Ref.
2024/FAMFCASWTCBOR/12003
Job offer type
Experts
Type of contract
Service contract
Deadline date
2024/10/13 23:55
Duration of the assignment
Beaded expertise
Duration
5 months
Framework and Methodology for conducting a stress-test with the Central Bank of Rwanda (BNR) (M/W)
Département Gouvernance - GOUV > Pôle Transparence, Gestion et Redevabilité
Published on : 2024/10/07
SUB-SAHARAN AFRICA
RWANDA
KIGALI
Mission description
|
Mission |
Mission : Support to the BNR on conducting a climate stress-test |
|
Component |
Climate Risk Assessment (DLI #5) |
|
Country |
Kigali, Rwanda |
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Duration and organization of the mission |
Field mission and remote work. The total estimated duration for this mission is up to 130 working-days distributed as follow: 40 days for a project leader 90 days for financial risk analyst / data analyst |
|
Beneficiaries |
Rwanda National Bank (BNR) and selected financial institutions from the private sector |
The mission should contribute to the achievement of the following disbursement-linked indicator
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#5 A sound institutional and regulatory framework for a green financial system that better takes into account climate risks is being promoted |
|
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Period |
Value |
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EXERCISE 23-24 |
Target 5.1 Data Collection guidelines (a data-gathering framework for sustainability-linked risks managements) has been developed and disclosed to financial institutions (1)
(2) Assessment of exposure and vulnerabilities to physical and transition risks |
|
EXERCISE 24-25 |
Target 5.2 Stress testing frameworks (Stress testing scenarios and stress testing guidelines have been published by BNR, based on an assessment of exposure and vulnerabilities to physical and transition risks And 2 trainings have been provided to financial institutions to raise awareness around them.) |
|
EXERCISE 25-26 |
Target 5.3 The macro-prudential policy framework is being updated to account for climate-related risks in financial sector stability. |
1. Project Context
Rwanda is a small, densely populated East African country located in the Great Lakes Region. With a GDP of about 13 Bn USD (GDP per capita around 2800 USD) the country classifies as low income country. The country reports a low carbon energy mix, with over 80% of renewable energy in the final energy consumption. The country is particularly vulnerable to the effects of climate change. In addition to the increased risk of food insecurity in a country dependent on rainfed agriculture for both rural livelihoods (62% of the population lives from agriculture) and tea and coffee exports (among the country’s main sources of currency), climate change could lead to health risks and damage to infrastructure.
Rwanda is a climate voluntarist: it was the first developing country to submit a revised national contribution (NDC) in 2021, and it aims for carbon neutrality by 2050. The estimated cost for the implementation of the NDC is estimated at USD 11 billion by 2030 (close to the country’s current GDP).
In December 2022, Rwanda became the first African country to access the IMF’s Resilience and Sustainability Fund (RSF). With an amount of USD 319 million, this RSF financing is backed by a matrix of reforms that will sequence the disbursements. The funding of the RSF also aims to play a catalytic role, by draining more funding towards Rwanda’s climate goals. Building upon this initiative, the French Development Agency AFD provided a 50 Mio EUR budget support programme to contribute to Rwanda’s ambitious climate goals alongside the IMF and other donors. This result-based financial support runs over 3 years, linked to a series of 8 disbursement indicators (DLIs) which will be assessed at the end of each fiscal year (i.e. end of May) for validation and disbursement of the related funds. As part of this programme, the AFD also funded a 3 Mio EUR technical assistance (TA) to support the Rwandan government (GoR) to achieve the DLIs. The monitoring the matrix of DLIs will be integrated in the TA.
Additional donors are active in the field of climate finance, including but not limited to WB, KfW, UN agencies, GIZ.
This TA contributes to (i) reinforcing the integration of environmental objectives in the management of Public Finance; as well as (ii) supporting Rwanda in its climate trajectory by increasing the scale and impact of climate financial flows. The main partner is MINECOFIN; however the activities are implemented with a series of partners according to the targeted result (see below).
