RFP-AFI-2023-18 Consultancy Services for Diagnostic Study on the FI of FDPs in Malawi 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, 84 member institutions make up the AFI network including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 76 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 AFI members 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 (WG): 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 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 (updated 2022) 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 complete the AFI platform of services by supporting 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:

RESERVE BANK OF MALAWI (RBM)

Political instability and social unrest in the Great Lakes and Horn of Africa region have led to a continuous influx of asylum seekers into Malawi for the last three decades. As of 31 March 2023, United Nations High Commissioner for Refugees (UNHCR) stated that the country hosts more than 50,000 individuals consisting of more than 13,000 households. Most of the new arrivals came from the Democratic Republic of Congo (DRC) specifically from Sud Kivu province. DRC population is the largest at 32,715 individuals, followed by Burundi at 10,895, Rwanda at 6,469, and individuals from Ethiopia and Somalia are the minority.

On the other hand, Malawi is not exempted from natural disaster and climate-induced forced displacements. In early 2023, Cyclone Freddy made landfall and forcibly displaced a lot of people in the southern districts of Malawi. According to the Department of Disaster Management (DoDMA), over 508,000 people have been displaced across Nsanje, Chikwawa, Phalombe, Mulanje, Blantyre, Thyolo, Chiradzulu, Blantyre City, Mangochi, Machinga and Balaka districts. Malawi is witnessing an increase in the frequency and intensity of climate and disaster shocks that are displacing many, interrupting their livelihoods, and financially excluding them.

With the focus now shifting towards ensuring that refugees and Internally Displaced Persons (IDPs) can participate actively in the economy, it is then of paramount importance that they also access formal financial services and products so as to take advantage of economic opportunities that will improve their well-being and those within their households.

3. Overall Objective:

Malawi implemented its second National Financial Inclusion Strategy (NFIS II) from 2016 to 2020. Recently, the Government reviewed the strategy, and it is about to launch its successor National Financial Inclusion Strategy (NFIS III).

The vision of the NFIS II was to “increase financial inclusion in Malawi from 34% (2014 Finscope) to 55% by 2020, and reduce the exclusion rate from 51% to 26%, in order to support growth and improve household welfare.”

The NFIS 2016 – 2020 targeted the following excluded segments of the population: – salaried workers, Micro, Small and Medium Enterprises (MSMEs), dependants, farmers, and casual labourers. Despite their growing numbers, the level of financial inclusion among refugees and IDPs is still unknown and these population segments are not directly addressed in the

NFIS and the country’s National Financial Literacy and Capability Strategy (NFLCS). In addition, the 2014 FINSCOPE and Household Financial Literacy and Financial Capability surveys did not cover FDPs and this has led to a big gap in data on the financial inclusion of FDPs.

This assignment will contribute to RBM’s efforts to ensure that no one is left behind in the pursuit of full financial inclusion, with the objective of producing:

• A diagnostic study on the level of financial inclusion of FDPs (asylum seekers, refugees, IDPs, and host communities).
• A roadmap for the inclusion of FDPs into the NFIS, NFLCS and other national mainstream financial inclusion policies and strategies.

3.1 Project Components

3.1.1 Diagnostic study on the level of financial inclusion of FDPs and Roadmap for the inclusion of FDPs into the NFIS, NFLCS and other national mainstream financial inclusion policies and strategies.

Rationale

Currently, FDPs are not sufficiently addressed in Malawi’s national financial inclusion policies and initiatives, and are at risk of being left behind in the pursuit of full financial inclusion and sustainable development. FDPs were not included in Malawi’s 2014 Finscope Surveys and there is no financial inclusion data on FDPs which makes it difficult for authorities to design targeted policies for their inclusion, there is limited multi-stakeholder coordination to advance their financial inclusion, and there is a lack of appropriate financial products and services for their unique needs. While FDPs were covered in recent financial capability survey, this assignment is intended to fill in any data gaps through an expanded scope for data collection and analysis. The consulting team is expected to effectively ensure that this assignment aligns with and complements any other financial inclusion data collection exercise on FDPs to avoid duplication and guarantee coherence in policy recommendations.

