TERMS OF REFERENCE (ToRs) for Recruitment of Short-Term Consultant (STC)

General Information
Strategic mapping of SMEs Innovative Finance in Africa and
Title of Assignment:
development of a sustainable financing framework for SMEs
Type of contract: Individual Contact
Location: Remote
Application Deadline: 06 December 2021
Type of Contract: Short-term
Consultancy Level: International

Languages Required: English

Expected Duration of Assignment: 15 weeks

I. Background- SMEs Innovative and Inclusive Finance

In order for Africa to recover from the covid-19 pandemic and set itself on a resilient and sustainable
development path, efforts to address the challenges impeding the realisation of the SDGs must be
decisively increased. Two primary challenges need to be tackled. First is the need to prevent further
erosion of gains and to accelerate progress towards the achievement of SDGs. And second is the need to
bridge the SDG financing gap, which in the case of Africa now requires an estimated additional $154
billion1 to address costs associated with the impact of the pandemic- this is on top of a pre-existing annual
financing gap of $200 billion.

The critical importance of supporting Small and Medium enterprises (SMEs) for quick recovery post-Covid
19 and for the advancement of the SDG Agenda is universally recognized. They are engines of growth and
essential drivers of productivity and competitiveness in developing countries. They are also the largest
employment providers and responsible for nurturing domestic entrepreneurial capacities, innovation,
technical skills and management competencies. SMEs are also key to promote social inclusion and
supporting their development yields a developmental multiplier effect by widening income distribution,
providing inclusive support for women and youth-owned businesses as well as social value creation
through the support of social enterprises.

One of the prevailing constraints facing SMEs is access to finance. Creating and scaling-up new tailored
financing solutions for SMEs is therefore one of the keys to advancing economic development, wealth
creation and reducing poverty. The challenges of SME access to finance can be clustered into two broad
categories. The first category is the supply-side challenge in terms of mobilization of financial resources
earmarked for SMEs transformation and development via such avenues as government funds, donors’
funds, funds of funds on one hand, and in terms of challenges associated with local financial institutions
and financial markets direct supply of funds to SME on the other.

1
https://unctad.org/osgstatement/unctad-economic-development-africa-report-2020-press-conference
The second category is the demand-side challenge in terms of SME risk-profile, financial literacy, SMEs
financial profile, management capability, and entrepreneurial readiness. Addressing the demand-side
challenges is vital to SMEs sustainability as going concerns.

Innovative financing mechanisms are essential to alleviate challenges on the supply-side of the equation.
The public and private financial systems require appropriate reforms and technical assistance to reduce
financial exclusion and de-risking financing SMEs. This are increasingly taking place through joint
interventions, coordinated actions and digital finance solutions. Recent research carried out by the UNDP
Africa Finance Sector Hub (AFSH) has shown that several factors can play a vital role in alleviating the
foregoing challenges.

(1) Facilitating SMEs access to finance through earmarked public funds (domestic and international) and
addressing regulatory prudential (e.g. Basle III-related capital requirements) preventing small financial
institutions like the Microfinance Institutions (MFI) from accessing public funds and earmarked liquidity.

(2) Developing financing channels other than mainstream commercial banks and boldly promote
alternative channels such as SME sector-friendly banks and other decentralized financial systems such as
microfinance institutions, village banks, NGOs, etc.

(3) Aggressively promoting the development of digital finance -inclusive of accounts, payment, financing
and e-commerce solutions- through dedicated programs aimed at establishing dynamic and lively
ecosystems for Fintech enterprises/e-businesses development. This would include appropriate regulatory
intervention, dedicated development of capital markets and equity financing, interventions in the
education system, as well as innovation promotion through incubation and acceleration programs.

(4) Scaling-up the usage of blended finance mechanisms to de-risk SMEs-related lending and investment
activities, for example through portfolio guarantee for SMEs lending of MFIs and other decentralized
financial system lending programmes and well as the use of innovation funds.

