MESPT-CREDIT-05-2022: Consultancy for Development of Financial Products (Eligible to Individual Consultants Only)

Country: Kenya

Organization: Micro Enterprises Support Programme Trust

Closing date: 17 Jun 2022

INTRODUCTION

Micro Enterprise Support Programme Trust (MESPT) is a development organization focused on enhancing, Development of Agricultural Enterprises through Market linkages, Agricultural productivity and Food Safety, Financial Access and Inclusion and Green Transformation. MESPT interventions targets small holder farmers and Agricultural Micro, Small and Medium Enterprises (MSMEs) for increased productivity, income generation and enhanced competitiveness for decent job creation, especially among women and youth.

The engagement of private sector towards achievement of the desired results within focus thematic areas continues to be critical and calls for integrated support mechanisms. MESPT has taken facilitative role towards both forward and backward linkages and building partnership for sustainable Agricultural enterprise development.

MESPT has a tripartite business model that entails working with;

1. MSMEs and Small holder farmers – MSMEs comprise Agri entrepreneurs that include small scale processors, aggregators, input providers, traders, off-takers, and exporters who we link to small holder farmers so that they can trade.


2. MSMEs and Financial Services Providers– We link MSMEs to financial service providers that can lend them working capital and asset financing when in need to enhance their operations. We partner with the financial service providers by giving them affordable loans for onward lending as well offer them technical assistance and business advisory services.


3. Smallholder Farmers and Financial Service Providers-We are at the forefront to ensure that the small holder farmers are supported to increase their agricultural productivity and profitability, linked to viable markets for their produce and offered appropriate capacity 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 in Kenya.

STRATEGY FOR FINANCIAL ACCESS AND INCLUSION

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

1. 
   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.


2. 
   MESPT contribution to green transformation agenda- MESPT wishes to significantly contribute to the national agenda in promoting green financing in agricultural sector. MESPT seek 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)


3. 
   Sustainability- The need to contribute to long lasting outcomes and results. Social and Environmental sustainability, build resilience, social inclusion, and sustainable livelihoods.

RATIONALE

Promotion of financial access and inclusion within Agricultural and Green Growth sectors is a critical strategic pillar for MESPT. This pilar is delivered through Credit & Business Development Department. Key functions of the department includes (i) Development of responsive financial products to serve the target groups through identified channels; (ii) Provision of debt capital to Financial Service providers (FSPs) for on-lending to smallholder farmers(SHFs), direct lending to SMEs and Farmer co-operatives for working capital and capex investments; (iii) Provision of Capacity and Technical support to FSPs to increase scale of capital supply to SHFs, SMEs and Farmer Co-operatives; (iv) fundraising to increase scale for debt facilitation; (v) identification of mutually beneficial partnerships to further the overall mission and vision of MESPT especially in achieving increased financial access and inclusion.

To support the financial access and inclusion eco system within Agricultural and green Growth sectors, it is becoming increasingly important to address the appropriateness of financial solutions targeting the sector. We have witnessed increased funding within the SME and Agricultural sectors, however, the fund utilization has been minimal. This has been associated to compelling limiting factors such as lack of collateral, mismatch between reward to risk, high risk perception for the sector, lack of historical track record, poor record keeping, inadequate capacities of the borrowers, high cost of credit, limiting terms and conditions among others.

MESPT, through its financial access and inclusion strategy, envisages opportunities in mitigating some of the above limitations by designing and developing financial solutions that are flexible, affordable and fitting different needs agricultural and green subsectors and targeting formal and informal Financial Service Providers; MSMEs, Farmer- Co-operative Societies and smallholder farmers.

OBJECTIVES OF THE ASSIGNMENT

The objective of this consultancy is to design and formulate credit products for MESPT for Agri and Green financing, both financial and non-financial (off balance sheet) where applicable. The products should be market oriented to enable MESPT remain competitive in the marketplace whilst delivering the mandate of impact creation to the end users.

SPECIFIC OBJECTIVES

The objectives of the consultancy are to:

• Refresh financial solutions offered by MESPT in response to new financial access and inclusion strategy.


• To enhance MESPT market niche in financial access and inclusion space.


