REQUEST FOR PROPOSAL: TECHNICAL ASSISTANCE TO UGANDA DEVELOPMENT BANK TO ACCELERATE SUSTAINABLE AGRICULTURE FINANCE AND INVESTMENTS TO TRANSFORM THE AGRICULTURE SECTOR IN UGANDA

RFP/INCLUSIVE FINANCE/2019

Synopsis of the Request for Proposal (Individual Consultant)

Solicitation Reference No. RFP/INCLUSIVE FINANCE/2019
Title of Solicitation Technical Assistance to Uganda Development Bank to Accelerate Sustainable Agriculture Finance and Investments to Transform the Agriculture Sector in Uganda.
Issuing Office & Address Alliance for a Green Revolution in Africa (AGRA) Website: www.agra.org
Point of contact for clarifications, questions and ammendments AGRA General Procurement, Procurement@agra.org
Email Address for submission of Proposals/ Quotes AGRA General Procurement, Procurement@agra.org
Solicitation Issue Date December 13th, 2019 Local, East African Time.
Deadline for Answering questions and clarifications December 18th, 2019 17:00 Local, East African Time.
Deadline for Submission of Quotations January 6th, 2020 17:00 Local, East African Time.   Please include the subject line “RFP/INCLUSIVE FINANCE / 2019: Technical Assistance UDB” in the email
  Anticipated Award Type   INDIVIDUAL CONSULTANCY AGREEMENT
Evaluation Criteria Bidder Must provide the below listed information   Mandatory Eligibility Requirement Evaluation Criteria Total weight: 100%


TERMS OF REFERENCE (TOR)

  1. OBJECTIVE OF THE ASSIGNEMEMT

To engage an independent consultant for Technical Assistance to Uganda Development Bank to Accelerate Sustainable Agriculture Finance and Investments to Transform the Agriculture Sector in Uganda.

  • BACKGROUND

Uganda Development Bank with support from Alliance for a Green Revolution in Africa intends to develop a strategy to accelerate sustainable agricultural finance and investment to transform agriculture in Uganda.

AGRA Founded in 2006, the Alliance for a Green Revolution in Africa (AGRA), is an African-led, African-based organization focused on putting smallholder farmers at the center of the continent’s growing economy by transforming agriculture from a solitary struggle to survive into farming as a business that thrives. As the sector that employs most Africa’s people, nearly all of them small-scale farmers, AGRA recognizes that developing smallholder agriculture into a productive, efficient, and sustainable system is essential to ensuring food security, lifting millions out of poverty, and driving equitable growth across the continent. AGRA currently works in 11 countries namely, Kenya, Uganda, Tanzania, Ghana, Nigeria, Mozambique, Mali, Burkina Faso, Ethiopia, Rwanda and Malawi.

AGRA’s 2017-2021 strategy seeks to catalyze an inclusive agricultural transformation in Africa by increasing income and improving food security for 30 million farming households in the 11 focus countries. An inclusive financial system that enhances access to financial services for agricultural small and medium sized enterprises (SMEs), farmer-based organizations (FBOs) and farming households, is a critical factor in transforming farming from a solitary struggle to survive into a business that thrives.

Timely access to a wide range of affordable financial services like payments, savings, insurance and loan products is crucial for SMEs, farmer-based organizations (FBOs) and farming households, in order to:

1.       Invest in improved technologies such as seeds and fertilizers and in agricultural machinery,

2.       Manage irregular cash flows that are inherent to the agricultural sector.

3.       Become more resilient to external shocks such as drought and market volatility,

4.       Grow their reach and scale, create jobs and contribute to economic growth.

In Africa, more than 50% of the population is involved in agricultural activities while less than 1% of banking credit goes to this sector (AGRA/AASR, 2017). According to IFC, African SMEs generate about 58% of total employment and 33% of GDP on the continent, but they receive on average less than 5% of bank financing. The agricultural sector has traditionally been avoided by Financial Services Providers (FSPs) even when ample liquidity exists in their balance sheets. Despite the presence of abundant business opportunities in agriculture, FSPs lean towards lending to other sectors, non-agriculture household needs and/or invest in government securities. Even if financial services are available to the agricultural sector, they are often concentrated in well-structured value chains such as export-oriented cash crops and wealthier farmers. The costs of the services are generally high, and the variety, volume and quality of financial products on offer are often limited.