In order for Malawi to achieve full financial inclusion that truly leaves no one behind, the FDPs residing within the jurisdiction need to be addressed so that they can similarly enjoy access to and usage of quality formal financial services which is a fundamental right for people to engage actively and participate in the economy. This is particularly important for a population segment that is excluded not just from the formal financial system, but also social protection systems, unlike citizens. Similarly, special attention should be made to ensure that IDPs are financially included, and their livelihoods are rebuilt.

The RBM and AFI are seeking a reputable and experienced consulting firm to conduct a diagnostic study on the level of financial inclusion of FDPs and their host communities in Malawi, and develop a Roadmap with an implementation plan based on the diagnostic study findings and recommendations.

The purpose is to develop and publish a report on the level of financial inclusion of FDPs and their host communities by building on existing initiatives, identifying barriers and gaps, and suggesting policy recommendations to the RBM and other key national stakeholders including for the NFIS and mainstream financial inclusion policies and strategies. The diagnostic study will inform the Roadmap and its implementation plan, and will essentially ensure evidence-based financial inclusion policies for FDPs in Malawi, and will promote coordination among key stakeholders to discuss existing initiatives for and barriers to the financial inclusion of FDPs.

The main activities under this assignment:

• Conduct stakeholders’ consultation meetings and/or workshops to map and gather ideas on financial inclusion barriers and gaps for FDPs as well as existing initiatives.
• Design and deploy demand- and supply-side survey questionnaires on the level of financial inclusion of FDPs and host communities.
• Undertake a policy and regulatory review on the financial inclusion of FDPs in Malawi.
• Develop a diagnostic study report based on the data from the demand- and supply-side surveys and the policy and regulatory review to establish the level of financial inclusion of FDPs and submit it to RBM for approval (the report will indicate the level of financial inclusion of FDPs and their host communities, the barriers and gaps they face, and policy recommendations to address these challenges, including in the NFIS and mainstream financial inclusion policy). The consulting team is expected to effectively ensure that this assignment aligns with and complements any other financial inclusion data collection exercise on FDPs to avoid duplication and guarantee coherence in policy recommendations.
• Present the findings and recommendations of the diagnostic study to a national consultative multi-stakeholder workshop for their validation. Provide policy recommendations for the appropriate design and delivery of a digital financial literacy program for FDPs.
• Formulate a roadmap and its implementation plan for the inclusion of FDPs in the NFIS and mainstream national financial inclusion policies and strategies, based on the diagnostic study and the Money Laundering/Terrorist Financing/Proliferation Financing (ML/TF/PF) Sectoral Risk Assessment (SRA will be conducted by another consultant).
• Present the roadmap to a national consultative multi-stakeholder workshop to validate it.

4. Scope of Work:

The consulting firm is expected to produce a diagnostic study report on the financial inclusion level of FDPs and their host communities in Malawi, and a roadmap with its implementation plan for the inclusion of FDPs into the NFIS and mainstream financial inclusion policy. This should cover FDPs (refugees, asylum seekers, IDPs who are in camps and residing in communities) and host communities. (i.e., Dzaleka Refugee Camp, IDP Camps in Phalombe, Blantyre, Chiradzulu and Chikwawa).

