English
FrançaisDespite recent advances in industrial development, equal economic opportunity in PNG proves elusive and access to finance for micro-entrepreneurs and small business remains constrained, particularly in the challenging rural and island geographies of this vast country.
The micro and small enterprise (MSE) market is served by banks, specialized microfinance providers, savings and loans societies and other community-based financial cooperatives. All providers report that high perceived portfolio credit risk poses a key constraint for broader and deeper access to MSE credit.
There is a distinct need for risk support instead of traditional on-balance sheet senior funding for MSE lending. Recent average annual default rates in the micro-segment of loans up to PGK 20,000 are estimated from five to eight per cent. This may appear manageable with pricing. There is concern, however, about the limited opportunities for effective portfolio diversification at MSE lenders.
MSE portfolios are vulnerable to stress losses in the event of natural disasters, adverse commodity price developments or a generalized macroeconomic downtrend. This is the market failure that the RSF will address: mitigating the risk of rare, unexpected stress losses by way of residual portfolio coverage that provides an alternative mechanism for effective portfolio diversification.
The RSF has been designed with the following objectives:
- Increase access to debt finance by MSEs
- Help mitigate and diversify default risk
- Encourage banks and FIs to grow their MSE loan portfolios
- Catalyse and leverage lending by banks to segments ‘perceived as risky’
- Help MSEs mobilise resources to grow their businesses
The RSF will share a portion of credit losses of PFIs on credit exposures to MSEs. The RSF is backed by a capitalized fund held in trust at BPNG and governed by an independent Board of Trustees.
The RSF will follow a portfolio guarantee approach and will cover MSE loans extended only for income and employment generating activities not exceeding PGK 50,000 per obligor. MSE borrowers will not be informed that their loan is under guarantee.
The Facility Manager shall:
Hold a university degree in law, business, finance, economics, accounting, or another relevant discipline or have acquired equivalent professional experience.
Have at least 10 years experience in microfinance, SME and rural credit, and/or development sector projects.
Must have a minimum of five years experience in managing and/or administering risk and/or guarantee funds.
Have experience working in the Pacific region, preferably in PNG.
Have a demonstrated capacity to negotiate and close complex contracts with retail financial institutions.
Demonstrate advanced analytical skills in compiling portfolio statistics, portfolio analysis and performing due diligence reviews of PFIS.
Be able to act as focal point within the contracted firm in order to pull together responses, actions and information from any supporting team members.
Be responsible for the RSF reporting to the Board of Trustees, PNG Dept. of Treasury the MEP Project Management Unit, and other relevant stakeholders.
The RSF expert team will be based in Port Moresby, Papua New Guinea. The Facility Manager and the Senior Relationship Manager will be required to commit a combined 75% of input (1.5 full-time equivalent) throughout the duration of the contract, the vast majority of this time to be spent in PNG.
Both key experts will be required to travel to other areas of the country, including rural ones, where PFIs operate. Back-office and other technical support can be provided from an off-site location if desired.
The services will be provided from the date of contracting (anticipated for Q1 2014) until Q1 2018.
If you are interested to cooperate with AFC in this tender, please send your most recent CV to
Barbara.Braun [at] afci.de
Thank you!