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Promotion of the Small and Micro-enterprise (PROPEMI) - El Salvador
Sources: Salvadoran Foundation for Economic and Social Development (FUSADES), and Salvadoran Vocational Training Institute (INSAFORP)
In 1986, the Salvadoran Foundation for Economic and Social Development (FUSADES) designed and executed a program which would focuson the necessities of the sector of the small and micro-enterprise (MYPE), obtaining consultation by institutions with a vast experience on a global level such as The Panamerican Development Foundation (FUPAD) from Washington, DC, and by the Carvajal Foundation in Cali, Columbia, the latter being a specialist in training for this sector of the economy.
PROPEMI was born as a strategic response to the necessities of the sector and was based on two fundamental premises:
Since its beginnings, PROPEMI has offered consulting, credit and training services for small and micro-enterprises in industry, commerce and services.
PROPEMI has the following objectives:PROPEMI has designed a program of specialized credit lines for the sector of the Salvadoran small and micro-enterprise. A real and permanent access are some of its principal characteristics.
PROPEMI has credit advisers, who visit owners of small and micro-enterprises so that they can complete their application right where they are. The credit adviser analyzes the necessary financial information, supports the entrepreneur in the completion of his application, and counsels him on investment priorities of the company, thus accomplishing:
Terms and Conditions of Credit
Economic sectors eligible for the service: manufacturing, agriculture, fishing, business and services.
Quantity: up to a million colons.
Destination of the funds:
Credit: According to the destination of and ability for payment. For working capital up to 36 months, other investments up to 72 months. Depending on the type of investment, these credit periods can be paid with a grace period of up to six months.
Interest rates: the average in the banking market.
Form of payment: through installments generally made monthly, although other forms of payment can be considered as well.
Guarantee: Depending on the total sum and credit risk the following factors can be considered:
Until December 2000, 125.2 million dollars in loans have been paid out.
FUSADES participates in the Integrated System of Support for the Small Enterprise, SIAPE, which is a project of the Multilateral Fund of Investments of the Inter-American Development Bank. The mission of SIAPE is: "To foment the productivity and competitiveness of the small and medium-sized Salvadoran business by means of the generation of a market of specialized technical services".
FUSADES offers technical consulting that provides new and better work methods in different areas of the company and permits greater cash earnings from sales, cost reductions, improvements in the quality of products and services, thus ensuring growth and profits.
National external consultants attended to these consulting services, have been selected and qualified, and cover a wide range of specialties.
The scope of the consulting is oriented toward attacking a critical problem within each specific area of the company for which a working plan is presented to and discussed with the businessperson in order to ensure that solutions to the problem are practical and that they obtain the expected benefits.
The cost of the consulting services is subsidized with a significant sum by SIAPE, thus offering accessible prices for the entrepreneurs.
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The Entrepreneurial Training Unit of PROPEMI is accredited by INSAFORP (Salvadoran Institute of Professional Education) and Swisscontact (Swiss Cooperative Foundation for Technical Development), which permits the participant in the training to access payment subsidies.
Training does not mean sending employees to incoherent seminars and courses much less submitting them to mechanized instruction. The training provided arises from a systemic program that the enterprise can implement to detect deficiencies that are affecting the company at this very moment:
Since 1986 PROPEMI has trained more than 32,000 entrepreneurs of small and micro-enterprises, through training courses conducted nationally and internationally in the following areas:
In addition, since 1996 training services have been provided to the institutions and financial organizations which serve the sector of small and micro-enterprises through the transfer of credit technology at the level of credit officials and managers with the objective of facilitating the development of the financial activities of the above-mentioned sectors.
Donation Agreements and Implemented Programmes
Various subprograms have been developed which have been implemented through donation agreements or loans from international organizations or national institutions. This is evidence of experience and formality in the implementation process.
