National consultant – To provide Technical Assistance support to selected Micro-Finance Institutions At International Labour Organization

Project Title

PROSPECTS: Partnership for improving Prospects for host communities and forcibly displaced persons

Organization

International Labour Organization (ILO)

Background and rationale

The International Labour Organization (ILO) is part of a Partnership on Inclusive Jobs and Education for Host Communities, Refugees and other Forcibly Displaced Persons, known as PROSPECTS. The Partnership is a multi-year programme, funded by the Government of the Netherlands, that brings together five agencies (ILO, World Bank, IFC, UNICEF, UNHCR) to devise collaborative and innovative approaches for inclusive job creation and education in contexts characterized by forced displacement. The programme encompasses three pillars, namely Education, Jobs, and Protection and operates in eight countries across East Africa, Horn of Africa and the Middle East employing an area-based approach, in which the partner agencies jointly focus their activities on selected regions in each country. For Kenya, the programme is implemented in the refugee hosting counties of Turkana and Garissa. Under the partnership, the ILO, together with IFC and World Bank, lead interventions to improve livelihoods of host communities and refugees, including through enterprise development, financial inclusion and Financial Education. Please find more information on prospects here: www.ilo.org/prospects

In December 2019, the ILO working closely with UNHCR organized a scoping mission to the two refugee camps in Kenya (Kakuma and Dadaab) to enable five Kenyan Micro Finance Institutions (MFIs) to assess business viability in the refugee hosting areas. They also sought to understand operations and business environment in the two camps. The MFI representatives participated in focus group discussions with a variety of business owners in the refugee camps, visited refugee owned businesses and held discussions with banks offering financial services in the targeted intervention areas.

ILO through PROSPECTS also commissioned a research on assess to financial and non- financial services for host communities and refugees in Kenya. The assessment revealed, among others, that MFIs and commercial banks largely limit themselves to the host community market particularly in the provision of credit products due to different reasons including negative perception regarding the bankability of refugees, know your customer (KYC) challenges in terms of lack of recognised identification documents for refugees, infrastructural challenges and ‘regulatory’ restrictions are their biggest hindrances to reaching out to the refugees.

Based on the assessment findings, the ILO developed and conducted a training of financial service providers through a course called Making Finance Work for Refugees and Host Communities (12^th 16^th October 2020) for key staff of financial service providers and stakeholders dealing or interested in financial inclusion of refugees in Kenya. At the end of the training, participants developed their own action plans to improve the services for Forcibly Displaced Persons (FDPs) and their host communities.

2. Objective of the assignment and scope of work

The national consultant will work under the direct supervision and support of an international consultant in providing technical assistance to selected MFIs in the following areas:

a) Conduct a market assessment in terms of analysing the status of financial service provision, unmet needs and barriers in the MFI preferred operational areas in Turkana and or Garissa Counties. The market assessment will include major financial institutions in these areas (covering both formal and informal ones); major products/services they offer and which demographic/gender/social/business segments each product/service targets; market penetration (estimation) i.e. number of customers or volume of products disbursed; and gaps in terms of which demographic, gender, social and business segments that are being left out. The national consultant will review the business models of the major financial institutions in the area: their major revenue and profit streams, and identify their major risks and costs. The national consultant should prioritize the gaps, which if met, would bring maximum benefit to the refugees and host communities. The market assessment will be conducted in close collaboration and engagement of the MFI research and marketing departments.

b) Institutional assessment. Assess the Microfinance institution in terms of analysing its governance, strategy, operations, products, delivery systems, processes, current portfolio and financial management. Analyse the current business model of the MFI in serving the host communities and refugees in area of operation in order to identify gaps in financial service delivery where technical support can improve on their service delivery. Collect and analyse information/data on management system and human resources (skills, capacity, and HR management). Needs to consider attempts to fill the gaps identified in a) and draw lessons and recommendations for the exercise in c). This may include studying their current financial products or those that the MFI may have launched in the past but were discontinued.

c) Propose financial products or services and their high-level specifications that will address the gaps identified in a) and informed by b) making sure these services are financially viable and in compliance with CBK regulations and Sharia guidelines – taking lessons from good practices in similar communities in Kenya or beyond. The national consultant will identify and estimate the resources and capabilities required to develop and market the products / services in terms of people, technology, procedures and processes, to deliver, sustain and scale up these products / services. S/he will also assess the current institutional set up of the MFI with respect to the resources and capabilities to deliver the proposed financial services in the area and evaluate their needs. It is also important to put in place a system to prioritize the pilot products or services to be launched based on agreed criteria with the selected MFI and the level of risks they are ready to take.

d) Recommend the most efficient and effective yet inclusive outreach strategy matching the assessed unmet market needs for financial products with the resource capacity and institutional capability of the Microfinance institution from b) and c) above to deliver the products. This may include upgrading internal capability, procurement/recruitment or partnerships across human resources, IT, processes. As part of this deliverable, the consultant will design and develop a marketing strategy to recruit and retain customers from the target communities. The strategy should include a mechanism for measuring the business and social effectiveness of such products including milestones on the clients to be served, products to be rolled out and volume of financial services delivered with quarterly targets/milestones.

e) Translate the inclusive outreach strategy under d) into an operational plan to obtain the resources and build the MFI capacity. These include technology/ infrastructure (procurement, in-house development, partnership) and human resources development (org structure, skills profiles), proposed changes in processes, procedures and products with milestones, timelines and KPIs such as the number of clients to be served, products to be rolled out and volume of financial services delivered with quarterly targets/milestones. The plan should also have a capacity building programme for the staff to skill them in the proposed product delivery and changes in their operations.

