USAID’S KENYA INVESTMENT MECHANISM
SCOPE OF WORK
Consultancy Position: Banking Specialist
Level of Effort (days): 45 working days
Estimated Start Date: on/around June 01, 2021.
Estimated Completion Date: on/around August 31st, 2021.
USAID’s Kenya Investment Mechanism (KIM):
KIM is a USAID funded project that is designed to unlock $400 million in investment for key sectors of Kenya’s economy, including agriculture; horticulture, dairy, and livestock (supported by Feed the Future), energy (supported by Power Africa), regional trade and investment opportunities (supported by the Prosper Africa initiative), women-owned businesses as well as in the WASH, health, and infrastructure sectors. KIM addresses constraints on both the supply and demand sides of investment transactions and is building a market system that will mobilize substantial capital from the public and private sectors. By building local partnerships among stakeholders in the financial system, KIM is stimulating the power of the private sector to accelerate Kenya’s journey to self-reliance.
KIM addresses two principal market failures that have discouraged investors from financing important segments of the targeted sectors: (i) insufficient quality consulting services (financial, transaction advisory, strategy, and business performance); and (ii) limited scalability of financial products tailored to selected key sectors of the economy in the region. KIM provides capacity building support to both business advisory service providers (BASPs) and Financial Institutions (FIs). KIM uses smart incentives to mobilize finance for development in the targeted sectors. These incentives are designed to create a sustainable ecosystem for businesses to access finance and investments needed to expand and grow. Business transactions are further supported by a diverse range of sustainable partnerships–with and among strategic businesses, institutions, government counterparts (county and national) and other development partners. These partnerships will lead to scaling and replicating creative approaches to unlock finance and investments, reduce risks of extending credit to the agriculture and energy sectors, and offer testing of innovative business models that can be scaled.
The Palladium Group:
Palladium is the implementing organization behind KIM. As a global leader in the design, development, and delivery of Positive Impact, Palladium creates enduring social and economic value. We work with foundations, investors, governments, corporations, communities, and civil society to formulate strategies and implement solutions that generate lasting social, environmental, and financial benefits.
For the past 50 years, we have been making Positive Impact possible. With a team of more than 2,500 employees operating in 90 plus countries and a global network of more than 35,000 technical experts, Palladium has improved—and is committed to continuing to improve—economies, societies and most importantly, people’s lives.
The National Treasury’s Credit Guarantee Scheme:
The Government of Kenya (GoK), through the National Treasury (NT) has established the Credit Guarantee Scheme (CGS) to enhance access to credit by providing a partial guarantee for loans advanced to Micro, Small and Medium Enterprises (MSMEs). This is in line with the recently enacted Public Finance Management (Amendment) (No 2) Bill, 2020 (August 3 2020) and publication of the Public Finance Management (Credit Guarantee Scheme) Regulations, 2020 (October 13th, 2020).
There are over 7.4 million MSMEs in Kenya contributing close to 40% of GDP. Despite the central role played by these MSMEs, they face several constraints to growth including access to credit from financial institutions due to perceived high risk. These constraints have been exacerbated by the COVID-19 pandemic, which has had a disproportionately large impact on the MSMEs due to supply chain disruptions and reduced market opportunities. Those that are to access credit are limited to expensive options with unfavorable terms. Recognizing the critical role played by MSMEs and the impact of COVID-19 on these businesses, the NT has established a Credit Guarantee Scheme aimed at supporting MSMEs to access quality and affordable credit, stabilizing the market and protecting jobs.
The management of the Scheme is vested in the CGS Unit. The NT provides guidance on the operationalization of the Scheme and ensures its prudent management, maintaining oversight of the CGS through a Steering Committee.
The NT has provided the initial funding of KSh. 3bn for the Scheme and entered a Risk Sharing Service Level Agreement (SLA) with seven (7) competitively selected Participating Financial Institutions (PFIs). The NT continues to engage other stakeholders and partners to provide additional funding, as demand increases.
The CGS is expected to submit reports to the Cabinet Secretary of the NT on a regular basis on the progress in the implementation of the Scheme. The CGS is deploying a credit guarantee management system to enhance efficiency of the Scheme in booking of guaranteed loans, monitoring and evaluation of performance, processing of claims, risk and compliance management, evaluation of impact and preparation of statutory reports for Parliament. The CGS Management System also aims to cut down costs and increase efficiency by removing manual operations.
KIM wishes to support the National Treasury to implement a successful credit guarantee scheme for MSMEs in Kenya. This SOW seeks technical assistance (TA) by a banking specialist with extensive Kenyan experience to support the establishment and operation of the scheme on a part-time basis initially for 45 days starting on/around June 2021. This SOW represents Phase I of the assignment. It is anticipated that Phase II will involve a one- to one-and-a-half-year full-time secondment to the NT.
1. Provide relationship management services for the existing portfolio of financial institutions during CGS start-up to ensure that institutions meet CGS requirements in key areas: target group, claims management, credit, and operational risk.
2. Support the development of internal operating manuals for the CGS under guidance from the International Credit Guarantee Advisor. Key manuals to be developed in this phase of the assignment are the wholesale risk management framework, the credit risk management framework and PFI selection criteria and operations manual. This will include reviewing/editing existing documents, consulting with relevant stakeholders, and preparing final acceptable manuals for implementation.
