Terms of Reference (ToR) for Architect Credit Guarantee Mechanisms to Promote Investment in Nepal’s Transformed Food System

Terms of Reference (ToR) for

Architect Credit Guarantee Mechanisms to Promote Investment in Nepal’s Transformed Food System

Background:

Heifer Project International Nepal (Heifer) is committed to transforming rural communities by co-creating inclusive, thriving, resilient and sustainable food systems, with smallholder farmers at the center of change. Since 1997, Heifer has served more than 418,000 families, supporting their journey from subsistence to prosperity through community-driven agriculture and livestock initiatives.

Heifer collaborates with local governments and partners, engages women, youth and smallholder farmer to improve agricultural practices, supports women-led cooperatives, and creates lasting economic change. By strengthening self-help groups, women-led cooperatives and producer organizations, Heifer builds social capital and collective agency, empowering communities to lead their own transformation. 

Despite agriculture contributing about one-third of Nepal’s GDP and employing over two-thirds of its workforce, smallholder farmers continue to face constraints in accessing suitable and affordable finance. Existing credit options often fail to meet their needs due to lack of quality collateral, limited availability or stringent conditions, increasing production costs and reducing competitiveness. 

Heifer has emerged as a key development agency in mobilizing agricultural investments, forging strategic partnerships, and advancing sustainable agriculture through its signature programs VITA, SLVC, and Milky Way. Since 1997, Heifer has supported financial inclusion by linking smallholder farmers and women-led cooperatives with formal financial institutions, facilitating USD 20.5 million in agriculture across Nepal.

Aligned with Nepal’s Agriculture Investment Decade (B.S. 2082-2092) ten-year development campaign, the Integrated National Financing Framework (INFF) Financing Strategy 2025–2030, and the 16th Five-Year Plan (2024/25–2028/29), which prioritize agricultural investment as a key driver of economic growth, Heifer plans to enhance and accelerate agricultural financing.

Heifer has been successfully implementing a couple of de-risking facilities to facilitate investment in smallholder farmers and agricultural cooperatives. Building on this foundation, Heifer aims to scale these interventions strategically and facilitate capital flow through enhanced de-risking and guarantee mechanisms. This approach will be designed to establish a sustainable full cycle of investment within the agriculture sector, generating long-term economic, social, and environmental impacts. 

Therefore, Heifer is seeking highly competent and dynamic experts to review existing de-risking mechanisms and to suggest a well-structured, viable guarantee model that can be easily implemented and scaled.

Objectives:

The objective of this study is to develop a strategic framework for utilizing guarantee funds to accelerate investment in the agriculture sector. This study will build on and complement existing guarantee mechanisms in Nepal (such as DCGF and other facilities).

• Map and analyze existing and potential de-risking and guarantee mechanisms specifically for investment in food system in Nepal, including identified gaps and opportunities.
• Identify key constraints specifically affecting use and scaling of guarantee mechanisms including those arising from legal, and regulatory frameworks. 
• Recommend legally sound and operationally feasible pathway for establishing or deploying guarantee mechanisms, including local, national (e.g., Deposit and Credit Guarantee Fund-DCGF, local government) and international funds, to mobilize investment in Nepal’s food system.

Scope of work

The study should develop comprehensive, actionable guidelines for implementing guarantee mechanisms to facilitate investment in Nepal’s agriculture sector across DCGF, government (local, provincial and national), cooperatives, banks and financial institutions (BFIs). The study will build on existing mechanisms and focus on improving their effective utilization and scalability.

