Homeoffice Consultant Mediation Mechanism and Solidarity & Relief Facility with verification

Introduction

Oikocredit is a global social impact investor active in 33 countries in Sub Saharan Africa, Latin America and South East Asia.

Oikocredit calls for consultancy support to set up a pilot of an independent Mediation Mechanism combined with a Solidarity & Relief Facility for Cambodia.

The results of the pilot will be used to inform Oikocredit’s contribution to the full scale development and operations of an independent Mediation Mechanism and Solidarity & Relief Facility in collaboration with other stakeholders.

Deliverables

A written proposal detailing the framework, governance structure, mechanics, workflow and timetable sufficient to:

i. Start the pilot operation of the mechanism and the facility using basic guidelines, workflow, procedures that are proposed

ii. Finalise and complete requirements for full scale operations (finalisation of policies, procedures, workflow, invite members to the governance bodies, etc).

Background

Cambodia’s microloan sector has experienced incredible growth in the last 20+ years and, as of March 2024, is valued at more than $18.1 billion, across 3.16 million loans – representing nearly half of the country’s GDP held as microloan debt. These loans come from both registered microfinance institutions (MFIs) and a group of banks that were formerly MFIs and maintain a microloan portfolio. In addition, a number of unregistered informal lenders contribute to the debt cycle.

Based on industry data, the average size of a microloan in Cambodia is over $5,000 – the highest in the world and several times more than the annual income of most Cambodians. Land is routinely required as collateral. Cambodia also lacks consumer protection regulation for the microfinance sector.

Cases of abuse, extreme distress due to over-indebtedness have also been brought to public attention. Today, the focus is on the situation in Cambodia.

In general, the various stakeholders involved in the financial inclusion sector of Cambodia acknowledge the signs of distress in the sector today and there is a shared interest to find ways to address/alleviate the distress of affected borrowers.

Oikocredit is committed to developing sustainable mechanisms to address some of the problems in the sector today. It recognizes that sustainability requires the engagement of the different stakeholders in Cambodia’s financial inclusion sector.

Oikocredit is supporting a client empowerment program in Cambodia. This capacity building program seeks to strengthen financial literacy and client empowerment via the development and dissemination of financial literacy modules as well as set up client empowerment mechanisms.

Oikocredit's years of experience with capacity building has proven that newly imparted or acquired skills and knowledge are best consolidated if these are put into practice. We therefore believe that the empowerment project can be enhanced and be more effective in changing behavior if clients are immediately provided with an opportunity to practice their skills and knowledge in negotiating a solution to their outstanding obligations. This can be through a pilot of an independent Mediation Mechanism combined with a Solidarity & Relief Facility.

The results of the pilot will be used to inform Oikocredit’s contribution to the full scale development and operations of an independent Mediation Mechanism and Solidarity & Relief Facility in collaboration with other stakeholders

Objective

Oikocredit is taking the lead in collaboration with local and international NGOs and other impact investors in developing a framework for a non- state, nonjudicial Mediation Mechanism (the Mechanism) and a supporting Solidarity & Relief Facility (the Facility) facility to start addressing some of the urgent issues exhibited by the financial inclusion sector in Cambodia today.

As part of this development effort, Oikocredit will run a pilot of the Independent Mediation Mechanism for 6 months after which lessons learned from the pilot will be fed into finalising the design and mechanics of the framework. Depending on the status and progress of other initiatives currently also being developed by other stakeholders in Cambodia, the framework may be offered for replication and scale up.

The Mechanism will:

i. Accept and review/assess complaints related to situations of over-indebtedness including proposals for a negotiated settlement filed by distressed borrowers for consideration by their FSP (formally registered financial institutions only).

ii. Review available financial records (held by FSP, client, credit bureau) and prior steps taken to address the borrowers’ situation

iii. Facilitate a negotiation meeting involving borrower and FSP representatives to arrive at an agreed resolution as much as possible.

iv. Arrive at its own recommended resolution terms including if appropriate as a last recourse, a recommendation for a financial contribution from the Facility as an incentive or support for parties to reach an agreement. Recommendations of the Mechanism will be based on the principle of fairness, accountability, viability.

