(ToR) To Hire a Service Provider (SP) To Provide Technical Assistance (TA) to the Partner Microfinance Institution (MFI) in the Afar Region

Terms of Reference (ToR)

To Hire a Service Provider (SP) To Provide Technical Assistance (TA) to the Partner Microfinance Institution (MFI) in the Afar Region

Institution: FC Africa Development.

Project Title: Economic Recovery for Conflict-Affected Population (ER-CAP)

Project Implementation Location: Afar Region – Abala Woreda

About FC AFRICA DEVELOPMENT

FC Africa Development is an economic development organization dedicated to empowering vulnerable communities by designing and implementing sustainable projects across various sectors, including agriculture, manufacturing, and services. Our multidisciplinary teams leverage local expertise to drive enterprise growth, improve access to finance, and foster skill development. With a proven track record, we've successfully created jobs, generated wealth, and attracted investments, ultimately leading to the formation and growth of thriving businesses.

About the ER-CAP Program

The Economic Recovery for Conflict-Affected Population Project (ER-CAP) is a five-year project aiming to improve the economic adaptation, protection, and recovery of populations affected by conflict. The program, led by Mercy Corps in collaboration with the Danish Refugee Council (DRC) and FC Africa Development, uses an integrated conflict-sensitive, systems-strengthening, climate-smart, and inclusive approach to enhancing systems that support the economic recovery of communities in three regions: Afar (Abala), Tigray (Mekelle), and Amhara (Woldiya). The program aims to benefit 43,540 individuals, with a specific focus on Internally Displaced Persons (IDPs), host communities, and returnee women, youth, and other marginalized groups. The expected outcomes include resilient livelihoods, improved access to financial products and services, and enhanced capacity to mitigate protection risks through access to justice and psychosocial support.

As part of this consortium, FC Africa Development primarily focuses on facilitating tailored access to finance to support conflict-affected communities, such as internally displaced persons (IDPs), returnees, and host communities. To ensure effective implementation on the ground, it is crucial to establish and strengthen partnerships with key financial service providers including microfinance institutions (MFIs), savings and credit cooperatives (SACCOs), and banks across all intervention sites. Strengthening the institutional capacity of these financial institutions and providing tailored technical assistance is therefore essential to the program's access-to-finance objectives.

Background and Rationale

Under the ER-CAP program, FC Africa Development has established a strategic partnership with a Microfinance Institution (MFI) operating in Afar Region to expand access to finance for conflict-affected communities in Abala Woreda. Two years of conflict in Northern Ethiopia significantly disrupted the operations, systems, and institutional capacity of financial service providers operating in the region, including the partner MFI.

As ER-CAP moves further into its implementation phase, FC Africa Development, in consultation with the partner MFI, has identified three priority, mutually reinforcing interventions required to restore and strengthen the institutional capacity of the MFI: (i) revision and updating of the MFI's internal manuals and guidelines; (ii) technical support for the implementation of a Core Banking System (CBS); and (iii) loan portfolio management and resource mobilization training for key staff, management, and board members.

FC Africa Development seeks to engage a qualified service provider to deliver all three components in an integrated and coordinated manner. This approach is expected to ensure coherence across the interventions, reduce transaction, and enable the service provider to effectively sequence and implement the activities.

Objective of the Assignment

The overall objective of this assignment is to strengthen the institutional capacity of the partner MFI in Afar Region by updating its internal manuals and guidelines, supporting the effective implementation of its Core Banking System, and building the capacity of its key staff, management, and board members in loan portfolio management and resource mobilization, with an emphasis on Interest-Free Banking principles.

Assignment Duration

The overall assignment is expected to be completed within four (4) calendar months from the date of contract signing. A detailed, jointly agreed work plan and implementation schedule will be finalized during the inception phase, allowing for reasonable sequencing and, where feasible, parallel implementation of the three components.

Scope of Work

The service provider will be directly responsible for executing activities split across three highly interconnected components:

Components One: Revision and Updating of Internal Manuals and Guidelines

The partner MFI's existing operational manuals and guidelines including credit/financing policy, operations, and risk management manuals require review and updating to reflect current National Bank of Ethiopia (NBE) directives, post-conflict operational realities, and enhancing of Interest-Free Banking (IFB) product lines. FC Africa Development seeks a consultancy service with practical experience in microfinance policy and procedure development to review the MFI's existing manuals, identify regulatory and operational gaps, and revise/update the manuals, accordingly, including embedding IFB-compliant procedures and controls.

Objective

The objective of this component is to review and update the partner MFI's internal manuals and guidelines to ensure they are current, regulatory-compliant, operationally sound, and reflective of the institution's Interest-Free Banking product lines.

    Specific Objectives:

·         Conduct a comprehensive desk review of the MFI's existing internal manuals and guidelines (credit/financing policy manual, operations manual, risk management manual, and any existing IFB operational guidelines).

·         Identify regulatory, operational, and IFB-compliance gaps in the existing manuals against NBE directives, cooperative/microfinance proclamations, and relevant good international practice.

·         Revise and update the identified manuals, incorporating IFB-compliant procedures, internal controls, governance arrangements, and risk management practices.

·         Facilitate a validation workshop with the MFI's management and board to review, discuss, and endorse the revised manuals.

·         Incorporate feedback from the validation workshop and finalize the approved manuals and guidelines, submitted in both hard and soft copy.

     Deliverables:

·         Inception report outlining the methodology, detailed work plan, and data collection/review tools for this component.

·         Manuals gap assessment report summarizing findings from the desk review and stakeholder consultations.

·         Draft revised manuals and guidelines package, including tracked changes/comments where relevant.

·         Validation workshop report, including participant feedback and agreed revisions.

