Terms of Reference Piloting of Micro-Credit Models for Consumers Financing to increase the uptake of Clean Cooking Solutions in Rwanda
1. Background
1.1 SNV in collaboration with GIZ is implementing the ‘Reducing Climate Impact of Cooking in Rwanda through improved cooking energy systems (ReCIC) Project’ for the last two years. This project is part of the multi-donor-funded global Energising Development (EnDev) Programme being implemented in some 21 countries across the world, with GIZ (German Technical Cooperation) as the programme manager. This project is co-financed by the European Union.
The EnDev ReCIC project in Rwanda is implemented by GIZ and SNV through a market-based approach, in partnership with private sector companies and cooperatives. The first phase of the project ended in October 2022 and the current second phase will continue till March 2024. SNV part of the project has the following scope of work:
1. Cooking Energy Business Growth Fund (CEBGF): a business challenge fund
• Technical and grant support (in-kind and cash) to cooking energy businesses (Companies and Cooperatives) across Rwanda
• Targeting capable businesses to take part in the competitive challenge fund.
2. Technical and Material (in-kind) Support to ICS Producers (Companies and Cooperatives) in Selected Districts, outside CEBGF:
• Targeting producers, unlikely to be competitive for the challenge fund
• Providing technical support in product development, quality control, business development, distribution and retailing, including the development of business plans
• Providing material support (raw materials, tools and equipment) for ramping up production and sales, with an approach of performance-based incentives

3. Market Promotion Support & Credit Finance Piloting
• It comprises mass media, community mobilisation and cooking demonstrations
• Piloting a micro-credit financing model through a saving and credit scheme.
1.2 As mentioned above under c), the project has the plan to design and pilot a micro-credit financing model to credit finance ICS and other cooking energy solutions promoted under the project. ReCIC project, during its first phase, involved a consultant to develop appropriate microcredit financing models to be piloted in financing improved cook stoves (ICS) in Rwanda. The study had three key objectives, (a) conduct stocktaking of existing financial models, (b) recommend three appropriate financing models, and (c) recommend interventions for piloting the selected model in specified geographical areas. The study used a mix of qualitative and quantitative approaches where primary data was collected from current and prospective users of improved cookstoves and members of savings and credit schemes through focus group discussions (FGDs) and also conducted key informant interviews with key project stakeholders including project technical team from SNV and GIZ, leaders of ICS producing companies and cooperatives, local government authorities at district and sector level and SACCO managers.
1.3 The study proposed three financing models for consumers. The first recommended financing model is the informal Savings and credit schemes model, which is commonly used and the most affordable model for rural people who largely use firewood stoves. The credit sales model is viewed as a feasible model, especially for consumers in rural and semi-urban areas. SACCO & MFI Model is considered feasible for customers who would purchase middle and higher-tier improved cookstoves that cost above 20,000 Frw.

2. Rationale
2.1 Smallholder farmers as well as the small-scale ICS producers in Rwanda have limited access to financial services and the financial markets. From the farmers’ perspective, credit is scarce and expensive and heavily skewed towards the larger, corporate sector and loan terms are often too short to accommodate the long-term nature of agriculture, and the processing of loan applications by banks often takes too long to support the smallholder farmers’ financial needs. However, poverty levels are high in rural areas, estimated at per cent, compared to 22 per cent in urban areas. Expanding financial services to rural households may result in transforming livelihoods as well as improving access to finance at large.
2.2 Not surprisingly, one of the main obstacles to the adoption and purchase of new clean cooking devices has been identified as the lower willingness of the people because of marred affordability. The price of Improved Cook Stoves for the end-user ranges from USD 5 to 50 depending on design, an investment which is relatively higher for potential clients. Despite the significant benefits, there are hardly any credit lines available for these farmers to purchase clean cooking devices, which is a main bottleneck for the adoption.
2.3 The consultant involved in developing appropriate microcredit financing models to be piloted in financing improved cook stoves (ICS) in Rwanda highlighted the need to carry out the following:
• Creating awareness among SACCOs and MFIs about improved cookstoves and their importance in minimizing environmental impacts.
• Development of a financial product for improved cookstoves in collaboration with Microfinance Institutions in Rwanda.
• Engaging SACCOs and MFIs to participate in awareness and mobilization campaigns/ cooking demonstrations.
• Developing and distributing marketing materials related to the financial product.
2.4 The Government of Rwanda (GoR) has published ministerial guidelines for clean cooking technologies intending to enforce the adoption of modern clean cooking practices in households and institutions transitioning from traditional biomass energy carriers to clean and energy-efficient technologies that deliver associated socio-economic, health and environmental benefits. The guideline restricts the dissemination of lower tire ICS (tier 2 and less) in the country effective from January 2024. Any fuel or appliances that do not comply with the set technical requirements of the guidelines shall not be included in a national Clean Cooking Program. Transition to higher tier ICS also calls for additional investment from the customers to purchase ICS of better quality. The ReCIC project, therefore, envisages partnering with a micro-finance institute (MFI) which has a proven track record in supporting the rural communities in the country to avail grassroots financial services.

