive for smaller firms. These certifications are important to help firms access export markets. Project support likely had a multiplier effect in increasing awareness of the importance of certifications because only 25 firms had certifications in 2004 while 324 did in 2010. Matching grants also helped 11 laboratories obtain international accreditations. The Honduran Office of Accreditation worked in conjunction with the internationally-recognized Costa Rican Accreditation body (Entidad Costarricense de Acreditación) to provide the accreditations. The CITEAT used matching grants to assist over 230 microenterprises pay for

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technical assistance services to help them adopt technologies to improve their products. Matching grants were also used to help firms pay for training through the El Zamorano Agricultural School. It should be noted that the evaluation of matching grants performance is based on disbursement and number of beneficiaries, while the Bank’s more recent work in this area uses more rigorous impact evaluation. Proactive FDI promotion campaigns for specific sectors. Based on guidance from the Bank’s Multilateral Investment Guarantee Agency (MIGA), the project supported proactive investment campaigns in light manufacturing, tourism, and agro-industry. The campaigns consisted of diverse activities such as preparation of promotional material for each sector, completion of sector profiles, creation of investor guides, and contacting of potential investors through mailings and international trips. These campaigns are principally responsible for 33 new investments, 5,815 new jobs, and approximately US$60 million in new foreign investments. Part C is rated satisfactory because matching grants exceeded targets in helping firms obtain certifications and accreditations and the FDI campaigns resulted in new investments and jobs. D. Financing small scale initiatives to improve productivity of selected areas by upgrading local infrastructure, promoting business innovation and use of technology (moderately satisfactory) Key Indicators Baseline

(2004) End target (2010)


Number of MSMEs using CITES financed by the Project

0 30 231 Achieved

Increased investment (local and foreign) in the areas selected as pilots for the local competitiveness initiative

0 Other donor financing mobilized: $2.95 million; Increased investment: $1.19 million

Other donor financing mobilized: $2.94 million; Increased investment: $1.1 million

Partially achieved (over 90% of target achieved)

Additional Indicators Creation and operation of CITEs No CITE

operating in country

Fully operational crafts/tourism CITE

Operational crafts/tourism CITE

Achieved

Innovation Technology Centers (Centros de Innovación y Tecnología, CITEs). The project supported the construction and equipping of an artisan crafts and tourism technology center (CITEAT) in Copan Ruinas. The center aims to support firms and individual entrepreneurs in adopting new technologies and increasing the marketability of their products. It includes design areas, an information and market intelligence center, and workshops for ceramics, pottery, and packaging. All of the services to be provided by the CITEAT are considered innovative for Honduras, and the center has high potential to help local businesses and craftspeople better serve tourists who visit the famous Mayan ruins in the area. The center was also designed to provide outreach to craftspeople in other regions of the country. Despite the center’s high potential, its sustainability is in doubt because it did not have adequate time to develop a sustainable revenue stream before the project closed. (See section 2.5 for more details on sustainability.) Nevertheless, prior to finishing the building, the CITEAT provided training and technical assistance to over 230 craft producers, which exceeded the project target of 30.

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The original project design had envisioned assisting in the creation of two other CITEs: wood/ furniture and textiles. The Government and Bank agreed to end support for the wood and furniture CITE (CITEMM) in 2007. The project financed the rent for the building, equipment, and operating costs for the CITEMM, but the wood sector had largely collapsed in recent years. It was decided that continuing support for the CITEMM would not be the best use of project resources and funds were redirected toward the CITEAT. The Central American Bank for Economic Integration was to provide parallel financing to establish the textiles CITE, which did not happen. Local competitiveness initiatives. In five regions, the project supported important local industries through technical assistance, small scale works, and equipment to promote productivity and innovation in key sectors. Most of the impacts were small but important to the beneficiaries. Over 400 MSMEs primarily operating in agriculture and tourism received project assistance. For example, oriental vegetable and mango producers received training in innovative production techniques, which led to higher productivity and sales. The mango producers were able to export their products for the first time. Small shrimp producers in the south of Honduras received training on production techniques, which led to increases in sales and productivity of over 70 percent per hectare and helped them to establish links with exporting firms. Also in southern Honduras, the project supported the construction of 2 cashew processing plants that assisted over 240 producers diversify into higher value-added products. In tourism, the project developed a strategic tourism plan in Comayagua, which included the training of over 300 people in the hospitality industry to improve the level of service provided. In another example, the project supported renovations to the Convention Center in Copan Ruinas (a major tourism center) to attract conference tourism. In Ojojona, the project helped design a new sewer and sanitation system and financed the remodeling of the municipal market. The investments were important for increasing the tourism potential of the regions. Part D is rated moderately satisfactory, as opposed to satisfactory, because of doubts about the sustainability of the CITEAT and because local competitiveness initiatives fell short of their targets. E. Increasing MSMEs’ access to training and advisory services (satisfactory) Key Indicators Baseline

(2004) End target (2010)


Number of SMEs receiving training through Project-financed courses (in coffee and bean sectors)

0 200 394 Achieved

Number of public and private training centers strengthened with Project support

0 4 15 Achieved

Additional Indicators Number of workers that received training through project-supported centers

0 800 1500 Achieved

Originally, the project had intended to create a legal framework for a national training system. The project developed the diagnostic, design, and carried out the necessary promotion to create this system, but the proposed changes encountered fierce opposition from the unions and the project did not carry out the plan. Resources for this component were redirected to strengthen the

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existing public and private institutions and their training capacity. Through this component, fifteen private and public institutes that provide training were strengthened and over 1,500 individuals received training from the strengthened centers. Among the 15 training institutions supported was the Central American Polytechnic Institute (Instituto Polítecnico Centroamericano, IPC) which received specialized training equipment and technical assistance for designing curriculums in such fields as refrigeration and electricity. Through a partnership with INFOP and the Agricultural School El Zamorano, 418 SMEs in the coffee, bean, and shrimp sectors participated in capacity building activities. SMEs that received training showed a 150 percent increase in productivity and a 200 percent increase in sales. The project also contracted international and national consultants to develop fifteen technical standards for training and five curricula in specific key sectors. Part E is rated satisfactory because the training activities exceeded all of their targets in the monitored indicators. Summary. Table 2 identifies the major outcomes resulting from project inputs that demonstrated progress toward achievement of the PDO. Table 2: Inputs, Outputs, and Outcomes

Inputs Outputs Outcomes

PDO component

Support to the Competition Commission

Commission operating with own budget and resolving economic concentration cases

Increased effectiveness of anti-monopoly policy as measured by WEF

A

Establishment of business portals

Eased business registration, decreased time

60 percent increase in firm registration in the first year after the reforms

B

Creation of National System of Environmental Impact Assessments

Decentralized approval of environmental permits

More efficient system, SERNA only responsible for reviewing permit applications with larger expected impacts

B

Modernization program for human resources section of DEI

Implementation of program recommendations, including changes in compensation scheme

More efficient human resources section; replication of program in other parts of DEI

B

Support to Puerto Cortes

Puerto Cortes operating with state of the art equipment

Port obtained international certifications; managing over 8 million tons of cargo, up from 7 million in 2004

B

FDI promotion campaigns

Magazine and website notices and participation in international fairs reached over 7 million potential investors; Sector-specific proactive campaigns

33 new investments; 5,815 new jobs; US$60 million in new foreign investments

C

Matching grants to firms to obtain certifications

110 firms (including 87 MSMEs) obtained quality certifications with project support

Multiplier effect of support - 324 firms had certifications by project-end while only 25 did in 2004

C

Support to training activities

1,510 individuals received training from strengthened training centers; 418 SMEs in specific sectors trained

394 SMEs working in beans, coffee, and shrimp sectors that received training showed a 150% increase in productivity and a 200% increase in sales

E

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Funding for cashew grower groups

Completed construction of 2 cashew processing plants, 240 producers trained

Diversification into processed cashew products, leading to increased value-added for producers

D

Training to vegetable and mango producers

150 small producers of mango and oriental vegetables were trained in innovative production techniques

30 percent increase or higher in income for producers; mango producers became exporters

D

Training to shrimp producers

50 shrimp producers trained in production techniques

76% increase in productivity per hectare; 79% increase in income per hectare; and links established with commercial exporters

D

3.3 Efficiency Given the nature and broad scope of the project’s activities, a formal cost-benefit/efficiency calculation is not possible. The PAD also did not include calculations for the economic and financial analyses. However, evidence from individual components suggests a high return in some cases. For the Foreign Direct Investment subcomponent alone, approximately US$2.5 million was spent and about US$60 million was generated in foreign investment. The approximately US$2.9 million spent on the Local Competitiveness component not only directly benefitted hundreds of MSMEs, leading to increased sales and value addition, but also helped to mobilize over US$4 million in donor and private investment in the target areas. The matching grants mechanism ensured that project resources were leveraged efficiently to encourage firms to obtain certifications, participate in trainings, and learn about new technologies. Lastly, the administrative simplification subcomponent contributed to increasing the efficiency of government processes. Also, since 60 percent more firms registered in the year after implementing the reforms (2006) and over 30,000 firms registered between 2006 and 2010, this indicates that the project contributed to increasing tax revenues from businesses.

3.4 Justification of Overall Outcome Rating Rating: moderately satisfactory The project achieved important advances toward improving the investment climate and increasing firms’ capacity for export. As noted, there was not one good aggregate measure of the project’s impact and, for that reason, it is necessary to look at the impact of each of the subcomponents of the PDO. For (a), supporting policy and legal reforms, the project facilitated the passage of three laws. Support for the competition law led to increased effectiveness of the anti-monopoly policy. For (b), the project supported the creation of several institutions and supported existing ones to improve competitiveness, which ultimately led to the achievement of most of the associated indicators and important impacts, such as greater firm registration. For (c), the project provided matching grants to support MSMEs and implemented proactive promotion campaigns to encourage FDI in dynamic sectors. The matching grants, although implemented in a limited form, exceeded project targets for number of firms assisted. The promotion campaigns were successful in attracting FDI, but the number of jobs created fell short of project targets. For (d), the project financed small scale initiatives and promoted business innovation through the CITEAT and the local competitiveness activities. The CITEAT assisted over 230 micro-entrepreneurs, exceeding the project target of 30. The local competitiveness activities had a variety of impacts, including increased sales, productivity, and exports for small entrepreneurs.

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Lastly, for (e), fifteen public and private training institutes were strengthened and 395 SMEs and 1,500 individuals received through project support - exceeding all project targets. Although the project made a large number of impacts that positively affected Honduras’ competitiveness, the overall outcome is rated moderately satisfactory, as opposed to satisfactory due to: (1) three of the five subcomponents were rated moderately satisfactory indicating shortcomings in some project activities; and (2) all aspects of the broad PDO could not be addressed by project activities. Some shortcomings were: delays in the operation of the craft and tourism technology center (CITEAT) and its future sustainability; incipient nature of the business training program operated by COHEP to be housed in a building financed by the project (formerly the Universidad Empresarial); and the future operation of the administrative simplification council. Also, project targets were only partially achieved in five of the sixteen monitored indicators, although some were close. For a small number of activities, it was unclear what the impact was on achieving the PDO. For instance, a communications campaign—aimed at raising awareness of project activities and the importance of competitiveness—only noted a slight increase in public awareness. A few subcomponents were modified or eliminated out of the 47 original subcomponents, but these changes were undertaken in order to best utilize project resources to achieve objectives. On the second point, as noted, the PDO placed emphasis on increasing firms’ capacity to export and take advantage of trade opportunities. Few activities specifically targeted this and it is not possible to evaluate based on the project’s outcomes and indicators whether activities led to greater exports for a critical mass of firms. The operation’s relevance and achievement of the PDO are rated moderately satisfactory and the efficiency is considered satisfactory.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development For gender impacts, the CITEAT targeted women as the primary beneficiaries of its services, particularly in the crafts sector. See section 2.4 under compliance with indigenous policies. (b) Institutional Change/Strengthening The project contributed significantly to institutional changes, as noted in part B of section 3.2 above. However, the changes have varied likelihoods of sustainability. The newly formed consumer protection and competition agencies will likely continue, since their existence is guaranteed by the laws that the project facilitated. Changes made with national and local government agencies to implement the administrative simplification measures are likely to be sustainable, but without leadership from the CSAE (or a similar body), the addition of new reforms is less likely. Among the project’s most impressive successes is the establishment of the National Quality System and its associated agencies. The sustainability of these institutions will be guaranteed once the national quality law is passed (again) by Congress (at project close, the government was working on changes to a few clauses of the law before resubmitting it to Congress for approval).

