Consultant: Development of a MSME Finance Policy Model

NGO Jobs / UN Jobs Vacancy

Organization: Alliance for Financial Inclusion
Closing date: 23 Feb 2021

1. Background

The Alliance for Financial Inclusion (AFI)
AFI is an innovative, member-driven organization that enables policymakers in developing countries to share their knowledge of financial inclusion policies that have delivered positive tangible results. The network currently comprises over 100 central banks, government ministries and other financial policymaking institutions from 90 emerging markets and developing countries.

By providing members with the opportunity for peer learning and supporting technical level knowledge exchange on key aspects of financial inclusion policy, AFI works with its members to influence policy reforms, which result in expanding the reach of quality financial services to low-income populations and disadvantaged groups.

Under its Phase III strategy, AFI is developing Policy Models through a consultative and collaborative process with its Working Group members. Currently, AFI is undertaking the development of a MSME Finance Policy Model stemming from published SME Finance Guideline Notes between 2016 – 2020 and will make reference to other AFI Publications related to MSME finance strategies and policies.

AFI Working Groups (WG) are technical content experts of the network and will contribute significantly to the development of a policy model by collating the network’s best practices, policy changes, and reforms attributable to evidence of voluntary use of AFI’s knowledge products. WGs shall document lessons from the network in a prescribed format that include: key policy focus; minimum principles or recommendations applicable to address identified financial inclusion challenges; relevant approaches and methodologies; and key examples to guide members in applying the guidance/ model.

The draft MSME Finance Policy Model created by the WG through the technical support of the AFI Management Unit shall be recommended to the Global Standards Policy Committee (GSPC) with evidence of high impact policy lessons for evaluation and subsequent endorsement for its issuance.

Importance of MSMEs in Economic Development
Micro, Small and Medium Enterprises (MSMEs) play a major role in most economies, particularly in developing countries. They represent approximately 90% of businesses and more than 50% of employment worldwide, contributing 35% to global Gross Domestic Product (GDP) and acting as an export enabler for developing countries1. One-third of the MSMEs in the world are run by women. The World Bank reports that formal MSMEs make up 45% of global employment and 33% of national income or GDP in emerging economies.

Despite these economic, social and political benefits, these enterprises remain significantly underserved by financial institutions. In investment climate surveys around the globe, the difficulty of obtaining financing is usually 1 of the Top 3 constraints on doing business that are identified by MSMEs and, in several regions, access to finance is the most defying constraint to their development.

MSMEs Access to Financing
Access to financing is especially apparent in the developing world. The International Finance Corporation under the World Bank Group reports that between 45%-55% of MSMEs in developing economies do not have access to financial loans. Furthermore, only 44% of total adults are recorded to have bank accounts in 2017 with 1 out of 5 being unused/dormant. The statistic seems less encouraging for women as they make up 56% of all unbanked adults. Due to the nature of MSME activities, it is common that the starting or working capital required is less than that offered by commercial bank and other formal financial institution.

MSMEs Accessing Credit from Formal Financial Institutions
When referring to the financial inclusion of MSMEs, most of the world data are from the supply-side and consist only of the formal financial sector - regulatory bank and commercial banks that have a rigid allocation and structure of bank credits available to business owners.

Accessing these credits usually requires the borrower to pay a high-interest rate with additional penalty fees for cases of late payment. Also, conditions for access is too far a reach for MSMEs particularly microenterprises as commercial banks may request for past bank statements, company registration documentation, tax statements etc.

Being a largely undocumented and informal sector, microenterprises fall through the cracks when we refer to the financial inclusion of MSMEs. In the developing world, estimates that 65 million firms, or 40% of formal MSMEs are either unserved or underserved by financial institutions resulting in a total credit gap of USD5.2 trillion every year or 1.4 times the current level of MSME lending.[1]

MSME Finance Model
AFI’s SME Finance Working Group (SMEFWG) supports members in their respective countries’ efforts to formulate, facilitate and implement their MSME finance polices. MSME finance policy serves as a masterplan for smart policy frames that facilitate access of MSME to finance. It is intended to serve as a first point of reference for regulators preparing to plan, assess and implement policy and legal measures to support access to finance for MSMEs and to build their resilients against adversities like climate change. Many governments have been stepping up efforts to foster a diversified and comprehensive environment for MSME finance.

