RFP_006_2026_Natl Firm to support financial institutions strengthening_FARM

Meeting ID: 820 8039 2148
Passcode: 505390

The selected firm will be responsible for the follwing traks.

Task 1: Financial sector diagnostic and assessment

• Conduct a desk review of key project documents, national policies and legislation on agriculture, chemicals management and finance sector regulation in Lao PDR, including underlying needs assessment instruments.
• Conduct stakeholder mapping and consultations with financial institutions (commercial banks, microfinance institutions (MFIs), Village Development Funds (VDFs), public banks including Rural Development Bank and Agriculture Promotion Bank), insurers, government institutions (DOA, the Department of Agricultural Extension and Cooperatives (DAEC), the Bank of the Lao PDR (BoL), the Ministry of Finance (MoF), MAE), private sector actors and farmer organizations.
• Conduct a financial literacy diagnostic in target provinces using the established instrument and protocol to ensure data comparability across all project sites.
• Identify market potential for green / sustainable finance in rural and agricultural sectors, including barriers and opportunities for mainstreaming new financial products.
• Produce an assessment report and consolidated dashboard covering all project target areas.

Task 2: Green finance product development and FI operational toolkit

• Develop innovative green finance products tailored to the capacity and systems of participating FIs that incentivize sustainable agricultural practices, including low-interest loans for farmers adopting Good Agricultural Practices (GAP)/Integrated Pest Management (IPM)/agroecological/organic practices; blended-finance models linking agricultural input supply with credit; and group-lending innovations adapted to crop cycles. Product scope may include loans, leases, and equity-participation instruments.
• Specify the eligible uses of loan proceeds that distinguish green agricultural loans from generic Agri-credit – for example: biopesticides, biocontrol agents and pheromone traps; mechanical or manual weeding equipment substituting for herbicides; cover-crop seed, mulch and compost infrastructure; transition-period bridge finance covering yield dips during conversion (typically two to three seasons); certification costs (GAP, organic), which are a major barrier for smallholders; storage facilities that help avoid forced post-harvest sales; and bulk procurement of safer alternatives at cooperative level. Where loan conditions (ticket size, tenor, risk profile) differ across these uses, the product design should specify a portfolio of use-case-specific products rather than a single one-size-fits-all green loan.
• Identify and assess the source(s) of concessional funding underpinning the low-interest loans and soft credit – for example the participating FI’s own balance sheet, the guarantee fund, a separate interest subsidy from the project or government, a refinancing facility from the Bank of the Lao PDR, or concessional funds from a development finance institution – and specify the proposed mechanism within the product design.
• Assess supply-side readiness for the inputs that green loans are intended to finance (biopesticides, IPM-compatible inputs, organic fertilizers) in the target provinces, and either (a) include a sub-component on financing alternative-input distributors – small and medium-sized enterprise (SME) credit, working capital for input cooperatives, and supplier-run demonstration plots – or (b) document the dependency of this consultancy on the parallel FARM activities responsible for strengthening that supply chain, so that demand-side finance does not outpace input supply.
• Develop a Monitoring, Reporting and Verification (MRV) protocol for green agricultural loans, including borrower-level baseline data collection; simple Application-record templates that farmers can complete (linked to the financial literacy curriculum); spot-check verification procedures; and an exit framework setting out how to manage situations where agreed agrochemical-reduction targets are not met.
• Draft a complete FI operational toolkit including: guidelines for Environmental and Social Risk Analysis (ESRA) integrated into the credit cycle (the ESRA shall be tiered, applying a full ESRA to loans above a defined size and a simplified checklist to smaller tickets, for which a full ESRA would be cost-prohibitive); model loan agreements and disclosure documents; underwriting and credit-scoring templates (including sex-disaggregated scoring); green portfolio reporting templates; grievance handling SOPs; crop-cycle-aligned repayment schedule templates; and group-guarantee model loan agreements.
• Negotiate at least three (3) signed memoranda of understanding (MOUs) or partnership agreements with FIs operationalizing the finance programme, covering all target provinces and including a mix of public banks, commercial banks, MFIs/deposit-taking microfinance institutions (DTMFIs) and VDFs/savings and credit unions (SCUs).
• Convene a Green Agricultural Finance Working Group with the Bank of the Lao PDR (at least four sessions) and draft at least one written prudential treatment guidance note for BoL consideration.

