DFC LPG Ag Portfolio performance assessment draft SOW 12.04.23.docx

Statement of Work (SOW)

U.S. International Development Finance Corporation (DFC)

Project Title: Performance Assessment of the Effectiveness of DFC Loan Portfolio Guaranties in Increasing Access to Agriculture Enterprises in Sub-Saharan Africa

1.0 GENERAL INFORMATION

The U.S. International Development Finance Corporation (DFC) is financing solutions to the most critical challenges facing today's developing world. Working with businesses, we mobilize private capital to invest in projects that create jobs and opportunities in emerging markets, including building critical infrastructure, expanding access to telecommunications, and providing small business financing for women entrepreneurs. Launched in 2019, DFC helps to advance America's foreign policy by partnering with projects that create economic stability, protect sovereignty, and ensure transparency. DFC investments adhere to high U.S. business standards and respect the environment, human rights, and worker rights.

2.0 BACKGROUND

DFC’s Office of Development Policy (ODP) is seeking a consultant to conduct a development impact performance assessment of the effectiveness of DFC's Loan Portfolio Guaranties (LPG) in increasing access to finance to agriculture-focused small and medium sized enterprises (SMEs) in Sub-Saharan Africa (“LPG Ag Portfolio”).

3.0 SCOPE

DFC’s ODP requires the services of an Independent Consultant (IC) to conduct an analysis of the performance of DFC’s LPG Ag Portfolio in increasing access to finance. DFC partners with local financial institutions by creating loan guaranty facilities to help de-risk historically underbanked agriculture-focused enterprises with the ultimate goal of increasing lending activities in the sector. However, DFC’s standard metrics do not fully capture the potential impact LPGs have in influencing its partner financial institutions in their overall portfolio growth, strategic direction, product and service development, and risk appetite in the agriculture sector. This portfolio assessment aims to evaluate the effectiveness of ten “mature” LPGs in nine countries in Sub-Saharan Africa in increasing access to credit to ag-focused SMEs and provide DFC with recommendations on how to better identify, analyze, and monitor the key factors that drive positive outcomes. Please find the list of countries and partner banks in Annex 1. The scope of the analysis will primarily focus on LPGs with local commercial banks that support lending to SMEs, rather than the microfinance sector. The conclusions derived from the analysis will also provide recommendations on how DFC’s LPG tool can be more effectively utilized to contribute to United States Agency for International Development (USAID) mission priorities, the U.S. Government’s Feed the Future program, and the host government’s development priorities.

4.0 REQUIREMENTS

The contractor shall perform the following tasks:

Task 1: Literature Review

a. Conduct literature review of access to finance in the agriculture sector in Sub-Saharan Africa to articulate the development challenge LPGs aim to address. The literature review should include but is not limited to:

i. Constraints to accessing finance in the sector, region, and country.

ii. The outcome of past evaluations of various approaches aimed to increase access to finance in the sector, including past evaluations of LPGs conducted by USAID country missions or their implementing partners, and the Swedish International Development Cooperation Agency (Sida, a frequent co-guaranty partner with DFC).

iii. Identification of appropriate benchmarks that can be used to assess the effectiveness of LPGs.

b. Review the following reference documents and frameworks:

i. USAID Country Development Cooperation Strategy in the relevant countries.

ii. U.S. Government Feed the Future Program and the Global Food Security Strategy.

iii. DFC’s impact management framework guidelines and templates, the Impact Quotient (IQ) (https://www.dfc.gov/our-impact/impact-quotient-iq).

c. Review DFC’s origination and monitoring documents and interview relevant DFC staff members to understand the structure and development goals of the LPGs.

i. This includes data captured in DFC’s Credit Management System (CMS), particularly semi-annual loan schedule reports from selected LPG partner banks.

Task 2: Reconstruct Theory of Change for LPGs

a. This task requires constructing an ex-post logic model that illustrates the short, medium, and long-term outputs and outcomes expected to result from DFC LPGs. The model should incorporate:

i. Outcomes from the literature review in Task 1.

ii. Metrics used to measure development outputs and outcomes.

Task 3: Data Collection and Impact Scoring

a. Evaluate the development impact of the LPG Ag Portfolio. This task requires:

i. The collection and validation of partner Financial Intermediary portfolio data relevant to the analysis: the size (by value and number of unique borrowers) in the overall portfolio compared with the agriculture portfolio before and after the origination of the LPG.

ii. Interviews with partner Financial Intermediary management.

iii. Ex-post IQ scoring utilizing DFC’s Impact Quotient Framework.

iv. Incorporation of any other data determined to be significant.

