Call for Consultancy to Conduct a Comprehensive Assessment of Financial Inclusion Barriers Hindering Access to Loans from Microfinance Institutions (MFIs) and Banks – SUIDAC Project.

Terms of Reference (ToR) Consultant.

Subject: Call for Consultancy to Conduct a Comprehensive Assessment of Financial Inclusion Barriers Hindering Access to Loans from Microfinance Institutions (MFIs) and Banks – SUIDAC Project.

Project Title: Sustainable Urban Infrastructure and Development Financial Inclusion Assessment
Client: SUIDAC PROJECT, Borama Local Government
Location: Borama City
Type of Assignment: Short-term Consultancy

1. Background

Borama is one of Somaliland’s fastest-growing economic hubs, characterized by a vibrant SME sector, agricultural trade, and a growing youth population. However, sustainable urban development and economic resilience are often hampered by the limited access to formal credit and financial services.

Under the SUIDAC Project, Borama Municipality aims to foster an inclusive economic environment. Currently, many local entrepreneurs, particularly women, youth, and vulnerable groups, face significant hurdles in securing loans from Microfinance Institutions (MFIs) and commercial banks. To address these challenges, the municipality requires a detailed evidence-based assessment to identify the systemic, regulatory, and socio-economic barriers to financial inclusion.

2. Objectives of the Assignment

Overall Objective
To conduct a comprehensive assessment of the barriers preventing local businesses and individuals in Borama from accessing credit/loans and to provide actionable recommendations to improve financial inclusion.

Specific Objectives

• Identify the demand-side barriers (e.g., lack of collateral, high-interest rates/markup, lack of financial literacy).
• Identify the supply-side barriers (e.g., stringent bank requirements, lack of tailored products, risk perception).
• Assess the regulatory and legal framework governing local micro-credit and banking.
• Analyze the impact of Sharia-compliance requirements on loan accessibility.
• Map existing MFIs and Banks in Borama and evaluate their current lending portfolios to SMEs.
• Provide strategic recommendations for the SUIDAC project to facilitate better linkages between financial institutions and the community.

3. Scope of Work

The consultant shall undertake the following tasks:

Phase 1: Inception & Desk Review

• Review existing literature on financial inclusion in Somaliland.
• Analyze national and local policies related to banking and microfinance.
• Submit an inception report detailing the methodology and tools.

Phase 2: Data Collection & Field Assessment

• Supply Side: Conduct Key Informant Interviews (KIIs) with managers of banks and MFIs in Borama.
• Demand Side: Conduct Focus Group Discussions (FGDs) and surveys with small business owners, women traders, and youth entrepreneurs.
• Institutional: Assess the documentation and collateral requirements currently demanded by lenders.

Phase 3: Analysis of Barriers

• Evaluate the gap between the financial products offered and the needs of Borama’s economic actors.
• Analyze the role of "social collateral" and informal lending vs. formal systems.
• Identify gender-specific barriers to financial access.

Phase 4: Stakeholder Validation

• Organize a workshop with representatives from the Borama Municipality, financial institutions, and the business community to validate the findings.

Phase 5: Final Reporting

• Develop a final report including a "Financial Inclusion Roadmap" for Borama.

4. Key Deliverables

• Inception Report: Detailed methodology, sampling plan, and data collection tools.
• Draft Assessment Report: Comprehensive findings on financial barriers.
• Validation Workshop Report: Summary of stakeholder feedback.
• Final Comprehensive Assessment Report: Including a strategic action plan and recommendations for the SUIDAC project.
• Executive Summary: A brief for policymakers and municipal leadership.

5. Methodology

The consultant is expected to employ a mixed-methods approach:

• Quantitative (Surveys with SMEs and potential borrowers).
• Qualitative (KIIs with bank executives, FGDs with community groups).
• Comparative analysis of lending requirements.
• Stakeholder mapping.

6. Duration & Timeline

The assignment is expected to be completed within 30–45 working days from the signing of the contract.

contract.

7. Consultant Qualifications & Experience

• Education: Advanced degree in Finance, Banking, Economics, Business Administration, or a related field.
• Experience: Minimum 7 years of experience in the financial sector, microfinance, or economic development research.
• Technical Knowledge: Deep understanding of the Somaliland banking sector, Islamic Finance (Murabaha, etc.), and SME financing.
• Context: Proven experience working in Somaliland; familiarity with Borama’s socio-economic landscape is an advantage.
• Skills: Strong analytical, statistical, and report-writing skills in English (Somali language proficiency is essential for field data collection).

For Consulting Firm / Company

The consulting firm should have:

• Legal registration and demonstrated operational presence in relevant sectors.
• Valid tax exemption
• Proven track record in successfully delivering in delivering similar consultanty
• Demonstrated experience working in Somaliland or similar fragile and decentralized contexts.
• Availability of a multidisciplinary team with relevant expertise (e.g., public finance specialists, economists, governance experts, and capacity-building specialists).
• Strong organizational capacity in project management, stakeholder engagement, and high-quality report delivery.

Evidence of successfully completed similar assignments (with references and sample

8. Reporting & Coordination

The consultant will report directly to the SUIDAC Project Manager. Coordination will be maintained with the Borama Municipality Planning Department and SUIDAC implementation partners.

9. Payment System

• Inception Report: 20%
• Field Work & Data Collection completion: 30%
• Submission of Draft Report: 30%
• Approval of Final Report: 20%

10. Proposal Submission Requirements

Interested consultants/firms should submit:

• Technical Proposal:
• Understanding of the ToR.
• Proposed methodology and sampling techniques.
• Detailed work plan.
• CVs of the lead consultant and team members.
• Financial Proposal:
• Itemized budget (Professional fees, data collection costs, logistics).

12. Submission of Proposal

Proposals should be submitted

 via email to: [email protected] or [email protected]. Hard copies can also be delivered to the Borama Municipality Office – Procurement Office.

Subject Line: Consultancy for Assessment of Financial Inclusion Barriers – SUIDAC Project.