Agency for International Development (AID)
On August 29, 1985, the first accord was signed granting a donation with which the organization PROPEMI was founded. The basic surveys in the sector were taken and personnel were trained in order to begin operations in January of 1986. The first credit was granted in June of that same year.
Thanks to the Program's excellent results, a second accord was signed with AID in September of 1993 so that the scope of PROPEMI's activities could be extended to municipalities contemplated in the Plan for National Reconstruction (PNR). The accord lasted for three years, terminating in 1996. The development of both programs was successful and had far-reaching repercussions for small companies, according to evaluations and measurements of the impact of the program.
Inter-American Development Bank (IADB)
PROPEMI expanded its services to the interior of the country, beginning operations in the city of San Miguel in 1988 to give coverage to the eastern part of the country, obtaining a loan from the Inter-American Development Bank. In 1998 payments on the loan began, because of which PROPEMI enjoys a good rating with this institution.
After the signing of the Peace Accords, international organizations such as UNDP and AID, and national ones such as the Secretariat for National Reconstruction identified PROPEMI as being a supporter of the Programs for the Reinsertion of Ex-combatants into the Economy.
Administrative training was given for the creation of small enterprises for 1,300 ex-combatants of the Farabundo Marti National Liberation Front (FMLN). Concurrently the Program for Reinsertion into the Economy of Leaders and Mid-level Commanders of the FMLN was implemented in modules that included: administrative training, the identification of small projects, financing and assistance for implementation.
The results of this training were: the founding of 347 small businesses, the development of 481 new entrepreneurs, the granting of credit for sums reaching 17.7 million colons.
Certificate of Credit for Micro-enterprises - Development Associates and US AID
Development Associates contracted by AID selected PROPEMI for granting the Certificate of Credit Analysis for Micro-enterprises to executives of non-government organizations in San Salvador from April to June 1999. This seminar was conducted for 60 executives with an emphasis on credit to micro-enterprises, adding modules for leadership and planning, and was rated as excellent, according to the participants' evaluations.
Central American Bank of Economic Integration (BCIE)
During 1999 the Central American Bank of Economic Integration, BCIE, contracted PROPEMI to administer the Certificate of Credit Analysis for the Small and Microenterprise in El Salvador, Honduras and Nicaragua.
Shared Activities with Other Organisations
National Commission for Fomenting and Developing the Small and Microenterprise (CONAMYPE)
PROPEMI participates in the National Commission for Fomenting and Developing the Small and Microenterprise (CONAMYPE) that has a vision of developing modern, competitive, profitable, and capitalized small and micro-enterprises with a capacity for creating wealth and jobs within the economic system of the country and the framework of the strategies for national development.
White Book of the Micro-enterprise
PROPEMI participated in the completion of a document called the "White Book of the Micro-enterprise" together with other public and private entities which are involved in the micro-enterprise sector on a national level.
The document contains a diagnosis and proposal with policy guidelines for the development of the micro-enterprise. It explains the problems which confront the development of these companies and offers possible solutions as well as the method for implementing them.
Businessmen from the sector, NGO's, financial entities, the public sector and international entities participated in the completion of this project with the purpose of gathering ideas on how the sector's development could be benefited.
Integrated System of Support for the Small Enterprise (SIAPE)
PROPEMI forms part of the Integrated System of Support for the Small Enterprise (SIAPE), a project of the Multilateral Investment Fund of the IADB that is coordinated together with the Salvadoran National Association of Private Companies (ANEP), whose objective it is to strengthen and support small businesses in El Salvador through a network of specialized counseling and technical consulting services, geared toward solving productivity and competitiveness problems.
As a result of its interaction with the sector, PROPEMI considers the following to be the impacts on the micro-enterprises:
Year after year PROPEMI has experienced growth in credit, consulting and training due to its strategy of growing with efficiency. The surplus has been reinvested in the goals of the program.
PROPEMI is permanently seeking to raise funds and forming strategic alliances in order that our operations continue to grow. Among our principal goals are:
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