• Review existing guarantee mechanisms and de-risking instruments in Nepal’s agriculture financing with focus on gaps, inefficiencies and opportunities for improving and scaling.
• Validate social capital as a de-risking mechanism for financing.
• Identify and detail all potential sources of guarantee funds, including government agencies at national, provincial and local levels, development partners, impact investors, private sector entities, and BFIs. Include their terms sheet, conditions, expectations and requirements.
• Review national policies, laws and regulatory frameworks governing guarantee funds, agricultural financing, cooperative operations and financial sector regulations including DCGF credit guarantee schemes, NRB regulatory frameworks, risk management provisions and agri-lending practices and manuals (e.g. Sahaj/NBI).
• Special review of newly released government policy 'Good Governance Roadmap 2082' for tackling the cooperative crisis.
• Maps require approvals, registrations and compliance requirements at each institutional level to implement guarantee mechanism including tax implications, accounting standards and financial reporting requirements for guarantee fund operations. 
• Identify potential legal risks and propose mitigation strategies and recommend policy and advocacy priorities or regulatory amendments needed to facilitate smooth implementation.
• Design viable guarantee mechanisms tailored to each institutional level, including credit guarantee schemes, risk-sharing facilities, revolving fund structures, and innovative de-risking instruments suitable to facilitate investment in agriculture.
• Define priority areas for using guarantee funds, including key value chains, locations, and target groups. 
• For each potential mechanism, provide step-by-step operational processes consisting of application procedures, eligibility and documentation requirements, due diligence, approvals, decision-making structures, and fund transfer modalities. 
• Analyze potential implementation challenges (governance, capacity, default, political interference, regulatory constraints, bureaucratic delays, coordination issues, and fund management) and recommend preventive measures, mitigation strategies with clear action steps.
• Demonstrate technical rigor in financial structuring including risk-sharing, leverage and pricing mechanisms and adequately address scaling risks such as over-indebtedness, portfolio concentration and potential market distortion.
• Define procedures for claim management in case of default or risk realization covering documentation, claim submission, verification, approval, disbursement, and recovery across each institutional level, in compliance with laws and policies. 
• Specify procedures for fund management after guarantee period completion for releasing unutilized funds for rotation to new guarantee cycles, redeployment to other agriculture initiatives, or conversion to revolving fund capital. Address contractual and legal requirements, decision-making criteria, accounting treatment and tax implications.

Ensure the proposed mechanism aligns with and complements existing DCGF credit guarantee schemes. The study should develop guidelines covering the full lifecycle of the guarantee mechanism from sourcing and securing guarantee funds, operationalizing them within the agriculture financing ecosystem, utilizing and managing risks, to exiting and reusing capital effectively. 

Deliverables:

The consultant/team will deliver the following:

• Inception Report: Methodology, work plan, timeline and data collection tools.
• Major Findings Sharing: Present draft findings to Heifer team and integrate feedback.
• Draft Report: Literature review, preliminary findings and initial recommendations and final report with complete mechanism design and procedures including practical outputs such as SOPs, process flow diagrams, and mechanism design options.

Required Qualifications and Experience:

• Master’s degree in economics, Finance, Law, Public Policy, or a related field.
• Minimum 10 years of proven experience in financing and law/policy related work.
• The consulting team must collectively include Experts on Financial/Guarantee Mechanism Specialist and Legal and Regulation.
• Demonstrated experience in designing and/or operationalizing guarantee funds, credit enhancement mechanisms, or risk-sharing facilities, preferably in agriculture or SME finance, including financial structuring aspects such as risk sharing, leverage and pricing.
• Strong technical expertise in de-risking instruments, including credit guarantees, risk-sharing facilities, revolving funds, and blended finance models with practical application experience preferred. 
• Practical experience with Banking and Financial Institutions (BFIs), including credit appraisal processes, risk management, and regulatory compliance and implementation of financial mechanisms.
• Experience with public-sector financing instruments, including government-backed guarantee funds (e.g., DCGF or comparable mechanisms).
• In-depth knowledge of Nepal’s legal and regulatory frameworks related to financial services, cooperatives, guarantees, collateral, taxation, and fund management.
• Proven experience working with government agencies and regulators, BFIs, cooperatives, development partners, and impact investors.
• Strong track record in policy and regulatory analysis and ability to develop legally sound, practical, and implementable policy recommendations and advocacy priorities.
• Experience working with smallholder farmers, cooperatives, and agri-SMEs in Nepal with understanding of agriculture value chains and rural finance system will be an added advantage.
• Excellent analytical, writing, and presentation skills, with the ability to produce clear and actionable guidance.

Duration and Assignment:

The assignment is expected to cover 60 days of time from the date of signing the contract, over a two and half month’s period.

Reporting and Supervision:

The team/consultant will work under the direct supervision of Access to Finance Lead and coordinate closely with designated focal points. Regular progress updates will be provided as agreed.

How to Apply:

Qualified individuals, teams or firms are invited to submit the application along with below documents to Procurement-NP@heifer.org with title “Application for Architect Credit Guarantee Mechanisms to Promote Investment in Nepal’s Transformed Food System” by no later than 15 April, 2026, 5:00 PM.

Documents Required:

1. Cover letter
2. A technical proposal outlining understanding of the ToR, methodology, work plan, and team composition.
3. Financial proposal
4. CVs of key personnel (not more than 3 pages each CV)
5. Relevant work samples or references
6. Registration Certificate
7. VAT registration Certificate
8. Tax Clearance Certificate (FY 081-82)

Note: VAT registered vendors are encouraged to apply.

Heifer reserves the right to accept or reject any proposal and to annul the selection process and reject all Proposals at any time prior to contract award, without thereby incurring any liability to affected individuals.