Description
Background
Mercy Corps has been operating in Ethiopia since 2004. In partnership with civil society organizations, academic institutions, private sector, and the government, Mercy Corps Ethiopia has reached more than five million Ethiopians with interventions to save lives and build secure livelihoods. Our programs emphasize market-driven solutions, reinforce social bonds, and help communities build resilience to the impacts of climate change. Currently in six regional states โ Afar, Amhara, Gambella, Oromia, Somali, and South Nations, Nationalities and Peopleโs Region (SNNPR), and in Dire Dawa Administration and the capital city of Ethiopia, Addis Ababa โ Mercy Corps is driven by the mission to contribute the emergence of a peaceful, resilient, and prosperous Ethiopia which is inclusive of youth and women. Our strategic directions focus in promoting inclusive and dynamic markets; promoting peace and social cohesion through strengthening formal/informal governance structures and citizen engagement; improved natural resource governance; and integrated humanitarian response.
Mercy Corps is implementing a five year, USAID-funded Resilience in Pastoral Areas (RIPA) โ North program in Ethiopia focused on: supporting to improve the disaster and risk management system; stimulating increased production, productivity and marketing through more competitive livestock and livestock products markets; increasing communitiesโ resilience; improving alternative livelihood options through essential skills transfer; improving food security and nutrition, and contributing to the wider knowledge on pastoral development. The program operates in Afar, Somali and Oromia regions.
The RIPA-North program incorporates a Crisis Modifier component, designed to enable the program to adapt its strategy dynamically in order to address urgent humanitarian needs without compromising long-term development and resilience goals. As part of this focus, Mercy Corps is set to launch a Crisis Modifier specifically aimed at enhancing water resilience in Ethiopia's Shabelle Zone. This specialized program, termed the Water Security Crisis Modifier (CM3), is structured around four key pillars: 1) Establishing new, drought-resistant water sources by means of river offtake, treatment, or deep boreholes; 2) Advancing innovative natural resource management techniques to optimize water usage in rangelands and other sectors; 3) Advocating for the professionalization and privatization of water service management; and 4) Expanding access to water for various productive applications.
Purpose / Project Description:
Mercy Corps seeks a Lead Economic and Financial Analyst to develop a business caseโinclusive of a comprehensive economic analysisโfor an anticipated Adadle water system in Ethiopiaโs Somali Region. The system includes the following project elements:
An intake on the Shebelle River near Gode, approximately 15 km north of Adadle
The analysis aims to evaluate the viability, potential benefits, costs, risks, and overall value proposition of the project. The analysis will encompass financial, economic, and strategic aspects to support decision-making regarding the implementation of the Adadle water system.
Consultant Objectives:
The primary objectives of the business case and economic analysis are as follows: Assess the market demand for water in Adadle town based on water demand, population growth trends, and customer preferences.Evaluate the costs associated with the establishment and operation of the Adadle water system, including capital investment, operating costs, revenue generation potential, and long-term maintenance and lifecycle costs.Develop financial model to determine full cost recovery tariff and estimate, if applicable, the viability gap funding.Analyze the long-term sustainability of the Adadle water system, considering water resource management, environmental impact, and adaptability to future challenges.Perform a risk and regulatory assessment to identify potential challenges, risks, necessary approvals, licenses, and compliance measures.Identify the financial and regulatory risks associated with building the new water system and evaluate risk mitigation strategies.
A separate but related work effort is being undertaken to study the engineering feasibility of the Adadle water system. It is anticipated that the following information will be coordinated between the economic and financial analysis and the Feasibility Design Report: Population projections Engineerโs estimate of probable construction cost and design life for each project element Operation and Maintenance (O&M) costs for each project element
The Engineering Feasibility Design will be summarized in a Feasibility Design Report.
