Evaluation of Africa Leasing Facility

THE BACKGROUND

In many small and middle-income emerging economies, the leasing industry has not been fully explored as an alternative for financing business. There has been a high demand for leasing products and services, including financial education and knowledge transfers, in sub-Sahara Africa and other frontier markets. Whereas access to traditional finance has been constrained in those countries (e.g. high collateral policies, lack of regulatory framework, information asymmetries), leasing allows businesses to make use of equipment’s which they have not purchased outrightly. As such, business could use the financial benefits arising from using the leased equipment as the means to pay the lease instalment payment.

Additionally, equipment leasing helped business to manage their financial resources prudently since they could use the cash for other pressing needs such as employee remuneration, developing marketing strategies, procuring raw materials etc., with a higher return on investment, as against investing an immediate property acquisition which could stifle their business operations. Existing assessment of market needs provided evidence that access to finance in sub-Sahara Africa, and in particular the leasing industry, has been a major issue. IFC conducted several market assessments which also demonstrated the potential of leasing for the continent.

THE PROJECT

FINANCE FOR IMPACT conducted an ex-post evaluation of the African Leasing Facility (ALF II) targeting Fragile Country-Affected States (FCAS). The purpose of the evaluation is to provide IFC and development partners with an assessment of the design and delivery of the program. The evaluation will also inform IFC’s leasing programs in other emerging markets and regions globally. The evaluation will address the implementation process of the leasing advisory services and business model, and identify the results achieved for the intended targeted outputs, outcomes and impact. This assessment will also provide learning from experience to improve the understanding of how development agencies and donors can best contribute to the development and growth of leasing in Africa.

THE RESULTS

FINANCE FOR IMPACT undertook the following activities among others:

• Interview and collect data on results (i.e. outputs and outcomes) of the program in four of the 10+ countries under ALF II (Cote d’Ivoire, Ethiopia, Guinea and Sierra Leone);
• Develop four case studies based on the experience in four selected countries participating in ALF II related to beneficiaries of IFC leasing advisory services). The selection methodology / criteria should be decided by leasing team and the consultant. The case studies should highlight the level of advisory services received by these entities and the impact on leasing development;
• Interact with the central banks, ministries of finance and other stakeholders including business associations in respective countries under ALF II to identify: Number of entities reporting satisfied or very satisfied with IFC leasing interventions in their respective countries; Number of entities that implemented recommended changes proposed by ALF II; Number of entities reporting improved knowledge of leasing and practices; and Improvements experienced as a result of leasing training, study tours, seminars and workshops.
• Interview relevant IFC staff and all leasing consultants hired by ALF II to obtain feedback on their contribution to leasing interventions and to establish level of results achieved and to ascertain their opinion of the program’s implementation, challenges, results and lessons learnt.
• Report in detail on your findings where relevant under the seven key topics: Relevance, Efficiency, Effectiveness, Impact, Sustainability, and lessons learned.
• Provide recommendations deducted from the findings.