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Among changes that did not occur, the project did not implement a major reorganization of INFOP nor establish the Transport Regulatory Agency, primarily due to changing government priorities. Also, an original loan covenant was to establish a long-term financing mechanism for FIDE to continue its FDI promotion activities. The third amendment removed the covenant from the loan agreement. The reasoning for its removal was that the Government no longer considered this a priority and the Bank agreed that this would not impact achieving development objectives. No other actions were taken to ensure the longer-term financing of FIDE. (c) Other Unintended Outcomes and Impacts (positive or negative) Not applicable.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable

4. Assessment of Risk to Development Outcome Rating: moderate There is a risk that some of the project’s activities and impacts will not be sustained. This risk comes from uncertainty over future levels of institutional support. As discussed for certain activities, such as the use of the buildings for the National Quality System and the Universidad Empresarial, government follow-up and monitoring is necessary and not guaranteed. In most other activities, the beneficiaries have already absorbed the intended benefits, such as training, certifications and accreditations, port improvements, and administrative simplification reforms. Furthering or maintaining some achievements, such as renewing quality certifications, could be difficult without project financing and matching grants. Also, it is worth noting that whether additional reforms and improvements will continue is less clear, particularly in the area of administrative simplification.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: moderately unsatisfactory The project’s objectives were strategically relevant, but the design was complex and the achievement of the PDO could not be easily measured. As stated above, the objectives were aligned with government priorities and Bank strategies. The project was designed based on extensive prior research and experience that pointed to a broad cross-cutting approach to improving competitiveness. The approach should be commended for including innovative mechanisms, such as the local competitiveness activities. The PAD provides well-researched justifications for the inclusion of project activities. However, the design was overly complex with many subcomponents and stakeholders. This complexity may have been appropriate in a higher-income country with strong institutional capacity, but in the case of Honduras, the high complexity did not match well with existing institutional capacity. This led to implementation challenges (particularly in procurement),

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intense supervision and project management needs (the PIU averaged 25 staff during peak implementation years), and difficulties in demonstrating to successive government counterparts that the project had a coherent and compelling focus. Also, despite extensive project preparation, the results of a few activities indicate that research of certain aspects may not have been sufficient. For example, during project implementation it was determined that the matching grants mechanism was unfeasible for government entities, but it is unclear why this was not determined during project preparation. Furthermore, for the CITEs, of the three sectors that were identified as having great potential, only one CITE was fully established and that one was modified with the addition of tourism. This could indicate that sector selection during preparation was not appropriate. The PAD also included proposals for establishing a quality system that conflicted with some international best practices, such as proposing to include members of the Ministry of Trade as part of the Accreditation Authority, which would undermine that entity’s independence. Also, in some cases, such as the CITEs, the PAD proposed an unrealistic implementation schedule. Among other design issues, the PDO was broad and an appropriate PDO indicator was never identified. The PDO included a strong focus on increasing firms’ export capacity to take advantage of trade opportunities, but little in the project directly supported or measured this. Furthermore, the PDO in the PAD differed from the one in the DCA, making meaningful measurement of progress toward the PDO difficult. The PAD accurately assesses most of the potential risks in the project, such as the likely difficulty in creating a self-sustaining CITE, but it does not adequately recognize exogenous threats such as the political situation, which resulted in serious delays in project implementation. (b) Quality of Supervision Rating: satisfactory Given the project’s complex design, the Bank had to provide close and intense supervision throughout the project life. The Bank was proactive in identifying opportunities and in resolving problems. The team worked with the counterparts to modify the project as necessary to better achieve project objectives, including through several different amendments/restructurings. During peak periods of implementation, the Bank had daily communication with the PIU and provided detailed feedback on hundreds of “no objection” requests, including identifying irregularities and objecting to certain requests. For activities with specific technical specifications, in many cases the team found an appropriate expert to review the activity prior to issuing a “no objection.” For example, the Bank hired an architect to review the construction plans for the National Metrology Laboratory. Also, the team contracted an international expert to review the Consumer Protection Law after it passed in Congress. An acceptable law was a condition for disbursing project funds to support the Consumer Protection agency. The expert identified shortcomings in the law that conflicted with international best practice and provided recommendations for addressing the deficiencies through the law’s regulation. The Bank demonstrated flexibility in terms of complying with government requests to include additional works, which changed the project’s environmental classification and required greater safeguard compliance supervision.

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The Bank team also made extensive efforts with entities outside the PIU to ensure project-financed activities were implemented as agreed, such as the Entrepreneurial Management University. Although much supervision time was devoted to resolving a wide range of urgent implementation bottlenecks within the PIU and in Tegucigalpa, the Bank team made sure missions included field visits all over the country to visit beneficiaries and learn of project impacts and obstacles. Examples include visits to San Pedro Sula, Copan Ruinas, Choluteca, Comayagua, Ojojona, Siguatepeque, Langue, Valle, Puerto Cortes, Roatan, La Ceiba, Brus Laguna, Reserva de la Biosfera de Río Plátano, and others. The Bank fiduciary staff provided more than average attention to this project, particularly since the PIU’s procurement capacity was weak. However, the PIU frequently complained of inconsistencies in the application of procurement rules on the part of the Bank due to changes in the Bank procurement specialists supporting the project. ISR reporting was both thorough and candid. The project had four TTLs over the course of implementation. Although transitions were handled adequately, given the steep learning curve for such a complex project, delays and oversights likely occurred in implementation during transition times. A final consideration is that the Bank did not restructure the project to substantially reduce the complexity of the original project design, which could have potentially led to more targeted interventions and outcomes. Such a course would have been difficult given that each of the subcomponents had a set of stakeholders with clear expectations and it would have been difficult to reverse support for them midstream, particularly without a request from the government to do so. (c) Justification of Rating for Overall Bank Performance Rating: moderately satisfactory While important results were achieved, the project design was overly complex and there were some deficiencies in project preparation. The Bank team took risks in implementing innovative mechanisms, particularly with the CITEs and the local competitiveness initiatives. The Bank’s performance was strong in supervising implementation. Close supervision played a large part in helping the project achieve many of its secondary objectives and make important advances towards furthering Honduras’ competitiveness. The moderately unsatisfactory quality at entry rating averages with the satisfactory quality of supervision rating to produce an overall Bank performance rating of moderately satisfactory.

5.2 Borrower Performance (a) Government Performance Rating: moderately unsatisfactory The Government’s expressed commitment to the project over the course of the project’s life was adequate and was demonstrated through the various partnerships the project had with government entities. The project worked with several government agencies including local governments with administrative simplification, public training institutions, SERNA, the consumer protection and competition institutes, and the national quality agencies. The project was implemented by an organization outside of the Government, which is rare in Honduras. Despite the unique situation, the Government generally provided promised counterpart funding in a timely manner (although budget years realistically only ran from March to November).

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However, governmental issues were an obstacle to the project’s successful implementation and the likelihood of sustaining its outcomes. As described in 2.2, in 2005, the Government slowed down implementation because the IMF had imposed external borrowing constraints and therefore asked all projects in Honduras not to commit to new contracts. The electoral process in 2005 caused a slowdown in the approval process for laws whose approval was a condition for advancing activities. In January 2006, the new Government suggested moving the PIU from FIDE to a governmental entity. This proposal created some delays and was eventually abandoned after the Bank expressed concerns about its possible negative impact on project implementation efficiency. The time it took for the new Government to become familiar with and buy-in to the project components in 2005-2006 led to some delays, as did the suspension of project activities after the political events of July 2009. Legislative changes passed by the new Government in January 2010 created some disruptions in the institutions supported by the project, including the CSAE and the national quality system. At the close of the project, the Government expressed interest in providing support needed to ensure the sustainability of the CITEAT, however no resources had been formally committed. (b) Implementing Agency or Agencies Performance Rating: moderately satisfactory The implementing agency was highly committed to achieving project targets. The PIU was housed in a private sector foundation, FIDE. The PIU was successful at developing various partnerships, both in the public and private spheres. Technical staff members of the PIU were highly capable and took ownership of results of activities. Monitoring of implementation results was important and changes in the project were implemented to reflect monitoring results. Although the sustainability of all project activities is not assured (see section 2.5), the PIU made great efforts to ensure the buy-in of the Government and other stakeholders in the importance of sustaining project activities. In most components, the project achieved or surpassed its targets and this is primarily thanks to the dedication and hard work of the PIU staff. This dedication was critical given that the PIU was basically created from scratch to manage this highly complex, multi-sectoral project. Procurement was weak and was the PIU’s most significant obstacle to satisfactory performance. The Bank repeatedly highlighted this issue as a major problem and made various suggestions for improvement, but problems continued throughout project implementation. Throughout the project life, the quality of procurement documents was low and required extensive reviews from the Bank. This issue and the delays it caused were also the most frequent complaint from technical staff in the PIU. Adequate quality control measures were never put into place, despite having a large procurement team of up to six members. Performance could have been improved if PIU management had taken greater efforts to strengthen communications between procurement and technical staff and impose better quality control mechanisms. (c) Justification of Rating for Overall Borrower Performance Rating: moderately satisfactory

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Despite the shortcomings in the Government and implementing agency’s performance, the project achieved several important outcomes. Although shortcomings in the Government’s performance were considerable, they were outweighed by the commitment and technical performance of PIU staff. This commitment, which also in part compensated for procurement inefficiencies, was a significant factor for the project’s achievements.

6. Lessons Learned An overly complex design with too many components and activities leads to a project that is difficult to implement, supervise, and evaluate. Although the project had five major technical components, most of the primary subcomponents were large enough to be considered separate components, meaning the project in reality had nine components. Managing so many activities made it difficult to ensure impacts and sustainability. With fewer components, more attention from both the PIU and the Bank could have been devoted to maximizing impacts of key activities. As it was, much supervision time was spent trying to resolve urgent issues and manage hundreds of procurement processes. With fewer activities, Government buy-in may also have been easier to obtain since it was difficult to grasp all of the project’s activities and potential impacts. With project resources divided among so many activities, the impacts were highly dispersed. For example, although project-funded training to shrimp producers led to significant improvements in productivity, the project was only able to fund training for 50 producers. A complex design also makes it challenging to establish an overall objective that is focused and near impossible to identify clear PDO indicators. For this project, this meant measuring the overall impact of the project was difficult. It is important to note that streamlining the component level indicators from the original 42 to those that most accurately reflected project activities did ease monitoring and evaluation. The Bank and Government could have considered reformulating the PDO through one of the restructurings, however, removing project activities would have been politically difficult and it is unlikely that a PDO could have been created that was both focused and accurately reflected the variety of project activities. Procurement practices should be applied in a predictable way. Procurement rules should be applied consistently and clear rules should be shared with counterparts. Particularly for Honduras, qualified and experienced procurement personnel are necessary. If new systems are to be introduced, such as SEPA in this project, they should not impede implementation. They should be introduced in parallel with old systems until they are tested and are fully functioning and counterpart staff are adequately trained. Housing the PIU in an entity outside of the Government has both advantages and disadvantages. The most important advantage of placing the PIU in a private foundation, FIDE, was that this institution was better placed to work with both public and private sector entities, which is important specifically for projects that focus on developing the private sector. Theoretically, the project was also better placed to avoid staff turnover and disruptions due to changes in government administrations. While staff turnover was quite low over the life of the project, other government-related issues—such as elections, the pause in 2009, and budget years that only realistically ran from March to November—still resulted in implementation delays. The

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biggest disadvantage with this set-up is that it may have decreased government ownership of project activities and diminished government interest in ensuring sustainability. When projects include matching grants, the mechanism for implementing the grants should be defined early in the project’s life. Matching grants mechanisms can require significant preparation time to get off the ground; implementation of the grants for this project did not start until 2008. If mechanisms had been defined earlier in the project, then it is likely that more matching grants would have been disbursed, particularly for quality certifications and accreditations where interest was high. It is important to design realistic sustainability mechanisms for technology centers (CITEs) from the outset of the project. Although an assessment of the viability of the CITEs was undertaken during preparation, the sustainability mechanisms defined were not realistic given the difficulty in actually establishing the CITEs. The design had assumed that the CITEs would be fully operational within the first year of project implementation, while in reality, the CITEAT (the only CITE supported by project-end) was not fully operational with a building and equipment until 2010. The CITEAT had been able to provide limited technical assistance to micro-entrepreneurs prior to the construction of the building and the purchase of the equipment, but was unable to attract larger firms and clusters of small enterprises that were willing to pay full price for services, which was the mechanism defined in the design. The design of future Bank projects that include CITEs should include more thorough demand assessments and realistic projections about start-up time and how many years of public support will be needed. Future CITE designs should also consider a variety of alternate sustainability mechanisms including the commitment of the Government to support the CITE if other mechanisms are not adequate. Risks that buildings constructed with project resources are used for purposes outside the scope of the legal agreement need to be carefully managed. In this project, these risks were present for the Enterprise University and the National Metrology Laboratory (see 2.5 for details). Minimizing this risk should start with clear language in the legal agreement that guarantees project-funded constructions are used for their intended purposes. Buy-in from the Government and other stakeholders in the importance of the buildings is also critical. In these cases, the Government has committed to assuring the buildings will be used for their intended purposes, however, this is an important lesson for other projects to keep in mind.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Borrower noted (see Annex 7a) that all of the project's audit reports received an unqualified (clean) opinion. However, the reports from 2008 and 2009 received a qualified opinion due to financial management issues related mostly with minor accounting and internal control issues, which were addressed by the project in a timely manner. (b) Cofinanciers Not applicable. (c) Other partners and stakeholders

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(e.g. NGOs/private sector/civil society) Not applicable.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)*

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal (%)

1. IMPROVING KEY ELEMENTS OF HONDURAS' INVESTMENT CLIMATE1.A. REDUCING FIRMS' ANTICOMPETITIVE BEHAVIOR AND IMPROVE CONSUMER PROTECTI

9.97 10.56 106

2. PROMOTING PRIVATE SECTOR INNOVATION2.A. CREATING CENTROS DE INNOVACIONES TECNOLOGICAS (CITE) TO FACILITATE TECHNOLOGY ADOP TION FO

10.86 9.57 88

3. IMPROVING THE SKILLS OF THE LABOR FORCE 2.79 3.75 134

4. LOCAL COMPETITIVENESS - IMPROVING ECONOMIC DEVELOPMENT IN FOUR SELECTED PILOT AREAS

2.99 2.90 97

5. DEVELOPING A COMMUNICATION CAMPAIGN ON BROAD THEMES RELATED TO COMPETITIVENESS

2.09 1.11 53

6. FINANCING OF THE PROJECT IMPLEMENTATION UNIT (PIU) 3.89 5.68 146

7. UNALLOCATED 1.02 0 0

Total Baseline Cost 33.61 33.57 103

Physical Contingencies 0.00

0.00

0.00

Price Contingencies 0.0

0.00

0.00

Total Project Costs 33.61 33.57 99Front-end fee PPF .18 0.18 .00Front-end fee IBRD 0.00 0.00 .00Total Financing Required 33.79 33.76 99 *Includes both Bank and counterpart funding.

