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Introduction

Name of Service: International Consultant – Support the design of blended financing facility for climate-smart MSMEs and strengthening of green finance products and services

 

Country: Laos   

 

Description of the Assignment:  

Under the overall guidance of the Economist at UNDP Lao PDR and Project coordinator and technical advisor, FARM project with support from the UNDP Country Office Environment Team Leader and experts from the UNDP Climate Finance Network and Department of Agriculture, Ministry of Agriculture and Forestry, the International Consultant will be responsible for the following:

Task 1 Contextual Review and Institutional and Market assessment  

Building on the CO’s ongoing work on ecosystem analysis and market assessment and working with the national consultant,

Institutional and Market assessment for selected sectors

·         Conduct a thorough desk review of key project documents, national policies/legislation on agriculture, chemicals management, and finance sector regulations in Lao PDR.

·         Conduct stakeholder mapping and consultations with relevant stakeholders to assess the current ecosystem of financial service providers and their enabling environment, gaps, and opportunities for integrating environmental and social considerations into financial sector activities.

·         Identify the specific financial requirements of sectors affected by the transition to sustainable practices and compare these needs with the type of capital and financial services currently offered by financial institutions. Conduct a sector-specific assessment to determine if existing financial services meet both environmental and social objectives of the just transition, identifying gaps and their primary causes.

·         Assess the current level of knowledge and availability of tools among financial ecosystem stakeholders for integrating environmental and social considerations into their strategies and operations as well as determine specific training and development needs for financial institutions to enhance their understanding and implementation of just transition financing practices.

·         Map the economic needs and barriers of access to finance faced by MSMEs and map out the potential pipeline of  producer groups, cooperatives and MSMEs in agriculture, tourism and energy sectors, particularly owned by women and minority ethnic-groups.

·         Identify market potential for green/sustainable finance in rural and agricultural sectors, including barriers and opportunities for mainstreaming new financial products.

·         The above should be based on a review of secondary material available, select number of primary interviews/ consultations with industry bodies and enterprises. The consultant will also be provided with materials/ studies developed by UNDP that could provide a foundation for this rapid assessment. 

·         Needs assessment should clearly outline barriers on financing for agri-MSMEs including categorizing around access issues, affordability issues, product mix etc. 

·         Produce an assessment report with key findings and recommendations on the above outputs of initial analysis.

 

Market scoping and Feasibility study on Blended Finance

·         Review global approaches on blended financing structures/ facilities aimed at the agriculture, tourism and energy sectors and identify best practices, learnings.

·         Based on global review and informed by the needs assessment in Laos and the local financing landscape propose 2-3 potential blended financing solutions.

·         The solutions should clearly identify the main objectives of the proposed vehicles, scope of potential intervention, the financing problem being solved, high level structures and capital required.

·         Validate the findings through stakeholder focus group discussions with business associations, financial institutions and government partners with the objective of identifying the solution pathway with potential interest from stakeholders.

·         Prepare a scoping report to summarize the key findings, challenges and opportunities for establishing a blended-finance facility and include a roadmap on establishing the blended finance structure

Task 2 Green Finance Products and Capacity building

·         Develop or build on existing innovative green finance products tailored to the capacity and system of the participating financial institutions that incentivize sustainable agricultural practices, such as low-interest loans and blended finance models with detailed guidelines for incorporating environmental and social safeguards in financial products.

·         Identify incentives and risk-mitigation mechanisms to encourage financial institutions to provide affordable credit to smallholder farmers as well as identify potential partnerships for scaling green finance products that integrate sustainable agricultural practices.

·         Develop training materials and toolkits relevant to sustainable agriculture financing tailored to the capacity needs of the financial institutions that have been assessed.

·         Conduct training sessions using the modality of training of trainers for participating financial institutions on green finance principles, risk assessment, credit appraisal, and best practices in sustainable agricultural finance.

 

Task 3 Stakeholder analysis and Partnership Engagement on Blended Finance Facility

·         Conduct meetings with key government stakeholders (Ministry of Finance, Ministry of Industry and Commerce, the Bank of Lao, National Development Banks) on their preferences, institutional requirements on the facility design based on the shortlisted solution pathway identified as part of Task 1.

·         Engage relevant IFIs and development partners to assess their mandate, objectives and risk-return profiles for participation in the facility.  

·         Identify the potential partners and also assess the enabling conditions for participation.

·         Clearly identify roles of different stakeholders, including UNDP – and a potential host/ partner for the blended finance mechanism.

·         Prepare a stakeholder engagement report on the key findings of partnership engagement process and appetite from different stakeholders for participation/ funding and roles.

Task 4 Financial Product Piloting, final reporting and knowledge sharing

·         Provide technical support to financial institutions to pilot-test the newly developed or enhanced green finance products, offering feedback on loan applications, risk assessments, and approvals at least at two (2)-target provinces.

·         Develop a concise framework to gauge pilot outcomes in terms of financial performance, environmental benefits, and social impacts.

·         Document lessons learned and propose a clear roadmap for product refinement, scale-up, and long-term sustainability.

·         Compile a final report capturing product designs, capacity-building activities, pilot results, success factors, challenges, and actionable recommendations.

·         Supporting organizing at least one networking workshop to engage with key stakeholders including financial institutions, private sector, government agencies, civil society, and the broader development community to promote the adoption of sustainable finance solutions and share key findings and lessons of the pilot project

Task 5 Design the Blended Finance Facility structure

·         Design the governance structure, including roles and responsibilities of the board, investment committee and technical advisory groups

·         Design the capital stack structure, specifying how public, philanthropic, and commercial capital will be layered to de-risk private investment

·         Determine the financial instruments tailored to address key market barriers

·         Draft Terms of Reference and selection criteria for the fund manager

·         Determine the eligibility criteria of MSMEs ensuring social inclusion, climate resilience, and integrates sustainability and responsible business conduct (RBC), in alignment with global existing frameworks

·         Deliver a draft facility concept document for endorsement by the government of Lao PDR and the participating institutions

·         Propose set of recommendations for implementation including on aspects around enhancing internal skills and capacities for the public institutions and recipients to aid in uptake and operationalization.  

 

Period of assignment/services: 97 working days.  

Proposal should be submitted directly in the portal no later than indicated deadline.

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