The following sets out the scope of work and specific deliverables under this brief:

• Inception meeting: preliminary consultations with the RBM and AFI teams to agree on the scope of work, timelines, deliverables, partners (e.g., Government Ministries and Agencies, UNHCR, Ministry of Homeland Security, WFP), support needed, and reporting process.
• Consultation meetings and/or workshops with stakeholders: Engage and consult stakeholders to map and gather ideas on financial inclusion gaps and challenges for FDPs as well as existing initiatives.
• Demand- and supply-side survey questionnaires: The questionnaires should complement and not duplicate existing ones that may be used for financial inclusion data on FDPs. They will be designed to facilitate establishing the level of financial inclusion for FDPs and host communities. Indicators such as gender, age, disability, financial services knowledge, having an account in formal financial institutions (Banks, MFIs, SACCOs, MNOs, NBFIs), frequency of using an account, having a loan in a formal financial institution, having an insurance policy, having a pension policy, having investments, savings and borrowing behaviors and some financial health indicators. The questionnaire should comprise of full identification of the person including refugee ID if any, Refugee camp, etc. The questionnaire to be approved by RBM.
• Methodology for the deployment of the survey questionnaires.
• Deployment of demand- and supply-side survey questionnaires on the level of financial inclusion of FDPs and host communities.
• Policy and regulatory review on the financial inclusion of FDPs in Malawi.
• Consultation meetings and/or workshops with stakeholders to present initial results and gather feedback.
• Diagnostic study based on the data from the demand- and supply-side surveys and the policy and regulatory review to establish the level of financial inclusion of FDPs and submit it to RBM for approval (the report will indicate the level of financial inclusion of FDPs and their host communities, the gaps and challenges they face, and policy recommendations to address these challenges, including through the NFIS and mainstream financial inclusion policy as well as recommendations for the appropriate design and delivery of a digital financial literacy program for FDPs).
• Validation workshop for diagnostic study: The consulting firm will present the findings and recommendations of the diagnostic study to a national consultative multi-stakeholder workshop for stakeholders’ validation.
• Roadmap for the inclusion of FDPs in the NFIS and mainstream financial inclusion policy, based on the diagnostic study and Sectoral Risk Assessment.
• Validation workshop for the Roadmap and its implementation plan. The consulting firm will present the roadmap to a national consultative multi-stakeholder workshop for stakeholders’ validation of the recommendations and implementation plan.

5. Timeline and Deliverables:

The assignment is expected to commence in November and end by May 2024. Below is a tentative timeline — Refer Link to Job Listing & ‘How to Apply’ section for more detailed information.

6. Travel:

This consultancy work requires domestic/regional/international travelling to support the implementation of the survey and national multi-stakeholder consultative workshops. This will be discussed in further detail after the award decision notification. Please include budgeting for survey- and workshop-related travel in your financial proposal as the expenses will be reimbursed supported by the original, itemized receipts where required.

Air Travel Policy: Air travel is to be arranged by the Consultant if needed. AFI shall reimburse travel expenses for economy class only by the most direct and economical routing. The Consultant should form part of the proposed cost, and is free to reroute or upgrade, where possible, at his or her own expense.

7. Consultant Experience:

• The applicants should be a consulting firm with a proven record in conducting research relating to financial sector development, financial inclusion, or related field.
• The consulting firm should have a team of experts that include statistics experts, technology experts and financial sector experts, with working knowledge of financial institutions and good understanding of existing financial innovations globally and particularly in Malawi.
• Good understanding of Malawi financial sector (Banking, MFIs, MNOs, SACCOs and etc.), existing products and Malawi’s Financial inclusion journey.
• To have done similar exercises for similar group (s) of people and institutions is an added advantage.
• The team leader should have at least 10+ years of relevant experience and hold a master’s degree in a relevant field.
• Excellent writing and presentation skills in the English and local language.
• Ability to communicate and interact with local people (rural communities and FDPs).
• Ability to maintain and keep confidential information within the scope of the project.

8. Reporting:

Throughout the contract period, the consultant will be reporting to the Project Lead from RBM supported by the Technical Lead from the AFI team supporting this assignment.

9. Payment Terms:

Refer Link to Job Listing & ‘How to Apply’ section for more detailed information.

10. Proposal Submission Information:

Refer Link to Job Listing & ‘How to Apply’ section for more detailed information.

11. Evaluation Criteria

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