SNV-RAYEE MoU No: ………………………..

BILATERAL AGREEMENT

BETWEEN

RAYEE – SNV Ethiopia

(Realising Aspiration of Youth in Ethiopia through
Employment- SNV Netherlands Development Organization)

AND

…………. Microfinance Institution

TO FACILITATE ACCESS TO FINANCIAL SERVICES FOR YOUNG

WOMEN AND MEN LED MICRO AND SMALL ENTERPRISES (MSEs)
WHO ARE ENGAGED, MAINLY ON AGRIBUSINESS.

JULY 2020

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 CONTENTS

1. General .............................................................................................3

2. Purpose of Bilaterla Agreement..................................................................3

3. Duration of the Bilaterla Agreement............................................................4

4. Duties and Responsibility of SNV-RAYEE......................................................4

5. Duties and Responsibility of ……MFI............................................................4

6. Amendment of the Bilateral Agreement.......................................................5

7. Termination.............................................................................................5

8. Future use of the Start-up Capital..............................................................6

9. Confidentiality and Access to information....................................................6

10. Applicable Laws, Disputes and Arbitration....................................................6

17. Signatories – Authorization……………………………………………………………………..………6

Annex A Reporting format...............................................................................7

 MoU No: ………………………..

1. GENERAL

This Bilateral Agreement expresses the understandings and common interests of

RAYEE-SNV (hereinafter referred to as SNV-RAYEE), address, Tel: ……….,
P.O.Box. 40675, Addis Ababa and …………..Microfinance Institute (hereinafter
referred to as ………..MFI), address: Tel:.......... P.O.Box: …………. Addis Ababa,
and hereinafter collectively referred to as “the Partners” to work together to
facilitate financial services for young women and men led Micro and Small
Enterprises (MSEs) engaged mainly on agribusiness (70% of the target) and
other business activities in …………………., ………………….,……………….,…………… and
………….regions.

WHEREAS, SNV-RAYEE, is a five year (2019-2023) project, implemented with

overall objective to secure dignified and fulfilling employment and income for
240,000 youth (of which 70% are women) enrolled in, mainly agribusiness). It
is implemented in urban, and per-urban with relevant value chain linkages to
rural areas of four regions (Amhara, Oromia, SNNPR and Tigray) and Dire Dawa
City Administration. To this effect, SNV-RAYEE is working on facilitating better
access to inputs, finance, markets information, market/work place (physical and
digital), and development of soft skill business, financial management and
technical skills of the youth. Along these, the project is establishing youth
savings groups (Youth Savings and Lending Association) where the target youth
internally mobilize savings, lend each other and practice access and
management of financial services.

WHAREAS: …….. MFI is a formal microfinance institution established under the

NBE Proclamation to provide microfinance services to low income people in
Ethiopia. ……….MFI has accepted the proposal of SNV-RAYEE to collaborate in
providing inclusive financial services to ………………… regions target youth.

NOW, THEREFORE, it is hereby agreed by and between the Partners as follows:

2. Purpose of the Agreement

Objective and Purpose of the Bilateral Agreement

3.1. The purpose of this agreement is to create sustainable business relationship between young
women and men, established in MSEs 1, who engaged on business activities and ………………..MFI
through facilitating access to financial services that will help participating youth increase
productivity and income. It aims to lay foundation for youth financial inclusion as the youth
become clients of the MFI even beyond the timeframe of the project.

3.2. To meet this objective, this bilateral agreement creates a working relationship between the
partners, where ……… MFI predominantly uses group lending methodology, but also uses, other
youth friendly working modalities. Similarly, the partners work together to ensure that whether
existing products and services are youth friendly and to revise or develop, where required in order
to maximize youth financial inclusion.
3. Duration of the Agreement
1
Young Women and Men led MSE is a Micro and Small Enterprise with, on average, four member established
by youth who are within 18-35 years of age

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This services shall commence upon signing of this Bilateral Agreement. The
duration of this bilateral agreement shall be until Oct 2024

4. Duties and Responsibility of SNV-RAYEE

SNV-RAYEE implements and manages the project activities in accordance with
the project plan. In general SNV-RAYEE is responsible for making target youth
productive, credit worthy, and ready to use credit services in responsible
manner. SNV-RAYEE will then specifically be working on the following key areas:
4.1 Identify youth choosing self-employment, who are looking to engage on
identified value chains
4.2 Provide training to youth so that improve their business and
entrepreneurship skills, financial literacy and technical skill
4.3 Support the youth select value chain activity to engage on that is
appropriate in their respective area, profitable and can be operated with
the youth
4.4 Advise and encourage the youth mobilize saving and link them with
…….MFI for deposit
4.5 Guide youth establish their own savings group where they practice
internal financial services from internally mobilized savings.
4.6 Support the youth through continuous business development advisory
services and coaching
4.7 Encourage the youth to have subsequent loan cycles with strong emphasis
to develop savings and credit culture to maintain long-term relationship
with the lender
4.8 Together with ……………. MFI identify capacity gaps of the MFI in serving
the target and closely work on filling the gaps; trainings, technical support
on designing new products and services that fit demands of the target
clients.
4.9 Allocate start-up capital (totaling …….% of value of loans disbursed to
start-up MSEs receiving first cycle loan) to ………….MFI to increase liquidity
of the MFI and hence loanable fund to target youth
4.10 Follow-up and monitor loan utilization of the borrowed youth and
repayment of loans to ……. MFI.

5. Duties and Responsibility of ………… MFI

5.1 Provide financial services to (1) …………………………region (woredas to be

covered) (2) ………….region ((woredas to be covered) and (3) ………………….
Region (woredas to be covered).
5.2 ………MFI shall exercise all reasonable skill, care and due diligence in
management of loans and savings services to the target Youth. Build the
necessary awareness on terms and conditions of its services, closely
support the youth for successful services delivery. ……MFI will play the
following key roles:
5.2.1 Assess capacity and readiness of youth led MSEs (those referred by SNV-
RAYEE) and identify those meet requirements for accessing credit
services.
5.2.2 Provide general orientation on terms and conditions of its services to
eligible youth to help them prepare for the requirements to access the
credit services.
5.2.3 Receive and review loan applications/business plan from eligible youth
MSEs, review and appraise the application and make timely loan
disbursement.

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5.2.4 Make regular visits to the borrowers, closely work with SNV-RAYEE staff,
where required, to make sure that loans provided are being properly
utilized for the agreed upon business/selected value chains.
5.2.5 Maintain and provide adequate financial services performance reports
on quarterly basis. This includes (see reporting template, annexed):
5.2.5.1 Loan Performance, including credit insurance (number of borrowers
(MSEs), members, Amount, terms, including repayment status)
5.2.5.2 Saving performance (number of savers, amount of savings)
5.3 During the entire service delivery process, provide good quality customer
service in terms of efficiency of timing and client management
mechanisims that benefits both the borrower and the MFI, consequently
laying foundation for long-term relationship between the two.
5.4 When required by SNV-RAYEE, host visitors from the project and the
donor- MasterCard Foundation.

6. Amendment of the Agreement

6.1 Either party may propose amendments to this Agreement at any time for
the purpose of improving the efficiency, cost effectiveness and impact of
the implementation.

6.2 Changes to this Agreement will only be effective if agreed upon in writing
and signed by both parties in the form of an addendum to the actual
Agreement.

7. Termination

7.1 If any circumstances should occur which may impair the objectives of the
bilateral agreement SNV-RAYEE and …..MFI shall mutually consult about
any actions that may be required. In such circumstances, SNV-RAYEE
and/or …..MFI the right to modify or terminate the Agreement.

7.2 This Bilateral Agreement shall be terminated in the following

circumstances:

a. The Agreement is expired as stipulated in Section 4 above.

b. The project finishes earlier than the initial plan and both SNV-RAYEE
and …..MFI fulfill all their duties and obligations under the Agreement.
c. The donor decides to terminate grant facility managed by SNV-RAYEE.
d. Other circumstances of force majeure.

8. Future use of the Start-up capital

8.1 SNV-RAYEE believes that target youth will be the potential market for
segment for the ……MFI and sustainable relationship will be established.
Hence, the repayments from borrowers will be used to create a revolving
loanable fund, as part of ….MFI asset, which will be a continuous credit
source for the young within the community; though …… MFI.

9. Confidentiality and Access to information

9.1 Confidentiality
SNV-RAYEE and…….MFI, will not disclose or allow to be disclosed any

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information that either is specified as confidential, or which ought

reasonably to be considered as confidential, without prior written
agreement.

9.2 Access to information

SNV-RAYEE shall be entitled to access target youth financial services
performance related information (except if deemed confidential)
9.3 Quarterly and Annual Report
……MFI will share loan and savings performance report on quarterly and
annual basis as stipulated under section 7, above.

10. Applicable Laws, Disputes and Arbitration

SNV-RAYEE and …..MFI shall attempt to resolve any dispute controversy or claim
arising out of or relating to this Bilateral Agreement. If they are unable to do
so, any dispute controversy or claim arising out of or relating to this Bilateral
Agreement or the breach, termination or validity thereof shall be settled under the
applicable laws of Ethiopia.

11. Signatories-Authorization

For and on behalf of SNV-RAYEE For and on behalf of …..MFI

Name:______________________ Name:______________________

Title:_______________________ Title:_______________________

Signature ___________________ Signature ___________________

Place & Date:_________________ Place & Date:_________________

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Annex A Reporting format

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