1.                   BACKGROUND

Enterprise Partners

Enterprise Partners (EP) is a 7-year (2013-2020) wealth creation programme, which aims to support the private sector and Ethiopia’s economic growth, inclusive of women and the environment. By applying the Making Markets Work for the Poor (M4P) approach for sustainable results, it aims to facilitate market development in order to spur innovation and investment, creating jobs and increasing incomes for the poor.  It does so with a combination of technical assistance and market facilitation in resolving market failures.  EP is being implemented by a consortium led by DAI Europe, and includes First Consult, Enclude, ITAD and BCaD.

The EP pillars are:

• The Finance Pillar is expected to achieve the outcome of increasing investment levels in the Ethiopian economy, particularly for growth-oriented Small and Medium Enterprises (SMEs). This will include funding of green technologies where appropriate and develop funding for green growth investments.

In addition, the finance team also focus on the base of the pyramid, where market failures are being addressed to increase the usage of semi-formal and formal financial services by the poor.

• The Agro-Industrial Pillar is expected to achieve the outcome of increasing returns on investment (productivity) and investment levels in the priority sectors of cotton/textiles/apparel, livestock/leather and fruits/vegetables, in order to achieve the impact of creating jobs and raising household incomes. Additionally, this pillar will incorporate the promotion of climate change awareness and addressing women’s economic empowerment.

Background specific to this assignment

The Government of Ethiopia (GoE), in cooperation with the World Bank Group, the European Investment Bank and the DFID-funded Enterprise Partners, is implementing the SME Finance Project, aimed at enhancing access to finance opportunities for SMEs in Ethiopia. The Development Bank of Ethiopia (DBE) has been identified as the implementing agency for the over $260 million credit facility aimed at supporting SMEs, through leasing finance and/or working capital finance, to be delivered through DBE, commercial banks, microfinance institutions and lease (or capital goods) finance companies.

The Ethiopia SME Finance Study (2014) represents the analytical background for the project. The study, conducted by the World Bank at the request of the GoE, looked at SME finance (or lack thereof) as one of the possible obstacles to job creation. The study has demonstrated the existence of a so-called “missing middle” phenomenon in Ethiopia, whereby small enterprises are more credit constrained than either micro or medium/large enterprises. The study also highlighted the inadequacies of Ethiopia’s financial sector to address the financing needs of SMEs, and the existence of severe limitations in the overall enabling environment for SME lending (e.g. the lack of a collateral registry).  Moreover, it also highlights the importance of lease finance as a complementary source of funding for boosting the Ethiopian economy, by providing long-term finance to SMEs, which need funds to expand but often do not have the credit history or collateral sufficient for credit from conventional financing sources.

The project will have four components: Component 1: Financial services to SMEs; Component 2: Enabling environment for SME Finance; Component 3: Business Development Services to SMEs; Component 4: Project’s management, communication and impact evaluation.

Under component 1, the project will provide participating financial intermediaries with a line of credit facility for the provision of leasing and working capital to eligible SMEs. This liquidity support will be complemented with technical assistance (TA) aimed at supporting participating financial institution in designing, piloting, and rolling out financial products, utilizing novel lending methodologies (i.e. cash flow based lending) to successfully expand their outreach to the target SMEs.

DBE will provide direct financing to SMEs, and wholesale finance to other financial intermediaries for on-lending to SMEs through two windows: a lease finance window and a lending (working capital) window.

A TA facility will be established to complement and reinforce the credit facility. In order to make the credit facility more effective, participating financing institutions will receive high-quality, tailored technical assistance. This will be delivered through a combination of specialized trainings and the presence of technical advisors with proven and relevant local and international experience to help build capacity in financial services to SMEs. This capacity building will aim to develop the staff of participating financing institutions to serve SMEs adequately – training them in assessing SME business proposals and developing suitable financial products and lending methodologies for the target group. Participating Financial Institutions will assume full credit risk of lending to SMEs and are free to set pricing and loan conditions, including relevant policies and procedures, commensurate with their cost structure, capital base and risk profile.

The final project beneficiaries will be eligible SMEs operating in the manufacturing, agro-processing, tourism and construction industries. For the purposes of this project, SMEs are defined in terms of number of employees (e.g. from 6 to 100 employees).  Working capital loans to SMEs will be limited to a maximum of Birr 10 million per SME, while lease finance loans will be aligned with the DBE Lease Financing Policy requirements: i.e. a maximum lease loan size of Birr 30 million.

2.  PURPOSE

The Lease Finance Expert will facilitate all TA deliveries to the DBE retail leasing unit and regional leasing companies (including branches)  as per the developed TA plan.  He/she holds primary responsibility for timely identification of consultants, coordinating TA deliveries, organizing trainings/workshops, following-up on and supporting implementation of TA recommendations, and coaching & mentoring DBE and regional leasing companies’ staff at different levels. So far, EP has been fully engaging with the DBE and Addis Capital Goods Finance SC in TA delivery and has started to be engaging with other four regional leasing companies starting December 2019.

