RFA #8

Project Description

LIFE is a 5-year USAID-funded project implemented by Palladium. The purpose of LIFE project is to improve economic opportunities and livelihoods of low income individuals and microenterprises by expanding and strengthening microfinance associations’ and member institutions’ services and enhancing entrepreneurs’ business skills.  To this end, LIFE will improve livelihoods, strengthen microfinance activities and advance inclusive finance.  Inclusive Finance, also referred to as financial inclusion, is defined as “universal access to a broad range of financial services, at a reasonable cost, provided by a diversity of sound and sustainable institutions.” LIFE will consolidate the gains made under the Lebanon Investment in Microfinance Program (LIM) and expand inclusive finance to the unbanked and higher-risk, micro business clientele.

Project Goal

The USAID/Lebanon LIFE project will strengthen livelihoods, advance the microfinance industry, and inclusive finance, in order to improve economic opportunities for under-served entrepreneurs and recipients of microfinance services. 

Funding Opportunity Statement

For the purpose of this RFA, the project will use grants to support achievement of LIFE results under Component 2- Microcredit.

The microfinance industry in Lebanon is targeting as potential clients more than 90% of existing businesses. These small businesses are informal micro and very small enterprises. They have less than five employees; they are not formally registered and they lack collaterals and assets required by formal banks to provide them with Access to Finance.

The micro-finance market in Lebanon shows signs of overheating; the sector has been growing rapidly over the recent years and, according to market players, competition has become more intense as commercial banks are trying to tap the bottom of the pyramid reservoir. The financial sector has been witnessing more mergers and acquisitions among different players.

Today, the access to finance industry is witnessing an evolution through the integration of transformative financial technology “Fintech”. Fintech and “Digital Financial Services” (DFS) are emerging, mitigating and leveraging MFIs risks, operational performance and outreach.

Fintech refers to the technological finance solutions that would allow the FIs’ financial products and services to become user-friendly, less costly to deliver and optimized for digital channels.

Fintech solutions will have significant impact on operational performance and outreach of financial institutions. MFIs employing appropriate Fintech will sustain their competitive advantages in the competition with commercial banks beyond bricks and mortars.

Tech solutions include e-platforms for financial and non-financial services that clients could access for lending, financial education and other emerging types of services. Solutions could support as well the internal operations of MFIs and financial institutions that will lead as well to reduce the costs of transactions and enhance the client’s experience, as well as increasing operational performance. This includes digitizing workflows “Digital Field Applications”, MFIs delivery channels, credit scoring solutions, customer mobile applications among others. Fintech solutions are covering among others: mobile banking, digital financial education, identification technology, tablets and digital fields’ applications, alternative scoring technologies.

LIFE aims to accelerate the investments in Fintech and help financial institutions and MFIs overcome challenging factors, such as high cost of acquiring and integrating the technology, partnering with Fintech companies and managing the change.

LIFE is expecting Digital Financial Services and Financial Technology “Fintech” to reduce the costs of transactions for “Financial Institutions” (FIs) and “Microfinance Institutions” (MFIs). Fintech solutions could expand their outreach for the unbanked-rural communities, increase their operational efficiency and enhance their unbanked clients’ experience. 

LIFE will encourage partnerships with Fintech and digital financial services providers that would lead to the provision of financial services through innovative technologies; it expects these investments to increase the outreach to the poor, improve and build management capacity, competitive edge, efficiency and effectiveness.

The purpose of this RFA is to accelerate and shed further light on how non-banking financial institutions (NBFIs) could leverage Fintech solutions to remain competitive in the rapidly changing financial landscape in Lebanon.

LIFE USAID is looking at how MFIs could benefit from this opportunity and adapt to this dynamic environment. LIFE is responding to this new and evolving milieu to determine the success of microfinancing in Lebanon.

LIFE intends to award grants to MFIs willing to invest in DFS, Fintech solutions and working under the FI umbrella.  MFIs must meet the criteria of small scale MFI as described above. MFI willing to apply, should be member of the Lebanese Microfinance Finance Association.