(5) Promoting and scaling-up SME capacity-building programs that will contribute to address the
challenges associated the demand-side of the equation, and alleviate the risks associated with lending to
smaller, less formal enterprises, including marginalised groups such as women associations/groups, youth
entrepreneurs’ associations and farmers associations/groups.

(6) Supporting important headways realised in various countries in Africa in developing SMEs finance
through securities issuance, inclusive of small-cap stock and alternative securities (basket bonds etc.).

(7) Supporting the development of start-up finance and rapid growth through mechanisms and
instruments such as challenge awards for concept and seed stage business, financing for unicorn firms,
venture capital financing, green business catalytic funding and crowdfunding.

(8)Addressing SME Insurance in the context of business interruption due to emergencies, disasters and
other climate and commercial vulnerabilities.

Against this backdrop, the AFSH is seeking the services of a Consultant to carry out a Strategic Mapping of
Innovative SMEs Finance Models in Africa and develop a sustainable financing framework for SMEs.
Considering the UNDP Country Offices and AFSH work to support MSMEs and entrepreneurship
development and financing, this research exercise will also be expected to survey the digital financial,
payment and e-commerce products and services to meet the needs of SMEs to address COVID-19
 challenges. It will also explore the best global practises from the SME Finance Forum, relevant SME
foundations, and other SMEs development initiatives across the Global South. Furthermore, beyond the
identification of key approaches to promoting SME financing, it will also formulate concrete and
structured interventions to be carried out by the AFSH along with relevant national and regional partners.

II. Scope of Work

The UNDP AFSH is looking for an institutional consultant to:

1) Carry out a mapping of successfully implemented innovative models, mechanisms, instruments, and
practices in Africa and beyond to promote SME financing;

2) Work closely with the AFSH technical team to identify 2 targeted actionable areas of most relevance
and importance to SMEs development in SSA, and carry out a strategic/SWOT analysis integrating potential
target countries, timeline, potential impact as well as required resource and capacity needs for concrete
intervention by the AFSH;

3) Outline a roadmap and program of actions for two countries specifying key entry points and
recommendations for implementation of this financing framework or initiative. Particular attention should
be given to strong entry points and selection within existing incubation and acceleration programs,
investment readiness needs and good practices as well as the inclusive digital finance, trade and green
finance opportunities with the greatest growth potential for SMEs;

4) Produce a final report capturing the above, and a PowerPoint slides summarizing key findings.

III. Duties and responsibilities

Under the supervision of the Private Sector Special Advisor, the institutional Consultant shall perform the
following main tasks:

(i) Engage with the AFSH technical team at inception and continuously throughout the consultancy
with weekly update meetings.
(ii) Carry out desk research as required to produce inputs for the final report including the roadmap
and action for 2 selected countries.
(iii) Undertake at least two stakeholders’ consultations to harvest ideas and validate the operationality
of the selected SMEs financing framework.
(iv) Formulate the specific interventions and roadmap for the 2 selected countries as well as the
relevant implementation strategies.
(v) Integrate stakeholders and AFSH inputs into the formal report.

Specific deliverables that will be subject to the approval of AFSH team include the following:

No. Deliverable/output Estimated duration

1 An inception meeting with the PSSI technical team to agree At the beginning of
on the detailed implementation plan for the consultancy. the consultancy
 2 An inception report identifying preliminarily 3-4 key areas 10 working days
of top relevance and importance to SME in SSA needs and
growth opportunities and outlining the approach that will
be adopted for the engagement.
3 A draft report, with a mapping of innovative SME Finance 22 working days
mechanisms, instruments, and successful practices around
the world and a SWOT analysis of any two suggested SMEs
financing framework relevant to SSA context.
4 Organization of stakeholders’ consultation session to 7 working days
harvest ideas on sustainable SMEs financing framework or
mechanisms
5 Strategies and a roadmap for action which indicates AFSH 8 working days
PSSI’s specific entry point in 2 SSA countries to apply and
upscale the successful SME finance solutions in the African
continent and specific implementation strategies
6 Organization of stakeholders’ validation session 8 working days
7 A final report consolidating the mapping, the SWOT 10 working days
analysis, and the strategies for innovating and diversifying
SME finance in SSA.
8 The production of a technical PowerPoint summarizing the 10 working days
findings and recommendations of the final report as well as
the program brochure materials.
Total days 75 working days
required for the
assignment

IV. Requirements

The institutional Consultant will hold the minimum below qualifications.

