Job Consultancy Services for the development of Regulatory Sandbox Guideline and Standard Operating Procedure for the Central Bank of Samoa 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 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).

Central Bank of Samoa (CBS)

The Central Bank of Samoa is the nation’s reserve bank and, as such, it acts as a bank to the Government and the commercial banks. One of its functions is to promote financial inclusion and financial literacy. This function is guided by a National Financial Inclusion Strategy.

The current draft of the National Financial Inclusion Strategy (NFIS) soon to be launched states the vision for financial inclusion as;

‘To build an inclusive and resilient financial sector that provides universal access to a broad range of client-centric, affordable, convenient, and responsible financial products and services for all Samoans (individuals and businesses) who are financially competent to make informed choices in their daily lives, leading to sustainable development of the country and improved quality of life for all.’

The NFIS framework is as follows:

The strategic pillars critical to support the vision are further explained below:

1. Client-centric Products and Services – Develop and provide innovative, technology-enabled, diverse financial products and services.
2. Accessible Delivery Channels – Develop accessible, efficient and technology driven delivery channels to reach unbanked and under banked segments especially women, youth, and elderly
3. Vibrant DFS Ecosystem – Build a vibrant ecosystem to promote adoption, uptake & sustained use of DFS
4. Improved access to finance for MSME, informal, and agriculture sector – Deepen and expand financial services for MSMEs informal, and agriculture sector
5. Financial Capability and Consumer Protection – Build financial capability through a structured financial education and financial literacy of people supported by robust consumer protection framework

Innovation plays a central role in the NFIS which necessitates the employment of a regulatory sandbox to strategically and safely navigate the potential growth of innovation in the financial ecosystem in the country.

2. Project Background:

Regulatory sandboxes are actively being adopted by financial sector regulators around the world for designing, developing, and reviewing regulation or policies that keep up with innovations as they provide the framework for a ‘test-and-learn approach’ without compromising on consumer protection or ecosystem safety. The Pacific Islands Regional Initiative (PIRI) members including Central Bank of Samoa (CBS) approved to setting up a regional regulatory sandbox, which was drawn based on consultations with member-countries’ stakeholders in 2019.

In March 2020, the Pacific Regional Regulatory Sandbox Guidelines was launched with the objective “to foster responsible financial innovation that improves efficiency, nurtures new opportunities, provides safeguards and robust risk mitigation, and achieves the mandates of financial inclusion by improving the access and, use and quality of financial services for people living in these participating countries”.

With the Central Bank of Samoa being a member of the PIRI Regional Regulatory Sandbox Initiative, being supported by AFI, it will enable the central bank to carry out its functions relating to financial inclusion by enabling the testing, regulating, and supervising of new and innovative solutions for all segments of the market covering individuals, MSMEs, large corporates, governments, and disproportionately excluded populations including older people, the youths, women etc.

The Pacific Regional Regulatory Sandbox is an important initiative relevant and necessary for CBS to provide a sandbox environment for interested genuine innovators to experiment and test potential financial technology and digital financial services innovation under close regulator’s supervision and safeguards. CBS’s approach is to balance the need for innovation in the financial sector with deepening inclusion, integrity, stability, and growth.

3. Objectives:

While several challenges are being prioritized, there’s consensus that fintech innovations are inevitable in exploring new opportunities for inclusion, growth, and stability for a small island country, it is therefore expected that this project will support the central bank with the following key objectives:

• Successfully implement the PIRI Regulatory Sandbox in the country by building up the central bank’s capacity and ensuring that necessary legal, prudential and technical infrastructures are in place to support the operation of the Regulatory Sandbox.
• Understand the incumbent risks and opportunities of FinTech solutions on consumers and market dynamics and be able to adapt the current regulatory environment to foster new opportunities at the same time, while ensuring an adequate level of consumer protection. Fulfilling this objective will be explored via capacity development activities such as knowledge exchange visits and trainings on implementing the Regional Regulatory Sandbox etc.
• Promote competition and efficiencies in the market for financial services providers through innovation and operational efficiencies.

