Assignment Title : 1273524 – ECA Agriculture Digital System
The International Finance Corporation, a member of the World Bank Group, invites interested parties to respond to a Request for Expression of Interest (REI) for digital platform (comprising a backend decision-making mechanism and a pluggable frontend implementation) that would boost decision making in agriculture across Eastern Europe to Central Asia (ECA) by connecting data and decision-making algorithms for the ecosystem of stakeholders that influence the growth of the agriculture sector. Primary outcomes expected is the convergence of data to assist farmers to make on-farm decisions to increase productivity, profitability, and resilience in their agricultural operations. A second outcome is to assist financial intermediaries to make faster, cheaper loans to farmers to facilitate growth in agriculture. A third outcomes is to assist access to quality agriculture insurance by improving risk mitigation amongst farmers, financial intermediaries and others. And finally, enable the connection of farmers/farmer output to traders, processors, and other end users. This REI is issued for the purpose of obtaining information concerning market conditions and vendor (or consortium of vendors) capability in order to allow the World Bank / IFC to better understand what is currently available on the commercial market place in order to enhance advisory client solutions.
BACKGROUND AND BUSINESS DRIVERS
The International Finance Corporation: IFC, a member of the World Bank Group, promotes sustainable private sector investment in developing countries to reduce poverty and improve people’s lives. In addition to its investment work, IFC provides advisory services to several clients to support them in meeting specific development goals. IFC’s advisory support to the financial sector is implemented via its Financial Institutions Group and is organized around the following main themes:
- Innovation/Base of Pyramid: including Microfinance, Mobile Financial Services, Housing Finance, Rural Finance.
- Banking Services: SME Finance, Sustainable Energy Finance, Insurance, Agri finance, Leasing, Trade Finance, Gender, Risk Management and Corporate Governance.
- Financial Infrastructure: Credit Reporting, Collateral Registries and Secured Transactions, Securities Markets
These services are delivered through regional Advisory Services teams, with support from global product specialists, and in partnership with IFC’s Investment Services (IS) teams.
EXPECTED DIGITAL SYSTEM’S FUNCTIONALITY
IFC Financial Institutions Group (“FIG”) is contemplating an initiative to design and implement a platform for data-driven agricultural finance focused on Agri-SMEs located in the Eastern Europe and Central Asia (“ECA”) regions. Such platform would leverage precise input data (e.g., data from official data bases or remote sensing platforms such as satellites, ground stations where available, etc.) as well as reliable models for crop production, and optimally automated services to approve loans. It would allow banks, microfinance institutions and other financiers across the ECA region to increase working capital financing to Agri-SMEs and strengthen their agricultural portfolios, increasing resilience against defaults through the application of sophisticated approaches to credit underwriting and risk management techniques based on such data and models. It is expected that such platform would foster increased lending to Agri-SMEs while offering more attractive terms and conditions to such category of borrowers.
Based on IFC’s discussions with selected banking institutions in the ECA region, we are aware of a range of data-driven decision-making platforms for agricultural financial products that are currently in use or under design. All of these efforts have in common that they seek to utilize data to improve the decision quality and efficiency and decrease the associated financial risk.
The Project is working on the initiative to develop/adapt an Agriculture Digital Platform for financial intermediaries that will boost agriculture finance across ECA by connecting data and decision-making algorithms for the ecosystem of stakeholders that influence the growth of the agriculture sector. The benefits should extend to:
Financial Intermediaries to:
- Understand the nuances of various types of agriculture, in order to assess the credit ask of farmers, benchmark to farmers in the region, examine cashflow and repayment items.
- Use digital tools to validate the creditworthiness of the farmer by connecting to registries and databases of information (land cadaster, rights registers; farmer data bases (being a legitimate farmer, accessibility to subsidies); credit bureaus (historical repayment); court proceedings docket (pending legal proceedings); collateral registries (first charge on moveable and non-moveable assets); potential remote monitoring of key assets (GPS, animal RFID chips, etc).
- Automate credit decision making with the inclusion of the bank’s key acceptance criteria.
- Current risk assessment on a growing agriculture portfolio.
- Remotely observe, monitor and track farm assets where appropriate.
- Agroclimatic information systems integration to facilitate the analysis of investments and loans, and improved risk management by banks (through agroclimatic zoning).
- Provide the opportunity for financial institutions to identify new financial instruments and investment for its customers to improve their mitigation and resilience to agriculture perils.
- Evaluate red flags that may inhibit the farmer from repayment, which includes digital validation from existing registers and data bases including:
- Monitoring weather conditions to mitigate agriculture perils and increase yields.
- Reduction of moral hazard and fraud (ability to monitor at real time) of financial products and loans.
Insurance Carriers to:
- Calculate adequate premium rates or link with systems that host calculation of premium rates.
- Improving and simplifying loss event management (better and faster risk assessment with good local data appraisal cost and lower appraisal cost due to better granularity).
- Improving insurance access and price afordability.
- Reduction of adverse selection, moral hazard and fraud (ability to quickly verify claims) by using satellite imaging, drones and other remote sensing technologies.
- Creating new products (automatic insurance price calculation and historical payments visualization) – based on remotely sensed variables.
- Developing NDVI-based index Index-Based Livestock Insurance (IBLI).
- Connect options of agr insurance purchases when applying for a loan (could be requirement of the financial institutions).
- Understand the requirements to apply for loans and insurance.
- Portals to submit financing requests to the bank, submit loan requests, and purchase insurance.
- Monitoring weather conditions to mitigate agriculture perils and increase yield.
- Access to non-financial services (reports, information, prices, training).
- Illustrate farming operations and key assets through satellite imagery, types of production, unique farm attributes to facilitate access to finance, insurance, and help the farmer better manage their own business.
- Link to input suppliers and commodity marketplaces to purchase or sell products.
- Access to agronomic information, weather, and input supplier training/products to increase agriculture production, which will make them stronger clients for the bank and grow their business.
- Link to prices, market information, agribusiness news, government programs, and technological developments in agriculture to overall increase their access to information to improve their agricultural business.
The service provider should have operational platform (or parts of the platform) that covers data collection and storing, processing, interpretation and linkages with financial instruments as described above. Services can be presented in the form of a company’s platform or a consortium of companies to create the service.
Interested parties are hereby invited to submit expressions of interest.
Expressions of Interest should be submitted, in English, electronically through World Bank Group eConsultant2
Assignment Title: 1273524 – ECA Agriculture Digital System
Responses Due: March 29, 2021