Social Entrepreneurship in the Western Balkans and Croatia- Study to assess the market potential for EBRD existing and new product

Location:

Regional

Business sector:

Other

Project number:

65096

Funding source:

Not Yet Determined

Contract type:

Consultancy Services

Notice type:

Invitation for expressions of interest (CSU)

Issue date:

26 May 2016

Closing date:

24 Jun 2016   at  23:59   London

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THE DEADLINE FOR SUBMISSION OF EXPRESSIONS OF INTEREST IS CHANGED TO 24 JUNE 2016. CHANGES HAVE BEEN MADE TO THE TEXT OF THE PROCUREMENT NOTICE: SEE BELOW IN CAPITAL LETTERS, UNDERLINED, IN BOLD.

Project Description:

The European Bank for Reconstruction and Development (the “EBRD” or the “Bank”) aims to identify how the Bank could be additional to the development of the social entrepreneurship market in the countries of the Western Balkans and Croatia, and support social entrepreneurship either through promoting and/or adapting existing EBRD products or developing new products tailored to the needs of this new market.

Currently, the EBRD does not provide targeted support to social entrepreneurs however, the introduction of economic inclusion as a part of the Bank’s transition mandate may open up opportunities to explore this area further. Also a number of mechanisms used to support MSMEs could be adapted to support social enterprises, in particular using a blended approach combining access to finance and know-how (business advisory services, capacity building, etc.).

Despite the growing number of entities operating like social enterprises in the Western Balkans, the lack of comprehensive mapping of social enterprises and their ecosystem hampers a full understanding of the scale and potential of the sector for economic inclusion purposes. The Group of Experts of the European Commission on Social Entrepreneurship (GECES) also recognised that the limited knowledge about social entrepreneurship as an emerging sector in the Western Balkans is a key obstacle for the development of the sector.

In this respect the Bank intends to engage a consultant to undertake a study , the focus of which should be social enterprises from civil society organisations (CSOs) with commercial arms to businesses that re-invest all or part of their profits into social activities or extensively employ staff from certain vulnerable target groups, such as young women and men and marginalised social groups. The study will aim to define the segments of the social enterprise sector where EBRD might consider engagement.

The geographical scope of the study will be Croatia and the countries of the Western Balkans that are part of the EU enlargement area, namely Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia. Given the size of the countries, it is considered appropriate to look at the regional aspect of social entrepreneurship and related social impact investing market.

Assignment Description

The Bank now intends to engage a consulting company (the “Consultant”) to undertake the assignment, which will consist of:

a) market study of the social entrepreneurship ecosystem IN CROATIA in the countries of the Western Balkans that are part of the EU enlargement area, namely Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia.

b) A business proposal on how the EBRD could: apply and/or adapt its existing financial products/advisory services and technical assistance to social enterprises in the Western Balkans and Croatia; apply and/or adapt existing social finance tools or otherwise foster the ecosystem for social enterprises in accordance with international best practices.

The expected outcome of the assignment is to develop recommendations on how the EBRD could:

- apply and/or adapt its existing financial products/advisory services and technical assistance to social enterprises in the Western Balkans AND CROATIA;

- apply and/or adapt existing social finance tools to the Western Balkans AND CROATIA context; or

- apply and/or adapt appropriate strategies to foster the development of the enabling ecosystem for social enterprises in accordance with international best practices;

- develop relevant requirements for financial and social reporting in order to identify, monitor and evaluate performance of social enterprises.

The selected Consultant is expected to provide the following services:

1. An inception report

Market study

The inception report related to the market study will entail the following:

- A table of content of the market study;

- The methodology used for the field research also including the preliminarily list of stakeholders to be interviewed per country and at international level if applicable;

- The expected timetable for the submission of the deliverables.

The market study should entail 7 sections, namely one for each of the countries under review.

The table of content of the market study should draw on (though not replicating) the existing methodology used in the EC funded Map of Social Enterprises and their Eco-systems in Europe. The objective will be to ensure comparability of data across countries but placing a greater focus on access to finance and the emergence of new instruments in support to social entrepreneurship made available both at national and international level.

The consultant should base and expand the table of content on at least the following aspects:

1) Outline of the executive Summary

2) Introduction

3) The ecosystem for social enterprises

a) The policy and legal framework for social enterprises

b) Public sector schemes targeting social enterprises

c) Other support and infrastructure available to social enterprises both at national and international level

d) Human capital: how and to what extent the current education system and vocational training offer foster social entrepreneurship as a career option.

