Country: Ethiopia
Closing date: 15 Mar 2019
STTA for Enhancing MFI Risk Management Systems for SME Lending
LOE: up to 30 days
Period of assignment: March to Jun, 2019**BACKGROUND**
Enterprise Partners (EP) is a 7-year (2013-2020) wealth creation programme which, inclusive of women and the environment, aims to support the private sector and Ethiopia’s economic growth. By applying the Making Markets Work for the Poor (M4P) approach for sustainable results, it aims to facilitate market development in order to spur innovation and investment that creates jobs and increases incomes for the poor. It does so with a combination of technical assistance and market facilitation in resolving market failures. EP is being implemented by a consortium led by DAI Europe, and includes First Consult, Enclude and ITAD.
Background specific to this assignment
The Government of Ethiopia (GoE), in cooperation with the World Bank Group, the European Investment Bank and DFID-funded Enterprise Partners, is implementing the SME Finance Project aimed at enhancing access to finance opportunities for SMEs in Ethiopia. The Development Bank of Ethiopia (DBE) is the implementing agency for the $269 million credit facility aimed at supporting SMEs through lease and working capital financing through DBE, commercial banks, microfinance institutions and lease finance companies.
The Ethiopia SME Finance Study (2014) represents the analytical background for the project. The study, conducted by the World Bank considered (the lack of) SME finance as one of the possible obstacles to job creation. The study has demonstrated the existence of a “missing middle” phenomenon in Ethiopia, whereby small enterprises are more credit constrained than micro or medium/large enterprises. The study also highlighted the inadequacies of Ethiopia’s financial sector to address the financing needs of SMEs, and the existence of severe limitations in the overall enabling environment for SME lending (e.g. the lack of a collateral registry). Moreover, it also highlighted the importance of lease finance as a complementary source of funding for boosting the Ethiopian economy by providing long-term finance to SMEs.
The project has four components: Component 1: Financial services to SMEs (providing a line of credit facility for the provision of leasing and working capital to eligible SMEs) Component 2: Enabling environment for SME Finance; Component 3: Business Development Services to SMEs; Component 4: Project’s management, communication and impact evaluation.
DBE provides direct financing to SMEs, and wholesale finance to other financial intermediaries for on-lending to SMEs through two windows: a lease finance window and a lending/working capital window.
A TA facility is established to complement and reinforce the credit facility. The capacity building will aim to develop the staff of participating financing institutions to serve SMEs adequately – training them in assessing SME business proposals and developing suitable financial products and lending methodologies for the target group.**Objectives**
- The objective of the assignment is to support partner MFIs to enhance their risk management systems with special focus on managing credit risk of the newly launched SME working capital loan portfolio. Specific objectives are:
- Refine risk management frameworks of MFIs addressing the newly launched SME working capital loan
- Refine/ provide risk management tools and templates to strengthen the risk management process
- Enhance staff knowledge in risk management through classroom training and on the job mentoring
- Support/ coach Board Risk Management Sub-Committee of partner MFIs by providing clear guideline to discharge their responsibility and impart necessary skill**SPECIFIC TASKS**
The consultant is expected to provide practical risk management training, provide necessary tools and templates, and follow-up with specific support to enhance the MFI’s risk management systems.
The consultant will carry out the following activities:
- Review documents in relation to the SME Finance Project, including the Project Appraisal Document by the World Bank, MFI Technical Needs Assessment and Inception Report.
- Meet with the MFI CEO and Risk Management Department personnel.
- Review the existing risk management system of MFIs and propose risk frameworks/ policy and procedures.
- Assess potential risks of serving SMEs in the targeted sectors and propose mitigation measures aligned with the situations of each MFI.
- Develop/ refine risk management tools and templates, starting from risk identification up to reporting. Also develop guidelines on how to use the tools, where necessary.
- Introduce a clear risk management system for the new SME working capital loan product.
- Develop risk management training material with relevant case studies and exercises.
- Deliver 3-5 days of combined risk management training for selected staff from partner MFIs. The training session should also include practical use of the proposed tools and templates.
- Conduct on the job mentoring of Risk Managers, Senior Management and/or Risk Management Sub-Committee of the Board.
TIMEFRAME AND DELIVERABLES
The assignment is expected to begin by mid-March and completed by June 30, 2019. The proposed days are indicative and could be revised in discussion with the consultant, but not exceeding the maximum of 30 days. The proposed days are to work with minimum of four MFIs for onsite support.
Detailed Activities and no. of days
- Desk review of MFI institutional and SMEFP project documents (1 DAY)
- Review existing risk management framework/manual and suggest revisions (2.5 days/MFI) – 10 DAYS
- Prepare practice-oriented risk management training material (4 DAYS)
- Develop practical risk management tools and templates (2 DAYS)
- Training delivery (combined workshop for all partner MFIs) – 4 DAYS
- Coach Risk Managers (1 day/MFI) – 4 DAYS
- Coach Risk Managers sub-committee of the Board (1 day/MFI) – 4 DAYS
- Prepare TA report (1 DAY)
Summary of deliverables: Revised risk management framework/ manual for each MFI.
Brief risk assessment report on serving SMEs in the targeted sectors with proposed mitigation mechanisms.
Risk management training material.
Risk management tools and templates.
Training and mentoring report.
Brief TA report highlighting key activities performed, results achieved, and recommendations.
WORKING ARRANGEMENTS
The consultant will work closely with the SME Finance team, CEOs, risk managers and other staff members of partner MFIs. The assignment may require two trips to align the TA to MFI plan and/or readiness. The consultant will report to the SME TA manager.
CONSULTANTS REQUIREMENTS
Senior-Level Expert in risk management with experience in institutionalizing risk management system for MFIs.
- Minimum of 10 years relevant international experience working in SME Finance, risk management, and training delivery.
- Proven experience in provision of technical assistance to the financial institutions, preferably MFIs, in risk management and developing policies, procedures, and tools.
- Knowledge of the Ethiopian financial sector is an asset.
- Competencies required include:
- Fluent in spoken and written English
- Excellent writing and presentation skills
- Excellent working guides and tools developing skills
- Ability to work under pressure and meet tight deadlines
How to apply:
Last date for submission of application is 15th March.
Please follow the link below to apply:
https://chm.tbe.taleo.net/chm04/ats/careers/requisition.jsp?org=DAINC&cws=1&rid=4305