About the Job
ABOUT FIRST CONSULT
First Consult is a leading economic development consulting firm implementing projects in Ethiopia. Founded in 2006, First Consult (FC) has grown to design and implement projects across the agriculture, manufacturing, and service sectors. Our multidisciplinary teams combine a capacity to execute with clarity of the local context. As a result, we have delivered at-scale real impact in terms of job creation, business formation, business growth, and investment attraction and mobilization.
MESMER PROGRAM
Micro, Small, and Medium Enterprise Recovery and Resilience Program (MESMER) is a 5-year program launched in October 2022 to support 72,200 MSMEs and 410,800 jobs by creating access to finance for micro, small and medium enterprises (MSME) to realize their growth prospects and resilience. MESMER also provide business development support, psychosocial services for MSMEs and technical assistance to financial institutions. MESMER is a countrywide program implemented by First Consult in partnership with the Mastercard Foundation as part of the Foundation’s Young Africa Works strategy and will strive to create dignified and fulfilling work for the youth, the majority of them women.
MESMER is a national scale-up of the existing MSE Resilience Facility launched in 2020 to support enterprises affected by the COVID pandemic. The project will mainly be following a four-pronged approach to meet its objectives: a) Grants and soft loans to MSMEs through a risk-sharing liquidity fund arrangement, b) Technical assistance to financial institutions, c) Business development services and life skills, d) Psychosocial support. The FDRE Ministry of Labour and Skills will be the main government counterpart for the program. Other partners include financial institutions (microfinance institutions, banks, and digital financial service providers), BDS, and psychosocial support providers.
BACKGROUND OF THE ASSIGNMENT
Ethiopian MSMEs growth and development as well as their contributions to socioeconomic development of the country are undermined by various challenges including limited access to finance, poor technical and business leadership skills, lack of working premise, weak support system and market access, high exposure to shocks such as conflict, inflation, and other macroeconomic challenges. Access to finance is the top citied constraint hindering access to credit by MSMEs as the banks’ business model is primarily catered to large enterprises who have fixed assets collateral and hence, they do not have MSMEs targeted financial products/services. In addition, banks are not particularly keen to engage MSMEs due to perceived risks and low return. Microfinance institutions primarily targeted micro-enterprise and offering group loans having limited experiences and technical capacity to offer tailored financial services for SMEs even if significant improvement is observed on that end. Moreover, the Ethiopian financial sector is liquidity constrained further affecting their capacities to adequately finance MSMEs. on the other hand, banks focus on large ticket customers and the existing loan products, policies and procedures and lending technology need to be revisited to identify areas of improvement to align it with the needs of the MSMEs.
Consequently, Ethiopian SMEs are categorized under the “Missing Middle” group within the context of access to finance. The MESMER program aims to promote inclusive and innovative financial services for MSMEs and support partner banks to develop innovative products that meets the specific financing needs of the MSMEs.
Digital banking is one of the government priorities and thus it has recently issued various directives to promote digital financial services to promote greater financial inclusion and extend high-quality financial services to underserved communities and businesses. Following digital wave and growing e-commerce platforms, customers’ expectations are also rapidly changing. Thus, innovations and implementation of digital banking enable FIs to proactively respond to changing customer needs and to further promote financial inclusion in faster and more cost-efficient ways. Therefore, digitization of the MSME lending operations brings a number of powerful benefits for banks, including better decisions, improved customer experience, and significant cost savings.
However, the digital credit market is very nascent in the country and hence there are gaps in optimizing digital opportunities due to limited awareness and expertise as well as underdeveloped digital platforms and other relevant infrastructure. Lack of exposure in conducting relevant algorithms using wide variety of data and tailored credit scoring model that supports informed decisions in the market are hindering digitalization of MSMEs credit operations. There is also limited engagement by FIs in designing & offering digital credit product for MSMEs. Likewise, MESMER partner FIs have very limited exposure in offering digital credit products so that they are facing difficulty to customize and offer MESMER credit product via digital lending platform. All partner banks are in the process of developing digital lending platforms while others have already finalized development, some in piloting phase and others pending launch. A common factor however is that the developed platforms need to be customized to accommodate MESMER credit and requiring support to customize their platforms to accommodate the new MESMER digital loan.
With this background, MESMER through its TA component aims to support partner financial institutions to optimize their digital lending platforms/mobile money platforms and customize & offer digital micro credit services for MESMER clients/MSMEs. The assignment will focus on exploring digital lending market contexts & operations, challenges and opportunities to digitize MESMER credit operations to enable partner banks to offer effective and faster credit process and decisions using digital platforms.
ASSIGNMENT OBJECTIVE
The objective of this assignment is to provide technical assistance for MESMER partner banks in digitalization of MESMER Credit Operations/MSMEs lending to enable them to automate and streamline end-to-end credit operations and management including online applications, digital document submission, automated document verification processes and creditworthiness evaluation, and faster credit approval and disbursements. The consultant will also support PFIs in developing relevant algorithms using wide variety of data & generating credit scoring to support informed credit decisions as well as in areas of designing & offering digital micro credit product for MSMEs.
