CONSULTANCY SERVICES FOR GAP ASSESSMENT FOR FINANCIAL SERVICE PROVIDERS At Micro Enterprises Support Programme Trust

https://mespt.org/download/consultancy-services-for-gap-assessment-for-financial-service-providers/

I. INTRODUCTION

Micro Enterprise Support Programme Trust (MESPT) is a development organization focused on enhancing Agricultural Productivity, Food Safety, Agricultural Business Development, market linkages, increased Financial Access and Inclusion and Green Transformation within Agricultural sector. MESPT desires to contribute towards creation of green decent jobs and improve competitiveness and socio-economic sustainability among stakeholders and more so the smallholder farmers and SMEs.

The engagement of private sector towards achievement of the desired results within focus thematic areas continues to be critical and calls for concerted effort for support mechanisms. MESPT has taken this role to facilitate both forward and backward linkages and build sustainable partnership to sustainably support the eco-system.

Vision

“Build a more Prosperous Society”

Mission

To provide sustainable business development and financial services to small holder farmers and Agri SME’s in Kenya.

II. STRATEGY FOR FINANCIAL ACCESS AND INCLUSION

MESPT strategy for Financial Access and Inclusion is influenced by the following:

a) Changing contextual reality where limited financial investments are available for agricultural productivity, food safety, agricultural business development investments. There has been a growing miss-alignment of financing structure(s) and increased perception of associated risk. With global warming becoming a reality, we have witnessed growing investments in green transformation initiatives and investments.

b) MESPT contribution to green transformation agenda– Alignment to SDG 13 and National Government Green Economy Strategy and Implementation Plan (GESIP), Kenya Climate Smart Agriculture Strategy 2017-2026, Climate Change Act, 2016, National Climate Action Plan 2018-2022, National Climate Change Action Plan (NCCAP 2013-2017)**

c) Sustainability- Social and Environmental sustainability, build resilience, social inclusion, and sustainable livelihoods.

III. RATIONALE

The financial sector continues to play a critical role in facilitating private sector investments through mobilization of savings and provision of credit facilities. With increased liberalization of the financial market, we have witnessed expanded financial space and increased access and inclusion. However, there is sustained debate on the level of responsible business conduct of some of the financial market players. This has birthed high level of competition and drive to commercialization for profit seeking strategies.

Limited access to finance and financial inclusion has been sighted as one of fundamental barriers towards achievement of the desired growth levels of the target smallholder farmers, Farmer Groups, farmer producer and marketing co-operatives and Small and Medium Enterprises (SMEs). The financial service providers have continually deprived the agricultural sector financial investments sighting high risk, uncertainty, lack of markets, minimal margins, uncoordinated support system and lack of verifiable data for decision making. This has further contributed to development of unfavorable financial solutions in respect to high interest rates, miss-aligned structures, lack of long-term investments, lack of flexible and patient capital, and enhanced requirements making easy access impossible thus contributing to exclusion among vulnerable groups such as women and youth.

In addition, there has been limited focus and understanding on the special needs within the sector thus greatly contributing to systemic internal limitations within the FSPs.

It is in recognition of the above challenges and desire to play a critical role in financial access and inclusion by working with Micro Finance Banks and Institutions, Savings and Credit Societies, Farmer Co-operatives and Small and Medium enterprises, that MESPT wishes to undertake this consultancy to document critical gaps and develop implementable capacity and technical support plan/solution for the identified FSPs.

MESPT Credit and Business Development team has undertaken key actions to identify some pertinent challenges faced by FSPs in providing financial access to actors within agricultural sector. These includes:

i. Invitation to FSPs to express interest to partner with MESPT. This process generated key baseline information.

ii. Desk review and onsite visits for 8 FSPs. This served to clarify and gather additional information.

iii. Development of Capacity and Technical support proposal template.

This consultancy will build on the preliminary work done and develop implementable capacity and technical support plan per FSP.

IV. OBJECTIVE OF THE ASSIGNMENT

The objective of this consultancy is to validate existing financing and technical barriers inhibiting increased credit facilitation by selected financial service providers.

V. SPECIFIC OBJECTIVES

The consultant is expected to:

i. Review specific EOIs per financial service provider and identify key strengths and weaknesses in respect to Agri and Green financing.

ii. Review internal due diligence reports per FSP and identify:

a) Key findings by MESPT team and recommendations.

b) Areas of improvement for detailed capture of necessary information.

c) Develop a sample due diligence report to be used by MESPT.

iii. Carry out an independent assessment of the capacity of identified financial service providers (FSPs) to engage in Agri and Green financing to smallholder farmers in selected value chains (annex 1).

iv. Identify major challenges and barriers that inhibit increased credit facilitation to smallholder farmers in selected value chains.

v. Identify opportunities for introduction and/or scale up of financial inclusion for Women and Youth.

vi. Identify major challenges and bottlenecks that inhibit increased financial access to small holder farmers for sustained Green energy adoption.

vii. Develop a pragmatic capacity and technical support plan/solution necessary to enhance FSPs capacity to increase credit facilitation to selected value chain actors per FSP.

viii. Document how the proposed capacity building and technical support solutions shall contribute to any of the below:

a) Financial inclusion for women and youth

b) Increased access to credit among ‘high risk’ category of Agri-producers/ small holder farmers.

c) Increased adoption of green energy solutions.

d) Flexible and adaptable financing structures to the target smallholder farmers.

e) Increased efficiency in measurement of impact resulting from enhanced credit facilitation to Agri and Green energy financing.

ix. Document key risks that may negatively affect the delivery of capacity and technical support solutions and achievement of desired results.