3. Duration of the consultancy

· 40__ working days spread between December 2021 and June 2022

3. Methodology

The consultant will describe in detail the methodology to address the above scope of work that they will use to deliver the assignment. This may among others include:

a) Desk research for background information such as the Central Bank of Kenya financial inclusion strategy and financial inclusion guidelines, overview of the market. Study of reports on access to finance in Kenya especially those related to delivery of financial services to refugees and host communities.

b) Sample surveys and/ or focus group discussions with target communities in the target areas essential for identifying real gaps and test product ideas

c) Interviews with senior executives of the selected MFI to understand current organization structure and operations for designing and rolling out products to make sure recommendations build on existing resources and capabilities

d) Monitoring, evaluation and reporting mechanisms together with a plan on how to document lessons learnt from the assignment.

4. Key Deliverables and timeline

The national consultancy is expected to start by 1 December 2021 and take 40 days to complete. The consultancy is expected to end on 30^th June 2022. The selected national consultant will be expected to deliver high quality work within the stipulated timelines. COVID-19 limitations to carrying out consultancy will be taken into consideration.

Key Deliverables of the Individual National Consultancy**

An inception report after signing of the contract detailing how they will conduct the assignment along with work plan, data collection tools and other technical documents

1 Report**

Market assessment report including a gap analysis on access to financial services in refugee hosting communities of Garissa and Turkana Counties including past attempts to fill this gap among that population segment.

An Institutional analysis report of the MFI governance, strategy, operations, current products, delivery mechanisms, systems processes, policies and procedures together with identified gaps in financial service delivery

1 Market assessment report, including focus group discussions in the 2 target counties

1 Institutional analysis report

An inclusive outreach strategy matching the assessed market needs with the analysed institutional capacity including a capacity building plan and operational plan for developing, rolling out and performance managing of the new products including clients reached, volume of transactions, etc. The strategy should include how to monitor and evaluate progress together with documenting of the lessons learnt from the assignment

1 inclusive outreach strategy and 1 operational plan

• High level specifications of financial products / services developed for the MFI that will best meet the gaps identified in the market assessment and ensure financially viable for the MFI

Financial products or services developed for roll out responding to the needs of refugees and host communities

• Roll out of the outreach strategy and operational plan including institutional capacity building for staff, revision of processes, products and systems. Documenting the progress and lessons learnt
• Report on roll out of the outreach strategy and support provided, progress in achieving results together with the documentation of lessons learnt

Report on institutional capacity building and the roll out of the outreach strategy and financial product/s by the MFI and lessons learnt.

5. Payments

The national consultant will receive five payments based on the following deliverables

1. 20% payment for the assignment will be paid on delivery of an acceptable inception report incorporating ILO’s comments.
2. 20% payment for the contract will be made on delivery of the market assessment report including an institutional gap analysis report for financial services
3. 25% payment will be made on delivery of an inclusive outreach strategy together with detailed financial products design and specifications
4. 20% payment will be made on delivery of a report on the roll out of institutional capacity building and operational plan in terms of progress made in staff capacity building, revision of processes, procedures, product roll out and documentation of lessons learnt.
5. 15% on final acceptable final report on the assignment integrating all feedback from ILO and partner institution

6. Eligibility requirements

§ University degree in Business Administration, Commerce, Economics, Finance and Accounting

§ A Masters in Business administration with specialization in banking or financial services is an added advantage

§ At least 7 years’ experience working in or providing capacity building support to a Bank, MFI or similar financial institution, preferably focused on product development, innovation, customer relations, marketing, systems, policy and procedures development or implementation

§ Strong familiarity with CBK financial inclusion strategy and any applicable laws and regulations together with knowledge of the international guidelines on MFI product design.

§ Knowledge of both conventional and Islamic finance and delivery systems is an added advantage

§ Experience in working in the financial sectors in either Turkana or Garissa Counties will be an advantage

§ Women are encouraged to apply

7. Staffing, Roles, and Reporting

The national consultant will report to the international consultant for technical matters and coordination, administratively report to the PROSPECTS Chief Technical Advisor (CTA) Kenya. S/he will be supervised by the ILO PROSPECTS National Program based in Nairobi.

S/he will receive technical guidance and support from the ILO PROSPECTS Regional Specialist on Enterprise and Market Systems development based in Nairobi and Social Finance Specialists based in Geneva.

Throughout the course of this assignment, the national consultant will report once in 2 weeks on the progress of the assignment to the ILO for coordination and follow–up. If it appears necessary to modify the tasks or timeline of work or exceed the time allocated, the national consultant must discuss the circumstances with the ILO and obtain prior written approval. The ILO may disclose the draft or final report to any person and for any purpose ILO may deem appropriate.

8. Confidentiality and contracting conditions

All data and information received from the ILO for the purpose of this assignment are to be treated confidentially and are only to be used in connection with the execution of these Terms of Reference. All intellectual property rights arising from the execution of these Terms of Reference are assigned to the ILO. The contents of written materials obtained and used in this assignment may not be disclosed to any third parties without the expressed advance written authorization of the ILO.

The present assignment is a consultancy under the standard terms and condition of external collaborator contract of the ILO.