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(b) Financing

Source of Funds Type of Cofinancing

Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD millions)

Percentage of Appraisal

Borrower 3.38 5.48 162 International Development Association (IDA) 28.06 28.81 103

Central American Bank for Economic Integration Parallel 2.35 0 0

(c) Initial and Final Disbursement Categories Category Original Amount

of Credit Allocated (SDR)

Final Amount of Credit Allocated (SDR)

Final Amount Disbursed (SDR)

(1) Works 530,000 1,993,000 1,984,619 (2) Goods (except those covered in Categories 6-10 below)

(a) under Part A.1(c) of the Project 300,000 176,704 176,704 (b) under Part A.3 (c) of the Project 1,460,000 586,000 570,468 (c) other 1,100,000 3,636,000 3,698,418 (d) under Part A.1 (d) of the Project 0 0 0 (e) under Part D of the Project 0 142,000 50,827

(3) Consultants’ Services (except those covered in Categories 7-10 below)

(a) under Part A.1 (c) of the Project 270,000 68,170 68,170 (b) under Part A.3 (c) of the Project 40,000 0 0 (c) for Audits 60,000 80,000 69,785 (d) other 7,430,000 7,222,000 7,210,220 (e) under Part D of the Project 0 601,000 592,205

(4) Communication Services 1,550,000 235,000 216,252 (5) Training/Workshops (except those covered in Categories 7-10 below)

(a) under Part A.1 (c) of the Project 220,000 178,000 177,989 (b) other 490,000 811,000 791,836 (c) under Part A.1 (d) of the Project 0 0 0

(6) Incremental operating costs (except those covered in Categories 7-10 below)

350,000 917,822 770,960

(7) Type A Grants 750,000 0 0 (8) Type B.1 Grants 590,000 53,000 0 (9) Type B.3 Grants 500,000 95,000 198,496 (10) Type C Grants 730,000 232,472 232,472 (11) Severance payments under Part A.3 (b) of the Project

1,820,000 1,634,000 1,633,891

(12) Certification costs under Part B.3 (c) (ii) and Accreditation Costs under Part C.4 (b) of the Project

170,000 18,000 30,544

(13) Refunding of Project Preparation Advance 1,260,000 117,364 117,364 (14) Unallocated 880,000 0 0 Total 20,500,000 18,796,422 18,776,446 Note: The Final Amount of Credit Allocated is less than the Original Amount due to funds that were cancelled from the project in December 2010

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Annex 2. Outputs by Component Component A: Improving Key Elements of Honduras’ Investment Climate (satisfactory, US $10.56 million) A1. Reducing Anti-Competitive Behavior and Consumer Protection (satisfactory, US $.79 million) Facilitated the drafting and approval of the Law for the Defense and Promotion of

Competition Establishing and strengthening the Commission for the Defense and Promotion of

Competition (CDPC) Five sector studies from the CDPC in sugar, dairy products, cement, grains, and fertilizers Updated version of the Consumer Protection Law Study tours to Brazil to learn about consumer protection best practices Facilitating the promotion and approval of the Consumer Protection Law Elaboration of the associated regulation for the Consumer Protection Law Institutional strengthening of the Consumer Protection Directorate (DGPC) For competition, the project funded the facilitating work that eventually led to the approval of the Competition Protection Law. The project provided technical and financial support to start the CDPC. By project-end, the commission was operating with its own budget and with adequate personnel and had resolved 39 cases of economic concentration. The CDPC also exceeded the project target of completing 7 sector studies by completing 18. Honduras’ ranking in the World Economic Forum’s Competitiveness Ranking jumped 21 spots in the 2007-2008 report from 105 to 84 in the “Effectiveness of anti-monopoly policy” at least partially due to project support to competition policy. The consumer protection agency was also strengthened with project support. The project financed the facilitating work and the elaboration of the regulation for the consumer protection law in collaboration with the Secretariat of Industry and Commerce (SIC). The project assisted the DGPC inside of SIC, in its first months of applying the law with equipment, a vehicle, and material and events to promote the law. The law had called for the complete autonomy of the DGPC within a year of its establishment, but this did not occur. Except for the lack of independence from SIC, the law is being applied as planned. A2. Administrative Simplification (moderately satisfactory, US $5.35 million) Implementation of one-stop-shops to facilitate registering a business Simplified processes, including reduction in times and costs, for starting a business,

registering a property, and obtaining a construction permit Implementation of software to ease administrative processes for businesses Institutional strengthening of the Natural Resources and Environmental Secretariat, including

funding consultants to eliminate backlogs of requests for environmental permits and implementing software digitize processes

Modernization of the human resources department of the Executive Directorate of Income through a contract with the Office of Technical Assistance with the US Treasury

Sovereign risk rating through Standard & Poor’s of Honduran debt

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The project contributed to the reduction of average time needed to register a property from 36 days in the Doing Business 2006 report to 23 days in 2011, to obtain a construction permit from 199 to 106 days, to export from 34 days to 19 days, and to open a business from 80 (DB 2004) to 14 days. For several years, Honduras was a top performer in Latin America in its Doing Business performance, as measured by the number of reforms it undertook. The project created business portals (Portales Empresariales) in San Pedro Sula and Tegucigalpa as one-stop-shops for opening a business. The PIU estimates that over 30,000 firms benefitted from eased business registration, based on the number of firms that registered after the reforms in both cities. The subcomponent also supported other entities and policy actions that affected the business climate. The subcomponent supported the creation of the National System of Environmental Impact Assessment, which decentralized approval of environmental permits, allowing municipal governments to provide these for projects with limited or no environmental impact. The implementation of this system meant that the Ministry of Natural Resources and Environment (Secretaría de Recursos Naturales y Ambiente, SERNA) would only be responsible for projects with larger expected impacts. To improve communication and supervision of processes, the project provided training to SERNA and chambers of commerce in San Pedro Sula and Tegucigalpa in Business Process Management software. The project implemented a modernization program of the human resources section of the Executive Directorate of Revenues (DEI), implemented by the Office of Technical Assistance with the US Treasury. The program included the design and implementation of new standards for contracting personnel, a salary reform, and a new incentives-based compensation program. These improvements were to improve the overall efficiency of the DEI and, therefore, facilitate tax payments. Although not clearly related to administrative simplification, this subcomponent also contracted Standard & Poor’s to complete a sovereign risk rating of Honduran debt. Concerns about the sustainability of the subcomponent’s activities are the main reason why it did not receive a “satisfactory” classification. One of the project’s conditions of effectiveness was the establishment of the Committee for Simplification of Administrative Barriers in Businesses (CSAE). Although the project met this condition, the government that entered office in January 2010 passed a law that eliminated the CSAE. The CSAE, through project support, had been principally responsible for implementing the business climate advances and the project had envisioned its continued existence to ensure the sustainability and momentum of reforms. At project-end, discussions were underway to establish a similar committee called the Council on Administrative Simplification. A3. Infrastructure and Logistics (satisfactory, US $4.42 million) Severance payments to workers of the port since this was a prerequisite for concession of

Puerto Cortés Establishment and strengthening of the National Commission for Port Protection, including

the purchase of important security and communications equipment for Puerto Cortés so it could obtain international certifications

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Direct support to improving the quality and reducing costs at one of the country’s major ports, Puerto Cortés, was the project’s main contribution to infrastructure enhancement. Initial support was US$2.5 million in severance payments to port workers since this was a prerequisite for concessioning the port. The project supported the establishment of the National Commission for Port Protection (CNPP), including funding salaries of initial staff and providing equipment. In collaboration with the CNPP, the project focused on increasing the security of the port primarily by providing critical tools for this purpose, such as equipment to identify explosive material and drug-sniffing dogs. The project’s support led to the Port’s attainment of important certifications – Container Security Initiative, Megaports, and one from the International Maritime Organization. The subcomponent was not successful in establishing a Transport Regulatory Agency due to a shift in government priorities, and this activity was removed from the project. B. Promoting Private Sector Innovation (moderately satisfactory, US $9.57 million) B1. Creating and Supporting CITEs (moderately unsatisfactory, US $1.63 million) Establishment and strengthening of the technology innovation center for crafts and tourism

(CITEAT) with national coverage, but focus on the western part of the country Technical assistance and training provided to over 230 artisans, in part through matching

grants Construction and equipping of the CITEAT in Copan Ruinas with areas for design, market

intelligence, labs, workshops for quality, packaging, and ceramics. Study tours to Spain for personnel of the CITEAT to learn about best practices in fair trade

and design of crafts Although the CITEAT has provided important training and services to small entrepreneurs, it faces a questionable future. The construction and equipping of the CITEAT was completed a month before project-end. The building includes design areas, a center of information and market intelligence, and workshops for ceramics, pottery, and packaging. Prior to finishing the building, the CITEAT provided training and technical assistance to over 230 craft producers. At project-end, the CITEAT only had sufficient funding to maintain six employees and other operating costs for three months. Although CITEAT staff had several leads on potential funding opportunities and the Government expressed interest in assisting its operation, no concrete decisions had been made. The original project design had foreseen the CITEs to operate as foundations or other types of non-profit institutions with yearly operating budgets. The CITEs were expected to offer full-price services to larger companies and institutions while MSMEs and individual entrepreneurs would benefit from a declining subsidy from a matching grant fund over three years. The PAD had established a US$300,000 matching grant fund for the CITEAT, but only US$21,450 was spent and only for micro-entrepreneurs. The CITEAT was unsuccessful in attracting larger entrepreneurs and clusters of firms that would have paid full price for its services. A limited demand assessment completed during project design indicated that there would be interest from these groups. The PAD had noted that it was unlikely the CITE would become self-sustainable without leading firms committed to using and paying for CITE services regularly. It is possible that if the construction had been completed in a timelier manner, the services offered from a fully-equipped CITEAT could have attracted larger leading firms while still receiving some project support. Other delays, particularly the difficulty in obtaining

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independent legal status (persona jurídica) for the CITEAT, slowed down the launch of its services. The Government and Bank agreed to end support for the wood and furniture CITE (CITEMM) in 2007. The project financed over US $460,000 to support rent for the building, equipping and furnishing the building, and operating costs over three years, but the CITEMM still had not managed to obtain the necessary equipment. Additionally, the wood sector had largely collapsed in recent years and the sustainability of a key strategic ally was in doubt because of changes in the legal structure of the sector. It was decided that continuing support for the CITEMM would not be the best use of project resources and funds were redirected toward the CITEAT. B2. Promoting FDI (moderately satisfactory, US $2.56 million) Sector studies and proactive campaigns in agro-industry, light manufacturing, and tourism Participation in important international fairs for promoting FDI in Honduras Publicity campaign in specialized magazines and websites reached 7.1 million people Communication campaign in the United States that produced about 100 articles in distinct

publications, reaching about 4.1 million people This subcomponent attracted considerable foreign investments in a variety of sectors. Activities for this component were completed by September 2009. Among its achievements, the project completed sector studies in agro-industry, light manufacturing, and tourism. Instead of preparing an overall national strategy for investment promotion, which was envisioned in the original project design, these studies were used to design and implement proactive investment campaigns. Although short of its targets, this subcomponent led to 33 new investments, 5,815 new jobs, and approximately US$60 million in new foreign investments. These results were primarily due to activities such as participation in important international fairs and proactive promotion campaigns. A publicity campaign that included notices in specialized magazines and websites reached 7.1 million people that brought important contacts with potential investors. The political situation in Honduras in the last years of the project diluted the impact of the campaigns. Few activities were continued after the project ended its funding of them; Government interest in promoting FDI without external funding seems limited. The original project design had planned for the design of an industrial sector diversification program in free zones and industrial parks. This activity was removed with the third amendment, because Honduras did not have free trade zones nor plans to develop them. Plus the existing industrial parks were already considered to be of world-class status. B3. Developing a National Quality System (moderately satisfactory, US $5.37 million) Creation of the National Quality Council Facilitated the drafting of the National Quality System Law Creation of the Honduran Office for Accreditation, which accredited 11 labs and 73

associated tests Creation of the Honduran Standards Organization and 69 technical standards Creation of the Honduran Metrology Center

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Construction and equipping of the National Metrology Laboratory according to international specifications

Through matching grants, 110 firms obtained various international certifications Significant progress was achieved in developing the National Quality System. At the project’s start, the National Quality System hardly existed and few organizations had international certifications, like ISO 9001. This subcomponent promoted both the supply and demand for quality services through technical assistance, training, equipment, funding of personnel, and matching grants for firms. The project helped to develop the National Quality Law, which was approved in Congress after much delay in May 2009. (Due to the political events of June 2009, the law was never “sanctioned” and didn’t enter into effect. As of the close of the project, the Government was considering modifications to the law.) The project created the Honduran Standards Organization (OHN) and supported the creation of 69 Honduran technical standards. In accreditation, the project financed the creation of the Honduran Office of Accreditation (OHA) and supported the accreditation of 11 public and private labs under ISO 17025 and accredited 73 tests of these 11 labs. The project supported the creation of the Honduran Metrology Center and funded the design, construction, and equipping of the National Metrology Laboratory, following international specifications. The laboratory was responsible for calibrating over 2,000 pieces of equipment (such as balances or weighing scales) from firms all over the country. The project supported 110 firms through matching grants and technical assistance to obtain international certifications. 94 managers from 50 firms (primarily SMEs) and 18 local consultants were trained in the importance of ISO 9001. This likely had a multiplier effect, since only 25 firms had certifications in 2004 and 324 did by project-end. The most important certifications were ISO 9001, ISO 14001, HACCP, and organic certifications. Despite exceeding most of its targets, the subcomponent is rated “moderately satisfactory” because of uncertainty about the sustainability of its activities. Section 2.5 describes the sustainability concerns, including lack of a National Quality Law that has entered into effect, and uncertainty over whether the quality institutions will have adequate budget and facilities (i.e. full use of the building constructed by the project). C. Improving the Skills of the Labor Force (moderately satisfactory, US $3.75 million) In association with the Agricultural School El Zamorano and INFOP, trained 418 SME

producers of beans, coffee, and shrimp Strengthened the Central American Poli-technical Institute’s offering of trainings for SMEs,

including equipment and designing curricula for textiles, electricity, refrigeration, and sik-screening

