Microfinance (Revolving Fund) Advisor

Terms of Reference

Position Title:

Microfinance (Revolving Fund) Advisor  

Location:

Hanoi based with frequent travel to Son La and Lao Cai

Period of Assignment:

January 2021-July 2021

Days:

6 months full time contract (with the possibility of extension)

Reporting To:

Operations Manager

Background:

With more than 30 year’s experience, Cowater International is Canada’s global leader in management consulting services, specializing in international development. We have managed the implementation of over 800 projects in more than 80 countries around the globe for clients such as FCDO, DFAT Australia, the World Bank and Global Affairs Canada. We work with governments, partner organisations, communities and civil society to design and implement sustainable solutions that generate lasting social, economic and environmental impacts. Our adaptive approach to management has led to our award-winning work and recognition as one of Canada’s Best Managed Companies in 2017, 2018 and 2019.

The Aus4Equality|Gender Responsive Equitable Agriculture and Tourism (GREAT) Program is a flagship initiative of the Australian Aid program in Vietnam. The Program, which seeks to promote women’s economic empowerment in the ethnically diverse north-west region of Vietnam through inclusive systems development (MSD) in the agriculture and tourism sectors, commenced in November 2017 and will run until December 2021. Under GREAT there are approximately 50 separate projects, each implemented by a lead partner.

Access to finance was identified as a key market system issue that, if unlocked, could have a significant impact on the lives of women living in target areas. An assessment, commissioned by GREAT, focusing on the supply chains of private sector partners in Son La, found that 60% of vegetable and passion fruit producers and 33% of tea producers are seeking additional finance. The study also found that female respondents were slightly more likely to access finance from informal sources rather than formal sources. The use of moneylenders and black credit was a problem in some areas, with farmers borrowing from the black market to repay a formal loan.

In response, GREAT implemented a two-pronged approach that avoided providing subsidies to farmers as partners originally proposed and balanced the need to begin implementation and the time needed to address the root causes restricting farmers in the targeted company supply chains being able to access affordable finance. This approach incorporated:

• The immediate solution of providing a revolving fund to selected partners, where the company distributes the funds and GREAT and the company share risk for any underperforming loans. The fund is designed to be returned to GREAT after 12 to 16 months depending on the production cycle and the availability of suitable alternative financial services. This was also designed to help test the viability of value chain financing for farming households in the target area. 
• The longer-term solution of identifying suitable financial institutions to partner with in order to address systemic constraints. GREAT is now working with LienVietPostBank to trial collateral-free lending to farmers based on cash flow modelling and risk-profiling of farmers within targeted value chains. The Program has also started a project with the Vietnam Bank for Social Policies (VBSP) to pilot value-chain lending in Lao Cai, focusing on loans for productive purposes rather than day-to-day expenses. Financial literacy training for women and capacity building for VBSP in gender lens lending is included in the solution to help women make informed decisions and manage debt. 

Given the impact of COVID-19, GREAT’s COVID-19 response and recovery plan recognised the need to review the revolving fund and formal credit repayment capacity of households within GREAT partner projects and formulate an action plan and suitable support mechanisms.  The Program has also identified that partners still lack capacity to adequately manage revolving funds despite training and tools provided. GREAT is now seeking to engage a Microfinance Advisor to assess the repayment capacity of beneficiaries and provide additional support partners to manage the revolving funds as well as provide other technical inputs to the GREAT Program.

Statement of Duty:

Given the impact of COVID-19, the Microfinance Advisor will review the repayment capacity of households within GREAT partner projects and partner management mechanisms and formulate an action plan and updated system of revolving fund monitoring and support.  The revolving fund covers 10 partners in Lao Cai and Son La province with a total budget for the revolving funds included in the partnership agreements of approximately AUD 1,000,000.  The Advisor will also assess beneficiary ability to repay any other loans (formal or informal) associated with project activities, as a result of changing market conditions due to COVID-19 or other sector challenges.

The Advisor will also provide technical support to GREAT’s Partnership Managers overseeing the VietED (VBSP and LVPB) access to finance projects.

Specific Duties:

• Conduct an assessment of the operations of the GREAT’s revolving fund including the ability of current GREAT beneficiaries to repay debt.
• Review the ability of beneficiaries to repay other loans (formal or informal) associated with Program activities.
• Review the databases of beneficiaries at the individual partner level and systemise to establish a database at the Program level which links with GREAT’s MIS including financial reporting and relevant indicators which will be updated by the partners for management purposes.
• Conduct internal control missions and spot checks in collaboration with other GREAT staff on the use and management of the revolving fund.
• Prepare a detailed action plan with recommendations at both GREAT partner and beneficiary level.
• Provide support and coaching to partners to strengthen the financial management of revolving funds.
• Provide technical advice as required to GREAT’s Partnership Managers on access to finance, as well as input into potential uses of revolving funds returned to GREAT.

Key Deliverables:

• An initial assessment report on the operations of GREAT’s revolving fund.
• An action plan with clear recommendations, including other loans associated with Program activities.
• A Program-level database of the beneficiaries of revolving funds linked with GREAT’s MIS M&E and Finance’s modules.
• Tools, training and advice to partners on how to manage revolving funds better.
• Internal control reports.
• Advice to GREAT Partnership Mangers, as required.

Required Qualifications:

• Minimum 10 years’ experience in microfinance/revolving fund/ grants within Vietnam.
• Relevant tertiary qualifications such as accounting, finance/ banking or business.
• Prior experience working with NGOs/development sector.
• A track record of success in implementing access to finance models with smallholder farmers.
• Experience with formal finance.
• Experience working with ethnic minorities and an understanding of women’s economic empowerment is an asset.

Contract arrangement

A service contract will be negotiated with the preferred candidate. Fees will align with GREAT standard cost norms for consultant fees and reimbursable costs.