• Document internal and external feedback and develop recommendations to guide this consultancy.


• To enhance MESPT internal capacity in financial services sector.


• To embed MESPT relevance in Agricultural and Green financing.

SCOPE OF WORKS

Working closely with the selected MESPT lead clients’ management and MESPT credit and Business development manager, the consultant will be required to;

1. Undertake refreshed market review by

• Engaging 5 financial institutions already working with MESPT


• Engaging 5 financial institutions not working with MESPT


• Engaging 5 informal financial service providers


• Engaging 5 SMEs and 5 farmer co-operatives


• Engaging with Kenya Climate Ventures (KCV), Agricultural Financing Corporation (AFC) and Kenya Union of Savings and Credit Co-operatives Societies (KUSCCO)

1. Undertake, document and share interviews with:

• MESPT management team


• MESPT program officers


• Danida Program Officer

1. Undertake documentary review of:

• Institutional Strategic Plan


• Financial access and inclusion strategy

1. Prepare and share market review findings and recommendations.


2. To design, develop prototype and final flexible and responsive Agricultural and Green financing products that;

• Align with MESPT strategy for financial access and inclusion.


• Are sensitive to different delivery channels.


• Are sensitive to different target groups.


• Are sensitive to different value chain cycles.


• Incorporates key risks and mitigating incentives and initiatives.


• Incorporates blended financing instruments.


• Promotes financing for both climate adaptation and mitigation at enterprise and farmer levels.


• Responds to findings and recommendation from market research as well as internal feedback from key stakeholders.


• Aligned to best practices.


• Addresses the changing market environment and emerging needs and promotes social equity and inclusivity for women and youth.

1. Support MESPT in undertaking staff and board training and sensitization of the developed financial products through workshops (online).


2. Support MESPT in undertaking product validation with key stakeholders. The validation will be conducted through a survey or and online meeting with respective stakeholders. The consultant will be expected to design product validation template for this purpose in case of a survey.


3. Development and sharing of product validation report and final product profiles ready for rollout.


4. Develop one year product rollout and marketing plan in collaboration with credit and business development department.


5. Design, develop, document and train staff on appropriate product performance monitoring tools.


6. Identify and document internal capacity building needs for successful rollout of the developed products


7. Recommend the ideal Non-financial solutions that can be incorporated in the product proposition.


8. Provide sustainability matrix for each proposed product within the specific profiles.

METHODOLOGY

It is recommended that for maximum value generation for this assignment, the consultant will undertake targeted stakeholder engagement either vide online or physical interviews as appropriate. The consultant will also be expected to be authentic and avoid generic product development methods. The consultant is expected to logically apply feedback from stakeholders and test practical applications for maximum utility of recommendations.

The consultant recognize that MESPT is not a conventional financial service provider and thus its objectives are fundamentally different from commercial lenders. With main objective being financial access with social inclusivity, the consult must endeavor to reflect this in the final financial product profiles. The consultant is expected to come up with schedule of activities with breakdown of the days and budget for each activity

KEY DELIVERABLES

1. 
   Milestone 1:
   

Inception report that highlights

• Agreed detailed work plan with MESPT


• Detailed methodology


• List of relevant documents to be reviewed

1. 
   Milestone 2:
   

• Report on market reviews from external and internal stakeholders and documentary reviews.


• Consolidated report (Draft Zero) on prototype financial products and justification/case for each.

1. 
   Milestone 3:
   

Draft 1 comprehensive product development report presented to MESPT Management (after feedback from credit team)

This report should contain the following elements:

• Detailed products names with their corresponding features.


• Specific foreseen risks resulting from the product offering - Detailed risks analysis resulting from roll out of the new products and corresponding risk management models


• Detailed monitoring and evaluation mechanisms and models for evaluating the performance of the newly launched products.


• Proposed marketing plan for the new proposed products.


• Product sustainability matrix for each product.

1. 
   Milestone 4: Presentation to management

Report on staff sensitization and training on new products to management team

Report on product pilot testing to management capturing:

• Name and type of the client


• Client’s feedback and comments


• Amount of credit considered by the client and timeframe of the application.


