SCOPE OF WORK
Iraq Governance Performance and Accountability Project (IGPA)
Senior SME Credit Specialist
The purpose of the Iraq Governance Performance and Accountability (IGPA) project is to advance effective, accountable, and transparent governance in Iraq. This USAID effort, implemented by DAI, will work with the Government of Iraq (GOI) at all levels to better respond to citizen needs by supporting reform initiatives and Iraqi change agents on inclusive governance and public sector transparency, accountability, and economy. “Reform initiatives” includes support to improve service delivery functions, public financial management, and open government initiatives. IGPA will support the GOI and the citizens of Iraq in forming partnerships and collaborative efforts to solve problems jointly. IGPA has four (4) objectives:
1. Enhance GOI service delivery capacity
2. Improve public financial management
3. Strengthen monitoring and oversight of service delivery and public expenditure
4. Support Iraqi change agents (cross-cutting objective)
Task Order 4 of the USAID Iraq Governance Performance and Accountability Project (IGPA), the Ninewa Investment Facilitation Initiative (NIFI), the aims to increase employment and economic opportunities by helping the private sector, including small and medium enterprises (SMEs) and, as appropriate, larger, developed businesses located in and near Ninewa province, (hereafter, Ninewa) build business management capacity, increase competitiveness, and attract investment and /or financing.
The growth of Iraq’s private sector is the key to creating jobs, promoting sustainable growth, and reducing dependency on oil exports. However, the development and growth of Iraq’s private sector is constrained by a number of factors.
One of the most important constraints is the underdeveloped financial sector, which is relatively small and dominated by the state, making it uncompetitive and unable to meet the needs of the private sector and SMEs in particular. The World Bank Doing Business 2020 report ranks Iraq 186th in ‘getting credit’ revealing a severe lack of access to finance for both established businesses and new entrepreneurs. The amount of credit provided to the private sector amounts to less than seven percent of GDP.
When they do lend, Iraqi banks are still underwriting business loans largely based on collateral – mostly in the form of real estate. This severely limits the ability of many SMEs to obtain bank loans. Banks urgently need to adopt credit analysis best practices that rely on underwriting loans based on cash flow as the primary source of repayment and collateral as a secondary source of repayment. Bank loan offices must become proficient at compiling and using monthly cash flow projections to validate borrowing need, assess repayment capacity, and determine proper loan structure. Furthermore, to build sound and profitable SME loan portfolios, banks must adopt and apply SME credit policies and procedures that are consistent with best practices.
To this end, IGPA NIFI seeks to retain a Senior SME Credit Specialist (Consultant) to deliver technical assistance to select Iraqi banks in the form of (1) Developing and delivering an SME Credit Training Program, and; (2) Performing gap analyses of SME credit policies and procedures against best practices and providing recommendations for closing the gaps.
TASKS AND DELIVERABLES:
The Senior SME Credit Specialist will be responsible for the following tasks and deliverables:
Task I: Develop and Deliver SME Credit Training Program
- Develop a full set of SME Credit Training Program training materials. The materials should be suitable for a 40-hour program to be delivered through several sessions, the number and duration of each session will be determined later depending on the schedule and availability of the bankers.
- The first draft of training materials needs to be developed in English. Once reviewed and approved, the materials need to be translated into Arabic with specific attention to accuracy of finance terminology.
- The SME Credit Training Program must be highly interactive with at least 50% of the content composed of exercises and case studies.
- The SME Credit Training Program will cover:
- Credit Analysis Framework – C’s of Credit
- Typical Causes of Borrowing
- Validating Loan Purpose and Proposed Loan Amount
- Loan Terms and Structure – Matching with Loan Purpose
- Why Cash Flow is the Primary Source of Repayment
- Developing and Using Financial Projections for Validating Loan Amount, Assessing Repayment Capacity, and Determining Proper Loan Terms and Structure
- Secondary Sources of Repayment
- Evaluating Credit History
- Evaluating Owners Contribution
- Evaluating Management Strength and Competency
- Evaluating Market and Customer Analysis
- Assessing Risks and Mitigating Factors
- Conducting Historical Financial Analysis
- Dealing with Inadequate or Lack of Financial Statements
- Formulating the Credit Recommendation / Decision
- The Consultant will deliver the SME Credit Training Program either in person or via video conference (MS Teams) for credit officers and managers in select Iraqi banks.
Task 2: Conduct Gap Analysis of SME Credit Policies and Procedures Against Best Practices
- For select private banks, review existing SME credit policies and procedures and conduct gap analyses against best practices. For each bank that is selected, produce a gap analysis report including recommendations and a roadmap for bringing existing SME credit policies and procedures in line with best practices.
- The gap analysis report and recommendations must be prepared in English and Arabic.
- Key areas that must be covered by the gap analysis include:
- Know Your Customer and Anti Money Laundering
- Target Market and Applicant Eligibility
- Credit Analysis
- Collateral and Guarantees
- Lending Limits and Loan Concentrations
- Loan Approval and Lending Authorities
- Loan Documentation
- Loan Disbursement
- Credit Files
- Loan Monitoring and Classification
- Loan Provisioning and Write Offs
LOCATION AND REPORTING
The Senior Business Finance Advisor and Trainer will report to the Team Leader of Task Order 4.
QUALIFICATIONS OF SENIOR SME CREDIT SPECIALIST
- Experience as a credit officer or manager in a small business or SME banking credit department at a reputable commercial bank. Microfinance experience is not considered relevant.
- Experience and expertise underwriting loans using cash flow as the primary source of repayment and using monthly cash flow projections for validating loan amount and repayment capacity.
- Experience providing SME Credit training and advisory services in developing countries.
- Native fluency in Arabic and English preferred.
- Willingness to provide sample of training materials including at least one case study.