Cost-Benefit Analysis of USAID Assistance
Cost-Benefit Analysis of USAID Technical Assistance
The purpose of this paper is to estimate the quantifiable benefits of two USAID programs on private sector development in Mozambique: Technical Assistance to the Confederation of Mozambican Business Associations (CTA) and the Ministry of Industry and Commerce (MIC), which operated from 2003 to 2005; and the Mozambique Trade and Investment Project (TIP), which has operated since 2005.
Using a discount rate of 13.2 percent, reflecting an estimate of the real opportunity cost of capital to the private sector in Mozambique in 2003, the present value of quantifiable benefits totals $52.3 million (discounted to 2003). At this discount rate, the present value of program cost has been $8.8 million. This gives a net present value of $43.5 million, and a benefit/cost ratio of 5.9.
Using a discount rate of 4.0 percent, in line with the rate recommended by the U.S. Office of Management and Budget in 2003, the present value (discounted to 2003) of quantifiable benefits totals $81.5 million. At this discount rate the present value of program cost has been $10.5 million. This gives a net present value of $71.0 million, and a benefit/cost ratio of 7.8
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