TERMS OF REFERENCE

Assessment of Aquaculture Finance and Development of Financing Product Options and

Access Tools for the Aquaculture Value Chain in Bangladesh

I.               Background

Aquaculture is one of Bangladesh's largest food sectors and a major source of income, employment, exports, and daily nutrition, and it continues to grow. Its further growth is held back less by technology than by finance. Standard loan products do not fit the way fish farming earns money, because funds are needed up front to buy seed, feed, and inputs, while income comes only after a production cycle of at least six months. The actors also need finance at different points in the cycle, the hatcheries, nurseries, and input suppliers earlier, and the farmers later when they stock and raise the fish, so one fixed loan schedule does not suit them all. This affects the whole value chain, from hatcheries and nurseries, through fish seed traders, feed dealers and retailers, and other input dealers and retailers, to farmers, and women and youth face the greatest difficulty.

The barriers go beyond timing. Collateral and documentation requirements exclude many actors. The chain is made up of large numbers of small, often informal businesses that are costly to reach. And lenders find it hard to judge how sound these businesses are and how likely borrowers are to repay, so they treat aquaculture as high risk and lend less than the sector could absorb. Some tailored products, refinance lines, and green finance windows exist, but they are little used for fish.

Yet aquaculture is a large and underserved market that lenders could serve profitably. Banks already have agricultural and fisheries lending targets and refinance lines from Bangladesh Bank to meet, and green and climate finance windows they can draw on. A loan product shaped around the fish cycle would fit the sector better, reduce missed repayments, and open a new group of customers. Risk can also be managed. Hatcheries are licensed and must meet quality criteria to renew their licenses, which gives lenders a reliable way to identify good suppliers, and as similar quality signals develop along the rest of the chain, lending becomes safer.

Several institutions could take this forward, including the Palli Karma Sahayak Foundation (PKSF), commercial and specialized banks, and microfinance institutions (MFIs). PKSF, the national apex development finance organization, works through a wide network of Partner Organizations (POs), and it already reaches fish farmers, though as part of general agricultural credit rather than through a product designed for fish. PKSF provides its members with both financial and non-financial services, and it has long experience in agricultural, fisheries, and climate-resilient financing through programs such as Sufolon and Agrosor and its microenterprise lending. WorldFish and IFPRI, under the S4I program, are supporting the aquaculture sector to strengthen its access to finance, and this consultancy is a preparatory step toward that goal. The consultant will develop the product options together with the relevant institutions, including PKSF, and design them to fit each institution's standards and requirements, based on meetings and discussions with them.

II.            Objective

The objective is to improve access to finance for the aquaculture value chain in Bangladesh, so that hatcheries, nurseries, traders, input dealers, and farmers can obtain finance suited to fish farming. Specifically, the consultancy will:

·       Assess the current state of aquaculture finance and recommend practical, fish friendly changes to policy and lending practice.

·       Design one or more sustainable, scalable, and risk-managed financing products built around the fish production cycle that fit the whole value chain and can be taken up by institutions such as PKSF, banks, and MFIs.

·       Set clear, workable eligibility rules for each type of actor, linked to seed quality, and test them with the institutions and the actors.

·       Build in features that help women and youth borrow, and connect financed farmers to quality seed from licensed hatcheries.

·       Prepare a plain language toolkit that helps actors prepare for and obtain finance.

·       Consult PKSF and other institutions, and set out a clear plan for how they can take up and scale the product after the consultancy.

III.          Scope of Work

The work has four parts and is focused and decision oriented. The consultant will draw on publicly available information and web-based research, existing studies, and planned discussions with WorldFish and IFPRI staff and with the relevant institutions, rather than new primary research. The consultant leads the technical work and the consultations.

III.A        Assess the finance sector and recommend policy changes

The consultant will give a short, current picture of aquaculture finance and propose practical policy changes. This covers:

·       The size and potential of the aquaculture lending market, and whether the value chain is attractive to finance, judged by market demand, growth potential for small farmers, geographic clustering, private sector linkage, and food and nutrition benefit.