Strengthened 11 public and private training institutes by diagnosing their needs and providing some equipment

Construction of a building in San Pedro Sula that is being used to implement a business training program

Although different from its original intent, this component achieved some important reforms of training programs. Originally, the project had intended to create a legal framework for a national

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training system. The project developed the diagnostic, design, and carried out the necessary promotion to create this system, but the proposed changes encountered fierce opposition from the unions and the project was unable to follow-through with the plan. Resources for this component were redirected to strengthen the existing public and private institutions and their training capacity. The project did provide technical assistance to develop a strategic plan for the National Institute for Professional Formation (INFOP), but for political reasons, did not implement a planned reorganization of the institute. Through this component, twelve private and public institutes that provide training were strengthened and 1,510 individuals received training from the strengthened centers. Through a partnership with INFOP and the Agricultural School El Zamorano, 418 SMEs in the coffee, bean, and shrimp sectors participated in capacity building activities. Training resulted in increases in productivity and sales for the SMEs. The project also contracted international and national consultants to develop 15 technical standards for training and 5 curricula in specific key sectors. The creation of an Enterprise University (Universidad Empresarial) to train private sector managers and entrepreneurs was added to the project with the third amendment. The establishment of this university included the construction of the building to house the university. The University was expected to contribute to the competitiveness of the private sector by offering concurrent academic and practical professional training, using a German dual training model. The program was to target professionals and entrepreneurs that were underserved by other training programs. The idea for the program originated as an agreement between the President and the Honduran Private Enterprise Council (COHEP), with COHEP implementing the program as part of its existing Universidad José Cecilio del Valle program. For approximately US $1.2 million, the University was constructed on land owned by the Foundation MHOTIVO. In 2009, COHEP sold its shares in the managing foundation for the Universidad José Cecilio del Valle and was not intending on implementing the Universidad Empresarial program. The PIU cautioned COHEP and the Government that not establishing this program would be in violation of the credit agreement and might require the repayment of the US$1.2 million invested in construction. COHEP then came up with an alternative proposal to operate a business training program (Programa de Formación Empresarial) in the building, and signed agreements with MHOTIVO and FIDE to this effect. The Bank considered this alternative arrangement to be acceptable, as did the Government. The new training program was just getting off the ground at project-end and consists primarily of a series of seminars during the first stage (that use only a small percentage of the available classroom space). In response to feedback from the Bank, COHEP developed plans to expand this offering, and the Bank recommended that the Government monitor the program and encourage its expansion to fully take advantage of the investment in the building. The “moderately satisfactory” rating is primarily because the Bank was not fully satisfied that the planned program met its original expectations. D. Local Competitiveness (satisfactory, US $2.90 million) Several small but important impacts for producers and MSMEs in Copan Ruinas,

Comayagua, Siguatepeque, La Paz, Ojojona, Choluteca, Langue, and Biosfera del Rio Platano

Trained at least 1,400 people from agricultural and tourism SMEs

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Examples of outputs include the construction of cashew processing plants to help small producers diversify their production, training to mango producers to improve their production techniques, development of tourism routes, assistance to SMEs in the production of clothing, and remodeling the convention center in Copan Ruinas to attract conference tourism.

The Local Competitiveness component had several small but important impacts in various parts of the country. Over 400 people were trained from SMEs operating primarily in tourism and agriculture. One example of project support to a local initiative was the construction of cashew processing plants that assisted over 240 producers to diversify into higher value-added products. In another example, the project supported renovations to the Convention Center in Copan Ruinas to attract convention and conference tourism. In Comayagua, the project trained mango producers in innovative practices which led to the first mango exports from that region. E. Communications (satisfactory, US $1.11 million) Publicity campaign to raise the public’s perception of the country’s competitive capacity –

included over 4,000 announcements in the press about competitiveness activities Communications initiatives and events generated over 650 positive news articles in the press

about project activities and achievements Trained journalists on economics and competitiveness issues, including study tours to learn

about practices in other countries, to increase the accuracy of their reporting on those subject areas.

The Communications component was perhaps one of the more unique aspects of this project, since few competitiveness projects include this. The focus of this component was to draw the public’s awareness to the Government and the project’s efforts at improving Honduran competitiveness. The idea was to change the population’s attitude toward the country’s potential to improve its economic prospects. In this regard, the component financed a Publicity Campaign to Elevate the Public’s Perception of the Country’s Competitive Capacity. The campaign included over 4,000 announcements in the press about competitiveness activities, which were primarily related to the project. Communications activities also led to more than 650 positive news articles in the press about project achievements. Moreover, communications activities helped the passage of laws promoted by the project, such as the competition and consumer protection laws. They also helped to promote the importance of certifications and the advances in Honduras’ performance in Doing Business and the Global Competitiveness Index. Given the importance of media coverage of competitiveness topics, this component also trained journalists in economics and competitiveness issues. Lastly, this component commissioned surveys to measure the general public’s and SMEs’ knowledge of the “Honduras Compite” program. (Project activities were branded to the public as being part of the national competitiveness program, i.e. Honduras Compite, which included this project as well as an Inter-American Development Bank operation.) The initial surveys were conducted in 2005 and found that 6 percent of the public and 13 percent of SMEs were aware of the program. At project-end, the increase in awareness was small – only 11 percent of the public and 14 percent of SMEs were aware. The reasoning given for the low increase was that improvements, such as simplified business processes, were attributed to local governments rather than to the program.

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Annex 3. Economic and Financial Analysis Given the nature of the project’s activities, a formal cost-benefit/efficiency calculation is not possible. The PAD also did not calculate estimates for the economic and financial analyses. However, evidence from individual components suggests a high return in some cases. For the Foreign Direct Investment subcomponent alone, approximately US$2 million was spent and about US$60 million was generated in foreign investment. The approximately US$2.2 million spent on the Local Competitiveness component not only directly benefitted hundreds of MSMEs, leading to increased sales and value addition, but also helped to mobilize over US$4 million in donor and private investment in the target areas. The matching grants mechanism ensured that project resources were leveraged efficiently to encourage firms to obtain certifications, participate in trainings, and learn about new technologies. Lastly, the administrative simplification subcomponent contributed to increasing the efficiency of government processes. Also, since over 30,000 firms are calculated to have registered their firms after the reforms, this indicates that the project contributed to increasing tax revenue from businesses.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/Specialty

Lending

John Henry Stein Manager LCR TTL, Financial and Institutional Analysis

Marialisa Motta Sr. PSD Specialist LCR TTL, PSD and Innovation

Jose-Manuel Bassat Communications Officer EXT Communications

Paulo Guilherme Correa Sr. Economist LCR Trade, competition and consumer protection

Alejandro Deeb STC LCR Environmental analysis

Jose Luis Guasch Sr. Advisor LCR Logistics and innovation

Luis Prada Villalobos Procurement Specialist LCR ProcurementIrani Escolano Procurement Specialist Procurement

Jennifer Sara Lead Infrastructure Specialist LCR Infrastructure and local competitiveness

Manuel Sevilla LCR Infrastructure and institutional analysis

Adam Calderon STC LCR Rajeev Kumar Swami Financial Management Specialist LCR FM C. Monica Rojas de Amez Financial Management Specialist LCR FM Clemencia Torres de Mastle Sr. Regulatory Economist LCR Infrastructure

Rodrigo Ortiz MIGA Investment promotion

Damien Shiels Investment Policy Officer MIGA Investment promotion

Geeta Batra Sr. PSD Specialist Training analysisPilar Gonzalez Counsel LEGLA Lawyer Stefka Slavova Young Professional LCR Lydie Ehouman STC LCR Lily Franchini Language Program Assistant LCR Marie Khoury Financial Management Specialist LCR FM Jonathan James Barton Financial Management Specialist LCR FM Eric Palladini STC LCR Project AssistantMauricio Cifuentes STC LCR Project AssistantMarc Heitner Emmanuel Njomo Sr. Projects Officer LCR Oswaldo Patino STC LCR

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Frank Sader Sr. Investment Policy Officer CIC/IFC Michaela Weber Bjorn Wellenius STC

Supervision/ICR Thomas Edward Haven Sr Private Sector Development LCSPF TTL Luke Haggarty Senior Manager CMEAS TTL Pablo Fajnzylber Sector Leader LCSPR TTL Sunita Varada Private Sector Development Analyst LCSPF Project mgmt Monica Patricia Rivero Riveros Program Assistant LCSPF Project support Jose-Manuel Bassat Communications Advisor WBIOP Communications Etel Patricia Bereslawski Senior Procurement Specialist LCSPT Procurement Diomedes Berroa Senior Operations Officer LCSPT Procurement Paulo Guilherme Correa Lead Economist ECSF1 Competition Juan Miguel Crivelli E T Consultant LCSEG Project mgmt Ana Cecilia Escandon Consultant LCSPF Architect/engineer Tanja Gabriele Faller E T Consultant LCSPF Safeguards Jimena Garrote Counsel LEGLA Legal Mary Lisbeth Gonzalez Senior Social Development Spec LCSSO Social safeguards Jose L. Guasch Consultant AFTSN CITEs Mariela Mena Consultant LCSPF Social safeguards Fabienne Mroczka Financial Management Specialist LCSFM FM Beate Gisela Mueller Procurement Specialist LCSPT Procurement Gunars H. Platais Sr Environmental Econ. LCSEN Env. Safeguards Kristtian Rada Operations Officer CLALA Manuel Jose Rey Figueroa Consultant LCSPF Env. Safeguards Jose Simon Rezk Financial Management Specialist LCSFM FM Camila Adriana Rodriguez Infrastructure Specialist LCSTR Tomas S. Serebrisky Senior Infrastructure Economist LCSSD Competition policy Damien Shiels Sr Investment Promotion Officer CICIG FDI promotion Stefka Slavova Senior Economist CICRA Rajeev Kumar Swami Sr Financial Management Specialist ECSO3 FM Luis Tineo Senior Infrastructure Specialist GPOBA Procurement Clemencia Torres De Mastle Senior Regulatory Economist PPIAF Rosa G. Valencia De Estrada Consultant LCSPT Procurement Joao Nuno Vian Lanceiro da Veiga Malta Senior Procurement Specialist LCSPT Procurement

Kimberly Vilar Consultant LCSTR Social safeguards

(b) Staff Time and Cost

Stage of Project Cycle Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending

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FY01 2 9.31 FY02 7 50.07 FY03 56 291.08 FY04 16 72.81

Total: 81 423.27 Supervision/ICR

FY04 14 44.33 FY05 53 216.31 FY06 39 127.88 FY07 25 102.79 FY08 33 125.88 FY09 41 170.40 FY10 26 87.57 FY11 27 99.4

Total: 258 974.5

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Annex 5. Beneficiary Survey Results Not applicable

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Annex 6. Stakeholder Workshop Report and Results Not applicable

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Annex 7a. Borrower Comments on Draft ICR The Ministry of Finance of Honduras sent the following comments on the draft ICR. The comments were translated into English by a translator contracted by the World Bank. The original comments in Spanish follow the translation. --------------------------------------------------------------------------------------------------------------------- The Ministry of Finance, after having read the draft of the closing report that the World Bank had sent for comment, has the following to say about the aspects indicated below:

1.-Financial Management: Financially, the project achieved its objective. The project had no difficulty in achieving its objectives in terms of disbursements and the liquidation of expenses and the rotating account.

Proof of this can be found in the external auditing reports, which covered the resources provided by the Loan Agreement and the national counterpart funding contributed by the Government of the Republic of Honduras for the project as a whole and all reports, including the closing statements, reflected clean reporting in compliance with the terms of the Loan Agreements and applicable laws and regulations.

Throughout the project’s life, earnings on special drawing rights (SDRs) were generated in several currencies (SDRs) for 2.7 million dollars. This amount was negotiated by the Central Government and the World Bank and the Presidential Appointee, Maria Antonieta de Borgon, reassigned the funds for execution according to the mutual agreement made with the Bank.

2.- Procurement Management: The WB made several observations in this area, such as the lack of experience of personnel with respect to norms; changes in WB officials; and the project’s complexity. Nevertheless, it is important to take the following into consideration:

-the volume of operations associated with drawing up the contracts

-The national supply of goods and services is limited, particularly in terms of purchasing sophisticated equipment that is only available from one supplier, which leads to direct contracting.

-Changes in WB NORM 94 with regard to procurement, which led to subsequent changes in manuals and the procurement plan.

-Changes in WB officials, each of whom applied different criteria.

- Delays in the WB’s issuance of No Objections

According to the report, operating expenses grew fourfold, given that the project’s complexity was exacerbated by the number and complexity of its components. As such, it was necessary to hire technical personnel as well as administrative/operating staff to execute the large volume of both national and foreign contracts, which were conditioned more by the nature of the goods and services acquired than by the amounts involved.

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3.-Compliance with Objectives and Indicators: The project achieved almost all of its objectives and those that were not completely fulfilled reached at least 90% compliance.

The changes in indicators generated by amendments to agreements led to a separation and redefinition of the original indicators. These measures were not clearly aligned with the general objective, which meant that the primary goal to facilitate trade was not met given that no specific activities for trade were included in the overall project framework.

It is important to point out that despite the frequent changes produced by each of the loan amendments and closing date extensions, the project managed to substantially achieve all of the indicators.