• Revised Draft 2 report on product development


• Specific product profiles documents for each product with sustainability matrix, risk assessment and mitigation (Macro and Micro)


• Draft 2 marketing plan

1. 
   Milestone 5: Presentation of the final product development report and specific product profiles to Board of Trustees.

ASSIGNMENT TIMELINES

The assignment will commence immediately after signing the contract with MESPT. The assignment will be carried out in a maximum of 45 working days spread over three months. The days need not to be continuous. During implementation of this assignment, periodic (fortnightly) briefing to Credit and Business Development Manager will be required.

CONSULTANT REQUIREMENTS

• Master’s degree in relevant field- (Agricultural Economics, Business Management, Strategy) and 5 years relevant technical experience (Training programs).


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


• Experience in supporting a financial institution in development of AVCF models or and products.


• Experience in conducting similar tasks with reputable organizations/agencies experience of 5 years or more.


• In-depth knowledge and experience in supporting financial institutions in development of Agriculture value chain financing Products.


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


• In-depth Knowledge of risk analysis and management in financial services sector.


• 3 References for similar assignment for the past 5 years, with contact details.

INSTITUTIONAL ARRANGEMENT

The Consultant will work under the direct supervision of the Credit & Business Development Manager. During his/her assignment, the consultant will be provided with all necessary information. We do not expect any charge on transport or accommodation. However, where this arises it will be subject to MESPT perdiem of Kes. 7,000 for the lead consultant and Kes. 5,000 for other for night out irrespective of the County. This caters for all applicable expenditure, i.e., Breakfast, Dinner, Accommodation and other out of pocket expenses and is limited to one lead and assistant consultant. Transport charge shall be limited to AA rates.

DOCUMENTATION REQUIREMENTS

• covering letter explaining how your experience addresses the requirements of the TOR.


• CV(s) of consultant(s) involved in the exercise


• Provide a copy of certificate of registration and KRA Pin Certificate where applicable


• A copy of valid KRA Tax compliance Certificate


• 3 references of relevant past works, scope, role and contact for the last 5 years


• Provide detailed proposal with a detailed Work plan demonstrating the number of man-days to be employed and budget for this work.


• Relevant academic and professional certificates.

PAYMENT PLAN

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

• 30% of agreed cumulative budget upon signing of the contract and satisfactory completion of milestone 1


• 10% of agreed cumulative budget upon satisfactory completion of milestone 2


• 10% of agree cumulative budget upon satisfactory completion of milestone 3


• 30% of agreed cumulative budget upon satisfactory completion of milestone 4


• Final 20% of agreed cumulative upon satisfactory completion of Milestone 5

CONDITIONS

• MESPT reserves the right to accept or reject any proposal.


• Any canvassing will lead to automatic cancellation of the submitted proposal

How to apply

SUBMISSION PROCEDURE

This consultancy is open to individual consultants.

The Financial Proposal and the Technical Proposal files MUST BE COMPLETELY SEPARATE and emailed through procurement@mespt.org and clearly named as either “TECHNICAL PROPOSAL” or “FINANCIAL PROPOSAL”. The subject of the email should clearly capture the description “CONSULTANCY FOR DEVELOPMENT OF FINANCIAL PRODUCTS”. The file with the “FINANCIAL PROPOSAL” must be encrypted with a password so that it cannot be opened nor viewed until the proposal has been found to pass the technical evaluation stage. Once a proposal has been found to be responsive by passing the technical evaluation stage, MESPT shall request via email the proposer to submit the password to open the Financial Proposal. Interested consultants should send their proposals by 17th June 2022 at 17.00 Hours East Africa Time to tender@mespt.org.

Kindly send your clarifications to procurement@mespt.org

Technical Proposal not exceeding 15 pages that should include:

• Interpretation of the TORs


• Methodology to be used in undertaking the assignment


• Time and activity schedule


• Organizational and Personnel Capacity Statement

The following should be under annexes;

• Relevant experience related to the assignment


• Recommendation letters by other firms you have carried out similar assignments


• Curriculum Vitae of the team that will carry out the assignment


• 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

Financial proposal not exceeding 1 page

1. Must include all rates in Kenyan shillings


2. Any other related costs must be noted.


3. All quotes should be inclusive of relevant taxes