Access to Financial Services

Objective

The” Access to Financial Services” Project is intended to build capacity of micro, small and medium-sized enterprises (MSMEs), particularly those directly or indirectly involved in the production of goods and services in Benin, for them to access financial services that can help improve sustainability of their businesses.

The “Access to Financial Services” Project consists of two Components, namely:

·         Component 1: Capacity Building for Financial Institutions and Borrowers

·         Component 2: Improving financial services framework

Main Activities

Activities under the “Access to Financial Services Project” are directly related to both components of the Project. Thus, there are:

* Capacity Building Activities for Financial Institutions and Borrowers, with two sub-activities:

·         Assessment of financial and nonfinancial services Request and Feasibility

·         “The Facility” for Financial Innovation and Expansion Challenge

* Activities for Improving Financial Services Framework, comprising   five (05) sub-activities:

·         Strengthening of the regulatory watch  of the microfinance sector

·         Capacity building for the Directorate of Microfinance Sector Supervision (DSSM, former Microfinance Division)

·         Support for annual accounts audit in microfinance institutions

·         Recovery Support to microfinance institutions in crisis

·         Support for organization of discussion forums on policy issues

·         Support to changes in the sub-regional regulation for financial services development

·         Support to the Risk management Authority for microfinance institutions in Benin

·         Support for the use of land titles as collateral for accessing credit

Beneficiaries

·         Farmers and rural borrowers

·         Promoters of MSMEs

·         Financial Institutions (MFIs, Banks and Financial Institutions) intended to receive financial incentives to create new services, their borrowers and MSMEs’ developers

·         Employees and customers of these businesses who will be provided with such financial products

·         Poor people  in urban and rural areas who will enjoy easier access to credit

·         Service providers, the Directorate of Microfinance Sector Supervision and the Professional Association of Microfinance Specialists (Consortium Alafia)

Expected Results

As a whole, the following outcomes are expected from the Project:

·         Increased incomes for nearly 1 million households benefiting from the Project

·         Reduced access cost for local financial services, and diversified range of financial products

·         Improved value-added of Micro, Small and Medium Enterprises (MSMEs) through assistance received from IMFs and advisory support entities.

The Project performance is evaluated in the view of objectives and through activities’ outcomes as well. These achievements are assessed through a number of relevant, practical and realistic indicators basing on results of prior studies.

Performance indicators

a / - Performance related to Project Objectives 

b / - Performance related to Project Activities 
 

  Project Cost: USD 19.65 million  

Overview on The Facility

 The Financial Innovation and Expansion Challenge  " The Facility" is a support instrument developed under the implementation of the '’Access to Financial Services Project'’ (PASF) in the Benin Program for the Millennium Challenge Account (MCA-Benin).

The Facility is part of the first Component of the Access to Financial Services Project, i.e. “Capacity Strengthening for Financial Institutions and Borrowers”. The second Component is entitled “Improving legal, regulatory and political framework of Financial Services”.

At the launch of the PASF, baseline studies conducted on the offer of and demand for financial and nonfinancial services have enabled The Facility to rely on relevant bases and databases to guide innovative projects and to ensure greater economic and social significance to the initiative (The Facility).

Overall Objective of The Facility

Strengthening the capacity of micro, small and medium-sized enterprises (MSMEs), mainly those involved directly or indirectly in the production of goods and services in Benin, to improve their operational efficiency and solvency vis-à-vis financial institutions and their sustainability as core units for the creation of family and national wealth.

Specific Objective (Mission)

Promoting sustainable access for a larger number of micro, small and medium-sized enterprises (MSMEs) to relevant and lower cost financial and nonfinancial services, and  improvement of  their performance in production and markets systems within successful economic sectors(quality, competitiveness, penetration, etc.)

Beneficiaries

-      Micro, small and medium-sized enterprises (MSMEs), their associations or umbrella bodies nationwide

-      Financial Institutions (Microfinance Institutions, Banks and Financial Institutions), with a focus on microfinance institutions for the first round projects

-      Providers or suppliers of nonfinancial services to MSMEs (BDS Providers ")

Sub-Components

-      Innovation (sub-component 1)

-      Institutional Strengthening (sub-component 2)

-      Development of MSMEs activities (sub-component 3)

Main strategy for sub-component 1

    - Special focus on financial institutions and MFI in particular

    - For microfinance institutions, favor is granted to technological innovations with significant impact on services costs reduction and / or services extension to un-served or underserved populations and sectors   

   - Support to banking institutions for establishment of support mechanisms for refinancing over mid to long term

  - Sensitivity to gender and the inclusive finance issue

  - Institutional strengthening as a crosscutting sub-component (sub-component 2)

Main strategy for sub-component 3
- Exclusively micro, small and medium-sized enterprises (MSMEs) networks;
- Priority to successful food processing agribusinesses
- Special focus on improvement  of products and services quality, and on quality process (certification, standards, market segmenting , etc.)

- Sensitivity to gender, the environment (ecosystem and biodiversity) and company social liability
 - Institutional strengthening as crosscutting sub-component (sub-component 2)

Total amount available for the Facility

10.7 million U.S. dollars

Amount or range of project financings

U.S. $ 25,000 to 250,000

Possibility of joint bids (consortia)

For 2 to 10 institutions / organizations (maximum)

Procedure

- Competition on the basis of calls for proposals
- "Cost sharing" funding mechanism with a maximum funding by The Facility limited to 66%
- Values promotion and cherishing: transparency, fairness and ethics

Duration of Support
From the date of grant agreement signing to the date of end of “Compact" between the United States and Benin (i.e. September 30, 2011)

Closing Date of Support

Not later than March 31, 2011 (6 months before end of Compact).

Target Components - Activities eligible to The Facility

NOTE: The list of activities presented in this table is neither exhaustive nor restrictive, provided that the activity falls within one of the three components of The Facility.

Institutional framework for the implementation of The Facility: the Management Unit of The Facility – the Selection Panel of The Facility

The Facility is implemented through two (02) entities under the supervision of the "Access to Financial Services" Project of MCA-Benin, which includes The Facility as well.
These two entities are (a) the Management Unit of The Facility (CGF) and (b) the Selection Panel of The Facility (PSF).

The Management Unit of The Facility (CGF):

The Management Unit of The Facility (CGF) is the responsible body for operational management of The Facility.

Mandate: Ensure on a daily basis technical and operational implementation of activities under The Facility in the most effective and most efficient way, under the responsibility of the Director of the “Access to Financial Services” Project.

Composition: A team of 7 persons from complementary backgrounds, all recruited on the basis of call for applications.
This team was set up and is operational since May 2008.

Headquarters of the CGF: BRS Building (2nd floor) located at 144 Avenue Vollen Van Hoven (Zongo neighborhood) Cotonou, Benin
Contacts: Tel: (229) 21 50 05 84
E-mail: info-facilité@mcabenin.bj

The Selection Panel of The Facility (PSF)

The Selection Panel of The Facility (PSF) is the established entity responsible for conducting the selection of projects submitted under calls for proposals. The PSF forms independent opinions on the project and its approach to the selection is mainly based on The Facility projects selection grid below.

Mandate: Conduct screening and final selection of beneficiary institutions of The Facility, basing on defined procedures and tools, and make necessary recommendations for effective and efficient implementation of The Facility.

Composition: Ten (10) persons representing, apart from MCA-Benin, international development organizations with headquarters in Benin and local organizations. Panel members meet well-defined criteria and their application is subject to prior approval by MCC.
The PSF was established and is operational since September 2008.

OUTREACH MECHANISM OF THE FACILITY: THE FOCAL POINTS

For information related to The Facility to be available and accessible to all potential applicants nationwide, an outreach mechanism has been established and consists of Focal Points. The challenge is to ensure equitable access to information and documentation to all stakeholders.
The Focal Point is a legal entity: the City Hall of the Head District in the Department, the Regional Center for Agricultural Promotion (CeRPA) and / or the Departmental Directorate for Development Planning (DDPA). Each Focal Point is managed by a Relay-Facilitator duly appointed by the first authority of the Focal Point on the basis of the background required by the CGF.
26 Focal Points have been put in place in all 12 departments in Benin.
Lists of the 26 Focal Points of the facility

The Facility Selection Grid (GSF)

The base grid  for projects selection is as follows: Selection Grid for the beneficiaries of The Facility

Preliminary studies
• STUDY ON THE SUPPLY OF NON-FINANCIAL SERVICES TO MSMEs IN BENIN (Full Version | Summary Version)

• STUDY ON THE RATE AND COST OF FINANCIAL SERVICES BY THE IMF OF BENIN (Full Version | Summary Version)

• STUDY ON THE FEASIBILITY OF INTRODUCING THE TECHNOLOGY AS SUPPORT FOR FINANCIAL SERVICES OF BENIN (Full Version | Summary Version)

• STUDY ON THE APPLICATION OF FINANCIAL SERVICES AND NOT BY THE FINANCIAL MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES IN BENIN (Full Version | Summary Version)