4.-Strategic Alliances

It is important to recognize that the projects’ impact was greater than the sum of its resources due to the following:

- With WB resources, the Project focused on the strategy’s transversal axes. It was complemented by another project for US$ 10 M with resources from IADB that targeted sector initiatives, thus increasing efforts and impact.

- Both projects were supported by the FIDE platform for investment and exports as well as the efforts of the Board, Executive Presidency and its operating structure despite the fact that the WB’s resources did not provide overhead for administration.

- Agreements were signed with GIZ for local development; with the IFC for business climate and municipal simplification; and with INCAE/FOMIN for local development and tourism. All of the aforementioned provided counterpart financing for initiatives.

5.-The Effect of a Change of Government and a Pause

Project effectiveness and goal fulfillment should not be measured in terms of the amount of legislation passed, this project passed 3 laws. The project’s design underestimated the need to create consensus to pass laws; this point is critical and is an observation for the WB. For us, this is excessively complex, particularly given that governments and their priorities change over time. As such, the project’s goals and terms should not be conditioned by the need to pass laws.

Another situation that was underestimated was the fact that the government changed hands three times, which generated turnovers in officers. Consider the case of the Government in place for the 2006-2010 period, which included between 3 to 5 directors or ministers per counterpart institution. This meant that relations had to be re-established on several occasions as new efforts were undertaken to develop trust, align priorities and ensure initiatives to achieve the results expected. For example, in the 2006-2010 period, there were changes in each institution of 3 to 5 counterpart officials including: Industry and Commerce (4), BCH (3), Secretary of Finance (3), Serna (3), Ministry of Labor (3), Institute of Property (5), DEI ( 3).

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Finally, the political crisis led the WB to take a unilateral pause, which created a delay in execution of at least 7 months; led to loan rescheduling; and meant that the contracts that had begun before the pause had to be reprocessed. Accordingly, some of the project’s activities were not completed due to a lack of time.

6.-Sustainability Risk:

-Sustainability: The project generated a series of initiatives for simplification, including the National Plan for Municipal Simplification that the IFC has executed with a delay of at least 6 months.

The Government should define the actions required to re-establish the Administrative Simplification Committee for Companies (CSAE). This public-private effort disappeared when the National Plan law was passed and is needed to follow up on initiatives and establish new priorities that favor the business climate.

-Universidad Empresarial: COHEP needs to implement its alternative plan for entrepreneurial training.

-Sustainability of the CITEAT: COPAN and the municipal mayor’s office worked together to create a foundation, which will be in charge of ensuring the Center’s sustainability.

-Sustainability of the national quality system. The Project passed a Law for the National Quality System; financed a civil works project to ensure its implementation; and financed as well as organized the system’s entities. The Secretary of SEPLAN should follow up on the application of this law and ensure that the necessary budget resources are in place.

We could say that the long-term sustainability results are not attributable to the executing unit and are instead attributed to other instances or exogenous factors.

7.- Lessons learned

Despite subsequent changes, the idea/action of delivering loan administration to a private non-profit foundation like FIDE guaranteed stability in the human resources of the executing unit; guaranteed follow up on the project’s initiatives and compliance of objectives; guaranteed the institutional relations that the project had developed with both the beneficiary groups and the Government, which implied additional efforts to develop trust with each change of government; and involved efficiency, transparency, business relations, strategic alliances, technical capacities, leadership and stability.

It is important to note the working and business relations that FIDE has brought to the project have been a key factor in its success and have generated relations with and trust among the project’s main actors.

--------------------------------------------------------------------------------------------------------------------- La Secretaria de Finanzas después de haber leído el borrador de informe de cierre enviado por el Banco Mundial para sus comentarios, considerando los siguientes puntos, opina lo siguiente:

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1.-Gestión Financiera: Financieramente el proyecto alcanzo su objetivo, no hubo ningún inconveniente en el manejo de los desembolsos, así como en la liquidación de Soe´s y fondo rotatorio.

Esto lo avalan los informes de auditoría externa la cual debe cubrir los recursos proporcionados por el Acuerdo de Crédito, la contraparte nacional aportada por el Gobierno de la Republica de Honduras del proyecto como un todo, ya que todos dieron como resultado “Informes de auditoría limpio” incluyendo el de cierre, en cumplimiento con los términos de Acuerdos del Crédito y las leyes y regulaciones aplicables.

En la vida del proyecto se genero una ganancia en los derechos especiales de giro, en diversas monedas (DEG) por dólares de 2.7 millones de dólares mismos que fue negociada por el Gobierno Central y el Banco Mundial en donde la Designada del Despacho Presidencial Licenciada María Antonieta de Bogran reasigno los fondos de común acuerdo con el Banco para su ejecución.

2.- Gestión de Adquisiciones: Hay observaciones sobre este tema de parte de BM donde menciona, poca experiencia del personal con respecto a las normas, cambio de oficiales de parte de BM, más la complejidad del proyecto, sin embargo, hay que considerar lo siguiente:

-Volumen de operaciones en la elaboración de contratos

-La oferta nacional de bienes y servicios es ilimitada y más cuando se trata de comprar equipos sofisticados donde solo había un proveedor, lo cual conllevaba a a realizar contrataciones directas.

-Cambio de la NORMA 94 del BM en materia de adquisiciones, que implicó cambios en manuales y plan de adquisiciones

-Cambio de Oficiales en el BM cada uno con criterios diferentes.

- Atrasos en la emisión de No Objeciones por parte del BM

Según el informe, se cuadruplico los gastos operativos, dado que la naturaleza del proyecto era bastante compleja, por el numero y la diversidad de componentes, situación que hizo necesario la contratación de personal tanto en la parte técnica como en la parte administrativa/operativo para ejecutar un gran volumen de procesos de contratación, que incluyó adquisiciones a nivel nacional y extranjeras, no tanto por los montos, sino por la naturaleza de los bienes y servicios contratados.

3.-Cumplimiento de Objetivos e Indicadores: El proyecto cumplió con casi todos sus objetivos y los que no, se llego a un 90% del alcance.

El cambio de los indicadores a través de las enmiendas, llevó a que los indicadores originales fueran separados y re-definidos, pero sin una clara consistencia con el objetivo general, lo que resulta en que el objetivo general no se cumplió en materia de facilitación de comercio, pues no habían proyectos específicos en materia de comercio dentro de la estructura de proyecto.

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Es importante mencionar que a pesar de los frecuentes cambios que se dieron con cada una de las enmiendas del crédito y extensiones de plazo, el proyecto al final dio cumplimiento a la totalidad de los indicadores de manera sustancial.

4.-Alianzas Estratégicas.

Es justo reconocer, que el impacto del proyectos fue más amplio que lo que permitieron solo los recursos del mismo por lo siguiente:

- El Proyecto con recursos BM que se concentró en los ejes transversales de la estrategia, fue complementario a otro proyecto por US$10. Mm con recursos BID, más enfocado en iniciativas sectoriales, lo cual magnificó el esfuerzo y su impacto.

- Por otra parte, ambos proyectos se complementaron con la plataforma de FIDE en materia de inversiones y exportaciones, el esfuerzo de su Junta Directiva, la Presidencia Ejecutiva y su estructura operativa, a pesar que con recursos de BM no recibió un over head por administración.

- Así también, se realizaron convenios con organizaciones como GIZ, en materia de desarrollo local, IFC en clima de negocios y simplificación municipal, INCAE/FOMIN en desarrollo local y turismo, con todos se logro aporte de contra-parte para financiamiento de iniciativas.

5.-Efectos de Cambio de Gobierno y Pausa

Los proyectos no deberían de estar condicionada su efectividad o su cumplimiento de metas al pasar leyes, este proyecto paso 3 leyes. En el diseño del proyecto se subvaluó la necesidad de crear consensos para pasar leyes, este es un punto crítico y es una observación para el BM y para nosotros eso pues resulta en exceso complejo, sobre todo cuando en el tiempo hay cambios de gobiernos con diferentes prioridades, por lo que no debería ser condiciones o metas a cumplir..

La otra situación que se sub-valuó fue los cambios de tres gobiernos y los cambios de funcionarios en el mismo, tal el caso del Gobierno 2006-2010 que incluyó entre 3 y 5 directores o ministros por institución de contra-parte, lo cual implicó cada vez re-establecer relaciones, desarrollar confianza, alinear prioridades y asegurar iniciativas, para lograr el éxito esperado., Ejemplo en el periodo 2006-2010 hubo cambios en cada institución los titulares de contraparte entre 3 y 5 puedo sacar la cuenta: Industria y Comercio (4), BCH (3) Secretaria de Finanza (3) Serna (3) Ministerio de Trabajo (3) Instituto de la Propiedad (5) DEI ( 3).

Finalmente, la crisis política provocó la pausa unilateral por parte del BM, lo que ocasionó un desfase de acciones de al menos 7 meses, la re-programación general del crédito, el re-proceso de contrataciones iniciadas antes de la pausa y que al final implicó dejar algunas actividades del proyecto inconclusas que no se completaron por falta de tiempo.

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6.-Riesgo de Sostenibilidad:

-Sostenibilidad: El proyecto deja una serie de iniciativas en materia de simplificación, tal es el caso del Plan Nacional de Simplificación Municipal que termina de ejecutar IFC, con un desfase de al menos 6 meses.

El Gobierno deberá definir las acciones para re-establecer el Comité de Simplificación Administrativa para Empresas (CSAE), instancia Público-privada, que desapareció con la aprobación de la Ley de Plan de Nación y que es fundamental para darle seguimiento a las iniciativas y establecer nuevas prioridades que favorezcan el clima de negocios.

-Universidad Empresarial: el COHEP tiene que cumplir con el plan alternativo de formación Empresarial.

-Sostenibilidad del CITEAT: se creó con las fuerzas vivas de COPAN una fundación en conjunto con la alcaldía municipal y que se encargará de darle sostenibilidad el CENTRO.

-Sostenibilidad del sistema nacional de Calidad. El Proyecto pasó una Ley para el Sistema Nacional de Calidad, financió una obra civil para su funcionamiento, financió y organizo los órganos del sistema, la Secretaria de SEPLAN deberá darle seguimiento a la implementación de la Ley y asegurar los recursos presupuestarios para su funcionamiento.

Se puede decir que el producto del tema de sostenibilidad a largo plazo no son atribuibles a la unidad ejecutora, son atribuibles a otras instancias o factores exógenos.

7.- Lecciones Aprendidas

A pesar de los subsecuentes cambios, la idea/acción de haber entregado la administración del crédito a una fundación privada sin fines de lucro como FIDE, garantizo la estabilidad del recurso humano en la unidad ejecutora, garantizo el seguimiento de las iniciativas de proyecto y el cumplimiento de los objetivos, garantizo las relaciones institucionales desarrolladas por el proyecto tanto al nivel de los beneficiarios como a nivel del gobierno de la Republica, implico un ejercicio adicional para desarrollar confianza con cada cambio de gobierno y además implico eficiencia, transparencia, relaciones de negocios, alianzas estratégicas, capacidad técnica, liderazgo y estabilidad.

Algo Importante, es que las relaciones de trabajo y de negocio que FIDE provee al proyecto, fue un factor clave de éxito, para generar las relaciones y confianza con actores críticos del proyecto.

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Annex 7b. Summary of Borrower's ICR The implementing agency (FIDE) submitted a detailed closing report of 114 pages. The following summary attempts to capture the main points. --------------------------------------------------------------------------------------------------------------------- El Programa Nacional de Competitividad (Honduras Compite), con el financiamiento del Crédito-3826 “Facilitación del Comercio e Incremento de la Productividad”, otorgado al Gobierno de Honduras por el Banco Mundial y ejecutado por FIDE, Inversión y Exportaciones, ha llevado adelante trascendentales reformas en el clima de negocios del país, a la vez que benefició en forma directa a 1,477 empresas, el 97% de ellas pequeñas y medianas, por medio de distintos mecanismo de capacitación y asistencia técnica.

Estas reformas han sido reconocidas por los reportes internacionales, el Informe de Competitividad Global del Foro Económico Mundial y el Doing Business del Banco Mundial. En lo referente al Índice de Competitividad Global, a pesar de la crisis política del último año, el país reporta un avance de 17% en este indicador del 2004 al 2009, de acuerdo a un análisis realizado por INCAE, el socio del WEF en la región. Logros del Proyecto Componente 1: Mejoramiento del Clima de Negocios Subcomponente 1.1: Promoción de la Libre Competencia y Protección del Consumidor En materia de Competencia, el proyecto contribuyó directamente en la elaboración del

Anteproyecto de la Ley de Competencia, a través de la contratación de expertos para la elaboración de su Diseño, así como, especialistas para asesorar técnica y legalmente a la Comisión del Congreso Nacional encargada de emitir el Dictamen de dicha Ley. Posteriormente, el proyecto coordinó el proceso de consenso, validación y aprobación de dicha ley.

En materia de protección al consumidor, el proyecto apoyó la elaboración del Anteproyecto de la Nueva Ley de Protección al Consumidor, así como, el proceso de consenso, validación, socialización y aprobación de la misma, brindando asistencia técnica a la Dirección General de Protección al Consumidor (DGPC). Posteriormente, el proyecto apoyó el desarrollo de visitas de mejores prácticas, talleres de consenso y validación de la ley

Subcomponente 1.2: Simplificación Administrativa Reducción en: 1) tiempo para abrir una empresa; 2) costo para abrir una empresa; 3) tiempo

para exportar; 4) tiempo para obtener permisos de construcción; y 5) tiempo para registrar una propiedad

El proyecto contrató los servicios de la Office of Technical Assistance (OTA) del Departamento del Tesoro de los Estados Unidos para la ejecución de un Proyecto de Modernización de Recurso Humano en la DEI. Unos logros fueron: una revisión de la Descripción de Posiciones en el Plan de Trabajo ha sido completada y se han provisto recomendaciones y comentarios; las Regulaciones sobre Reclutamiento y Selección basado en Meritos han sido revisados y oficialmente aprobados por el Ministro Director; y Lineamientos y recomendaciones entendibles han sido provistos para asistir a la DEI en la

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planificación e implementación de un nuevo Sistema de Compensación Salarial en tanto los fondos lo permitan.

