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RFP: Consultancy To Develop Strategy Implementation Models and Applicable Products

Synopsis of the Request for Proposal

Solicitation Reference No.RFP/105/IF/2022
Title of SolicitationConsultancy To Develop Strategy Implementation Models and Applicable Products
Issuing Office & AddressAlliance for a Green Revolution in Africa (AGRA)Website: www.agra.org
Point of contact for clarifications, questions and submission of ProposalsAGRA General Procurement,Procurement@agra.org 
Solicitation Issue DateSeptember 14, 2o22
Confirmation of interest in this consultancyInterested consultants/bidders are requested to register on the link below by close of business, September 2022, 12:00PM East African Time. Any additional communication will be shared with those that will have registered on the link below.
For Registration Link click: HERE
Deadline for submission questions and clarificationsSeptember 24, 2022 5:00 PM East African Time
Deadline for Answering questions and clarificationsSeptember 28, 2022 5:00PM, East African Time
Deadline for Submission of ProposalsOctober 19, 2022 5:00 East African Time
Please include “RFP/105/IF/2022” on the subject line in the email
Type of consultantConsultancy Firm
Anticipated Award TypeCONSULTANCY AGREEMENT
Procurement MethodQuality Based Selection (QBS)
Evaluation CriteriaMandatory Eligibility Requirements: 
a) Company profile.
b) Trading license or Certificate of incorporation or Certificate of Registration
c) Valid tax clearance certificate (Applicable to firms originating from Kenya, Rwanda, Ghana, Tanzania, and Mozambique).
d) List of clients /reference letters of similar work carried out.
e) of key personnel.
Evaluation Criteria 
a) Experience of the Consultant firm ………………………………………………………………20%
b) Consultants to include CVS and supporting certifications ………………………………25%
c) Staff schedule, work and deliverable schedule………………………………………………..25%
d) Key Professional Qualification for the Assignment …………………………………………30%
Total:……………………………………………………………………………………….100%
NB. 
1. Minimum technical pass mark for technical evaluation is 75%
2. AGRA will negotiate with the firm that attains the best technical score

Terms of Reference 

Consultancy To Develop Strategy Implementation Models and Applicable Products

  1. Background

Agricultural Finance Corporation (AFC) is a wholly owned Government Development Finance Institution (DFI) incorporated under the Agricultural Finance Corporation Act (Cap 323) of the Laws of Kenya. The Corporation’s mandate is to assist in the development of agriculture and agricultural industries by making loans and providing technical assistance to farmers, co-operative societies, incorporated group representatives, private companies, public bodies, local authorities and other persons engaging in agriculture or agricultural industries.

Financial Sector Deepening Kenya (FSD-Kenya) is a donor funded Trust established in 2005 to support the development of inclusive financial markets in Kenya through “making markets work for the poor” (M4P) approach, which allows agencies to build on a detailed understanding of market systems and a clear vision of the future to address systemic constraints and bring about large-scale, sustainable change. FSD has supported AFC through A2F to conduct a feasibility study on possibility of conversion to an agro bank (in 2017) and through Genesis Analytics in the development of AFC transformation strategy for 2018-2022 (in 2018). 

Alliance for Green Revolution in Africa (AGRA) is a Pan-African development agency aiming at supporting the Africa to achieve food sufficiency and agricultural business efficiently. AGRA has supported AFC with technical capacity to design and/or implement programmes like Women Affirmative Access Window and Programme for Rural Outreach of Financial Innovations and Technologies (PROFIT), a credit risk sharing facility. Other support includes developing innovations aimed at farmers’ efficiency and AFC capacity development that included developing an end-to-end system for credit delivery. 

The design of the AFC current business model is that of a credit-only institution which is premised on Government providing the necessary capital for all its operations. The operating model is majorly retail lending. The organization has had several constraints that made it difficult to effectively perform its mandate. Considering these circumstances, it has become necessary that the Corporation reviews its business model if it must remain relevant and stay close to its mandate.

The smallholder farmers in Kenya usually experience challenges in accessing financing from financial institutions due to a myriad of challenges. The financial sector is characterized by lack of customized loan products for farmers with commercial banks considering smallholders as risky and often lacking capacity for wider outreach to rural farmers. Smallholders are therefore constrained in expansion of their investment as majority are cut off from financial services including credit.