Task 4: Analysis

a. Using data and impact scoring in Task 3, draw conclusions about the effectiveness of LPGs in influencing partner financial institutions activities in the agriculture sector, including but not limited to:

i. Overall portfolio growth.

ii. Strategic direction (including but not limited to geographic, value chain, and/or segment expansion).

iii. Product and service development.

iv. Additionality and risk appetite in the agriculture sector (e.g., would the Financial Institution have issued loans to the eligible borrowers without DFC’s loan guaranty? Would the terms of issued loans be different?).

v. Likelihood of sustainability of impacts beyond the expiration of the guaranty.

vi. Comparison to appropriate benchmarks, as identified in Task 1.

Task 5: Lessons Learned and Recommendations

a. Create and deliver an internal report Word document with lessons learned and recommendations on how DFC could improve the effectiveness of its LPGs.

b. The internal report shall contain answers to the following questions as well address as any other recommendations or lessons learned outside of this question set.

i. What where the drivers that led to successful development outcomes? Unsuccessful outcomes?

ii. How can DFC improve its LPG product through selection of partner financial institutions, due diligence, structuring, etc.?

iii. How can DFC better measure, monitor, and evaluate the impact LPGs have on increasing access to capital in the sector? Are there recommended refinements to DFC’s Impact Quotient to better measure development impact of this product? Are there development risks that DFC should consider in the IQ framework?

iv. How has the LPG Ag Portfolio contributed to USAID’s country strategy and the U.S. Government’s Feed the Future Program and the Global Food Security Strategy?

c. Provide a summary report of findings and recommendations.

d. Provide a PowerPoint presentation and present findings to DFC staff.

e. Provide an external report and presentation.

Key Personnel:

The key personnel specified below are essential to work performance. At least 30 days prior to diverting any of the specified individuals to other programs or contracts (or as soon as possible, if an individual must be replaced, for example, as a result of leaving the employ of the Contractor), the Contractor shall notify the Contracting Officer and shall submit comprehensive justification for the diversion or replacement request (including proposed substitutions for key personnel) to permit evaluation by the Government of the impact on performance under this contract. The Contractor shall provide complete resumes for proposed substitutes, and any additional information requested by the Contracting Officer. Proposed substitutes should have comparable qualifications to those of the persons being replaced.

The Contracting Officer will notify the Contractor within 15 calendar days after receipt of all required information regarding the consent on substitutions. No change in fixed unit prices may occur as a result of key personnel substitution. The Contractor shall not divert or otherwise replace any key personnel without the written consent of the Contracting Officer. The Government may modify the contract to add or delete key personnel at the request of the contractor or Government.

Name Position [To be proposed]

5.0 DELIVERABLES

The contractor shall provide the following deliverables:

Specifications Due Dates

· At a minimum, the report should include:

· Executive Summary

· Introduction (including the evaluation objectives, methodology, assumptions, and data limitations)

· Literature Review described in Task 1

· Reconstructed Theory of Change described in Task 2

· Analysis of the development impact performance of the LPG Ag Portfolio described in Task 4

· Lessons Learned and Recommendations described in Task 5 To be determined (TBD)

TBD

6.0 QUALIFICATIONS

The contractor shall possess the following qualifications:

A strong expertise assessing the development impact of investments made by development finance institutions, such as the International Finance Corporation (IFC), British International Investment (BII), the Dutch development bank FMO, and IDB Invest.

· A strong expertise in the financial services sector in Sub-Saharan Africa, with a focus on the agriculture sector

· Possess at least 5 years’ experience in conducting development impact performance assessments that result in actionable recommendations.

· When required, the IC shall deploy additional experts and support staff.

· Possess strong analytical, report writing, and presentation skills.

· Be fluent in English, as all communication and deliverables will take place in English.

7.0 TRAVEL

Engagements with DFC’s partner financial intermediaries in sub-Saharan Africa may require travel if the contractor or its sub-contractors, if any, are not already presently located in the region.

8.0 PLACE OF PERFORMANCE

The principal place of performance will be the contractor’s facility.

9.0 HOURS OF OPERATIONS:

DFC standard hours of operation:

Monday - Friday, 9:00 a.m. – 5:00 p.m.

10.0 PERIOD OF PERFORMANCE (POP)

The period of performance shall be from 02/16/2024 - TBD.

Annex 1

List of Partner Banks

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