Credit Risk Management and Problem Loan Training – Volunteer Expert, Egypt 110 views0 applications

The Farmer-to-Farmer (F2F) Program is designed to enhance agricultural competitiveness in the MENA region in order to ensure reliable and consistent national food supplies; offset imports; improve rural and urban food security and employment opportunities for the rural poor, especially women and youth; and improve on-farm natural resource management practices.

The Middle East and North Africa (MENA) economies depend heavily on agricultural production, processing, and associated industries. Although many of the countries in the region have optimal growing conditions, the region as a whole imports most of its food. With a strategic focus and the right technical assistance, MENA farmers can leverage favorable agro-climatic conditions, physical proximity to key markets, and counter-seasonal production potential to reach higher value export markets, increase domestic market share, and boost their profits.

DETAILED RESPONSIBILITIES: Egypt F2F is currently fielding a credit risk management and problem loan training volunteer expert to train MFI loan officers on making credit based decisions, credit risk, and how to resolve problem loans.

Anticipated outcome:

• Utilize credit analysis to make smarter decisions for larger/more complex loans.
• Develop strategies to obtain repayment on current delinquent/nonpaying loans.

Background: Analysis of the demand for and production of Micro and Small Enterprise (MSE) loans indicates that in Egypt, it is strong. Further examination concluded that MSE access to finance can be boosted by strengthening existing microfinance institutions (MFIs).

In particular, capacity building is needed to understand and build in proper controls and processes so that MFIs could maintain and expand their loan portfolios sustainably.

The host organization (HO) has increased the size for loans that its MFI Loan Officers can make. In addition, the Small Enterprise Loan Officers were promoted from within the HO’s MFI and are now required to make more ‘credit based decisions’. Micro finance loans are often decided by ‘character’ and less by ‘credit’. The skills necessary to make these larger and more complex loans which are correctly designed and repaid require additional training.

In addition, the HO is concerned about the level of arrears, delinquencies and defaults in both the MFI and SME Loan Portfolios. Training should be in early identification and work out/work through strategies for both individual loans and the loan portfolios.

The HO is requesting a volunteer expert to assist with credit risk management and problem loan resolution.

Scope: The Egypt F2F Program is fielding volunteer Expert to provide expertise/training on credit risk management and problem loans. The objective of the 15 days Egypt based assignment is to build the capacity of the loan officers to manage credit risks and handle the loan problem.

During this assignment the volunteer expert is expected to conduct two workshops each 4 days in length; one in Cairo and one in Aswan to help address identified gaps at HO credit granting process, introduce strategies for problem loan resolution (both individual and portfolio) and present international best practices for identifying, measuring, controlling and monitoring credit risk. The volunteer expert will also address internal controls and operations related to credit, market and operational risk, and how to coordinate credit risk management practices between central management and field/branch staff. The workshop will include group exercises to apply concepts learned. The primary audience will be loan officers responsible for lending to micro and small enterprises. The workshop may also include risk officers and others who are responsible for managing risk management of individual loans and the loan portfolios of loan at HO; and other field staff responsible for administering loans and working directly with MSE clients.

The volunteer is also expected to recommend follow-up trainings if needed.

Objectives of the Assignment

• Instruct the FMF-E loan officers in the necessary analytical skills to evaluate larger and more complex credit requests.
• Provide a practical analysis format for these loans to minimize credit risk and maximize the potential for repayment.
• Improve on the collection skills of FMF-E loan officers in ‘problem’ loans: slow repayment; delinquencies; defaults

Host Profile: ‘The First Micro Finance Foundation Egypt (FMF-E) was established in 2005 by the Aga Khan Agency for Microfinance. From its inception in the historic district of Darb Al-Ahmar in Cairo, FMF-E has expanded to serve rural populations across Upper Egypt.

FMF-E is committed to alleviating poverty by supporting individuals in becoming self-reliant and in improving their quality of life.

FMF-E currently operates six branches across Cairo, Aswan and Qena Governorates. Majority of the clients reside in rural areas and a large proportion of all clients are female. While the Cairo branches’ disbursed most of its loans for trading and commerce purposes, Upper Egypt branches’ focus on livestock and fishing loans that constitute almost 50% of FMF-E’s total loan portfolio.

