IFC Europe Microfinance: Review and Lesson
SELECTION FOR CONSULTANTS BY THE WORLD BANK
REQUEST FOR EXPRESSIONS OF INTEREST
Electronic Submissions through World Bank Group eConsultant2
https://wbgeconsult2.worldbank.org/wbgec/index.html
ASSIGNMENT OVERVIEW
Assignment Title: 1087723 - IFC Europe Microfinance: Review and Lesson
Assignment Countries:
- (countries have not yet been selected)
ASSIGNMENT DESCRIPTION
IFC in Europe/Central Asia has worked with policy makers, regulators, microfinance networks and providers to address some pressing industry challenges in the region and continue to grow the industry in a responsible manner.
This consultancy is to do a review that will take stock of IFCs role and contributions, and key lessons learned to support the microfinance industry in this context.
The review will include the following key points:
1. Evolution of microfinance in Eastern Europe and Central Asia
-Late90s: large MFIs, significant volume
- Different institutional forms or providers
- Transformation of NGO MFIs to banks
2. Critical factors that contributed to rapid explosive growth of microfinance in the region
-Regulatory and policy environment
- Investors/investment flow
3. Key challenges and implications
-Overindebtedness
4. IFCs role and contribution
5. Key lessons learned
6. Ways forward
The proposed methodology includes desk review, phone interviews and a field mission.
FUNDING SOURCE
The World Bank intends to finance the assignment / services described below under the following trust fund(s):
- BANK BUDGET
- IFC / GLOBAL MICROFINANCE TA PROGRAM
ELIGIBILITY
Eligibility restrictions apply:
[Please type list of restrictions]
INDIVIDUAL / FIRM PROFILE
The consultant will be a firm.
SUBMISSION REQUIREMENTS
The World Bank now invites eligible consultants to indicate their interest in providing the services. Interested consultants must provide information indicating that they are qualified to perform the services (brochures, description of similar assignments, experience in similar conditions, availability of appropriate skills among staff, etc. for firms; CV and cover letter for individuals). Please note that the total size of all attachments should be less than 5MB. Consultants may associate to enhance their qualifications.
Interested consultants are hereby invited to submit expressions of interest.
Expressions of Interest should be submitted, in English, electronically through World Bank Group eConsultant2 (https://wbgeconsult2.worldbank.org/wbgec/index.html)
NOTES
Following this invitation for Expression of Interest, a shortlist of qualified firms will be formally invited to submit proposals. Shortlisting and selection will be subject to the availability of funding.
Microfinance has developed rapidly from donor-driven non-profit microfinance programs to commercial microfinance providers of various forms, including banks downscaling to provide microfinance services and non-governmental microfinance providers transforming to commercial banks. Along with the positive benefits in the form of significant volume of portfolio and large scale of outreach to provide financing to microenterpreneurs and low-income households in order to create jobs and enable income smoothing, the rapid growth has brought along some negative developments just as in the case of mainstream financial providers.
Explosion of portfolio growth in terms of volumes and potential to expand even further has given ample appetite to investors, which then flooded the Eastern Europe and Central Asia region, resulting in excessive liquidity. The end result was over indebtedness, given the absence of credit information sharing systems in these markets. While growth and increased access to financing for enterprises and households which previously did not have access, has had positive impacts for a large segment of the households, when done irresponsibly, the same access to financing or provision of excessive credit can lead to negative impacts, such as over-indebting the very target population that is intended to benefit.
When there are beginnings of negative impacts that emerge in the market, governments start to react dramatically and in a repressive manner.
Therefore, to develop inclusive financing in a responsible manner, microfinance providers need infrastructure and systems to deal with clients who may get over-indebted.
IFC in ECA region has worked with policy makers, regulators, microfinance networks and providers to address some of these pressing industry challenges in the region and continue to grow the industry in a responsible manner.
This review will take a stock of IFCs role and contributions, and key lessons learned to support the microfinance industry in this context.
It is intended to share the knowledge and lessons learned with microfinance industry in general, and other development finance institutions specifically, in their efforts to contribute to a healthy growth of microfinance industry in this region, as well as in other regions that are in the process of similar rapid growth.
