SAID Source: fb.com/LIFELeb FINAL PERFORMANCE EVALUATION LIVELIHOODS AND INCLUSIVE FINANCE EXPANSION (LIFE) PALLADIUM GROUP FINAL REPORT September 2021 This publication was produced by Social Impact, Inc. for the United States Agency for International Development under Contract/Order No. AID-268-C-15-00001. It was prepared by Dr. Kari Nelson (Team Leader) with the support of Mr. Ziad Antonios (Local Consultant) and Drs. Rana Taher and Tamara Nassereddine of Social Impact. Note: Limited redactions have been made to this version of the report in accordance with the principled exceptions to the presumption in favor of openness established in OMB Bulletin 12-01, “Guidance on Collection of U.S. Foreign Assistance Data.” FINAL PERFORMANCE EVALUATION LIVELIHOODS AND INCLUSIVE FINANCE EXPANSION (LIFE) PALLADIUM GROUP FINAL REPORT September 2021 Prepared by Social Impact, Inc. for the United States Agency for International Development under USAID Contract/Order No. AID-268-C-15-00001 – Performance Management and Support Program for Lebanon (PMSPL II). This document is not available in print. Documents of this nature are made available to the public through the Development Experience Clearinghouse repository (dec.usaid.gov). For additional information, please contact: Social Impact, Inc. Corporate Office 2300 Clarendon Boulevard Suite 10300 Arlington, VA, 22201 Tel: (703) 465-1884 Fax: (703) 465-1888 info@socialimpact.com Or Social Impact, Inc. Arz Street Librex Bldg. Bloc B – 3rd Floor Zalka, Metn, Lebanon Tel: +961-1-879260 DISCLAIMER The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. ABSTRACT The United States Agency for International Development (USAID)’s Livelihoods and Inclusive Finance Expansion (LIFE) activity is a five-year (2016-2021) $20.3 million activity that aims at improving livelihoods, supporting microfinance, and expanding inclusive finance in Lebanon. This evaluation assessed LIFE’s ability to adapt to the evolving crises facing Lebanon; the current challenges faced by micro, small, and medium-sized enterprises (MSMEs); and LIFE’s ability to integrate women and youth into MSME financing and support services. The evaluation team carried out a total of 23 key informant interviews, 25 focus group discussions, and a survey of 121 MSME beneficiaries. LIFE has encompassed a diverse range of activities, as its priorities have shifted in response to Lebanon’s recent crises. Over this time, LIFE demonstrated an ability to remain responsive to stakeholders and their emerging needs. Overall, LIFE grantees greatly appreciated LIFE’s flexibility and adaptability, as well as LIFE’s efforts to keep MSME support flowing throughout the crises. Currently, MSMEs face many challenges caused by the country’s economic crisis, most notably access to reliable electricity and dealing with hyperinflation and a highly volatile exchange rate. As a result, many of these businesses have closed their doors. Opportunities do exist, however, to provide MSMEs with support in the future that can help them weather the crises, including a combination of grants and subsidized loans. i | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 ACKNOWLEDGMENTS The authors would like to thank PMSPL II’s staff, LIFE’s staff, and everyone that has helped facilitate the work on this evaluation. Evaluation Team Dr. Kari Nelson [Team Leader] Ziad Antonios [Local Consultant] Randa Aractingi [Local Consultant] Dr. Tamara Nassereddine, DBA [Senior M&E Specialist, Social Impact] Dr. Rana Taher, Ph.D. [Senior M&E Specialist, Social Impact] ii | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 TABLE OF CONTENTS ABSTRACT I ACKNOWLEDGMENTS II TABLE OF CONTENTS III TABLES IV FIGURES IV ACRONYMS V EXECUTIVE SUMMARY VI INTRODUCTION AND BACKGROUND 1 EVALUATION PURPOSE 1 ACTIVITY BACKGROUND 1 EVALUATION QUESTIONS 3 EVALUATION DESIGN, METHODS, AND LIMITATIONS 3 FINDINGS & CONCLUSIONS 6 EVALUATION QUESTION 1 6 EVALUATION QUESTION 2 10 EVALUATION QUESTION 3 17 EVALUATION QUESTION 4 18 SUPPLEMENTAL FINDINGS 19 RECOMMENDATIONS 21 POLICY AND REGULATORY REFORM 21 MSME-FOCUSED SUPPORT 21 ANNEXES 24 ANNEX I : LIFE FINAL EVALUATION SCOPE OF WORK 24 ANNEX 2: LIFE FINAL EVALUATION STATEMENT OF OBJECTIVES 24 ANNEX3: LIFE COOPERATIVE AGREEMENT MODIFICATIONS 24 ANNEX 4: LIFE MEL PLAN 24 ANNEX 5: LIFE INDICATOR PERFORMANCE TRACKING TABLE 24 iii | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 TABLES Table 1: Distribution of KIIs—Clients and Staff.........................................................................................................4 Table 2: FGDs with beneficiary MSMEs........................................................................................................................4 FIGURES Figure 1: Respondents’ confidence that their business will remain open into the future..............................11 Figure 2: Respondents’ confidence in their ability to repay a new loan.............................................................14 iv | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 ACRONYMS CDCS Country Development Cooperation Strategy CGAP Consultative Group to Assist the Poor EQ Evaluation Question ET Evaluation Team FGD Focus Group Discussion GAP Gender Analysis and Action Plan (Palladium/LIFE) KII Key Informant Interview LIFE Livelihoods and Inclusive Finance Expansion Activity LMFA Lebanese Microfinance Association MEL Monitoring, Evaluation, and Learning MFI Microfinance Institution MSMEs Micro, Small, and Medium-sized Enterprises NGO Non-Governmental Organization PAR Portfolio at Risk PSMPL II Performance Management and Support Program for Lebanon II PWDs Persons with Disabilities SI Social Impact USAID United States Agency for International Development USAID/Lebanon USAID’s Mission to Lebanon v | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 EXECUTIVE SUMMARY ACTIVITY BACKGROUND The United States Agency for International Development (USAID)’s Livelihoods and Inclusive Finance Expansion (LIFE) activity, implemented by the Palladium Group, is a five-year (2016-2021) $20.3 million activity aimed at improving economic opportunities for low-income individuals and microenterprises by advancing small entrepreneurs’ business skills and expanding their access to financial services. In its earlier years, LIFE worked on expanding finance to unbanked and previously excluded microbusinesses by providing them with wider credit access, credit information, and financial literacy training, which helped many of them to open checking and savings accounts and obtain debit/ATM cards. However, when the economic and banking crises hit Lebanon in 2019, LIFE adapted its programming to the evolving context and focused more heavily on maintaining the microfinance institution (MFI) sector’s functioning and helping micro, small, and medium-sized enterprises (MSMEs) remain open. EVALUATION PURPOSE AND QUESTIONS The objective of this final performance evaluation is to inform future USAID programming with MSMEs based on an assessment of LIFE’s performance and lessons learned. The primary evaluation user is USAID/Lebanon. Palladium’s LIFE staff and other sector stakeholders are additional potential users of the findings. The evaluation looks at effectiveness as well as gender and youth considerations via the following main questions: EFFECTIVENESS 1. To what extent was the shift that the LIFE activity has undergone in the past two years effective in addressing the emerging needs of the microenterprises and achieving the activity’s objectives following the multi-dimensional crisis? More specifically, to what extent is LIFE’s approach and performance successful in terms of: a. Assisting microenterprises suffering from lack of liquidity, due to the financial meltdown, in meeting their liquidity needs? b. Assisting businesses affected by the pandemic and the subsequent forced closures through BDS, grants, and microloans? c. Supporting microenterprises that were affected by the Beirut port blast through established partnerships with local NGOs/MFIs? 2. To what extent are microenterprises able to remain operational during the economic crisis? More specifically, what are: a. The financial needs of microenterprises to remain operational until their activity picks up? b. The alternative sources of local financing that are most effective in assisting the microenterprises following the collapse of the banking sector and the Lebanese lira? GENDER AND YOUTH 3. To what extent were the recommendations generated by the gender analysis integrated in LIFE’s implementation? What are the outcomes generated by the activity as a result of gender mainstreaming? vi | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 4. To what extent was LIFE able to mainstream youth in its livelihood activities? EVALUATION DESIGN & METHODS The evaluation utilized a mixed-methods approach. In addition to a desk review of project documents as well as external literature, the Evaluation Team (ET) conducted key informant interviews (KIIs), focus group discussions (FGDs), as well as a short online survey. KEY INFORMANT INTERVIEWS The ET conducted 23 KIIs with USAID/Lebanon staff, Palladium’s LIFE staff, LIFE grantees (MFIs, NGOs, and banks), and external experts. The ET selected a purposive sample of respondents, focusing on those who were most involved with the LIFE activity and the present-day experiences and challenges of MSMEs. Amongst LIFE’s partner organizations, the ET focused on those that have implemented LIFE grants since 2019; this helped the team focus on how the LIFE program was able to adapt to the current challenges in Lebanon. The interview with external experts provided a broader understanding of the sector and the potential options that exist for supporting MSMEs into the future. FOCUS GROUP DISCUSSIONS Through the support of InfoPro, an external data collection firm, 25 FGDs were conducted with beneficiary MSMEs. The FGD format allowed business owners to engage with one another, debate the current challenges, and discuss potential ways in which their businesses could be supported to survive the current crises. ONLINE SURVEY OF END BENEFICIARIES In addition to the FGDs, the ET also conducted a short, online survey to collect additional information from MSMEs. The online survey format provided a low-cost way to connect with a large number of MSMEs who may not be reached through the FGDs. In the end, 121 surveys were completed. FINDINGS AND CONCLUSIONS EQ1: LIFE’S ABILITY TO ADAPT TO THE CRISES Overall, both grantees and MSME business owners were very appreciative of the LIFE activity and the support it enabled. Grantees were also very complimentary regarding the flexible and adaptive approach that LIFE took, which enabled them to modify their programming to meet the needs of the evolving crises. Though the strain from the multi-dimensional crisis continues, LIFE was effective in shifting its course to address the changing needs of MSMEs. Despite the overall positive feedback received, there were some challenges in implementation, particularly regarding the provision of in-kind equipment to business owners. The economic crisis contributed to these challenges (something that is outside the power of LIFE staff). These challenges prevented some MSME owners from achieving their intended goals and, in some cases, the equipment has gone unused. Despite the challenges, however, business owners were largely happy and appreciative of the support they received during these difficult times. During these times of crisis, some help is better than no help. One of the biggest successes of the LIFE activity since 2019 has been its ability to keep money flowing in an economy where lending and access to new capital have almost completely ceased. LIFE provided a much-needed lifeline for many MSMEs, helping to keep them open through the crisis. Given the high percentage of the population who are employed by MSMEs, their success (or failure) has significant vii | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 carryover effects for the overall economy. Thus, even though growth for MSMEs may be limited in the current crisis situation, keeping MSMEs open is a worthwhile objective. EQ2: ABILITY OF MSMES TO REMAIN OPERATIONAL MSMEs are struggling. As a result of the economic crisis, the pandemic, and the Beirut port blast, many of them have closed their doors, and many others are not sure how much longer they will be able to continue operating. MSMEs face a wide range of needs in the current Lebanese context. The most critical of these is access to reliable electricity. Without it, they can’t keep their shops open, operate their machines, or provide services to their clients. Additionally, MSMEs face a variety of inter-dependent challenges related to the financial crisis, such as high inflation, the devaluation of the Lebanese lira, unstable exchange rates, and access to dollars and thereby imported goods. Without notable improvement in these key challenges, it will be difficult for MSMEs to grow and, in many cases, to survive. Current sources of financing for MSMEs include MFI loans, grants through donor activities like LIFE, and informal financing sources such as family and friends, shopkeepers, and not paying invoices on a timely basis. Business owners have a particular preference for grant-based support, particularly in the current, volatile economic context. Such grants are quite helpful in the short-term to keep MSMEs open. However, they are not sustainable in the longer-term. Lending is a more sustainable source of financing. But even MFI lending is at risk in the current context. Despite the risks associated with taking on new debt, there is some demand for loans, at least among some MSME owners. Based on the evaluation data, there appear to be differences across sectors in terms of the willingness of owners to take on a loan as well as their level of confidence that they would be able to pay it back. Combined with data on the confidence of business owners that their businesses will remain open in the future, the ET finds that there are likely differences amongst MSMEs regarding long-term viability. These variations between MSMEs have implications for the types of services that could be offered in the future. Both loans and grants appear to offer potential, albeit for different segments of the MSME population. Those businesses with the highest income and growth potential are likely to be able to manage a loan while others will likely require grant assistance to continue operating. Sectors with the highest potential for growth and sustainability are those whose goods offer domestic replacements for imports (such as agriculture), those with export potential, and those that continue to experience steady demand despite the crises (such as food services and digital services). In addition to continuing the traditional MSME supports services (grants, loans, and training), respondents also recommended other interventions that could help MSMEs, including improved fintech as well as MFI-focused policy reform. However, additional study is needed to determine the best support options. EQ3: LIFE’S EFFECTS ON WOMEN-OWNED BUSINESSES Although gender mainstreaming appears to have been a central focus of LIFE, the gender analysis and action plan (GAP) has not been a guiding document in its work, particularly after October 2019. This is largely due to the multidimensional crisis and the need for continuous shifts in LIFE programming. It is evident, however, that LIFE exhibited a positive and effective approach to the inclusion of women in financial and business support services. While LIFE was able to achieve some success in supporting women, particularly prior to 2019, the crises have caused a setback. As a result of the crises, many women were forced to close their businesses to support their families. Much of this dynamic is outside the direct influence of the LIFE activity, however. viii | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 EQ4: LIFE’S EFFECTS ON YOUTH-OWNED BUSINESSES While LIFE was able to achieve some success in supporting youth, the crises have had a particular effect on this demographic. As a result of the multidimensional crisis, many youth prefer to leave the country rather than stay and start a business or try to find a job. Much of this is outside the ability of LIFE to directly influence, however. RECOMMENDATIONS The following recommendations outline ways in which USAID could continue to support MSMEs through the multidimensional crisis. Without improvements to the central challenges facing MSMEs currently—such as the electricity shortage and the macroeconomic challenges of rapid inflation and an unstable exchange rate—it will be difficult for any MSME-focused interventions to achieve significant growth for the businesses. In the shorter term, the ET recommends the following: POLICY AND REGULATORY REFORM 1. USAID should support necessary reforms to the MFI sector, though a sectoral assessment is needed to identify the precise policies needed 2. USAID should support the expansion of digital financial services MSME-FOCUSED SUPPORT 3. USAID should support the ongoing operations of MFIs through: a. Financial support b. Technical assistance to reduce operating costs, such as through the expansion of digital processes c. Expanding MFI services to larger MSMEs 4. USAID should support continued financial services for MSMEs including: a. Grantmaking (with controls) to support the smallest MSMEs b. Subsidized lending through MFIs 5. USAID should continue providing non-financial support services to MSMEs including: a. Business development training, including support for modernization and online services b. Targeted support for disadvantaged populations, including women, youth, and persons with disabilities (PWDs) c. Improving access to alternative energy sources d. Technical support (and possibly grants) to reduce operating costs 6. To maximize impact, USAID should focus support on key, high-potential sectors: a. Those that replace imports (such as agriculture or food processing services) b. Those that produce exportable goods and services c. Those with steady domestic demand (such as food processing and digital retail markets) ix | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 INTRODUCTION AND BACKGROUND EVALUATION PURPOSE The United States Agency for International Development (USAID)’s Livelihoods and Inclusive Finance Expansion (LIFE) activity, implemented by the Palladium Group, is a five-year (2016-2021) $20.3 million activity aimed at improving economic opportunities for low-income individuals and microenterprises by advancing small entrepreneurs’ business skills and expanding their access to financial services. In its earlier years, LIFE worked on expanding finance to unbanked and previously excluded microbusinesses by providing them with wider credit access, credit information, and financial literacy training, which helped many of them to open checking and savings accounts and obtain debit/ATM cards. However, when the economic and banking crises hit Lebanon in 2019, LIFE adapted its programming to the evolving context and focused more heavily on maintaining the microfinance institution (MFI) sector’s functioning and helping micro, small, and medium-sized enterprises (MSMEs) remain open.1 The objective of this final performance evaluation is to inform future USAID programming with MSMEs based on an assessment of LIFE’s performance and lessons learned. The primary evaluation user is USAID/Lebanon. Palladium’s LIFE staff and other sector stakeholders are additional potential users of the findings (for details, refer to the scope of work in Annex I). It would not be possible to adequately assess LIFE’s achievements without contextualizing its work within the complex and rapidly evolving state of crisis in Lebanon. Since October 2019, Lebanon has faced several compounding crises: 1. The breakdown of the banking and financial sector 2. COVID-19 3. The Beirut port explosion on August 4, 2020 These events have led to a multidimensional crisis that affected all aspects of the economy and life in Lebanon. LIFE’s staff have had to adapt to these evolving crises to continue supporting MSMEs. ACTIVITY BACKGROUND The LIFE activity was conducted under USAID’s Private Sector Development (PSD) project. LIFE supported Development Objective 2 of USAID/Lebanon’s Country Development Cooperation Strategy (CDCS): Inclusive Economic Growth Enhanced. LIFE aimed to improve livelihoods, support microfinance, and expand inclusive finance in Lebanon. LIFE’s original intention was to expand and strengthen microfinance associations’ and member institutions’ services and enhance entrepreneurs’ business skills. To achieve this goal, LIFE provided grants to partner organizations including banks, MFIs, and non-governmental organizations (NGOs). It was these grantees that then worked directly with end beneficiaries (the MSMEs) to provide training, access to finance, grants, in-kind equipment, and other support services. The exact services and support provided by each organization varied by grant. However, some interventions that the grants supported include: • Financial support to extend MFI operations and provide subsidized loans and training to MSMEs • In-kind grants in the form of equipment for MSMEs • Business development training • Extending savings and loan services to the unbanked (these efforts stopped after 2019) 1 LIFE MEL plan, LIFE final Evaluation SOO, LIFE Final Evaluation SOW, LIFE Final Evaluation Inception Report 1 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 • Creation of regional hubs which created peer support networks for MSMEs while also expanding access to training and in-kind equipment In October 2019, midway through the LIFE activity, the banking crisis unfolded, which prompted significant shifts in programming to meet the changing needs of MSMEs. In light of these significant shifts, LIFE’s activities are best described as pre-2019 and post-2019. This evaluation focuses on LIFE’s activities post-2019. Prior to this study, Social Impact (SI) had conducted a midterm evaluation of LIFE in late 2019, providing an assessment of the activity’s work pre-2019. LIFE ACTIVITIES BEFORE 2019 In its earlier days, LIFE had three main components: 1) Inclusive finance policies: The activity worked through the Lebanese Microfinance Association (LMFA), commercial banks, and other stakeholders to develop policies that promoted a vibrant, sustainable, and inclusive financial sector that economically empowers the unbanked, low-income, and underserved clientele, particularly in rural areas. 2) Expansion of microfinance products available to the poorest: The activity aimed to expand the reach of banks and MFIs to clients and borrowers that had traditionally been excluded, including microenterprises and the poorest. 