Consultant - Credit Guarantee Scheme and Revolving Loan Fund Partnership Review - Iraq

Job Description

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 Iraqs 18 governorates since 2003, implementing relief and development programming. Mercy Corps Iraqs 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 centers 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 loan funds. The MFIs are allowed to do lending services only which limits them to mobilize savings/deposits for lending to their customers. Group lending methodology and outreach models do not exist limiting the access to loans only for the people capable of furnishing enough guarantee. Informal mechanisms for financial services are almost absent and people 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 actors in the agricultural sector 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.* Identify other interventions to improve and strengthen partnerships with these and other MFIs to ensure the sustainable and scalable provision of finance to actors in the agricultural sector.Consultant Activities:The Consultant will: *Review of Credit Guarantee Scheme and Revolving Loan Fund Projects+ Study of 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 of 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 of 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 studie

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