Expression of Interest are invited for CGAP International Models and Lessons of Financial Cooperative Consolidation The Building Rural Incomes through Digital, Gender-Equitable SACCOs and FPOs (BRIDGES) Project is a joint initiative by CGAP, the World Bank and Dalberg financed by the Gates Foundation that seeks to develop a digital, gender-equitable SACCO and FPO network in Kenya that drives private sector investment in the agricultural sector and supports increased productivity and incomes of rural women participating in NAVCDP and FSRP agricultural value chain transformation programs. Over the past 3 years, BRIDGES has successfully tested and demonstrated digitization and automation models for SACCOs and FPOs, identified local technology solutions to support those models, and developed tools to help SACCOs improve their services for rural women. The project developed tools to support capacity building and effective operation of SACCOs, a basic offering of financial services targeting women farmers, and a coordinated dialogue between government agencies implementing and rolling out these solutions. As a result, BRIDGES successfully expanded access to financial services for rural women in Kenya, reaching nearly 290,000 SACCO members and 300,000 FPO members. It also advanced digitization and governance reforms across these institutions, resulting in more transparent and efficient service delivery. However, these gains were constrained by persistent infrastructure challengessuch as unreliable electricity and the internetand capacity constraintssuch as bookkeeper, treasurer and management skills. Moreover, while digital data management systems were developed, their institutional uptake has continued to remain limited. And many SACCOs that were created under NAVCDP and FSRP remain small, with minimal success in mobilizing members, savings, and issuing loans. Going forward, sustaining project SACCOs and FPOs and achieving project objectives will require three things: (i) identification of SACCOs and FPOs that meet minimum requirements to adopt a digital operating system and maintain it in the long-term versus those that will need to consolidate through partnerships with other, more capable SACCOs and FPOs (e.g., through unions or a hub-and-spoke aggregation); (ii) deeper investment in SACCO and FPO training and governance as well as a stronger focus on facilitating strategic partnerships with ecosystem actors to enhance operations; and (iii) a better model of oversight to ensure SACCO and FPO compliance with project participation requirements. As part of strengthening SACCOs performance, the project is advising the Government of Kenya (GoK) in its development of a vision for strengthening the agriculture-focused SACCO sector in the country. About the Assignment Despite the project having supported SACCOs with Inclusion Grants for startup requirements (rent, remuneration of staff, automation) and a Line of Credit for Agriculture (Revolving Fund) to boost their capital for onward lending to members, they still continue to register low business growth. This is caused by a myriad of challenges, such as low membershipand hence low shares and savings for lending and investmentswhich can negatively impact the SACCOs operations and their sustainability. They may fail to grow and remain relevant in the prevailing competitive financial sector as fewer members result in high operational costs, low-income levels generated from interest on loans and investments, and poor loan repayment. Other challenges include poor compliance with governance practices and regulatory frameworks, inadequate financial literacy and poor managerial capacity. Although most of the SACCOs have been automated, they have not been fully digitized in their operations due to the capacity of the staff posing difficulties in mining reliable data for informed decision making. The inability of these SACCOs to pay for the annual license for the MIS software due to low business volumes may lead to inefficiency in operations, thus compromising accountability and transparency. In addition, the majority of the newly established SACCOs have not yet attained the break-even point. Most SACCOs hardly realize adequate income to cater for their basic operational costs and thus offer limited services to approximately 355,040 members. GoK is proposing the introduction of Agricultural SACCO Unions to address these issues by unifying SACCOs under a strong umbrella organization to improve financial inclusion, enhance service delivery, build institutional capacity, and promote sustainable agricultural development for small-scale farmers. The objective is to enhance their operational performance through prudent management practices, automation, and provision of efficient union-led shared services. Within this context, CGAP is looking for a Consultant or Firm to support the development of a roadmap for strengthening Kenyas SACCO sector through consolidation and introduction of secondary and tertiary support structures (i.e., unions, federations, etc.). Scope of Work The assignment will cover the following: I. Organization of a study visit for the GoK and BRIDGES partners to 1 or more market(s) with strong, consolidated SACCO sectors, and facilitation of an exchange of experience and learnings with policymakers, relevant support organizations and leaders of the SACCO sector. II. Review of SACCO viability across a database of over 1000 project SACCOs, applying an internationally proven grading system that identified those SACCOs with solid financial operations and strong viability, those with gaps and challenges that could be addressed through certain interventions, and those that are unviable and require significant attention to be liquidated or converted into access points of larger, viable SACCOs. III. Recommended actions that strengthen the existing network of SACCOs in Kenya, based on the grading and international good practice. Methodology and Specific Tasks The Consultant/Firm will work in close coordination with the Task Manager and other CGAP team members. Key tasks include: I. Grading Support the project in categorizing participating SACCOs to identify the number and geographic spread of viable versus unviable SACCOs and inform next steps in strengthening the network of ag-based SACCOs through consolidation. - Propose an internationally used grading model and adjust as needed, based on CGAP inputs. - Apply the grading model to project SACCOS, based on the existing database. - Identify how many SACCOs fall into each of the 3-4 categories based on their financial and operational performance and long-term viability and map their geographic spread across counties. II. Study Visit Demonstrate an example of a solid, federated/unionized financial cooperative sector that uses branches and agents to effectively reach rural and remote communities across the country. Facilitate an exchange of learnings about the process of implementing this model that can inform similar reforms in Kenya. - Develop a brief overview of the models that have been introduced in other markets and what Kenya could learn from each of these, in order to facilitate selection of 1-2 countries for the study visit. - Develop a schedule and briefing materials for the study visit - Organize and facilitate exchanges with relevant local stakeholders Areas of interest to be covered in the study visit: - How is the financial cooperative sector regulated? o Can and do all cooperatives take deposits? High-level understanding of the regulatory framework under which they operate. o How are deposit-taking cooperatives supervised? o How do SACCOs target and effectively serve the ag sector? - Is there deposit insurance for the SACCO sector? o How does it operate? Is it linked in any way to the DI organism that applies to the mainstream banking sector? o How was it formed? - What is the performance of the SACCO system? o How many SACCOs exist, how many are rural, what is the distribution of size (in terms of members, and volume of loans), what kind of loans do they offer? - What is the federal model and what happens at every level? o What are the functions of unions (or second-level organizations)? o Is there a third level organization (i.e., a federation)? And if so, what are its functions? o Whats the business model at each level, incl. how do financial cooperatives, unions, federations, etc. sustain themselves? o Is there an organization that provides shared services, especially Tech/CBS services? o Is there an apex model that provides liquidity or other financial services to SACCOs? - How was consolidation implemented? o Who led it? What was the motivation? o Small cooperatives: § Were smaller cooperatives operating on their own or were they linked with larger cooperatives? If linked, what was the model followed: merger, acquisition, hub-and-spoke model? § Were any cooperatives closed? How was the termination/closure handled? § Were new cooperatives created? What was the process of creating new cooperatives? § What training and handholding was provided to them throughout this process? o U Tender Link : https://wbgeprocure-rfxnow.worldbank.org/rfxnow/public/advertisement/6071/view.html