I. STRUCTURE OF THE ASSIGNMENT

The assignment will be structured as follows:

Proposed Engagement mode

Nairobi – 7 Physical meetings

Machakos -1 Physical meetings

Nyeri – 1 Physical meetings

Nyandarua -1 Physical meetings

Kisii – 1 Physical meetings

Mombasa – 1 Online Meeting

Kilifi – 1 Online Meeting

Embu – 1 Physical meetings

Total – 14 Institutions

I. METHODOLOGY

It is recommended that for maximum value generation for this assignment, the consultant will adopt participatory approach that includes interviews with CEOs, Technical teams and (if necessary) review of systems and relevant documents to ascertain accuracy of information.

II. KEY DELIVERABLES

1) Milestone 1: Inception report that highlights (i) Agreed work plan with MESPT (ii) Revised budget.

2) Milestone 2:

I. Desk review report detailing major findings from EOIs, MESPT internal due diligence reports, areas of improvement within MESPT internal due diligence reports and draft sample due diligence report template to be utilized by MESPT.

II. Draft Gap Validation report detailing methodology used, key strengths and weaknesses of FSPs, general barriers inhibiting accelerated financial credit to smallholder farmers in the target value chains( for agri-production and adoption of Green energy), key risks that may negatively affect the delivery of capacity and technical support solutions and achievement of desired results, opportunities for financial inclusion for women and youth, increased adoption of green energy solutions, flexible and adaptable financing structures to the target smallholder farmers.

III. Draft capacity and technical support plan/solution necessary to enhance FSPs capacity to increase credit facilitation to the target clients per institutions on a priority basis. Document how the proposed capacity building and technical support solutions contribute to any of the below:

a) Financial inclusion for women and youth in agriculture and green growth sector

b) Increased adaptation and adoption of green energy solutions.

c) Flexible and adaptable financing structures to the target smallholder farmers.

3) Milestone 3

i. Final Gap Validation report presented to Credit & Business Development Manager

ii. Final capacity and technical support plan/solution presented to Credit & Business Development Manager providing clear gaps and solutions per Financial Service Provider.

III. Consultant Requirements

a) In-depth knowledge and experience in Microfinance, Agricultural finance, Climate/Green finance, Development finance, financial inclusion, Enterprise development and/or Agricultural Value Chain Development.**

b) Demonstrated understanding of concepts for financial and inclusive finance and value chain approaches.

c) References for similar assignment for the past 5 years, with contact details.

d) Minimum five years’ experience in undertaking business advisory services, needs assessment, capacity building solutions, market survey, feasibility studies, and design and delivery of capacity and technical support to FSPs;

e) Degree in relevant field- (Bcom. Agricultural Economics, Business Management etc) and 5 years relevant technical experience.

IV. INSTITUTIONAL ARRANGEMENT

The Consultant will work under the direct supervision of the Credit & Business Development Officer in consultation with Credit & Business Development Manager to adapt and deliver the consultancy appropriately to meet MESPT expectations. During his/her assignment, the consultant will be provided with all necessary information.

V. DOCUMENTATION REQUIREMENTS

1. A covering letter explaining how your experience addresses the requirements of the TOR
2. CV(s) of consultant(s) involved in the exercise
3. A copy of valid KRA Tax compliance Certificate-individual
4. Provide detailed proposal with a detailed Work plan demonstrating the number of man-days to be employed and budget for this work

VI. SUBMISSION PROCEDURE

The individual consultant(s) that wish to signify their interest in undertaking the prescribed work are to share the following documents to tender@mespt.org by 5.00pm 17^th November 2021:

a) Technical Proposal not exceeding 10 pages that should include:

i. Interpretation of the TORs

ii. Methodology to be used in undertaking the assignment

iii. Time and activity schedule

iv. Organizational and Personnel Capacity Statement

The following should be under annexes

i. Relevant experience related to the assignment

ii. Curriculum Vitae of the team that will carry out the assignment

iii. Information on any representative of your team, or any member of your team, which may give rise to a direct or indirect conflict of interest, including identifying other current contractual works being conducted for MESPT

b) Financial proposal not exceeding 1 page

i. Must include all rates in Kenyan shillings

ii. Any other related costs must be noted.

iii. All quotes should be inclusive of relevant taxes i.e., VAT & WHT

I. Payment Plan

The payment plan to the Consultant will be as follows: –

a) 30% of agreed cumulative budget upon signing of the contract and satisfactory completion of milestone I

b) 40% of agreed cumulative upon satisfactory completion of Milestone II

c) Final 30% of agreed cumulative budget upon satisfactory completion of Milestone III