The Agricultural Sector Transformation and Growth Strategy (ASTGS) 2019 -2029 envisions to transform the agriculture sector to a vibrant, commercial and modern agricultural sector that sustainably supports Kenya’s economic development and national priorities. This is to be achieved through three anchors namely: Increasing small-scale farmer, pastoralist and fisherfolk incomes; Increasing agricultural output and value add; and Increasing household food resilience. In the ASTGS, Warehouse Receipt System (WRS) is a key project whose objectives include supporting farmers through provision of storage during surplus periods. This would enable small-holders and other players to access credit using the warehouse receipt as an alternative collateral instrument while stabilizing the prices during surplus production.

The Third Medium Term Plan (MTP III) (2018 – 2022) of Kenya Vision 2030 anticipates that during the plan period, the Corporation will transform into a responsive farmers development bank. Particularly, this will enable it champion financial inclusivity and crowd-in investments to the agricultural sector from the private sector players and other impact investors both locally and offshore. In addition, the Corporation is an implementing agency for the “Big Four” Agenda on ‘food security’ and ‘agro-manufacturing’ as well as the Sustainable Development Goals (SDGs). These are well documented in its disruptive strategic blueprint that guides its transformation between 2018 and 2022. To achieve the transformation, the Corporation is being supported by Financial Sector Deepening (FSD Kenya) and Alliance for Green Revolution in Africa. The ambitious AFC new strategy creates new trajectory paths for the Corporation to be a financial market maker to unlock capital for agricultural sector development. In the new strategy AFC will take a lead role in creating incentives for the financial markets to take risks and capitalize financial sector innovators to increase access to capital. It is envisioned that AFC needs to create new robust business models and financing products to deliver value to its customers sustainably. 

It is against this background that AFC requested FSD Kenya and AGRA for support to develop strategy implementation models and applicable products. FSD Kenya has provided support to development of the first strategy implementation models that include Agricultural Credit Guarantee Scheme financing model, Wholesale lending financing model, Warehouse receipt financing and Mechanization financing models. AGRA has on other hand provided financial support to develop applicable products that will actualize the financing models developed and as a result enable AFC to achieve the strategic objective of driving financial inclusion and access to finance by smallholder farmers and other marginalized groups.

  1. Summary of Project Description

The Corporation with support from the Alliance for Green Revolution in Africa (AGRA) and FSD Kenya intends to develop warehouse receipt and wholesale financing products, train the Corporation’s officers, refine the rollout model, train smallholder farmers and cooperatives and roll-out the products and thereafter organize an investor’s conference to mobilize support and funding from different sources. 

The intended operational models have been drawn from the Corporation’s Strategic Plan (2018-2022), whose strategic objectives are: 

  1. Enhancing Government collaboration to achieve Big Four Agenda and minimize wastage.
  2. Driving financial inclusion in agriculture sector.
  3. Developing a wholesale lending model to de-risk and catalyze private sector agriculture financing.
  4. Diversifying funding sources to ensure organization sustainability and reduce single source funding dependencies.
  5. Optimizing the business model and accordingly enhance operational efficiencies to realize cost savings;
  6. Enhance governance and management framework.

The hypotheses that would guide in the development of the products include:

  1. The Corporation is expected to be a key driver and facilitator of growth in financial access by rural and agriculture dependent populations from the current 35% to at least 60% by 2027 through wholesale lending model and provision of credit using alternative collateral. This will ensure that
    1. There is a percentage increase of agriculture credit portfolio for Participating Financial Service Providers (FSPs) compared to their total credit portfolio. This will be in tandem with the current medium-term average. 
    2. There is an increase in proportion of small and medium scale (SMEs) farmers accessing credit from AFC in comparison to the current total borrowers.
  2. The Corporation is expected to improve its portfolio performance through partnership with the private sector players to deliver capital to end user for sustainability. The task to develop appropriate products has been identified as a viable way for the Corporation to effectively channel agricultural capital and risk tools to smallholder farmers through the existing value chain actors. This is intended to achieve the following.
    1. AFC wholesale lending portfolio Non-Performing Loans (NPLs) will be expected to reduce substantially. The portfolio quality performance is expected to be better than the retail portfolio NPLs. AFC wholesale lending portfolio NPLs will be at portfolio at risk (PAR) or at most +5% of the national industry average NPLs for agriculture sector credit.
  3. New agricultural financing products and approaches can improve efficiency of managing lending risks (production, markets/trading and finance risks) and costs to incentivize FSPs to make investment in new areas in the sector. This will ensure that.
    1. There is a percentage increase of agriculture credit portfolio invested in new areas by AFC or other participating FSPs (new investment– besides their current investment areas).
    2. There is a percentage decline in NPLs for schemes under new financing and/or business model compared to the medium-term average NPLs of existing credit portfolio of AFC or other participating FSPs.
  1. Objectives.

