Youth Lending Expert Volunteer

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SCOPE OF WORK

Youth Lending Expert Volunteer

Location of Assignment: Dar es Salaam, Tanzania

Proposed Level of Effort: 3 weeks

Anticipated Start Date: February 2018

Anticipated End Date: March 2018

Objectives of the Assignment

This assignment aims to build the capacity of financial institution staff so that they may change their behavior in ways that lead to an increase in access to capital among youth business owners.

Specifically, the volunteer will gather insights on the financial needs of youth in Tanzania and design strategies to overcome and remove obstacles. The volunteer will also review the current youth loan policies, procedures and products of Tanzanian financial institutions and work with the financial institutions to find ways to revise them in ways that better align with the needs of youth business owners.

This assignment will address the challenges facing youth in accessing finance, present international best practices for managing youth loans, develop a financial loan product tailored specifically to youth and work to implement real changes. The primary audience will be the head of marketing, senior credit officers, senior relationship managers and managers within MSME lending units.

Participating FIs will come away with:

• Revisions to existing policies and procedures related to youth;
• A new or revised loan product tailored for youth business owners;
• An increase in the number and value of loans issued to youth business owners.

Problem Statement

Access to finance is a hindrance to youth who struggle to meet qualifying criteria to access credit to start and grow their businesses. The World Bank notes that only less than 1% of loan portfolios of loan providers are directed at those under the age of 30. Lack of collateral, less experience (quality and feasibility of the business idea), higher interest rates and stringent lending requirements are some of the reasons that hinder youth from accessing funds. Financial institutions tend to see youth as too risky despite the modest amounts of investment that many require.

With youth taking up 70% of the total population in Tanzania, supporting the next generation of entrepreneurs has significant potential to drive sustainable and inclusive economic growth. Yet SME lending in general remains limited, despite broad commitment to expand opportunities, especially to young entrepreneurs.

Background

The Tanzania Enabling Growth through Investment and Enterprise (ENGINE) program is a four-year USAID-funded Feed the Future program awarded through the Volunteers for Economic Growth Alliance (VEGA) that aims to streamline and enhance many of the regulatory, informational and financial systems to encourage domestic and foreign investment in the southern agricultural regions of Mbeya, Morogoro, and Iringa, and in Zanzibar.

ENGINE focuses at the district level, using a broad-based approach that works with district councils, private sector associations, business development service providers, financial institutions and micro, small and medium enterprises. The program’s activities are divided into three main components:

1. Implement policies for growth. Build the capacity of the private sector to effectively dialogue with the government to set the policy agenda and improve the capacity of the public sector to implement policies.
2. Equip businesses for growth. Strengthen SME capacity and foster the growth and capacity of a sustainable market for business development services (BDS) in Tanzania.
3. Access to finance for growth. Broaden access to finance for small and medium-sized enterprises (SMEs), specifically women and youth entrepreneurs and those working within agricultural value chains, to facilitate increased investment and growth.

Anticipated Tasks

The Expert Volunteer will complete the following tasks:

Prior to departure:

1. After receiving confirmation to work with ENGINE, the volunteer will coordinate closely with the IESC office in Tanzania, review available secondary information and identify any country or institution-specific information needed to tailor the materials to the local context.
2. Develop effective workshop materials and finalize details of the assignment. The volunteer is encouraged to incorporate case studies and practical examples in the materials.

Upon arrival in Tanzania:

1. Attend an orientation meeting with ENGINE Program staff in Dar es Salaam .
2. Gather insights on the financial needs of youth in Tanzania through conducting discussions with youth organizations/groups in the country.
3. Meet with financial institutions to review their current youth lending policies and procedures, loan products and application forms if available. Volunteer to spend 2 - 3 days working with the selected relevant staff to develop a youth product tailored for each financial institution.
4. Analyze the developed product, develop recommendations on changes to policies and procedures and present findings to the FI’s senior leadership.
5. Conduct a one-day workshop on youth lending fundamentals for the selected bank staff. The volunteer should plan to cover the following topics:

• Overview of the youth sector in Tanzania

• Analyzing youth activities
• Fundamentals of youth lending
• Youth loan structuring
• Lending process and procedures
• Substitute collateral
• Youth group-based loans
• Youth loan monitoring and collection
• Challenges/risks of youth lending
• Ways to assess and mitigate the risks/ risk management
• Alternative approaches for meeting know your client (KYC) process and other institutional requirements to access financial services.
• Youth Lending opportunities in Tanzania

1. Provide recommendations to the ENGINE program staff on potential follow-up assignment with the hosts.
2. Write a final report summarizing observations and recommendations, as well as follow-up plans. The final report is discussed in the section on deliverables below.
3. Attend a debriefing session with ENGINE COP and host organization staff members to provide feedback and discuss the recommended future to follow up on volunteer recommendations and capture impact.

Deliverables

The Expert Volunteer will submit the following deliverables:

i) To be submitted prior to delivering the workshop:

1. Training materials that include practical examples, case studies and group exercises.

ii) To be submitted after concluding the workshop:

1. Final Report: Volunteer must submit a Final Report and tools to the ENGINE Program, which is to include the following sections:

1. A summary of tasks and observations from FIs visits
2. A list of 5-7 specific and actionable recommendations for the host organization(s). These recommendations will be reviewed during the debriefing session with ENGINE staff at the end of the assignment and the volunteer may revise them in their Final Report.
3. A section listing the assignment objectives above and how they were met or why they were not met.

Additionally, the Expert Volunteer will provide exit debriefings to the ENGINE staff.

Volunteer Qualifications

• At least 15 years of professional banking experience;
• University level of education in banking, finance, accounting, economics or related field;
• Extensive knowledge of product development, sound MSMEs lending knowledge and loan structuring particularly for banking products and services;
• Excellent interpersonal, communication and training skills, including training in group settings;
• Ability to address issues, challenges, questions and concerns in a professional, respectful, logical and timely manner;
• Flexibility and adaptability to cross-cultural environments;
• Good writing and computer skills ;
• Experience working in developing countries is preferred.