Subcomponente 1.3: Infraestructura y Logística El proyecto contribuyó directamente con el apoyo técnico y financiero para alcanzar la

certificación de Puerto Cortés bajo las normas de la Organización Marítima Internacional OMI. Asimismo, a partir del año 2005 Puerto Cortés forma parte de la Iniciativa de Seguridad de Contenedores (CSI) y de la Iniciativa Megapuertos. Con estas certificaciones, el puerto ha incrementado desde el año 2004 a la fecha el manejo de carga en más de un millón de toneladas métricas.

Componente 2: Promoción de la Innovación en el Sector Privado Subcomponente 2.1: Creación de Centros de Innovación y Tecnología El proyecto apoyó la puesta en marcha del Centro de Innovación Tecnológica en Artesanía

Turismo (CITEAT) en la Ciudad de Copan Ruinas. Asimismo, el proyecto le brindó fortalecimiento institucional mediante la construcción del edificio del CITEAT, equipamiento total que incluye mobiliario y equipo, equipo de cómputo, comunicaciones, equipos de los talleres de empaque, alfarería y cerámica, aula modelo, audio-visual, así como, gastos de capacitación a través de talleres y visitas de mejores prácticas y los costos operativos requeridos para su funcionamiento.

Subcomponente 2.2: Promoción de Inversión Extranjera Directa con alto valor agregado Se definió una nueva estrategia, basada en campañas pro-activas, y enfocada en cuatro

sectores prioritarios, Ensamble Ligero, Agronegocios, Turismo y Servicios. Se realizaron estudios sectoriales para apoyar la promoción de inversiones en cada uno de estos sectores y se desarrolló una campaña de comunicación para posicionar a Honduras entre potenciales inversionistas, la cual fue sumamente exitosa.

Las actividades de promoción de inversiones trajeron como resultado del 2005 al 2009, 27 inversiones nuevas, nueve expansiones, para un total de 5,815 empleos directos generados y un aproximado de US$60 millones de Inversión Extranjera Directa captada.

La Campaña de Comunicación fue ejecutada en los Estados Unidos y mediante mecanismos de Relaciones Públicas, produjo la publicación de casi 100 artículos en distintas publicaciones, que alcanzaron a un estimado de 4,1 millones de personas.

Subcomponente 2.3: Desarrollo de un Sistema Nacional de Calidad Se logró la conformación de organismos que tienen entre otras las responsabilidades

generales de representación el país en estos temas, la promoción y difusión de los mismos entre los diversos sectores a nivel nacional, la formación de personas y el crecimiento de los organismos como respuesta a las necesidades nacionales. La Sostenibilidad de estos organismos y su reconocimiento nacional se ha asegurado mediante la elaboración de la Ley del Sistema Nacional de Calidad.

Mediante el Fondo de Cofinanciamiento y los programas de certificación y Acreditación manejados desde la coordinación técnica de calidad en FIDE, se logró mejorar la posición de Honduras a nivel regional en términos de “calidad” incrementando el número de emrpesas certificadas solamente en ISO 9001, de 35 reportadas en el 2005 a 130 a octubre del 2010. En este incremente de un 300% aproximadamente el apoyo brindado por Honduras Compite

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a través de las iniciativas antes mencionadas, no solo es representativo, sino que también ha representado un estímulo para el crecimiento constante del tema en los últimos 3 años.

Componente 3: Mejoramiento de las Habilidades de la Fuerza Laboral El proyecto brindó fortalecimiento institucional a través de equipamiento de talleres/oficinas

a 13 institutos y centros de formación para el trabajo. En esta materia, el proyecto logro 15 normas estándares de capacitación y 5 diseños de

currículas, a través de la contratación de consultorías nacionales e internacionales. El proyecto capacitó a 394 MYPES de las cadenas de fríjol, café y productores de

camarones, a través de la implementación del Programa de Capacitación y Asistencia Técnica para Elevar la Competitividad de las Cadenas de Fríjol, Café y Camarón en el Marco de Tratados de Libre Comercio, incrementando su productividad e ingresos en 150 y 200% respectivamente.

Componente 4: Competitividad Local El proyecto llevó a cabo experiencias piloto para la creación e implementación de estrategias

de competitividad locales en las siguientes localidades: Ruinas de Copan, Comayagua, Ojojona, Reserva del Hombre y Biosfera del Río Plátano (RHBRP) en los departamentos de Gracias a Dios, Colón y Olancho, y la zona Sur del país (Municipios de Langue, Valle y El triunfo, Choluteca).

Se han elaborado y apoyado en su implementación varias estrategias de desarrollo local y estudios técnicos en cada uno de los municipios y zonas antes mencionadas.

Componente 5: Campaña de comunicación en temas relativos a competitividad Realización de Campaña de Publicidad para Elevar la Percepción de la Capacidad

Competitiva del País. Se pautaron 4,097 anuncios muy por encima de la meta trazada de 1,380 comerciales.

Gestión de más de 650 noticias positivas que divulgan los objetivos y logros de Honduras Compite, por medio de la realización del viaje de mejores prácticas, más de 190 eventos, la gestión directa de entrevistas con diversos medios y el envío de boletines electrónicos, usando la plataforma Web (www.hondurascompite.com), siendo además cada uno de estas herramientas vehículos de comunicación directa con los públicos clave.

Retos y Lecciones Aprendidas para el Proyecto en General Aunque podemos considerar que el proyecto fue en líneas generales sumamente exitoso, debemos apuntar que su ejecución, sobre todo en lo relativo al tema de adquisiciones, fue sumamente compleja. En un mismo proyecto se presentaron temas sumamente diferenciados lo que significó un reto importante, sobre todo considerando que se presentaron en cada tema adquisiciones que, sin ser de montos muy significativos, resultaron auténticos dolores de cabeza, como la adquisición de membrecías a ISO, equipo especializado de metrología o el monitoreo periodístico, entre otras. Muchos de los problemas del proyecto fueron producto de la complejidad del mismo, 6 componentes y 12 sub-componentes diversos entre si y la necesidad de crear concensos entre

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actores del sector privado y público, lo cual no fue lo suficientemente considerado o medido por el Banco Mundial en el Concept & Appraisal Document. También, faltaba de una Gestión eficiente (Gerencia) por parte del área de adquisiciones, como un área de apoyo a la función central de la Unidad de Coordinación del Proyecto (UCP). Es importante mencionar que esta área llegó a contar con personal que duplicó el número de personal técnico y no precisamente en las épocas de mayor demanda de actividades, a la vez que se tuvo personal que oscilaba entre el altamente experimentado pero con serias limitaciones de criterio, o personal con poca experiencia y bajo aporte a la operación. La centralización de decisiones y desconocimiento de la normativa del Banco así como de lo establecido en el manual operativo del proyecto, quedaron en evidencia en más de una ocasión, no contribuyendo a una ejecución financiera y técnica óptima. También debe reconocerse que en el mismo período, se cambió la normativa de adquisiciones del Banco y consecuentemente el Manual Operativo. Por otro lado el cambio constante de oficiales de adquisiciones del mismo Banco, con diferencia de criterios, orientó en la organización interna de la UCP y las practicas sugeridas y a veces contradictorias, que no contribuyeron a una mejor gestión en el aérea de adquisiciones. Otro aspecto importante a considerar es que resulta sumamente riesgoso comprometer el desarrollo de un proyecto con leyes que deben ser aprobadas en el Congreso Nacional, como sucedió en los temas de Promoción de la Competencia y Protección al Consumidor. Aunque el resultado en ambos casos al final fue positivo, la tardanza en la aprobación de estas leyes provocó un rezago en el ritmo de los desembolsos bastante importante, aparte de que las probabilidades de no aprobación de ambas leyes en los tiempos necesarios para la ejecución del proyecto fueron elevadas. El seguimiento operativo por la alta dirección era bajo. Este aspecto quedó evidenciado en la revisión de medio término del proyecto, en la cual se sugirió la contratación de un profesional de apoyo a la Coordinación General para el seguimiento de lo planificados, sin embargo la contratación realizada, finalmente terminó ocupándose del seguimiento de un componente y no en la interacción entre la coordinación técnica y la administración y la Coordinación General. La contratación de una persona en apoyo a la Coordinación General tal como se sugirió, habría sido de gran utilidad en especial para facilitar información valiosa a la coordinación del proyecto que dada la naturaleza de los distintos sub-componentes tuvo que ocupar gran parte del tiempo a realizar gestiones externas (políticas) necesarias para el avance de los distintos componentes. Trabajar con años fiscales limitados, congelamiento de recursos o cambios de autoridades de gobierno era otro reto. Lastimosamente, pese a que FIDE administraba Honduras Compite, los recursos, por ser un crédito al Gobierno de Honduras, eran canalizados a través de la Secretaría de Finanzas, el Banco Central y en comunicación con la Secretaría de la Presidencia, esto en muchas ocasiones limito la eficiencia operativa, aún con todos los esfuerzos que se realizaban, ya que el proyecto no gozaba de un trato diferente que le permitiera no detener las actividades. Hubo años en los que se debía esperar hasta el mes de marzo para contar con recursos y las actividades fueron suspendidas en noviembre, generando de 3 a 4 meses de atraso por año.

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Retos al Nivel de los Componentes Componente 1: Mejoramiento del Clima de Negocios Subcomponente 1.1: Promoción de la Libre Competencia y Protección del Consumidor La creación y/o reforma de leyes en materia de competencia y protección al consumidor, los

cuales fueron alcanzados en el transcurso del desarrollo del proyecto, sin embargo, un paso que no se ha logrado aún por razones de carácter estrictamente políticas y económicas es la autonomía de la entidad encargada de la aplicación de la Ley de Protección al Consumidor.

Subcomponente 1.3: Infraestructura y Logística Otro reto considerado bajo este componente, fue el diseño e implementación de un ente

regulador integral de transporte, el cual debería ser creado a través de una nueva legislación, lo cual en las condiciones vigentes en ese momento no era factible por lo que se decidió conjuntamente entre el Gobierno y el Banco Mundial eliminar este objetivo.

Componente 2: Promoción de la Innovación en el Sector Privado Subcomponente 2.1: Creación de Centros de Innovación y Tecnología Este componente consideraba como principales retos no solo la creación y conformación de

tres centros de innovación tecnológica, sino también el funcionamiento de los mismos, lográndose conformar dos de los centros en madera y muebles y en artesanías y turismo. Sin embargo, sólo el CITE en artesanía y turismo está en funcionamiento, ya que por razones política e inestabilidad legal de gobernabilidad se cerró el CITE de madera y muebles.

Otro reto sumamente importante fue la obtención de la personería jurídica del CITEAT por parte de la Secretaría de Gobernación y Justicia, la cual fue otorgada hasta el año 2009, lo cual limitó la venta de servicios del CITEAT, porque no podía suscribir ningún tipo de contratos.

Subcomponente 2.3: Desarrollo de un Sistema Nacional de Calidad El desarrollo de una Ley del Sistema Nacional de Calidad. Si bien se logró la elaboración y

aprobación de una Ley que respondía de la manera más óptima a las condiciones del país, permitiéndole a éste adaptarse a las estructuras internacionales, no se logró conseguir dentro del marco del proyecto la implementación de dicha ley, quedando éste como un compromiso de la nueva Secretaría que ha absorbido al Sistema Nacional de Calidad - La Secretaria de Planificación y Cooperación Externa (SEPLAN). Es importante mencionar que los esfuerzos por lograr la aprobación e implementación de esta Ley fueron múltiples desde la coordinación del sub-componente y FIDE, sin embargo los cambios de Gobierno atravesados a lo largo de los últimos 3 años y las nuevas autoridades encargadas del tema, pretendieron encargarse plenamente de las acciones previstas para conseguir una Ley, sin embargo no se obtuvieron los resultados esperados, que aseguren de forma plena la sostenibilidad de los organismos creados.

Apoyo a la función de Reglamentación Técnica (RT). Las actividades desarrolladas para este tema han sido mínimas en relación a lo requerido. Apenas se ha podido desarrollar una consultoría para la generación de una propuesta clara para la estructuración del tema, sin embargo acciones clave como la mejor coordinación entre las entidades encargadas de la Normalización y la Reglamentación Técnica, no ha sido posible, ya que la función de RT requiere de un fuerte esfuerzo de ordenamiento entre todas las Secretarías de Estado que

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desarrollan esta función, la mayor difusión de esta función entre los sectores y la generación y facilitación de información oportuna sobre la generación de Barreras no arancelarias.

Apoyo al Desarrollo de la Metrología Legal. En lo relativo a esta función clave en la protección del consumidor, se han logrado realizar a través de otro componente del programa, modificaciones a la Ley que alberga el tema, sin embargo de las pocas acciones concretas definidas durante la ejecución del sub-componente, para este tema, solo las remodelaciones y amueblamiento del laboratorio, calibraciones iniciales de equipo, apoyo en el desarrollo de un par de seminarios y la provisión de algún equipo complementario, se han podido concretar. Otras actividades previstas tales como el desarrollo de una visita de mejores prácticas o la participación de un consultor experto en el tema, vía el contrato PTB, no se han podido desarrollar, pretendiendo con éstas al menos el establecimiento de un diagnóstico de la función y la generación de una propuesta de desarrollo y ordenamiento del tema.

