International Consultant on Developing Financial Mechanism for the CLEAN Project
Home Based - May require travel (Home Based)
UNDP and UNICEF have together been developing a project proposal for the SDG fund titled CLEAN – CLimatE Adaptation and mitigatioN Financial Mechanism. The project proposal has simplified two components, one is to develop a loan facility which can finance investments in piped water and solid waste management, and secondly a pipeline of potential businesses and operators with capacity to access the funds and make the investments. This ToR focuses on developing the blended finance vehicle of the proposal development.
UNICEF and UNDP are collaborating with an ongoing process to support the establishment of the Cambodian Climate Finance Facility (CCFF). This initiative is being developed jointly by the Ministry of Environment, Ministry of Economy and Finance and implemented and managed through the Mekong Strategic Partners (MSP) – a private investment firm. The facility is intended to be capitalized by the Green Climate Fund, GCF and Agence Francaise de Developpement, AFD, of which AFD is the accredited entity submitting the GCF proposal. The CLEAN joint programme will establish a financial window within CCFF focused on the WASH and Waste sector.
In Cambodia the WASH and Waste sectors are largely managed by private entrepreneurs, and partly regulated by national legislation and local decisions. For both sectors national tariff systems are used thereby limiting revenue possibilities. Finance is largely based on user fees, though in practice some basic services (such as waste collection in public spaces and waste management) are financed by a public national fund. Outside the larger cities the services are semi-functional, and coverage is partial. Some areas outside of city centers still lack piped waters and in many secondary cities waste collection only covers up to 20% of households.
Infrastructure investments for WASH and waste management services are needed to ensure quality and continuality of service that meet acceptable standards. However, in most cases it is found that such investments cannot be realized for a variety of reasons that includes; (I) cost of finance, (ii) high project risks and (iii) weak proposals and business modelling. In order to improve the business case for investment the CLEAN joint programme aims to establish a facility that can provide concessional loans including some smaller grants to make investments financially viable.
The CLEAN project aims to use the blended finance to unlock public and private finance so that by 2025 Cambodians living in and around 5 provincial cities have improved water, sanitation, and waste services, provided by climate and gender sensitive piped water, organic waste, and faecal sludge businesses. This will be achieved through: (i) establishing a CLEAN technical assistance facility (TAF) that will work with water, sanitation, & hygiene (WASH) and solid waste management (SWM) businesses on investment pipeline development; infrastructure quality assurance; and enhanced commercial viability; and with cities on developing a WASH and SWM investment and business supportive environment; and (ii) establishing and managing the CLEAN blended financing mechanism that will identify and operationalize optimized blended financing instruments and deals for the project pipeline, unlocking public, and crowding in private commercial capital for WASH/SWM investments, and SDG acceleration.
Duties and Responsibilities
The task is to undertake an assessment of options with the purpose to determine a blended finance model and the financial instruments and mechanisms that complies with UN standards to deliver financing solutions for the CLEAN project.
The consultant shall make an assessment report reviewing the following options
(i) the original proposal meaning establishing a CLEAN window within the forthcoming CCFF based on current situations and realistic timelines, cataloging the strengths and weaknesses.
(ii) assess the options suggested by UNCDF to use existing UNCDF approved instruments and global systems to finance commercially viable high-risk investments and verify the potentials and experiences of UNCDF in deploying funds to close deals using blended finance that unlocks domestic capital
(iii) Explore the UNICEF global fund and verify the potential in deploying funds to close deals using blended finance
(iv) consider using the SDG funds for establishing a grant facility which will help investors leverage loans and investment capital that has legal compliance and technical capacity to effectively and efficiently deliver within the project cycle.
The scope of the work also includes drafting the financial arrangements needed to be established to run the blended finance window under the facility, based on the review of available frameworks and facilities of the involved UN agencies and considering engagement with commercial banks, fund managers etc. The UN agencies will receive ‘grant fund’ from the UN joint SDG fund and facilitate access to the Cambodia Climate Facility to provide private operators of Piped water, Solid Waste Management, and fecal sludge management in Cambodia with concessional loans.
The consultant should explore the options for the most optimal set-up and develop a detailed draft financial layout and arrangements between the UN agencies and Cambodia Climate Finance Facility, explaining the relationship between Fund Manager (The Agricultural and Rural Development Bank, represented by Mekong Strategic Partners), and the UN agencies (UNDP, UNICEF, and potentially UNCDF); taking into account mandates, operational and financial rules and regulations of UNICEF and UNDP; and potentially UNCDF. If another option is chosen, this output will have to be adjusted.
