Objective and Purpose of the Assignment
SMEs play a major role in Cambodia’s economy. However, they are constrained by lack of finance. In recent access to finance interventions, MEF focused on the rice sector – farmers, millers, and sellers – recognizing its significance to the economy. However, other real sectors have become increasingly important in financial inclusion, especially due to the economic impacts of the COVID-19 pandemic and the EU’s withdrawal of Cambodia’s Everything But Arms (EBA) trade preferences. Further, the representation of women entrepreneurs is still relatively low in Cambodia, which can be attributed to lack of financial literacy, skills and capital. A significant proportion of the SME entrepreneurs in Cambodia are women.
By formalizing a robust and accessible public CGS, MEF seeks to build and maintain market confidence through a simplified yet impactful credit enhancement mechanism, which includes parameters to address the needs of women.
Scope of Work
There have been previous attempts at establishing an SME CGS in Cambodia, which comprised support from ADB and Agence Française de Développement (AFD) on assessment of the sector, design and recommendation for a proposed CGS scheme, as well as USAID and ADB pilot CGS schemes.
ADB is preparing an agribusiness project which comprises a financial scheme that includes a CGS pilot to complement debt and equity financial products. This project has required extensive research and due diligence involving key Cambodian private and public sector and government stakeholders. The new CGS is expected to replicate the structure and format of the ADB-supported CGS pilot and incorporate lessons learned.
Finally, an ADB-supported project is underway to develop policies and regulations, otherwise known as a Prakas, governing a robust public SME CGS, which will encourage and stimulate participation from the female population. These policies will incorporate the lessons learned from previous and existing CGS pilot facilities and create an enabling environment for an accessible and fit-for-purpose CGS for all sectors. It will also take into account the impact of COVID-19 on SMEs and how credit guarantees could help resolve bottlenecks. The prakas is expected to be adopted in time for the launch of the SME CGS.
The General Department of Financial Industry (GDFI) at MEF has been tasked with implementing Cambodia’s inaugural public SME CGS and has requested ADB’s support for technical, advisory and capacity building in structuring and implementing the CGS. The Project Implementation Unit (PIU) of the SME CGS will be initially incorporated in GDFI and may be linked to the soon-to-be operational SME Bank and SME CoFinancing Scheme (SCFS).
The government has future plans to invite development partners to participate in the CGS through financial intermediation/ apex loans when it becomes operational.
Detailed Tasks and/or Expected Output
The expert will work in a team comprising 2 international and 2 local and support the international consultants to perform the following activities:
• Provide detailed guidance and implementation requirements for pricing methodology, product development and structuring to MEF, producing the following outputs: (i) a fee pricing mechanism; (ii) structuring of the CGS product; (iii) market-sounding and project identification; (iv) participating financial institution (PFI) consultation and research; (v) risk assessment methodology for the PIU; and (vi) benchmarking with similar institutions in ASEAN and global emerging and frontier markets • Work with other ADB and MEF consultants responsible for drafting the prakas to ensure consistency and compatibility of regulation and implementation
• Provide detailed guidance and implementation requirements to MEF on internal controls and risk management tools required to standardize CGS in the local market
• Review previous and existing credit guarantee schemes in Cambodia including documents prepared under technical assistance provided by ADB and AFD
• Perform analyses of key SME sectors – agriculture, garment, tourism, hospitality and others under Cambodia’s Ministry of Industry and Handicraft
• Under the guidance of MEF, engage with government stakeholders in other ministries, commercial banks and MFIs (the would-be partner financial institutions) to identify the reasons for limited uptake in previous schemes, impact on the proposed CGS on their sectors, how the introduction of practical schemes could be used to build market confidence
• Undertake a CAMELS (Capital adequacy, Assets, Management Capability, Earning, Liquidity, Sensitivity) assessment of MEF (or the appropriate state-owned institution) to determine gaps (if any) in providing an SME CGS
• Ensure alignment with World Bank and FIRST initiative’s 16 principles for public credit guarantee schemes for SMEs, covering the four key areas https://www.worldbank.
org/en/topic/financialsector/publication/principles-for-public-credit-guarantee-schemes-cgss-for-smes • Prepare detailed implementation expertise on loan documentation and agreements required to support an SME CGS
• Provide recommendations on areas where MEF may bolster its expertise in terms of technical capacity and resources to manage the CGS in the long-term, including recommendation of industry-standard software if applicable
• Produce a detailed product manual/ standard operating procedure encapsulating the aforementioned requirements for MEF’s product library
• Conduct workshops to present proposed product structures to stakeholders.
Minimum Qualification Requirements
The expert shall have:
• Extensive experience in credit risk and loan origination in Cambodian commercial banks; • A thorough understanding of the credit risk methodology, loan appraisal and origination process in commercial and MFI banking in Cambodia;
• Understanding of the Cambodian SME financing market ecosystem;
• Extensive working knowledge of National Bank of Cambodia banking regulations • Experience of working in Cambodia and with Cambodia government counterparts; • Understanding of financial deepening in Cambodia;
• Extensive experience in SME financing – origination, structuring, loan negotiation and execution; • Advanced capacity to interpret, analyze and negotiate complex finance contracts and other legal documentation in typical SME transactions that include credit-enhancement products; • A master’s degree in a related discipline, such as business, public administration or economics with at least 10 years minimum specific experience; and
• High proficiency in English and be a native Khmer speaker
Deadline of Submitting EOI: 05-Jul-2020 11:59 PM Manila local time