Componente 3: Mejoramiento de las Habilidades de la Fuerza Laboral Este componente consideraba como principal reto la reforma del Sistema de Formación y

Capacitación y la Reingeniería del INFOP, sin embargo, solo se logró el diseño de ambas cosas ya que por razones estrictamente políticas no se logró la implementación de ambos instrumentos.

El reto más importante para la implementación de este componente, fue adquirir el equipo didáctico de los centros de formación, ya que el mercado es limitado y los proveedores no están acostumbrados al cumplimiento de los procedimientos contenidos en la Normativa de Banco Mundial (BM), ya que la empresa privada maneja procedimientos más expeditos al respecto.

Componente 4: Competitividad Local Algunos de los proyectos de asistencia técnica y capacitación, específicamente los proyectos

para el aprovechamiento del falso fruto de marañon; y la transformación de madera en los talleres de las cooperativas agroforestales de la Reserva del Hombre y Biosfera del Río Plátano (RHBRP), estaban diseñados para ejecutarse considerando que se contaba con la infraestructura y equipo adecuado, sin embargo, esto no coincidió por los retrasos en los procesos de contratación tanto de las obras como de los bienes o equipos, por lo cual tuvo que llevarse a cabo en instalaciones inadecuadas y usando equipos muy diferentes a los que están siendo entregados por el PNC. Siendo que actualmente se están realizando las entregas tanto de las obras como de los equipos de procesamiento, será responsabilidad de los beneficiarios gestionar la continuidad de los servicios de capacitación y asistencia técnica con otras instancias locales o a nivel nacional, de forma de poder fortalecer sus conocimientos.

Sostenibilidad de los Logros Alcanzados Componente 1: Mejoramiento del Clima de Negocios Subcomponente 1.1: Promoción de la Libre Competencia y Protección del Consumidor La sostenibilidad de los logros alcanzados del primer subcomponente está dada por la

vigencia de las Leyes de Competencia y Protección al Consumidor, además, tanto la CDPC como la DGPC como las entidades encargadas de la aplicación de dichas leyes cuentan con las capacidad instalada idónea para continuar operando aún después del cierre del proyecto.

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Subcomponente 1.3: Infraestructura y Logística La sostenibilidad de los logros alcanzados del segundo subcomponente está dada por el

funcionamiento y efectividad de la CNPP en mantener las acreditaciones de los puertos, lo cual dependerá de que el Gobierno le brinde el respaldo político y económico requerido a la comisión. Asimismo, que las instituciones fortalecidas en materia de la seguridad del puerto, hagan uso eficiente de los bienes y estén atentas a dar respuesta efectiva en los casos de emergencia nacional en sus diferentes niveles.

Componente 2: Promoción de la Innovación en el Sector Privado Subcomponente 2.1: Creación de Centros de Innovación y Tecnología La sostenibilidad de los logros alcanzados del primer subcomponente está dada por el

funcionamiento y la sostenibilidad del CITEAT, que está enmarcada en el papel protagónico que jueguen sus socios fundadores representados por su Junta Directiva, así como, de la gestión de los recursos disponibles en la comunidad internacional en apoyo a este sector y principalmente en la venta de sus servicios. Cabe resaltar, que en las mejores prácticas en otros países tales como España, Perú entre otros, estos centros inicialmente son apoyados por el Gobierno hasta que estos generen los suficientes recursos financieros para su sostenibilidad.

Subcomponente 2.3: Desarrollo de un Sistema Nacional de Calidad En cuanto a los organismos del Sistema Nacional de Calidad (SNC) su sostenibilidad se cifra

hoy en el compromiso asumido por la SEPLAN para la provisión de un presupuesto anual para su operatividad, así como la puesta en marcha de la Ley del Sistema. A esto se suma las fortalezas de reconocimiento y condiciones de equipamiento y salones con los que cuenta esta estructura, para la facilitación de servicios de calibración y formación, como una fuente de ingresos complementarios, así como también a los esfuerzos por la gestión de proyectos afines a los temas de normalización, metrología y acreditación que deberán ser desarrollados a través del Instituto. Vale la pena mencionar que en ese sentido la SEPLAN no deja de ser un respaldo en la obtención de recursos externos de cooperación, ya que esta no es una fortaleza del personal técnico del Sistema. Así mismo la disponibilidad de un inmueble y sus condiciones le facilitan el acercamiento a entidades de cooperación, para su fortalecimiento con más equipos y recursos para llevar a cabo sus funciones, siendo el tema de calidad fundamental en aspectos del ámbito internacional comercial.

Sobre los esfuerzos de Certificación de empresas y acreditación de laboratorios emprendidos a través del sub-componente, si bien se ha sembrado la semilla en estos temas con casi un centenar de empresas/laboratorios que cumplen con requisitos internacionales, la sostenibilidad de los mismos requiere de un amplio esfuerzo económico por parte de éstos, ya que parte de los servicios demandados en estos procesos, como ser los de certificación y acreditación realizados por los organismos encargados, aún se encuentran fuera del ámbito local, representando altos costos. Aún así, la mejora continua propiciada en estas empresas y laboratorios, les ha permitido sobrevivir en épocas de crisis recién vividas, quedando demostrado que la gestión con calidad es una forma de asegurar no solo su existencia sino también la mejora y crecimiento.

Componente 3: Mejoramiento de las Habilidades de la Fuerza Laboral

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La sostenibilidad de los logros alcanzados de este componente está dada por el buen uso y manejo de los equipos otorgados por el proyecto a los diferentes centros de formación, así como, al correcto funcionamiento de la Universidad Empresarial.

Componente 4: Competitividad Local En el municipio de Copan Ruinas, tanto el gobierno local como la Cámara de Comercio,

Industria y Turismo han dado y continúan dando seguimiento a las intervenciones del PNC, lo cual se refleja en la ejecución del Proyecto de Alcantarillado y Agua Potable del municipio, y las actividades de capacitación del personal, promoción turística, entre otros que se continúan ejecutando en el municipio.

En Comayagua, el dinamismo mostrado por la cámara de turismo que la ha llevado a ser reconocida como una de las cámaras de mayor proyección a nivel nacional, representa y lo ha demostrado en los últimos 2 años, una garantía para continuar impulsando el sector turístico de este municipio. Este dinamismo de la cámara de turismo, acompañado por un gobierno local que continúa invirtiendo y promoviendo el desarrollo de este sector, forman el binomio ideal para la sostenibilidad de las acciones en el municipio.

En la zona sur, la sostenibilidad de las acciones del PNC se sustenta en la sostenibilidad de las organizaciones de pequeños productores de marañon, organizados alrededor de las Empresas de Gestión Local de El Triunfo en Choluteca y Langue, Valle. Ambas organizaciones cuentan con personería jurídica y con sus propias estructuras organizativas-administrativas, y con una amplia gama de relaciones con instituciones nacionales (públicas y privadas) así como de contar con el respaldo de los gobiernos locales.

En el municipio de Ojojona, tanto el gobierno local como la Fundación Amigos de Ojojona son las 2 instituciones locales en las cuales descansa la sostenibilidad de las acciones.

En la Reserva del Hombre y Biosfera del Río Plátano (RHBRP), la Unión de Cooperativas Agroforestales UNICAF-BRP, organización con personería jurídica y que representa las 12 organizaciones cooperativas de la RHBRP, ha logrado un alto grado de autonomía en su gestión organizativa, administrativa y productiva. Lo anterior, más un fuerte vínculo comercial para la comercialización de sus productos maderables certificados tanto a nivel nacional como internacional, aseguran la sostenibilidad de las acciones en esta región.

Evaluación de desempeño del prestatario durante la preparación e implementación Componente 1: Mejoramiento del Clima de Negocios Subcomponente 1.1: Promoción de la Libre Competencia y Protección del Consumidor El desempeño del Gobierno ha sido favorable en lo que respecta al proceso de validación y

aprobación de los anteproyectos de las leyes de Competencia y Protección al Consumidor, ya que los actores políticos (diputados/funcionarios de gobierno) estuvieron anuentes a conocer, validar y aprobar los mismos. Asimismo, el gobierno ha asignado recursos financieros anualmente desde el año 2007 a la CDPC para su funcionamiento.

Sin embargo, su compromiso con protección al consumidor no se ha concretado porque no se ha logrado la autonomía administrativa y financiera de la DGPC.

Subcomponente 1.3: Infraestructura y Logística El desempeño del Gobierno ha sido favorable para el subcomponente 3, ya que para la

implementación de este componente designó a la Comisión Presidencial de Modernización

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del Estado (CPME) como co-ejecutora de este componente, además ha asignado recursos financieros para la operatividad de la CNPP.

Componente 2: Promoción de la Innovación en el Sector Privado Subcomponente 2.1: Creación de Centros de Innovación y Tecnología El desempeño del Gobierno (local) en la implementación del sub-componente uno fue

favorable, ya que la Alcaldía de Copán Ruinas cedió el predio donde se construyó el edificio del centro y brindó el apoyo logístico como ser el espacio físico y servicios públicos donde funcionó inicialmente el centro.

Se requerirá que la intervención del Gobierno Central sea predominante a través de las instituciones involucradas para apoyar la sostenibilidad financiera del CITEAT.

Componente 3: Mejoramiento de las Habilidades de la Fuerza Laboral El desempeño del Gobierno en la implementación de este componente fue poco favorable, ya

que por razones políticas no se logró crear el Sistema de Formación y Capacitación, ni la reingeniería de INFOP.

Se requerirá la intervención del Gobierno Central en la gestión de la orientación didáctica que tenga la Universidad Empresarial.

Componente 5: Campaña de comunicación en temas relativos a competitividad En líneas generales los distintos Gobiernos con los que el Programa trabajo (Administración

Maduro, Administración Zelaya, Administración Micheletti y Administración Lobo) tuvieron un desempeño aceptable en el marco de la ejecución de los objetivos comunicativos del proyecto.

Aunque la característica de instancia público-privada del Programa no siempre fue adecuadamente entendida y aceptada, en distintos ámbitos varias secretarías de gobierno desarrollaron iniciativas comunicativas conjuntas con el programa que fueron sumamente exitosas.

Evaluación de desempeño del BM y de otros socios Componente 1: Mejoramiento del Clima de Negocios Subcomponente 1.1: Promoción de la Libre Competencia y Protección del Consumidor Para el subcomponente 1, el desempeño del Banco Mundial ha sido favorable, ya que ha

estado comprometido en apoyar las actividades previstas en este componente, a pesar de que los resultados previstos por su naturaleza en algunos casos (reformas de leyes) han demorado en ser logrados y han sido una condicionante para continuar con otras actividades.

Subcomponente 1.3: Infraestructura y Logística Para el subcomponente 3, el desempeño del Banco Mundial ha sido medianamente favorable,

ya que algunos procesos se repitieron muchas veces por cambios internos de adquisiciones de BM que influía en la interpretación de la normativa del BM. Adicionalmente, por la complejidad de estos equipos los especialistas no comprendían el impacto de estos en el mejoramiento de la seguridad del puerto y por ende en el mantenimiento de las certificaciones del mismo.

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Componente 2: Promoción de la Innovación en el Sector Privado Subcomponente 2.3: Desarrollo de un Sistema Nacional de Calidad Para subcomponente 3, en cuanto al Banco, con fines de solventar la carencia de un área

técnica en el tema de calidad, se procedió desde el seno del subcomponente, a la contratación del PTB como un asesor experto en la materia. Cabe destacar que algunas veces éste organismo no comprendía que la relación contractual la tenía con FIDE como administrador del Programa y responsable en su ejecución, y que como un asesor en el tema, sus consejos serían pauta y no regla, ya que el desconocimiento de las condiciones propias del país no les permitían tal alcance de asertividad. Además el desconocimiento de los procedimientos que dicta la normativa de adquisiciones de Banco Mundial no les permitía opinar de una forma más objetiva a los tiempos de respuesta en procesos. Algunas veces la comunicación sostenida por éstos con el Banco, parecía reflejar una subordinación directa a los gerentes del proyecto en él, y no a FIDE. Estos impases se tuvieron que aclarar a lo largo del proyecto y hasta que la asistencia técnica del PTB concluyó.

El desconocimiento técnico del tema al interior del banco debería ser solventado para futuras actividades de esta naturaleza, ya que imposibilita una comunicación fluida y una comprensión de los avances y limitaciones en el logro de las metas. Aún así es importante hacer notar que la parte técnica mostró una apertura a todas las explicaciones proporcionadas desde la UCP y requeridas en especial para la gestión de procesos de adquisiciones, evaluación del componente y asignación de recursos adicionales.

Sería importante que el Banco Mundial como ejecutor de proyectos de esta magnitud y vía crédito, considere un seguimiento local más frecuente y el abordaje directo con las autoridades, ejerciendo las presiones necesarias para que algunos cambios y compromisos requeridos, sean ejecutados, de tal manera que se asegure la sostenibilidad de los resultados del proyecto. En lo relativo al componente, condicionar la entrega del inmueble del Laboratorio Nacional de Metrología y su equipamiento, a la puesta en marcha de la Ley del Sistema Nacional de la Calidad y la Creación del Instituto Hondureño de la Calidad, fuera de la SEPLAN, habría sido valioso a fin de asegurar una sostenibilidad clara de lo creado.

Componente 3: Mejoramiento de las Habilidades de la Fuerza Laboral El desempeño del Banco Mundial ha sido favorable, ya que en la mayoría de los casos existió

el apoyo requerido para lograr una ejecución eficiente de los recursos. Sin embargo, algunos procesos se repitieron varias veces por la imposición del área de adquisiciones de Banco Mundial para agrupar ciertos equipos que no era factible su adquisición a través de licitaciones.

Componente 5: Campaña de comunicación en temas relativos a competitividad Es evidente que sin el empeño y dedicación de diversos funcionarios del Banco Mundial con relación a este proyecto, el legado del Programa, materializado en una gran cantidad de logros que indudablemente han mejorado la competitividad del país, no se hubiese podido concretar.