The leasing expert will be responsible for the day to day implementation of the work plan and managing consultants, ensuring that provided TAs are to the satisfaction of DBE, and that all outputs are up to standard and delivered on time.

In addition, the leasing expert is expected to bring his/her experience to provide guidance and support to DBE lease financing and regional leasing companies staff at the head office and branches. He/she will be responsible for following-up and coaching of staff in the implementation of the leasing  operational policies with special focus on NPLs management; portfolio monitoring procedures, tools& templates and the repossession polices and guidelines. At the core of the role of the leasing expert is supporting DBE leasing unit in reduction of NPLs and ensuring proper portfolio management policies and practices are in place

3.    SPECIFIC TASKS

The Lease Finance expert is expected to bring his/her experience, judgement and best financial sector knowledge to support DBE and regional leasing companies in the execution of its SME Lease Financing Policy by undertaking the tasks and activities listed below:

·         Review all relevant Ethiopian proclamations in relation to the capital goods leasing business

·         Review DBE’s SME lease financing policy

·         Review all DBE procedures in relation to lease financing at the head office, district and branch levels

·         Review documents in relation to the World Bank SME Finance Project, including the Project Appraisal Document by the World Bank and DFID’s SME Finance Project TA Facility ToR

·         Provide advice and guidance to managers and staff in head office , districts and branches as required.

·         Build and maintain good working relationships with the Lease Financing Unit, regional leasing companies and other stakeholders

·         Build and maintain good working relationship with the TA Manager- Leasing wing

·         Execute the TA work plan and ensure timely delivery of TAs that meet the needs of DBE leasing unit and that of regional leasing companies, and ensure delivery of expected outputs and milestones

·         Support the implementation of recommendations on improving DBE’s organisation for leasing. 

·         Collect reports on a monthly and quarterly basis from the respective directorates and assist the adviser in portfolio analysis

·         Support efforts to implement DBE’s Arrears Guidelines, in particular the Arrears and NPL Action Plan reporting require by these Guidelines.

·         Continue to assess repossession status, based on monthly Repossession Status Reports.

·         Support efforts to implement the Repossession Procedures Manual, to establish at HO repossessions team, and to correctly account for repossessions.

·         Support efforts to finalise and approve the Revised Lease Accounting Manual. Ensure that errors in the draft Manual are corrected.

·         Provide hands on support, including field level supports, to DBE leasing using in an attempt to reduce NPLs. This might include detailed assessment of causes of default and presenting to DBE with clear recommendations and actions to be taken. Work closely with other pillars of the SME Finance Project, to ensure efficient utilization of resources, and contribute to successful implementation of the project

·         Represent SME Finance Project TA Facility in meetings within DBE/ regional leasing companies and/or with stakeholders as and when required

·         Mentor/ coach staff of DBE leasing and regional leasing companies as required and provide continuous support to the leasing unit/ branches

·         Pay regular visit to DBE and regional leasing companies branches, including visit to selected lessees, to monitor progress, identify bottlenecks in overall project implementation and engage with stakeholders to seek solutions for issues falling out of the TA mandate.

·         Prepare monthly and quarterly progress reports to DBE, EP and other stakeholders. These includes but not limited to insight reports, portfolio analysis report, monitoring report and others.

·         Perform other relevant activities as required

4.       WORKING ARRANGEMENTS

The Consultant will be based at EP Office.  The Consultant will be working closely with the Lease Financing and Branch Operations Directorate of DBE as well as all the regional leasing companies. The Lease Finance Expert will report to the SME Finance Lead at EP.

  5. CONSULTANT REQUIREMENTS

Senior/mid Level Consultant with experience in the financial sector including SME finance.

·         University degree or higher, in business, economics, finance or related discipline

·         Knowledge of hire purchase/ leasing of manufacturing equipment models and mechanisms

·         6 years + proven experience in SME finance, experience in hire-purchase lease products is an added advantage

·         Experience working with financial institutions

·         Proven experience in provision of technical assistance to financial institutions

·         Experience in developing policy documents/ procedure manuals, guidelines, and training materials

·         Good knowledge of the financial sector in Ethiopia or experience in other African countries

·         Ability to manage technical experts, work plans and budgets

·         Excellent interpersonal skills and ability to work with others

·         Proven ability to develop and deliver classroom training as well as on the job mentoring

·         TAbility to work with public and private sector stakeholders

·         Commitment to building the skills and competence of the team

·         Competencies required include:

o   Fluent in spoken and written English, Amharic is an asset

o   Excellent writing and presentation skills

o   Excellence in developing work plans and budgets

o   Ability to work under pressure and meet tight deadlines