Description

Project/Consultancy Title: Credit Guarantee Scheme and Revolving Loan Fund Partnership Review, Lesson Learned Documentation, and Recommendations

Project Location: Mosul, Iraq

Finance Department Code: 91340-23100-IQ10/IQ15-91340L028/L030

Background:Mercy Corps is a leading global organization powered by the belief that a better world is possible. In disaster, in hardship, in more than 40 countries around the world, we collaborate to put bold solutions into action - helping people triumph over adversity and build stronger communities from within now and for the future.

Mercy Corps has worked across Iraq’s 18 governorates since 2003, implementing relief and development programming. Mercy Corps Iraq’s current goal is to work with new and existing civil society, public and private sector partners to meet immediate and long-term needs by strengthening communities’ ability to rebuild amidst increasing crises. Mercy Corps Iraq focuses on (1) a relief-to-resilience pathway to meet the needs of conflict-affected communities leveraging agency expertise in conflict management and civil society development (2) a humanitarian response that empowers conflict-affected populations to meet their own needs (3) partnering with conflict-affected adolescents to address their diverse needs, promoting leadership and linkages with civil society, as well as access to education, psychosocial support, and economic opportunities; and (4) promoting reconciliation and foster trust across community divisions by strengthening conflict management and prevention mechanisms and enhancing social cohesion.

Purpose:To review the Credit Guarantee Scheme (CGS) and Revolving Loan Fund (RLF) pilot projects and partnerships, document lessons learned, and recommend key considerations for improvement and scale up the intervention.

Project Description:Mercy Corps Iraq has been implementing Promoting Economic Revival for Microbusinesses and Agriculture (PERMA) program funded by the Agence Francaise Developpement (AFD) that aims to improve the business environment, improve access to financial services as well as reactivate the agriculture value chains in the area of Hamdaniya in Ninewa governorate. The agricultural sector in Ninewa has been largely disorganized by the conflict: public infrastructures such as irrigated perimeters, slaughterhouses, markets, etc. have been either damaged and/or plundered, as were private equipment and assets (orchards, poultry houses, feed production units, etc.). Although rehabilitation and recovery costs may be modest, access to financial resources is a challenge both for the government, due to a comparatively low priority on agriculture in reconstruction efforts, and for farmers, whose capital has been depleted. The same can be said for all micro and small enterprises that are part of the economic fabric of rural areas and therefore contribute to the overall rural development of the governorate.

Facilitating access to finance for agricultural and other MSMEs in rural areas and smaller urban areas of Ninewa Governorate is one of the objectives of the PERMA program. To contribute to this objective of increasing access to finance, PERMA has been implementing a number of interventions to contribute in addressing the key constraints such as lack of trust in formal financial services and providers, cultural and social beliefs, lack of information, limited financial capability and dependency on subsidies and grant assistance, limited options and high requirements for the guarantee in accessing loans, limited institutional capacity, the weak value proposition for customers, limited understanding of market opportunities, lack of capital with the supply side. In this context, PERMA is partnering with two MFIs- Al-Rabiein Development Center (ARDC), Hamdaniya and Al-Tadhamun Organization for Economic Development (TDMN), Mosul to facilitate lending to targeted farmers and MSMEs in Hamdaniya and Bashiqa through a credit guarantee scheme (CGS) – a risk-sharing mechanism modified in the local context. PERMA is also pilot testing a Revolving Loan Fund (RLF) scheme confined to finance actors in the agricultural sector in partnership with ARDC.

Contextual overview of financial services in Ninewa: The financial sector in Iraq, in general, is poorly developed and the situation in Ninewa has been further aggravated by the conflict and security situation. The banking services are limited to city centres and people still do not find the banks as the trusted sources for financial services. MFIs in Iraq established with donor-supported programs to serve low-income people are still in an NGO status and lack diversified long term debt and/or equity funding. The MFIs are allowed to do lending services only which also prevents them from mobilising savings/deposits for lending to their customers. Group lending methodology and outreach models do not exist which further limits access to credit to people capable of providing enough guarantee. Informal mechanisms for financial services are almost absent and people mostly depend on family, friends, and relatives for loans. Even among the available loan products with the financial institutions, the products and procedures seem to be fit for all with the same terms and conditions. The financial institutions lack knowledge on product diversification, differentiation, and the use of technology in service delivery. Since the MFIs are not in a position to meet the demand of their customers with the funds available to them, the MFIs’ focus is limited to giving continuity to their services rather than developing outreach models and communication strategies to inform and expand their services. Due to the above-mentioned limitations, the internal systems of the MFIs for risk management, transparency, and client protection are lagging behind the industry standards.

