SRO-SA International consultant – Consultancy assignment for the production of a “A handbook on ‘Innovative Finance for Industrialization and Private Sector Development in Zambia’

Result of Service The main objective of the consultancy is to produce a fit-for-purpose “Handbook on ‘Innovative Finance for Industrialization and Private Sector Development in Zambia”. The Handbook should provide an overview of available innovative financial instruments for industrialization and private sector development, and step-by-step guidance for implementation of instruments identified as possibly most impactful for the Zambian context

Work Location Remote

Expected duration 6 Months

Duties and Responsibilities PROJECT BACKGROUND:

1. ECA Subregional Office for Southern Africa, together with other implementing partners (notably the ECA’s Macroeconomics and Governance Division, as well as the African Center for Statistics and Private Sector Development and Finance Division and UNCTAD) is currently implementing a Development Account project on Integrated National Financing Framework in Zambia. The project covers a number of activities, mainly around issues such as enhancing economic governance and domestic resource mobilization, leveraging innovative sources of finance and strengthening SDG-based reporting tools. The importance of exploring new financing avenues was highlighted by ECA (2022), pointing at the need for additional resources to offset the impact of the COVID-19 pandemic, by both strengthening traditional sources of finance and pursuing innovative ones, notably sustainability bonds, impact investment and blended finance.

2. Enhancing private sector development and industrialization requires adequate financing, which is a major problem in most African countries, including Zambia (UNECA, 2020). Without sustainable financing, it is difficult, if not impossible, for Zambia to fulfill its objectives with regard to private sector and industrial development. Unfortunately, the traditional sources of financing have proven insufficient to cope with industry and private sector development in Zambia, especially due to shrinking fiscal space in the aftermath of the COVID-19 pandemic. In November 2020, the country opted to skip a $42.5 million eurobond repayment, becoming the first African nation to default on its debt in the COVID-19 era. According to World Bank data, the debt-to-GDP ratio for Zambia almost doubled from 2019 to 2020, moving up from 61.9% in 2019 to 103.7% in 2020. These figures show that heavy reliance on external financial flows has shown its limits, especially in the context of recent crises.

3. ‘Innovative financing’ encompasses new or novel non-traditional mechanisms designed to raise funds from unconventional sources through innovative projects (e.g., public-private partnerships, market-based financial transactions, and micro-contributions, among others). Innovative finance leverages greater investment from multiple investors (both private and public) by lowering the cost of capital through measures that mitigate risks and deliver greater outcomes. Innovative financing has become an important tool in promoting development. ECA ERA (2020) on “Innovative Finance for Private Sector Development in Africa” reviewed different categories of financing relevant for the private sector in Africa. The report zoomed in on categories such as banking and commercial financial services, non-bank financial institutions (such as microfinance institutions, savings and loan associations, insurance firms and housing finance companies), Public-Private Partnerships, bonds (including green/sustainability bonds), credit guarantee schemes, fintech solutions, trade finance and mergers and acquisitions (M&A). Novel tools such as orange or blue bonds, as well as Social and Development Impact Bonds (SIBs and DIBs) are gaining traction as potent tools for mobilizing impact-driven financing. In addition, Debt-for-Development Swaps, or even more specifically, Debt-For-SDGs swaps constitute an avenue for purpose-driven debt restructuring (for instance, EU (2021)). World Bank (2015) identifies also among others, solidarity taxes and carbon finance, as well as Results-Based Financing and Partial Risk Guarantees as promising instruments.

4. Against this background, in order to support Zambia in leveraging innovative sources of finance for inclusive industrialization and private sector development, the Subregional Office for Southern Africa is leading the development of a Handbook on innovative finance for promoting inclusive industrialization and private sector development in Zambia. This Handbook shall build on the theoretical desk review of the various types for innovative financial instruments and collection of best practices, coupled with a practical step-by-step guidance for policymakers, to maximise the practical applicability of identified solutions. 5. The handbook will be prepared by the Subregional Office for Southern Africa in collaboration with relevant ECA divisions, including the Private Sector Development and Finance Division and the Macroeconomic Policy and Governance Division, in consultation with the Zambia Ministry of Finance and Planning and other relevant stakeholders. The handbook will go beyond merely theretical reflection on the financial instruments; it shall propose specific avenues of implementation, including identifying key financing gaps and stakeholders to be targeted, partners to be engaged in the implementation, as well as specific steps to be undertaken.