Consultant Activities / Deliverables:
The following separate but interrelated tasks will be conducted by the Consultant:
Task 1 โ Forecast Market Demand (5 days of LOE) Evaluate water demand and population growth trends in Adadle town using available data sources. Coordinate projections with the Feasibility Design Report consultant. Assess demand from residential customers as well as commercial customers including water truckers.Develop methodology and questionnaires for affordability and willingness-to-pay survey to gather insights on pricing sensitivity and customer preferences in the Adadle market. This task will include technical support and guidance during data collection and processing.Task 1 Deliverables: Summary of meeting with Feasibility Design Report consultant to coordinate population projections and demands (Task 2 of the Feasibility Design Report scope of work) Affordability and willingness-to-pay survey methodology, questionnaire, and guidance note: Methodology: This document outlines the structured approach and techniques employed to conduct an in-depth affordability and willingness-to-pay survey. It will encompass sampling strategies, data collection methods, and statistical analyses, ensuring accurate insights into target demographics' financial capacity and purchasing inclinations. Questionnaire: This questionnaire should be comprehensive in its scope to capture critical insights into potential customers affordability thresholds and their willingness to pay for specific products/services. The questions employ a mix of Likert scale, open-ended, and multiple-choice formats to elicit nuanced responses that inform pricing and market strategies. Guidance Note: The guidance note should provide step-by-step instructions for implementing the affordability and willingness-to-pay survey aimed at Mercy Corps staff. It will provide context on survey objectives, tips for effective administration, and recommendations for data collected, management, and processing. Market Demand Forecast report, including water demand, population growth trends, and customer preferences in Adadle town. Communication with Mercy Corps via periodic telephone calls and meetings Contribute to monthly and quarterly reports.
Task 2 โ Evaluate cost considerations (3 days of LOE)
This task includes preliminary activities related to feasibility verification and identification and definition of additional alternatives and includes: Assess anticipated operating costs, including energy consumption, maintenance, labor, and chemical usage based on inputs from the engineering feasibility study. Attend meetings with Feasibility Design Report consultant during which cost information is to be acquired and reviewed. Assess long-term maintenance and lifecycle costs associated with critical infrastructure, equipment, and machinery for the Adadle water system. Attend meetings with Feasibility Design Report consultant during which cost information is to be acquired and reviewed.Provide oversight and quality assurance for the financial model to determine the full cost recovery tariff and estimate viability gap funding required if cost recovery tariff is greater than the tariff determined through the affordability and WTP study.Task 2 Deliverables: Meeting summary of meeting with Feasibility Design Report consultant to coordinate Engineerโs estimate of probable construction cost, design life and O&M costs for each project element. Cost considerations evaluation report inclusive of financial model.
Task 3 โ Perform Risk and Regulatory Assessment (6 days of LOE) Identify risks associated with the Adadle water system, such as disruptions to water supply, regulatory changes, limited technical capacity, unexpected events, and availability of trained operators.Identify necessary approvals, licenses, and compliance measures, and assess legal and regulatory risks.Develop risk mitigation strategies, considering redundancy measures, emergency response plans, and feasibility of implementation.Task 3 Deliverables: Risk and regulatory assessment report, identifying risks, necessary approvals, licenses, compliance measures, and risk mitigation strategies.
Task 4 โ Economic Analysis and Recommendations (6 days of LOE) Estimate economic costs and benefits associated with the plant and all system elements to calculate the economic EIRR.Develop financial projections for the Adadle water system, including income statement, balance sheet, and statement of cash flows for 10 years.Conduct an analysis using financial metrics such as net present value (NPV), internal rate of return (IRR), and profitability ratios. Consider strategic factors, program objectives, stakeholder interests, and long-term strategic planning.Task 4 Deliverables: Economic analysis report, including financial projections, comparative analysis using financial metrics, and consideration of strategic factors and stakeholder interests. Two-to-three-page brief summarizing the project and findings.
Task 5 โ Illustrative Activities (up to 15 additional days of LOE*)
This task covers but is not limited to the following illustrative activities: Recalibrate and rerun the financial model should the need arise to revisit water system designs due to cost considerations. Support discussions with the Regional Water Bureau and other local authorities about any financial viability gap and potential options.Other tasks as agreed with the CM3 team.