Consultant Objectives:

  • Evaluate the Credit Guarantee Scheme and Revolving Loan Fund against their objective of increasing access to finance for clients in the agricultural sector (including gender objectives, outreach, sustainability, reduction of the level of required collateral, etc.) and identify key successes, challenges, risks and lessons learned.
  • Make recommendations for further improvements in the design of the CGS and RLF to ensure a successful and sustainable scale-up in the next phase of the partnership.
    • Run institutional capacity assessment of partner MFIs.
      • Identify other potential interventions (including capacity building) to improve and strengthen partnerships with these and other MFIs to ensure the sustainable and scalable provision of relevant and diversified financial services for clients in the agricultural sector and/or in the target areas.Consultant Activities:The Consultant will:
        • Review of Credit Guarantee Scheme and Revolving Loan Fund Projects
            • Study the secondary information related to agriculture and financial sector development in Iraq in general including constraints and opportunities and microfinance in Ninewa in particular.
            • Study the project documents including the credit guarantee scheme and revolving loan fund concepts and strategies, program description, and partnership agreements.
            • Review the partners’ reports and partnership progress, and disbursement and repayment data from partners’ MIS.
            • Review the partners’ products and internal processes intended to identify opportunities for further enhancement.
            • Review of partners’ communication strategy about their existing products and the CGS/RLF products.
            • Review credit processes and policies including credit administration cycle (client identification, loan appraisal, loan monitoring, supervision, loan recovery), credit risk assessment methods, and risk-based pricing)
            • Review the collateral requirements for the different products
            • Conduct interviews with PERMA staff
            • Conduct interviews with partner staff to discuss their partnership with Mercy Corps and to understand more about the services they are providing, their target participants and market, their experience of the partnership so far and of setting up and managing the CGS and RLF, and their hopes and expectations for future collaboration
            • Conduct KII and/or focus group discussions with the borrowers to understand their experience of receiving and repaying the loans, the impact the loans have had on their lives and livelihoods, any challenges they have faced, and their future plans and needs.
            • Document the findings of the above studies and the results of the pilot testing.
              • Document lessons learned
                  • Conduct lesson learned sessions jointly or separately with the partner and program representatives to capture the challenges, mitigation measures, what went well, what went wrong, and what needs to be improved during the announcement and bidding, selection of partners, and implementation phases.
                  • Identify and document the key constraints for the partners to adapt and continue CGS/RLF schemes
                  • Identify capacity gaps that need to be addressed through technical assistance in order to continue or expand the partnerships
                  • Identify the impact that the CGS/RLF had on the PERMA participants and identify any improvements that need to be made.
                  • Draft a technical assistance plan in consultation with the PERMA program team and the partners considering the limitations of the PERMA program and the partners.
                    • Recommend for improvement
                        • Recommend for improvement in the concepts, features, and processes of the credit guarantee scheme and revolving loan fund to increase access to inclusive finance, and a capacity building plan for the partners that should be based upon a diagnosis of the institution (strategy, governance, organization, processes, etc.)
                        • Evaluate and make recommendations for combining the features of the credit guarantee scheme and revolving loan fund to establish an agriculture investment fund for the next phase targeted to smallholder farmers and agribusiness.
                        • Any other relevant recommendations for scale-up, impact, and sustainability.
                        • Prepare a short communication notice for broader public sensitization about rural microfinance potential, successes and challenges.Consultant Deliverables:The Consultant will:
                          • Draft a report of key findings, lessons learned and recommendations, to be shared with PERMA staff and partners for feedback and validation
                          • Results dissemination workshop to share report findings and recommendations
                          • Final report of the study including review report, technical assistance plan, lessons learned, and recommendationsTimeframe / Schedule: Thirty-five workdays in between June 2022 to August 2022. The desk study, designing tools and report writing can be done remotely; however, the consultant is expected to travel and be on-site for meetings, interviews and observation with partners, borrowers, and other stakeholders. The consultant can continue working on weekends or holidays if assistance of a program or partner’s team is not required to carry out the planned activities.

