Development of an Agricultural Machinery Leasing Scheme

Objective of the Programme

The Land Investment For Transformation (LIFT) Programme is a 6.5 year long (to August 2020) DFID funded programme, that aims to improve the incomes of the rural poor and enhance economic growth, through three components: The development of second level land certification (SLLC); improved rural land administration; and the development of a land systems following a ‘making markets work for the poor’ (M4P) approach. The M4P component aims to implement a number of complementary interventions in three sectors: rural land rental; access to credit; and the environment and conservation in the agriculture market to ensure that the benefits of second level certification are maximised.

In late 2014, the M4P team undertook a market assessment in the Amhara and Oromia regions of Ethiopia to identify the main constraints affecting the poor in each of the three sectors and identified a number of interventions. Within access to credit, there are four interventions:

• Intervention 5 – Promote the development of new agricultural individual loan products linked to SLLC,


• Intervention 6 – Promote the development of new products in agricultural finance (credit related),


• Intervention 7 – Promote partnerships in finance to overcome risk and market limitations, and


• Intervention 8 – Improve knowledge and information on supply and demand of rural financial services.

This ToR support the implementation of Intervention 7 – Promote partnerships in finance to overcome risk and market limitations.

Background to the Assignment

Poor mechanisation limits farmers’ ability to step into modern agriculture. Since farmers are dependent on animal power, it takes a lengthier time for them to prepare their lands and that sometimes makes them sow their seed later than optimal. It is also physically challenging for the farmers to do tilling and threshing with their available animals. Some of the farmers do not have animals of their own and depend on more traditional practices such as using hoes or waiting to get oxen from other farmers. There are available solutions in the market with agro-machinery for different processes of agricultural cultivation and different companies are engaged in the business of importing and marketing those machines. However, their reach is very limited and they only see institutions as their potential target group.

This intervention aims to develop new and sustainable systems through which farmers can access agricultural machinery and help them improve their productivity.

Scope of Work

Dates: Phase 1:October 2015 – December 2015 Phase 2: January 2016 – December 2016

Number of Days:40 days for Phase 1 (see below) TBD for Phase 2

The activities for the first phase of this assignment will include:

Phase 1

· Assess the leasing market for agricultural machinery in Oromia and Amhara. This will include a review of existing leasing practices in Ethiopia, detailing the way they currently operate and the challenges faced, including their suitability for the needs of farmers.

· Assess the willingness and capacity of MFIs, banks and importers to start a new leasing scheme for machinery (in particular, agricultural machinery).

· Identify feasible options for developing new leasing systems, including identifying local financial institutions (MFIs, leasing companies) and agricultural machinery suppliers that would be interested in piloting such a scheme.

Phase 2

If it is feasible to develop a new leasing system for agricultural machinery, the second phase of the consultancy will include:

· Develop a detailed business plan for the implementation of the leasing system.

· Provide technical support to the selected partners to implement the business plan and set up the systems for leasing of agricultural machinery.

· Monitor the implementation of the pilot scheme and provide ad hoc support to ensure that the pilot is implemented effectively.

· Evaluate the feasibility of the pilot, including options for up scaling.

Milestones and Timeframe

The selected consultant(s)/consulting firm(s) will be expected to deliver the following outputs:

No.Outputs/deliverables Indicative due date 1. Detailed assessment of the agricultural leasing market and options for its development December 2015

If developing a leasing system is feasible, the second phase of the assignment will then require:

No.Outputs/deliverables Indicative due date 2. Business plans for the implementation of leasing scheme finalised; partners for pilots identified and committed. February 2016 3. Pilot interventions in leasing agricultural machineries started March 2016 4. Bi-monthly monitoring reports on the implementation of pilots Every 2 months 5. Evaluation of pilot interventions, including suggestions for scaling up December 2016

Qualifications:

The following are the required competencies and qualification of the consultants:

· At least 10 years’ experience on designing, managing and evaluation leasing systems, in particular agricultural leasing schemes.

· Good knowledge of the Ethiopian banking and MFI sectors, including on the institutional and regulatory environment, particularly with regards to SMEs financing.

· Working experience in Ethiopia and good knowledge of the Ethiopian agribusiness sector is an advantage.

· Strong ability in building capacity of national staff and board members of microfinance programs/MFIs as well as board members and staffs of cooperatives and unions through training, coaching and mentoring.

· Excellent skills in spoken and written English will be required.

Application Deadline:

15^th September 2015

Application Process:

All applicants are required to submit the following documentation:

• Cover letter expressing interest and stating previous relevant experience for this assignment.


• CV(s) of consultant(s) who will be undertaking the assignment.


• Please state ‘ToR 11’ in your email title when submitting the above documents

All required documentation must be submitted in electronic form to the LIFT M4P Coordinator – Christian Portal (cportal@htspe-team.com) and copied Max Schultz (mschulz@nathaninc.com) and Matt Woodhouse (matt_woodhouse@dai.com). Incomplete submissions will not be considered.

Selection criteria:

Applicants will be assessed against their capacity to carry out the assignment as described in the qualification section above.