DUTIES AND RESPONSIBILITIES: 6. Under the general supervision of the Chief of the Subregional Initiatives Section of the Sub-Regional Office for Southern Africa, and the direct supervision of the Associate Economic Affairs Officer of the Section; the successful candidate shall work in collaboration with a dedicated national/secondary consultant, to accomplish the following tasks: (i) Prepare an inception report detailing among other things, the work to be undertaken, the conceptual framework, the methodology, work plan task division across the international and national consultant and annotated outline of the report; (ii) Oversee the work of the national consultant as it feeds into the main study report; (iii) Review past and current literature, key analytical frameworks, methodologies and other documents relevant for the innovative financial instruments landscape; (iv) Establish an effective methodology and present an appropriate analytical framework to identify, categorize and describe the key innovative finance instruments for industrialization and private sector development, and a methodology for selecting innovative finance instruments which could be applied in Zambia; (v) Review and analyse best practice and case studies of successful innovative financial instruments undertaken in other countries across Africa and other developing regions which could be applied for the specific financing challenges encountered in Zambia; (vi) Prepare data collection tools, including a survey questionnaire, undertake a desk review, as well as compilation of data from databases to collect data and information relevant to the assignment, and oversee the national consultant in carrying out interviews and other necessary consultations as required; (vii) Analyze data and information gathered from different sources to inform the drafting of the report using appropriate methodologies and tools; (viii) Engage on an ongoing basis with the ECA-SRO-SA and the focal point in the Ministry of Finance and National Planning of Zambia to ensure relevance of the findings with regard to planned implementation of innovative financial instruments; (ix) For the innovative financial instruments identified as most promising for Zambia (see point 3), prepare step-by-step guidance on implementation of the instruments (see for instance IFC (2022)); (x) Prepare and submit for review by ECA-SRO-SA, a robust, analytical and well-informed Handbook on ‘Innovative Finance for Industrialization and Private Sector Development in Zambia’ (xi) Provide substantive support to the dissemination and capacity building based on the findings, including (tentatively) to a workshop/validation meeting.

The development of the Handbook is expected to deliver the following outcomes: a) Improved understanding and awareness of the interrelationship between innovative finance, private sector development and industrialization in Zambia. b) Increased awareness of the current state of financing, industrialization and private sector development in Zambia. c) In-depth understanding of the types of innovative finance instruments, their architecture and possible impact; d) Enhanced capacity of the government entities in selecting and applying adequate innovative financing instruments for promoting industrialization and private sector development in Zambia. e) Increased knowledge of innovative financing models that are relevant for the Zambian economy.

Qualifications/special skills Advanced university degree (at least a Masters Degree or equivalent) in economics, finance, international development, public policy or related discipline is required. A first degree with 2 additional years of qualifying experience may be accepted in lieu of an Advance degree A minimum of 7 years of progressively responsible experience at the national and/or international level in international development, international finance and/or fiscal policy work. Experience in research/analytical work on innovative financial instruments in Africa, either in the academia or in private, public or civil society organizations is an advantage. Professional experience in finance, public development bank or other relevant policy field is an advantage.

Languages English and French are the working languages of the UN. For this consultancy Fluency in English both written and spoken are required

No Fee THE UNITED NATIONS DOES NOT CHARGE A FEE AT ANY STAGE OF THE RECRUITMENT PROCESS (APPLICATION, INTERVIEW MEETING, PROCESSING, OR TRAINING). THE UNITED NATIONS DOES NOT CONCERN ITSELF WITH INFORMATION ON APPLICANTS’ BANK ACCOUNTS.