·       Bangladesh Bank rules and targets for agricultural and fisheries lending, refinance lines, and green banking.

·       The relevant institutions and their products, including PKSF windows such as Sufolon and Agrosor, the PO network, and commercial and specialized banks, and how well they fit fish farming.

·       How aquaculture lending has performed where institutions are already active, including portfolio quality and portfolio at risk, seasonal repayment and default patterns, existing repayment schedules, the cost of serving small and dispersed borrowers, and the lessons learned, drawing on PKSF's experience as a leading example where information is available.

·       The green and climate finance windows relevant to aquaculture.

·       The main barriers to finance, such as collateral, documentation, and repayment terms that do not match the production cycle.

·       The financing gap along the value chain and the segments that remain underserved, including women, youth, and climate-vulnerable coastal areas, and the scope for digital finance and simple credit scoring to reach them at lower cost.

·       A short, ranked set of fish friendly policy recommendations, each with the responsible institution and a practical entry point.

III.B     Develop financing product options and eligibility rules

The consultant will design practical financing options for the value chain, ready for an institution to take up, and connect finance to quality seed. These options are for discussion and joint development with financial institutions, not built for any single institution. PKSF is used as the anchor and reference partner to keep the design concrete and ready, while the products, tools, and eligibility rules are kept usable by banks, MFIs, and other finance providers. This covers:

·       The financing needs and the repayment capacity of each actor, from hatcheries and nurseries to traders, input dealers, and farmers.

·       The two kinds of finance the product should cover, namely investment capital for hatcheries and nurseries, which is larger and longer term, and working capital for traders, dealers, and farmers, which is smaller and short term.

·       A differentiated set of products rather than a single loan, matched to these needs and to borrowers such as women and youth, so each can be taken up and priced on its own terms. For example, the products could include a startup or enterprise loan for women and youth, working capital for traders and farmers, lease or investment finance for upgrading hatcheries and nurseries, a pond renovation loan, and a climate resilient loan, with the final set decided during the assignment.

·       Repayment structured around a production cycle that varies by species, for example around four to five months for tilapia and eight to ten months for carp, and longer for species such as shrimp, using a single or staggered payment after harvest in place of weekly instalments. The repayment options could include a grace period during grow-out, periodic interest during the cycle, and a larger repayment at harvest, set to suit the species and the actor.

·       For each product, the terms an institution needs to set, namely the loan ceiling, the borrower's own contribution, the grace period, the repayment frequency and how interest is calculated, and any insurance, guarantee, or refinancing source, set out so each institution can calibrate them to its own standards.

·       Simple credit appraisal tools suited to aquaculture, covering expected cash flow and profitability, repayment capacity, and a basic credit-scoring approach that Partner Organization or branch staff can apply.

·       Features that build resilience to climate and disaster risk, such as flexible rescheduling after a shock and links to insurance and to climate or green finance windows.

·       Terms that are ready to use, mapped onto existing lending windows and PO procedures, and the funds and refinance lines that can support the product.

·       An integrated design that pairs the loan with non financial services, such as technical training, access to quality seed from licensed hatcheries, and market linkage, and features that help women and youth qualify, such as group guarantees or a loan without traditional collateral.

·       Illustrative eligibility rules for each actor, tested with the institutions and the actors for what is practical, since not all actors meet them yet.

The table below sets out illustrative eligibility rules for each actor, offered as a starting point for discussion:

III.C   Develop the financial access toolkit

The consultant will develop one simple, user-oriented toolkit that helps actors prepare for and obtain finance. It includes:

·       A How to Access Finance guide, in plain language, setting out the steps and requirements for approaching banks, MFIs, and PKSF POs, with sections for women and youth.

·       A Bankable Profile Template that lets each actor present the basics a lender needs, such as licenses, seed sourcing, and production or sales records.

·       Brief sections for each type of actor.

·       Simple record keeping and loan application formats for smallholder farmers and small traders.