                            Activities and Due dates (Work schedule and due dates will be agreed upon once the consultant is selected):
                            1. Inception Meeting -
                            2. Desk study of PERMA I and II proposals, reports, credit guarantee scheme, and RLF concepts, agreements, program description, and partner progress reports -
                            3. Discussion session with program team -
                            4. Design tools for MFI assessment, FGD/KII with borrowers, MFI staff, and program staff -
                            5. KII program staff -
                            6. FGD with potential/borrowers -
                            7. Assessment of MFIs -
                            8. Documentation of review, lesson learned, and technical assistance plan -
                            9. Submission of draft consultancy report -
                            10. Incorporate comments/inputs from the program team/TSU -
                            11. Conduct result dissemination workshop -
                            12. Finalize and submit the consultancy report - The Consultant will report to Financial Inclusion Manager/PERMA Programme The Consultant will work closely withPERMA Financial Inclusion Team, TSU representative, and PERMA Consortium Manager

                              Payment SchedulePayment will be made according to the following schedule:

                              Milestone

                              % Payment

                              Submission and acceptance of draft review reports, lessons learned documents, and technical assistance plan for the partners

                              40%

                              Submission and acceptance of the final assignment report

                              60%
                              Required Experience & Skills:The consultant will be a financial inclusion specialist with proven experience, will act as an organizer for the assignment, and will have primary responsibility for the conducting and documentation of the study. The proposed consultant should include the technical expertise and practical experience required to deliver the scope of work and deliverables.

                              The consultant should have:

                              • At least a bachelor’s degree in banking, finance, business administration, social science or equivalent, Master’s degree preferred.
                              • Good knowledge and understanding of financial instruments such as credit guarantee and revolving loan funds.
                              • Fluency in written and spoken English. Knowledge of Arabic will be added advantage.
                              • Technical knowledge on carrying out capacity assessments, design, and delivery of technical assistance for financial institutions: especially, microfinance institutions.
                              • Demonstrated exceptional technical statistical knowledge of data collection and analysis, both quantitative and qualitative.
                              • Minimum of 7 years previous relevant experience in banking, conducting consultancies in the sector of banking, financial inclusion, especially in the microfinance sector.
                              • Familiarity with the local context, security situation, and financial sector development in Iraq.
                              • Cultural sensitivity, facilitation skills, and ability to work in a low profile.Diversity, Equity & Inclusion
                                Achieving our mission begins with how we build our team and work together. Through our commitment to enriching our organization with people of different origins, beliefs, backgrounds, and ways of thinking, we are better able to leverage the collective power of our teams and solve the world’s most complex challenges. We strive for a culture of trust and respect, where everyone contributes their perspectives and authentic selves, reaches their potential as individuals and teams, and collaborates to do the best work of their lives.

                                We recognize that diversity and inclusion is a journey, and we are committed to learning, listening, and evolving to become more diverse, equitable, and inclusive than we are today.

                                Equal Employment Opportunity
                                We are committed to providing an environment of respect and psychological safety where equal employment opportunities are available to all. We do not engage in or tolerate discrimination on the basis of race, colour, gender identity, gender expression, religion, age, sexual orientation, national or ethnic origin, disability (including HIV/AIDS status), marital status, military veteran status or any other protected group in the locations where we work.

                                Safeguarding & Ethics
                                Mercy Corps team members are expected to support all efforts toward accountability, specifically to our stakeholders and to international standards guiding international relief and development work, while actively engaging communities as equal partners in the design, monitoring and evaluation of our field projects. Team members are expected to conduct themselves in a professional manner and respect local laws, customs and MC's policies, procedures, and values at all times and in all in-country venues.

                                Closing Date: 13 June 2022, 23.59
                                Applications will be considered on a rolling basis.

This vacancy is archived.

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