3) Livelihoods and business support: The activity provided customized business-management training, technical know-how, mentoring, and basic business-development skills to MSMEs (particularly microenterprises). The activity also provided small grants for technology adoption and improved productivity. LIFE ACTIVITIES AFTER 2019 In mid-2019, LIFE began working with banks to increase access to financial services among the unbanked. However, with the eruption of the October 2019 protests and the collapse of the banking sector soon after, it became infeasible for LIFE to continue working directly with banks, and these activities were either halted or dramatically shifted. Instead, LIFE modified its work to focus on MFI and NGO partners. Shortly thereafter, the COVID-19 pandemic hit in March 2020 and LIFE pivoted again. The activity worked with its partners to shift their work online and find ways to continue providing services and support to MSMEs throughout the lockdowns and other implications of the pandemic. Then, on August 4, 2020, an enormous explosion of ammonium nitrate stored at the Port of Beirut led to hundreds of deaths and widespread damage to homes and businesses totaling upwards of $15 billion.2 Particularly for smaller businesses, which typically did not have insurance, the effects were devastating and only compounded the effects of the economic and COVID-19 crises. LIFE again shifted its work and expanded its grants to include Beirut, focusing on assisting affected MSMEs to rebuild their businesses. The situation in Lebanon has continued to evolve, and it is difficult to separate the effects of one crisis from those of another. As of the writing of this report, Lebanon had only just formed a new government after more than a year without one, and the financial crisis has led to hyperinflation and widely fluctuating exchange rates between the US dollar and Lebanese lira (despite the official peg at 1,507 liras to the dollar). The crises have also led to security concerns and the imposition of frequent security 2 USA Today: https://www.usatoday.com/story/news/world/2020/08/06/aid-lebanon-beirut-explosion-force-corruption￾reforms/3307109001/ 2 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 checkpoints/roadblocks, substantial fuel shortages, and a scarcity of electricity. At the time of data collection for this evaluation, electricity was commonly only available for a few hours per day in many places because of rolling blackouts. As a result of these many crises, though the three overarching components described above remained the same, LIFE had to shift the focus of its work from expanding livelihoods and MSME activity to keeping MSMEs’ doors open. EVALUATION QUESTIONS To assess the LIFE activity within the broader Lebanese context, the evaluation team (ET) focused on the following four evaluation questions: Effectiveness 1. To what extent was the shift that the LIFE activity has undergone in the past two years effective in addressing the emerging needs of the microenterprises and achieving the activity’s objectives following the multi-dimensional crisis? More specifically, to what extent is LIFE’s approach and performance successful in terms of: a. Assisting microenterprises suffering from lack of liquidity, due to the financial meltdown, in meeting their liquidity needs? b. Assisting businesses affected by the pandemic and the subsequent forced closures through BDS, grants, and microloans? c. Supporting microenterprises that were affected by the Beirut port blast through established partnerships with local NGOs/MFIs? 2. To what extent are microenterprises able to remain operational during the economic crisis? More specifically, what are: a. The financial needs of microenterprises to remain operational until their activity picks up? b. The alternative sources of local financing that are most effective in assisting the microenterprises following the collapse of the banking sector and the Lebanese lira? Gender and Youth 3. To what extent were the recommendations generated by the gender analysis integrated in LIFE’s implementation? What are the outcomes generated by the activity as a result of gender mainstreaming? 4. To what extent was LIFE able to mainstream youth in its livelihood activities? EVALUATION DESIGN, METHODS, AND LIMITATIONS DESK REVIEW The ET conducted a comprehensive literature review, which included both internal LIFE documents (annual and quarterly reports, monitoring data, etc.) as well as external studies and literature. Considering the complex and rapidly evolving situation in Lebanon, external sources were important reference points for contextualizing the evaluation findings. In addition to reviewing the established literature, the ET also requested two additional small-scale literature reviews focused on assessing the MSME sector, to feed into the ET’s findings. InfoPro, the firm also hired to collect focus group discussion (FGD) data, conducted a short literature review regarding MSMEs’ major needs in the face of the current crises. Building upon this initial summary, SI recruited 3 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 Randa Aractingi, an MFI expert in Lebanon, to supplement those findings with some suggestions for how to address the identified needs. The findings from both these reports informed the evaluation findings. KEY INFORMANT INTERVIEWS The ET conducted 23 key informant interviews (KIIs) with USAID/Lebanon staff, Palladium’s LIFE staff, LIFE partners (MFIs, NGOs, and banks), and external experts, as shown in Table 1 below. Table 1: Distribution of KIIs TYPE OF STAKEHOLDER NUMBER OF INTERVIEWS ff 4 LIFE Partners 18 External Experts 1 Total 23 The ET selected a purposive sample of respondents, focusing on those who were most involved with the LIFE activity and MSMEs’ present-day experiences and challenges. Amongst LIFE’s partner organizations, the ET focused on those that have implemented LIFE grants since 2019. This helped the ET focus on how the LIFE program has adapted to the current challenges in Lebanon. The interview with external experts provided a broader understanding of the sector and the potential options for supporting MSMEs into the future. FOCUS GROUP DISCUSSIONS Through the support of InfoPro, 25 FGDs were conducted with beneficiary MSMEs. The FGD format allowed beneficiaries to engage with one another, debate the current challenges, and discuss potential ways in which their businesses could be supported to survive the current crises. The below table provides a breakdown of FGD participants by region, number, and gender. Table 2: FGDs with beneficiary MSMEs REGION NUMBER OF FEMALE ATTENDEES NUMBER OF MALE ATTENDEES TOTAL Akkar 6 6 Baalback 8 6 14 Beirut 12 19 31 Nabatieh 2 3 5 Saida 14 3 17 Tripoli 19 22 41 4 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 USAID and LIFE Staff LIFE Partners External Experts Total 4 18 1 23 Zahle 8 8 Total 63 59 122 ONLINE SURVEY OF END BENEFICIARIES In addition to the FGDs, the ET conducted a short, online survey to collect additional information from MSMEs. The online survey format provided a low-cost way to connect with many MSMEs that could not be reached through the FGDs. A total of 121 respondents (MSME owners) completed the survey. ETHICAL CONSIDERATIONS All members of the ET received research ethics training from the team leader and were sensitized to the importance of maintaining the privacy, confidentiality, and protection of the study participants. Audio recordings will be destroyed upon submission of the report. DATA ANALYSIS Data Preparation: Interviews were transcribed into summary transcripts daily. FGDs were transcribed into detailed and summary reports by the InfoPro team and transmitted to the ET. Coding: The ET then coded KII and FGD transcripts using a tally-sheet approach. The team created a codebook of key themes arising from the KIIs and FGDs and then systematically identified which themes arose in which KIIs/FGDs, providing a systematic tool for assessing the frequency of themes and any patterns across stakeholder groups. Based on the coding results, the ET worked collaboratively to develop the evaluation findings and conclusions. LIMITATIONS AND BIASES The ET noted several potential biases/limitations for this evaluation: Response Bias: Response bias is the risk that key informants may be motivated to provide socially desirable responses or responses they believe may help them obtain future donor support. For example, an MSME owner may provide positive remarks about LIFE because they would like to receive similar support in the future or because they want to please the interviewer. The team mitigated these risks by clarifying SI’s role as independent evaluator and clarifying that their responses would not be linked to future opportunities for support. Recall bias: Particularly in a rapidly changing environment like Lebanon, respondents may reply to the ET’s questions based on their most recent experiences and opinions, potentially leaving out past experiences and/or conflating historical events with those that are more recent. The team mitigated this risk by reminding respondents about the focus of the evaluation as well as by triangulating findings across data sources to increase the validity of the findings. Selection/Availability Bias: In KIIs and FGDs, there is a risk that the team might only reach the most active, responsive, or engaged stakeholders or that the selection of respondents could be biased for or against the activity. At the time of data collection, Lebanon was also facing recurring power cuts, challenges with the internet connections, and a fuel crisis that made it more difficult for people to move about (such as traveling to an in-person FGD). To mitigate the risk of selection bias, the ET implemented several strategies, both during the design phase as well as during data collection. In the design phase, the ET conducted its own selection of respondents, with only high-level input from LIFE implementers. In the case of MSMEs, the ET also utilized random selection to further minimize potential 5 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 selection bias. During data collection, the ET minimized travel-related challenges by focusing selection on particular geographic areas so that participants in each FGD were located close to the location of the discussion. For remote KIIs, the ET maintained a flexible schedule, offering to schedule (or reschedule) interviews as needed around when respondents would be most likely to have access to power and a sufficiently strong internet connection. FINDINGS & CONCLUSIONS EVALUATION QUESTION 1 To what extent was the shift that the LIFE activity has undergone in the past two years effective in addressing the emerging needs of the microenterprises and achieving the activity’s objectives following the multi-dimensional crisis? (Effectiveness) FINDINGS To assess the extent to which LIFE was able to shift and adapt to the emerging crises in Lebanon, the ET examined not only the activity’s overall response, but also looked specifically at the ways in which LIFE was able to adapt to each of the primary crises—the economic crisis, COVID-19, and the Beirut port blast (EQs 1a-1c, respectively). The following sections will explore each of these topics in turn. Overall Feedback on LIFE Implementation In talking with respondents for this evaluation, it was often difficult to parse out the effects of one crisis vs the others. Rather, they all compound upon one another to make it more and more challenging to operate an MSME. As one business owner explained in an FGD, “For us in Lebanon, it was a compilation of crises. So, the pandemic could not be separated from the financial crisis or the economic crisis; so, they all laid on top of each other.” Given this broader context, respondents, particularly the grantees, were appreciative of LIFE’s overall flexible and adaptive approach. They appreciated not being held to rigid output and outcome indicators and the ability to change their programming approach to better meet MSMEs’ needs. Within this context, several business owners noted how the support they received through LIFE grantees gave them hope. Ninety-four percent of survey respondents who were directly familiar with the LIFE activity were satisfied with it. One business owner described their experience this way: “…when you stumble upon something that is subsidized, it makes you happy and gives you a glance of hope. You feel like someone is by your side, despite everything that is suffocating us.” In the current context in which many MSMEs, particularly the smallest ones, are closing their doors,3 support from an activity like LIFE can help them continue working and pushing forwards. Considering that MSMEs employ 50 percent of the Lebanese labor force,4 an implosion of the MSME sector would have devastating consequences for the overall economy. Despite the largely positive feedback regarding the LIFE activity and its responsiveness to the many crises facing Lebanon, some respondents noted challenges as well. The most significant of these were reported by MSME beneficiaries of in-kind equipment (in lieu of cash grants). Numerous business owners reported having problems with the equipment they had received. The most frequent complaint 3 InfoPro. 2021. Microenterprise Paper. 4 Social Impact. 2021. Lebanon Political Economy Analysis. 6 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 that arose in the majority of FGDs with in-kind equipment recipients was that the equipment was different than what they had asked for. In one case, a cobbler who had asked for a professional sewing machine that he could use in his work received instead a regular sewing machine that was not strong enough to stitch thick shoe materials. So, to make use of what he was given, he shifted his work to making handbags instead of mending shoes. In another case, the owner of a sewing business noted, “I ordered a cutting machine for vinyl (…) but they gave me something completely different. It wasn’t useful for me. The machine is still at home.” In this case, the business owner was not able to make use of the equipment he received. A few business owners also complained about the poor quality of the equipment they had received, noting that it had broken down soon after they had started using it. In some cases, the grantee organizations helped to repair or replace the equipment while in others, they did not. In the latter cases, the faulty equipment could not be used. Several others complained about receiving lesser quality goods for a higher cost instead of the equipment they had originally picked out. For instance, one business owner complained, “I said I wanted a 190-[cubic]-meter refrigerator valued at $1,000. They made me get a 90-[cubic]-meter one and valued it at $1,000. It was supposed to be the kind of support where we needed help, but it ended up being us getting the support they chose for us based on the relations and contracts they had with companies.” Much of the equipment provided to MSMEs rely on electricity (e.g. refrigerators, laptops, sewing machines, etc). With the current power cuts, it became impossible for many of them to use the equipment they received. Several respondents said they wished they would have also received solar panels and/or batteries, which would have enabled them to continue working despite the power cuts. In discussions with LIFE staff, it became clear that part of the issue with the equipment cost complaints, and even with some of the mismatches between the MSMEs’ needs and the equipment they received, related to the restrictions in place on eligible equipment vendors as well as the challenges, in the current Lebanese context, of accessing the full spectrum of imported goods. The staff had extensive difficulties to this end, negotiating with suppliers and arranging for payment in US dollars. As a result, some equipment was more expensive than other products available on the Lebanese market. And some equipment was not available at all, which contributed to beneficiaries receiving something different than what they had requested. Despite the challenges with the in-kind equipment received, the majority of FGD participants were still appreciative of the support. As one sewing machine recipient noted, “I am using the sewing machine and things are going well. Even though it wasn’t what I requested… it was 50% useful you can say.” In the current context, business owners in the FGDs noted they were making the best of what they had. Other implementation challenges noted in the interviews were far less prevalent. Nonetheless, a few grantee respondents noted that the granting processes and procedures were sometimes slow and burdensome. Particularly in the current context where all organizations face liquidity problems, having organizations pay their expenses up front and submit for reimbursement later was also noted as a challenge. EQ1a: The Economic Crisis MSMEs have struggled in the face of the economic crisis, with nearly half (47 percent) of survey respondents saying the economic crisis had impacted them more than COVID-19 or the Beirut port blast. When SI conducted its midterm evaluation of the LIFE activity, the economic crisis had only just begun. LIFE was still in the process of finalizing, in collaboration with USAID, how best to pivot its 7 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 activities in response to the crisis.5 Since then, direct work with the banks was halted and/or significantly altered, and LIFE worked with its grantees to pivot their work to meet the emerging challenges.6 In the KIIs with grantees and implementation staff, respondents raised a number of successes through the LIFE activity. The number one theme respondents raised was LIFE’s ability to keep money flowing through a very turbulent time (whether through grants or loans). With the banks unable to lend, accessing a grant, in-kind equipment, or a loan through an MFI or NGO became a lifeline for many MSMEs. Several MFI respondents also noted that they may not have been able to continue lending (and certainly could not have continued lending at the same volume) without support from LIFE. According to respondents, LIFE enabled this continuation of lending through a variety of approaches such as subsidizing low interest loans, supporting MFIs to reschedule active loans, and providing direct support for MFI’s operational costs (staff salaries, etc.). Other areas of success related to the economic crisis involved LIFE’s shift towards financial technology (fintech), pushing businesses to innovate with digital and online platforms, and the creation of regional hubs. Several respondents noted how fintech and the integration of technology into financial services in Lebanon was significantly behind that in other countries. Online financial services (online account and payment functions, online bill payments, mobile payment services, etc.) are all nascent or non-existent. Respondents described how such services would be helpful to MFIs, businesses, and the Lebanese economy in general. In one example, implementation staff talked about helping MFIs reduce their operating costs by digitizing record keeping and loan-approval processes (paper-based processes are time intensive and more costly). Such internal processes are easy targets for improving MFI efficiencies; they also don’t require any government-level policy change to enact. On the other hand, some fintech efforts, such as enabling online payment systems and inter-bank transfers, do require policy change. However, the current, uncertain political environment inhibits significant movement on such measures. The push towards digital platforms for conducting business had multiple impetuses. One was to push MSMEs into the modern, digital era. The other was COVID-19 (LIFE’s responses to the pandemic are explained in more detail below), which pushed businesses worldwide into the digital arena. Several FGD participants talked about the training they had received in digital marketing, social media, and setting up online shops. These efforts were broadly seen as helpful in pushing MSMEs into the digital era. Some respondents, however, noted that the current fuel crisis and frequent roadblocks had put a damper on their online sales, as deliveries have become difficult and expensive. Respondents also complimented the regional hubs since they enabled a peer support-type network while also providing access to training (including some of the digital business trainings noted above) as well as in-kind grants of equipment. EQ1b: COVID-19 The onset of the COVID-19 pandemic compounded the economic challenges already facing Lebanon and its MSMEs. KII respondents were very appreciative of LIFE’s efforts to help adapt programming to the COVID-19 context. As noted above, LIFE helped push many MSMEs to modernize their businesses and utilize online platforms. Also, where needed, LIFE supported the amendment of grantee agreements to allow for shifts in programming. For example, after the October 2019 protests, LIFE amended its grants with the banks to focus on MFIs (changes that required formal amendments to grant agreements). One grantee expressed appreciation for an e-learning platform that was introduced through LIFE’s support, 5 Social Impact. 2020. Midterm Evaluation of the LIFE Activity. 6 Palladium Group. 2020. LIFE Activity Annual Report Year 4. 8 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 which helped provide remote learning opportunities for their MSME beneficiaries. This platform enabled them to continue training and capacity-building efforts during the pandemic. EQ1c: Beirut Blast The Beirut port explosion caused over $15 billion in damages, much of which was not insured.7 Several of the grantee respondents noted appreciation for the speed with which LIFE shifted to support MSMEs in rebuilding their businesses after the blast. For those MSMEs that were affected, the impact was devastating. The help that LIFE was able to provide through its grantees enabled many businesses to rebuild. As one pastry shop owner explained, “…my situation was very bad. I have a pastry shop… My pastry shop, house, and car were destroyed by the port blast. We were waiting for someone to come and help us. …they really benefited me. They helped me get the machines and products for my pastry shop. This support helped me to work and improve my business.” Several MSME respondents were particularly thankful for the support provided by LIFE because many other organizations who were supposed to “help” did not. They noted that after the blast, there were many NGOs and other organizations going around and doing assessments. They would assess the business owner’s needs, complete with a list of equipment needed to restart operations, but would then disappear, never to be heard from again. One business owner noted, “I have a fish store. There were two people [from a LIFE grantee organization] who came and asked me what I wanted, and they gave me what I requested. However, there were many other NGOs that were liars.” CONCLUSIONS Overall, both grantees and MSME owners were very appreciative of the LIFE activity and the support it enabled. Grantees were also very complimentary regarding the flexible and adaptive approach that LIFE took, which enabled them to modify their programming to meet the needs of the evolving crises. Though the strain from the multidimensional crisis continues, LIFE was effective in shifting its course to address the changing needs of MSMEs. Despite the overall positive feedback received, there were some challenges in implementation, particularly regarding the provision of in-kind equipment to business owners. The economic crisis contributed to these challenges (something that is outside the power of LIFE staff). The challenges prevented some MSME owners from achieving their intended goals and, in some cases, the equipment has gone unused. Despite the challenges, however, business owners were largely happy and appreciative of the support they received during these difficult times. During these times of crisis, some help is better than no help. One of the biggest successes of the LIFE activity since 2019 has been its ability to keep money flowing in an economy where lending and access to new capital have almost completely ceased. LIFE provided a much-needed lifeline for many MSMEs, helping them to stay open through the crises. Given the high percentage of the population who are employed by MSMEs, their success (or failure) has significant carryover effects for the overall economy. Thus, even though growth for MSMEs may be limited in the current crisis situation, keeping MSMEs open is a worthwhile objective. 