Mémorandum of Understanding
BETWEEN
Handicap International (HI), an International non-profit organization organized in accordance with French law of 1 July 1901, founded on July 19, 1982 and recognized as a humanitarian concern, based in 14 Avenue Berthelot, 69361 Lyon Cedex 07, France, and is represented by Mr. Yann Cornic, as Program Director, Mano River Program, Sierra Leone/Liberia, by authority of the President, hereinafter referred to as HI, on the one hand;
AND
Lift Above Poverty Organization (LAPO) located at 56, John Street, Freetown, Sierra Leone, and represented by Mr. Aighobahi O Ferguson, as General Manager, hereinafter referred to as LAPO, on the other hand;
AFTER RECALLING THAT:
Handicap International is a humanitarian organization that aims to help anyone in a vulnerable situation, particularly for people with disabilities (PWDs). It campaigns for the development and reinforcement of capacity of individuals with disabilities to improve their living conditions and their greater participation in society.
HI carries out interventions in different developmental areas that includes health, education, anti-mine, the socio-economic development and promotion of the rights of disabled people.
Handicap International is implementing a project for livelihoods development in the communes of Kamara, Gbense, Tankoro and Nimikoro chiefdoms of Kono, and in Western rural and Western urban districts of Freetown. The project aims to improve the economic empowerment of persons with disabilities and other vulnerable groups in the target communities by improving their access to sustainable income generation and marketable skills development activities.
The Lift Above Poverty Organization (LAPO) is a licensed non-deposit taking microfinance institution that started its operation in Sierra Leone in March, 2008 and currently has reached over 22,000 poor households with its financial services through 16 branches around the country including Kono district.
MOU between Handicap International and Lift Above Poverty Organization 1 IT WAS AGREED THAT:
Article 1 - PURPOSE
This agreement is intended to facilitate the linkage between LAPO and project beneficiaries to allow them access financial services including people with disabilities identified and accompanied by Handicap International as part of their professional integration within the operational areas of the project.
Article 2 – TARGET BENEFICIARIES/CLIENTS
The beneficiaries for financial service, shall include two categories,
2.1 General clients shall include residents of the communities, above 18 years of age, covered by the livelihood project and especially those who are running a business or willing to expand existing business with additional capital;
2.2 Clients from vulnerable households shall include woman-head of poor household, persons with disabilities and or relatives of persons with disabilities or their representatives who have a running business or willing to develop a business.
Article 3 – SKILL DEVELOPMENT TRAINING FOR THE BENEFICIARIES
Handicap International, shall ORGANIZE field-based training programs for the vulnerable household beneficiaries/clients in the target communities. The training is intended to develop specific entrepreneurship skills among beneficiaries and develop their capacities to utilize effectively the financial services of LAPO. The training will focus on the following;
. Planning and management of micro-enterprises in general trading and business; . Planning and management of micro-enterprises in the fields of food- processing, agriculture, livestock, fisheries and cottage industry.
HI shall invite LAPO field staff in the training courses to orientate beneficiaries/clients on credit policy and procedures of LAPO.
HI and LAPO staff shall organize training courses for the group members prior to extending credit. This training shall be organized as per training plan and approaches, and sufficiently in line with LAPO’s credit policy, with normal duration of 2-3 days for each training session.
Article 4 – TRAINING FOR THE CREDIT EXTENSION FIELD STAFF
MOU between Handicap International and Lift Above Poverty Organization 2 HI shall also provide support to organize field-level training for the LAPO field staff to strengthen their capacity in inclusive finance, product development for disabled microfinance clients, performance monitoring, portfolio quality management and reporting. With advice from LAPO, HI will be obliged to invite LAPO’s staff for training on advocacy for mainstreaming and inclusive development.
Article 5 – INTEGRATION OF THE BENEFICIARIES TO LAPO’s FINANCIAL SERVICE
Beneficiary clients to access financial service will be identified by the field staff of LAPO and will have access to financial services on the basis of the selection and screening criteria of LAPO.