MSMEs require a mixture of debt and equity to grow. They also need different types of financing, which are likely to change and evolve as they grow. The rapid emergence of digital finance, particularly in Africa, and the growth of FinTech companies in the wake of the Global Financial Crisis (post-2009), has witnessed the emergence of many new and innovative approaches to SME financing. A country with a well-developed and implemented MSME financing ecosystem complements the MSME development of demand and supply-side thus contributes to overall economic numbers. And the current pandemic an asserted for us the need for digital finance

The design of each MSME finance policy is not standardized, changing according to the MSME financing landscape under its jurisdiction. Therefore, it is helpful to be aware of the varying approaches towards different challenges to MSME financial inclusion. As part of AFI’s support towards this endeavor, the SMEFWG issued Guideline Note No. 36 SME Finance Guideline Note in 2019 that synthesizes the work of several international and national agencies on MSME finance highlights innovations with potential to transform this space. In addition, a Framework for Women-led MSMEs Access to Finance published in 2021 documents on the efforts of policymakers and regulators in member countries facilitate access to finance for women-led MSMEs, how financial ecosystem influenced by women entrepreneurs and policy recommendations to facilitate and complement the existing efforts.

AFI is seeking the services of a consultant to support the development of this MSME Finance Policy Model which will draw on the experiences and expertise of the AFI members in the pre-formulation, formulation, implementation and monitoring of a MSME finance policy. The MSME Finance Policy Model is intended for policymakers and regulators but may be useful for other financial inclusion stakeholders at the country level.

[1] World Bank, “SME Finance: Improving SMEs’ Access to Finance and Finding Innovative Solutions to Unlock Sources of Capital. (

2. Objectives

The objective of this consultancy assignment is to support the MSME Finance Policy Model sub-group and the AFI Management Unit in drafting the final version of the MSME Finance Policy Model which shall highlight the pillars, principles and high-level recommendations proven over time through voluntary application of AFI services. This includes knowledge products, capacity building and other services for any stakeholder, AFI member and/or industry, with the intent to promote MSME finance policy pre-formulation, formulation, implementation as well as monitoring and evaluation.

The objectives of the assignment are to:

  1. Conduct a comprehensive study and review of all relevant AFI publications including guideline notes, case studies, survey reports and all other such information available on the AFI website to identify pillars and references to MSME Finance policy.
  2. Review other notable publications related to the MSMEs
  3. Develop a questionnaire for both qualitative and quantitative surveys (including individual interviews) and prepare a brief analysis and results.
  4. Develop the draft Policy Model in consultation with the AFI management team and SME Finance Working Group (SMEFWG) members converging and documenting best practices, and with practical recommendations and roadmap to implement them.
  5. Create a Power Point ower Point presentation (or equivalent) on AFI template representing a summary of the policy model.
  6. Write a blog (700 words max) according to AFI blog guidelines with focus on the pillars, evidences and opportunities apparent upon global adoption and use of the MSME Finance Policy model.

3. Tasks & Deliverables:

This assignment is expected to involve extensive desk research and key informant interviews. The consultant will be supported and advised by the AFI Management Unit throughout the assignment and will have access to AFI’s extensive knowledge database related to and for the purposes of this assignment. AFI will facilitate and arrange any interviews with members and partners. There is no travel associated with this assignment.

4. Timeline:

The consultant is expected to commence the assignment as soon as possible in February or March 2021 and will complete the deliverables by 12 June 2021.

5. Consultant Experience:

The consultant undertaking this assignment should have the following qualifications:
• Advanced degree in a field related to Economics, Public Policy, International Development or another related discipline.
• 10+ years of professional experience in broad MSME Finance regulatory and policy interventions (e.g. developing report on MSME finance policy or run training/programme on MSME finance policy),
• 5+ years specific experience in MSME policy development.
• Experience working directly with central banks on policy development and implementation, preferably in regulatory oversight, supervision, reporting and enforcing policies and mandates
• Knowledge and experience regarding National Financial Inclusion Strategy is desired.
• Fluency in English (oral and writing) is compulsory.
• Excellent written and presentation skills in the English language. Having French and Spanish, are added advantage.
• Writing experience. If feasible, do submit working papers or research around the topic.

6. Reporting:

The consultant will work closely with the Policy Programmes and Regional Initiatives (PPRI) Unit and with the AFI’s SME Finance Unit, and other key staffs. The consultant will report directly to both Head of the PPRI Unit and Senior Policy Manager, SME Finance.

7. Criteria for Evaluation:

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

  1. Academic Qualification; 15%
  2. Experience and competence of the key staff for the assignment related; 40%
    • Adequacy for the assignment - 25%
    • Regional/Global experience - 15%
  3. Adequacy of the proposed work plan and methodology in responding to the Terms of Reference; 30%
    • Technical approach and Methodology - 15%
    • Workplan - 15%
  4. Sample work – Writing experience and English; 15%

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 23rd February 2021.

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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