Consultant: Development of a Guideline Note on Green Credit Risk Guarantee

NGO Jobs / UN Jobs Vacancy

Organization: Alliance for Financial Inclusion
Closing date: 7 Jan 2021

1. About AFI:

The global development landscape is in a period of rapid and significant change, allowing a new model for cooperation to emerge: the Alliance for Financial Inclusion (AFI). A horizontal model, peer learning network for financial regulators and policymakers from developing and emerging countries. AFI enables international cooperation and knowledge exchange that empowers developing and emerging countries to drive their financial inclusion agendas and strengthen their collective voice.

Established as a project in 2008 through an initial grant from the Bill & Melinda Gates Foundation (BMGF) to GIZ, AFI became the world’s first South-South peer learning and knowledge sharing platform for financial inclusion policy, promoting policy formulation and implementation to expand financial services for the World’s poorest. Since then, AFI has transitioned from a project to a sustainable, independent, member-owned institution — a policy driving network that supports impactful and scalable financial inclusion policies affecting millions of underserved people. Because AFI is a member-driven organization, its programs and services are designed specifically to meet members’ policy needs and interests. In 2016, AFI transitioned from a project to a member-owned institution whose core operations are funded through annual membership dues. Likeminded funding partners, including the BMGF and BMZ, continue to support AFI programs and member services through a combination of financing and technical contributions.

The AFI network consists of over 100 regulatory and policymaking institutions in over 90 developing and emerging countries around the world. AFI members are primarily central banks, ministries of finance and economy, and other regulatory bodies which hold the mandate to develop and implement financial inclusion policies. AFI is headquartered and registered in Kuala Lumpur, Malaysia, as an International Organization Under Malaysian Law, and hosted by Bank Negara Malaysia. To date, AFI members credit over 380 policy improvement to their engagement and peer learning in AFI.

AFI is a member-driven network whose members direct and implement the work streams themselves. Existing work streams on policy and regulatory approaches to drive financial inclusion include digital financial services, consumer protection and empowerment, SME finance, financial inclusion data, national financial inclusion strategies, and global financial standards. More recently, inclusive green finance and gender inclusive finance has been identified as a priority policy theme and incorporated into the work streams mentioned above.

AFI’s members are actively engaged in advancing financial inclusion policy at national, regional and international levels through partnerships and cooperative arrangements with other regulators, as well as with international organizations and private sector leaders. The network uses the depth of unique knowledge and experience to produce regulatory guidance, provide insights on innovative policy developments and highlight proven solutions in the field.

The cooperation model upon which our network is built is a simple one, based on two key priorities:
•Country-led approaches: AFI members focus on ways to support countries in designing and implementing high-impact solutions to meet their unique needs and challenges. This approach has created ownership and a sense of pride as ever more ambitious targets are set and achieved.
•Peer-to-peer engagement: The value of knowledge and experience is not judged by the size or wealth of any one institution. Our cooperation model creates a community of equals where every member, no matter how large or small, is given the opportunity to share as well as to learn.

2. Project Background:

Climate change, according to the Environmental Protection Agency, means a significant change in the measures of climate, such as temperature, rainfall, or wind, lasting for an extended period – decades or longer. Nevertheless, researches have found that human activities are significantly contributing to natural climate change through our emissions of greenhouse gases. This interference is resulting in increased air and ocean temperatures, drought, melting ice and snow, rising sea levels, increased rainfall, flooding and other influences.[1] Hence, many countries have faced financial risks driven by climate change. Attending those risks is becoming more urgent since the frequency of catastrophic events have a growing pattern.

Financial services play a vital role in enabling the poor and vulnerable to cope with financial losses resulting from the impact of climate change. The development gains made by increasing financial inclusion in developing countries and emerging economies are at risk of climate change impact. While climate change deepens poverty, financial inclusion can build the resilience of individuals, either to a sudden and extreme climate event or the gradual effects of varying rainfall patterns, sea level rise or saltwater intrusion. Savings, credit, insurance, money transfers and new digital finance channels provide adaptation strategies for climate change impacts. Financial inclusion can also expand access to green technologies and renewable energy sources that help mitigate climate change. The cost of these technologies can make them inaccessible to low-income population and MSMEs. Supportive financing can help, and central banks and regulators are playing a role by adopting a range of policies to expand access to green technologies and include the poor in the transition to a low-carbon economy.

