Consultant: development of a Financial Inclusion Indicators Framework in Nepal At Alliance for Financial Inclusion

1.Background

The Alliance for Financial Inclusion:

The Alliance for Financial Inclusion (AFI) is the world’s leading organization on financial inclusion policy and regulation. Currently, nearly 100 member institutions make up the AFI network including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 85 developing countries and emerging markets. AFI empowers policymakers to increase the access and usage of quality financial services for the underserved through sustainable and inclusive policies and an effective use of digital technologies.

Policies developed and implemented by the members of the Alliance contribute to a range of the Sustainable Development Goals. by Setting their own agenda, AFI members harness the power of peer learning to develop practical and tested policy reforms that enhance financial inclusion with strategic support from both public and private sector partners.

AFI has 7 Working Groups (WGs): Consumer Empowerment and Market Conduct Working Group (CEMCWG), Digital Financial Services Working Group (DFSWG), Financial Inclusion Data Working Group (FIDWG), Financial Inclusion Strategy Peer Learning Group (FISPLG), Global Standards Proportionality Working Group (GSPWG), Inclusive Green Finance Working Group (IGFWG) and SME Finance Working Group (SMEFWG).

As the key source of policy developments and trends in financial inclusion and as the primary mechanism for generating and incubating technical content in the network, the Working Groups serve as “communities of practice”. Providing a platform for knowledge exchange and peer learning among policymakers to share, deliberate and deepen their understanding, the working groups offer leadership and expertise in their respective policy fields and support the network to monitor new developments in emerging fields.

The knowledge generated via the working groups is disseminated for implementation by a range of capacity building activities such as Joint Learning Programs, Member Trainings, Trainings by Private Sector Partners. The practical experience members garner from engaging in peer learning based capacity building is then applied by members as in country implementation (ICI) projects which are supported by the provision of financial or technical support to AFI member institutions in conducting activities that aim to deliver financial inclusion policies, regulations, supervisory tools or enablers for the development of policies, such as national financial inclusion strategies

The working groups receive strategic guidance and insight from the High-Level Global Standards & Policy Committee, while the Gender Inclusive Finance Committee, supports WGs in integrating gender considerations into all aspects of their work and support members in fulfilling their Denarau Action Plan (2016) commitment to promote women’s financial inclusion.

AFI members have made further commitments in a range of other accords which can be read here.

The AFI’s five regional initiatives support policy implementation in Africa (AfPI), Latin America and the Caribbean (FILAC), the Pacific Islands (PIRI), Eastern Europe and Central Asia (ECAPI) and the Arab Region (FIARI).

2.Project Background

THE ALLIANCE FOR FINANCE INCLUSION & Nepal Rastra Bank

The Alliance for Financial Inclusion (AFI) is a unique international network of central banks, ministries of finance and economy, and other regulatory bodies, which hold the mandate to develop and implement financial inclusion policies. Our aim is to do so through our mission of empowering financial regulators and policymakers to increase access and usage to quality financial services for the most underserved and unserved populations. As part of its service to its member institution network, AFI offers technical and financial support through its “in-country implementation” (ICI) service line to develop specific projects aimed to deliver positive changes in financial inclusion policies, regulations, supervisory tools or enablers for the development of policies. Hence, this request for proposal is part of an ICI project provided to the Nepal Rastra Bank, an AFI member institution.

The Government of Nepal (GoN) has prioritized having the goal of an inclusive financial system reflected in the objectives section on Nepal’s Financial Sector Development Strategy (2017) for developing an inclusive financial system to make access to finance easy and comfortable for those with low income from rural areas, to increase financial literacy in financial services and instruments and also to protect the interests of financial consumers. Nepal Rastra Bank (NRB), the Central Bank of Nepal, has the objective in NRB Act, 2002 section 4 (1b) as, “To increase the access of the financial service and increase the public confidence towards the banking and financial system by maintaining stability of the banking and financial sectors.” Similarly, the third Strategic Plan (2017-2021) of NRB includes an objective to enhance financial access and financial inclusion and NRB had issued Financial Literacy Framework in 2020. In this regard and to expedite work on this, NRB recently received an AFI In-Country (ICI) Implementation Project entitled “Implementation of Financial Literacy Framework in Nepal”

In line with the AFI network ethos of providing technical and resource support to members towards achieving and/or improving on their financial inclusion targets, this consultancy brief sets out the requirements for the engagement of a consultant to support Nepal Rastra Bank (NRB) in the ICI with the identification and definition of macro level financial inclusion indicators, a financial inclusion index, template and dashboard to reflect in a high frequency basis the status and trend of key aspects of financial inclusion.

3.Objective

The overall objective of the deliverable is to possess a financial inclusion index and template which will provide the central bank with an accurate identification of key indicators and definition of a robust financial inclusion index to keep track of the progress in terms of different dimensions of access, usage, and quality of financial inclusion.