4) Mapping of social enterprises

a) Spectrum of social enterprises (legal form, business models, size, financial turnover, social impact, field of activities, target group)

b) Social enterprises’ contribution to youth and gender inclusion as well as expansion of services (that verifiably enhance economic opportunities) to remote / least developed regions [1]

c) Creditworthiness of social enterprises

d) Gender analysis of social enterprises focusing on, when available, the following: i) sex-disaggregated data on ownership and management of social enterprises; ii) existing discriminations/obstacles/difficulties in access to finance and to markets; iii) any additional relevant information pointing out differences based on gender.

e) Monitoring and evaluation systems used by social enterprises to report on financial results and social impact

5) The social investment market

a) Supply and demand for finance

b) Access to traditional sources of finance by social enterprises (and/or impediments thereto)

c) Specialised social investors, social financial institutions and social impact funds

d) Specific financial instruments available for social enterprises

e) Market gap analysis and opportunity for EBRD investment

6) Gap analysis related to the start-up and development of social enterprises and related recommendations on:

a) Legal framework

b) Access to finance: (i) Funding needs of social enterprises in the Western Balkans AND CROATIA vs funding and financial tools currently available; (ii) Market rate gap versus solvability of social enterprises (e.g. how much support should social enterprises receive in order to repay loans at commercial rates)

c) Creation of an eco-system for social enterprises (e.g. business skills assessment and gap analysis, presence of supporting network for social enterprises, etc.)

d)

7) Benchmarking of the social entrepreneurship sector in the Western Balkans against Member States of the European Union that are EBRD country of operations, including but not limited to Poland and Romania. A benchmarking with countries where the social entrepreneurship sector is more developed, such as the UK or the Italian market, will also be considered as part of the study. Indicators of the benchmarking will include inter alia existence of a specific legal framework for social enterprises (no legal review will be envisaged), size of the social enterprises, access to the market, access to credit.

8) Annex

a) Methodological annexes including questionnaires

b) Bibliography

Development of recommendations for the EBRD

The inception report related to the development of recommendations for the EBRD should outline the table of content, which will include inter alia:

- A review of existing social finance tools such as development impact bonds (DIBs), payment-by-result schemes, hybrid financing tools, crowdfunding, etc. currently in use or under development in the European context. Social finance tools used by other international organisations, development aid agencies, IFIs, private social investors, civil society organisations, and governments, primarily in the European Union, should be used as a benchmark for the study (e.g. French Development Agency and Credit Cooperatif, USAID, Social Finance UK, Big Society Capital, Goldman Sachs, Deutsche Bank, Interamerican Development Bank, Asian Development Bank, European Investment Bank, European Investment Fund or the UN’s Social Impact Fund).

- A review of monitoring and evaluation of financial and social impact reporting requirements used by social impact funds and other social investors.

- A review of social finance mechanisms, including social impact funds, having a structure that could be applicable to the needs of the emerging social entrepreneurship market in the Western Balkans and Croatia.

- A review of models of social entrepreneurship supporting networks in Europe that could be replicated or expanded to the Western Balkans and Croatia to promote regional integration of the sector.

- A review of EBRD existing products and services that could be offered/adapted to social entrepreneurs in the countries under analysis. This review is aimed at showing the consultant(s) understanding of the availability and use of financial/business advisory/and technical assistance instruments by the EBRD in the countries where it operates, with a focus on the support to micro and small enterprises. This background research will facilitate the Consultant(s) in scoping the applicability of EBRD’s finance, business advisory and technical assistance mechanisms for micro and small firms qualifying as social enterprises in the Western Balkans AND CROATIA.

2. Market study[2]

The Consultant will proceed with the market study as per inception report agreed with the CSEU. The Consultant will draw the findings of its market study from a mix of literature review and field research. Consultations with local and regional stakeholders and key actors of social impact investing and social entrepreneurship shall be regarded as the primary source of information for the market study.

3. Development of recommendations for the EBRD

The recommendations should focus on the following main aspects, namely on how the EBRD could:

- apply and/or adapt its existing financial products/advisory services and technical assistance to social enterprises in the Western Balkans AND CROATIA;

- apply and/or adapt existing social finance tools to the Western Balkans AND CROATIAN context; or

- apply and/or adapt appropriate strategies to foster the development of the enabling ecosystem for social enterprises in accordance with international best practices;

- develop relevant requirements for financial and social reporting in order to identify, monitor and evaluate performance of social enterprises.

The Consultant will proceed with the review of existing financial mechanisms for social enterprises already in use or under development by other operators with the objective to inform the development of recommendations for the EBRD. The recommendations should relate to specific investment/business advisory/technical assistance opportunities that the EBRD could consider taking in supporting social entrepreneurship in the countries of the Western Balkans and Croatia both at country level and also with the aim to tentatively develop a regional programme.[3]

The recommendations should be gender-responsive, i.e. suggesting any tailored actions aimed to close gender gaps in any aspects (e.g. legislative framework, financing, ownership, management, marketing, etc.) related to social entrepreneurship.

The Consultant shall develop recommendations also related to the development of potential new products or the adaptation of existing products that the Bank could use in support to social entrepreneurs.

As part of the recommendations, the Consultant will suggest an operational definition of social entrepreneurship for the EBRD aimed at identifying the different segments of social entrepreneurs operating between the purely for-profit and purely for-impact operational model, firm’s size, services and products. For EBRD purposes only registered entities could be taking into consideration. For the different segments of social entrepreneurs, the Consultant shall identify different products and services or technical assistance needed for the sector to develop by assessing the applicability of existing social finance tools. Pending the findings of the market study, the assignment could be seen as preparatory phase to the EBRD support to social entrepreneurship in the Western Balkans and Croatia.