Inclusive Green Finance is an evolving policy area pioneered by AFI member institutions implementing policies, regulations and national strategies to mitigate or build resilience to climate change. In May 2019, AFI published a scoping study on inclusive green finance – ‘Inclusive Green Finance: A Survey of the Policy Landscape’- outlining the 4P Framework on Inclusive Green Finance. The policies fall within four key pillars of inclusive green finance categorization, namely the 4Ps of inclusive green finance:

• Promotion policies and initiatives prepare the private sector to offer financial services for green projects or related climate action activities to qualified beneficiaries, for example, through awareness raising, information sharing, capacity building and data collection..
• Provision policies help to ensure financial resources for green projects or related climate action activities are provided to qualified beneficiaries, whether through lending policies, refinancing or other financing schemes.
• Protection policies reduce financial risk by “socializing” potential losses through insurance, credit guarantees, social payments or other related risk-sharing mechanisms.
• Prevention policies aim to avoid undesirable outcomes by lowering financial, social and environmental risks.


The AFI Inclusive Green Finance Working Group (IGFWG) was established in September 2019 during the AFI Global Policy Forum in Kigali, Rwanda. The Working Group aims to:
• Produce policy guidelines and tools for formulating financial inclusion policies;
• Provide peer reviews of members’ draft policies and regulatory frameworks; and
• Contribute to AFI’s engagement with global Standard-Setting Bodies (SSBs) and financial inclusion ecosystems at national and regional levels.

Working Groups are where the AFI network deepens its understanding of key financial inclusion issues. The latest IGFWG reports are:
• AFI Report ‘Inclusive Green Finance: A Survey of the Policy Landscape (Second Edition)’, which was launched in June 2020. It outlines this emerging policy area and presents the 4P Framework of Inclusive Green Finance: Provision, Promotion, Protection and Prevention. It also reveals new and emerging policy practices that are guiding the transition to more inclusive and resilient low-carbon economies. It also contributes to the global effort to implement the Paris Agreement and achieve climate-related Sustainable Development Goals (SDGs).
Climate Risk Insurance for the Agriculture Sector in Armenia, this case study details specific conditions that make Armenia’s agricultural sector vulnerable to climate change, and steps that Central Bank of Armenia has taken to cope with the effects of a warming climate.

Since AFI is a knowledge member platform, the AFI IGF Management Unit launched in 2020 the Inclusive Green Finance Resources, an alive Database where IGF policies implemented by AFI members can be found.
During the last Management Meeting, IGFWG members decided to generate guidance on how to adapt the Credit Risk Guarantees for projects, businesses or initiatives that build resilience to climate-related risks or mitigate the climate change causes with special focus on the role of regulator as the main guarantor of loan losses or as an enabler for such protection policies.

Credit risk guarantees are one of the many potential de-risking instruments to help accelerate green lending support from central banks and build vulnerable population’s resilience to climate change. The implementation of this risk financing framework by central banks will leverage banking loans for low carbon solutions and green projects which otherwise would not have been able to receive financing from the private sector. They will also help to share credit risks stemming from climate change between the private and public sectors.

Through a credit guarantee, central banks or any third party guarantor can cover loan losses, either entirely or in part, to encourage lending to priority sectors most affected by climate change. There are a couple of cases across AFI members:
• Under the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), the Central Bank of Nigeria guarantees 50 percent of the loss if a smallholder farmer cannot repay a loan. NIRSAL includes a $300 million risk-sharing facility through which 30 to 75 percent of a commercial bank’s risk on agricultural loans is shared with the Central Bank. Bundling climate risk insurance with subsidized lending and credit guarantees amplifies the impact.
• The Bank of Ghana supported the development and initial implementation of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL). GIRSAL was set up to increase the total amount of credit available to the agricultural and agribusiness sectors by de-risking agricultural financing through the issuance of agricultural credit guarantee instruments. GIRSAL is managed as a company with the Ministry of Finance as the principal shareholder. GIRSAL’s credit guarantee covers financing for the entire value chain (horticulture, cereals, tree crops, roots and tubers, legumes and poultry) and includes insurance products for smallholder farmers.

3. Objective:

AFI is seeking an expert to structure and develop a Guideline Note on Green Credit Risk Guarantees.

The main objective of this project is to develop a Guideline Note on how to adapt the Credit Risk Guarantees for projects, businesses or initiatives that build resilience to climate-related risks or mitigate the climate change causes with special focus on the role of regulator as the main guarantor of loan losses or as an enabler of Credit Risk Guarantees for the priority sectors most affected by climate change.

The document will stress the connection between Credit Risk Guarantees and climate change related risks mitigation for the most vulnerable and underserved population and the role of central banks in calibrating existing credit risk guarantees in ways that account for climate change and financial inclusion.

This paper will be produced in a similar structure as the SME Finance Guideline Note. This report will have a strong focus on how to adapt the current Credit Risk Guarantees cover climate-related loan losses and to encourage lending to priority sectors most affected by climate change, key learnings, challenges, recommendations to regulators and conclusions and trends in this regard.