The objective of the exercise is to develop warehouse receipt financing products and a wholesale lending product that will enable AFC effectively to channel agricultural credit to the agricultural sector through the existing value chain actors. The implementation models are expected to drive AFC transformation and impact to ultimately achieve the following impacts by the end of strategy implementation period.

  1. Serve the financial needs (Financial Inclusion) of at least 30% of farmers in Kenya.
  2. Increase youth and women participation in agriculture by at least 20% through increased access to agricultural credit.
  3. Encourage and adopt use of alternative collateral to drive financial access. 
  4. Drive growth increase access to finance from formal sources by rural based and agriculture dependent population from the current 35% to at least 60% in five years.
  1. Deliverables

To meet the above objectives, the following outputs should be achieved. This will be done in close collaboration with the implementation team as follows:

  1. Establish a baseline report on each of the products with clear information on the current financing situation for product, the challenges and recommendation on the most appropriate approach for AFCs in its operating environment.
  2. Develop two financing products: (i) a Warehouse Receipt financing product and (b) a wholesale financing product, each with clear and well-defined features of a credit product applicable to AFC’s lending environment. 
  3. Identify and recommend applicable changes to be factored in the AFC’s credit policy as a result of the new products
  4. Identify and recommend applicable changes to be factored in the AFC’s operational processes and systems as a result of the new products
  5. Identify capacity and technical challenges that AFC and targeted participants may face in implementing each product developed.
  6. Identify and recommend applicable changes to be factored by AFC’s targeted participants in terms their operational processes and systems as a result of the new products and the envisioned integration with AFC operational model 
  7. Review and recommend appropriate amendments to relevant AFC strategy implementation models and appropriate investment papers
  8. Develop a detailed products rollout roadmap based on the above assessment of AFC market ecosystem (including a product pilot testing protocol). 
  9. Develop a report on training needs and with recommendations on priority training areas and approach.
  10. Develop a comprehensive Monitoring and Evaluation and Learning (MEL) tool(s) that will guide reporting and measuring of intended outcomes and impact.
  11. Development of Knowledge Management Framework and tools
  1. Conduct of the work

The assignment will be undertaken in close working relationship with the Project Team comprising of; AFC project implementation team & AFC Management, FSD Kenya and AGRA. A contract will be put in place with AFC and input to the project provided as per the outline above and as may be agreed with Project Team.  The entire support is expected to be provided on-site, off-site, via telephone and online communication whenever necessary. The consultant will manage their own time in consultation with the Project Team through AFC and keep a timesheet indicating level of input under this contract and the specific nature of support.  Project Team through AFC will assist in logistics related to this assignment e.g. travel and accommodation.  The Project Team and AFC will be available to work closely alongside the consultants to share data and relevant resources throughout the process. In case the consultants need physical space during the consultancy period, the space will be made available by AFC. 

  1. Expected Outcome and Deliverables

The desired outcome is the finalization of each of the outputs listed in section 5 above.  These key deliverables will include. 

  1. Inception report detailing the understanding of the assignment and a detailed plan on how the assignment will be carried out. 
  2. A baseline report 
  3. A draft and final report with products features. 
  4. A report detailing capacity and technical challenges and clear recommendations.
  5. Comprehensive monitoring and evaluation and Learning tool.
  6. Knowledge Management (KM) framework and tools
  7. Revised; Baseline survey, product features, report on capacity challenges and recommendations, a monitoring & evaluation tool, strategy implementation models and appropriate investment papers following the pilot testing
  1. Terms of payment: 

Payment will be made based on the deliverables below. 

  1. The initial payments to a maximum of 30% would be made upon signing of the contract and delivery of project inception report (Deliverable 1 above).
  2. Second payment of 40% upon presentation and acceptance of the draft reports (Deliverable 2, 3, 4, 5 and 6 above). 
  3. The final payment to a maximum of 30% would be paid upon finalization of the assignment and delivery of final baseline survey, products, capacity and challenges report, monitoring & implementation tool, strategy implementation models and appropriate investment papers (Deliverable 7 above).
  4. The above payments would be accompanied by related timesheets.
  1. Ownership

