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Advance Action on Procurement and Retroactive Financing

Country/Borrower: Viet Nam

Title of Proposed Project: Formalizing Microfinance Institutions

Name and Address of Executing Agency:

State Bank of Viet Nam
49 Ly Thai To
Hanoi, Viet Nam
Fax No.: +84 4 825 0612
Tel No.: +84 4 3934 3367
Email: adbsbv@hn.vnn.vn
Contact: Mr Le Minh Hung, Director General, International Cooperation Department
Brief Description of the Project:

The project supports the development of a formal microfinance sector in Viet Nam to provide sustainable, reliable and affordable microfinance services for the poor, especially in rural areas. In particular, the project will support the transformation from unregulated microfinance programs to formal regulated microfinance institutions (MFIs) under the new microfinance regulations (Decree 28/165) by helping selected institutions build their institutional capacity to meet the requirements for transformation, sustainable operation, and outreach to the poor. The project will provide training and supplementary matching funds (SMF) for transformation costs, operational expansion, and introduction of innovative pro-poor products and services. The project will also provide training to enhance the supervisory capacity of the State Bank of Viet Nam (SBV) microfinance regulators and raise awareness among relevant government officials to build general support for market-based microfinance. The project will showcase successful transformations and disseminate lessons learned to demonstrate Government commitment to implementing the new microfinance regulations and encourage further transformation of MFIs.

The total project cost is $2,449,838 equivalent. ADB will finance $1.5 million on a grant basis.

The project will be implemented over two years, March 2009 - February 2011.

Component A: Institutional Review

The project will take stock of existing microfinance initiatives and assess their capacity, constraints, and potential for transforming to regulated MFIs under Decree 28/165. This institutional review will establish a database of microfinance programs under transition to be maintained at SBV for future sector monitoring purposes, and will identify potential candidate programs for further detailed due diligence and appraisal for project support. A review of the SBV regulations will also be conducted through stakeholder consultations to provide recommendations for addressing difficulties in implementing the regulations.

Component B: Microfinance Training Activities

The project will provide three types of training: (i) Awareness-raising for relevant Government officials about the new microfinance regulations, pro-poor sustainable microfinance, and microfinance best practices; (ii) Operation training for MFI board members, managers, and staff to improve their operational capacities and compliance responsibilities, focusing on the SBV prudential requirements and microfinance best practices; and (iii) Regulation and supervision training for SBV, focusing on MFI off-site/on-site supervision and SBV roles and responsibilities in regulating the sector. Training for Government officials will be conducted by the project internally, while training for MFIs will be conducted in partnership with local microfinance training institutions.

Component C: Pilot Transformation MFIs

The project will assist up to five MFIs in building institutional capacity to meet the SBV requirements for transformation, sustainable operation, and outreach to the poor. For this purpose, the project will provide SMF to help the selected MFIs implement their transformation plan, improve portfolio, strengthen operational efficiency, and expand services. The total amount of the SMF will be up to $800,000, pending on the institutional review under Component A. Eligible programs will have a sound record of microfinance operations meeting the SBV prudential and non-prudential requirements for transformation; a clear plan and firm commitment to establish themselves as formal regulated MFIs and operate on a sustainable basis following microfinance best practices and outreach to the poor; and require initial grant assistance to make their transformation possible and sustainable. The project will support MFIs with different ownership structures including private initiatives and MFIs in different geographical areas.

Component D: Project Management, Monitoring, and Evaluation

SBV will be the project executing agency (EA). The project will assist the EA in the establishment and operation of a project management unit (PMU) and in each participating MFI a project implementing unit (PIU). The PMU will undertake overall administrative and supervisory tasks, and oversee the implementation of the SMF, training activities, financial audits, and project monitoring and evaluation. The PIUs will be responsible for implementing activities in their respective MFIs under their grant implementing agreement (GIA) with the PMU. The project will conduct a project impact evaluation to attribute the project's contribution to improving the poor's access to finance and the quality of microfinance products and services being offered, to showcase successful MFI transformations and demonstrate the Government commitment to implementing the new microfinance regulations and encourage further MFI transformations.

Brief Description of Consulting Services to be Procured:

The project will provide a total of 27.5 person months of consulting services, comprising (i) an international MFI development specialist/team leader (6.5 person months); (ii) an international microfinance training coordinator (4 person months); (iii) an international project impact evaluation specialist (2 person months); (iv) a national microfinance specialist (9 person months); and (v) a national microfinance training specialist (6 person months). The consultants will be recruited by ADB following consultation with the EA on an individual basis. To get the data for the project impact evaluation, the project will contract out the baseline survey and the follow-up survey to a local economic research institution using the consultant qualification selection method.

Component A:

International Consultant:

  1. MFI Development Specialist/Team Leader (2 person months, intermittent)

National Consultant:

  1. Microfinance Specialist (3 person months, continuous)

Component B:

International Consultant:

  1. Microfinance Training Coordinator (4 person months, intermittent)

National Consultant:

  1. Microfinance Training Specialist (6 person months, intermittent)

Component C:

International Consultant:

  1. MFI Development Specialist/Team Leader (3 person months, intermittent)

National Consultant:

  1. Microfinance Specialist (6 person months, intermittent)

Component D:

International Consultant:

  1. MFI Development Specialist/Team Leader (1.5 person months, intermittent)
  2. Impact Evaluation Specialist (2 person months, intermittent)

National Consultant:

  1. Local economic research institution for collecting survey data
Refer to the Terms of Reference for detailed information regarding the nature of services to be provided.
Address for Submitting EOI:
Mr. Binh T. Nguyen
Finance Specialist (Rural and Microfinance)
Asian Development Bank
6 ADB Ave., Mandaluyong City
Philippines
Tel No: +632 632 6406/4170
Fax: +632 636 2331
Email: bnguyen@adb.org

Deadline for Submission of EOI: 5 January 2009