3. Support the International Credit Guarantee Advisor to train internal CGS Unit staff on the frameworks.
4. Support the CGS Unit to develop a technical assistance plan for participating financial institutions.
1. Inception Report and revised/contextualized workplan for this assignment.
2. Monthly progress report on each participating financial institution to cover key areas: existing portfolio review and assessment of claims, challenges, and overall performance.
3. Wholesale risk management framework established.
4. Credit risk management system and selection criteria for PFIs established.
5. Operations policy manual established.
6. Training materials on wholesale and credit risk policies developed; training delivered to internal staff.
7. Development of technical assistance plan for participating financial institutions and Scopes of Work for consultants to assist with implementing the TA.
Deliverables Acceptance Criteria:
Deliverables will be subject to review, revision, and final approval by the National Treasury Scheme Manager and KIM Chief of Party or his designee.
Required Qualifications and Experience.
• A bachelors’ degree in business / finance / economics or related field; Master’s degree is an added advantage.
• At least 10 years’ experience in banking, MSME finance, research, and product development.
• Experience lending to a variety of sectors in the Kenyan economy with knowledge of product development/design.
• Experience in financial institution operations, credit policies, risk, and relationship management.
• Understanding or experience with Credit Guarantee Schemes.
• Knowledge of financial reporting/analysis internally and to the Central Bank.
• Strategic thinker with strong business judgement and analytical problem-solving abilities.
• Demonstrated experience in identifying technical assistance needs, developing terms of reference and work plans, and supervising highly technical short-term engagements; and
• Demonstrated experience in identifying partner’s needs and developing appropriate solutions while maintaining effective working relationship with national and international stakeholders.
Level of Effort and Timing
The consultancy is expected to commence o/a June 01, 2021 and be completed o/a August 31, 2021. The level of effort to complete this consultancy is 45 working days across three calendar months. This SOW represents Phase I of the assignment. It is anticipated that Phase II will involve a one- to one-and-a-half-year full-time secondment to the NT.
• The Consultant will report directly to the National Treasury – Scheme Manager who will approve all outputs based on an agreed workplan.
• The frequency of the reporting to KIM as the contracting entity for this entity will be based on the agreed deliverables timelines/workplan.
How To Apply
Interested qualified individual consultants are encouraged to submit their proposals to: email@example.com with reference “Banking Specialist”. To be considered, your proposal must be received by 14 May 2021, at 23:59 hours, EAT (UTC +3).
The proposal submitted should contain the following:
a. At most 3-page documented technical approach on applicant’s understanding of the assignment, how he/she will address each of the elements of the scope of work and tasks as stated above, the proposed methodology, and expected outputs.
b. At most 3-page schedule summarizing past similar assignments including details on title of assignment, dates of the assignment, brief description of the assignment, and evidence of:
- i. Experience lending to a variety of sectors in the Kenyan economy with knowledge of product development/design, financial modelling, and business planning.
ii. Experience in financial institution operations, credit policies, risk, and partners relationship management.
iii. Understanding or experience with Credit Guarantee Schemes.
iv. Experience in the Kenyan banking sector; understanding of credit and compliance with CBK regulations and knowledge of financial reporting/analysis internally and to the Central Bank.
v. Demonstrated experience in identifying technical assistance needs, developing terms of reference and work plans, and supervising highly technical short-term engagements.
c. At most 1-page summary budget (inclusive of all applicable fees and taxes) which should contain proposed professional fees for undertaking this assignment, including an estimated number of hours per each deliverable and an itemization of any other relevant costs.
d. At most 3-page curriculum vitae which should include three (3) client referees.
KIM is obliged by the Kenyan tax authorities to withhold taxes on service fees as well as any applicable VAT. Tenderers are advised to ensure that they have a clear understanding of their tax position regarding the provisions of Kenyan tax legislation when formulating their financial proposals.
NOTE: Palladium reserves the right to select one or more candidates, or no candidates, at its sole discretion.
The successful tenderer will be selected through an evaluation of the technical proposal in line with the Technical Evaluation Criteria Form below. The financial offers of those tenderers reaching a minimum score of 60 will be evaluated to generate an overall assessment for review and selection by the procurement committee of KIM.
Technical Evaluation Criteria Form
No. Criteria for Assessment Marks Score
1. Past Work Experience 20
a) Examples of similar work undertaken – financial sector experience in Kenya, product development and knowledge of credit guarantee schemes; business development and relationship management experience (at least 2 past work examples/ samples provided) 20
2. Understanding SOW 10
b) Understanding of what KIM/NT is expecting from this assignment (Reference -submitted detailed response to the scope of work and tasks) 10
3. Methodology and Approach 20
c) Relevance of the methodology and approach proposed to successfully complete this assignment 15
d) Adequacy of the proposed workplan, including key deliverables and timing 5
4. Technical experience of the consultant proposed 30
e) At least 10 years’ experience in banking, MSME finance, research, and product development. 5
f) Experience lending to a variety of sectors in the Kenyan economy with knowledge of product development/design, financial modelling, and business planning. 5
g) Experience in financial institution operations, credit policies, risk, and partners relationship management. 5
h) Understanding or experience with Credit Guarantee Schemes. 5
i) Experience in the Kenyan banking sector; understanding of credit and compliance with CBK regulations and knowledge of financial reporting/analysis internally and to the Central Bank. 5
j) Demonstrated experience in identifying technical assistance needs, developing terms of reference and work plans, and supervising highly technical short-term engagements. 5
Total Score 80
Minimum score required: 60
Please note that this position is contingent on USAID approval.