*The consultant must have written approval to proceed with this work. Activation of this contingency LOE will require a mutually agreed upon schedule and outlined deliverables in advance of any work initiated.
Level of Effort:
The total level of effort for Tasks 1-4 is 20 days.
Travel:
This assignment will include one in-country trip of no more than 10 days inclusive of travel days. Travel and per diem costs will be in line with Mercy Corps class of travel and policies.
Timeframe / Schedule:
Much of the work, Deliverables 2, 4 and 5, are dependent upon information to be developed as part of the Feasibility Design Report, which is set to begin in the coming weeks. Once the schedule for that has been completed, notice to proceed will be issued for this scope of work. The consultant shall complete this scope of work within 45 working days of notice to proceed. Working days are defined by the working week โ Monday through Friday.
Deliverable 1 Affordability and willingness-to-pay survey methodology, questionnaire, and guidance note 10 working days after the consulting agreement is fully executed 2a Market demand forecast outline 10 working days after all WTP survey data is processed, cleaned, and finalized. 2b Market demand forecast report 5 working days after the MDF outline is approved in writing by the Water Security Team Lead and Global Water Security Director. 3a Risk and regulatory assessment report outline & 3b Risk and regulatory assessment final report Within 45 working days after the consulting agreement is fully executed. Consultant must have written approval of outline from the Water Security Lead and Global Water Security Director before finalizing report. 4a Economic Analysis Report Outline & 4b Economic Analysis Report Within 60 working days after notice to proceed. Consultant must have written approval of outline from the Water Security Lead and Global Water Security Director before finalizing report. 5a Briefer outline & 5b Briefer Within 60 working days after notice to proceed. Consultant must have written approval of outline from the Water Security Lead and Global Water Security Director before finalizing report.
The Consultant will report to:
RIPA-North Water Security Team Lead, and the Global Water Security Director
The Consultant will work closely with:
RIPA-North Water Security Team Lead; Global Water Security Director; Water Supply Services Specialist; Monitoring, Evaluation, and Learning (MEL) Team; Communications Team; HQ Infrastructure Team; RIPA-North Chief of Party; and RIPA-North Deputy Chief of Party.
Required Experience & Skills:
Education and Expertise: A minimum of a bachelor's degree in a relevant field such as Economics, Business Administration, Environmental Science, Engineering, or a related discipline.Advanced degree (master's or Ph.D.) in economics, finance, or a related field is highly preferred.Proven expertise in conducting business case assessments, economic analyses, and financial modeling for infrastructure projects, preferably with a focus on water and wastewater management.Professional Experience: At least 10 years of experience in conducting economic viability assessments, business case studies, and financial analyses for water treatment plant projects or related initiatives.Demonstrated experience in evaluating water supply and demand dynamics, tariff structures, revenue generation, and cost considerations for water infrastructure projects.Proven track record of delivering high-quality economic analysis reports, including key financial metrics (NPV, IRR, etc.) and strategic recommendations.Technical Knowledge: Deep understanding of water treatment processes, technologies, and industry standards.Knowledge of regulatory frameworks and compliance requirements related to water treatment projects.Familiarity with sustainability principles and environmental impact assessment in the context of water treatment plant operations.Analytical Skills: Strong analytical and quantitative skills, with the ability to interpret complex data and financial information accurately.Proficiency in using financial analysis tools, spreadsheets, and software for economic modeling and forecasting.Capability to conduct sensitivity analysis and scenario planning to assess the impact of various variables on the project's economic viability.Communication and Reporting: Excellent written and verbal communication skills to effectively convey complex economic concepts to diverse stakeholders.Demonstrated ability to create clear and concise reports, presenting complex economic analysis findings in a straightforward manner.Project Management: Experience in managing projects and meeting deadlines effectively.Demonstrated ability to work independently and collaborate with multidisciplinary teams.