7 USA Today: https://www.usatoday.com/story/news/world/2020/08/06/aid-lebanon-beirut-explosion-force-corruption￾reforms/3307109001/ 9 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 EVALUATION QUESTION 2 To what extent are microenterprises able to remain operational during the economic crisis? (Effectiveness) FINDINGS To assess the viability of microenterprises and MSMEs more broadly, the ET relied on all its data sources—i.e., the literature and document review, the KIIs, the FGDs, and the survey. In addition to addressing the overall question about ongoing MSME operations, the ET also addresses the related sub￾questions regarding the factors influencing whether MSMEs will be able to continue their operations as well the financing and programming options that might be able to support MSMEs to remain operational. This section will first address the extent to which MSMEs are likely to remain open, then it will discuss the factors influencing their operations. It will then turn to MSMEs’ current options for financing as well as some of the new and innovative approaches that respondents and/or the literature indicate could be employed in the future. MSME Continuity Since October 2019, the economic crisis has heavily affected MSMEs and forced many to shut down their operations, according to KII respondents. The repercussions of the crisis increased with the effects of the pandemic and the Beirut port blast, further increasing businesses closures. According to a recent study by the Consultative Group to Assist the Poor (CGAP) that followed a cohort of MFI borrowers over time, the number of respondents calling themselves entrepreneurs dropped from 69 percent in mid-2019 (pre-crisis) to 43 percent by mid-2020.8 In addition to the drop in the pool of potential entrepreneur borrowers, loan default rates increased significantly. For example, one MFI respondent indicated that the share of their Portfolio at Risk (PAR) at 90 days reached an average of 25 percent as compared to two percent before the crisis. The decrease in the potential borrower pool and the increase of PAR suggest that many MSMEs are struggling to remain operational. In the survey, MSME owners were asked to indicate whether their business was likely to remain operational in six months, in one year, and in three years. Forty-four percent thought they would be open in six months, but this dropped to 23 percent after three years, with a corresponding increase in the proportion who reported being unsure if their business would survive that far into the future, as depicted in Figure 1 on the next page. Across sectors, those with home-based businesses and those in the agriculture sector were the most confident that their businesses would survive in the short-term, with 71 and 80 percent (respectively) saying they thought their businesses would still be operating in another six months while those in other sectors (small industry, retail, services, and food services) were notably less confident.9 In a separate assessment, SI found that agriculture was a sector with the potential for growth. In part, this was said to result from households’ attempts to maintain their livelihoods by returning to the land and producing food for local consumption. It is also in part due to Lebanon’s comparatively fertile land and the potential to export higher-value crops such as wine, dairy products, and baked goods. The 8 Consultation and Research Institute, Lebanese Microfinance Association, and CGAP. 2020. Impact of Economic and Covid-19 Crises on Microcredit Borrowers. 9 Sample sizes by sector were low (ranging from 5 responses to 35 responses per category). Thus, the ability to draw firm conclusions across the six sectors is limited. 10 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 - - ■ ■ ■ ■ 70% 62% After 6 Months After 1 Year After 3 Years Yes Unsure No 44% 35% 23% 44% 53% 13% 12% 15% 0% 10% 20% 30% 40% 50% 60% Figure 1: Respondents’ confidence that their business will remain open into the future report also noted that, historically, Lebanon imported 80 percent of its basic goods (including food products). But, with the currency crisis, imports have been very difficult to obtain, leaving additional room for producers of local agricultural and food products to fill the gap.10 Challenges Facing MSMEs Within the current context, the challenges faced by MSMEs are some of the same challenges faced by all the Lebanese people. Access to basic services (in particular, though not exclusively, electricity) was noted most frequently in the FGDs as being a significant challenge. At the time of data collection, power was only available for a few hours a day in many locations, which severely hindered daily business operations and resulted in the loss of sales and an increase in operating costs due to heavy reliance on community generators during power cuts. As one MSME owner noted, “…It has been a while since we started to close our shops… due to the electricity cuts. First, we used to pay 100,000 liras for the local power generator subscription, but now we are paying 600,000 liras.” Though access to electricity was the most frequently noted basic service that posed an impediment to MSME operations, other basic services like access to fuel, water and sanitation, and transportation were also noted in the FGDs. Regarding transportation, some FGD participants talked about how the frequent road blocking by protestors, combined with the fuel crisis, had led to significant cost increases for both the transport of raw materials/goods that MSMEs use to do their work and the delivery of customer orders. After basic services, FGD participants cited several interrelated challenges related to the economic crisis including high inflation (137.8% in August 202111), the devaluation of the Lebanese lira (which has lost approximately 90% of its value12), and issues with the $/lira exchange rate. Officially, the exchange rate between the two is fixed at 1,507 liras to the dollar. However, the central bank continued to print new lira banknotes to deal with rising economic issues, an approach that led to hyperinflation and the devaluation of the currency.13 The official exchange rate remains 1,507, but inflation and the devaluation of the currency have led to a shadow market where the exchange rate fluctuates rapidly and where the 10 Social Impact. 2021. Lebanon Political Economy Analysis. 11 https://www.bnnbloomberg.ca/lebanon-s-inflation-rises-to-highest-globally-as-crisis-deepens-1.1655264 12 https://www.bnnbloomberg.ca/lebanon-s-inflation-rises-to-highest-globally-as-crisis-deepens-1.1655264 13 Social Impact. 2021. Lebanon Political Economy Analysis. 11 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 dollar is currently valued at approximately 16,000 liras.14 The compounded challenges of the exchange rate fluctuations with the collapse of the Lebanese lira has made it extremely challenging for business owners to maintain profitability and plan their sales prices such that they are able to recoup their fluctuating costs while ensuring their customers can actually afford their products. Despite the collapse of the lira, most salaries in the country have remained the same.15 Thus, as one FGD respondent noted, even simple things like buying a school uniform for one’s children has become a daunting task. What used to be easily manageable on a monthly salary now consumes three months’ worth of a person’s salary. This has led to a drastic reduction in buying power and a drop in demand for all types of goods and services. As one Beirut coffee-shop owner who participated in an FGD noted, “My work really went downhill. People used to drink a cup of coffee before going to work and it was only 1,000 liras. Nothing much. But… no one would pay 5,000 for a cup of coffee. They can't afford it. For example, they get paid 20,000 liras a day; to pay 5 [thousand] for coffee and 10 [thousand] for transportation would mean all his income. So [my business] isn't the same as before.” These currency issues also contribute to one of the other significant challenges that MSMEs face, which is access to raw materials and other inputs for their businesses. As noted above, Lebanon has historically imported the majority of its basic goods. Given the collapse of the Lebanese lira, few importers/suppliers are willing to accept payment in lira. Instead, they typically require payment in US dollars. However, in part because of the significant trade imbalance with more products being imported than exported, “fresh” (as they’re called in Lebanon) dollars are hard to come by. Thus, in addition to the collapse of the lira, the scarcity of “fresh” dollars (another key challenge for MSMEs) in the economy has made accessing imports, which most MSMEs use as raw materials or goods to run their businesses, very challenging.16 Other challenges mentioned by FGD participants include the high operating costs and the need for adequate equipment. High operating costs in the current context are in part due to the broader economic and currency challenges noted above. However, they also relate to the general difficulties in operating a business in Lebanon and the challenges (and costs for circumventing the challenges) in accessing basic services. The equipment challenges are similarly related to the current economic crisis and to difficulties affording and gaining access to quality imported equipment. Current Sources of Financing To support long-term growth, businesses can benefit from access to financing to expand and grow their operations. In the current context, they could also use financing to weather the current economic crisis—helping to keep their businesses afloat until the economy can turn around. According to the FGD discussions, however, many MSME owners do not feel like they have a lot of options in the current context, which may reflect the limited availability of some of these support mechanisms. EQ2b asks about the current and potential sources of financing that are available (or could be made available) to MSMEs. The below sections describe some of the current sources of financing that are available to MSMEs, including loans, grants, and informal forms of financing as well as some of the potential future options for providing financing and support to MSMEs. 14 https://lirarate.org/ 15 Social Impact. 2021. Lebanon Political Economy Analysis. 16 This is the same type of challenge discussed under EQ1 that LIFE grantees faced when trying to purchase and provide in-kind equipment to beneficiaries. 12 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 MSME LOANS Lending through commercial banks stopped after October 2019. Thus, MSMEs rely on financing through MFIs. However, such loans depend on both the demand for loans (whether MSMEs are willing/interested in taking out a loan) as well as the supply of loans (the willingness/ability of organizations to lend, and the terms at which they can do so). Each of these components is discussed in turn. On the demand side, there is a fear that MSMEs would not be willing or interested to take out a loan in the current context. Our data do not support this fear—at least for some segments of the MSME population. In one example, an MFI representative described a new lending product they had offered and how demand for it far had outstripped their expectations. The staff person said, “…we [anticipated] finalizing the disbursement of these loans within a couple of months. However, in a matter of ten days, all the loans were disbursed. We were very surprised and happy with this result.” In FGDs, MSMEs were divided in their interest and willingness to take on the potential risk of a new loan. Where participants were willing to take on a new loan, it was because they needed the access to capital. This finding complements data gathered in a survey by Al Majmoua (one of the largest MFIs) which found that 48 percent of MSMEs need financing.17 Based on the recent CGAP study as well as the ET’s KIIs, MFIs have succeeded in maintaining the trust of MSMEs. After the banking sector collapsed in 2019, the Lebanese people lost confidence in the formal banking sector. However, MFIs have retained that trust. In the CGAP survey, 94 percent of respondents were satisfied with their MFI, and 77 percent would recommend them to someone else.18,19 MSME’s primary concern with loans is the ability to repay, according to FGDs. This is supported by the survey data, which found nearly equal proportions of MSMEs that were confident and unconfident about their ability to repay a new loan. Interestingly, this varied somewhat by sector. Those in the agriculture sector were among the most confident of their ability to repay a loan.20 This parallels the finding that those in the agriculture sector were among the most confident that their businesses would continue to operate in the future. Those in the food services sector also reported a high level of confidence that they could repay a loan. Figure 2 on the next page shows the distribution of responses across sectors. In these uncertain times, FGD participants shed light on the conditions that would make them more confident about taking out a loan and being able to repay it. The top request across FGDs was for longer-duration loans. Participants were concerned about obtaining a loan and having to pay it back quickly. In the current environment, sales are relatively slow, and owners need more time to be able to recoup their costs by selling their products/services. The next most frequently cited condition was for low-interest loans. While some participants specifically requested zero interest loans, low-interest loans were more frequently requested. There were also some requests for grace periods. Similar to the loan duration request, a grace period would allow businesses to make their investments and start earning income from it before having to pay back the loan. In terms of preferred currency for the loans, respondents were split regarding whether they preferred loans in dollars or liras. As noted above, many of MSMEs’ raw materials and goods are not available 17 Al Majmoua. 2021. Needs of Large Businesses Survey Report. Internal Report. 18 CGAP did not provide disaggregated data by MFI organization. Thus, it is not possible to know if there were any notable variations across MFI organizations. 19 Consultation and Research Institute, Lebanese Microfinance Association, and CGAP. 2020. Impact of Economic and Covid-19 Crises on Microcredit Borrowers. 20 Small sample sizes when disaggregated by sector limit the ability to draw firm conclusions based solely on the survey data. 13 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 ■ ■ ■ 20% 24% 40% 43% 60% 62% 31% 67% 29% 30% 43% 40% 23% 39% 13% 47% 30% 14% 0% 15% 30% 0% 20% 40% 60% 80% 100% Services Small Retail Home-based Agriculture Food Services Overall Industries Likely to be Able to Repay Neutral/Unsure Unlikely to be Able to Replay Figure 2: Respondents’ confidence in their ability to repay a new loan for purchase in Lebanese liras. Thus, many need dollars in order to operate. But, given the exchange rate challenges, many found a loan in dollars to be too risky, especially as the lender was likely to require repayment in dollars if it was given in dollars. Thus, though some participants preferred loans in dollars, others preferred them in liras. In all cases, respondents preferred repayment to be in liras, not dollars. On the supply side of MSME loan financing, the financial crisis has also negatively affected MFIs. MFIs are the primary lending source for MSMEs—particularly those on the smaller end of the MSME spectrum. Since the start of the economic crisis, however, KII respondents noted that MFIs’ lending portfolios have decreased. Prior to the crises, MFIs were supporting an estimated 170,000 MSMEs; they support approximately 120,000 now.21 Of those MFIs that were willing to share details regarding how their clientele has shifted since the economic crisis, all noted that they had fewer clients overall now. They also noted higher default and PAR rates. Some KII respondents also talked about how inflation and the devaluation of the Lebanese lira had affected MFI operations. Given the rapid rate of inflation, even when they are lending money in liras and accepting repayment in liras, the length of time between when the loan is given out and when it is repaid means that the value of the MFIs money has significantly decreased. The problem can be even worse if they lend in dollars and accept payment in liras without adjusting the exchange rate over time. Increasing default rates only exacerbate the losses. Additionally, some of the large MFIs have currency discrepancies in their balance sheets. MFIs in Lebanon cannot accept deposits. Their only internal source of new revenue for expansion is through the interest charged on their loans. Often, they increase their portfolios through debts from foreign lenders.22 For example, they take out a large loan in US dollars on the international market and then lend this money (at a higher interest rate than they are being charged) to their clients. They then use the payments from clients to repay their own loans. As noted above, the currency crisis leads to considerable foreign exchange losses. The challenge is exacerbated by the fact that their US dollar deposits at local commercial banks are subject to capital controls and cannot be accessed at this time, with no clarity on when that might change. These challenges threaten the solvency of MFIs, in turn threatening access to finance for MSMEs. 21 Social Impact. 2021. Lebanon Political Economy Analysis. 22 Aractingi, Randa. 2021. Microfinance Background Study. 14 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 GRANTS Grants (and/or in-kind goods like equipment) are another main source of capital available to MSMEs according to both KII respondents and FGD participants. Across respondent types, however, respondents noted the importance of controls and making sure that the funding was being used for its intended purpose. In-kind grants can be a way of avoiding the potential pitfalls of cash grants, ensuring that the money gets used for the intended purpose. As discovered under EQ1, however, supplying in￾kind equipment also comes with its own risks and challenges, particularly in the current context. As they rely on donor funding, grants are not sustainable in the long-term. But, in the short-term, respondents greatly appreciated grant benefits and often attributed their ability to keep their businesses open to receiving grants. INFORMAL FORMS OF FINANCING During the FGDs, when asked what sources of financing they have, many business owners said they did not have any sources of financing beyond the profits from their work. However, in addition to the loans and grants discussed above, a few indicated they had access to informal sources of financing such as through family and friends or through shopkeepers. This is supported by the CGAP study, which found that 46 percent of respondent firms had an outstanding loan to family or friends and 32 percent had an outstanding loan through mini-markets or other shops. Additionally, 20 percent said they had a “loan” via unpaid invoices.23 Potential Future Sources of Financing and Support In terms of the types of support that MSME owners wanted to see in the future, many FGD respondents said that grants (including in-kind equipment) and direct cash support from international organizations would be their preferred source of assistance. This is in line with the survey findings where 89 percent of respondents said that grants would be the most beneficial form of future assistance. Though many KII respondents agreed that future support should include grants, they emphasized non￾financial support as well. In particular, they recommended support for accessing new markets, including both online markets and regional/international markets. They also had recommendations for specific types of training that could be provided, such as training on how to adapt to the crises and how to set prices in a volatile market. Support for expanding digital business operations was also frequently noted as a worthwhile form of support by both KII respondents and FGD participants. Such support could include training on website creation, using social media, and handling online sales. In light of the challenges facing the industry as well as the current financial crisis, interviewees suggested blended forms of finance as being the best way to support ongoing lending to MSMEs. Such blended finance involves donors providing guarantees on the loans that reduce the currency and default risks for the MFIs. It can also be used to lower the interest rates for the loans and offer other special terms that might not otherwise be possible. Though blended finance and loans were noted more frequently by KII respondents than FGD participants, some business owners that took part in the FGDs were interested in loans, and 10 percent of survey respondents said their preferred form of support would be access to a new loan. Beyond helping MSMEs operate in a digital world, several KII respondents also talked about fintech options that could have a positive effect on MSMEs. While some of these interventions would be 23 Consultation and Research Institute, Lebanese Microfinance Association, and CGAP. 2020. Impact of Economic and Covid-19 Crises on Microcredit Borrowers. 