The beneficiaries from vulnerable households shall become qualified to access financial services of LAPO only after successful completion of skill training organized by HI training staff. HI through project Steering Committee, shall introduce to LAPO the beneficiaries who have developed specific skills, have specific business plans to utilise acquired skills and are willing to undertake income generation activities based on individual business plans with financial services from LAPO. The scheme will be tried first in Kono and Western urban district areas of Freetown and at a later stage be extended to Grafton areas of Freetown.
In either case, the decisions to grant credit are subject to client capacity assessments of LAPO and shall rest on the decision of the management of LAPO.
Article 6 – BRANCH SUPPORT
HI shall provide LAPO with finance, a fixed amount of USD 1,000 (the budget for Branch support costs is annexed) in each month to support operation of its branch offices in Freetown and Kono project sites. The support in this respect is intended to cover partially the operational costs of the branch and shall include salaries of two credit officers, office rent, transport and office supplies. This support will come into effect as they two parties go into agreement and this MOU is signed. Subsequent transfers will be done on quarterly basis to Bank Account of LAPO after validation of the previous expenditure reports (by the Project Manager, Livelihoods Project) and in line with HI procedures that also, in agreement with European Union (EU) procurement rules.
Article 7 – OPERATIONAL PLANNING
MOU between Handicap International and Lift Above Poverty Organization 3 An Action Plan will be worked out in consultation with LAPO management during each of the operational year focusing on key components of the microfinance scheme in order to implement the scheme.
Article 8- PURPOSE OF CREDIT
The credits granted by LAPO are intended to implement micro-enterprise and income generation ventures. The credit provided is expected to cover working capital needs of the undertakers. The purpose of the credit for individual undertaker must be specified in the credit request including a business plan.
Article 9- ELIGIBILITY CRITERIA
In general, the clients requesting a loan shall fulfil the following requirements based on LAPO’s eligibility criteria,
A permanent resident of the community in which the project operates; Being of contractual age; Experience in managing a business or training in business skills; A member of the local DPO (for persons with disabilities); Have no negative credit history with LAPO; Not indebted to others in the community; Willing to accept the conditions of granting credit described in this agreement;.
Article 10- CHARACTERISTICS OF CREDIT
10.1 Amount of Credit
The amount that can be granted to a client according to LAPO’s standard, minimum Le 300,000 and maximum Le 700,000 for small-scale business activities.
A higher amount of credit might be granted in case the borrower can provide guarantees based on the loan security policies of LAPO.
A borrower can request for higher amounts after he demonstrates his creditworthiness by completing repayment of the loan on time.
10.2 Loan period and Repayments
The loan period shall depend on the type of activity covering a minimum of 5 months to maximum 8 months during which the loan principal shall be repaid in weekly/monthly instalments with interests.
MOU between Handicap International and Lift Above Poverty Organization 4 10.3 Interest and other charges
The interest rate applicable to loan capital is 2.5% per month (at flat rate) Registration fee of Le 15,000 1% of loan capital as insurance for the loan amount
10-4. Deferred repayments
2.5% penalties will be charged against loan balances for delays in the repayment of loan instalments as per credit regulations of LAPO and charge is over due after loan period.
10-5. Personal contribution
Prior to the granting of credit, a personal contribution in the form of fixed savings of 10% of the loan amount requested is deposited by the borrowing client. This savings amount serves as collateral for the loan amount and the borrower shall be allowed to withdraw this savings amount only after full repayment of the loan.
LAPO has right to confiscate this amount in case of default and appropriate the amount with the remaining balance of loan unpaid.
Article 11– LOAN COLLECTION AND ARREARS CONTROL
The field staff of LAPO shall be responsible to collect loan repayments from respective borrowers on dates in which loan instalment payments become due.
LAPO shall follow its regulations for the control of loan arrears (overdue loans). In precise, the procedure shall include the following actions by LAPO,
Organize meeting with group members to inform them about defaults and allow a deadline for making the payments; Notice of call to allow one week after the deadline, Home visit one week after the notice, Ultimatum and notice two weeks after the first notice, Beginning of litigation and legal proceedings two weeks after the ultimatum.
Article 12– MONITORING AND REPORTING OF DELINQUENT LOANS
A loan shall become delinquent if not paid up on the due date by the client/borrower. A loan shall be considered as bad loan, partially or fully, if not paid off within 12 months after the end/final date of the loan period.
MOU between Handicap International and Lift Above Poverty Organization 5 LAPO through their field staffs shall identify and monitor delinquent loans case by case basis. LAPO management shall implement strict control measures to maintain delinquency at acceptable levels.
LAPO shall prepare monthly portfolio quality report for the loans granted to vulnerable household clients (including those with disabilities), specifying total outstanding portfolio, current portfolio, portfolio in arrears, portfolio at risk, amount of loan loss and amount of loans written off. This report shall be submitted to HI on monthly basis.
Article 13- RISK SHARING AND GUARANTEE FUND
Handicap International shall provide LAPO with a guarantee cover probable capital losses for loans granted to vulnerable household clients/borrowers (only for those with disabilities and vulnerable) as defined in Article 2. Handicap International shall cover 10% of the delinquent loans measured in terms of portfolio at risk (PAR). As described in earlier chapter, a loan shall become delinquent if not paid on due date while a bad loan shall be termed as a loan which becomes past due for more than six (6) months after the maturity date.
HI shall provide finance for potential loan losses up to 10% measured in terms of PAR while any loan losses beyond 10% shall be a LAPO responsibility.
In this arrangement, LAPO shall provide loans to vulnerable household clients/borrowers (including those with disabilities) up to a total of 150 individuals (this figure shall be reviewed annually) and total loan capital not exceeding Le 90,000,000 equivalent to 20,000 USD. Side by side, LAPO shall also provide loans to clients in the target communities of the project in Freetown and Kono who generally become qualified for the service.
LAPO shall present a report on its claim annually based on portfolio quality report and aging analysis of loans of the operational year. The report shall be signed by the General Manager of LAPO. HI shall have right to review and verify the report before the claim is considered and validation of the report prior to approval for payment six – twelve months after final evaluation report of the project.
Article 14- SUSTAINABILITY
Both HI and LAPO give emphasis on the sustainability of the services for the people with disabilities. It is expected that the branch support given for two years will contribute to build capacity of the LAPO team by adopting best practices in order to continue deliver similar services to the vulnerable people including persons with disabilities. HI shall also develop staff skills to provide support for the replication os similar programs.
MOU between Handicap International and Lift Above Poverty Organization 6 Article 15- REPLICATION
Based on the experience and learning from the operations of this microfinance scheme in Kono, and in Western urban district project sites, LAPO shall take initiatives to replicate similar services for the vulnerable clients including those with disabilities in other branch areas by their own.
Article 16- TIMEFRAME AND DURATION OF THE CONVENTION
This agreement is made initially for 26 months effective from the signing of this document till the end of the current phase of this project in December 2013 and shall remain valid until final review of the project. A revalidation of the agreement may be considered in case the project is extended for another phase.
Article 17- ETHICS AND PRINCIPLES OF ASSISTANCE
Each party agrees to comply with the intervention philosophy and ethics of the other party.
Both parties will make every effort for the successful completion of the actions defined and implemented within the framework of this Convention. This convention can be modified with prior notice of either party for gray areas to redress.
Article 18- CONFIDENTIALITY AND PUBLICITY
Affairs to a party, the other party may have acquired in the context of their partnership, are strictly confidential.
Each party agrees to include the other in public communications referring to a project set up in partnership.
The logo of Handicap International has been the subject of a trademark registration with the National Institute of Industrial Property (INPI, France). This brand can not be reproduced without the written permission of Handicap International. An official logo (electronic format) for HI/EU can be delivered to the partner for the printing needs and visibility, but the express written consent of HI is required before each use.
