Evaluation of LWR’s Tripartite Rural Financing Model: PART I, DESK REVIEW

TERMS OF REFERENCE

Evaluation of LWR’s Tripartite Rural Financing Model: PART I, DESK REVIEW

I. Summary:

This document summarizes the tasks to be performed under a consultancy to conduct the first of two parts of an evaluation of LWR’s Tripartite Rural Financing Model, an approach which has been incorporated within numerous LWR projects in West and East Africa, since 2002. The purpose of this consultancy is to conduct a desk review of the results and lessons learned from both past and present LWR projects in Mali, Niger and Kenya employing this approach. Furthermore, a comprehensive literature review will be conducted on other similar approaches to rural financing which can situate and compare LWR’s approach to that of other organizations. Specifically, LWR intends to analyze this model in order to extract lessons from implementation and corresponding results, to both verify the success of the approach and to determine success factors necessary for replication and scale-up of the model in other projects, countries, and regions in which LWR works. This desk review will provide foundational background information which will feed into Part II; a larger, multi-country impact evaluation study.

The assessment team will consist of one Principle Investigator (external consultant), who will be responsible for the entire review and producing the final deliverable. S/he will conduct this as a desk review from either our HQ in Baltimore or offsite, with at least one in-person consultation at LWR’s offices in Baltimore, MD.

Consultant: Principle Investigator; responsible for all deliverables

Duration of Consultancy: Up to 30 working days

Start/End Dates: Anticipated start date: early August – September 30,2012

Final Report submitted by: September 30, 2012

Reports to: Christie Getman, LWR Director for Monitoring and Evaluation

II. Background:

Lutheran World Relief (LWR) is a non-governmental organization founded in 1945 to respond to the needs of communities devastated by World War II. Today LWR works with local implementing partners worldwide to respond to emergencies, seek lasting solutions to rural poverty, and work for peace and justice for all. LWR seeks to empower communities through a philosophy and framework called accompaniment, which emphasizes shared values and jointly-developed objectives to achieve sustainable results. In Africa in 2011, LWR managed a total of 38 projects in 6 countries, with 43 local partners and a total program value of over $16 million, which is about 40% of all of LWR’s work worldwide. In West Africa specifically, LWR focuses its work in Mali, Niger and Burkina Faso, while in East Africa, LWR is working primarily in Kenya, Tanzania and Uganda. The Terms of Reference for this

Desk Review will only include work done in Mali, Niger and Kenya.

Summary of the Tripartite Approach

Farmers in Africa, like farmers around the world, need access to seeds, tools, fertilizers and pest control for optimal production, but they lack working capital to purchase these key production inputs. Lacking collateral, living in remote and often marginalized areas, and having distinct credit needs, African farmers face severe barriers to formal financial services. Formal credit opportunities are rare in rural areas as most banks and microfinance institutions (MFIs) are located in larger towns, and many farmers do not qualify for loans due to collateral requirements or rigid lending program guidelines, forcing them to turn to informal local lenders who charge usurious rates.

With its Tripartite Rural Financing Model, LWR bridges the gap between financial institutions and community agricultural initiatives that are currently denied the financing critical to success. LWR’s model creates a three-way partnership among LWR, local farmers’ organizations and the financial institutions that were previously beyond their reach. LWR provides the ?missing link? to connect these smallholder farmers with lenders by providing an initial, partial loan guarantee to the financial institution as incentive to lend to the farmer. This allows the financial institution to have more adequate and stable funds to make larger, longer-term loans, and connect with clients that were previously excluded. At the same time, LWR strengthens the capacities of local farmers’ organizations to ensure successful harvest and sale of production surpluses, through technical skills building, market analysis and negotiation, feasibility studies, post-harvest storage improvements and production innovations. Farmers’ organizations develop a relationship with a lending institution while also increasing their capacity to manage and successfully repay loans, allowing farmers and their organizations to build a credit history to help ensure long-term access to credit.

LWR’s Tripartite Model is flexible and has taken a variety of forms based on farmers’ identified needs. This has ranged from individual loans for small irrigation equipment, to in-kind lending for collective procurement of seeds or fertilizers, to cooperatively-managed cash loans for rented farm implements. Farmers have also accessed credit to purchase equipment and services to increase their members’ participation in the agricultural value chain, such as harvesting machines, seed processing equipment, oil presses, and transportation to new markets. In some cases, the model supports cooperative-based warehouse financing, purchasing and storing farmers’ crops at harvest to re-sell later when the prices are higher. These interventions — all made possible by the new relationship with their financial institution — have helped improve farmers’ terms of trade, and ultimately their income and wellbeing.