SCOPE of WORKS
Working closely and with the guidance of the MESMER program management team and partner banks’ management team, selected service provider will carry out the following key activities:
• Review regulatory frameworks and digital lending operations performance against international best practices with the emphasis on MSMEs digital credit provisions,
• Review partner FIs readiness, challenges and opportunities with special focus on MSME digital lending and other relevant areas for MESMER credit operations digitalization,
• Produce gaps analysis report with clearly defined and practical areas of interventions/recommendations to embrace innovations to further optimize their digital platforms with the aim to effectively offer digital loan for MSMEs including MESMER credit,
• Define business model and relevant data type and sources to be used for credit scoring,
• Formulate suitable and automated credit scoring model to be adopted to assess creditworthiness of MESMER loan applicants/MSMEs and support faster approvals and disbursements following best practices and contexts on the ground,
• Customize partner banks’ digital lending platform/mobile money platform to streamline and digitize MESMER credit operations, in consultation with partner bank digital banking operations team and MESMER TA team,
• Integrate MESMER online applications portal with the partner banks’ digital lending platform to streamline and digitalize MESMER credit operations -online applications, digital document submission, automated document verification processes, credit scoring, credit approval and disbursement,
• Organize validation sessions for banks executive management team to review and validate customized business model & credit scoring algorithms and digital MSMEs lending platform,
• Produce tailored MSMEs digital lending operations framework and guideline,
• Train and mentor relevant partner bank staff in areas of digital MSMEs lending principles and practices including credit scoring and its applications,
• Support in piloting, enhancing and scaleup of MESMER digital loans with partner FIs
DELIVERABLES
Deliverables of the assignment are listed in the table below:
- Inception report with clearly defined methodology and time framed work plan
- Readiness assessment report to offer digital MSME credit product/digitalization of MESMER credit operations – performance trends and gaps analysis together with areas of interventions/ specific recommendations considering contexts and best practices,
- Customized and automated credit scoring model for MSMEs/MESMER credit applicants using alternative and relevant data,
- Customized and integrated digital MSME lending platform for partner FIs
- MSMEs digital lending operations framework and guideline,
- Organize workshop/trainings for partner banks staff in areas of MSME digital lending – training report
- Pilot test MESMER digital loan/MSME digital lending operations using each partner banks digital platform,
- Launch customized MESMER digital loan with each partner bank
- Ongoing implementation support and troubleshooting for 3 months. 10
- TA report
About You
REQUIRED QUALIFICATIONS
To qualify for the design and development of digital MSME lending packages and platform, the firm should possess the following minimum qualifications:
• At least five years proven experience in designing and implementing in designing and implementing credit scoring models and digitalization of MSME lending operations & management,
• Proven experience in digital credit operations, fintech, mobile money and MSME financing,
• Experience in conducting a diagnostic of digital banking operations, digital credit market and devise reliable and scalable interventions & recommendations,
• Partnership and consortium with renowned international company who has hands on experiences in the field is a plus,
• Good knowledge of the digital credit market operations and financial sector in east Africa, more specifically in Ethiopia,
• Proven experience in training delivery and mentoring of financial institutions in credit scoring and digital credit operations,
• Excellent analytical, reporting and interpersonal skills and ability to work with others,
• Ability to work with public and private sector stakeholders,
• Commitment to building the skills and competence of the team,
WORKING ARRANGEMENT AND REPORTING
The service provider (SP)will be working under a contract with First Consult PLC. SP will report directly to the MESMER TA Team and will also closely work with partner banks and other key stakeholders. The service provider is also obligated to work within the required deadlines and be available in accordance with the schedule, which can be adapted as needed.
Required Skills
- Training and Development
APPLICATION PROCEDURE
Proposals should include:
1. Technical Proposal (maximum of 12 pages), excluding company profile, CVs of key team members, legal documents (renewed business license, TIN and VAT registration certificates) and testimonials, and recommendation letters from previous work which can be attached as annexes. The technical proposal is expected to include the following sections:
• Understanding of the ToR and assignment
• Proposed methodology
• Proposed team
• Project work plan detailing the anticipated delivery dates for all deliverables defined in the scope of work.
• Company profile with relevance to the required work, detailed CVs of consultant/s, and references on previous similar works
• Other supporting documents in relation to similar work done.
2. Financial Proposal (submitted as a separate PDF)
• Disclose all charges, including all taxes, that will be transferred to MESMER because of the services provided by the consultant.
• Quote an estimated total fee for completing all requirements outlined in this ToR.
• The financial proposal should include all project costs with detailed descriptions.
PROPOSAL EVALUATION:
First Consult will review submitted proposals in accordance with the qualification and experience requirements, as well as specific tasks stated above. The best technical and financial bids will be those that demonstrate competencies in related works, value for money and budget efficiency, which are closely tied to the rationally determined methodological approach and reasonable remuneration rates.
SUBMISSION OF PROPOSALS:
The deadline for proposal submission is October 11, 2024. Technical and financial proposal must be submitted separately in PDF format on or before the deadline to the following email address: [email protected]
The subject of the email should be stated as “Terms of Reference to Digitize MESMER Credit Operations & Management: Design and Develop Digital MSME Lending Packages and Platform’’
INFORMATION:
For clarification or for any queries relating to this assignment please contact the focal person below on or before October 11, 2024, until 5:00PM (GMT+3:00):
Name: Asefa Abba
Title: Deputy Programme Lead, MESMER
Email address: [email protected]
More Information
- Address Ethiopia
- Experience Level Senior
- Total Years Experience 5-10