Status of Selection Process: Interested firms or groups of firms are hereby invited to submit expressions of interest.

Assignment Start Date and Duration: The Assignment is expected to start in June 2016 and has an estimated overall duration of two months.

Cost Estimate for the Assignment: EUR 74,300 (exclusive of VAT).

The Consultant must determine whether any VAT would be chargeable on the services and the basis for that determination, without taking into consideration the special status of the Bank as an IFI and state this to the Bank in their response to the Invitation for Expressions of Interest. To the extent that a Consultant incurs input VAT on goods and services purchased in connection with the provision of services (e.g. VAT on airline ticket) which is not otherwise recoverable by the consultant from the local tax authority, the gross cost to the consultant of such expenses shall be treated as a reimbursable expense.

Funding Source: It is expected that the Assignment will be funded by the EBRD Technical Cooperation Programme. Selection and contracting will be subject to the availability of funding.

Eligibility: There are no eligibility restrictions.

Consultant Profile: Corporate services are required. The Consultant will be a firm or a group of firms preferably with previous project experience related to:

1. Development of financial products for social enterprises

2. Firm’s project experience in Western Balkans and Croatia related to the assignment.

The Consultant’s expert team is expected to include key experts as follows:

a Key Expert No 1: Team Leader with BANKING BACKGROUND AND preferably 12 years of previous professional experience in impact investing and/or support to social entrepreneurship. Experience in setting up regional programmes for the development of SMEs, promotion of employment and similar would be considered an advantage. Experience in developing financial products for social enterprises is mandatory.

b Key Experts 2: Pool of local experts with experience and knowledge in the field of social enterprises of Western Balkans and/or Croatia, with the capacity of conducting field research for the market study and identify opportunities for the EBRD to support/invest social enterprises in Western Balkans and Croatia.

c. Key Expert 3: Social Entrepreneurship Expert with extensive international experience in developing financial products for social enterprises, good knowledge of structure and decision making processes of stakeholders in the field of the assignment in Western Balkans and Croatia as well as experience in networking with the said stakeholders.

All Key Experts should be fluent in English. Key Experts 2 should be fluent in one or more languages of the countries of Western Balkans and/or Croatian.

Submission Requirements: In order to determine the capability and experience of Consultants seeking to be shortlisted for this assignment, the information submitted should include the following:

1. Company/group of firms’ profile, organisation and staffing (max. 2-4 pages).

2. Details of previous project experience or similar assignments particularly undertaken in the previous five years, including information on contract value, contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided (if different from duration) , main activities, objectives.

3. CVs of key experts who could carry out the assignment detailing qualifications, experience in similar assignments, particularly assignments undertaken in the previous five years, including information on contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided, assignment budget, main activities, objectives.

4. Completed Consultant Declaration Form and Contact Sheet, the template for which is available from the following web-link:

http://www.ebrd.com/pages/workingwithus/procurement/notices/csu/contact_sheet.doc.

The above information should not exceed 100 pages excluding CVs and contact sheet.

The complete expression of interest (including CVs, Consultant Declaration and Contact Sheet) should be submitted, in English electronically through e-Selection, to reach the Bank not later than the closing date. The expression of interest shall be one file (pdf). The EBRD reserves the right to reject applications of firms submitting more than one file. Only if the permissible file size is exceeded (4MB), the Consultant may split the expression of interest into further files.

Bank Contact Person:

Marina Matushina

Advisor, Technical Cooperation

Technical Co-operation

European Bank for Reconstruction and Development

One Exchange Square

London EC2A 2JN

Tel: + 44 207338 657

e-mail:MatushiM@ebrd.com (submissions should be sent through eSelection and NOT to this email address)

Notes:

1. The selection will normally be made from responses to this notification only. Consultants will not be asked to submit a proposal. The highest-ranked Consultant will be selected from a shortlist and be invited to negotiate the contract, subject to availability of funding.

2. The shortlist criteria are:

(a) Firm’s previous experience in developing social finance products for social enterprises 50%

(c) Firm’s project experience in Western Balkans and Croatia related to the assignment10%

(d) CV of Key Experts 40%



[1] Examples of contribution of social enterprises to inclusion can be through a) employment, ownership, governance structure or direct labour participation by young men and women and other vulnerable groups 2) services and products provided by social enterprises. Particular attention will be paid to the contribution of social entrepreneurship in addressing issues relate to youth employment given the critical unemployment youth rates in the focus region.

[2] The information and views contained in the market study will be solely those of the author(s) and will not necessarily reflect the opinion of the EBRD, which will not guarantee the accuracy of the data included in the study. The EBRD shall not be held responsible for the use which may be made of the information contained in the study.

[3] The recommendations should be specific to types of investments the EBRD could take, structure of investments and/or other support, potential participation to social impact funds active in the region development of credit lines through social financial intermediaries, policy dialogue initiatives for the promotion of social entrepreneurship as part of its broader mandate to promote entrepreneurship, development of business skills, support to the development of social entrepreneurship networks, etc.