·         Final, approved manuals and guidelines package (hard and soft copy).

·         Support the MFI in organizing board meeting and approval process of the updated internal manuals.

 Timeframe

   Thirty (30) Calendar days. A detailed timeline will be developed during the inception phase.

Component Two: Core Banking System (CBS) Implementation Support

The partner MFI is implementing a Core Banking System (CBS) to modernize its operations and enhance service delivery to conflict-affected communities in Afar Region. FC Africa Development seeks a consultancy service with practical CBS implementation experience to support the MFI in configuring the system including for Interest-Free Banking product modules validating data migration and building staff capacity through on-site training at the MFI's operations in Semera and Abala Woreda.

Objective

The objective of this component is to provide hands-on technical assistance to the partner MFI for the effective implementation of its Core Banking System, ensuring the system is properly configured (including for IFB products), data is accurately migrated, and staff in Semera and Abala Woreda are competent to operate it.

   Specific Objectives

·         Assess the current status of CBS implementation at the MFI (data migration progress, and IT infrastructure readiness) and identify implementation gaps and risks.

·         Support the configuration/parameterization of CBS modules relevant to both conventional and Interest-Free Banking products.

·         Support data cleansing, migration validation, and reconciliation between legacy records and the new CBS.

·         Develop a CBS user manual/standard operating procedure (SOP) tailored to the MFI's staff and IFB product lines.

·         Conduct on-site, hands-on CBS training for relevant staff at the MFI's Semera location and its Abala Woreda branch.

·         Provide post-training, post-go-live troubleshooting and handholding support to consolidate staff competence and system stability.

 Deliverables:

·         Inception report and detailed work plan for the CBS implementation support assignment.

·         CBS implementation status and readiness assessment report.

·         CBS configuration and IFB-module support report.

·         CBS user manual/standard operating procedure (SOP).

·         On-site training reports for Semera and Abala Woreda, including attendance lists and participant feedback.

·         Final CBS implementation support report, including recommendations for post-go-live stabilization, and a live Core banking system.

Timeframe

Two Calander months inclusive of on-site training, mentoring and coaching days in Semera and Abala Woreda. A detailed timeline will be developed during the inception phase.

Component Three: Loan Portfolio Management and Resource Mobilization Training (Interest-Free Banking Focused)

The service provider will assess current portfolio management practices, develop a tailored training manual, and build the capacity of key staff, management, and board members to manage an expanding IFB financing portfolio soundly. It also evaluates existing resource mobilization methods and delivers specialized IFB-compliant training to help the MFI diversify its funding sources, sustain its growth, and effectively expand its outreach into conflict-affected communities.

Objective

Enhance the knowledge and practical skills of the partner MFI's key staff, management, and board members in effective loan/financing portfolio management, within an Interest-Free Banking framework. It also aims to strengthen their capacity to develop and implement resource mobilization strategies that are compliant with Interest-Free Banking principles.

    Specific Objectives

·         Assess the MFI's current loan/financing portfolio management practices, tools, and capacity gaps, including underwriting, appraisal, monitoring, and non-performing financing (NPF) management.

·         Assess the MFI's current resource mobilization practices, products, and challenges, including its existing deposit base and funding sources.

·      Develop a tailored, IFB-focused loan/financing portfolio management training manual and materials, covering credit risk fundamentals, sound underwriting and appraisal, monitoring and follow-up, and IFB-specific risk classification and provisioning practices.

·         Develop an IFB-compliant resource mobilization training manual and materials, covering deposit mobilization approaches and outreach/marketing strategies.

·         Develop a practical resource mobilization action plan/roadmap tailored to the MFI's operating context in Afar Region.

·         Deliver structured training to key staff, management, and board members of the MFI on loan portfolio management and resource mobilization.

·         Conduct pre- and post-training assessments to measure knowledge gained and inform follow-up support needs.

Deliverables:

·         Inception report outlining methodology, work plan, and training approach.

·         Portfolio management capacity gap assessment report.

·         Resource mobilization assessment report.

·         IFB-focused loan/financing portfolio management training manual and PowerPoint materials.

·         IFB-focused resource mobilization training manual and materials.

·         Resource mobilization action plan/roadmap for the MFI.

·         Training delivery report, including attendance, pre/post-assessment results, and participant feedback.

Timeframe

   Thirty (30) calendar days. A detailed timeline will be developed during the inception phase.

No

Deliverable

No of Working Days

1

Inception report

3

2

Portfolio management and resource mobilization capacity gap assessment

8

3

Develop IFB-focused training manuals and materials

12

4

Deliver training to staff, management, and board

4

5

Training report and recommendations

3

Total

30

Note: training-related costs (such as training hall, stationery, refreshment, lunch, transport, and DSA) will be covered by FC Africa.

Methodology

This assignment will employ a mixed-methods approach, combining desk-based reviews of documents with primary data collection, hands-on technical assistance, and structured training delivery. The service provider is expected to develop and agree a detailed work plan and methodology based on this ToR and discussions with FC Africa's ER-CAP Access to Finance team.

·         Desk review: review of the MFI's operational manuals, financing/credit policy, by-laws, board minutes, audit reports, CBS documentation, and relevant National Bank of Ethiopia (NBE) directives.

·         Key informant interviews: Key informant interviews with the MFI's board members (where appropriate), senior management, middle management, and branch staff in Semera and Abala Woreda.

·         Focus group discussions: Focus group discussions with relevant staff and, where appropriate, community members/clients to inform the resource mobilization and portfolio management components.

·         Technical assistance and training delivery: Hands-on technical assistance and coaching for manuals revision and CBS configuration, alongside structured, participatory training delivery for the capacity-building components.