15 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 possible through direct work with the MFIs—such as by helping them to digitize loan applications and processes—others would require policy reform in order to enact. One of the most notable of these policy reforms needed to enact digital and/or mobile payments. If MSMEs could accept credit/debit cards or mobile money transfers as payment for goods and services, it could significantly facilitate their businesses while also reducing operating costs, they noted. But inter-bank money transfers are not currently permitted under Lebanese banking regulations. These policies would need to change in order to enable this particular portion of digital business operations.24 KII respondents also suggested other MFI-focused policy reforms, though most respondents did not go into great detail regarding the specific reforms they felt were needed. SI’s Political Economy Assessment 2 (May 2021) as well as the Microfinance Background Study conducted as a part of this evaluation also recommended some MFI-focused policy reforms that would help support their sustainability into the longer term. Though these reports made some recommendations regarding ways to standardize MFI regulations and improve the financial standing of MFIs, a more thorough examination of the sector would be needed to draw conclusions about the specific reforms needed. What the sources do agree upon, however, is that reform is needed.25 Finally, though they were not often mentioned in interviews (or in the FGDs), the desk review suggested the possibility of new forms of financing beyond the blended approach to subsidizing loans. The first type is a product-based loan. Many MSMEs require similar types of equipment, such as refrigerators, stoves, sewing machines, or solar panels and batteries. In a product-based loan, MSMEs are offered access to particular goods or equipment that are provided at reduced rates because they are supplied in bulk to many clients. The MFI would purchase the goods directly, in bulk, offering significant efficiencies and lower costs. The MSMEs receive the equipment and pay its value back to the MFI through a loan. The MSMEs would rest assured that they know what products they are receiving and would take on the financial burden of those products through the loan. Some additional forms of financing were discussed in the literature, though their direct application to MSMEs is less clear. Such options include equity financing, venture capital, and pooled loans. Particularly for the smallest MSMEs, it is not clear in the data whether these would be viable options or not. Additional research would be needed to assess the conditions under which they may or may not be beneficial. CONCLUSIONS MSMEs in Lebanon are struggling. As a result of the economic crisis, the COVID-19 pandemic, and the Beirut port blast, many have closed their doors, and many others are not sure how much longer they will be able to continue operating. MSMEs face a wide range of needs in the current Lebanese context. The most critical of these is access to reliable electricity. Without it, they can’t keep their shops open, operate their machines, or provide services to their clients. Additionally, MSMEs face a variety of inter-dependent challenges related to the financial crisis—high inflation, the devaluation of the Lebanese lira, unstable exchange rates, and access to dollars and thereby imported goods. Without notable improvement in these key challenges, it will be difficult for MSMEs to grow and, in many cases, survive. Current sources of financing for MSMEs include MFI loans, grants through donor activities like LIFE, and informal financing sources such as family and friends, shopkeepers, and not paying invoices on a timely 24 Aractingi, Randa. 2021. Microfinance Background Study. 25 Social Impact. 2021. Lebanon Political Economy Analysis. and Aractingi, Randa. 2021. Microfinance Background Study. 16 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 basis. Business owners have a particular preference for grant-based support, particularly in the current, volatile economic context. Such grants are quite helpful in the short-term for helping keep MSMEs open. However, they are not sustainable in the longer-term. Lending is a more sustainable source of financing, but even MFI lending is at risk in the current context. Despite the risks with taking on new debt, there is some demand for loans, at least among some MSME owners. Based on the evaluation data, there appear to be differences across sectors in terms of the willingness of owners to take on a loan as well as their level of confidence that they would be able to pay it back. Combined with data on the confidence of business owners that their businesses will remain open in the future, the ET finds that there are likely differences amongst MSMEs regarding long-term viability. These variations between MSMEs have implications for the types of services that could be offered in the future. Both loans and grants appear to offer potential, albeit for different segments of the MSME population. Those businesses with the highest income and growth potential are likely to be able to manage a loan while others will likely require grant assistance to continue operating. Sectors with the highest potential for growth and sustainability are those whose goods offer domestic replacements for imports (such as agriculture), those with export potential, and those that continue to experience steady demand, despite the crises (such as food services and digital services). In addition to continuing the traditional MSME support services (grants, loans, and training), respondents also recommended other interventions that could help MSMEs including improved fintech as well as MFI-focused policy reform. However, additional study is needed to determine the best support options. EVALUATION QUESTION 3 To what extent were the recommendations generated by the gender analysis integrated in LIFE’s implementation? What are the outcomes generated by the activity as a result of gender mainstreaming? (Gender) FINDINGS In December 2016, Palladium submitted a gender analysis and action plan (GAP) to ensure gender integration throughout the LIFE activity and to comply with the USAID Policy on Gender Equality and Female Empowerment (2012). Among the key recommendations in the GAP was to promote gender mainstreaming within the financial sector through the development and tailoring of products, services, and market linkages to meet the needs of women-owned MSMEs. It also recommended the promotion of female mentorship, networking, and male championing of women’s access to finance. The LIFE midterm evaluation conducted by SI in 2019 suggested that LIFE revisit the GAP and incorporate more of its specific recommendations (e.g. including gender awareness sessions in all training offered). Gender-related Changes Prior to 2019 LIFE’s management and partners expressed a commitment to serving women at multiple levels of the activity. Most KII respondents felt that LIFE was able to improve women’s access to finance and MSME support services. Part of this impact involved imperatives from LIFE staff that grantees target women in their programming and requiring them to report on their work with female MSME owners. LIFE tracked its gender-related work with indicators such as the percentage of female partner staff trained and the percentage of female beneficiaries. They stated that the activity had surpassed the outreach target for women. According to the Q3 FY2021 monitoring, evaluation, and learning (MEL) data available, the percentage of female beneficiaries and female staff trained stands at 47 percent each compared to its 35 percent target. 17 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 Most grantees agreed that LIFE emphasized the need to support and empower women, especially in rural areas. It was a mandate from the beginning of their involvement with the activity. This message resonated well with their own existing efforts to reach women. Gender-related Changes After 2019 Most implementation staff and grantees agreed that the crises affected women more than men, as women struggled to juggle family responsibilities and mitigate livelihood challenges. The majority indicated that during the multiple crisis women had to assume larger responsibilities as they must care for families at home. This has resulted in many women closing their businesses. Several respondents disagreed, however, feeling that everyone was harmed equally/similarly by the crises and that there was no difference between how men and women were affected. The majority of beneficiaries agreed that women faced difficulties accessing financial and non-financial resources and that women were often subject to bias and discrimination. Furthermore, they said women faced many day-to-day challenges in opening and running their businesses, as they had to work harder and had more responsibilities. As one male FGD participant put it, “Women are highly underestimated in our society by men in terms of money, power, and responsibilities. In my line of work, I have come to the conclusion that women are far more responsible than men. I hope women get more recognition and trust than they get at the moment.” CONCLUSIONS Although gender mainstreaming appears to have been a central focus of LIFE, the GAP has not been a guiding document in its work, particularly after October 2019. This is largely due to the multidimensional crisis and the need for continuous shifts in LIFE programming. It is evident, however, that LIFE exhibited a positive and effective approach to the inclusion of women in financial and business support services. While LIFE was able to achieve some success in supporting women, particularly prior to 2019, the crises have caused a setback. The crises forced many women to close their businesses in order to support their families. Much of this dynamic is outside the direct influence of the LIFE activity, however. EVALUATION QUESTION 4 To what extent was LIFE able to mainstream youth in its livelihood activities? (Youth) FINDINGS In October 2019, SI conducted a rapid youth assessment for USAID/Lebanon. Key opportunities that emerged from this study for mainstreaming and integrating youth included: 1. Integrate youth across all program cycles 2. Identify and adopt youth-based indicators within each project 3. Identify employment opportunities for youth 4. Engage youth in activities that can both spark connection to their communities and create opportunities for employment 5. Develop community relations programs that bring together refugees and Lebanese youth, particularly in areas of Lebanon where social tension between these populations is high Youth-related Changes Prior to 2019 LIFE’s implementation staff expressed a commitment to mainstreaming youth in their business support services. This is reflected in the work of the regional hubs, the breakdown in the indicators based on age 18 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 group, as well as LIFE’s efforts to reach out to youth-owned MSMEs. Most respondents felt that LIFE had positive impact on youth-owned MSMEs prior to October 2019. A few disagreed, however. Youth-related Changes After 2019 Since March 2020, LIFE has adopted the Youth 1, Youth 3, and Youth 526 indicators in order to measure how its activity is targeting and working with youth. Furthermore, LIFE appointed a youth focal person to attend all youth trainings and workshops organized by SI/PMSPL II, as per USAID directive. Additionally, LIFE has targeted youth owned-MSMEs through its work with the MFIs. Most respondents agreed that the crises affected youth more than other target groups. They noted that youth struggled to continue their education, find employment, and/or secure funding to start their own businesses. It is evident from the KIIs and FGDs that youth face more difficulties now in accessing resources than before. As a result, many youth are trying to leave Lebanon all together, respondents noted. As one MSME owner explained in an FGD, “I have my son and his brother. They are 23 years old, and there isn't any type of support for the youth in this country. There isn't any fuel. There isn't any petrol, or even electricity. Just as the man before me said, my son is trying to get out of this country.” Most LIFE partners agreed that youth-owned MSMEs faced major challenges after 2019. These challenges are driving many youth to leave the country for better opportunities abroad. Respondents also noted that youth suffered from a lack of trust due to their limited experience (or their perceived lack of experience). They often also lack access to collateral. Together, these challenges limit youth’s abilities to access finance to start their own businesses. One FGD participant said that education and experience were a key requirement for acquiring loan. He provided the example of one young man he knew who just needed a loan. Although this young man had experience, it was difficult for him to access a loan because the financial institution did not trust him, as he did not have a lot of experience or access to collateral. Another respondent said the “main reasons youth do not start their own businesses, are high interest rates; they think they will not be able to pay it back.” This can limit youth’s ability to build and/or start their own businesses. Overall, young people are often afraid to borrow for fear of not being able to repay. Even though this is a challenge to all age groups and genders, youth suffer the most as their opportunities are limited and access to finance requirements are quite rigid, according to respondents. CONCLUSIONS While LIFE was able to achieve some success in supporting youth, the crises have had a particular effect on this demographic group. As a result of the multidimensional crisis, many youth are preferring to leave the country rather than stay and start a business or try to find a job. However, much of this is outside the ability of LIFE to directly influence. SUPPLEMENTAL FINDINGS Inclusion of PWDs in Finance and Business-support Services 26 Youth 1: Number of youth trained in social or leadership skills through USG assisted programs; Youth 3: Percentage of participants in USG-assisted programs designed to increase access to productive economic resources who are youth (15-29) [IM-level] ; Youth 5: Percentage of youth who participate in civic engagement activities following soft skills/life skills training or initiatives from USG assisted programs 19 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 FINDINGS The EQs for this evaluation did not specifically ask about LIFE’s work with persons with disabilities (PWDs). However, LIFE did pursue meaningful work with PWDs who owned their own businesses. Thus, the evaluation also captured information on LIFE’s work with this vulnerable population. PWD-related Changes Prior to 2019 Prior to 2019, LIFE targeted all vulnerable populations including women, youth, and PWDs in their initiatives. This is reflected in the GAP, as there is a broad reference for vulnerable populations including PWDs. Implementation staff and grantees expressed commitment to serving and working with PWDs across all stages of the LIFE activity. This is reflected in LIFE’s partnership with several local organizations advocating for the rights of persons withs disabilities. Most KII respondents agreed that LIFE had a direct, positive impact on PWD-owned MSMEs prior to October 2019, as it sought to mainstream the financial inclusion of this population. PWD-related Changes After 2019 LIFE continued to advocate for working with PWDs, particularly after 2019 and more so following the Beirut port blast. This is reflected in its advocacy for PWD job placements within its partner organizations and within the wider business community. LIFE also promoted loans and grants catering to PWD-owned businesses. It expanded its work with PWD beyond reporting, as was reflected in its closing ceremony for the activity and its call for wider PWD mainstreaming and integration within Lebanese society. As with women and youth, PWDs faced challenges after 2019 that have impacted their livelihood. As a marginalized group with limited access to resources to begin with, the crises had a strong, negative impact on PWD. Many KII respondents and FGD participants agreed that the crises had affected vulnerable populations at large, including PWDs, with a few respondents indicating that the crises had affected PWD-owned MSMEs more than other target groups. One of the main challenges faced by PWDs is that they face trust and acceptance issues. As one FGD participant noted, “No one supports them or helps them. They consider them non-existent.” Another participant in the same FGD concurred, noting, “There is a complete disregard for them.” These examples summarize some of the key biases and challenges that PWDs face in trying to start and run their own businesses. CONCLUSIONS LIFE was able to support some PWDs to access business services and grants to support their businesses, though it was not a primary focus of the activity as a whole. 20 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 RECOMMENDATIONS During the design phase for this evaluation, USAID/Lebanon emphasized its desire to understand, in the current context, what it could do to support MSMEs through future programming. Thus, the following recommendations focus on potential options for future USAID support. As outlined in the evaluation findings and conclusions, the biggest challenges facing MSMEs are the same challenges facing everyone in Lebanon: the availability and reliability of basic services like electricity and the inter-related issues of inflation and the instability of the exchange rate. These primary constraints mean that any effort to assist MSMEs that does not address these primary constraints will be limited in its ability to create change and achieve intended growth. With the potential exception of a few high-potential sectors, it is more likely that MSME-focused efforts (without addressing the broader constraints) will be limited to helping keep MSMEs open rather than helping them grow and prosper. Despite the magnitude of the challenges, there are potential options for USAID to intervene and improve the enabling environment for MSMEs in the longer term while also supporting MSMEs in the shorter term. The recommendations that follow are organized into two larger categories: (i) policy and regulatory reforms and (ii) MSME-focused support services. Regardless of the specific intervention, a flexible and adaptable approach is necessary. The situation in Lebanon continues to evolve at a rapid pace. Future programs must be able to adapt to this changing context and not get caught providing services that meet the needs of 2021 but not the needs of 2022 or 2023. They should also be closely coordinated with other donors to avoid duplication and/or activities that work at cross-purposes. POLICY AND REGULATORY REFORM 1. USAID should support necessary reforms to the MFI sector, though a sectoral assessment is needed to identify the precise policies needed. It is likely that broader economic reforms will be the focus of government attention, particularly in the short term. However, USAID should be prepared to take advantage of future policy openings in the longer term. MFIs offer valuable services to MSMEs that cannot access financing through traditional options. Helping to ensure the long-term health of MFIs could have significant benefits for MSMEs. In advance of that opening, however, USAID will need to identify the precise nature of the needed reforms. While some issues and potential opportunities were raised by respondents in this evaluation, it is outside the ET’s scope to provide a comprehensive assessment. 2. USAID should support the expansion of digital financial services. In the modern era, online and digital financial services (online banking, mobile payment services, etc.) have the potential to facilitate the economy and reduce operating costs for businesses. But they are not possible under current regulations. MSMEs (and the economy in general) would benefit from being able to accept digital payments for goods and services as well as being able to pay suppliers while also reducing operating costs. MSME-FOCUSED SUPPORT 3. USAID should support the ongoing operations of MFIs. With the collapse of the banking sector, MFIs provide a rare source of financing for MSMEs. Thus, they play a substantial role in keeping the economy moving and helping to keep many MSMEs open. To extend this support, USAID should provide: a. Financial support for ongoing MFI operations. This would be an extension of the support provided under LIFE. Without the ability to take deposits, with default rates rising, and currency-related challenges in recuperating the full value of their loans, many MFIs face an uncertain future, relying on donors like USAID to help continue their operations. Fortunately, such support can provide a multiplier effect for the economy. 21 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 b. Technical assistance to reduce operating costs, such as through the expansion of digital processes. Reducing operating costs is another way to support the long-term viability of the MFIs. Digitizing internal MFI operations can expedite services and reduce costs. Many internal records and processes at MFIs are manual and paper-based. Moving to digital records and processes offers significant potential for improvement. c. Expand MFI services to larger MSMEs. Most MFIs have long catered to the smallest MSMEs (i.e., the micros) while those on the larger end of the spectrum have relied on formal banks for financing. Now that the banks are no longer providing services, these larger businesses have approached MFIs for lending. But, the MFIs could use external support in adjusting their processes and selection procedures to meet the needs of these larger businesses. 4. USAID should support continued financial services for MSMEs. This support should build off of and expand upon the services provided through LIFE and should include: a. Grantmaking (with controls) to support the smallest MSMEs. Some MSMEs are unable to handle the financial obligations of a loan and will require grants (cash or through in-kind equipment) in order to continue their operations. b. Subsidized lending through MFIs. Subsidized loans can reduce MSME and MFI risks in the current context. Preferential terms could include lower interest rates, longer payback periods, and grace periods. These strategies can enable struggling MSMEs to continue business operations with new capital while also enabling them to repay the loans. USAID should also consider supporting product-based lending. 5. USAID should continue providing non-financial support services for MSMEs. Though the economic crisis and access to capital are significant challenges, MSMEs can continue to benefit from non-financial services that can help their businesses in the long term. Such continued services should include: a. Business development training, including support for modernization and online services. Many MSMEs will continue to benefit from technical assistance that can help them improve their operations, gain new customers, and reduce their operating costs. Pushing MSMEs into the modern, digital era also provides significant new business opportunities. To expand export options, training on quality assurance and achieving international certifications for products can also be helpful. b. Targeted support for disadvantaged populations, including women, youth, and PWDs. Though improving access to banking services to the unbanked had to be halted under LIFE, efforts to support women-, youth-, and PWD-owned businesses through loans, equipment, and training continued. USAID should continue providing these services, specifically targeting the unique needs and circumstances of these particular business owners. c. Improving access to alternative energy sources. As noted above, unreliable electricity is a major constraint for many MSMEs. Improving access to alternative energy sources and/or battery backup systems could help alleviate some of this strain. The services should be tailored to the specific needs of each business. While some may require battery banks and small solar panels to power laptops and digital equipment, others may require battery backup systems to power refrigerators or other key equipment during an outage. 