Liberia - DFC-USAID 2024 Call for Expressions of Interest.pdf

Expression of Interest no: 001 Issuance Date: Friday, 8 March 2024 Closing Date/Time: Monday, 8 April by 17:00 GMT

SUBJECT: Call for EOIs in a Partial Credit Guarantee for financial institutions to mobilize financing to agricultural enterprises in Liberia

Ladies/Gentlemen:

The U.S. International Development Finance Corporation (DFC), in partnership with the United States Agency for International Development (USAID), is seeking Expressions of Interest (EOIs) from private financial institutions for a partial credit guarantee to mobilize lending to agricultural micro, small, and medium enterprises (MSMEs) in Liberia. DFC anticipates signing a partial credit guarantee agreement with one or more successful parties, subject to due diligence and the availability of funds.

I. Background

DFC is the United States’ development financial institution. DFC partners with the private sector to finance solutions to the most critical challenges facing developing markets today.

USAID is a U.S. government agency that provides and implements foreign assistance to support shared development objectives with governments and their citizens.

DFC and USAID partner to provide financing tools and assistance that help businesses expand in emerging markets, foster growth, and improve lives.

Our financing tools are designed to drive financial market growth by assisting financial institutions to expand lending in underserved sectors and segments. Our goal is to encourage financial institutions to lend to underserved businesses or sectors of the economy, develop a new product, lend to underserved geographic regions, and/or lend at improved terms.

II. Scope of the Transaction

DFC is considering structuring a partial credit guarantee with one or more financial institutions to mobilize lending to agricultural enterprises in Liberia aligned with USAID/Liberia’s development priorities and technical assistance. The anticipated terms are found below. Terms are indicative and subject to change based on market needs and due diligence on selected applicant(s):

1. Qualifying Applicants: Private entities that provide loans, leases, or other debt instruments. These include but are not limited to banks, non-bank financial institutions, savings and loans companies, rural and community banks, microfinance institutions, financial NGOs, credit unions, debt funds, and/or private lenders (individuals or groups).

2. Qualifying Borrowers (i.e. end customers of Qualifying Applicants): Non-sovereign Liberian individuals, micro-, small, and medium enterprises (MSMEs), associations, cooperatives, groups, rural & community banks (RCBs), village savings and loans, and/or non-governmental organizations (NGOs) seeking financing for the Qualifying Projects listed below.

3. Qualifying Projects: (i.e. investment plans of Qualifying Borrowers): Investments that support agricultural value chain development in Liberia, such as loans for agricultural production, aggregation, transportation, processing, input supply, etc.

4. Geographic Focus: Strong preference for Qualifying Projects to be located in the Bong, Grand Bassa, Lofa, Nimba, Margibi, and Montserrado counties of Liberia.

5. Gender Focus: Strong preference for lending strategies that will result in a meaningful proportion of lending to women or women-led businesses.

6. Anticipated terms:

a. Guarantee percentage:

i. 50-70% coverage on loans to Qualifying Borrowers

ii. Coverage is pari-passu on loss of loan principal (not fees or interest) outstanding at the time of default.

b. Estimated size of facility: Up to US$ 10 million of loans under coverage, in LRD equivalent

c. Single obligor limit: Maximum 10% of the size of the facility.

d. Fees: One-time origination fee and 6-month utilization fees, rates subject to negotiation.

e. Other Key Terms:

i. DFC cannot provide guarantees on loans sourced with capital provided at highly concessional rates, such as subsidized lines of credit from government, donor, or foundation sources.

ii. Loans under coverage are expected to be in LRD.

iii. DFC’s guarantees are structured as cumulatively utilized guarantees rather than revolving guarantees.

All DFC transactions are required to comply with DFC’s Environmental and Social Policy and Procedures,1 which includes compliance with IFC Performance Standards. Additionally, all DFC transactions are required to comply with DFC’s Know Your Customer (KYC) and Anti-Money Laundering (AML) policies and procedures.

USAID/Liberia may provide technical assistance to expand and strengthen the capacity of selected applicants and/or Qualifying Borrowers, which may include:

● Facilitating access to business advisory services

● Pipeline development to identify Qualifying Projects

● Facilitating market and product development to increase lenders' risk appetite for lending in the agriculture sector

● Research and feasibility studies, including opportunity landscape assessments, market assessments, or value chain analysis

1 Available online at https://www.dfc.gov/sites/default/files/media/documents/DFC_ESPP_012020.pdf.

III. Submission Instructions and Review Process

(A) Submission Instructions

Through this announcement, DFC and USAID/Liberia invite interested Qualifying Applicants (as defined above in Section II) to submit EOIs in accordance with the instructions provided here below:

1. Brief profile of the applicant, including a point of contact with email address and phone number.

2. Description of how the applicant intends to utilize DFC’s guarantee and expand its lending to the focus areas described in Section II above, including:

a. A proposal for how DFC’s guarantee would be used.

b. The applicant’s strategy for reaching Qualifying Borrowers and Qualifying Projects

c. The average loan size and number of loans the applicant estimates disbursing under DFC’s guarantee.

d. The applicant’s strategy for reaching female borrowers and/or borrowers led by women.

e. A description of the applicant’s current presence in Bong, Grand Bassa, Lofa, Nimba, Margibi, and/or Montserrado counties, and how the applicant plans to conduct outreach to potential agricultural clients in these areas.

i. A description of the sources of funds to be used for lending under the guarantee.

f. The desired size of the guarantee facility (up to US$ 10 million), and rationale for why the desired size is tenable.