LWR now seeks to not only provide evidence-based verification of this impact, but also to reflect on the contributions the model can possibly make to future projects.

The portfolios in Mali, Niger and Kenya have been chosen for this study due to the similarity of the Tripartite financial partners in these countries—all private-sector development banks. The specific financial mechanisms in place have included a loan fund to the financial institution for onward lending and/or partial loan guarantees with the same institution.

III. Purpose of Review & Components:

Review Purpose: The purpose of this review is to collectively examine all the agricultural projects in Mali, Niger and Kenya, which employ or have employed the Tripartite approach, including the compilation of existing monitoring and evaluation data which describes the outcomes of this approach on our beneficiary population, as well as a review of the financial performance of the model. Part I of this full evaluation, which is the subject of this Terms of Reference, consists of the project desk review and external literature review.

LWR’s principal objectives of this study are to answer the following two key research questions:

A) Based on existing data and report information, what are the strengths, weaknesses, successes, and areas of improvement needed for the Tripartite model, relative to financing for rural farmers, farming cooperatives, and financing institutions?

The desk review should use the following questions as a guide to examine the current project documentation. The list of questions is not necessarily all inclusive and it is expected that some of these questions cannot be fully answered through this Part I study. The unanswered questions will be more fully explored via Part II. Nonetheless, it is expected that the consultant consider these themes were possible. Likewise, the consultant is encouraged to include additional key themes or outcomes which become evident throughout the course of the review, but which may not be included below.

1) What are the documented achievements related to the use of credit by the implementing partners/CBOs through the Tripartite Model? What is the resulting change in incomes, collective and/or individual savings, value addition for farmers’ products and sustainable access to credit (that is, access to credit for the CBOs when the Tripartite Model relationship ends)?

2) To what degree is the success of LWR’s agriculture program model in Africa, in supporting rural farmers and CBO implementing partners, dependent on the Tripartite rural financing component?

3) What is the value for financial partners under the Tripartite Model? Are there benefits or costs of using this model from an institutional, financial, strategic and procedural perspective? What, if any, has been the effect of using this model on the financial institutions’ conventional lending procedures?

4) What are the recommendations to improve and strengthen the achievements of this model and make up for any shortcomings in its implementation?

5) What conditions are necessary for success? Should the Tripartite model be replicated and/or scaled up within the same country, other countries, or regions, or in different contexts?

B) What does the literature regarding rural financing models in international development in Africa say about other approaches, both the models and their results, and how does LWR’s Tripartite model compare across the spectrum of approaches?

1) Landscape Analysis. What models for rural financing currently exist in Africa or other regions, which are similar to Tripartite? In what contexts and with which other agencies are they being implemented? What evidence is provided by these agencies to prove the efficacy and sustainability of these models?

2) In what contexts are donors including support for rural financing in project that they fund, especially linked to agriculture?

3) What does the more academically-oriented discourse, including research, about rural financing say about successful and less successful rural financing models? What are factors for success are mentioned?

4) How does LWR’s approach under the Tripartite model fit with other models for rural financing, and based on external literature, what analysis can be made about our approach vs. other approaches, based on desk review information from LWR?

5) In order for LWR to provide a more compelling case of evidence for the success of its model, compared with other rural financing models, what key research and/or evaluation questions and methods would be needed to drive future primary data collection work?

Results of this study will be used to assess and inform future impact-oriented evaluations of LWR’s model of rural financing. The recommendations will, in turn, guide decision-making about additional future programming both of this size, and programming on a larger scale. It may also be used to inform learning papers and public communications materials targeted towards US Lutherans. The final report should include major findings, key lessons, and recommendations to inform decision-making pertinent to ongoing and future implementation of LWR’s agricultural programming.

LWR is committed to a rigorous assessment of these programs that is both independent and open-minded.

Components of the Assessment: The evaluation components below are meant to provide a framework to assist the consultants to organize information in a manner consistent with LWR’s goals for this study. Each component is described and (for some components) specific questions generated.

1) Detailed analysis and summary of LWR’s work with the Tripartite Rural Financing model in 3 African countries: Mali, Niger and Kenya. Through a desk review of projects which have been implemented over the last 5 years, provide a description of the work completed based on project proposals, documented reports from the farmer associations and the financial institutions, and external project evaluations. LWR HQ and field staff will also be available for interviews as needed. Review should include both the model and implementation of the model, as well as a review of all monitoring and evaluation data available. The analysis conducted should follow Key Research Question A above, as well as its sub-questions 1-5.