4. Scope of Work:

The following will be the deliverables expected from the consultant(s) under this assignment.

• Development of a national or local regulatory sandbox framework: This would be an external document published by the central bank of Samoa to present clear guidance and information to prospective applicants to the country’s regulatory sandbox.
  • The consultant(s) shall develop the agenda and facilitate internal and external stakeholder engagements to identify pillars, needs and specific context relevant and aligned to the needs of the country, its actors and policy goals to inform the development of the regulatory sandbox framework or guidelines. The consultant(s) shall ensure key stakeholders, AFI and CBS are actively engaged to identify, shape, and design the outline for the guideline/framework and align the framework with the implementation mechanisms identified in the Pacific Regional Regulatory Sandbox and the sovereign laws and policies of Samoa
• Development of a ‘Standard Operating Procedure’ (SOP) for the regulatory sandbox: This is a comprehensive operational manual and/or guidance for internal use within the central bank of Samoa on the implementation, operation, and processes necessary for the running of the regulatory sandbox. The technical consultant(s) shall lead with the development of the SOP with inputs and alignment on processes from both CBS and AFI.
• Knowledge exchange with AFI member countries: The consultant(s) shall lead and support with the agenda, planning and implementation of a knowledge exchange program with two (2) identified AF member countries with practical experience in implementation and operation of a regulatory sandbox.
  • The modality for this deliverable shall either be physical or virtual. Decision on modality shall be finalized/ reviewed within the context of the global health protocols regarding travel and physical events, position of the identified AFI member countries and the Central Bank of Samoa.
• Internal Capacity Building for CBS Staff and Stakeholder Workshop: The consultant(s) shall lead and support with the organization, planning and implementation of capacity building for relevant staff of the central bank and also plan and execute the exposure and alignment of relevant external stakeholders with the regulatory sandbox framework via a workshop.
  • The modality for this deliverable shall either be physical or virtual. Decision on modality shall be finalized/ reviewed within the context of the global health protocols regarding travel and physical events, position of the identified AFI member countries and the Central Bank of Samoa.
• Other Project Management and Coordination Responsibilities: The consultant(s) shall be responsible for the following activities and deliverables throughout the project delivery cycle:
  • Desk research, preparation, calls/discussions with Central Bank of Samoa (CBS) and Alliance for Financial Inclusion (AFI) and prepare consultation schedule.
  • Conducting assessments and studies to align the Pacific Regional Regulatory Sandbox with relevant and necessary legislation, regulations, policies and prudential standards in Samoa
  • Compile meeting minutes and summary documents from all stakeholder consultations (internal and external) and workshop.
  • Coordinate the review process of the draft guideline/framework and SOP and, compile contributions from participants and incorporate into draft revisions.
  • Submission of initial drafts and recommendations to CBS & AFI project team for comments.
  • Development of capacity building and workshop materials including agenda, slides and reading materials etc. This also includes supporting and facilitating speaker engagements where necessary.
  • Lead and facilitate stakeholder workshops and consider the inputs from such workshops as contribution to the development of the draft guideline/framework and SOP.
  • Submit the final Guideline/framework and SOP and, a final report that details the tasks undertaken for this assignment, the workshop summary/report and, the other project documentation as requested by CBS and/or AFI.

5. Timeline:

Activity

Deliverable/Next StepTimeline**

1. Consultant Onboarding and Kick-off meeting
2. Kick-off meeting with AFI and CBS – March, 2022
   1. Desk research, interviews, and consultation with relevant stakeholders
3. Summary report highlighting recommendations – March, 2022
4. Draft regulatory sandbox framework/guidelines and Standard Operating Procedures (SOP)
5. Submit draft of the regulatory sandbox guidelines/framework and SOP – April, 2022
6. Consultations and Review Process with internal and external stakeholders
7. Submit Comment/feedback matrix report and highlight recommendations – April – May, 2022
8. Submit revised draft of regulatory sandbox guidelines and SOP – April – May, 2022
9. Conduct Stakeholder Workshop and Capacity Building
10. · Exposure workshop of the regulatory sandbox guidelines to external stakeholders – May, 2022
11. · Capacity building for CBS internal staff – May, 2022
    1. Support with knowledge exchange and peer learning activity with 2 AFI member institutions
12. Support with agenda, session briefs, slides, speaker engagements, meeting minutes and summary report highlighting key learning recommendations – March – May 2022*
    1. Completion of consultancy / assignment
13. Submit final draft of regulatory sandbox guidelines and SOP – June, 2022

*Timeline is subject to review and final knowledge exchange schedule shall be advised accordingly.

Effective consulting days is estimated at 45 – 50 days.

6. Travel:

Traveling is expected for activity 5 above but this is tentative and subject to review considering CBS, AFI and global health and travel SOP.

Air Travel Policy: Air travels are to be arranged by the Consultant, if needed. All air travel expenses shall be approved by AFI’s Travel & Sponsorship Administrator (sponsorship@afi-global.org) before booking, for the expense to qualify for reimbursement. AFI shall reimburse travel expenses for economy class only by the most direct and economical routing. The Consultant is free to reroute or upgrade, where possible, at his or her own expense.

Payment will be based on man-day work. Please complete the detail in Annexure 2.

7. Consultant Experience:

• 8+ years of professional experience in broad financial regulatory and policy interventions, covering considerably; digital payment, digital currencies (e.g. stablecoins, virtual assets etc), payment systems, digital financial services, monetary policy, financial technology, financial regulation and supervision for DFS and Fintech, digital economy, platform ecosystems and transformation, AML-CFT consideration, public policy, financial inclusion and international development.
• Understanding and relevant global experience in analyzing the issue of regulatory oversight and supervision around monetary policy, open finance, payment systems with specific expertise and experience aligning with financial inclusion, digital financial literacy, balanced approach to DFS and FinTech supervision, financial system stability, integrity, market conduct and consumer protection.
• Experience working directly with central banks on policy development and implementation, preferably in regulatory oversight, supervision, reporting and enforcing policies and mandates.
• Knowledge of potential technological solutions for regulatory and supervisory technology (e.g. FinTech and RegTech applications) and their linkages to deepen, accelerate, supervise and operate inclusive open DFS regimes.
• Preference for consultants with experience in working with small developing states, policy interventions for vulnerable and underserved segments including women, forcibly displaced, migrants, elderly etc.
• Excellent oral, writing and presentation skills in the English language is compulsory.
• Advanced university degree in engineering, social science, international economics, development finance or other related field.

8. Reporting and Coordination:

Throughout the contract period, the consultant will work closely with designated officers from the Financial System Development Department and will coordinate the project and report progress to AFI’s policy team on FinTech and DFS and the Financial System Development Department of the Central Bank of Samoa.

Consultant(s) is required to facilitate bi-weekly meetings and/or as and when required update meetings with CBS and/or AFI to update on the progress of this assignment.

9. Criteria for Evaluation:

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

Technical Scoring

1. Academic Qualification – 10%

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

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• Technical adequacy for the assignment (30%)
• Regional/global experience (20%)

3. Adequacy of the proposed work plan and methodology in responding to the Terms of Reference – 20%

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• Technical approach and Methodology (10%)
• Workplan (10%)

4. Sample work – Relevance to Assignment and demonstrated experience in writing – 20%

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Total: 100

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Evaluation of technical and financial proposals

The evaluation and decision on the best proposal will be made based on the combined criterion, where companies are qualified by means of a score that takes into account the combined valuation of the technical and financial proposals, with the following weights:

a) Technical Proposal: 70% (Seventy percent).

b) Financial Proposal: 30% (Thirty percent).