Scope:
The review will address the following, but not limited to, key points:
1. Evolution of microfinance in Eastern Europe and Central Asia:
-Late90s: large MFIs, significant volume
- Different institutional forms or providers
- Transformation of NGO MFIs to banks: Two comprehensive case studies
2. Critical factors that contributed to rapid explosive growth of microfinance in the region
-Regulatory and policy environment
- Investors/investment flow
3. Key challenges and implications
- Trend by countries and key selected MFIs: selective financial and portfolio performance indicators to analyze trends
- Overindebtedness
4. IFCs role and contribution
- Regulatory and policy work
- Technical assistance to MFIs
- Results Country by Country
- Tool/method to measure overindebtedness
5. Key lessons learned
- Providing more access to financing does not automatically translate into expected positive development impact. Growth has two sides: positive impact and negative impact
- Consumer protection law/regulation is often as important as self-regulation to ensure responsible financing
- In the absence of credit bureau or the relevant infrastructure, microfinance providers need to have self-regulated industry information sharing system - Triggers that helps microfinance providers grow to the next level of development
- Lessons learned from IFCs advisory services provided to microfinance providers
6. Ways forward
- What can be done at each level to prevent and address over-indebtedness:
- Policy and regulatory level (e.g. consumer protection)
- Microfinance service providers (e.g. loan appraisal policy)
- End level clients (e.g. financial literacy)
- What is appropriate role for IFC?
Proposed methodology
Desk review: review of IFC relevant project documents, MIX and CGAP regional offices for regionally relevant documents on microfinance industry development. The review should also include an analysis of key performance indicators of selected MFIs (e.g. outreach and sustainability) and selected country portfolio. IFC identified potential IFC client MFIs in Kyrgyzstan, Tajikistan, and Bosnia. The review of the country profile should include regulatory challenges faced in the industry, and solutions in each country.
Interviews with key informants: Phone or skype interviews will be conducted with IFC Global and ECA regional Microfinance team/specialists, representatives of MIX and CGAP regional offices (Baku and Moscow).
Field mission: Based on the desk review and phone/skype interviews, the Consultant will develop focused/well-crafted field-mission plan to conduct interviews with key informants in selected country (s) to cross-validate the desk review findings and gather additional evidences and data. Key informants include representatives from the policy and regulatory agencies, microfinance providers, microfinance network/association, and end-level clients.
REQUEST FOR EXPRESSIONS OF INTEREST
Electronic Submissions through World Bank Group eConsultant2
https://wbgeconsult2.worldbank.org/wbgec/index.html
ASSIGNMENT OVERVIEW
Assignment Title: 1087723 - IFC Europe Microfinance: Review and Lesson
Assignment Countries:
- (countries have not yet been selected)
ASSIGNMENT DESCRIPTION
IFC in Europe/Central Asia has worked with policy makers, regulators, microfinance networks and providers to address some pressing industry challenges in the region and continue to grow the industry in a responsible manner.
This consultancy is to do a review that will take stock of IFCs role and contributions, and key lessons learned to support the microfinance industry in this context.
The review will include the following key points:
1. Evolution of microfinance in Eastern Europe and Central Asia
-Late90s: large MFIs, significant volume
- Different institutional forms or providers
- Transformation of NGO MFIs to banks
2. Critical factors that contributed to rapid explosive growth of microfinance in the region
-Regulatory and policy environment
- Investors/investment flow
3. Key challenges and implications
-Overindebtedness
4. IFCs role and contribution
5. Key lessons learned
6. Ways forward
The proposed methodology includes desk review, phone interviews and a field mission.
FUNDING SOURCE
The World Bank intends to finance the assignment / services described below under the following trust fund(s):
- BANK BUDGET
- IFC / GLOBAL MICROFINANCE TA PROGRAM
ELIGIBILITY
Eligibility restrictions apply:
[Please type list of restrictions]
INDIVIDUAL / FIRM PROFILE
The consultant will be a firm.
SUBMISSION REQUIREMENTS
The World Bank now invites eligible consultants to indicate their interest in providing the services. Interested consultants must provide information indicating that they are qualified to perform the services (brochures, description of similar assignments, experience in similar conditions, availability of appropriate skills among staff, etc. for firms; CV and cover letter for individuals). Please note that the total size of all attachments should be less than 5MB. Consultants may associate to enhance their qualifications.
Interested consultants are hereby invited to submit expressions of interest.