III.IV    Consult, agree, and plan for taking the product forward

The consultant will engage the relevant institutions and lead the consultations. WorldFish and IFPRI will support initial contact with PKSF, the Department of Fisheries (DoF), and others, and the consultant is responsible for managing, sustaining, and documenting the engagement. The consultant will:

·       Consult PKSF, including its Fisheries and Livestock Unit and its credit and climate functions, selected POs, banks, and DoF, to gather their views, test feasibility, and refine the product.

·       Keep the design consistent with the wider work on seed quality and standards under the Aquatic Solution Track.

·       Show how the product can be rolled out in phases and scaled through an institution's network, for example PKSF's Partner Organizations, from a first set of areas to wider coverage, with a few key indicators to track uptake, repayment, and benefits for women, youth, and nutrition.

IV.          Deliverables

Deliverable 1: Inception Report and Consultation Plan

·       Methodology, workplan, and the consultation plan.

·       The institutions to engage, including PKSF, selected POs, banks, and DoF.

·       A draft outline and the illustrative eligibility rules to be tested, agreed with WorldFish and IFPRI before drafting.

Deliverable 2: Aquaculture Finance Status, Landscape, and Fish Friendly Policy Report

·       The current state of aquaculture finance, the size and potential of the market, and the main institutions and products.

·       Whether the value chain is attractive to finance, judged by market demand, growth potential for small farmers, geographic clustering, private sector linkage, and food and nutrition benefit.

·       The green and climate finance windows relevant to aquaculture.

·       The main barriers to finance, the financing gap and the segments that remain underserved, and a short, ranked set of fish friendly policy recommendations, each with the responsible institution.

Deliverable 3: Financing Product Options, Access Toolkit, and Plan for Taking the Product Forward

·       One or more financing product options, ready to use, with indicative loan sizes, repayment suited to a production cycle matched to the species, and provisions for women and youth.

·       The integrated design that pairs the loan with non financial services, technical training, quality seed access, and market linkage, mapped onto existing lending windows and PO procedures.

·       The eligibility rules for each actor and the way to connect financed farmers to quality seed from licensed hatcheries.

·       The financial access toolkit, comprising the How to Access Finance guide, the Bankable Profile Template, and the record keeping and application formats.

·       How the product would be funded, drawing on the refinance and green finance windows identified in Deliverable 2, together with the business case for offering it, including why it is sustainable for the institution, and the expected results in income, jobs, women and youth, and nutrition.

·       An outline institutional product guide, covering the operating steps, the appraisal procedure, and the roles of branch and Partner Organization staff, the borrower information and simple systems needed to manage the product, the way repayment and recovery would be handled, the capacity building staff would need, and a short results framework with a few key indicators, set out at the level an institution can develop into full procedures.

·       A clear, actionable plan for how PKSF and other institutions can take up and scale the fish specific product after the consultancy, with steps, responsibilities, and timing, and a summary of the consultations and each institution's interest.

V.             Required qualifications and experience

The Consultant shall meet the following minimum qualifications and professional experience:

·       At least ten years of experience in microfinance, agricultural, rural, or development finance in Bangladesh.

·       Sound knowledge of the finance sector, including apex and development finance organizations such as PKSF, commercial and specialized banks, and Bangladesh Bank agricultural, fisheries, and green banking rules.

·       A track record of designing financial products that institutions have adopted and put into use, including inclusive credit for women and youth.

·       Proven ability to turn complex financial requirements into simple, usable tools for non-specialist users.

·       Experience in credit risk assessment, loan structuring, or financial product development for small and medium enterprises.

·       Strong facilitation and stakeholder engagement skills. Familiarity with aquaculture or agricultural value chains, digital finance or credit scoring, and results tracking is an advantage.

VI.       Application

Please submit (1) an updated CV demonstrating relevant experience in the finance sector and development finance in particular, and (2) where available, an example of a relevant technical report, policy document, or similar work. Materials should be submitted in English. No cover letter is required.