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The Government of Lao PDR received financing from the World Bank Group’s International Development Association (IDA) for a project to assist Micro, Small, and Medium Enterprises (MSMEs) and the Financial Sector, specifically Participating Financial Institutions (PFIs). The Project’s development objective is to provide long-term funding sources for banks to provide long-term credit to MSMEs to overcome the impact of the COVID 19 Pandemic. Negative impacts of the global COVID-19 pandemic have exacerbated Lao PDR’s weak fundamentals and lead to a deterioration in the macroeconomic situation, including the SME and Financial sectors. The project’s aims are to strengthen the capacity of financial institutions and MSMEs to sustain operations and recover from the COVID-19 emergency. The project is expected to support the recovery and growth of privately-owned MSMEs by increasing the supply of long-term finance provided by commercial banks and by strengthening the capability of Department of SME Promotion to formulate and implement public policies that promote access to finance for MSMEs and strengthen the banking sector to recover from the effects of the COVID 19 Pandemic.
The Project’s three components are: (i) Emergency and Recovery Line of Credit to MSMEs; (ii) Strengthening BOL Capacity to Supervise PCG Facility; and (iii) Technical Assistance and Project Management. This project is being implemented and managed by the Department of SME Promotion (DOSMEP).
Functions of the LAO CGF: The Lao CGF will offer guarantees to banks for long term MSME financing. The CGF will draw on the World Bank’s “Principles for Public Credit Guarantee Schemes for MSMEs”, tailored to the Lao context. The BOL established a decision on the establishment of Credit Guarantee Companies on December 21st, 2020, which specifies principles, regulations, and measures for business establishment application and activities of credit guarantee companies and based upon the Feasibility Study for the Establishment of a CGF, which was completed on December 26, 2020.
Objectives:
The Objective of a Lao Credit Guarantee Facility (CGF) is to support credit worthy loan constrained MSMEs, in the targeted sectors, by providing credit guarantees to those that lack sufficient collateral and supports these MSMEs under the Project to develop their financial skills through the provision of technical assistance. Proposed capital for the Lao CGF is for US $10 million, with the capital sought from the Government of Lao PDR. A possible funding source for Government of Lao PDR could be through the World Bank supported current MSME A2F-ESR Project via the DOSMEP.
- At least 10 years’ experience in environmental & social due diligence in the financial sector, having worked in this field in developing countries.
- Relevant experience in Southeast Asia, specifically in Laos.
- Experience with World Bank or other development institutions.
- Proficient in English; knowledge of Lao is an advantage.
Tasks:
The consultant will work closely with DOSMEP to ensure the CGF and the PFIs are aware of and follow appropriate procedures defined in the Environmental and Social Management Framework (ESMF).
The World Bank support for this Project requires that the Participating Financial Institutions integrate into their lending operations (guaranteed under the Project) the requirements of environmentally and socially sound and sustainable development as identified in laws and regulations of Lao and the applicable World Bank Operational Policies. Accordingly, DOSMEP prepared, and the World Bank approved an Environmental and Social Management Framework (ESMF) to ensure that environmental and social risks are screened, identified, and managed by the PFIs and SME.
30 months
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