Article 19- ENTRY INTO FORCE OF THE CONVENTION
This MOU shall enter into force upon signature by both parties.
Article 20- SETTLEMENT OF DISPUTES
MOU between Handicap International and Lift Above Poverty Organization 7 The parties will make every effort to resolve amicably any disputes that arise from the application or interpretation of this Agreement. Otherwise, it will be submitted to the competent court in Sierra Leone.
Article 21- TERMINATION OF THE AGREEMENT
This agreement may be terminated only with the consent of both parties or in case of catastrophic failure of proven either party to fulfil its obligations. It can be terminated by either party giving written notice of three months.
Article 22- CHILD PROTECTION
The partners shall undertake, as part of the agreement to respect the rights of the child. As such, they undertake to refrain from working with children less than 15 years of age, and supervise the work of children from 15 to 18 years to prevent abuse. They also undertake to be particularly vigilant about abuse and to report to competent authorities breaches of the rights of the child they will see.
This agreement sealed and signed by the under mentioned parties on and behalf of their respective organizations;
Mr. Yann Cornic,
Programme Director,
Mano River Programme, Sierra Leone/Liberia,
By Authority of the President, hereinafter referred to HI, on the one hand,
Sign: ......
Date: ......
Mr. Aighobahi O Ferguson,
General Manager, hereinafter referred to as LAPO, on the other hand,
Sign: ......
Date: ......
MOU between Handicap International and Lift Above Poverty Organization 8 ANNEX 1. Guidelines for reporting (Branch Support costs)
Narrative part of report for office costs
While reporting on office costs it will be imperative to be in line with financial costs, to include the following per details below:
Examples: - Administrative support- Provide the copy of the contract (ie service contract) with the person (can not be an executive member)
- Stationary and communication- will be explained in the financial report
- Transport- More detailed in the financial report but if money spend on meetings/seminars list of participants to be attached
Financial part of report:
o Administrative costs- copies of a contract between LAPO and the person, receipts of payment to the person provident of the support.
o Stationary and communication- all items bought should be detailed and copies of the receipts specifying the item should be given
o Transport- a list specifying the name of the person using transport, reason of using the transport, date of payment, authorizing officer.
ANNEX 2 . Justification transportation form/ Payment Voucher
o To be substantiated with payment vouchers validated by authorized officers.
ANNEX 3 . Budget summary : (needs to be submitted to HI before the 10th of each month, in order to receive funds for the next month)
Budget summary over ______(month/year) from LAPO
Remaining budget from last month ______
MOU between Handicap International and Lift Above Poverty Organization 9 Received budget this month ______
Total ______
Budget spend on:
- Salary ______
- Utilities ______
- Stationary and communication ______
- Transportation ______
- Administrative support ______
Total ______
Remaining budget ______
Signed on: ______
Signed by: ______
ANNEX 4 . Budget for Branch Support Costs of LAPO
MOU between Handicap International and Lift Above Poverty Organization 10 Branch Support Costs for LAPO (Freetown and Koidu Branch Offices)
Budget estimates for 2011 to 2013 Operational Year
Program: E61 Project Code: E61_010 Currency: USD
Search Description Quantity Unit cost Monthly Financial year Site Funding Funding Body Name in USD break-up code Code (in USD) 2011 2012 2013 FREE FE61_011 TE04 Salary for Credit Staff 2 persons 103 (at 50%) 206 412 2,472 2,472 1.1.1.6 Office rent 2 offices 150 300 600 3,600 3,600 4.2.2 Local transport 2 offices 100 200 400 2,400 2,400 2.2.2 Office supplies 2 offices 100 200 400 2,400 2,400 - Capacity Building Staff training 4/Year 45 45 90 540 540 6.1.2 Beneficiary training 12/Year 50 50 100 600 600 6.3.4 Total: 1,001 2,002 12,012 12,012
MOU between Handicap International and Lift Above Poverty Organization 11