Majority of FMF-E loans are targeted towards micro-enterprises with approximately 40% micro loan clients in 2016 earning less than 2.5$/day. Access to credit is critical for microenterprise growth. However, as micro-enterprises expand they confront numerous barriers to obtaining loans which are large enough to meet their investment and expansion needs. Microenterprises may need credit beyond a micro-loan but lack the collateral required to receive a loan from a commercial bank. FMF-E’s new strategy aims to address this ‘missing middle’ by providing SME loans and helping these enterprises grow and eventually enter the commercial banking system. FMF-E’s SME portfolio has been growing steadily and is now approximately a quarter of its outstanding portfolio. As a part of its new strategy, FMF-E also plans to leverage technology and various digital channels to increase its outreach while offering loans at greater conveniences and lower costs across its network.’

http://www.akdn.org/where-we-work/middle-east/egypt/microfinance

Specific tasks

U.S.-based:

• The volunteer is encouraged to bring any media or training materials such as manuals, journals, literature, DVD/video that will serve as good resource materials for training and for the library of the host organizations and Land O’Lakes office in Egypt.
• Review previous reports from volunteer experts and IESC staff regarding access to finance F2F programming and information on the microfinance industry in general and in Egypt.

In-country:

• Attend orientation meeting with Egypt F2F staff at Land O’Lakes’ 6th October Office.
• Meet with the representatives of the host organization for an overview of the specific assignment objectives.
• Develop training materials including PowerPoint Presentation and handouts for the in coordination with the host.
• Provide two training rounds for two groups of trainees. During the training, the volunteer expert is expected but not limited to cover the following:
  • Credit Risk Training Topics
    • Credit guidelines and analytical techniques
    • Financial Statement Analysis
    • Asset Conversion Cycle – Working and Investment
    • Borrowing needs – financing gap; fixed asset; permanent growth
    • Risk based pricing
    • Loan Structuring – interest rate, collateral, guarantees
  • Problem Loan Training Topics:
    • Identify early warning signs of potential problem loans
    • Distinguish between causes and symptoms of problem loans
    • Analyze the problem loan
    • Identify and evaluate available options
    • Develop an action plan
• Provide recommendations to the F2F Program staff on potential follow-up assignment with the hosts;
• 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.
• Attend a debriefing session with F2F Egypt Country Director and host organization staff members to provide feedback and discuss the recommended future plans to follow up on volunteer recommendations and capture impact.

Deliverables:

• Final report, submitted to the F2F Program and host organization containing detailed recommendations on the assignment. This final report should include:
  • Training materials
  • A summary of tasks and observations from site visits
  • A list of 5-7 specific and actionable recommendations for the host organization(s). The recommendations are very important to the program as we use them to track host adoption of recommendations and the impact on hosts’ farms and businesses. These recommendations will be reviewed during the debriefing session with country staff at the end of the assignment and the volunteer may make revisions to them in their Final Report.
  • A section listing the assignment objectives above and how they were met or why they were not met.
• Outreach: Upon return to the United States, the volunteer is requested to communicate his or her F2F experience. Outlets to share the volunteer experience include home groups (e.g., civic and religious groups, professional associations, etc.), workplace presentations, local newspapers, community or workplace newsletters, personal blogs and social media sites. It is important to give recognition to USAID for funding F2F. At least two outreach events are requested and should be communicated to Carybeth Reddy at [email protected].

QUALIFICATIONS:

• U.S. Citizen or U.S. permanent resident (as required by the Farmer to Farmer Program).
• At least 10 years’ professional experience in financial/accounting management.
• University degree in finance/accounting management.
• Previous experience with group training. Familiar with conducting trainings through translators/interpreters.
• Very good communication, presentation, and analytical skills.
• Sufficiently physically fit, with appropriate medical clearance.
• Physical fitness (sufficiently physically fit to be able to endure multiple visits to a variety of producers, while providing technical assistance).
• Regional experience in MENA highly desired.
• Writing Skills: Reporting requires good computer skills including, but not limited to, working and generating reports with MS Word. Experience with PowerPoint presentations is desirable.
• This is a United States government funded program. Therefore, for the purpose of achieving desired results in accordance with the work plan and submitting requisite reports, written and spoken fluency in English is required. Ability to work through translators in the field, however, is essential. This requires deliberation and sensitivity to cultural issues in communication.
• Arabic and/or French language skills a plus, but not required.

VOLUNTEER EXPERT SUPPORT: IESC provides comprehensive support to pro bono experts before, during, and after the anticipated assignment. Support to include:

• All travel and logistics arrangements and costs to be provided by IESC including airfare, visas, medical examination, medevac and emergency travel insurance, and transit expenses;
• Project management and oversight from the country office and the home office in Washington, DC;
• All accommodation, transport, meals, and incidental expenses throughout the duration of the assignment in country;
• Follow up and administrative support for the production and dissemination of the final report and deliverables for the project.