Despite the importance of the agricultural sector to African economies, access to finance remains a key challenge restricting the growth of the sector that is crucial for job creation and economic growth on the continent.

The Uganda Development Bank Ltd (UDBL) was established by the Government of Uganda (GoU) in order to promote the country’s economic development by undertaking specific objectives stated in its mandate. UDB was founded as the country’s development finance institution through the Uganda Development Bank Act of 1972. While now defunct, this Act established Uganda Development Bank with the mandate to: –

  1. Profitably promote and finance viable economic development in Uganda by assisting in the establishment, expansion and modernization of key sectors as well as by providing advice to clients as it relates to establishing and expanding businesses in these sectors;
  2. Provide finance in the form of short, medium and long term secured loans:
  3. Acquire shareholding in viable businesses; and
  4. Make funds available for reinvestment by selling any investment of the company when and as appropriate.

The overall mandate is to operate as Uganda’s development finance institution, particularly through interventions in priority sectors and in line with the Government of Uganda’s development priorities to improve quality of life.

The National Development Plans identifies priority sectors and key public and private delivery partners that will drive achievement of strategic objectives for the country to achieve middle income status by 2040. As a development and policy Bank, it is recognized by the Government that UDBL is a key entity in implementing many interventions outlined in the NDP, particularly those that relate to provision of affordable finance to facilitate and catalyze private sector investment and support growth and development of Small and Medium sized Enterprises. UDBL is therefore a key factor in the Private Sector Development Strategy of the Government of Uganda and the development of the country at large.

The Bank continues to consolidate the impact of its recent successes to play a more pivotal role in fostering economic growth that is inclusive.  To this end, in line with its purpose of “improving the quality of life for every Ugandan”, the Bank will seek to support Uganda’s growth in a green and sustainable manner while cognizant of, responding to and adapting to the 21st century challenges and opportunities.

To achieve its purpose and mandate, the board approved three High Impact Goals, two of which have agriculture as the main sector of intervention. These two goals are (i) to reduce poverty, where the Bank seeks to uplift several Ugandans still living below the poverty line above the poverty line and (ii), to build a sustainable food system in the country (iii) and promote agro industry. This is to help assure food security in the country in the wake of impacts of climate change among others.

  • PROBLEM STATEMENT

Uganda Development Bank has had tremendous investment in the Agriculture sector, however the impact is still dismal compared to the country’s need, and the sector is still faced with; (i) Low production and productivity of the farmers, (ii) About 43.2% are in subsistence and small holder  farming, (iii) Harvest and post-harvest loss is still very high at 40%, (iv) Export volumes are still low, (v) Food insecurity still exists in the country, (vi) Agriculture methods are less Resilient and can’t guarantee sustainability of the sector.

UDB therefore recognizes the urgent need to transform the agricultural sector in the country through an innovative medium-term value chain finance programme, fully integrated into other support services required to develop sustainable system for agricultural value chain. However, the bank is challenged and unable to deliver such a service due to lack of a proper agriculture finance strategy. The current mode of finance is not well structured and hence can’t deliver strong scalable impact in the country and largely still conventional. UDB is looking at positioning its self as a key Agriculture Value Chain Finance Services provider able to undertake major National Agriculture finance programs. It is for this reason that UDB has approached AGRA for support it in the development of a clear agriculture finance strategy and systems that will address the gaps identified.