The draft financial framework agreement should include:
Description of governance and major operational and business processes
A term of reference for contractual arrangements between the UN agencies and CCFF regarding the disbursement and risk management of CLEAN funds
Description of the financial model, management fee and other key financial matters in the relationship between UN agencies and CCFF
A ‘CLEAN’ window needs to have a solid description of how the funds will be allocated to private service operators in loan forms and opportunities to crowd-in private or additional public capital in the form of blended finance
Arrangements for the asset holding of the CLEAN investment funds
The Consultant shall further summarize the findings in a final report, which shall include:
A description of the Preferred option among the alternatives presented above, describing which option offers the most advantageous solution in terms of
legal compliance and accountability,
reputational and financial risk management,
proven capacity for a quick start thereby not delaying project implementation
affords the lowest development and transaction costs,
Brings in value added to support UNICEF and UNDP to develop bankable project pipelines for WASH and waste management
has the ability to provide a recognized de-risking function that can unlock domestic capital,
is able to generate blended financial solutions of a portfolio or project by project basis and
carries an option to crowd in additional funds
- Business case: Explaining rationale of pipeline assessment on the financial and market needs, and why blended finance mechanism is used for CLEAN window.
- Governance and management arrangements between United Nations and the Cambodian Climate Finance Facility (or other chosen option), private providers, investors, etc (including service fees).
- Financial product(s) – justification for terms and conditions, including the level of concessionality and mechanism for blended finance. Description of the financial instruments and blending mechanisms CLEAN will provide to the market (concessional loans, guarantees, step-down guarantees, first loss provisions). Demonstrate how UN funding will de-risk those investments and crowd in private sector through acting as first-loss.
- Operations: loan screening, evaluation, approval and monitoring process under the “CLEAN” windows.
- Impact measurement framework, key metrics and how they will be monitored and evaluated.
What rules will govern the special CLEAN window within CCFF
Arrangements including key terms of contracts to be made between UN, CCFF, etc., including fees and costs
Revenue model and financial projections. Resource mobilization/capitalization plan, inclusive of co-financing commitments (potential).
The consultant should develop an appendix to the CLEAN project proposal which shall include (but are not limited to:
Appendix part 1 Financial model including instruments and financial structures and flows that the project will develop to enable the provision of the CLEAN window and services to domestic business that it offers.
Appendix part 2: Description of CCFF, its size and investment strategy, the status of the CCFF in terms of its realization that lays out what legal documents needs be finalized, status of capitalization and potential realistic timeline for operationalization of the CCFF. Fund Manager Background and the structure of the ownership of the fund manager.
Strategic vision, strong technical and analytical capabilities;
Strong writing and reporting skills.
Ability to work in a team, develop synergies and establish effective working relations with government counterparts, donors, NGOs and other development partners;
Strong interpersonal and communication skills, resourcefulness, initiative, maturity of judgment, tact, and negotiating skills, and the ability to cope with situations which may pose conflict;
Openness to change and ability to receive/integrate feedback;
Ability to accommodate additional demands on short notice;
Ability to work under pressure and stressful situations;
Ability to manage heavy workload and solve complex problems with minimum supervision.
Demonstrates integrity by modeling the UN’s values and ethical standards.
Displays cultural, gender, religion, race, nationality and age sensitivity and adaptability.
Treats all people fairly without favoritism.
- Fulfils all obligations to gender sensitivity and zero tolerance for sexual harassment.
Required Skills and Experience
- Master’s degree or equivalent educational background in Finance, Economics and Business Administration
At least 7 years of working experience in the finance sector with financial analysis, capital markets, banking, investments and financial products
Experience in dealing with capital markets structures in developing countries
- Proven experience with creating financial mechanisms in developing countries. Knowledge of climate finance from both public and private sources is an advantage.
- Excellent writing, editing and oral communication skills in English is required.
Interested offeror must read the Individual Consultant (IC) Procurement Notice, which can be viewed at https://procurement-notices.undp.org/view_notice.cfm?notice_id=83167 more detail information about term of references, instructions to offeror, and to download the documents to be submitted in the offer through online.
UNDP reserves right to reject any applications that is incomplete.
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Interested individual offeror must submit the following documents/information to demonstrate their qualifications:
1. Proposal: Letter of intertest explaining why they are most suitable for the work
2. Financial proposal (Duly accomplished Letter of Confirmation of Interest and Availability using the template provided by UNDP)
3. Personal CV including past experience in similar projects and at least 3 references
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