Half of the Budget Meant For Assisting the SMEs Was Spent On Program Operation
<p style="line-height: 20.7999992370605px;"><span style="line-height: 1.6em;">This is the plan Buenos Aires Competitive City, which is dedicated to assisting companies, granting loans. According to the AGCBA, in 2010 the area devoted more than half of their expenditures to cover the administrative costs of its own operation. With 90% of the funds they only achieved half of their objectives. The audit says the same thing happened with the money of another similar project.</span></p> <div> </div>
The Auditor General of the City of Buenos Aires (AGCBA, for its acronym in Spanish) analyzed the management of the Secretariat of Economic Development of Buenos Aires, with activities concerning Competitive City and Buenos Aires Enterprise. On the first they found that most of the expenditure is intended to cover administrative matters. The report says, in relation to both plans, there are no studies to discover whether the objectives proposed are "achievable".
The Competitive City Program seeks to further the process of investment and technological upgrading of SMEs through special loans with convenient rates. According to the audit only "45% of expenditures were allocated to subsidize the interest rate of loans granted to beneficiaries", while "more than half of the expenditure incurred is used to cover operating and administrative program costs".
Meanwhile, the watchdog said that Competitive City used almost all of its funds to meet half of its objectives: "To reach 49.4% of its physical goal, they used 81.4%" of its budget. The same happened with the Buenos Aires Enterprise Program, which aims to promote the creation and development of innovative enterprises. The latter invested $ 4,568,409, 92% of its funds for 59% of its physical goal.
The Buenos Aires Audit noted in its report published in 2011 on 2010 data, that it is not known whether the objectives of both programs can be reasonably achieved with the allocated resources because "there is no record of studies" that demonstrate this. To this, we must add that "none of the two plans have indicators to measure the impact of the actions on economic activity in the City."
A Program with Discretionary Selection Criteria
The watchdog said that 21% of the analyzed cases of assisted companies in the Buenos Aires Embark "do not meet the admission requirements." There were detected, for example, two "incomplete budgets," three "that do not meet the age requirements of less than 24 months since its creation," and three "that do not correspond to innovative activities and new ventures."
Also, on the sponsors (whose task was to support entrepreneurs in order to implement their respective business ventures), the auditors reported that it should be evaluated numerically, but a letter code was used, so that "in the last evaluation, the sum of the scores obtained does not match the criterion of the minimum, average, and maximum of abbreviations mentioned." According to the City Watchdog, "this allows the application of discretionary assessment criteria that decrease the transparency of the selection process and evaluation of applicants, coupled with a subjective application of the criteria by reviewers."
Buenos Aires, Competitive City?
Although the program is dedicated to assisting the SMEs in the process of investment and technological upgrading, promoting its competitiveness, the AGCBA found that "only 75 credits for the incorporation of technology or capital goods were granted (10.37% of total loans), "and instead" 648 loans were made to strengthen the work."
The audit said that "20 loans for OPEs were granted in breach of the Agreement between the Secretariat of Economic Development and the Bank of the City of Buenos Aires, which is a requirement for a loan qualification, the beneficiary is organized under one of the rates established by law 19,550. These loans represent 24% of the 84 selected in the sample of cases audited by the watchdog.