22 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 d. Technical support (and possibly grants) to reduce operating costs. High operating costs are a significant barrier to competitiveness, particularly in export markets. USAID can help MSMEs improve their competitiveness by helping them to reduce their operating costs. This could include improving internal efficiencies, expanding digital services, as well as improving the efficient use of resources (energy efficiency, water efficiency, etc.). Where equipment upgrades can help achieve these reductions, USAID could consider subsidizing more efficient equipment. 6. To maximize impact, USAID should focus support on key, high-potential sectors. MSMEs’ needs are great, and, unfortunately, it is unlikely that sufficient resources would be available to help all enterprises. Focusing on the sectors of the economy that have stronger potential can achieve greater outcomes. Higher potential sectors include: a. Those that replace imports (such as agriculture or food processing services) b. Those that produce exportable goods and services c. Those with steady domestic demand (such as food processing and digital retail markets) 23 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 ANNEXES ANNEX I : LIFE FINAL EVALUATION SCOPE OF WORK [Attached] ANNEX 2: LIFE FINAL EVALUATION STATEMENT OF OBJECTIVES [Attached] ANNEX3: LIFE COOPERATIVE AGREEMENT MODIFICATIONS [redacted] ANNEX 4: LIFE MEL PLAN [Attached] ANNEX 5: LIFE INDICATOR PERFORMANCE TRACKING TABLE [redacted] 24 | LIFE FINAL PERFORMANCE EVALUATION USAID/LEBANON FINAL REPORT – SEPTEMBER 2021 1 Source: Photo obtained from Facebook LIVELIHOODS AND INCLUSIVE FINANCE EXPANSION (LIFE) FINAL PERFORMANCE EVALUATION Scope of Work June 2021 2 ACRONYMS ADS Automated Directives System AOR CDCS Agreement Officer Representative Country Development Cooperation Strategy CLA Collaboration, Learning and Adaptation COP Chief of Party COR Contract Officer Representative DEC Development Experience Clearinghouse DO Development Objective DQA Data Quality Assessment EQUI Evaluation Quality Use and Impact FGD Focus Group Discussion FTE Full-Time Equivalent GIS Geographic Information System HQ Headquarter FY GE/FE Fiscal Year (USAID Oct 1 to Sept 30) Gender Equality and Female Empowerment GOL Government of Lebanon IM Implementing Mechanism Ips Implementing Partners IR Intermediate Result KII Key Informant Interview LF Logical Framework LIFE Livelihoods and Inclusive Financial Expansion LOE Level of Effort LOP Life of the Project M&E Monitoring & Evaluation MOU Memorandum of Understanding PAD Project Appraisal Document PIR Project Intermediate Result PIRS Performance Indicator Reference Sheet PMP Performance Management Plan PMSPL Performance Management and Support Program for Lebanon RF RSS Results Framework Refugee Scholarship Support SOW Scope of Work USAID United States Agency for International Development USG United States Government 3 TABLE OF CONTENTS ACRONYMS 2 INTRODUCTION 4 AUDIENCE AND INTENDED USERS 4 LIFE ACTIVITY DESCRIPTION 5 DEVELOPMENT HYPOTHESIS AND ASSUMPTIONS 6 EVALUATION OBJECTIVES 6 KEY EVALUATION QUESTIONS 7 FINAL RECOMMENDATIONS 8 LESSONS LEARNED AND ADAPTIVE MANAGEMENT 8 EVALUATION DESIGN AND METHOD 8 TEAM STRUCTURE 9 EVALUATION MANAGEMENT 10 DELIVERABLES, TIMELINE AND DISSEMINATION PLAN 11 REPORTING GUIDELINES 14 4 INTRODUCTION USAID’s LIFE project is a five-year (2016 -2021) $20.3 million project to improve economic opportunities for low-income individuals and microenterprises by advancing the business skills of small entrepreneurs and expanding their access to financial services. In its earlier years, LIFE was expanding finance to unbanked and previously excluded microbusinesses, leading to wider access to credit, checking and savings accounts, debit/ATM cards, credit information, and financial literacy training. Starting 2019, in response to the multidimensional crisis that Lebanon is facing, LIFE shifted its interventions in the field during the last two years of the project, focusing mostly on livelihoods assistance and limiting its inclusion efforts, as the financial system Lebanon is still very unstable and witnessing a wave of financial exclusion. USAID tasked Social Impact PMSPL II to conduct a final performance evaluation for the LIFE program. The objective of the final performance evaluation is to closely examine and analyze the effectiveness of the shift that LIFE has undergone in the past two years of implementation. The evaluation should also look at alternative sources of finance, particularly for microenterprises, as Lebanon’s financial sector seems to be in a state of long-term restructuring following the collapse of the banking sector and the Lebanese Lira. The evaluation should provide recommendations for USAID on opportunities for USAID to help microfinance sector recovery. The evaluation will be conducted with adherence to SI’s Evaluation Quality Use and Impact (EQUI™) approach, processes, and protocols. EQUI processes are designed to achieve a quality evaluation that incorporates learning and utilization. Based on EQUI, this evaluation will have a utilization focus. In addition to assessing program performance in achieving planned objectives, the evaluation will highlight lessons learned and provide recommendations taking into consideration programming of future activities in Lebanon. To support utilization, this evaluation will be followed by a post-evaluation action plan. SI will continue to actively engage USAID, implementing partners (IPs), and other stakeholders in the evaluation process. The estimated duration for completion of the evaluation is 10 weeks with a proposed start date in mid-July. A six-day work week is authorized for the evaluation team. The proposed evaluation team will include an Expat Evaluation Team Leader, and one or more local specialized experts. The team is to have expertise in microfinance support and livelihoods development. The deadline for completion of the evaluation is the end of September 2021. A data collection and research firm will be supporting the evaluation team in organizing and conducting FGDs with LIFE beneficiaries. AUDIENCE AND INTENDED USERS The audience and intended users for the evaluation are USAID/Lebanon, specifically the Economic Growth Office, Palladium Group and other relevant stakeholders at the discretion of the Mission. Throughout the evaluation, SI will use the EQUI approach to actively engage USAID/Lebanon, implementing partners and other relevant stakeholders at the discretion of the Mission. SI will work with USAID to clarify the goal, purpose, objective of the evaluation as well as finalize and agree on the final evaluation questions. The EQUI1 approach will guide the discussion on the methodology, coding 1 EQUI (Evaluation Quality Use and Impact) is a system developed by SI and used for all its evaluations. It combines evaluator training, quality assurance, and stakeholder engagement to produce accurate and useful results. This system starts with training for every team leader and team member in the basic tenets of quality in evaluation through an online platform. Next – it provides a series of checklists that identify what we believe will define quality through five key parts of the process. Then SI sets key milestones for a utilization focus that start before the final report and focuses the client and the team on use from the outset. Finally, SI will have an online dashboard that allows SI to track all its evaluations and where SI is in the process and note possible delays and problems. * 5 process, analysis and presentation to help assure that the findings and conclusions meet the needs of USAID. In the spirit of the USAID Evaluation Policy, the evaluation will provide USAID/Lebanon with concise, actionable recommendations based on findings and analyses to be used by USAID for future program design or program improvement. The team anticipates that the results from the final performance evaluation will be used by USAID/Lebanon during its annual Portfolio Review. The final evaluation report will become publicly available on the Development Experience Clearinghouse (DEC). LIFE ACTIVITY DESCRIPTION USAID’s LIFE project is a five-year (2016 -2021) $20.3 million project to improve economic opportunities for low-income individuals and microenterprises by advancing the business skills of small entrepreneurs and expanding their access to financial services. The LIFE project has three components: • Inclusive Finance Policies enacted through empowered local organizations: With a focus on elevating the discourse on access to finance and banking services to the national level, the project works through the Lebanese Microfinance Association (LMFA), commercial banks, and other stakeholders to develop policies that promote a vibrant, sustainable financial sector that economically empowers the unbanked, low-income, and underserved clientele, particularly in rural areas. • Expanding the range of products available to poorest: The project is improving the ability of commercial banks and microfinance institutions (MFIs) to increase their range of products and services and expand their reach of clients and borrowers to include microenterprises and the poorest, with an emphasis on higher-risk, conflict affected areas (areas where economic pressures and social tensions have increased significantly as a result of the high influx of refugees). This requires an emphasis on youth, those currently without a bank account, the disabled, and low-income women-headed households; and • Livelihoods and business support: This involves providing customized business management training, technical know-how, mentoring, and basic business development skills to micro, mostly family-owned enterprises to give them the skills they need to grow their sales and income. Often, the objective is to enable these small businesses to position themselves to gain access to commercial finance for the first time, a critical ingredient for business growth. The project provides small grants that generally support technology adoption for improved productivity. In its earlier years, LIFE was expanding finance to unbanked and previously excluded microbusinesses, leading to wider access to credit, checking and savings accounts, debit/ATM cards, credit information, and financial literacy training. However, in October of 2019, street protests began in Lebanon, and lasted for more than six months. This was accompanied by a gradual devaluation of the Lebanese Lira, and depletion of foreign currency reserves at the Central Bank of Lebanon (Banque du Liban). This resulted in informal controls on cash withdrawals imposed by retail banks in Lebanon reducing liquidity and further devaluation of the currency. This downward spiral continued throughout the year. The liquidity crisis and devaluation placed a heavy economic burden on microenterprises, the end￾beneficiary of the LIFE activity, who soon found themselves in dire need of liquidity to continue operations. The situation was further exacerbated by a prolonged lockdown imposed by the outbreak of COVID -19. On December 6th, 2019, the USAID Mission began a conversation with all economic growth implementing partners to adjust their portfolio in response to the multidimensional crisis. LIFE immediately proposed creative ways to pivot to approaches that served to sustain partner microfinance institutions (MFIs) and their clients (an estimated 175 thousand micro businesses across 6 Lebanon). LIFE pivoted three times, in response to: 1) the financial crisis; 2) Impact of COVID 19 on businesses, and 3) August 4, 2020 blast that hit Beirut Port and impacted Beirut businesses. The first shift was in December 2019, as the contractor shifted activity to assist businesses suffering from lack of liquidity. LIFE refrained from its financial inclusion activity and worked on microfinance interventions to assist microenterprise in meeting their liquidity needs. As a result of COVID 19, the contractor was asked to pivot again in February 2020 to assist businesses affected by the pandemic and the subsequent forced closures. As a result of COVID, its provision of Business Development Services (BDS) became virtual BDS. It also supported microenterprises affected by COVID 19 through microloans and in-kind grants. Following the August 4th, 2020, explosion at the Beirut Port, LIFE was among the first respondents to submit a plan to pivot again, and support microenterprises affected by the blast. In three weeks, LIFE established a partnership with two NGOs/MFIs that offered assistance to more than 200 businesses in the blast affected areas. Thus, during the last two years of the project, LIFE responded to the situation on the ground focusing on livelihoods assistance, limiting its inclusion efforts. The much-weakened financial sector remains unstable showing an increase of financial exclusion measures being taken. DEVELOPMENT HYPOTHESIS AND ASSUMPTIONS The attainment of the LIFE activity’s outputs outcomes, impacts and goals were conditional upon certain external factors remaining unchanged or any changes occurring only as anticipated. These are regarded as assumptions critical to the timely and successful accomplishment of activity goals. They must be monitored in order to ascertain whether any failure to achieve activity objectives is the result of internal, manageable factors or uncontrollable, external forces. Critical assumptions for the LIFE project to achieve its targets and objectives, are as follows: • A stable functioning government in the coming years with policy makers open to policy changes supporting improved access to finance; and especially continued government support for the development of the LMFA. • The Syrian crisis and the political and macroeconomic stress that it places on the Lebanon’s public infrastructure, services and economy does not significantly worsen leading to internal conflict, political strife or economic crisis. • Despite macroeconomic strains and rising public debt the overall economy remains stable with continued low but positive economic growth, moderate inflation, sufficient reserves to maintain the exchange rate peg, and relatively stable interest rates. • MFA’s risk appetites do not substantially change, and they remain willing to expand business despite macroeconomic uncertainty. • Consumers’ and microenterprises’ risk appetites also are unchanged and demand for financing remains stable. All of these assumptions are now known to be wrong. In the midst of a deepening economic crisis with continued rapid devaluation of the Lebanese Lira no government has been formed. The ability of consumers and microenterprises to accept new debt is greatly diminished. Hence the basis for the development hypothesis as envisioned no longer exists. LIFE’s M&E staff have monitored the political and economic context allowing the project to adapt to new and changing realities. EVALUATION OBJECTIVES 7 The objective of this evaluation is to examine and analyze the effectiveness of the shift that LIFE has undergone in the past two years. Specifically, the evaluation will review the rationale, experiences, current performance to date of the three pivots LIFE has adopted. The evaluation should also look at alternative sources of finance, particularly for microenterprises, as Lebanon’s financial sector seems to be in a state of restructuring that is expected to take a long time following the collapse of the banking sector and the Lebanese Lira. The evaluation should provide recommendations for USAID on potential ways for USAID to help the microfinance sector in its recovery. The evaluation will also address gender as a cross-cutting element of all activities, showing to what extent the LIFE program has adhered to the USAID’s gender integration requirements. The outcome of the evaluation is expected to provide the Mission, the USG, and the implementing partners with usable lessons learned for adaptation under USAID’s Collaborating, Learning and Adapting (CLA) framework. It should provide the audience with input on the approach and intervention implemented under microfinance and livelihood programs in terms of achieving outputs and outcomes as well as assess the sustainability of these interventions. The evaluation will also provide the Mission and the Implementing Partner with a background, conclusions and recommendations package to better plan for future projects. KEY EVALUATION QUESTIONS According to USAID SOO, the final evaluation is expected to address the following elements: Effectiveness: 1) To what extent was the shift that LIFE project undergone in the past two years effective in addressing the emerging needs of microenterprises and achieving project objectives following the multidimensional crisis? More specifically, to what extent is LIFE’s approach and performance successful in terms of: • assisting microenterprises suffering from lack of liquidity as a result of the financial meltdown to meet their liquidity needs. • assisting businesses affected by the pandemic and the subsequent forced closure though BDS, grants and microloans. • supporting microenterprises that were affected by the blast through established partnerships with local NGOs/MFIs. 2) The extent to which microenterprises are able to remain operational during the economic crisis, with a specific focus on: 2.1) The financial needs of microenterprises to remain operational until economic activity picks up. 2.2) The alternative sources of finance that are most effective in assisting the microenterprises following the collapse of the banking sector and the Lebanese Lira Gender 8 3) To what extent recommendations generated by the gender analysis were integrated in LIFE recent implementation shift? What are the outcomes generated as a result of LIFE gender mainstreaming? FINAL RECOMMENDATIONS The final evaluation is to provide formal recommendations to the Mission on potential ways to sustain microenterprises until economic activity is restored. The final recommendations should highlight if the strategic shift undertaken by the LIFE program was a sound decision, and whether USAID should continue with similar activities. The evaluation will explore the challenges and successes that should be taken into consideration if a similar approach was maintained and advise on indicators to best track those successes or failures of the activity. The different recommendations will be justified by an analysis and based on the questions and evaluation framework. LESSONS LEARNED AND ADAPTIVE MANAGEMENT The final evaluation is expected to provide the Mission, the USG, and the implementing partner with usable lessons learned for adaptation under USAID’s Collaborating, Learning and Adapting (CLA) framework. The evaluation will provide valuable information that will contribute to the mission’s overall learning framework, which can then be replicated or shared in other contexts. EVALUATION DESIGN AND METHOD This evaluation will rely on review of project documentation (e.g. the contract, work plan, gender analysis, quarterly reports, annual report, and technical reports) and data collected from interviews and focus group discussions with the Mission, activity staff, partners staff activity beneficiaries and other stakeholders. Site visits, direct observations, and other tools will be used to inform the evaluation team. In accordance with ADS 205.3.8.2, this evaluation is to adequately capture the situations and experiences of both males and females and highlight any challenges and/ or achievements in filling gender gaps identified in the LIFE gender analysis. The evaluation should include the extent to which the project meets CDCS gender objectives as a result of the activities that were implemented. The evaluation is expected to primarily use qualitative research methods. However, the development of the inception report is an opportunity for the TL, or other experts to propose changes to the methodology, including collecting quantitative data via a random sample of LIFE selected beneficiaries. Methods that will be used for qualitative data collection are inter alia following: - Desk review: The evaluation team will do a systematic literature review of documents, including CDCS, LIFE PAD, RFP, contract agreement, contract modifications, initial assessments (including the project gender analysis), periodic reports (annual, quarterly, other), MEL plan and all other activity’s documents relevant to answer the evaluation question. In addition, the evaluation team will review relevant external and internal studies and assessments on Lebanon that may lend additional context to the activity’s relevance and effectiveness. 