Sin embargo, en reiteradas ocasiones el proyecto no sintió el suficiente respaldo del departamento de adquisiciones del Banco que envió en distintas etapas del proyecto indicaciones contradictorias. Estamos claros que es necesario asegurar la transparencia de los procesos, en lo cual el ejecutor siempre puso un especial énfasis, pero en reiteradas ocasiones se cruzó esa frontera en la cual el proceso de contratación se volvía artificialmente complejo y demorado.

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Lecciones Aprendidas y Recomendaciones Componente 1: Mejoramiento del Clima de Negocios Subcomponente 1.1: Promoción de la Libre Competencia y Protección del Consumidor El elemento clave para el éxito sostenible del alcance del subcomponente 1 es y será la

voluntad política, ya que se requiere tanto del sostenimiento intacto de dichas leyes, como de su aplicación.

Se requerirá que el gobierno continúe y amplíe el respaldo político y financiero a las instituciones encargadas de la aplicación de las Leyes de Competencia y Protección al Consumidor.

En materia de consumidor, lo recomendable es que se busque la autonomía administrativa de la DGPC, ya que se requiere evitar la constante rotación de personal, que impide contar con una plataforma de recursos humanos calificada. Subcomponente 1.3: Infraestructura y Logística

El elemento clave para el éxito sostenible del alcance del subcomponente 3 es el mantenimiento de la certificación de Puerto Cortés y de los demás puertos, a través del apoyo incondicional del Gobierno a la CNPP mediante el respaldo político y financiero.

El proyecto ha contribuido con el mejoramiento de la seguridad de Puerto Cortes, sin embargo, las necesidades que aún presentan las instituciones encargadas de la misma son muchas, por lo que se recomienda que el Gobierno continúe fortaleciéndolas ya que es esencial para mantener las certificaciones.

Componente 2: Promoción de la Innovación en el Sector Privado Subcomponente 2.1: Creación de Centros de Innovación y Tecnología El elemento clave para el éxito del alcance del subcomponente 1 es el funcionamiento

sostenible del CITEAT, basado principalmente en la venta de sus servicios. El mercado meta del CITEAT es un sector que no cuenta con la capacidad financiera para

optar a los servicios del centro, por lo que fue fundamental identificar las instituciones nacionales e internacionales que orientaban recursos a este sector y realizar alianzas estratégicas para poder ejecutar los mismos a través del CITEAT. Sin embargo, esto el CITEAT lo realizó sin contar aun con su propio edificio y equipamiento, por lo que se limitó a ofrecer servicios exclusivamente de asistencia técnica relacionada a las potencialidades del personal staff del mismo.

Se recomienda que el Gobierno a través de las instituciones relacionadas con el CITEAT tal como la Secretaría de Turismo, INFOP, la Alcaldías, brinde acompañamiento al centro, hasta que éste genere los recursos suficientes para su autosostenibilidad.

Subcomponente 2.3: Desarrollo de un Sistema Nacional de Calidad Para subcomponente 3, la participación nacional experimentada en la fase de diseño del sub-

componente, como contraparte al trabajo desarrollado por expertos internacionales, así como también una amplia interlocución con actores clave es necesaria para asegurar un adecuado diseño en términos de alcance y tiempo.

Iniciativas orientada a la mejora de la Gestión pública deberían ser desarrolladas para una armonización y eco de los esfuerzos desarrollados por lo sectores productivos.

Si se contempla el desarrollo de una segunda fase de Honduras Compite, temas como la promoción del SNC, el apoyo en el desarrollo de la reglamentación técnica y la metrología

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legal, el fortalecimiento de las funciones de inspección y un fuerte énfasis en la certificación para el sector alimentario, no deberían pasar por alto.

Componente 3: Mejoramiento de las Habilidades de la Fuerza Laboral El elemento clave para el éxito del alcance de este componente es el buen manejo didáctico

de los equipos y el efecto multiplicador que produzcan. Se requiere que el papel de INFOP sea predominante en la temática nacional de capacitación

y no que funja solo como un regulador. Se requiere que tanto el Gobierno como la empresa privada se concienticen sobre la

importancia de la capacitación y del fortalecimiento de los centros que la ofertan. Se requerirá que el Gobierno de un seguimiento oportuno a la inversión realizada en la

Universidad Empresarial y que el funcionamiento de ésta, sea enmarcada en los lineamientos establecidos bajo el proyecto.

Componente 4: Competitividad Local Las intervenciones a nivel local se debe enfocar en sectores que representen o tengan una

mayor participación en la economía de los municipios. Esta situación favorece o genera un clima favorable para la implementación del proyecto, en tanto que más empresas y más personas se benefician del mismo. De lo anterior, se recomienda siempre llevar a cabo una caracterización plena de cada municipio o zona donde se pretenda intervenir a fin de asegurar una selección optima de la región o municipio y dentro de este, de los sectores y estrategias a desarrollar para favorecer el mejoramiento de la competitividad de esos territorios.

La existencia de instituciones locales sólidas y representativas, crean un ambiente favorable para el desarrollo de estrategias de desarrollo local y se convierten en las contrapartes ideales para implementar las acciones del proyecto. En ese sentido, es necesario fortalecer las instancias locales a nivel público o privado durante la vida del proyecto, de forma tal que se empoderen de su papel como los actores locales claves y asumen su protagonismo durante y después de la vida del proyecto.

Todo proyecto de mejora a la competitividad local debe incluir tanto inversión en formación de recurso humano como inversión en infraestructura productiva. Por lo tanto, ambas variables deben ser consideradas para implementarse en forma paralela, pues aunque se invierta en la formación de recurso humano sino se dispone del equipo y estructura adecuada que signifique el cambio hacia un mejor nivel productivo, no se logrará culminar el proceso.

La coordinación interinstitucional es otro elemento clave para impulsar iniciativas de desarrollo local, y que en consonancia con la lección anterior, ayudan a complementar las estrategias en un municipio. Este elemento fue de gran valor para llevar a cabo los diferentes proyectos en el caso de Copan Ruinas y la zona sur.

Componente 5: Campaña de comunicación en temas relativos a competitividad En el tema de adquisiciones hay un buen número de lecciones aprendidas sobre los procedimientos de contratación a seguir en una gran variedad de gama de herramientas comunicativas, que muchas veces no se acoplan en su realidad de mercado a los procedimientos del Banco. Por ejemplo, ya sabemos que para contratar publicidad es mejor desarrollarlo con un proceso de licitación, en tanto exista una estrategia comunicativa previa (consultoría) que guié el diseño de

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la campaña de publicidad. Este diseño (aunque comúnmente los oficiales de adquisición del Banco se confundían con la palabra) no implica un proceso cognitivo profundo que caiga dentro de la categoría de consultoría. Es un diseño operacional (gráfico y de distribución de inversión) que no puede caer dentro de lo que es entendido como consultoría.

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable

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Annex 9a. List of Supporting Documents FIDE (2010), Informe Final – Programa Nacional de Competitividad (Honduras Compite). FIDE (2010), Informe Final – Resumen Ejecutivo: Programa Nacional de Competitividad (Honduras Compite). Government of Honduras (2010). National Plan for 2010-2022. World Bank (2003), Country Assistance Strategy for Honduras. World Bank (2003), Project Appraisal Document on the Enhancing Competitiveness: Trade Facilitation and Productivity Project. World Bank (2007), Country Assistance Strategy 2007-2010 for Honduras. World Bank (2010), Doing Business Report 2010 and earlier years. World Bank (2010), Interim Strategy Note for Honduras.

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Annex 9b. Documents in the Project File of the PAD Mission Reports Aide Memoire and Back to Office Reports o f the following missions: July 2002; December 2002; March 2003; and July 2003. Documents needed to meet conditions of effectiveness Operational Manual (first draft) Matching Grant Manual (first draft) PPF Plan Financial Management Action Plan Procurement Plan Plan for creation of Comite de Simplificacion Administrativa Consultant Reports Banegas D.M., 2003, Requerimientos Voluntarios y Obligatorios para la Certificacion de Productos, Personal, y Servicios en Honduras: Turismo, Agroindustria, Forestal y Maquila. Industria Textil y Componentes Electronicos.

Banegas DM, 2003, Pequeiias y Medianas Empresas en Honduras (PYMES): Turismo, Agroindustria, Forestal y Maquila. Industria Textil y de la Confeccion y Componentes Electronicos

Carias Chaverri JP., 2003, Informe de Actividades Componente de Comunicacion Programa Nacional de Competitividad de Honduras

Fuster J., Sertorius A., 2003, CITEs for Honduras - wood and art craft sectors

Fuster J., Sertorius A., 2003, CITEs for Honduras - textile sector (Preliminary Report)

Fuster J., Quella N., 2003, Preliminary Manual for a Matching Grant Scheme for the Honduras

Competitiveness Project

Gre J., 2003, Reducing Administrative Barriers in Honduras: Lessons from the Chilean Experience

PA Consulting, 2003, Inputs for the Local Competitiveness Component of the Honduras competitiveness project

Rawland B., 2003, Administrative Barriers in Honduras: Diagnostic of Diagnostics

Thompson D., 2003, Improving the Competitiveness of Honduras through a National Quality System

Government and FIDE regulation/policies/decrees Decreto Ejecutivo No. PCM-004-2002 (Presidencia de l a Republica) - Creation o f National

Competitiveness Commission

Acuerdo Ejecutivo No. 057-A-2002 (Presidencia de l a Republica) - Executive Agreement

between FIDE and the Presidency designating FIDE as the Technical Secretary to the National

Competitiveness Commission

Republic o f Honduras. 2002. "Plan de Gobiemo 2002-2006: Un Compromiso con Honduras," Seminar Working Paper, Valle de Angeles, Honduras.

Resolucion N o . 47 - Juridical Personality of FIDE

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Resolucion No. 64-88 - Juridical Personality of FIDE (name amended)

Other Consejo Hondureiio de la Empresa Privada (COHEP). 2003. "Propuesta de Reingenieria del Instituto

Nacional de Formacion Profesional." Tegucigalpa, Honduras.

Corrales C., 2003 Ideas Sobre La Integracion de un Sistema Nacional de Formacion Profesional

(unpublished)

Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) ."La Promocion a la Micro, Pequena y Mediana Empresa en America Central: Instituciones, Politicas e Instrumentos de Fomento en El Salvador, Guatemala, Honduras, Nicaragua"

ESA Consultores for the World Bank, 2001 : Honduras, Report on Infrastructure Policy.

ESA Consultores, 2003: Honduras en e l Siglo XXI: Una Agenda para la Competitividad y Desarrollo Sostenible.

Fundacion Comision Asesora en Alta Tecnologia de Costa Rica (CAATEC). "E-Readiness Assessment of Nicaragua and Honduras", document prepared for the World Bank.

Hallberg, Kristin. 2000. "A Market-Oriented Strategy for Small and Medium-Scale Enterprises," World Bank, IFC Discussion Paper no. 40, Washington, D.C.

INCAE, CLACDS, FIDE. "Cambio Empresarial: Agenda para e l Desarrollo Sostenible y la

Competitividad en e l Siglo XXI."

Inter-American Development Bank. 2002 "Honduras Country Strategy,"

Inter-American Development Bank. 200 1 "Competitiveness: The Business o f Growth. Economic and Social

Progress in Latin America"

Inter-American Development Bank. 2002 "Poverty Reduction Support Program Loan Proposal

Klenk, Jurgen (coord.). 2002. "Diagnostico de la Micro, Pequena y Mediana Empresa en Honduras," Comision Nacional de la Micro Pequena y Mediana Empresa (CONAMIPYME), Ediciones ZAS, Honduras.

Klenk, Jurgen (coord.) 2000. "Instrumentos, Prioridades, Estructuras Institucionales para e l Fomento de la Pequena Empresa: La Experiencia de Honduras," Programa de Fomento a la Micro, Pequena y Mediana

Empresa PROMYPE/GTZ, Tegucigalpa, Honduras.

Lechuga, Dennis Gamero, et. al. 200 1 "Analisis del Sector Transformadores de la Madera de Honduras (HO-0212) para Definir una Estrategia Competitiva y e l Fortalecimiento de un Cluster," INCAE, Alajuela, Costa Rica.

Loayza, Norman, Carlos Calderon, Pablo Fajnzylber. 2002. "Economic Growth in Latin America and the Caribbean". The World Bank.

Marradiaga E., "Aspectos Laborales de La Empresa Nacional Portuaria". Document based on the report "Asesoria en Materia Laboral Para la Reforma Portuaria", prepared by Compensation Outsourcing Consulting.

Republic o f Honduras. 2002. "Una Vision de Estrategia Competitiva para Honduras," Seminar Working Paper, Valle de Angeles, Honduras.

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World Bank, 2003: Honduras: Improving the FDI Climate through Public-Private Sector Cooperation.

World Bank. 2003. Honduras Country Assistance Strategy (CAS).

World Bank. 2002a. "World Development Indicators." Washington D.C.

World Bank. 2002b. "Closing the Gap in Education and Technology." Latin America and the Caribbean

Region. Washington D.C.

World Bank. 2002c. "Voices o f the Firms." Washington, D.C.

World Bank 1999. "Business Environment Survey." Washington, D.C.

World Economic Forum. 2002-2003. "The Global Competitiveness Report 2002-2003," Oxford

University Press.

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17°N

HONDURAS

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 20

0 60 Miles4020

100 Kilometers806040

IBRD 33418R1

FEBRUA

RY 2008

HONDURAS SELECTED CITIES AND TOWNS

DEPARTMENT CAPITALS

NATIONAL CAPITAL

RIVERS

PAN AMERICAN HIGHWAY

MAIN ROADS

RAILROADS

DEPARTMENT BOUNDARIES

INTERNATIONAL BOUNDARIES