Call for EOI: Credit scoring of smallholder farmer in Lac Duong district - CAFÉ-REDD Project

CALL FOR EXPRESSION OF INTEREST (EOI)

CREDIT SCORING OF SMALLHOLDER FARMER IN LAC DUONG DISTRICT

– CAFÉ-REDD PROJECT

BACKGROUND

About SNV Netherlands Development Organization

SNV is an international not-for-profit development organisation, working in more than 25 countries in Africa, Asia, and Latin America. SNV is a mission-driven global development partner, rooted in the contexts and societies where we work. And that mission is to strengthen capacities and catalyse partnerships that transform the agri-food, energy, and water systems to enable sustainable and more equitable lives for all. Our global team of advisors use their specialist expertise to facilitate sustainable change in the livelihoods of millions of people living in poverty.

About Café-REDD+

SNV has obtained funding from the International Climate Initiative (IKI) for a project entitled ‘Coffee Agroforestry and Forest Enhancement for REDD+ in Lam Dong’ (CAFÉ-REDD), from 2018-2024. The project aims to establish and develop a public-private-producer partnership (4P) for forest landscape conservation and restoration in one of Lam Dong’s most important forested landscapes - the Lang Biang Biosphere Reserve comprised of Bi Doup Nui Ba National Park and surrounding agricultural land in Lac Duong District.

Activities of the project include; i) strengthening public sector capacity for climate smart/sustainable land use planning and collaborative management of forests with communities, ii) working with coffee-buying companies to improve monitoring and traceability systems to prevent deforestation in supply chains; and iii) investing in (mainly ethnic minority) smallholder farmers to promote climate smart, sustainable coffee production techniques leading to improved coffee quality and prices, whilst also promoting landscape restoration through mixed agroforestry systems and alternative livelihoods.

Since its inception in 2018, the project has supported over 3,355 farmers in the district through the provision of more than half of million coffee and tree seedlings, training of the farmers in better practices, formation of farmer groups, and building connections between these farmers and coffee companies in inclusive value chain models. These activities allow farmers to rejuvenate coffee farms and introduce multi-purpose tree species (macadamia and persimmon) and improve the quality of their coffee and their marketing power. This results in diversifying their incomes an creating economic and climatic resilience.

Longer term sustainability and upscaling of the project’s activities is threatened by farmers’ lack of capital and/or access to credit to invest in seedlings and improved production methods. In 2021 the project commissioned a study into the risks and opportunities associated with improving financial access for farmers. This study found that there is a large ‘market failure’ in the provision of finance in Lac Duong and similar rural populations nationwide, with a large unmet demand for credit products by several groups of stakeholders, especially base-of pyramid customers, poorer farmers and smaller or newer enterprises. However, many of the solutions, including access to finance through farmer groups, were already being put in place by the Café-REDD+ project.

About the partner banks

Building on the recommendations of this report, in 2023 the project began strategically coordinating with banks that are operating in the district and who are motivated to grow the lending that they can offer to groups such as those that have been the beneficiaries from Café-REDD+. In March 2023 the project team held consultations with Agribank (Lac Duong branch), VSPB (Lac Duong branch) and Lien Viet Post Bank (Lam Dong branch) to discuss potential collaboration modalities.

It was agreed with both Agribank and LVPB to sign MOUs for further collaboration. Both banks are interested to work with SNV to lend through the many farmer groups we have established. In LVPB’s case, to expand the lending model they have developed with Him Lam Maca to the macadamia farmer groups that the project has established, and Agribank’s case, to work with farmer groups in communes of the district where their footprint is smallest, such as Dung K’no commune. SNV discussed several activities that we could support the banks with, and they were both interested in support to engage with and on-board these farmers.

OBJECTIVES

Café-REDD is looking for consultants to support our partner banks to ‘on-board’ new clients at scale, cost effectively. This will be done by conducting Know Your Customer (KYC)/’credit scoring’ checks on farmers that the project has worked with on behalf of the banks. The project requires the qualified consultants to oversee and lead this process by developing the credit scoring questionnaire, method, and process in cooperation with the partner banks; developing tools or survey software to collect the data; training and testing the collection process with local staff who will act as enumerators; and cleaning, processing, and analysing data for the partner banks.

The projects target is to credit score 375 farmers, and we hope that at least 25% will take up financial products with out partner banks, although this is not a requirement on the selected consultants. While we fully acknowledge that decisions to demand or supply finance are beyond the control of the selected consultants and of SNV, we plan to organise the scoring among target groups that we believe are most suitable, and the selected consultants will work with SNV and the partner banks to utilise existing data sets in order to pre-select the farmers and groups to credit score in order to maximise the chances of success.

TASKS

The expected tasks to meet this objective are as follows:

1.    Development of KYC / “credit scoring” mechanism appropriate for the requirements of Agribank and LVPB, the products which they intend to deploy, and for the target market (i.e., farmers who have worked with SNV and are organised in farmer groups). This task should be conducted in close collaboration with the banks so that the farmer data generated through this exercise is directly relevant to and consistent with their KYC systems and procedures.

2.    Creation of farmer questionnaire based on this KYC / credit scoring mechanism that includes all required data and variables. This will be developed in collaboration with the banks, but may include:

• Personal Information such as household size, farm size, crops grown, land title.
• Income, expenses, and cash flow.
• Financial needs and existing debt.

3.    Formatting the questionnaire into a media that is agreed as appropriate for the enumerators and banks partners, possibly including Kobo Toolbox, for example.[1]

4.    Review existing data sources[2] in collaboration with project partners to pre-select farmers and agree the sample of farmers to be surveyed.

5.    Oversee data collection of 375 farmers (to be managed by local SNV staff, and not included in the budget for this assignment) through training of on-field enumerators for data collection activities, data testing, monitoring, and calibration of questionnaire, assessing the data’s consistency and dependability.

6.    Clean the data.

7.    Provide raw data and KYC decisions to project partners.

8.    Write a short final project report reviewing the process and a summary report of the data analytics.

The work specified above is expected to be completed within 3 months, by October 2023

For more details on the Expression of Interest process, submission requirements, and evaluation details, please see corresponding sections below:

Selection Process

SNV will review all Expressions of Interest received in accordance with the guidelines and criteria in this solicitation. SNV reserves the right to exclude any EOIs that do not meet the guidelines. Please note that SNV is unable to provide detailed feedback to those EOIs that are not selected.

Step 1: SNV will shortlist selected EOIs, and unsuccessful respondents will be notified. Successful applicants will be contacted by SNV.

Step 2: SNV will release Requests for Proposals (RFPs) for the specific activities and contract with the selected organizations/ consultants.

Protection of Information

We request that Expressions of Interest responses be free of any intellectual property that the applicant wishes to protect. Should offerors wish to include proprietary intellectual property that they believe would be helpful for SNV, please note the proprietary nature of such information. Costing information will be kept confidential and will not be shared beyond SNV.

Issuance of this EOI does not constitute a commitment, award, or engagement on the part of SNV nor does it commit SNV to any future commitment or engagement.

Note: SNV reserves the right to change or cancel this requirement in the EOI/or solicitation process at any time.

[1] The Café-REDD+ project has also developed a traceability system and databased being used by many companies in the region which already includes a software app and farmer database for >2000 farmers. Each of the farmers to be credit scored by this activity would already have a profile on this database, and the selected individual/organisation would be able to access this data and make use of the software also if desired for conducting the survey.

[2] See above.