9 - Key Informant Interviews with USAID, LIFE staff, MFI and other grantees staff: The evaluation team will conduct KII with USAID key staff members (Program Office, Economic Growth Office, COR/AOR); LIFE HO, and in-country staff and partners (Palladium assigned personnel, COP, DCOP, M&E Director, Gender Focal Point, Program Managers, MFIs and others grantees such as banks and organizations) to obtain more detailed, in-depth understanding about specific issues. The KIIs will provide in-depth understanding about activity’s achievements, factors that contributed towards achievement of the activity’s results, and implementation challenges. The relevant sub-questions to be developed for the questionnaire at the time of developing the evaluation tools, will then be based on the findings and recommendations of the gender analysis relevant to livelihood and access to finance/ economic empowerment sections of the analysis. -Focus group discussions FGDs with LIFE beneficiaries and stakeholders: The evaluation team will conduct structured FGDs with sampled beneficiary that were supported through the identified grants. The information will be collected from LIFE data base. The FGDs will focus on exploring the relevance of the LIFE approach to targeted segments’ needs, how effective the activity has been in reaching the targeted segments and achieving the planned results, and how sustainable the achieved results are likely to be. The selection process of the beneficiaries’ participants of the FGDs will be detailed in the inception report. Efforts should be made to conduct equal number of male/ females FGDs. FGDs logistics will be supported by a data collection firm. - Data Analysis: Evaluation team will conduct qualitative data analysis and development of findings, conclusions and recommendations. The study team will use a structured and systematic approach to analyzing the qualitative data and will triangulate multiple methods and sources to ensure the reliability and validity of results. The study team will analyze the qualitative data as follows: Code KII according to themes relevant to the evaluation questions; answers for all Key Questions must be disaggregated by M/F (people/ enterprises), Prepare an evaluation data analysis matrix identifying the themes that emerge in the KIIs to facilitate systematic and rigorous data analysis aimed at identifying key study findings as they relate to the evaluation questions; and Prepare a detailed outline summarizing key findings based on all the data analysis, conclusions for each study question and overall recommendations. Anonymous Data analysis files developed through this evaluation would become the property of USAID and uploaded on their DDL. TEAM STRUCTURE The evaluation team will consist of a team leader and a local expert in education and higher education, in addition to staff from PMSPL II team. USAID’s ADS require that at least one member of every evaluation team be an evaluation specialist. The PMSPL II team will provide evaluation specialization support to the evaluation team backstopped by Social Impact’s home office. SI’s head office will support evaluation management and quality. Evaluation Team Leader: The team leader will be responsible for coordinating and directing the overall evaluation, including preparation and submission of the inception report, draft and final performance evaluation reports. He/she will be responsible for the overall design of the evaluation methodology, creating KII instruments, conducting KIIs, data coding and data analysis. The Team Leader for the LIFE final evaluation should have a professional background in international development and a robust knowledge of financial inclusion, access to finance, livelihoods, support to associations etc. He/She must hold a PhD in Business, Finance, Microfinance, Development studies and/or related field; or equivalent experience combined with lesser academic degrees. He/She should 10 have at least 10 years of experience working in the finance, microfinance, and/or economic and social development sector specifically managing, assessing, evaluating economic growth, financial inclusion and livelihood programs. (45 LOE). Evaluation Team Member (Higher Education Local Expert TBD): The expert will contribute technical inputs in the design of the evaluation methodology, developing KII instruments, conducting KIIs, coding, data analysis as well as contribute to report writing. It is necessary that he/she has a professional background in international development and a robust knowledge of financial inclusion, access to finance, livelihoods, support to associations etc. He/ She should have at least 5 years of experience working in the finance, microfinance, and/or economic and social development sector specifically managing, assessing, evaluating economic growth, financial inclusion and livelihood programs. (40 LOE). PMSPL II staff will support the evaluation team, providing logistical and technical support. PMSPL II staff and HO staff participates in drafting, reviewing and editing the draft final report before circulating to the stakeholders for comment and review. Preparation of the evaluation report is the responsibility of the team leader/technical expert. Final editorial responsibility and quality control for the report is with Social Impact. Comments received are to be address by the technical expert supported by the PMSPL II staff. PMSPL team will contribute quality assurance to ensure that the evaluation follows SI’s EQUI® process and is gender sensitive. She additionally serves as a team member to contribute to evaluation methodology and instrument design, facilitate FGDs and KIIs, and contribute to data analysis and reporting. The draft evaluation report is to be reviewed by USAID/Lebanon and, at the request of USAID/Lebanon, a broad range of stakeholders. PMSPL II will certify that there is no conflict of interest or potential conflict of interest with respect to the performance of this evaluation on the part of the contractor and the contractor’s team members. Social Impact will guarantee that substitutions will not be made for individuals proposed as team members without the approval of USAID. EVALUATION MANAGEMENT Pre-Fieldwork (PMSPL II staff): Identify and recruit the technical experts and assign a team leader. Obtain key documents, establish key contact, liaison with USP staff to set up interviews with activity staff and prepare interview schedule with USP stakeholders and beneficiaries. Pre-Fieldwork (Experts): During this time the evaluation team will develop the inception report including methodology, preliminary design for the field work, the KII interview guides, and all the necessary forms for collection of informant narratives, design of field work, and strategy for qualitative analysis, etc. PMSPL team will support the TL in preparing for the inception report and kick-off meeting at USAID. The pre-field work should be accomplished prior to the data collection process. Technical advice and counsel are sought from SI HQ at this time. Kick-off: PMSPL II COP/DCOP meets with the Team Leader, Local Experts and PMSPL II evaluation team to assign roles and responsibilities, agree on the evaluation work plan, list of people to be interviewed. The team will meet with USAID Program Office and COR for an in-country briefing to agree on the details of the evaluation. Additional documentation may be requested at that time. Logistics for the field visits will also be made final. Inception Report: The Team Leader will present an Inception Report underlying a detailed 11 methodology and data collection plan and evaluation matrix to be approved by USAID COR prior to the start of the field work. Field Work: The field work will include interviews with key stakeholders including, USAID key staff, LIFE project staff, partners, sub-contractors and grantees/beneficiaries and focus group discussions with beneficiaries who received BDA. Post Fieldwork: The Team Leader is expected to write the final evaluation report including background, setting and institutional context, data analysis, findings and recommendations. All other experts will provide support where applicable in the drafting and writing of certain sections in the report. Integration of the results and analysis from the different focus group discussions will be the responsibility of the team leader. Where applicable, PMSPL II team will provide support to the evaluation team. Submission and presentation of the draft final report is the responsibility of the Team Leader; an out brief to the Mission will be carried out prior to the team leader departure from the country. Presentation of Interim Findings: Following the field work and prior to the submission of the draft report, the Team Leader will conduct a presentation of interim findings to USAID staff members. The purpose of the presentation is to highlight some of the major findings, conclusions and recommendations based on the field work carried out. It will help underline any concerns or issues by USAID staff members and stakeholders to be included in the draft as well as final report to be presented. Review Draft Report: USAID and stakeholders are requested to review the draft report and prepare comments within one-week of the submission of the final evaluation report. Respond to Draft Report Comments: PMSPL II responds to comments from USAID and stakeholders revising the report as necessary. The expat technical expert travels from Lebanon but remains available to respond to USAID and stakeholder comments as needed. Final Report Preparation: The final performance evaluation report will be submitted within 3 working days following receipt of final comments from USAID/Lebanon. This includes time needed by SI HQ to edit and review the report prior to submission as a final evaluation report to USAID/Lebanon. Quality Assurance: the project director (PD) at SI HO, assisted by PMSPLII local team, will apply EQUI quality assurance steps throughout the evaluation and to the draft report, and final report. DELIVERABLES, TIMELINE AND DISSEMINATION PLAN Deliverable Expected Delivery Date Scope of Work: PMSPL II team will prepare the SOW including methodologies, tools, evaluation work plan and time schedule. The SOW will be submitted to the AOR at USAID/Lebanon for approval. Submitted USAID June 29 2021 Approval USAID July 1st 2021 12 Kick off Meeting: The evaluation team will provide a briefing to USAID prior to the start of the evaluation. The initial briefing will focus on presenting the evaluation plan. The meeting will also include discussions with the Mission on the evaluation questions, the proposed methodologies and the development of the Inception Report (a deliverable). July 19h 2021 Inception Report: The evaluation team will prepare an Inception Report based on the results of the kickoff meeting with the Mission. The Inception Report will include final the methodologies, tools, and evaluation work plan and time schedule agreed upon. The Inception Report will be submitted to the AOR at USAID/Lebanon for approval. Approval of the Inception Report signals agreement by the Mission and the evaluation team to use the proposed methodologies and tools with adherence to the work plan and time schedule. The Inception Report is Annex A of the evaluation report. Submitted to USAID July 30th , 2021 Approved by to USAID on August 2nd 2021 Phase 1: KII & FGD (In-Person/ Remote) Depending on the situation within the country, the KII and FGDs will be conducted in August 2021. This can be done remotely or in person depending on the official Covid-19 restrictions by government and willingness of the stakeholders to meet face to face. A plan for both scenarios will be included in the inception report. 4 August 2021 Phase 2: field work completion The field work is expected to be completed by August 20th. This includes data collection, interviews, focus group discussion and other. 20 August 2021 Preliminary Findings Presentation: The evaluation team will provide a briefing to USAID at the end of the evaluation. Toward the end of the field work, prior to the development of the Draft Report, the team will carry out a preliminary findings’ presentation at USAID. 6 September 2021 Draft report: A draft report of the findings and recommendations will be submitted to USAID COR clearly describing findings, conclusions, and recommendations, within two weeks of completing the field work and data collection. USAID will provide comments on the draft report within two weeks of submission. ADS 201 directives state that draft reports “must undergo a peer review organized by the office managing the evaluation”, and that “reports must be shared with implementing partners of the projects or activities addressed in the evaluation.” The evaluation team will consider USAID comments and the comments of other stakeholders and revise the draft report accordingly and as appropriate for an independent evaluation. Where difference of opinions exists, these will be presented in a Statement of Differences Annex. 17 September 2021 13 Final Report: The final evaluation report will be provided to USAID in MS Word and Adobe PDF following receipt of final comments from USAID. The report will include all of the components outlined in the “Structure of the Evaluation Report”, but not necessarily in the order specified below. The report will not exceed 20 pages (excluding appendices). Appendices should at a minimum include the Inception Report for the evaluation; a list of individuals interviewed; a complete description of the methodology used for the evaluation; and any data collection used. The report will be submitted in English, electronically in MS Word format and compliant with USAID Graphic Standards. 29 September 2021 14 REPORTING GUIDELINES USAID’s Evaluation Policy requires that all evaluation reports adhere to USAID’s Criteria to Ensure the Quality of the Evaluation Report. The USP performance evaluation team will incorporate these guidelines in the final evaluation report where relevant and applicable. The findings from the evaluation will be presented in a draft report at a full briefing with USAID/Lebanon and key stakeholders. The format for the evaluation report is as follows: 1. Abstract of not more than 250 words briefly describing what was evaluated, evaluation questions, methods, and key findings or conclusions. 2. Glossary & Acronyms 3. Table of Contents (1 pp.); 4. Executive Summary: Summarizes key points (background and purpose, evaluation questions, methodology, findings, and conclusions). (2 to 5 pp.); 5. Introduction: project context, purpose, audience, and summary of activities (1 pp.); 6. Background: Brief overview of USP activity, USAID/Lebanon program strategy, USP activity strategy, development hypothesis, and activities implemented in response to the development hypothesis, USP activities and outcomes, and purpose of the evaluation (3 pp.); 7. Methodology: Describes the evaluation methodology used (primary/secondary, FGD, KII, constraints and gaps (1 pp.); 8. Findings, Conclusions and Recommendations: Each evaluation questions will be addressed in terms of findings, conclusions and recommendations; including a reference to the data quality of the evidence provided (10 pp.); 9. Issues: Provide a list of key technical and/or administrative issues, if any (1 pp.); The final version of the evaluation report will be submitted to USAID/Lebanon in hard copy as well as electronically in MS Word format. The report should not exceed 25 pages, excluding references and annexes. 10. Annex A of the Final Report should be this Evaluation SOW. Annexes: (A) Inception Report (B) Persons Interviewed, (C) Bibliography, (D) Survey and Data Collection Tools, (E) Data Analysis, (F) Focus Group results, (G) AOB, (H) Statement of Differences, (I) No Conflict of Interest declaration Section C: Scope of Work Project No: xx Project Name: Final Evaluation of LIFE Task Name: Research and Evaluation of USAID support for financial inclusion and livelihoods Contract No: AID-268-C-16-00002 Position Title: Team Leader Level of Effort: Up to 35 days Period of Performance: C.1. Background Through PMSPL II, Social Impact supplements the monitoring and program management efforts of USAID/Lebanon staff and verifies, monitors, and supports USAID program performance in Lebanon. The period of performance of this project is September 2015 – September 2020. Under this contract, Social Impact has been asked to support a final performance evaluation of a USAID￾funded activity, the Livelihoods and Inclusive Finance Expansion (LIFE) through the provision of a consultant who would act as the Team Leader of the evaluation. USAID’s LIFE project is a five-year (2016 -2021) $20.3 million project to improve economic opportunities for low-income individuals and microenterprises by advancing the business skills of small entrepreneurs and expanding their access to financial services. In its earlier years, LIFE was expanding finance to unbanked and previously excluded microbusinesses, leading to wider access to credit, checking and savings accounts, debit/ATM cards, credit information, and financial literacy training. However, in October of 2019, street protests began in Lebanon, and lasted for more than six months. This was accompanied by a gradual deterioration of the Lebanese Lira, as foreign currency reserves started to deplete at the Central of Lebanon. This resulted in controls on cash withdrawals imposed by banks in Lebanon, resulting in further liquidity shortage and further currency devaluation and this vicious circle went on throughout the year. This posed a heavy economic burden on microenterprises, the end-beneficiary of the LIFE activity, which found themselves in dire need of liquidity to continue operations. The situation was further exacerbated by a prolonged lockdown imposed by the outbreak of COVID -19. On December 6th, 2019, the USAID Mission began a conversation with all economic growth implementing partners to adjust their portfolio in response to the multidimensional crisis. LIFE immediately proposed creative ways to pivot to approaches that served to sustain partner microfinance institutions (MFIs) and their clients (an estimated 175 thousand micro businesses across Lebanon). LIFE pivoted three times, in response to 1) the Financial crisis; 2) Impact of COVID 19 on businesses, and 3) August 4, 2020 blast that hit Beirut Port and impacted Beirut businesses. The first shift was in December 2019, as the contractor shifted activity to assist businesses suffering from lack of liquidity as a result of the financial meltdown. LIFE refrained from its financial inclusion activity and worked on microfinance interventions to assist microenterprise in meeting their liquidity needs. As a result of COVID 19, the contractor was asked to pivot again in February 2020 to assist businesses affected by the pandemic and the subsequent forced closure. As a result, its provision of BDS in a timely manner to virtual BDS. It also supported microenterprises affected by COVID 19 through microloans and in-kind grants. Following the August 4, 2020 explosion of the Beirut Port, LIFE was among the first respondents to submit a plan to pivot again and support microenterprises that were affected by the blast. In three weeks, LIFE established a partnership with two NGOs/MFIs that offered assistance to more than 200 businesses affected by the blast. The LIFE project has three components: 1) Inclusive Finance Policies enacted through empowered local organizations: With a focus on elevating the discourse on access to finance and banking services to the national level, the project works through the Lebanese Microfinance Association (LMFA), commercial banks, and other stakeholders to develop policies that promote a vibrant, sustainable financial sector that economically empowers the unbanked, low-income, and underserved clientele, particularly in rural areas; 2) Expanding the range of products available to poorest: The project is improving the ability of commercial banks and microfinance institutions (MFIs) to increase their range of products and services and expand their reach of clients and borrowers to include microenterprises and the poorest, with an emphasis on higher-risk, conflict affected areas (areas where economic pressures and social tensions have increased significantly as a result of the high influx of refugees). This requires an emphasis on youth, those currently without a bank account, the disabled, and low-income women-headed households; and 3) Livelihoods and business support: This involves providing customized business management training, technical know-how, mentoring, and basic business development skills to micro, mostly family owned enterprises to give them the skills they need to grow their sales and income. Often, the objective is to enable these small businesses to position themselves to gain access to commercial finance for the first time, a critical ingredient for business growth. The project provides small grants that generally support technology adoption for improved productivity. As mentioned above, during the last two years of the project, LIFE and in response to the situation on the ground focused mostly on livelihoods assistance, limiting its inclusion efforts, as the financial system Lebanon is still very unstable and witnessing a wave of financial exclusion. The purpose of this evaluation is not only to assess the performance of Palladium under LIFE, but also to closely examine and analyze the effectiveness of the shift that LIFE has undergone in the past two years. The evaluation should also look at alternative sources of finance, particularly for microenterprises, as Lebanon’s fincial sector seems to be in a state of restructuring that is expected to take a long time following the collapse of the banking sector and the Lebanese Lira. The evaluation should also closely look at the microfinance sector, examine its ability to recover from the crisis and to continue it serve microenterprises and look at potential ways for USAID to help the sector in its recovery. Specifically, the evaluation will review the rationale, experiences, current performance to date, and likely impact of the three pivots LIFE has adopted. 1) Did they succeed? 2) Should USAID pursue a similar approach in the future? 3) what are the prospects for the microfinance sector? 4)Should USAID continue to invest in the sector? 5) what’s the current status of microenterprise and their ability to remain operational? 6) How can USAID limit the damage on microenterprises for them to remain operational until economic activity picks up? C.2. Tasks and Responsibilities The Team Leader for the LIFE final evaluation should have a professional background in international development and a robust knowledge of financial inclusion, access to finance, livelihoods, support to associations etc.. . This person shall be responsible for coordinating and directing the overall evaluation, including preparation and submission of the draft and final evaluation report. The Team Leader will be responsible for the following tasks: • Provide technical expertise and lead efforts in final performance evaluation design, methodology and data collection instruments; • Lead the preparation and presentation of the key findings and recommendations to USAID/Lebanon; • Provide leadership for the team and coordinate activities as necessary; • Conduct interviews, surveys, site visits, document review and focus groups. • The Team Leader is responsible for analyzing information collected through desk reviews, field interviews, and other proposed methods preparing periodic (bi-weekly) interim findings and presenting these to USAID/Lebanon. • Taking into consideration of feedback from interim findings presentations, the team leader is responsible for writing the draft assessment report and presenting main findings to USAID/Lebanon. • The team leader is responsible for responding to USAID comments on the draft report and submitting a final report to USAID/Lebanon. • Other responsibilities, as assigned by the PMSPL II Chief of Party C.3. Management Framework The Team Leader will complete the evaluation using SI’s Management and Quality Assurance (QA) Framework. The framework has three required components: A. SI’s On-line Evaluation Team Leader Training. The Associate will complete the Team Leader Training and worksheets with a minimum 80% score before leading the Team Planning Meeting. B. SI’s UFE approach. The Associate will apply the U-FE approach throughout the evaluation and achieve the standards for each of the 11 U-FE Checkpoints. The Associate will work with the PM to update the Project Dashboard to indicate completion of each Checkpoint. C. SI’s QA Framework. The Associate will deliver evaluation products that meet or exceed the quality criteria of a passing score of 80% for each of the five QA Checkpoints and adhere to project timelines and contract deadlines. The five QA Checkpoints require SI review and approval before submission to the client. The five checkpoints are: 1. Inception Report including draft evaluation work plan, evaluation design matrix, and data collection instruments (29 out of 36 points) 2. Evaluation Findings Matrix (11 out of 14 points) 3. Evaluation Briefing Presentation or findings workshop (19 out of 24 points) 4. Draft Evaluation Reports (56 out of 70 points) 5. Final Evaluation Reports (86 out of 108 points) C.4. Deliverables and Quality Standards Below is a table of the deliverables that are expected of the Associate, each with a tentative deadline and defined quality standard. Per Section B sub-sections 2 and 7 of this agreement, SI may withhold payment for the Associate’s outstanding labor charges if these deliverables are not completed according to these quality standards or any others set forth by the Technical Supervisor indicated in Section A. Failure to produce acceptable deliverables within the timeframes established may be grounds for termination by SI. C.5. Illustrative LOE The table below serves as an illustrative guide for how the Associate is expected to use the LOE allocated in this contract over the contract’s period of performance. The Associate is expected to advise their technical supervisor and/or project manager if their LOE appears insufficient for these tasks and deliverables, whether such notice is prior to beginning work or after experiencing some unexpected complication. Please refer to Section B, sub-section 5 of this agreement for additional information related to LOE usage on this contract. Illustrative LOE Breakdown: Activity Level of Effort (Days) Document Review 3 Inception Report, Inbrief and Pre-fieldwork 7 Fieldwork, including data analysis and preliminary findings presentation 15 Draft Report 5 Final Report 5 Total Level of Effort 35 C.6. Expectations 1. The Associate shall be responsive to Social Impact, Inc. and USAID/Lebanon throughout the project, and demonstrate ability to present results according to USAID/Lebanon’s needs; 2. The Associate shall provide all project documentation to Social Impact for review and clearance prior to disseminating to beneficiaries; 3. The Associate shall coordinate with, and be responsive to, Social Impact and USAID/Lebanon in all aspects of project management. The Associate is expected to be responsive to all project updates requests in addition to regular communications; 4. The Associate shall forward all project deliverables to Social Impact according to the timeline, pending unforeseen delays. When there are unforeseen delays, or other project or financial issues are evident, the Associate must inform Social Impact immediately; and 5. The Associate shall deliver high quality final products (deliverables) suitable for the intended users. 