Sponsoring Agency: UNCDF
Type of Fund: Grant
Deadline Available: Available
Deadline Date (mm/dd/yyyy): 05/11/2021
Size of the Fund: USD $50,000 to $500,000
UNCDF is accepting applications from Microfinance Institutions registered and operating in Sierra Leone that are involved in Agriculture Financing in need of concessional debt funding necessary to finance their working capital or expansion goals with a special focus in the Agriculture sector. The entities should specifically be focused on serving rural and peri-urban communities, households and/or businesses led by women and youth segments in Sierra Leone.
The objective of this RFA is to select Microfinance Institutions (MFI) in Sierra Leone that will be eligible to apply for a loan to fund the expansion of their loan portfolio through new initiatives including facilitation to capital accumulation. On a case by case, the facility will provide a risk sharing mechanism that will be agreed upon with each MFI. Moreover, the debt finance component will come together with a technical assistance component.
UNCDF debt funding will be discussed on a case by case with the institution. The debt funding will preferably be issued in local currency, but can be issued in hard currency if deemed appropriate. Debt financing will be provided to two or more selected applicants after a detailed due diligence to assess their technical and financial viability. Financing will be up to a maximum of 150,000 USD per MFI.
Eligibility Requirements
• Legal status: Licensed by Bank of Sierra Leone to provide credit facilities and mobilise deposits to the public.
• Compliance with applicable prudential regulations and guidelines of Bank of Sierra Leone. Each MFI must be in compliance with all applicable prudential regulations and guidelines of BSL, including but not limited to those for: (a) a minimum paid up capital of Le. 1Bn; (b) minimum liquidity (20% minimum requirement of total deposit liabilities of which 10% shall be cash reserves); (c) overall nonperforming loan ratio for SME loans.
• Minimum rating for Capital adequacy ratio of 8%. The Capital Adequacy shall be measured as a percentage of the capital base of the Other Deposit-Taking Institution to its risk weighted assets.
• Corporate Governance: Compliance with BSL's measures for corporate governance of financial institutions, which includes:
o corporate governance structures that promote effective identification, monitoring, and management of all material business risks.
o systems for ensuring compliance with all statutory and regulatory requirements
o implementation of financial disclosure requirements for market participants and observers
o setting of corporate governance objectives, strategies, and techniques.
• Non-involvement in financial fraud: Compliance with non-involvement standards of financial frauds, notably large-scale financial fraud cases, including Anti money laundering, will become ineligible for participation in the Jobs and growth Investment facility.
• Non Performing Loans (NPL): Compliance with 10% prudential limit of Bank of Sierra Leone
• Risk management procedures: Compliance with proper risk management processes and/or procedures (e.g. risk identification, measurement, monitoring and control manual) that cover the necessary (a) credit risk, (b) asset-liability management risk, and (c) operational risk. The MFI should have the control structure and capacity to systematically evaluate and/or conduct credit risk appraisal, asset-liability management, internal control and compliance, as well as market risks (e.g. interest rate risk and foreign exchange risk).
• With regard to credit risk, the Institution shall address:-
o Credit policies (which must include limitations on loans to affiliates and controlling persons).
o Plans to minimize concentration risk through diversification and limitations on exposures to individual and groups of related borrowers, and
o Asset quality considerations such as underwriting, loan classification system, and provisioning for bad and doubtful loans.
More information at: https://www.uncdf.org/article/6730/rfa-microfinance-institutions-funding-in-sierra-leone
