Financial Mechanisms Consultancy

Terms of References

Financial Mechanism Vol.3

1. BACKGROUND INFORMATIONS

Lebanon is currently suffering from an unprecedented economic and financial crisis that has severely shaken its economic foundation. Characterized by high inflation, currency depreciation, and severe shortages of basic commodities, this crisis placed tremendous stress on businesses, households, and the general social fabric of the nation. The banking sector has faced severe liquidity problems, leading to restrictions on cash withdrawals and illegal capital controls. In addition, escalating public debt and financial mismanagement have exacerbated the dire economic landscape. The crisis has left thousands unemployed, eroded purchasing power, and strained the provision of basic services.

Social Entrepreneurship (SE) is increasingly regarded as a tool capable of easing communal tensions and contributing to communities’ socio-economic development. SEs can “contribute to the economic security of all segments of the population and contribute to economic diver­sity as it invests in territorial development and proximity, promoting community participation, prioritizing local impacts and modelling participatory values”. In Lebanon, a 2019 mapping showed that SE has recently gained more national visibility among urban communities in big cities[1]. This can be explained by the fact that SE responds to the national priorities and is aligned with Lebanon Crisis Response Plan (LCRP) goal, and the strategy of both the Livelihood and Social Stability Sector. During the past few years, several projects started promoting SE as a tool to strengthen social stability and support local economic development for Lebanese, Palestinian, and Syrian refugees. Some of the projects invested in building the knowledge and awareness of community members on SE, others supported the identification of social ventures and their evolvement into SE through the provision of ad hoc technical and financial support, and others focused on developing a legal framework for SEs.

Findings from previous Financial Mechanism Vol 1 and 2

In this context, designated research consultancies undertook the task of a more comprehensive examination, aiming to assess the viability and practicality of micro-loans, credit guarantees, and an array of credit services. This inclusive analysis encompassed both registered and non-registered entities active within the Lebanese landscape.

The primary mission of the previous consultancy was to conduct comprehensive feasibility studies, aimed at expanding the financial landscape of small and medium enterprises, SEs, and SESOs within the Lebanese context. Building on insights gained from previous research initiatives that have systematically explored channels of fund delivery and identified potential financial institutions for intermediary roles, we expand our overarching goal.

Simultaneously, our research endeavours have extended beyond national boundaries, to the complexities of international trade. The consulting firms have carefully assessed the availability of financial and logistical services and the operational efficiency necessary for the smooth implementation of import and export activities. Notably, this investigation involved complex mechanisms such as letters of credit and guarantees, culminating in a comprehensive understanding of their feasibility along with the associated costs.

In parallel, our research focus has shifted towards addressing the main challenge of devising financial mechanisms that are ingeniously compatible with Lebanon's complex financial ecosystem. A comprehensive assessment of existing financing avenues was undertaken, supported by an unwavering commitment to integrating sustainability and operational efficiency for SEs. In this context, the consulting firms have carefully defined mechanisms designed to operate smoothly within the limits of the Lebanese financial framework.

2. Brief Presentation of Projects

SEE Change: Oxfam in partnership with Beyond Groupe and COSV is implementing an EU Funded project entitled “Social Entrepreneurship Ecosystem Change” (SEE Change).  As of September 2020, and over the course of 3 years, the project will be implemented in 5 different areas in Beqaa, North and Mount Lebanon.

The project aims at increasing the impact of social entrepreneurial activities in Lebanon, creating employment and social stability opportunities, and supporting the local economy.

3.  PURPOSE OF THE RESEARCH/ RATIONALE

Oxfam is currently looking for a Research Consultant who can carry out a comprehensive assessment. The primary objective of this research initiative is to gain a deep and comprehensive insight of the complex interplay between social entrepreneurship, investment readiness, and economic development in the context of Lebanon. By delving into three distinct and interrelated research topics (namely, the multiplier economic/financial impact on the broader society, the investment readiness of SEE Change SEs, and the research on investment vehicles in Lebanon), this study aims to clarify the critical factors that together contribute to the sustainable advancement of socio-economic conditions. Subsequent sections provide a clear overview of the intent and reasoning behind each research topic.

The study will be guided by the following research themes:

1. Economic/Financial Multiplier Effect on the Broader Community

The purpose of this research is to assess the economic and financial multiplier effect resulting from social entrepreneurship initiatives in Lebanon. The consultant will analyse the impact of social enterprises on the larger community, considering factors such as job creation, income generation and community development. The research will identify key indicators for measuring the economic and financial benefits derived from social entrepreneurship activities, providing insight into the broader socio-economic impact. Investment Readiness of SEE Change SEs.