6. The Associate shall take primary responsibility for managing their Level of Effort (LOE) and completing the required tasks within the LOE provided. The Associate will provide periodic updates of remaining LOE to the PMSPL II Chief of Party and the PMSPL II Project Manager LIVELIHOODS AND INCLUSIVE FINANCE EXPANSION (LIFE) MONITORING AND EVALUATION PLAN January 2017, resubmitted June 2017 This report was prepared for USAID/Lebanon by Palladium International under Contract No. AID-268-C-16- 00002 LIVELIHOODS AND INCLUSIVE FINANCE EXPANSION (LIFE) MONITORING AND EVALUATION PLAN CONTRACT NO. AID-268-C-16-00002 DISCLAIMER The views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. ii TABLE OF CONTENTS TABLE OF CONTENTS.................................................................................................... ii ACRONYMS & ABBREVIATIONS................................................................................iii BACKGROUND ...............................................................Error! Bookmark not defined. OVERVIEW OF MONITORING AND EVALUATION PLAN ...................................... 6 PROJECT OBJECTIVES AND LOGICAL FRAMEWORK............................................ 8 RESULTS FRAMEWORK ...............................................Error! Bookmark not defined. MONITORING AND EVALUATION APPROACH...................................................... 17 Data Collection ............................................................................................................. 17 Data Quality.................................................................................................................. 18 LIFE Database .............................................................................................................. 19 Reporting....................................................................................................................... 19 Stakeholder Collaboration ............................................................................................ 20 Evaluation ..................................................................................................................... 20 PERFORMANCE MONITORING PLAN....................................................................... 21 ANNEX 1: PERFORMANCE INDICATOR TRACKING TABLE……………………21 ANNEX 1: PERFORMANCE INDICATOR REFERENCE SHEETS ........................... 22 ANNEX 2: DQA CHECKLIST AND RECOMMENDED PROCEEDURES ................ 23 iii ACRONYMS & ABBREVIATIONS ADS Automated Directives System AMEP Activity Monitoring and Evaluation Plan BAS Business Advisory Service CDCS Country Development Cooperation Strategy CLA Collaborating, learning, and adapting COP Chief of Party DCA Development Credit Authority DDL Data Development Library DIAS Data, Information and Analytic Systems DO Development Objective DQ Data Quality DQA Data Quality Assessment FI Financial Institutions HO Home Office HR Human resources IR Intermediate Result LIFE Livelihoods and Inclusive Finance Expansion LIM Lebanese investment in Microfinance LMFA Lebanese Microfinance Association M&E Monitoring and Evaluation MFI Micro-Finance Institution MSME Micro small and medium enterprises NCAT Network capacity assessment tool NGO Non-governmental organizations PIRS Performance Indicator Reference Sheets PMP Performance Monitoring Plan RF Results Framework TA Technical assistance USAID United States Agency for International Development USG United States Government 4 BACKGROUND The Lebanon Livelihoods and Inclusive Finance Expansion (LIFE) project is a five year program with the goal of improving livelihoods, supporting microfinance and expanding inclusive finance in Lebanon. The purpose of the LIFE project is to improve economic opportunities and livelihoods of low income individuals and microenterprises by expanding and strengthening microfinance associations’ and member institutions’ services and enhancing entrepreneurs’ business skills. The project will consolidate the gains made under the Lebanon Investment in Microfinance Program (LIM), expanding inclusive finance to the unbanked and higher-risk, micro business clientele and bring the Lebanese microfinance system to the next level of service provision and financial sustainability. The LIFE project is a critical component of USAID/Lebanon’s Development Objective 2 (DO2): Inclusive Economic Growth Enhanced, and therefore both directly and indirectly supports other ongoing economic growth projects in areas like value chain and small business development. Over the life of the project the LIFE activities will focus on three core areas: 1) Inclusive Finance: which will elevate the microfinance discourse by bringing about key policy and institutional changes with the potential to transform the financial inclusion landscape – a proven approach for developing a vibrant, sustainable microfinance sector and economically empowering the unbanked, low-income, and underserved micro clientele; 2) Microcredit: which will strengthen the capacity of microfinance institutions (MFIs) and the LMFA to increase their range of products and services and expand their reach of borrowers to include microenterprises with an emphasis on higher-risk, conflict affected areas including new, unbanked, and existing microenterprises, and low-income women￾headed households. 3) Livelihoods: which will provide grant support and basic business training to microenterprises and individuals that are excluded from the financial ecosystem and economic value chains. The purpose of these grants, along with business development services, is to give these microenterprises the chance to grow and become potential MFI clients. With more than 95% of businesses in Lebanon considered MSMEs, the LIFE project’s targeting of microfinance for MSMEs will increase local job opportunities and also encourage the entry of vulnerable groups such as women and youth into the formal and already extensive (but weak) MSME network. LIFE will therefore take steps to make financial and non-financial services more readily available to the country’s marginalized populations, helping MFIs to develop services to that address the problems faced by MSMEs and vulnerable populations. The LIFE project will support an integrated and balanced approach to further advance the microfinance sector in general, and microcredit in particular. It will assist with institutionalizing the provision of support that borrowers require to manage their finances and apply the skills for growing their enterprises. 5 ACTIVITY INSTITUTIONAL CONTEXT LIFE will be implemented throughout all the rural Lebanese territory stretching from the North to the South of Lebanon as well as for most of the Bekaa Valley from North till West. Clients of LIFE will be reached out by the 9 MFI partners that will be in charge of disseminating LIFE grants to potential startup and already operating SMEs and entrepreneurs. Activity Critical Assumptions: The attainment of the LIFE activity’s outputs, outcomes, impacts and goals is usually conditional upon certain external factors remaining unchanged or any changes occurring only as anticipated. These are regarded as assumptions critical to the timely and successful accomplishment of activity goals. They must be monitored in order to ascertain whether any failure to achieve activity objectives is the result of internal, manageable factors or uncontrollable, external forces. There are a few critical assumptions for the LIFE project to achieve its targets and objectives, as follows:  The recent election and appointment of a prime minister provide a platform for a stable government and functioning governing context in coming years with policy makers open to policy changes supporting improved access to finance; especially continued government support for the development of the LMFA  The Syrian crisis and the political and macroeconomic stress that it places on the Lebanon’s public infrastructure, services and economy does not significantly worsen leading to internal conflict, political strife or economic crisis.  Despite macroeconomic strains and rising public debt the overall economy remains stable with continued low but positive economic growth, moderate inflation, sufficient reserves to maintain the exchange rate peg, and relatively stable interest rates.  MFA’s risk appetites do not substantially change, and they remain willing to expand business despite macroeconomic uncertainty.  Consumers’ and microenterprises’ risk appetites also are unchanged and demand for financing remains stable Monitoring of Assumptions: Risks and mitigation measures will be monitored throughout the implementation of the project. In addition to monitoring the indicators presented in the AMEP the M&E staff will conduct supplementary observational and contextual data collection to track unanticipated consequences and unexpected risks. This supplementary data will be collected via publicly available information and through sharing and collaborating with stakeholders and other projects.  Political stability and openness to policy reform will be monitored via observation of government communications and official reports 6  Monitoring of the Syrian crisis and its effects on the Lebanese political and economic environment will primarily be through news reports and international crisis monitoring  The Lebanese macro economy with be monitored via reports from the central bank, ministry of finance and international organizations such as the IMF  MFI’s willingness to continue expanding business will be done via qualitative data collections and assessments are part of ongoing project activities Consumer’s demand for finance will be monitored through both qualitative data collection such as focus groups, and through monitoring of the number of loan applications OVERVIEW OF MONITORING AND EVALUATION PLAN The following Monitoring and Evaluation (M&E) Plan outlines Lebanon LIFE’s systems and approach to monitoring, analyzing, and evaluating progress toward achieving project goals and objectives. The M&E Plan is comprised of several components: 1) Overview of Project Objectives and Logical Framework. The Logical Framework describes the overall relationship between project activities and desired results. It also demonstrates how LIFE’s Activity Monitoring, Evaluation and Learning plan indicators are situated within the broader USAID Lebanon monitoring framework. 2) Results Framework. The Results Framework is a graphic representation of a development hypothesis on how the achievement of LIFE’s three sub-purposes (components) contribute to the achievement of the Lebanon Country Development Cooperation Strategy (CDCS) sub-IRs and IRs, ultimately resulting in the USAID Lebanon goal of “improved accountability and credibility of public institutions, and broader economic prosperity.” 3) Monitoring and Evaluation Approach. This section provides an overview of LIFE’s data collection approach, tools, and strategy for ensuring data quality. 4) Activity Monitoring, Evaluation and Learning Plan outlines the indicators selected, annual targets, and the data source and methodology for capturing progress on each indicator. 5) Performance Indicator Reference Sheets (PIRS). The PIRS describe how the performance monitoring system is operationalized. A PIRS is completed for each performance indicator monitored. Together, these components describe how the LIFE M&E system provides for tracking performance, serving as the basis of making informed strategic choices to better steer efforts towards achieving results. Chief of party Matt Lovick will have ultimate responsibility for the LIFE project Activity Monitoring and Evaluation Plan (AMEP) and will ensure full alignment between annual work plan, the AMEP, Communication strategy and M&E reporting protocols. The LIFE project’s M&E efforts will be directed by M&E Lead Tarek El Khazen. Mr. El Khazen will be responsible for establishing M&E protocols, overseeing monitoring and data collection efforts by LIFE Project Field Coordinators and various partners, and coordinating with the LIFE project management team to ensure and iterative and integrated processes of learning and adapting 7 throughout project implementation. The M&E Lead, with support from the technical team based at Palladium, will prepare reports on project performance, assure data quality, ensure timely data collection by project staff, and support capacity building of data collection and analysis by project partners and grantees. LIFE project partners are an integral piece of the M&E framework, sharing data collection responsibilities, and the M&E Lead will work closely with them to ensure consistent practices and establish uniform policies 8 RESULTS FRAMEWORK The Lebanon LIFE Results Framework (RF) is integrated into the USAID/Lebanon CDCS RF illustrating the LIFE project’s central role in supporting DO2: Inclusive Economic Growth Enhanced. The integrated LIFE and CDCS RF illustrates the development hypothesis underlying the project strategy and how planned activities and deliverables will lead not only to project results but also country wide development goals. The CDCS Goal is Improved Accountability and Credibility of Public Institutions, and Broader Economic Prosperity. The two Development Objectives (DOs) that support this address the key development issues for Lebanon: improving public sector capacity, and enhancing inclusive economic growth. The LIFE project directly supports DO2: Inclusive Economic Growth Enhanced, by addressing IR 2.1: Increased Private Sector Competitiveness and the Sub-IR2.1.1: Strengthened Business Association Services and Policy. IR2.2: Increased access to finance, especially for business start-ups and women entrepreneurs, and the Sub-IR2.2.1: Strengthened micro-finance association and member institution services, The key objective of the LIFE project is to support broad-based economic growth, reaching the most vulnerable populations in Lebanon, by increasing financial inclusiveness. This will be achieved by targeting both the regulatory and policy environment and helping the microfinance industry grow and increase service offerings. The LIFE project believes reaching these goals is a function of achieving the three project sub purposes (or outcomes) below: 1. An environment that is conducive to expanded national financial inclusion services and products 2. Support MFIs targeting low income, high risk, and conflict affected beneficiaries 3. Improve livelihoods of low income, high risk, and conflict affected beneficiaries To accomplish these sub purposes, which directly feed into sub-IRs 2.1.1 and 2.2.1 (as illustrated in Figure 2), the project has identified six supporting outputs, two for each sub purpose: Output 1.1: Financial inclusion strategy and regulatory framework development Output 1.2: Strengthened Lebanese Microfinance Association (LMFA) as a credible and competent advocate for financial inclusion Output 2.1: Linkages of guaranteed capitalization for selected MFIs to expand access to credit to targeted beneficiaries and areas Output 2.2: Increased capacity of MFIs to develop suitable lending products Output 3.1: Grant capital extended to targeted beneficiaries through NGOs Output 3.2: Technical assistance extended to targeted beneficiaries through NGOs The sub purposes and corresponding outcomes serve as the framework for organizing project activities and identifying specific interventions. As illustrated in the Logical Framework they also serve as the organizing principal for the AMEP indicators and monitoring project progress. 9 Figure 2. Results Framework 10 PROJECT OBJECTIVES AND LOGICAL FRAMEWORK The Logical Framework presented below, illustrates how the LIFE project’s three components, or sub-purposes have been designed to support both project goals and the USAID/Lebanon results. Project interventions, or inputs, were designed to support the activity outputs under each component or sub-purpose, and the indicators and assumptions associated with each of these outputs were selected to help the LIFE implementation team monitor the project progress and the validity of the theory of change that underpins the logical framework. Measuring progress against indicator targets presented in the Log frame allows for continuous learning and feedback on project implementation and design. Unexpected results or lack of progress will be treated as an opportunity for learning and adapting and the LIFE project team would work with USAID/Lebanon to revisit assumptions and hypothesis underlying the project design and make modifications as necessary. The logical framework also feeds up into and supports the Results Framework and the overall USAID/Lebanon CDCS strategy and development hypothesis. In this way the activity level monitoring and validating of the theory of change will support USAID/Lebanon’s broader development goals and learning objectives. Figure 1. Logical Framework LIFE Project Logical Framework Project Hypothesis: By addressing both demand and supply side constraints of the microfinance landscape, improved and new economic opportunities will be achieved for higher-risk groups, new and existing micro borrowers and the unbanked in conflict and non-conflict areas and financial inclusion services improved. Indicator – DO2 Level: 1- Number of new jobs attributed to LIFE USG support 2- Number of jobs sustained attributed to the LIFE USG support 3- Proportion of Female participants in USG-assisted programs LIFE Project Purpose: Improved economic opportunities of low income and micro firms through strengthening the Lebanese microfinance association and member institutions’ financial inclusion services (CDCS DO2, Intermediate Result (IR) 2.2) IR 2.2 – Increased access to finance, especially for new business start-ups and women entrepreneurs 1) Percent change in income of women, youth, and disadvantaged individuals targeted by market linkage grants 2) Number of vulnerable individuals who receive TA and training IR 2.1 – Increased private sector competitiveness 1) Percent change in number of MSME loans by LMFA members Sub IRs 2.2.1 – Strengthened micro-finance association and member institutions & 2.1.1 – Strengthened business association services and 11 policy Sub-purpose Outputs Inputs Indicators Means of Verification Key Assumptions C1/Sub-purpose1: An environment that is conducive to expanded national financial inclusion services and products Output 1.1: Financial inclusion strategy and regulatory framework development  Map rural financial markets and landscape to better understand both the demand and supply sides of access to capital.  Conduct a gender analysis for access to finance to address constraints to women’s empowerment  Select NGOs-MFIs and other key stakeholders to engage with national policy makers, donors and other strategic partners to develop a lending strategy especially suited for the unbanked with emphasis on conflict areas  Develop a draft strategy and action plan for national financial inclusion  Coordinate with the Central Bank and provide technical assistance when needed to support the financial inclusion strategy  Promote cooperation between NGOs-MFIs for (1) cross-lending  Number of policy/institutional changes that expand financial inclusion achieved  Project reports, assessments and analysis.  Project site visits.  Mid-term Evaluation  Project training attendance sheets.  This output will be demand driven, based on market assessments carried out by Palladium on potential opportunities for technology innovation and adoption.  Guidelines will focus on improving performance of the microenterprise sector to become a substantial, capable, efficient and financially viable operation.  The mapping will include information that would enable Lebanon’s policy makers to better understand the needs of the poor and the range of financial services that they have come to depend on. 12 information to be shared between MFIs in an increasingly competitive environment (2) moving down-market to more vulnerable people and conducting outreach to new rural markets. (3) Other forms of cooperation. Output 1.2: Strengthened LMFA as a credible and competent advocate for financial inclusion.  Conduct an institutional capacity assessment of the LMFA to identify strengths, weaknesses, opportunities and threats.  Develop and implement an LMFA strategic business plan for operational sustainability.  Provide technical assistance to LMFA to advocate for regulatory framework based on the assessed needs and recommendations.  Assist LMFA to define its role in the financial inclusion strategy and regulatory framework development  Support the establishment of network of microenterprise stakeholders (MFIs,  Overall score of USAID-assisted MFI Association on SEEP NCAT Index  Number of TA packages delivered to LMFA  Project reports, assessments, and project site visits.  Mid-term evaluation  Project training attendance sheets  The institutional capacity assessment of the LMFA will provide a clear roadmap for improving operational sustainability  LMFA will be open and willing to adapt and improve operations and engagement in regulatory reform advocacy 13 NGOs, SBA, CCIAs, 3 buyers, suppliers, etc.) to share information on new technologies, innovation, and financial inclusion services. C2/Sub-purpose 2: Support MFIs targeting low income, high-risk, and conflict affected beneficiaries Output 2.1: Grant for selected MFIs to support expanded service to vulnerable populations.  Provide grant funds or a guarantee scheme for matching lending capital 1:1 at the minimum to select MFIs for new loans provided to targeted individual and group borrowers including those in conflict areas.  Raise matched lending capital to support expanded financial inclusive services.  Create operational linkages between NGO/MFIs and the Development Credit Authority (DCA) loan portfolio guarantee or any other guarantee scheme (linked to inputs in output 2.1), depending on relevance of a credit guarantee scheme to LIFE.  