  • OBJECTIVES OF THE ASSIGNMENT

To provide UDB with Technical Assistance (TA) in collaboration with AGRA’s technical staff and Uganda Agribusiness Alliance (UAA) to develop a clear agriculture finance strategy that addresses the needs of Small, medium, large farmers, agro processors and Value chain actors such as Agricultural SMEs and Farmer groups to effectively participate in the agricultural transformation in Uganda.

  • SCOPE OF WORK
  • The scope of work for the consultant includes compiling of a comprehensive agricultural financing/lending strategy that enables the bank to achieve its high impact goals of Reducing poverty, Food security and Agro industry. The strategy should address the needs of small, medium, large and agro processors, large farming schemes and allied value chain actors in the Agriculture sector and will include:
  • Appropriate Organization structure to deliver the strategy with relevant operational systems and structures in the Agriculture Unit, including, I) efficient agricultural desks or services and, ii) improving staff capacity (requisite personnel skills) for each lending strategy (e.g. small holders versus large-scale players), iii) support to set up relevant Management Information Systems to support the institutions’ M&E, oversight and decision-making functions
  • agriculture finance standards and structures that mitigate risk exposures in the sector for the respective categories of clients.
  • Document suitable Agriculture Finance policies and procedures with related agriculture lending processes and procedures suitable to the different categories of target clients.
  • Document systems for credit processing, including credit application, credit risk assessment, credit scoring tools and other relevant credit processes taking into consideration the target client which include small holder farmers, medium, large scale and Agro processors.
  • Document developed financial products suited to respective beneficiaries and value chain actors.
  • Document alternative channels to ease credit dissemination and accessibility suited to the targeted beneficiaries.
  • METHODOLOGY AND TASKS

In undertaking the assignment, AGRA in collaboration with the consultant will not be limited to the following methodology;

  1. Carry out consultations with the Board, top management and operations/technical teams.
  2. Carry out meetings and consultations with the key stakeholders of the bank and agriculture sector including government, MDAs, development partners and other relevant agencies.
  3. Identify best practice Agriculture services providers in the world to develop better strategies suitable to Uganda and UDBL.
  4. Synthesize the study on the agriculture finance sector in Uganda already conducted by Uganda Agribusiness Alliance (UAA) including characteristics, key challenges, players, opportunities and how the sector can be boosted.
  5. In collaboration with UAA articulate agriculture finance policy issues that would have an impact on the agri-finance strategy for UDB key among them (i) Review the current Agri Finance strategy of the Uganda and benchmark it against prudential guidelines and sample competitive forces; (ii) Evaluate the impact of the lending environment in Uganda and how the strategy could adapt to changes;
  6. Support the bank to articulate a good Agri Finance Strategy: – (i) Identify key drivers of strategy and gaps as well as recommendations for these gaps; (ii) Carry out a SWOT analysis of the strategy; (iii) Give recommendations on Capacity Building tools, timelines and frameworks and (iv) Give a monitoring and evaluation framework on the implementation suitable to the bank’s customer segments.
  7. Carry out a capacity needs assessment to identify the exact needs of Uganda Development Bank. Identify and understand their current levels of capacity in relation to offering financial products and services to the agriculture sector.
  8. Develop capacity to enhance Agri Value Chain Finance products: – (i) develop a catalogue of existing products and proposed product designs; (ii) hold discussions with stakeholders; (iii) carry out a performance review of the products and their contribution to strategy; and (iv) ideation for new product rollout/ review of existing products to improve reach/profitability/efficacy of products and provision of product prototyping tool
  9. Assess the staff capacity in agriculture value chain financing: – (i) develop a framework for assessing capacity for agriculture lending; (ii) obtain feedback from UDBL on the capacity of staff in responding to their need for Agriculture lending; (iii) hold a participatory forum on capacity building solutions for UDBL; (iv) carry out peer/regulatory benchmarking, case study and best practices of Agri capacity building; (v) recommend capacity building program for the client with resources, timelines and milestones; (vi) provide a progress report against the baseline.
  10. Assess Credit Management System, procedure and policies.
  11. In collaboration with UAA Enhance learning for Agri financing policy – (i) report on the learnings from successes and failures of the capacity building program and (ii) hold a close out workshop with discussion centered on the learnings that can be incorporated in Agri-Finance policies.
  • OUTPUT AND DELIVERABLES