1.  Investment Readiness of SEE Change SEs

This study specifically aims to comprehensively investigate the investment readiness of SEE Change Social Enterprises (SEs) - around 3-5 social businesses. The consultant will conduct a comprehensive assessment to identify social enterprises that are primed for external investment, considering the complex interaction between their social impact and the viability of their business models. This assessment will include an in-depth analysis of multiple factors including financial stability, growth potential, and the alignment of the SEs’ social impact with its core business model. Taking into consideration the symbiotic relationship between social impact and business viability, the service provider will identify SEs that are poised for investment. This research will culminate in identifying 3 to 5 SEs that show a strong willingness to attract external investment, while at the same time contributing positively to their social mission and business sustainability.

1. Investigation of Investment Vehicles in Lebanon

The Research Consultant will be tasked with conducting an in-depth investigation into the current existing or potential feasibility of investment vehicles in the context of Lebanon. This investigation will include a thorough analysis of the various investment vehicles available in Lebanon, with a focus on assessing their relevance, effectiveness, and alignment with the SEs’ investment potentials and the local economic landscape. The work conducted by the consultant should take into account the following factors:

Factors

Description

Supply and Demand Dynamics

Analyse the supply and demand of various investment vehicles, including the types available, popularity among investors, and target asset classes, highlighting investor preferences and areas for growth.

Intermediate Ecosystem

Evaluate the role of financial institutions, regulatory bodies, and intermediaries in facilitating investment transactions, providing insights into access for individual and institutional investors

Collateral and Security

Explore how investment vehicles provide collateral or security to investors, enhancing credibility and risk management.

Regulatory Framework

Analyse the legal and regulatory requirements governing investment vehicles, ensuring alignment with local regulations.

3. SUGGESTED METHODOLOGY

A financial research consultant will be tasked with developing the methodology for this research project, which aims to explore social entrepreneurship, economic multiplier effects, and financial mechanisms in Lebanon.

1. Conduct an updated literature review on social entrepreneurship, economic multiplier effects, and financial mechanisms in Lebanon, taking into consideration findings and insights from previous research phases (Vol. 1 & 2)
2. Conduct interviews with financial institutions, experts and supporting organizations to gather ideas and insights about available financial mechanisms and investment readiness.
3. Interview key informants (KIIs) with social enterprises (SEs) and social entrepreneurship support organizations (SESOs) to understand their financial needs and experiences.
4. Prepare a detailed report summarizing the results and recommendations related to the economic multiplier effect, the investment readiness, and the available financial mechanisms.

4. EXPECTED DELIVERABLES

The consultant is expected to submit the deliverables listed below:

Type of deliverable

Deadline

A. Final methodology and workplan

One week into the assignment.

B. Present a draft report, including the research findings and initial recommendations:

. Conduct research on the Economic/Financial Multiplier Effect on the Broader Community (Weeks 1-2)

. Assess the Investment Readiness of SEE Change SEs (Weeks 2-4)

. Investigation of Investment Vehicles in Lebanon (Weeks 4-5)

5 weeks after the assignment

C. submit the final report, incorporating feedback and finalizing the recommendations

7 weeks after the assignment

1. Consultant Qualifications:

This project should be led by a consultancy group or an individual with:

• Relevant experience in offering financial support for businesses, social businesses, associations, and NGOs.
• The consultant should have experience in investigating matters related to grant allocation for social enterprises and small and medium-sized enterprises (SMEs) in Lebanon.
• Provide existing research, works, and papers related to the three components of this research: Economic/Financial Multiplier Effect on the Broader Community, Investment Readiness of SEE Change SEs, and Available Financial Mechanisms to Support Existing SEs and SOSOs
• Strong expertise in conducting both quantitative and qualitative research.
• Excellent English communication skills, including advanced writing abilities.
• Strong Arabic communication skills preferred.
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1. Process

Interested consultants should submit their:

• Organization profile
• Registration Documents
• CV(s) of the capacities and facilitator(s) that would be working on the project (should be provided before starting the activities)
• Banking details (Active Fresh US$ Account)
• Consultants should provide a financial proposal outlining their fees and payment terms,
• Financial proposal including consultancy fees and all associated estimated costs such as logistics and communication costs
• Quotation should depict detailed pricing to include Lumpsum amount per Assessment, per Topic (research), and themes that includes all expenses, overhead and fees to deliver as per the above Job deliverables.
• Immediate availability to start the project.

Interested consultants should present their CVs and a brief proposal which must include a methodology for this study.

The CV and the proposal must be sent by e-mail to:

s Process