NGOs, business associations, and NGOs￾MFIs will organize and host networking  Number of strategic alliances formed between MFIs, NGOs, and commercial partners  Percent change in geographic coverage of MFIs  Percent change in financial sustainability ratio of MFIs  Number of financial intermediaries serving poor households and microenterprises supported by USG assistance  Project reports, assessments and project site visits.  MFIs and NGOs annual financial reports.  Mid-term evaluation  Progressive loan portfolio reports  Political stability and low conflict.  MFIs are committed to raising matching funding, and expanding lending and financial inclusive services to high-risk targeted groups and conflict areas.  Previously USG assisted NGOs￾MFIs under LIM will participate in the LIFE project.  At least 3 to 5 new NGOs/MFIs will participate in the project  Commercial banks are: (1) interested in participating in the DCA program or any other guarantee scheme; and (2) financial risk analysis justifies the need for a 14 workshops and events to broaden knowledge and share beneficiaries’ experiences and lessons learned in working in targeted areas including conflict affected areas. guarantee scheme facilitation.  Assistance for MFIs and micro￾enterprises operating in conflict-affected areas will be emphasized at this level Output 2.2: Increased capacity of MFIs to develop suitable lending products  Provide technical assistance to select NGOs and MFIs to develop new and suitable lending products.  Provide appropriate training material, modules, equipment or other resources to targeted, NGOs-MFIs to support innovative outreach to local communities  Assist MFIs to identify and establish new lending tools and products to effectively operate and expand financial inclusive services provided to targeted areas including conflict affected areas  Assist targeted NGOs, and MFIs to develop a contingency strategy for increasing the resiliency  Number of days of USG-funded training provided to management and staff of financial intermediaries  Project reports, assessments, studies, and strategies  Project site visits.  Project training attendance  Copies of the training material and modules  Technical assistance will include but not be limited to basic business development skills and other technical skills (quality assurance, standards).  Some of the TA will focus on (1) establishing best practices to guide MFI loan officers to effectively assess eligibility of loan applications in the aftermath of conflicts; and (2) strengthening the MFI to develop resiliency and coping mechanisms for dealing with beneficiaries in 15 of rural communities to cope with conflicts, unexpected life events, and financial exclusion in affected rural areas. conflict-affected areas.  The provision of material and equipment will support innovative outreach training (e.g., mobile training) to local micro businesses in hard to reach communities and economically marginalized women-led households.  Technical assistance will support the reduction of MFIs’ operating and service costs to expand financial services to targeted groups and conflict areas. C3/Sub-purpose 3: Improve livelihoods of low-income, high risk, and conflict affected beneficiaries Output 3.1: Grant capital extended to targeted beneficiaries through NGOs NGOs will provide sub￾Grants to entrepreneurs in the form of in-kind grant.  Value of market linkage grants targeting rural women, unemployed youth, and disadvantaged individuals  Number of beneficiaries receiving in-kind  Project reports and assessments.  Project site visits.  NGOs annual financial reports.  NGOs are effectively positioned to target grant capital to MFIs and micro￾enterprises operating in conflict-affected areas 16 grants Output 3.2: Technical assistance extended to targeted beneficiaries NGOs will provide entrepreneurship skills and business development services training to entrepreneurs  Number of new income-generating microenterprises in communities that were beneficiaries of grants and TA  Number of new income-generating microenterprises in communities that were beneficiaries of grants and TA  Project reports and assessments.  NGOs annual financial reports.  Project training attendance  NGOs are well positioned and sufficiently skilled to provide effective TA and training to MFIs and micro￾enterprises operating in conflict-affected areas l 17 MONITORING AND EVALUATION APPROACH The LIFE project will integrate a variety of data monitor tools and procedures to ensure a tailored and evidence based approach to project monitoring, learning and management. As part of this approach the LIFE team will integrate the principals of a collaborating, learning, and adapting (CLA) methodology into project management. This will include establishing a CLA team consisting of key project implementation staff, the Chief of Party (COP) and the M&E Lead, who will monthly to review lessons learned and indicator progress in light of activity implementation and discuss any issues and potential needs for project adaptation. This strategy will allow for active project management and informed resource allocation decisions. The COP, as head of the CLA team will ensure regular communication with USAID/Lebanon, and work closely with them to ensure the LIFE project supports broader learning and development goals. Data Collection M&E for the LIFE project will depend on accurate and timely collection and analysis of a wide range of information. Data for output-level indicators (e.g., number of staff trained, number of days of training received) that are organized by the project or its subcontractors will be measured directly via internal record-keeping and items such as sign-in sheets from trainings. However, we will need to collect the most critical data from project partners, as described below. The M&E lead will develop data collection and reporting protocols to guide partners through the processes of data gathering, reporting, and electronic data management. The protocols include detailed instructions and templates for both data gathering and reporting (e.g. TA tracking templates, excel templates for reporting loan numbers and capitalization rates, etc). All protocols will be tailored to meet each partners’ needs and duties and will be reviewed and updated as part of the Data Quality Assessment (DQA) process to address challenges reported by partners or observed by the M&E lead. The M&E Lead will work closely with partners and grantees to ensure we obtain all the necessary data to manage the program and communicate its achievements. MFIs and NGOs To measure MFI performance and the impact of the project at the microenterprise and household levels we will structure indicator reporting into agreements (e.g., MOUs and grants) with partner MFIs and provide TA as necessary to ensure they have appropriate data collection systems and processes in place. These tools will also be essential for MFIs to report as required under Automated Directives System (ADS) 219, and report to industry groups and government regulators. Gathering high-quality data from MFIs has been a challenge in the past, as they were not accustomed to high transparency or releasing client data for study purposes. To address this issue, LIFE will sign MOUs with all project-supported MFIs outlining the training and TA we will provide, as well as the responsibilities of the MFIs, including a commitment to share training costs, financial statements, and client information integral to LIFE’s M&E work (both for baseline figures and regular reporting), and as required by ADS 219.3.6. Continued training and TA to individual MFIs and participation in any grants program under LIFE will depend on timely and accurate reporting on the indicators specified in the AMEP and PIRSs: Similarly, 18 disbursement of livelihoods grants to NGOs will also depend on successful completion of and reporting on specified indicators: LMFA Reporting Monitoring of the LMFA falls into two categories—internal reporting on institutional capacity and external reporting to fulfill its role as an advocacy organization for the microfinance industry. The former is concentrated on the Network Capacity Assessment Tool (NCAT) assessment and subsequent annual assessments which will be conducted by LIFE partner SEEP. LIFE’s subcontract with SEEP will include conducting the NCAT assessments and evaluating and reporting results to the M&E Lead. The external reporting will be supported by TA from the LIFE team and development of a database integrated into the online microfinance portal to be hosted by the LMFA. Palladium’s home office Data, Information and Analytic Systems (DIAS) practice has extensive experience in designing similar databases and portals and will provide customized support to the LMFA. The M&E Lead, along with Palladium Home Office (HO) support and SEEP will help LMFA establish systems to collect and manage data for its members on items such as which services they provide and at what cost, ensuring MFI sector transparency. Enterprise-Level Assessments In order to gather data at the microenterprise level, and measure the impact of financial and business development services on beneficiaries, LIFE subcontractor InfoPro will work with the M&E Lead and Palladium HO staff to design a beneficiary impact assessment. This will include establishing a sampling framework and control group from the population of vulnerable individuals and microenterprises. The sample will be randomly selected from the beneficiaries of the market linkage grants and associated trainings, as well as from the client lists of partner MFIs. This rigorous survey design will enable us to more clearly attribute the impact of LIFE on program participants. As part of survey implementation InfoPro will train NGOs and MFIs on proper data collection to inform the assessment survey, which will capture: changes in income for vulnerable populations (indicator #14), number of new microenterprise (#16), number of new jobs (#15) and number of new MFI clients (#10). Data Quality As data is collected and aggregated, the M&E Lead will be responsible for assessing its validity, reliability, precision, integrity, and timeliness, and will work closely with LIFE implementing partners involved in M&E activities. If any issues are detected, especially related to integrity or reliability, the M&E Lead will be responsible for verifying the data against the original sources. On a quarterly review cycle—as the data is aggregated and assessed against the targets—the M&E Lead will consider any potential validity issues. This process will also feed into the ongoing cycle of learning and project management. If any of the indicators are determined to be unrepresentative of the interventions, the LIFE team will work with USAID/Lebanon to determine better indicators. As part of the quarterly reporting of indicators, the project will submit statements on any data quality issues detected and how they were resolved. The PIRSs included below will serve as the guiding documents for measuring indictors under the activity. As needed, tailored indicator data collection templates, excel spreadsheets and reporting protocols and instructions will be developed for activity personnel and partners tasked with data 19 collection, in order to ensure that data monitoring and tracking meets the five standards of data quality as defined in ADS 203: 1. Validity: Indicator data clearly and adequately represent the intended result of the Ag. Diversification activities and outcomes; 2. Integrity: Data collection processes incorporate safeguards to minimize the risk of transcription error or data manipulation; 3. Precision: Data points and data elements have a sufficient level of detail to permit management decision-making based on indicator reporting; 4. Reliability: Indicator data reflect stable and consistent data collection processes and analysis methods; and 5. Timeliness: Data collection processes ensure that current, up-to-date data will be available at a useful frequency and timely enough to influence management decision-making. The main LIFE project partners involved in data collection (InfoPro, SEEP, Enclude, Financial Services Volunteer Corps, BAS providers) will work with the M&E Lead to codify these protocols and train their staff at project start. The development of these protocols will be informed by the partners’ current operating systems and capacity levels. As most of the LIFE project indicators are custom indicators an initial internal data quality assessment will be conducted by the M&E lead 6 months after the baseline data collection is complete. This will provide a chance to review data collection methods and catch quality issues early in the monitoring process. As part of the LIFE projects commitment to learning the results of the initial DQA will be documented and shared with USAID/Lebanon. Any issues raised will be addressed through revision or adaption of the data collection processes, or when necessary, the indicator definition or scope. Before any changes are made to the indicators options and plans will be discussed and agreed upon with USAID/Lebanon. LIFE Database The M&E Lead will work with Palladium’s DIAS practice to design a comprehensive database to centralize data collection efforts and guide the CLA team with data on LIFE’s progress toward achieving project indicators. The database will be designed to easily integrate data gathered by project partners and grantees via the excel reporting templates, and to comply with Data Development Library reporting standards. It will also be integrated into a data visualization dashboard tailored to clearly summarize key indicators and progress against targets. The data visualization tools from the dashboard will also be used to report on our indicators and in all M&E reports to USAID. The M&E Lead will work with MFIs to ensure we adhere to all client data confidentiality requirements per the Central Bank (e.g., anonymization of loan data). We will also collect all baseline data before any significant project implementation has occurred. Reporting The LIFE team will submit quarterly monitoring and evaluation reports. These will include the summary indicator dashboard, current progress of indicators against targets, and a summary of lessons learned or issues being discussed or addressed by the CLA team. The quarterly reports will be a way of documenting the ongoing learning and adapting processes of project monitoring. Each year the LIFE team will also review and updated the project M&E plan as part of the annual work planning process. This will include reviewing data quality and making any needed adaptations to indicator targets or monitoring design. At project close the M&E officer will also 20 ensure that all data is in a suitable machine readable format and submitted to the Data Development Library (DDL). Broad Stakeholder Collaboration The project will collaborate with USAID, other implementing partners and relevant stakeholders (e.g., LMFA, and Central Bank) to ensure coordination on USAID/Lebanon development priorities and a greater impact on project objectives. By engaging NGO and MFI grantees in data collection and project monitoring activities the LIFE team hopes to foster greater ownership of project activities and goals. Our investments in M&E will also endow partners with increased data collection, management, and analysis capacity that will inform their organizational strategies and performance through ongoing learning and adaptation. Collaboration will also apply to sharing of monitoring results through regular communication with project partners and stakeholders of both challenges and successes. In this manner, successful approaches can be tailored and adapted by other programs and partners to scale up impact. Evaluation The LIFE project will fully support the midterm and final project evaluations, sharing all M&E data and datasets, DQAs and quarterly monitoring reports, and cooperating with the external evaluator. Findings from the mid-term evaluation will be treated as an important learning opportunity for project design and monitoring and relevant changes be integrated into the following year’s monitoring and evaluation plan. Learning LIFE will also support a robust learning agenda that will be baked in to project activities, monitoring, and evaluation. On a bi-annual basis, the CLA team will convene project staff and key partners to discuss recent activity streams and performance. The group will focus on questions like, “what’s working?”, “what’s not working?” and “why?” to develop a deeper understanding of the broad approach and tactical moves that can have a positive or negative influence on project implementation. The learning agenda will enable LIFE project management, in consultation with USAID, to discontinue, adapt, and scale up interventions based on the outputs and results they are generating, thus optimizing value for USAID’s investment in LIFE. The project will proactively share project learning with a broad audience of stakeholders to further promote effective donor and institutional programming. 21 Annex 1: PERFORMANCE INDICATOR TRACKING TABLE (Please see attached Excel file titles “Annex 1”) 22 ANNEX 2: PERFORMANCE INDICATOR REFERENCE SHEETS (Refer to PIRS Separate Word Document) 23 ANNEX 3: DATA QUALITY ASSESSMENT CHECKLIST AND RECOMMENDED PROCEEDURES USAID Mission or Operating Unit Name: Title of Performance Indicator: [Indicator should be copied directly from the Performance Indicator Reference Sheet] Linkage to Foreign Assistance Standardized Program Structure, if applicable (i.e. Program Area, Element, etc.): Result This Indicator Measures [For USAID only] (i.e., Specify the Development Objective, Intermediate Result, or Project Purpose, etc.): Data Source(s): [Information can be copied directly from the Performance Indicator Reference Sheet] Partner or Contractor Who Provided the Data: [It is recommended that this checklist is completed for each partner that contributes data to an indicator– it should state in the contract or grant that it is the prime’s responsibility to ensure the data quality of sub-contractors or sub grantees.] Period for Which the Data Are Being Reported: Is This Indicator a Standard or Custom Indicator? ____ Standard Foreign Assistance Indicator ____ Custom (created by the OU; not standard) Data Quality Assessment methodology: [Describe here or attach to this checklist the methods and procedures for assessing the quality of the indicator data. E.g. Reviewing data collection procedures and documentation, interviewing those responsible for data analysis, checking a sample of the data for errors, etc.] Date(s) of Assessment: Assessment Team Members: USAID Mission/OU Verification of DQA Team Leader Officer approval X_______________________________________ 24 YES NO COMMENTS VALIDITY – Data should clearly and adequately represent the intended result. 1 Does the information collected measure what it is supposed to measure? (E.g. A valid measure of overall nutrition is healthy variation in diet; Age is not a valid measure of overall health.) 2 Do results collected fall within a plausible range? 3 Is there reasonable assurance that the data collection methods being used do not produce systematically biased data (e.g. consistently over- or under-counting)? 4 Are sound research methods being used to collect the data? RELIABILITY – Data should reflect stable and consistent data collection processes and analysis methods over time. 1 When the same data collection method is used to measure/observe the same thing multiple times, is the same result produced each time? (E.g. A ruler used over and over always indicates the same length for an inch.) 2 Are data collection and analysis methods documented in writing and being used to ensure the same procedures are followed each time? TIMELINESS – Data should be available at a useful frequency, should be current, and should be timely enough to influence management decision making. 1 Are data available frequently enough to inform program management decisions? 2 Are the data reported the most current practically available? 3 Are the data reported as soon as possible after collection? PRECISION – Data have a sufficient level of detail to permit management decision making; e.g. the margin of error is less than the anticipated change. 1 Is the margin of error less than the expected change being measured? (E.g. If a change of only 2% is expected and the margin of error in a survey used to collect the data is +/- 5%, then the tool is not precise enough to detect the change.) 2 Has the margin of error been reported along with the data? (Only applicable to results obtained through statistical samples.) 25 SUMMARY Based on the assessment relative to the five standards, what is the overall conclusion regarding the quality of the data? Significance of limitations (if any): Actions needed to address limitations prior to the next DQA (given level of USG control over data): IF NO DATA ARE AVAILABLE FOR THE INDICATOR COMMENTS If no recent relevant data are available for this indicator, why not? What concrete actions are now being taken to collect and report these data as soon as possible? When will data be reported? 3 Is the data collection method/tool being used to collect the data fine-tuned or exact enough to register the expected change? (E.g. A yardstick may not be a precise enough tool to measure a change of a few millimeters.) INTEGRITY – Data collected should have safeguards to minimize the risk of transcription error or data manipulation. 1 Are procedures or safeguards in place to minimize data transcription errors? 3 Is there independence in key data collection, management, and assessment procedures? 3 Are mechanisms in place to prevent unauthorized changes to the data? 26 Recommendations for Conducting Data Quality Assessments 1. The Data Quality (DQ) assessor will make sure that they understand the precise definition of the indicator by checking the Performance Indicator Reference Sheet. 2. The DQ assessor will have a copy of the methodology for data collection in hand before assessing the indicator. This information is available in the performance management plan’s (PMP) Performance Indicator Reference Sheets for each indicator. 3. A copy of the method of data collection will be kept on file with the M&E Manager, who will also ensure that data is collected according to the methodology. 4. The DQ assessor will record the names and titles of all individuals involved in the assessment. 5. The M&E manager will be responsible for maintaining documentation on data verification. This will include documents (process/person conducting the verification/field visit dates/persons met/activities visited, etc) which demonstrates that M&E team has verified the data that was reported 6. The DQ assessor will be able to review the files/records against the methodology for data collection laid out in the PMP. Any data quality concerns will be documented. 7. The DQ will include a summary of significant limitations found. A plan of action, including timelines and responsibilities, for addressing the limitations will be made. Social Impact, Inc. 2300 Clarendon Boulevard Arlington, VA 22201 Suite 1000 Tel: (703) 465-1884 Fax: (703) 465-1888 www.socialimpact.com