A detailed and comprehensive Agriculture finance strategy suitable to the bank strategic interests, its stake holders and the country at large. Able to deliver the high impact goals of the bank which incorporates the following:  

  • Recommended appropriate Organization structure to deliver the strategy with relevant operational systems and structures in the Agriculture Unit, including i) efficient services delivery, ii) Staff capacity development, iii) Management Information Systems, (iv) Research and M&E.
  • Recommended internal systems to support credit processing from credit origination to disbursement and monitoring including; credit risk assessment, credit scoring tools and other relevant credit processes taking into consideration the target client which include small holder farmers, medium, large scale and Agro processors.
  • Developed Agriculture finance standards suitable for small holder, medium, large scale and Agro processors including credit process and financing structure.  
  • financial products suited to respective beneficiaries and value chain actors and related agriculture lending processes and procedures suitable to the different categories of target clients.
  • alternative channels of dissemination of credit and accessibility suited to the targeted beneficiaries’ categories.
  • Recommended comprehensive and prioritized capacity building interventions, clearly indicating the capacity building objectives and expected results or outcomes.
  • APPLICATION SUBMISSION REQUIREMENTS

The proposal should include:

  1. Technical Proposal
  2. Relevant experience related to the assignment;
  3. Understanding and interpretation of the terms of references;
  4. Methodology to be used in undertaking the assignment;
  5. Curriculum Vitae;
  6. Consultant work plan/activity schedule.
  • Financial Proposal
  • A breakdown of the financial proposal in USD indicating daily rate and the total time for carrying out the assignment.
  • Applicable withholding taxes should be quoted separately;
  • If the financial proposal is silent on taxes, AGRA shall assume that these are inclusive;
  • Use template provided in Annex 1 for financial proposal.
  • PERIOD OF PERFORMANCE

The assessment will be undertaken in maximum of 2 months with anticipate start date of mid-January 2020.

  1. CRITERIA FOR EVALUATION

The following criteria should be used during technical evaluation:

Technical Criteria

  1. Qualification of the individual Consultant relevant to the assignment: [20%]
  2. Experience in carrying out similar assignments: [40%]
  3. Technical approach and methodology: [30%]
  4. Relevant experience in the region: 10%

Total weight: 100%

  1. PROPOSALS
  • The proposals SHALL be submitted to procurement@agra.org by January 6, 2020 17:00 East Africa, Local Time
  • The proposal and ALL Attachments submitted via email SHALL NOT exceed 10MB
  • Interested Consultant MUST Provide the following documents:
    • Identification documentations of Bidder (Valid Passport or National Identification certificate)
    • Technical Proposal (including technical approach/methodology; work plan; and CV.
  • Financial Proposal quoted in USD inclusive of all professional fees, reimbursables and applicable taxes (The Financial Offer shall be password protected. The password shall be requested from the best selected consultant).
  1. OTHER CONDITIONS OF ASSIGNMENT ARE AS FOLLOWS:
  2. PRICES to be quoted in USD. Bidder shall include all professional fees, reimbursables and all taxes required to deliver the assignment.
  3. PAYMENT will be made as follows:
  4. Inception Report-                      10%
  5. Draft Report-                            30%
  6. Final Report-                            60%
  7. VALIDITY of your proposal shall be 90 days from the date of bid closure.

Annex 1: DOWNLOAD Summary of Costs, Breakdown of Remuneration and breakdown of reimbursable expenses template here – https://agra.org/wp-content/uploads/2019/12/RFP-CSD-369-2019-Cross-Border-Trade-Hotline-templates.docx

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