Terms of reference (ToR)

 To Hire a Service Provider to Deliver Technical Assistance to Addis Credit and Saving S.C (AdCSI’s) Staff on Portfolio Management 

INTRODUCTION

Lending is the principal business activity for most financial institutions. The loan portfolio is typically the largest asset and the predominate source of revenue. As such, it is one of the greatest sources of risk to a financial institution’s safety and soundness. Whether due to lax credit standards, poor portfolio risk management, or weakness in the economy, loan portfolio problems have historically been the major cause of financial institutions losses and failures.

Effective management of the loan portfolio and the credit function is fundamental to a financial institutions safety and soundness. Loan portfolio management (LPM) is the process by which risks that are inherent in the credit process are managed and controlled. Risk can be defined as a potential event, expected or unexpected, having an adverse impact on financial institution’s earning or capital.

Here, we give emphasis on credit risk albeit there are 9 possible risks that are associated with lending practices. Many products, activities, and services expose FIs, particularly MFIs, to credit risk as MFIs address the base of the pyramid with less or no collateral requirements. The risk of repayment is either lessened or increased by the financial institution’s credit risk management practices. A FI’s first defense against excessive credit risk is the initial credit-granting process − sound underwriting standards, an efficient, balanced appraisal process, and a competent lending staff.

In light of this, BRIDGES would like to assist Addis Credit and Saving Institution S.C on portfolio management particularly on their Enterprise Loan portfolio. For such purpose, BRIDGES would like to contract a service provider to deliver technical assistance service to AdCSI’s staff on loan portfolio management with a particular focus on Know Your Customer (KYC), Loan Appraisal Techniques and Due diligence. BRIDGES partner with different financial institutions to address challenges faced by these intuitions through technical assistance, introducing new and innovative financial products, and link financial institutions with each other and MSMEs. 

BRIDGES PROGRAMME

BRIDGES is a job creation program funded by the Mastercard Foundation and implemented by First Consult PLC. It envisages supporting the creation of close to 600,000 jobs for the youth (80% women) and 15,000 MSMEs, with 300,000 unemployed youth trained through supporting IP job creation initiative and market linkage between IPs and MSMEs.

The BRIDGES Program will address two fundamental, immediate and complementary challenges to unlock the potential for job creation within IPs and their surrounding ecosystem. (1) Making the industrial workforce markets work (2) Making the IP business linkages (MSME) markets work to enhance domestic manufacturing value-added (MVA) for every given dollar of export. This will be done by substituting the currently-heavy import-dependent operations – itself a constraint on the factories - via local suppliers (MSMEs) in a number of ways.

Labor market: BRIDGES will scale-up proven and successful worker recruitment and retention interventions to additional industrial parks (to be selected in consultation with GoE and other development partners) increasing the total number of IPs that BRIDGES works with to ten. The worker recruitment intervention helps provide platform for factories and workers to create smoother linkage which will help address the quantitative and information mismatch problems in workers’ recruitment. Once in employment, factories will be supported to provide soft skills training as a key element of induction and managing job expectations. The training modules will use a standardized soft skills curriculum aimed at addressing the “Soft” elements of the transition that stems from workers moving from a village-based, family/community-based and agrarian life to an alien environment in the industrial, individualistic living of an urban setting.

MSMEs market: BRIDGES will work with MSMEs to enable them tap into major market opportunities around 10 major IPs and Anchor Enterprises outside IPs. The work will involve a major information, coordination, capacity development and access to finance initiatives to be undertaken in partnership with key IP, AE and MSME stakeholders at various levels including Demand (IP markets), Supply (MSMEs), Linkage (information, transaction and payment platforms) and Ecosystem (macro and other meso level actors).

The key departure from prior MSME development efforts will be to leverage the demand side to be more than just a passive or reactive customer at the end of the process and to facilitate the linkage at the beginning in a demand-driven way. BRIDGES’ facilitation will enable to bring the AEs, MSMEs and necessary public and private stakeholders together and de-risking the initial rounds of technical assistance and business linkage transactions. In order to ensure the marketability of the various types of BDS delivery as well as outreach, BRIDGES is proposing to create a win-win Public Private Partnership (PPP).

Access to finance: this applies to both direct workers within parks as well as MSMEs that BRIDGES will be working with. Access to finance will be facilitated through SME finance programmes, private equity funds, advisory services, as well as availing grant facility through a crowdsourcing platform. BRIDGES will also facilitate innovative and progressive (pre)payment & risk reduction mechanisms from the customers (factories, workers, government) based on MSME performance and track record (credit scoring via the data from the e-commerce payment platform).

OBJECTIVE

The objective of this assignment is to assist Addis Credit and Saving Institution on enhancing the performance of their Enterprise loan portfolio by capacitating 150 loan officers, credit supervisors, area managers and control staffs on stringent project appraisal techniques and portfolio management functions. 

SPECIFIC TASK

The service provider will be responsible for:

• Review and assess the existing project appraisal and credit risk management procedures and the organizational set-up for credit-related functions of the MFI
• Develop a report on the findings on the appraisal techniques being employed and how they can be improved
• Develop a training material that intends to enhance AdCSI’s enterprise loan portfolio performance in particular and their loan portfolio management system in general.
• Deliver a one-day training to 150 AdCSI’s staff

DELIVERABLES 

• Assessment report
• Training material
• Trainee attendance
• Training outcome report  

The assignment will take one to two weeks, starting from 10^th of January 2022 to 24^th of January 2022. 

TIMEFRAME

The estimated allotted time for the assignment is 15 working days

Job Requirements

QUALIFICATION AND EXPERIENCE

• The service provider must have a firm at least 7 years of experience in conducting trainings and must also incorporate consultants which hold an advanced University degree in Finance, Management, and Economics or any other related field of study.
• The consultants must also have at least 10 years’ experience in consulting in the financial sector with a particular focus on Microfinances.

How to Apply

APPLICATION PROCESS

Documents

In response to this ToR, qualified companies should submit both technical (maximum 10 pages, CVs could be annexed) and financial proposals (Maximum 3 pages) in the following structure:

Technical Proposal Structure

• Organization Track Record and Relevant Experience
• Description of Technical Approach, Methodology and Module contents
• Team Composition, Assignment, and Key Experts CV’s

Financial Proposal

• The firm should submit the total budget in the proposal with detail breakdown including applicable government taxes. All costs should be stated in ETB.

Submission of the proposal

Applicants should email their proposal (technical and financial) to bids4@firstconsultet.com with the relevant information detailed in technical and financial section of a proposal. For any queries relating to this assignment please contact Kalkidan Alemseged via: kalemseged@firstconsultet.com till December 27, 2021.

NB: The subject of the email should say “Technical Assistance to AdCSI, BRIDGES Programme”. Proposals must be received no later than 5 PM on December 30, 2021.