Objectives of the Guideline Note on Green Credit Risk Guarantees:
• Develop a Guideline Note into the same structure as the mentioned report;
• Identify any knowledge gaps and formulate questions for each AFI member institution and for other relevant stakeholders (i.e. Ministry of Finance, Ministry of Environment, private sector institutions, etc.) to fill those gaps;
• Conduct interviews with AFI members (no more than 6), and follow-up on the questionnaires, interview, experiences, legal citation, etc.;
• Present key challenges, credit risk guarantees in place, lessons learnt, recommendations to include “green” elements;
• Research and enrich the report with some examples emerging from developed countries, as advised by the AFI Management Unit, and;
• Finalise the report including conclusions and recommendations.

4. Scope of Work:

The Guideline Note will be informed by AFI Report ‘Inclusive Green Finance: A Survey of the Policy Landscape (Second Edition)’ and Financial Inclusion background needed of AFI member institutions. This report will be produced in a similar structure as the SME Finance Guideline Note.

• 1 questionnaire to get an overview of credit risk guarantees in place across AFI members, specifically across IGFWG members.
• 1 inception report (3-5 pages max) identifying gaps, outlining planned methodology, key stakeholders to interview, working plan and overall content.
• 1 workshop to present the first proposal paper to the IGFWG Subgroup members and gather their feedback.
• Interviews transcripts.
• 1 narrative report (no less than 10 pages and up to 40 pages, including annexes) with introduction, country cases, recommendations, conclusions and potential trends, which is a finalized product ready for editing and design.
• 1 executive summary (2 pages max)
• Technical appendices including technical details of credit risk guarantees in countries explored.
• 1 presentation of the final draft, main conclusions and recommendations to IGFWG Subgroup members and gather

This project is part of the International Climate Initiative (IKI), and the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) support this initiative based on a decision adopted by the German Bundestag. AFI views financial inclusion, not only as an important tool to alleviate poverty and reduce inequality but as an important adaptation intervention that builds resilience to climate change.

5. Project Approach:

To achieve the objectives of this assignment, the Consultant will engage with the AFI IGF team to be provided with the surrounding context and project objectives. The Consultant will communicate specific questions to all relevant regulators, policymakers and stakeholders, through the AFI IGF team and will follow-up and compile all the questionnaires. The Consultant will research similar develop-countries promotion’s projects to incorporate such experiences into this report.

6. Timeline & Resources:

The consultancy work will begin on the 1st February 2021 and last until 16th July 2021.

The structuring of the report and the identification of any knowledge gaps in the study, as well as formulating the questions to fill these gaps and the inception report should be done between 15th and 26th February 2021. After this any additional questions will be answered and shared with the consultant.

7. Consultant Experience:

• 8+ years of professional experience in broad financial regulatory and policy interventions, digital financial services and financial technology, financial regulation for DFS and Fintech, green finance, public policy, financial inclusion, climate policy and international development.
• Sophisticated understanding and experience in analyzing the issue of regulatory oversight and supervision around financial inclusion, stability, integrity, and consumer protection through the lens of growing digital technology.
• Experience working directly with central banks on policy development and implementation, preferably in regulatory oversight, supervision, reporting and enforcing policies and mandates.
• Knowledge of potential technological solutions for regulatory and supervisory technology (e.g. FinTech and RegTech applications) and their linkages to deepen financial inclusion.
• Knowledge of green finance and climate change policies and development.
• Excellent oral, writing and presentation skills in the English language is compulsory.
• Previous experience writing is desirable.
• Advanced university degree in social science, international economics, environmental policy, development finance or other related field.

8. Reporting:

Throughout the contract period, the Consultant will be reporting to AFI’s Head of Inclusive Green Finance. The contract will be from AFI with the individual consultant (or consulting firm with specific names of the team members) that would be working on the assignment. The consultant is expected to have a technical background on regulatory issues on green finance, climate change, and financial inclusion.

9. Evaluation Criteria:

The proposals submitted will be evaluated based on the following criteria:

  1. Academic Qualification - 10%
  2. Experience and competence of the key staff for the assignment related - 50%
    • Financial regulation, green finance or financial inclusion policies
    • Financial regulation and/or its links to sustainable development
  3. Adequacy of the proposed work plan and methodology in responding to the Terms of Reference - 30%
    • Technical approach and Methodology
    • Conceptual framework of the proposal including a demonstration of logical and clear planning to execute tasks and complete deliverables
    • Risk Assessment linked to the consultancy
  4. Sample work – Writing experience and English - 10%

How to apply:

Interested applicants are expected to submit a proposal with updated CV and using template given by email to AFI’s Procurement & Contracts Office at by 7th January 2020.

The final decision on selection of a consultant/consulting firm for this project rests with AFI management team and with the Inquiry. Only shortlisted and successful consultants will be contacted.

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