3. Responses to the following questions:

a. Would DFC’s guarantee affect the applicant’s interest rates for Qualifying Borrowers? If so, how?

b. Would DFC’s guarantee affect the applicant’s collateral requirements for Qualifying Borrowers?

If so, how?

c. Would DFC’s guarantee affect the tenor of loans to Qualifying Borrowers? If so, how?

d. Overall, how would DFC’s guarantee help the applicant lend to Qualifying Borrowers and

Qualifying Projects in ways that it currently does not or is unable to?

4. Information regarding:

a. Size of the applicant’s current total loan portfolio

b. Non-performing loan (NPL) rate of the total loan portfolio

c. Size of the applicant’s current agriculture sub-portfolio

d. NPL rate on the agriculture sub-portfolio

5. The extent of the applicant’s presence nationwide, including through digital finance technologies.

6. Copies of 2020, 2021, 2022 and 2023 annual financial statements or annual reports.

7. Copies of the applicant’s environmental & social policies and procedures, or similar documents.

Please do not exceed five (5) pages for your submission to the items listed in Section III.A.1-3 above. Items in Section III.A.4-7 may be included as attachments to your submission. EOIs must be submitted in English. DFC does not require a specific template for submissions.

EOIs must be received by email no later than Monday, 8 April 2024 by 17:00 GMT. EOIs received after this date and/or time specified may not be considered.

Please send EOIs by email to the following persons:

● Heather Bateman: hbateman@dfc.gov

● Brennan Shearer: bshearer@usaid.gov

Please note that DFC and USAID/Liberia do not accept responsibility for delays in transmission or receipt of emails. EOIs will be treated as business sensitive information by DFC and USAID/Liberia.

(B) Evaluation Information and Timeline

EOIs will be evaluated based on the extent to which the applicant’s concept aligns with the scope of the transaction outlined in Section II, perceived creditworthiness based on information provided, and alignment to DFC and USAID/Liberia’s priorities.

Shortlisted candidates from this Call for EOIs may be requested to send clarifications on their submission and/or be requested to have a call with DFC and USAID/Liberia.

Following successful final selection, the applicant will be required to complete and provide a list of documents per the attached Due Diligence Checklist for Selected Partners (Annex 1). Due diligence, including credit, environmental & social, KYC, and legal due diligence will then be undertaken in parallel with legal negotiations on the Guarantee Agreement. Following the due diligence process, signing of the Guarantee Agreement is estimated to occur in/by March 2025. Timelines are subject to change based on responsiveness of the selected applicant and unforeseen events.

DFC and USAID/Liberia reserve the right to partner or not partner as a result of this request for EOIs.

This request does not represent a commitment on behalf of the U.S Government. The U.S. Government is not responsible for any costs associated with the preparation of an Expression of Interest in response to this request.

IV. Questions and Further Assistance

Please submit any questions or requests for clarifications via email to:

Heather Bateman Director of Investments, Africa, DFC hbateman@dfc.gov

Only shortlisted parties will be contacted.

ANNEX 1

Due Diligence Checklist for Selected Partners

This list is provided for informational purposes only. Only short-listed applicants will be requested to submit the following items from DFC’s due diligence checklist:

1. A completed DFC Supplemental Information Request, including:

a. Annual report for the most recent four (4) years (audited financial statements with footnotes, management discussion and analysis of financial condition and results of operations (MD&A) disclosure, auditor’s opinion and auditor’s management letter)

b. Latest un-audited interim financial statements

c. Organizational chart

d. CVs of key managers / decision makers (including president, CEO, treasurer, chief credit officer, chief risk officer and director of internal audit, or equivalents)

e. CVs of board members

f. International or local rating agency reports (if applicable)

g. Certificate of incorporation (or local equivalent)

h. Articles and Memorandum of Association (or local equivalent)

i. Financial/banking industry report provided by the Central Bank, regulator, or industry association that shows Lender's market position compared to other financial institutions (if applicable)

j. Credit policy and procedures

k. Know-Your-Customer (KYC) and Anti-Money Laundering (AML) policies and procedures

l. Safety & Soundness Examination report conducted by the Central Bank

m. Three (3) to five (5) year business plan. If available, include cash flow projections with detailed assumptions and SWOT (Strengths, Weaknesses, Opportunities, Threats) or similar analysis

n. Environmental and social policy and management system

o. Human resources policy

p. Copies of template employment agreements

q. Information regarding internal and external grievance mechanisms

r. Any other presentations or documents, as deemed relevant (such as presentations for donors or investors, sector strategies, legal documentation unique to the applicant, etc.)

2. Completed DFC Personal Identification Forms (DFC-006) for major shareholders, board of directors, and senior management for DFC to complete KYC checks (to be submitted online via DFC’s website)

3. A completed DFC Impact Assessment Questionnaire (DFC-007, to be submitted online via DFC’s website)