The copyright for all material prepared under these terms of reference will pass to AFC, AGRA, and FSD Kenya.  Any or all of the three organizations (AFC, FSD Kenya and AGRA) may publish the reports after commissioning in their own house style.  All final reports should be presented in an electronic format allowing the text and graphics to be manipulated in preparation for publication.  Where a final report is presented in a portable document format (pdf) generated from another format (such as Microsoft Word) it should be accompanied by the original file from which it is generated.  All representations of graphic material (tables, figures, drawings, charts, graphs and photographs) must be able to be reproduced at high print resolution.  Tables, figures, drawings, charts, graphs should be provided in Microsoft Excel or Adobe Illustrator format.  Photographs must be provided in high-resolution JPG images set to minimum of 300 dots per inch (dpi).  Any technical questions regarding these requirements should be addressed to the Project Team Leader.

  1. Requirements

The nature of assignment might require different skills set. Bidders can bid as a consortium with the lead bidder submitting the bid. Invited bidders shall not be allowed to bid as a consortium.   

Mandatory requirements 
Strong background and experience in developing and implementing or guiding implementation of innovative financial products and strategies. (Must have executed at least three similar assignments).
Experience in developing pro-poor, gender and minority groups empowerment strategies.
Strong background in general financial markets development for emerging markets.
Strong background in fundraising with a bias in financial services.
Availability of qualified and experienced personnel to undertake the assignment  
Previous relevant experience in agricultural financing and proper interpretation of the assignment    
Excellent communication skills (both written and spoken English) 
  1. Location and nature of the assignment

The assignment is regional and should be carried out as per the schedule above, the consultant is required to periodically check in with AGRA team in Kenya.

  1. Reporting arrangements

The consultancy team shall report to Head of Inclusive Finance

  1. Evaluation Criteria 

Interested firms shall be evaluated against the following technical criteria:

  1. Experience of the Consultant firm …………………………………………………………………..20%
  2. Consultants to include CVS and supporting certifications ………………………………….25%
  3. Staff schedule, work and deliverable schedule……………………………………………………25%
  4. Key Professional Qualification for the Assignment …………………………………………….30%
  1.  Team Leader (20%)
  2. Other key experts (10%)

Total:………………………………………………………………………………………………..100

  1. Timetable

The assignment is expected to start in late October and last for a maximum of Four (4) months. The bidder is expected to provide an indication of availability and their timeline for undertaking the assignment.

NB:

Selection Method – Quality Based Selection (QBS)

  1. Application Submission Requirements 

a) Technical Proposal

  1. Firms’ registration documents Company profile, Certifications, and accreditations.
  2. Proposed Methodology, approach and workplan with clear timelines.
  3. Detailed reference list indicating the scope and magnitude of similar assignments carried out.  
  4. Proposed key staff, their roles including their CVs, academic and professional certificates.
  5. The technical proposal shall not exceed 20 pages. CVs and copies of academic certificates may be attached as annexes.

b) Financial Proposal 

  1. The firm shall provide a financial proposal for carrying out the assignment. The breakdown of unit and total fees per person (for each proposed consultant) shall be provided. Use the templates provided under Annexes A, B and C for the financial proposal.
  2. Reimbursable costs if applicable shall be quoted separately.  These will be reimbursed based on actual cost incurred.
  3. Professional Fee quoted shall include all applicable Withholding TAX.
  4. VAT shall be quoted separately and is only applicable to firms registered in the following countries (Kenya, Tanzania, Rwanda, Ghana, and Mozambique).
  5. If the financial proposal is silent on taxes, AGRA shall assume that these are inclusive.
  6. Prices must be quoted in USD ($). Contracting and Payment will be made in USD and bidders are encouraged to have a USD bank accounts
  7. The financial proposal shall be sent as a separate attachment and MUST be password protected.
  1. Guidelines for Preparations and Submission of Proposals 
  1. The Proposals shall be prepared in English Language.
  2. The proposals SHALL be submitted to procurement@agra.org by the deadline indicated in the synopsis.
  3. The technical proposal shall not exceed 20 pages.
  4. The proposal and ALL Attachments submitted via email SHALL NOT exceed 10MB.
  5. VALIDITY of the proposal shall be for a period of 90 days from the date of bid closure. 
  6. Financial proposal shall be sent as a separate attachment and MUST be password protected. The password shall be requested from firms that meet the minimum technical score of 75%.

Download the full RFP

https://agra.org/wp-content/uploads/2022/10/RFP-105-IF-2022-Consultancy-To-Develop-Strategy-Implementation-Models-and-Applicable-Products-1.docx