2) Debrief and short summary from review of LWR’s work. Since this consultancy has two key research questions, LWR assumes both sections of the work will be included in one full report, divided into relevant sections. However, at the conclusion of this stage, LWR would like an informal debrief, preferably with a powerpoint presentation, on initial findings and reflections of Part A of the work. Should the consultant choose to do both Part A and Part B concurrently, then LWR would request a mid-point check-in debrief on both sections.

3) Detailed literature review and situation of LWR’s work with the sector of rural financing. Through a desk review of other similar agencies’ websites, reports, and where possible, informational interviews, the consultant should focus his/her attention on Key Research Question B above, and it’s sub-questions, in order to provide LWR with a sufficient literature review of other rural financing programs in the agriculture/international development and even disaster recovery sector. LWR’s intention is to have a better understanding where our approach to rural financing fits compared to other similar programs.

4) Review and provide recommendations for Part II of the evaluation: impact evaluation. LWR is cognizant that there is limited impact information included in its existing project reports, and that most of the available data output or outcome oriented monitoring data. Thus we intend to conduct additional primary research via a multi-country impact evaluation in the future that will enhance our evidence about the success of our approach. The consultant is requested to provide clear recommendations for which key questions and methods should be used to conduct the impact evaluation. A ToR for the evaluation will be available for the consultant to review and provide feedback and recommendations which will be included as part of the overall consultancy report.

5) Submission of draft report and feedback, to a final report. LWR’s intends to work closely with the consultant to ensure that his/her work conforms to this Terms of Reference while taking into account negotiations with the selected consultant surrounding the scope of the ToR. Mutual success is in everyone’s interest. Therefore we will outline a clear process for likely 2 rounds of feedback on the draft report, with the presentation of findings to be scheduled during the earlier part of this report feedback process.

6) Presentation of findings and facilitation of a discussion workshop. In order to ensure success LWR expects deliverables which are useful to us, owned by our team, and as a result significantly assist us in moving our agenda forward. Thus, a short time after submission of the first draft of the report, the consultant should plan to present a summary of the report and findings to a team in Baltimore, and facilitate a participatory discussion with the team around the key points. Any relevant feedback should be included in the draft revisions, and general notes and reflections from the discussion should be included by the consultant as an annex to the report.

IV. Evaluation Methodology:

This evaluation will include a desk review of documents, key program materials, and external resources, identification of themes, and analysis of the information. Specific methodological approaches for the desk review are to be proposed by the consultant when submitting a bid for the assignment, and will be reviewed at the start of the assignment, discussed jointly with the Evaluation Consultant, the LWR Director for Monitoring and Evaluation, and the LWR Africa team.

V. Deliverables:

Note: draft schedule is negotiable, thus below is illustrative, but at this point assumes an August 13th start date.

1)Oral debrief with powerpoint,in person,on Part A Due: Monday, August 27, 2012
2)First Draft Report Due: Friday September 14, 2012
3)Presentation and Discussion workshop: Wednesday, September 19,, 2012
4)Second Draft Report Due: Friday, September 21, 2012
5)Final Report Due: Friday, September 28, 2012

NOTE: Due to budget restrictions, ALL work under this Terms of Reference MUST be completed by September 30th, 2012.

Appendices

A. Position Description for Consultant

Principle Investigator: Finalizes and implements evaluation methodology; conducts full desk review, compilation and synthesis of data, analysis of information according to key question areas; development of recommendations; presentation of preliminary results and facilitation of workshop; writing and submission of draft and final report.

Requirements

• A minimum of five to seven years of experience in the international development sector, especially in
• evaluation of a range of interventions, including agriculture and rural finance
• Experience with research methods, in particular meta-evaluations
• Field experience, including a strong understanding of development program management, especially in Africa
• Ability to work independently and also with a diverse team
• Excellent written and oral English and French skills (many key project documents will be in French, some
• staff speak only French, and some correspondence may be need to be done in French)
• Post-graduate qualification in related social science field, such as agriculture or international development
• Ability to work in Baltimore, MD, though flexibility for remote work can be negotiated

NOTE: Due to budget restrictions, ALL work under this Terms of Reference MUST be completed by September 30th, 2012.

TO APPLY:

Consultants interested in applying should forward the following information to LWR’s Human Resource team at hr@lwr.org, no later than 9:00am (EST) on Friday, August 3rd , 2012.

1) CV

2) Proposed daily rate and availability, including primary home/work location

3) Information on the following key questions:

a. What is your experience and understanding of the role of rural financing in today’s agriculture
programs in Africa?
b. What methodologies are you proposing, to organize and analyze a large volume of documentation for a desk review like this?
c. What options might you suggest for presenting the synthesized information requested under this TOR (see the Components of the Assessment)?
d. What questions, if any, might you have for LWR about this potential assignment?