The project is articulated around 5 results, with respective partner institutions:
· R1: Climate-sensitive public investment (MINECOFIN - Project development and Quality Insurance Department)
· R2: Climate budget tagging (adaptation and mitigation) (MINECOFIN - National Budget Department)
· R3: Sustainable public procurement (Rwanda Public Procurement Agency - RPPA)
· R4: Monitoring, reporting, evaluation (MRV) (Rwanda Environmental Management Agency – REMAN)
· R5: Sustainable financial systems (National Bank of Rwanda – BNR; further FIs)
The project duration is 36 months from November 2023 to November 2026, all activities will take place at central level in Kigali. A head of project is based in Kigali and oversee the coordination of the project implementation.
The fifth Disbursement Loan Indicators (DLI) is directly related to the country’s progress to integrate climate related-risks into financial stability monitoring and micro-supervision; and bridging the data gap in terms of Climate Risk Assessment. The increasing frequency and severity of climate-related events pose significant risks to financial systems globally. Recognizing this, the Rwandan Central Bank (National Bank of Rwanda, NBR) seeks to pilot a climate stress-test to evaluate the resilience of the financial sector to climate-related risks. This initiative aligns with Rwanda's commitment to sustainable development and climate resilience, as well as Rwanda’s own positioning as champion of green / climate finance.
The main objectives of the climate stress-test pilot are:
Ø To identify and assess the vulnerabilities of Rwanda's main financial institutions to climate-related risks, currently as well as across a medium term (3-5 year) horizon.
Ø To enhance resilience and strengthen the capacity of main financial institutions to manage and mitigate climate risks, based on the insights received from the analysis of the stress test results.
Ø To provide insights and data to inform the development of policies and regulations aimed at enhancing financial stability in the face of climate change.
Ø To enhance the understanding and capabilities of NBR staff and financial institutions in conducting and interpreting climate stress-tests.
Expertise France Expertise France is looking for a duo of highly qualified experts to participate in a project aimed at assessing the climate and financial risks of financial institutions. This project is essential to ensure that financial institutions integrate climate-related risks into their risk management and supervisory processes. In addition, the experts are expected to coordinate with the French Central Bank’s intervention, who is providing online support for awareness-raising as well as document review.
Project or context description
1. Specific objectives of the mission:
- Finalize the development of climate scenarios for the stress-test: Complete and refine the climate risk scenarios based on the existing scenario development document, ensuring they are relevant, realistic, and tailored to the needs of the pilot project.
- Customize and implement the data collection template: Adapt the existing data collection template to make it operational for the pilot stress test. Ensure that the level of detail and granularity is customized to meet the specific requirements of the financial institutions involved.
- Conduct climate and financial risk analyses: Apply the developed scenarios to the balance sheets of financial institutions to assess the potential impact of climate risks, using the data collection template as a working basis.
- Ensure coherence and alignment with supervisory standards: Make sure that the stress test scenarios and collected data comply with regulatory expectations for climate risk management, in collaboration with supervisory authorities.
- Collaborate with financial institutions and stakeholders: Work closely with financial institutions to guide them in using the data collection template and provide guidance on applying the climate stress scenarios to their own balance sheets.
- Produce an analysis and recommendations report: Deliver a detailed report presenting the results of the climate stress test, including an analysis of the identified impacts, as well as concrete recommendations to help financial institutions better integrate climate risks into their risk management.
- Transfer knowledge and train partners: Ensure knowledge transfer to partner financial institutions, including training them on using the data collection tools and analyzing climate stress scenarios, to strengthen their capacity to manage climate risks in the future.
2. Deliverables
|
Deliverables |
Format |
Timeframe (tentative) |
Final draft integrating comments (one round) |
|
Monthly progress report detailing the progress of the work, challenges encountered, corrective measures implemented, and upcoming next steps. |
Word (format to be shared by EF) or email |
Each month |
No later than 5 working-days after receiving the comments from BNR |
|
Draft of the methodology to conduct a climate stress-test (the methodology should be structured so that it can progressively integrate further sectors / institutions) |
Word |
December 15th 2024 |
No later than 10 working-days after receiving the comments from BNR and BdF |
|
Final methodology |
Word |
January 15th 2025 |
Integrating all comments from BNR and BdF |
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Final template for data collection |
Excel |
December 15th 2024 |
No later than 10 working-days after receiving the comments from BNR and BdF |
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Final report on the climate scenarios |
Word (and data sets in Excel format or any fitting format) |
Q1 2025 |
No later than 10 working-days after receiving the comments from BNR, BdF and REMA |
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List of pilot selection institutions |
Word (format to be shared by EF) |
Q1 2025 |
No later than 10 working-days after receiving the comments from BNR and BdF |
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Updated data collection |
Format used by the financial institutions |
End of Q1 2025 |
This needs to be streamlined with BNR as data collection and storage will be under BNR responsilibity |
It is at the discretion of the experts, in the concept note, to propose a detailed list of deliverables and timelines that should be in line with the ones proposed here and supportive of the overall goal of the project.
All reports must be submitted in English. All deliverables must be submitted as draft, and the expert must integrate one round of comments.
3. Duration
The consultant’s mission is scheduled from November 2024 to March 2025.
Per diems are lumpsum per overnight stay.
Logistical costs will be taken in charge directly by Expertise France.
4. Coordination arrangements and working conditions
The expert will work under the supervision of the project team in Kigali, Rwanda (head of project Hannah Thombansen and the national coordinator (to be identified)) for the entire assignment. He/she will also be in regular contact the Expertise France head office in Paris.
An office space will be provided in Kigali, Rwanda.
Required profile
1. Profiles
Position 1: Project Leader / Climate Risk Specialist
Responsibilities:
- Lead the entire project, from planning to implementation, ensuring the monitoring of different stages and adherence to deadlines.
- Serve as the main point of contact with stakeholders, including participating financial institutions and project partners.
- Establish climate risk models and oversee their application to the portfolios of financial institutions.
- Ensure the project's alignment with established objectives and provide recommendations based on climate risk analysis.
- Manage and coordinate the team, including the Financial Risk Analyst, to ensure coherence and efficiency in the work.
Profile Sought:
- Demonstrated 15+years’ experience in project management, preferably in the financial sector working on projects related to climate risk.
- In-depth knowledge of climate risk models and their application in the financial sector.
- Strong communication skills and the ability to interact with high-level stakeholders.
- Ability to work in a team and manage complex projects.
Position 2: Financial Risk Analyst
Responsibilities:
- Perform financial risk analyses by applying climate risk scenarios to the balance sheets and risk profiles of financial institutions.
- Develop and implement stress testing models in collaboration with financial institutions.
- Work closely with the Project Leader / Climate Risk Specialist to ensure that financial risk analyses are integrated consistently into the project.
- Ensure the correct use of data and the creation of robust and tailored financial risk models.
Profile Sought:
- Solid experience in financial risk analysis, ideally with expertise in stress testing.
- Knowledge of climate risk issues and their impact on the financial sector.
- Advanced skills in financial modelling and data analysis.
- Ability to work independently while collaborating closely with the Project Leader.
Additional information
7. Documents to provide
- CVs of the 2 experts
- Concept note (2 page max.) on the proposed methodology to address the above-mentioned needs in order to assess the understanding of the envisioned positions.
Selection criteria for applications
The selection process for candidates will be based on the following criteria :
- Candidate’s training/skills/experience
Deadline for application : 2024/10/13 23:55
Expertise France is the public agency for designing and implementing international technical cooperation projects. The agency operates around four key priorities :
- democratic, economic, and financial governance ;
- peace, stability, and security ;
- climate, agriculture, and sustainable development ;
- health and human development ;
In these areas, Expertise France conducts capacity-building initiatives and manages project implementation, leveraging technical expertise and acting as a project coordinator. This involves combining public sector expertise with private sector skills to drive impactful results.