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3. Objective
3.1 The overall objective of the proposed assignment is to pilot appropriate consumer-focused microfinancing models to facilitate the speedy uptake of clean cooking products and services in Rwanda. Such micro-financing aims to provide zero-interest capital to banks, MFIs, cooperatives, and SHGs to enable them to lend to ICS customers at a reasonable interest rate. The selected MFI will pilot the microfinancing model in two districts – Gatsibo and Rubavu. A revolving loan fund will be established as the pool of capital from which loans will be disbursed for clean cooking products, and as loans are repaid, the capital is then re-loaned for another project. The revolving loan fund will be a self-replenishing pool of money, utilizing interest and principal payments on old loans to issue new ones.
3.2 The scope of work under the framework of this ToR includes:
• Developing financial products for consumer financing for improved cookstoves.
• Delivering the selected financial products.
• Developing and distributing information, education and communication materials related to the selected financial products through community mobilisation.
• Monitoring the loan disbursement process and loan repayment status.
• Synthesising the lessons learnt and formulating the way forward.

4. Approach and Methodology
The selected MFI will work in close collaboration with the ReCIC Project Team (GIZ and SNV), companies/cooperatives operating under the framework of the project and other relevant stakeholders, e.g., other associations/groups already in existence and interested in consuming the product, prospective ICS customers. The roles and responsibilities of the SNV and the MFI are highlighted below:
Roles and Responsibilities of SNV
• Avail Euro 14,000 to RMI for establishing a revolving loan fund(RLF) as initial funding, or capitalization.
• Organise and conduct community mobilization and promotional events at the community levels.
• Developing and distributing information, education and communication materials related to the selected financial products through community mobilisation.
• Link cooperatives and individual customers with the selected MFI and facilitate the loan processing.
• Monitoring the loan disbursement process and loan repayment status
• Ensure that the loans received by the cooperatives/individuals are properly used for the right purpose.
• Support MFIsin developing relevant financial products for households by providing adequate knowledge of the clean cooking market.
• Contribute to the development of the client's database and pre-market research.
• Develop and share funds compliance tools with the MFI.
Roles and Responsibilities of the MFI
• Establish a revolving loan fund and formulate its operational modality/guideline (length of the loan term, default and delinquency terms, interest rate etc.) in consultation with SNV.
• Receive approval from SNV on the operational modality/guideline of the revolving loan fund.
• Set the eligibility requirements for borrowers and set a minimum and maximum amount for the loans in consultation with SNV.
• Participate in community mobilization and promotional events organized at the community levels and share the operational modality of the revolving loan fund with the participants.
• Disburse loans as per the operational guidelines and ensure timely repayment of the loans by the recipients.
• Report the status (disbursement and repayment) of the revolving loan fund monthly to SNV.

5. Funding
The project (SNV) will avail a fund of Euro 14,000 to the selected MFI to establish a revolving fund. The MFI will disburse loans to ICS customers under the prevailing terms and conditions. This revolving fund will be replenished through repayment of the loans by the customers.

6. Duration
A Memorandum of Understanding (MoU) will be signed with the selected MFI. This MOU is at-will and may be modified by mutual consent of authorized officials from SNV Rwanda and the MFI. This MOU shall become effective upon signature by the authorized officials from both partners and will remain in effect until modified or terminated by any one of the partners by mutual consent. In the absence of mutual agreement by the authorized officials from SNV and the MFI, the MOU shall end on 31st March 2024.

7. General Provisions
7.1 The MFI shall perform all its obligations with the necessary skill, diligence, efficiency, and economy to satisfy generally accepted professional standards expected from experts and in accordance with SNV’s Code of Conduct.
7.2 The MFI shall not support, encourage or accept fraud and corruption concerning the implementation of the proposed activities or in their business or primary activities. The MFI undertakes to combat corruption, safeguard its credibility and continuously demonstrate ethical practice.

8. Evaluation Criteria
8.1 The following criteria will be employed for the evaluation of the proposals:
• The MFI must be a legally registered financial institute in Rwanda with a minimum of 3 years of operation completed (validated by a certificate of registration).
• Track records micro-finance, alliances and networks with other agencies.
• The MFI must have operating branches/sub-branches in Gatsibo and Rubavu districts.
• The Letter of Interest (LoI) must be submitted with the following documents:
o Organisational profile including the involvement of the MFI in disbursing micro-credit to rural customers.
o Proposed terms and conditions for credit disbursement and repayment (client identification, credit management, interest rates, loan term, collateral provisions, effective risk management, fraud control and regulatory framework etc.)
o Anticipated support provisions from SNV/ReCIC project

9. Submission of Letter of Interest
• The MFIs willing to involve should submit the letter of interest (LoI) to the Operation Officer Mr Bonkey Ruzirabwoba (bruzirabwoba@snv.org) no later than April 21, 2023 5:00 Pm Rwanda, time.highlighting their understanding of the assignment, logistical arrangements and other testimonials as described above under chapter 8.
NB: Only shortlisted candidates will be contacted 
We do not appreciate third-party mediation based on this advertisement.