MSME Loan Transaction Facilitator
Location of Assignment: Dar es Salaam and Iringa region, Tanzania
Proposed Level of Effort: 25 days
Anticipated Start Date: August 2018
Anticipated End Date: October 2018
Objectives of the Assignment: The objective of this assignment is to finalize two previously-identified financing opportunities, resulting in new loans issued to agricultural producers and MSMEs from Tanzanian financial institutions. Specifically, the two opportunities for this assignment are as follows:
1. Identify, negotiate with and reach written agreement with a local microfinance institution to assume a loan book valued at over US$200,000 that a leading poultry producer has been successfully managing, with over 200 brooders located across the Northern, Coastal, and Southern Highlands regions of Tanzania. The average loan value is $1,200 with a two-month repayment period.
2. Support the establishment of or the expansion of at least five commercial farming operations supplying a high-value agricultural crop to a large local processor by securing access to finance for equipment, infrastructure and working capital (and potentially the purchase of additional land for established commercial farmers). These nascent and established commercial farmers already possess land, inputs, short production cycles and an unlimited demand for their output.
The Tanzania Enabling Growth through Investment and Enterprise Program (ENGINE) is a four-year, USAID-funded Feed the Future activity awarded through the Volunteers for Economic Growth Alliance (VEGA), that aims to streamline and enhance many of the regulatory, informational and financial channels that encourage domestic and foreign investment in the southern mainland agricultural regions of Mbeya, Morogoro, and Iringa, and in Zanzibar.
ENGINE works at the district level, using a broad-based approach to engage with district Local Government Authorities (LGAs), private sector associations, business development service providers, financial institutions (FIs) and small and medium enterprises. The program’s activities are divided into three main components:
1. Implement policies for growth. Build the capacity of the private sector to effectively dialogue with the government to set the policy agenda and improve the capacity of the public sector to implement policies.
2. Equip businesses for growth. Strengthen SME capacity and foster the growth and capacity of a sustainable market for business development services (BDS) in Tanzania.
3. Access to finance for growth. Broaden access to finance for small and medium-sized enterprises (SMEs), especially women and youth entrepreneurs and those working within agricultural value chains, to facilitate increased investment and growth.
In support of the program’s Access to Finance component, ENGINE has conducted a thorough assessment of value chain opportunities across four areas of Tanzania. From this activity, ENGINE has chosen to work with three lead firms representing three agricultural value chains: poultry, dairy, and a high-value specialty crop. These opportunities were selected based on the high potential for productive partnerships and anticipated impact. In order to bring each of these opportunities to fruition, additional dedicated effort is necessary to better understand incentives, constraints and risks among value chain actors and to develop mutually beneficial arrangements. This assignment will focus specifically on finalizing financing opportunities within two of these selected value chains.
In order to complete the assignment, the consultant is expected to execute the following tasks:
• Meet and build relationships with value chain actors, including agriculture producers, MSMEs, lead firms, and financial institutions, to structure formal credit opportunities, including existing credit needs, to support ongoing lending and the generation of new loans for lead firms’ commercial producers.
• Work with all parties to structure financing arrangements that systematically address critical constraints, mitigate risk, and align with institutional incentives.
• Explore the potential for incorporating supporting structures, such as credit guarantees from PASS Trust and USAID’s Development Credit Authority, to support the deliverables described below.
• Serve as an independent third party, providing hands-on technical support to borrowers and lenders to ensure that agreed-upon credit facilities related to the deliverables described below, once agreed to, are quickly brought to finalization.
• Develop a pipeline of targeted borrowers related to the deliverables described below and provide support as needed in the form of information, mentoring, capacity building and/or organization and loan application structuring and facilitation with financial institutions to prepare them for receiving and managing credit.
• Negotiate the deals between the relevant parties required to successfully produce the deliverables described below.
• Provide regular reporting to ENGINE counterparts, including a final briefing upon completion of the assignment.
The success of this assignment will ultimately be measured by the degree of agricultural producers and MSMEs within the two identified value chains receiving external financing as a result of this activity. During the assignment, formal deliverables will include but are not limited to the following:
• The assumption of the poultry producer’s loan book by a well-managed micro-finance institution that continues lending to the existing clients.
• A minimum of five loans structured and negotiated, resulting in financial institution approval of the same, for equipment and working capital for new and existing commercial farmers who have entered into contracts to supply a high-value agricultural crop to a large local processor.
• Weekly reports (format to be provided).
• Final report (format to be provided).
• University degree in banking or relevant field, advanced degree preferred.
• At least 10 years prior banking experience working in areas of micro, small and medium enterprise credit origination, assessment, structuring, and monitoring.
• Previous transaction advisory experience with value chain actors.
• Demonstrated understanding of agriculture value chain financing, including product financing, receivables financing, physical asset collateralization, risk mitigation products, and financial enhancements.
• Previous experience structuring and closing loan agreements.
• Understanding of banking systems and lending practices, financial analysis, accounting rules and credit products.
• Self-motivated, proactive, detail-oriented, mature, professional team player, who is a strong people person and communicator, with good inter-personal skills.
• Good computer skills in MS Office.
• Written and spoken fluency in Kiswahili and English.
• Ability to work legally in Tanzania.