Provision of Technical Assistance to Financial Institutions for Pilot Studies on... Tender

Procurement Summary

Country : Lesotho

Summary : Provision of Technical Assistance to Financial Institutions for Pilot Studies on Alternative Data-Driven Lending in Lesotho

Deadline : 23 Aug 2022

Other Information

Notice Type : Tender

TOT Ref.No.: 70304328

Document Ref. No. : 1282321

Financier : World Bank (WB)

Purchaser Ownership : Public

Tender Value : Refer Document

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Tender Details

Expression of Interest are invited for Provision of Technical Assistance to Financial Institutions for Pilot Studies on Alternative Data-Driven Lending in Lesotho

Program Context
The World Banks Africa Gender Innovation Lab (GIL) and its Finance, Competitiveness and Innovation Global Practice (FCI) are conducting two pilot studies on the impact of data-driven credit scoring on access to finance for small business owners, especially for women-owned firms. This pilot study is conducted in the context of the Millennium Challenge Corporations new Compact in Lesotho and with the support of Lesothos Ministry of Finance.
Micro, Small and Medium-Sized Enterprises (MSMEs) across Africa face a major financing gap. In Lesotho, according to a recent World Bank assessment, only 2 percent of MSMEs borrow from banks while 7 percent use informal financial services. Banks are often unwilling to lend to MSMEs, but lending from microfinance institutions (MFIs) has also been marginal. Financial institutions have signalled a willingness to increase financing for MSMEs but are constrained by limited borrower information due to the lack of credit bureau data, unsystematic financial reporting, and the predominance of cash-based transactions. Lenders therefore often rely on fixed-asset collateral, which tends to disadvantage female borrowers whose access to such assets is typically limited.

The World Bank is exploring how alternative data can be leveraged to improve access to finance for MSMEs in Lesotho, especially for female entrepreneurs. Two pilots with local financial institutions are currently under preparation and focus on psychometric credit scoring as well as the use of app-based digital data collection for small business owners. The World Bank now seeks the services of a suitably qualified firm to lend technical support to the financial institutions participating in the proposed pilots. The role of the contracted firm will be two-fold: first, to provide training on MSME lending to relevant staff at participating financial institutions; and second, to provide technical assistance as participating financial institutions introduce and make use of the alternative data-based credit scoring solutions procured from external vendors. The overarching objective is to develop data-driven evidence that will enable financial institutions to adopt and scale new appraisal mechanisms that promote financial inclusion, especially for women entrepreneurs.

Assignment
As part of the two World Bank pilots in Lesotho, the firm will provide technical assistance to two or three financial institutions, including at least one microfinance institution and one local commercial bank. The selection of partner institutions is currently underway, as is the procurement of the technology providers.
The firms responsibilities under this contract will include:
Conduct an assessment of participating institutions MSME lending practices and technical capacity;
Provide training on MSME lending to relevant bank and MFI staff, drawing on the needs assessment and best practices in the industry;
Support the institutions in the development of the necessary internal processes and resources for MSME lending (marketing, due diligence, underwriting, etc.)
Assist the institutions in the introduction of new technology for alternative data-driven credit scoring procured from external providers;
Support the overall coordination of the pilots by acting as a liaison between financial institutions, technology providers, World Bank team, and government stakeholders.

Documents

 Tender Notice