The final deliverable is expected to reflect and align to the following:

• Objectives and targets as set out in the Nepal Rastra Bank financial inclusion action plan;
• Identify the indicators and proxy indicators from assessment of data collected from the supply-side by NRB that better reflect the key dimensions of access, uptake, usage, and quality, including aspects related to consumer protection and financial literacy from data and indicators regularly collected from financial service providers or other sources where a data sharing agreement exists;
• Assess Nepal data availability, identify data gap, recommend data collection templates, develop methodology of Financial Inclusion Index (FII) for Nepal and submit report including detail methodology;
• Design the concept of a dashboard to disseminate these indicators and the index in a regular basis to share an updated status of financial inclusion for public consultation and internal analysis, leveraging in the existing dashboard. In this regard, have to hand over modality of FII and Dashboard and suggest sustaining mechanism of FII/Dashboard after AFI project.

4.Scope of Work

The consultant (or consulting firm) is expected to present a final draft report of the Financial Inclusion Index (FII) which will include the methodology, weightage, indicators and data to be included in the index. The rationale for the selection of indicators and weightage should be clearly presented in the report.

Additionally, the consultant will submit a Concept Note containing the design of a financial inclusion dashboard which will most accurately reflect the status of financial inclusion in its different dimensions in Nepal. The NRB will use this design to adapt it into the website already available for this objective.

The following sets out the scope of work and expected deliverable under this brief:

• Inception meeting – preliminary consultations with the NRB team and AFI technical team to agree on the scope, expected deliverables, support, reporting and related timelines.
• Scoping and assessment: Conduct extensive consultation process with the NRB team and related stakeholders related to the financial inclusion data collection and to determine data gaps and should assess the available statistical data and indicators.
• Financial Inclusion Index (FII): Should develop the scope and methodology of the FII, perform different tests to define the more adequate index, and construct FII.
• Capacity Building Workshop: A workshop for involved NRB staff in key components to define the Financial Inclusion Index and also detail the methodology on constructing and interpreting FII**.** This shall serve as a dissemination and training event and will be supported by NRB.
• Definition of a financial inclusion dashboard: Identify the data and financial inclusion indicators at a macrolevel to disseminate in a frequent basis the main basic indicators on financial inclusion.
• Stakeholder Engagement Workshop: Support with the planning/hosting of a workshop to present the results of the FII and the dashboard.
• Support Launch of the FII: Develop presentation and other communication of the financial inclusion dashboard, and the FII towards the launch and dissemination to various stakeholder groups across different communication channels.

Note: The actual dissemination of the FII is out of scope for this project.

5.Timeline

The scope of this consultancy is designated to be undertaken in 3 months (November 2021 – February 2022) with an estimated total number of 10 man-days.

Activity – Output/ Deliverable – *Timeline*

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1. Appointment of Consultant – Signed Agreement with Consultant – October 2021
2. Inception Meeting – Introduction to team and discussion on brief – November 2021
3. Landscape Diagnosis & Desk Research – Summary of findings and inputs into framework outline – November 2021
4. Interview Stakeholders and review financial inclusion data infrastructure – Minutes and reports on interviews with identified stakeholders – November 2021
5. Capacity Building Workshop – Detail knowledge of methodology on constructing and interpreting FII – November 2021
6. Develop a draft financial inclusion index and a Dashboard – First draft of the FII for NRB – November 2021
7. Support workshop for NRB in FII – Workshop report with key recommendations and outcome – January 2022
8. Technical Review / Dissemination of Exposure Draft Framework – Develop matrix and collection of feedback, inputs and comments for evaluation and finalization – January 2022
9. Finalise financial inclusion index and a Dashboard – Submit final draft – February 2022
10. End of Consultancy – February 2022

During the assignment, the NRB team and AFI MU will closely coordinate with the consultant by: sharing internal expertise and existing research; contacting or connecting key stakeholders to assist in arranging the consultant’s communications and telephone interviews; and providing inputs to deliverables. This assignment is expected to involve extensive desk research and interaction with key stakeholders.

6.Travel

For consultant domiciled in Nepal or international, no travel is expected.

7.Consultant Experience

· Master’s degree in statistical science, international economics, development finance or other related field. **

· 7+ years of professional experience in statistical research, data analysis, data science, and knowledge of financial inclusion, public policy, and international development.

· Sophisticated understanding and experience in analyzing the issue of measuring financial inclusion, parametric and non-parametric methodologies, statistical research, and data dissemination.

· Experience working directly with central banks on policy development and implementation, preferably in payment system, regulatory oversight, supervision, reporting and enforcing policies and mandates.

· Excellent written and presentation skills in the English language.

· Previous experience working with policymaking and regulatory institutions is desirable.

8.Criteria of Evaluation

The proposals submitted will be evaluated based on the following criteria:

1. Academic Qualification 10%

2. Experience and competence of the key staff for the assignment related; 50%

• In financial sector policy and regulation or related areas 25%
• Policy research and data analysis 25%

3. Adequacy of the technical approach, proposed work plan and methodology in respond to the Terms of Reference 30%

• Technical approach and Methodology 20%
• Work plan 10%

4. Sample work – Writing experience and English 10%

Total: 100%

9.Reporting

Throughout the contract period, the consultant will be reporting to the APISC from NRB and AFI’s Technical Support team. At the local level the consultant will be supervised NRB’s AFI’s Program Implementation Steering Committee Taskforce 4 Leader.

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