In addition, the project will include the establishment of a facility.

The Facility will:

v. Support the negotiation process by providing an incentive to enable or facilitate agreement between parties. The mechanism will submit an application to the facility presenting the rationale for the financial support requested and why such support does not constitute as an incentive for irresponsible practices on the part of the borrower or the FSP to continue or absolve either party of their obligations but serves only to enable agreement between the parties. It can also be contemplated that support from the Facility goes towards helping borrowers restart their businesses, become productive again and strengthen their capacity to repay.

Scope of work

The proposed Grievance Mechanism and Solidarity & Relief Facility must be designed consistent with all of the effectiveness criteria for non-state, non-judicial grievance mechanisms articulated under Principle 31 of the UN Guiding Principles on Business and Human Rights.

The proposed Mediation Mechanism and Solidarity & Relief Facility must also be designed in consideration of specific criteria and resources.

The proposed mechanism should be designed to be sustainable and should therefore identify the critical elements needed for sustainability and should include a forward-looking design to enable the expansion of operations of the mechanism and facility in order to accommodate the volume and complexity of complaints received.

The work will be based on these specifications:

i. A framework for the mechanism, including recommendations for the legal structure of the mechanism, governance, management, receiving and assessing complaints. A proposal on how the mechanism may be implemented for a pilot period of 6 months with the least complexity.

ii. A framework and options for the facility and a proposal on how the facility may be implemented for a pilot period of 6 months with the least complexity.

iii. Development of draft operational policies and procedures for the workflow of the mechanism and the facility consistent with international standards.

iv. Development of TORs for legal services regarding the structure and establishment of the mechanism, as necessary.

v. Identification and initial proposal for basic administrative processes, procedures, workflow to accompany the key processes of the mechanism and the facility.

vi. Development of ToRs for Secretariat/Management and case officers vii. An implementation plan presuming full scale implementation of both the mechanism and the facility and related budgets.

Evaluation metrics and criteria

Your proposal must demonstrate:

i. understanding of the nature and dynamics of credit/lending operations and the standards of responsible financial inclusion.

ii. consideration of regulatory and other market factors pertinent to the development and operations of the mechanism and the facility.

iii. understanding of the vulnerability of different segments of the borrowing population – in this case, the vulnerable populations in Cambodia.

iv. understanding and familiarity with processes related to negotiations and loan restructuring and the staffing requirements (skills, expertise and number of staff depending on level of cases submitted) required.

v. inclusive approach to ensure buy-in and sustainability.

The above considerations should be reflected in the submitted plan of work/approach to the assignment with clear milestones/deliverables and budget.

Qualifications of consultant

i. University degree in finance, law or related field. Advanced degree or certification in business management or law will be an advantage.

ii. Experience in credit operations, microfinance will be an advantage.

iii. Specific experience in project design and management, independent grievance mechanisms, and/or responsible business conduct/due diligence processes in the financial sector.

iv. Demonstrated track record of strong analytical, research, and writing skills. The candidate should be able to work to deadlines.

v. Native-level fluency in spoken and written English is required.

Additional information

The assignment will be for 3 months.

For more information, you can reach out to Ging Ledesma, Strategic Advisor Impact & Social Performance via [email protected]

How to apply

Applicants must send the following documents:

i. CV including the names and contact information for three references.

ii. Cover letter explaining qualifications and relevant experience, highlighting previous experience in a similar assignment. Please add specify consultancy fees, travel expenses, and other relevant costs.

We look forward to receiving your application before August 23rd.

Oikocredit is an equal opportunity employer. We value diversity and are committed to creating an inclusive work environment that embraces individuals from various backgrounds.