Task 3: De-risking and credit enhancement instruments

• Conduct a feasibility study and produce product specifications for a pilot crop insurance scheme covering target crops at pilot sites. The insurance shall be index-based (a parametric weather index or an area-yield index) to avoid the moral hazard associated with indemnity insurance. The specification shall cover insurable perils, sum insured, premium structure, distribution channel, claims procedure, and engagement with at least one Lao or regional insurer / reinsurer.
• Design a guarantee fund / first-loss / portfolio guarantee mechanism for participating FIs, including structure, capitalization sources, eligibility criteria, leverage ratio, claims and recovery procedure, and sustainability plan.
• Mobilize seed-capital commitments of at least USD 200,000 for the guarantee fund through engagement with project, government, donor and FI partners.

Task 4: Capacity building and financial literacy

• Conduct capacity needs assessment to understand the gaps of financial institutions, government counterparts, and farmer organizations in implementing the pilot.
• Strengthen capacities of at least twelve (12) financial entities (of which at least three formalize the partnership through a signed MOU under Task 2 above, while the remaining entities are reached through training and technical support without a formal MOU) through training of at least 250 FI staff (at least 90 women) on green finance principles, ESRA implementation, credit appraisal for sustainable agriculture loans, gender-responsive product design, and value-chain risk management. Certify at least fifteen (15) internal FI trainers to ensure post-contract continuity.
• Design and deliver a behavior-change-oriented financial literacy programme for at least 800 farm households (at least 200 female-led) across the target sites, covering: (i) understanding financial services; (ii) record-keeping and basic bookkeeping; (iii) developing bankable projects and loan applications; (iv) budgeting, savings and debt management; (v) due diligence, compliance and market linkages; and (vi) the economics of transition, including comparative crop budgets and cash-flow analysis, relative input and labor costs, yield risk during the transition period, identifying premium markets and buyer requirements, and certification economics.
• Develop a Farmer Guidebook for loan applications in three languages (Lao, English and one ethnic-minority language), user-friendly and visually illustrated, with at least 1,000 printed copies distributed.
• Strengthen at least twenty (20) agribusinesses / middlepersons (five per province) in business management, sustainable supply-chain management, and their role as credit intermediaries; facilitate tri-party offtake-backed credit arrangements between middlepersons, farmer groups and FIs. Value-chain finance with embedded sustainability standards shall be treated as a central strategy of the assignment – not a peripheral activity – as it may be the single most effective lever for sustained agrochemical reduction. The firm shall explicitly link these arrangements to candidate export-oriented value chains in Lao PDR (for example organic coffee, vegetables and herbs) where buyer requirements can anchor sustainability standards and price premiums.
• Design and implement a capacity strengthening programme for at least 1,000 wider stakeholders (500 women and 500 men) from DOA, DAEC, Provincial Agriculture and Extension Office (PAEO), District Agriculture and Extension Office (DAEO), commercial banks, agri-service providers (ASPs), civil society organizations and other key stakeholders on sustainable agricultural practices, IPM, agroecology, plastic management, and financial mechanisms developed by the project.

Task 5: Technical assistance, pilot testing and field coaching

• Provide technical support to FIs to pilot-test the newly developed green finance products at the project sites, offering feedback on loan applications, risk assessments, and approvals.
• Deliver hands-on financial literacy coaching to farmer groups in completing loan applications, assembling documentation, preparing simple business plans and cash-flow projections, and presenting proposals to FIs.
• Technically assist at least twenty (20) farmers (at least 10 women, 50% gender parity) in applying for and obtaining soft credit through the finance programme.
• Facilitate linkages between farmer organizations, recycling and agribusiness enterprises, local government authorities and potential investors.
• Document best practices, challenges and lessons learned throughout implementation; develop a pilot monitoring framework covering financial performance, environmental benefits, social impacts and financial literacy improvement.

Task 6: National replication, sustainability and knowledge sharing

• Contribute substantively to the national replication and scaling-up plan, including baseline scenario from pilot results, geographic identification of target farm households and crops nationally, implementation schedule, and performance indicators.
• Produce a stand-alone financing options analysis identifying funding pathways for scale-up beyond the project.
• Ensure that each principal output has a named institutional custodian and a written handover arrangement; sign at least five (5) custodianship/handover agreements before final acceptance.
• Organize at least two knowledge-sharing workshops: (i) one national-level multi-stakeholder workshop; and (ii) one field-level workshop at project sites for direct beneficiary feedback and learning exchange.

Cross-cutting requirement – Gender and Social Inclusion: