MESPT-CREDIT-001-2024 – Consultancy for Assessment of Partnering FSPs (Eligible to National Consultants only) At Micro Enterprises Support Programme Trust

INTRODUCTION

Micro Enterprise Support Programme Trust (MESPT) is a development organization focused on enhancing, Agricultural Enterprise Development and Market linkages, Agricultural productivity and Food Safety, Financial Access and Inclusion and Green Transformation. MESPT interventions targets small holder farmers, farmer groups, farmer organizations and Agricultural SMEs with the aim of increasing productivity, incomes, market expansion and enhancing competitiveness for decent job creation and financial access and inclusion.

MESPT has taken catalytic and facilitative role to engage both private and public stakeholders to build sustainable partnership to support the agricultural and green eco-system. This calls for integrated delivery model that entails working with:

1. Small holder farmers (SHFs)- MESPT support is geared towards increased productivity, profitability, compliance with food safety and market standards and enhanced linkages to markets. MESPT has a focus on unlocking potential among women and youth in Agri-value chain enterprise development. This is achieved through grant support.
2. Micro Small and Medium Enterprises (MSMEs)-(including farmer co-operatives) – MESPT support focuses on increased market capacity, production capacity, entrenchment of food safety processes, adoption of and transition to ecofriendly agro-processing and value addition, reduction of post-harvest losses, and increased operational efficiency. This is facilitated through Technical/Business Development Services, grant and debt financing. MESPT plays a critical role in facilitating market linkage and market infrastructural development.
3. Financial service providers (FSPs) – MESPT supports focuses towards increased provision of financial services to agricultural sector and more specifically to smallholder farmers, farmer producer organizations, women and youth in agribusiness. MESPT supports FSPs through affordable debt financing for on lending, grant financing for technical and business development services.

Vision

“Build a more Prosperous Society”

Mission

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

RATIONALE

MESPT financial access and inclusion strategy was rolled out in 2021 anchored on promoting increased accessibility and affordability of financial credit to smallholder farmers, Micro, Small and Medium Enterprises in Agri and Green business and farmer co-operatives. The strategy placed a deliberate focus on women and youth led Agri and Green entrepreneurs.

The first phase of strategy focused on wholesale lending to financial service providers to catalyse increased Agri-Green loan portfolios within MESPT partnering FSPs. With perceived risk in Agri-lending, our engagement with FSPs was and continues to aim at enhancing their funding capacity to Agricultural and Green sectors, evidence based social impact measurement and reporting, improving climate smart investments at enterprise, domestic and farm levels, promoting financing for women, youth and vulnerable groups and enterprises.

To facilitate strategy rollout, MESPT developed a new credit policy and financial products in 2022 with a paradigm shift to conventional credit model. MESPT key lending principles includes patient capital, affordability, flexibility and technical support. Therefore, the credit policy and financial products were modelled to facilitate a lending structure that accommodates these principles. This called for MESPT to adopt a pragmatic approach of pricing its products below single digit interest rate, in some cases waiving both legal and appraisal fees and setting maximum lending interest rate to end consumers of the funds.

MESPT being aware of the potential risk of cannibalization of financial product within FSPs portfolio due to concessional funding, tasked the FSPs to develop innovative delivery mechanisms to mitigate this occurrence. In addition, MESPT credit team offered desk technical advisory on available approaches for consideration to manage such challenges.

The majority of FSPs had Agri and Green financing products but were not deliberate in activating utilization among their customers. The Credit officers were also not aggressive in pushing for the uptake of such products or even developed active customer engagement mechanism for Agri-Products.

MESPT plans to undertake an assessment on FSPs delivery mechanisms taking note of pre-disbursement preparatory initiatives undertaken by FSPs, to facilitate smooth rollout of the fund, positive/ negative impact and opportunities that have been realized and emerged from this engagement, challenges that have been experienced and approaches that have been taken to mitigate them and whether there are still existing challenges, identification of model case studies, major reasons enabling and /or hindering funding utilization by FSPs, , any sustainability issues both on MESPT and FSPs, technical and capacity needs that may influence accelerated consumption of the fund. emerging issues within the financial sector that have and will continue to affect FSPs in delivering Agri-financing to target clients

OBJECTIVES OF THE ASSIGNMENT

The objective of this consultancy is to undertake an assessment on whether the new MESPT strategy for financial access and inclusion is being achieved, relevant and effective through partnering Financial Service Providers (FSPs) on Agri-value chain and Green financing, identifying key bottlenecks and opportunities within the model and areas of improvement.

SPECIFIC OBJECTIVES

The objectives of the consultancy are to:

1. To determine the level of understanding of both management and technical teams of FSPs on MESPT partnership in Agri and Green financing.
2. To determine the adequacy of the preparatory initiatives taken by specific FSPs in readiness to rollout of the financing from MESPT.
3. To establish the level of support provided by MESPT through its staff and how it has contributed to the financing model of the FSP(s).
4. To determine emerging challenges related to fund rollout, and the extent to which such challenges have affected uptake by end borrowers and administration of the fund per specific FSP.
5. To determine emerging opportunities that have influenced fund rollout and uptake by end borrowers and administration of the fund per specific FSP.
6. To establish the effect of MESPT financing model to end borrowers in respect to credit size, credit period, grace period, and repayment period.
7. To determine the level of impact MESPT financing model has had on smallholder farmers production/productivity, income generation, investment in green solutions, affordability, high uptake by women and high delivery on green financing.
8. To establish the accruing benefits and opportunities to FSPs since partnering with MESPT in respect to additionality on first time borrowers, new clients/members on savings, additionality on increased savings, increased credit size per individual borrower among others.
9. To identify key lessons learnt and present 3 case studies.
10. To provide recommendations for improved delivery of the objectives of the new financial access and inclusion strategy.
11. To establish key sustainability risks and provide practical mitigation measures.

SCOPE OF WORKS

Working closely with MESPT Credit and the Business Development Manager, the consultant will be required to engage the management and technical teams of FSPs as well as sample end borrowers for a wide scope of feedback. The consultant shall be expected to undertake the following:

1. Desk review of MESPT documentation- new strategy for financial access and inclusion, new credit policy, profiles of financial products, letter of offers and loan agreements for different financial service providers, loan portfolio reports, social impact statistics held by MESPT among other.
2. Review of preparatory documentation and interventions of the FSPs. This may include review of committee’s minutes (where necessary), reports, interviews, loan applications forms, marketing materials and any other necessary documentation.
3. Development of tools and approaches to be applied on MESPT staff, Staff of FSPs and end borrowers.
4. Hold in depth discussions with MESPT Management team as per agreed list at inception meeting.
5. Interviews with CEOs and Management teams of various FSPs-preferable hybrid (onsite and online).
6. Undertake end borrowers survey with a target mix of 50% women, 30% youth and 20% Men.
7. Presentation and Validation of findings and recommendation-preferable online forum.
8. Presentation of final report and case studies and all the supporting documentation including field notes, data sets, photo gallery etc

   METHODOLOGY

It is recommended that for maximum value generation for this assignment, the consultant will adopt a participatory approach that include close collaboration with MESPT and FSPs. The consultant will be expected to develop a detailed work schedule that will ensure maximum utility of time and other resources and use proactive engagement methods to generate necessary information from the target stakeholders.

KEY DELIVERABLES

Milestone 1:

1. Inception report highlighting harmonized understanding of the assignment in respect to objectives and expected output, agreed work plan with MESPT, schedule of engagements with FSPs, logistical support, list of documents for desk review (from both MESPT and FSPs) and timelines for the engagement.
2. Tool and approaches differentiated for utility by MESPT team, FSPs and end borrowers to be approved by MESPT.

Milestone 2:

1. Draft reports upon conclusion of in depth discussion with MESPT team, desk review of necessary documents from MESPT and FSPs and interviews with management and technical teams of FSPs per cluster.
2. Draft reports per cluster upon onsite engagements with FSPs, end borrowers and review of any additional information and documents.
3. Draft case studies.

Milestone 3

1. Presentation and Online validation of key findings and recommendations. This will involve the teams from MESPT and FSPs.
2. Presentation of consolidated final report on this assignment to MESPT management Team and Board
3. Presentation of final case studies to MESPT Management Team.

ASSIGNMENT TIMELINES

The assignment will commence immediately after signing the contract with MESPT and will be for a period of 45 working days.

1. CONSULTANT REQUIREMENTS
2. In-depth knowledge and experience in Microfinance finance, Agricultural/ Agri value chain finance, Climate/Green finance, Development finance, financial inclusion, Enterprise development and/or Agricultural Value Chain Development minimum 5 years’ experience.
3. Demonstrable experience in undertaking surveys and assessments within the financial sector including developing tools for data collection.
4. Demonstratable Knowledge of credit and financial risk analysis and management.
5. Master’s degree in relevant field- (Agricultural Economics, Business Management, Finance, Economics, Accounting, Statistics, Mathematics).

INSTITUTIONAL ARRANGEMENT

The Consultant(s) will work under the direct supervision of the 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 and logistical support for field engagements and office space to undertake online interviews and engagements.

DOCUMENTATION REQUIREMENTS

1. Covering letter explaining how your experience addresses the requirements of the TOR.
2. CV(s) of consultant(s) involved in the exercise.
3. Provide a copy of certificate of registration and KRA Pin Certificate where applicable
4. A copy of valid KRA Tax compliance Certificate-individual
5. 3 references of relevant past works, scope, role and contact for the last 3 years
6. Provide detailed proposal with a detailed Work plan demonstrating the number of man-days to be employed and budget for this work.

Technical Proposal that should include:

1. Interpretation of the TORs
2. Methodology to be used in undertaking the assignment.
3. Personnel Capacity Statement.

The following should be under annexes.

1. Relevant experience related to the assignment.
2. Recommendation letters by other firms you have carried out similar assignments.
3. Curriculum vitae of the team that will carry out the assignment.
4. 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 ongoing works being conducted for MESPT.

Financial proposal not exceeding 1 page must include:

1. All rates in Kenyan shillings
2. Any other related costs must be noted.
3. All quotes should be inclusive of relevant taxes.

PAYMENT PLAN

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

1. First payment-30% of agreed cumulative budget upon signing of the contract.
2. Second payment-30% of agreed cumulative budget upon satisfactory completion of Milestone I.
3. Third payment-20% of agreed cumulative budget upon satisfactory completion of Milestone II.
4. Fourth payment- 20% of agreed cumulative budget upon satisfactory completion of milestone III.