Expressions of Interest should be submitted, in English, electronically through World Bank Group eConsultant2 (https://wbgeconsult2.worldbank.org/wbgec/index.html)
NOTES
Following this invitation for Expression of Interest, a shortlist of qualified firms will be formally invited to submit proposals. Shortlisting and selection will be subject to the availability of funding.
Microfinance has developed rapidly from donor-driven non-profit microfinance programs to commercial microfinance providers of various forms, including banks downscaling to provide microfinance services and non-governmental microfinance providers transforming to commercial banks. Along with the positive benefits in the form of significant volume of portfolio and large scale of outreach to provide financing to microenterpreneurs and low-income households in order to create jobs and enable income smoothing, the rapid growth has brought along some negative developments just as in the case of mainstream financial providers.
Explosion of portfolio growth in terms of volumes and potential to expand even further has given ample appetite to investors, which then flooded the Eastern Europe and Central Asia region, resulting in excessive liquidity. The end result was over indebtedness, given the absence of credit information sharing systems in these markets. While growth and increased access to financing for enterprises and households which previously did not have access, has had positive impacts for a large segment of the households, when done irresponsibly, the same access to financing or provision of excessive credit can lead to negative impacts, such as over-indebting the very target population that is intended to benefit.
When there are beginnings of negative impacts that emerge in the market, governments start to react dramatically and in a repressive manner.
Therefore, to develop inclusive financing in a responsible manner, microfinance providers need infrastructure and systems to deal with clients who may get over-indebted.
IFC in ECA region has worked with policy makers, regulators, microfinance networks and providers to address some of these pressing industry challenges in the region and continue to grow the industry in a responsible manner.
This review will take a stock of IFCs role and contributions, and key lessons learned to support the microfinance industry in this context.
It is intended to share the knowledge and lessons learned with microfinance industry in general, and other development finance institutions specifically, in their efforts to contribute to a healthy growth of microfinance industry in this region, as well as in other regions that are in the process of similar rapid growth.
Scope:
The review will address the following, but not limited to, key points:
1. Evolution of microfinance in Eastern Europe and Central Asia:
-Late90s: large MFIs, significant volume
- Different institutional forms or providers
- Transformation of NGO MFIs to banks: Two comprehensive case studies
2. Critical factors that contributed to rapid explosive growth of microfinance in the region
-Regulatory and policy environment
- Investors/investment flow
3. Key challenges and implications
- Trend by countries and key selected MFIs: selective financial and portfolio performance indicators to analyze trends
- Overindebtedness
4. IFCs role and contribution
- Regulatory and policy work
- Technical assistance to MFIs
- Results Country by Country
- Tool/method to measure overindebtedness
5. Key lessons learned
- Providing more access to financing does not automatically translate into expected positive development impact. Growth has two sides: positive impact and negative impact
- Consumer protection law/regulation is often as important as self-regulation to ensure responsible financing
- In the absence of credit bureau or the relevant infrastructure, microfinance providers need to have self-regulated industry information sharing system - Triggers that helps microfinance providers grow to the next level of development
- Lessons learned from IFCs advisory services provided to microfinance providers
6. Ways forward
- What can be done at each level to prevent and address over-indebtedness:
- Policy and regulatory level (e.g. consumer protection)
- Microfinance service providers (e.g. loan appraisal policy)
- End level clients (e.g. financial literacy)
- What is appropriate role for IFC?
Proposed methodology
Desk review: review of IFC relevant project documents, MIX and CGAP regional offices for regionally relevant documents on microfinance industry development. The review should also include an analysis of key performance indicators of selected MFIs (e.g. outreach and sustainability) and selected country portfolio. IFC identified potential IFC client MFIs in Kyrgyzstan, Tajikistan, and Bosnia. The review of the country profile should include regulatory challenges faced in the industry, and solutions in each country.
Interviews with key informants: Phone or skype interviews will be conducted with IFC Global and ECA regional Microfinance team/specialists, representatives of MIX and CGAP regional offices (Baku and Moscow).
Field mission: Based on the desk review and phone/skype interviews, the Consultant will develop focused/well-crafted field-mission plan to conduct interviews with key informants in selected country (s) to cross-validate the desk review findings and gather additional evidences and data. Key informants include representatives from the policy and regulatory agencies, microfinance providers, microfinance network/association, and end-level clients.
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