Technical Competencies

- The faculty members must have Master’s Degree or above in Development Finance, Development
Economics, Development studies or related social science fields.
- The institution must have at least 10 years’ experience in strategy consulting and/or economic
research, with a focus on innovative SME finance and financial sector development.
- Knowledge of the Sustainable Development Goals and of different approaches used in private sector
engagement in the 2030 Agenda.
- Knowledge of local and regional development focus areas with a good appreciation how to leverage
the private sector, in particular the finance sector and emerging digital finance institutions for
innovative SME finance.
- Experience in enterprise financing strategy development is an asset.
- Proven strong analytical, research and training capabilities will be an asset Proven experience in
developing knowledge products and presenting data and information for use by wider audiences.
- Effective communication, facilitation, and presentation skills.
- Hands on work experience in fields related to the assignment in SSA in general.

Functional Competencies

- Ability to undertake in desk research and in-depth studies;

- Ability to shape and guide the research agenda of the SME finance mapping exercise by defining key
questions which can be addressed through data-driven research prioritizing data sources to be
explored.
- Lead the collation of insights from multiple research sources into a primary document, ensuring that
data collected is of comparable breadth and depth.

V. Assignment Management, Reporting and institutional arrangements

- The institutional Consultant will report to a UNDP coordination team composed of PSSI Unit experts.
All deliverables will be validated by the Private Sector Special Advisor.

- An inception meeting shall take place at the beginning of the consultancy. During this inception
meeting, the Consultant shall endeavour to precisely outline its envisaged approach for this
assignment and seek clarifications of any pending issues to ensure a joint understanding on the scope,
deliverables, and timeline for the work.

- The Consultant will engage on a weekly basis with the coordination team to report on deliverables
development to ensure compliance with estimated duration for completion under the
deliverables/output table in section III as well as swift deliverables validation.

VI. Criteria for selecting the best offer

Upon the advertisement of the Procurement Notice, qualified Institutional Consultants are
expected to submit at least three CVs, a short Technical (up to 5-7 pages) and a Financial Proposal.
Accordingly, the institutional consultants will be evaluated based on the following criteria:

- Responsive/compliant/acceptable, and
- Having received the highest score out of a pre-determined set of weighted technical and
financial criteria specific to the solicitation. In this regard, the respective weighting of
proposals is as follows:
(i) Technical Criteria weight is 70%
(ii) Financial Criteria weight is 30%

Technical Criteria Weight Max 70.

- Educational relevance of faculty members - 20 points.

- Understanding the scope of work as evidenced in the technical proposal- 25 points.
- Strong experience and accomplishment in research and training 25 points
- Strong record of accomplishment in enterprise and local development financing, including
microfinance and private sector engagement experience - 15 points.
- Experience of similar assignment/regional market analytics & trade work - 15 pts

VII. PAYMENT MILESTONES AND AUTHORITY

The qualified institutional consultant shall receive lump sum service fees upon certification of the
completed tasks satisfactorily, as per the following payment schedule:

Instalment of Deliverable Details Percentage of

Payment/ Period Payment
1st instalment Deliverable 1 (Inception Report) 30%
nd
2 instalment Deliverable 2 (Draft report) 40%
rd
3 instalment Deliverable 3 (Final report) 30%
100%

These TORs are approved by:

Name:

Designation:

Signature:

Date Signed: