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TERMS OF REFERENCEBeneficiary of Assignment:Somali MFI - EthiopiaIntroductionFinancial inclusion works to increase people’s access to and use of affordable financial services. It is not an end in itself, but it enables people to make quick and easy payments; borrow to invest in their farms and businesses; save for the future; and insure against shocks. Mercy Corps uses financial inclusion to help rural women, youth, and people on the move improve and protect incomes and assets, and manage risk. In doing so, we support stronger, more inclusive economic growth that increases food security and reduces poverty in fragile and rural environments.Islamic Finance In Ethiopia, formal financial service providers have commonly excluded Muslim customers. Mercy Corps has facilitated the creation of three Sharia‐compliant MFIs – including Somali MFI (the first in the country) – to provide enterprise and trader credit, savings, money transfers and payment products in the Somali and Afar regions. The largest, the Somali Microfinance Institution (SMFI) has 41 branches that serve pastoralists and livestock traders with 83% female clients and is the only dedicated provider of Islamic financial services in Ethiopia. The Somali MFI, with support from Mercy Corps launched mobile money products and established a fast-growing agent network country’s first commercial mobile banking service to become an agent network to 1966 mobile agents and 41 branches. This will allow an initial 750,000 Ethiopians in the Somali region to access financial services.Background of the TA AssignmentMercy Corps is currently implementing two projects in the Somali Region of Ethiopia which have the goal of improving livelihoods and economic opportunities for local populations as well as refugees. Mercy Corps’ EC-funded STEDE program is being implemented in Fafan Zone and USAID funded RiPA project being implemented in Fafan, Jarar and Sitti zones. Both projects aim to further develop and expand financial inclusion services to their geographical areas, with a particular focus on vulnerable households and market actors that have potential to serve these vulnerable groups.The projects aim to improve the adoption and use of financial services in Ethiopia, particularly Somali Region, by addressing key barriers hindering full access and participation in the formal financial sector. Mercy Corps has a long-standing partnership with Somali MFI, and over the years has supported SMFI to expand its branch network, introduce mobile money and agent services, and introduce products and services. Despite the many successes, there are still significant challenges to overcome in delivering services that have transformational impact at scale for households and key market actors. For example, mobile money services have expanded rapidly, but are currently primarily limited to money transfer services and do not contribute to broader financial inclusion such as access to full branch accounts and credit services. In addition, SMFI is currently applying to re-license as a bank (while maintaining MFI services – a condition of the National Bank of Ethiopia). This process will enable SMFI-Shabelle Bank to introduce innovative products/services targeting new types of market actor, expand its geographical scope beyond Somali Region, and manage transactions across international borders. This transformation offers tremendous opportunities to stimulate more dynamic growth in the region,but lessons from financial institutions in other countries show it can also risk losing focus on the needs of vulnerable customers. SMFI management are committed to maintaining this focus, and managing the transition successfully. SMFI and Mercy Corps are therefore seeking an experienced and qualified consultancy organization to support SMFI to assess institutional performance and develop a strategic vision and implementation plan for the next five years, with a focus on enhancing financial services for MFI target groups (vulnerable groups) and managing the successful transition to relicense as a bank. By helping SMFI to identify and realize its strategic goals and objectives, the plan will drive SMFI forward and allow it to affirm itself as a key player in the Ethiopian financial market.Overview of Somali MFI Establishment, ownership and governance of SMFIThe SMFI was registered on January 31st, 2011 by the National Bank of Ethiopia with support of Somali Regional Government and Mercy Corp, SMFI is a legal registered company governed by General Assembly, Board of directors and Managing Director with seven shareholders the Somali Regional government being one of them. Somali microfinance institution is the first MFI in Ethiopia providing financial services based on Islamic sharia principles and as well as the first MFI in the Somali region with a sharia compliance committee.PERFORMANCE of THE COMPANY as September 30, 2020ActivityDescriptionsLoan outstanding as September 20201,756,524,737.45 ETB# of outstanding clients39,800 Total saving mobilized during the year403,906,432.03 birrPortfolio AT Risk (PAR) 3%Total asset 2,177,944,276.62 birrPaid up capital 501,580,000 BirrCAMEL Bases Assessment scores3.11Ratio of Total Liquid Assets to Total Deposits41.90%CAMEL Bases Assessment scores3.11Objectives and key deliverables of the TA AssignmentThe overarching objective of this assignment is to identify the main bottlenecks and a roadmap to sustainability, profitability and growth for SMFI while identifying opportunities and new insights to strategically drive Somali MFI in affirming itself as a key player in the Ethiopian financial market and transform to a bank (Shabelle Bank). Key deliverablesThe assignment objective will be achieved by supporting SMFI-Shabelle Bank to develop a framework and long-term (e.g. 5-year) strategy and business plan for growth, innovation and impact on vulnerable households in Ethiopia. This will include: Assess current internal and external context: Review SMFI’s existing strategic goals and objectives, and assess performance to-date;Identify challenges with SMFI’s delivery of trusted sharia-compliant products and services;Scan the Ethiopian market, and clearly provide justifications for SMFI to transform to a bank by analyzing similar existing local and international experiences;Provide an overview/market-scan (key challenges, success stories, and learnt lessons) of existing local and international transformations.Work with SMFI to develop a 5-year strategic vision and business plan: The business plan will cover all key areas of the SMFI-Shebelle Bank business, encompassing the objective to develop more impactful MFI services at scale and also addressing the particular issues and topics unique to the transformation;As per collected market insights, clearly provide strategic direction of the Somali MFI-Shabelle Bank ? its Purpose, Vision, Mission, Values. and Initiatives;Describe the new ownership and governance structure, reflecting the new regulatory and supervisory requirements and ensuring that SMFI successfully navigates the transformation process while remaining true to its mission of targeting vulnerable households;Describe SMFI’s target market (e.g. size and share, main competitors, geographic coverage), existing and new products and services, including outreach targets, and delivery channels, including branches and more innovative delivery channelsCreate financial projections to accompany and support the plan and to guide the decision making process. Work with SMFI to develop a roadmap to operationalize the strategy / business plan: Develop a roadmap for formulation and operationalization of the strategy / business plan. This should include: (i) A transformation plan; (ii) A MIS / digital technology plan; and (iii) A plan for strengthening sharia-compliant products and services. The transformation plan should describe all the activities to be completed for a successful transformation, and a timeframe and budget for those activities. The plan should be based on an assessment of SMFI’s readiness to transform, reflecting SMFI’s current capacity and the external environment (e.g. policy and regulation), and describe what needs to be done to develop SMFI’s capacity as it transforms. The areas that should be addressed by the plan include: ownership and governance; HR management; MIS; marketing and competitive positioning, including product development and refinement; risk management; financial management, internal audit procedures and capacity. The MIS / digital technology implementation plan should describe all the activities to be completed for the successful implementation of a new MIS, and provide guidance on key decisions related to digital transformation, including a timeframe and budget for those activities. This should be driven by clearly articulated business objectives, including a definition of the business problem, goals and objectives. It should be supported by a change management plan reflecting the required changes to business processes and structures. The plan will guide SMFI through the entire process of the MIS implementation, including a needs assessment based on a definition and prioritization of the functional and operational requirements, the selection of an MIS, and the implementation process itself.The plan for strengthening sharia-compliant products and services will include recommendations for new products and services, capacity-building approaches for management and branch staff, and marketing and trust-building for communities. It should include recommendations for SMFI-Shebelle Bank on whether and how to introduce products in line with the new NBE regulation permitting moveable assets (including livestock) as collateral; The roadmap should suggest revisions to the overall governance and operating model/framework for SMFI-Shebelle Bank, and how will it create synergies, alliances and value.Describe the internal changes and resources required to realize these goals and targets, including those in the following areas: Human Resources, including a new / revised organizational structure, recruitment and training needs, salary incentive structuresManagement Information Systems, including plans for new hardware and softwareDigital Financial Services, including a high-level DFS strategy and implementation plan that identifies the key objectives and impacts of digitization, and identifies and prioritizes the digital opportunities across the organization, including delivery channels, process and products Financial resources, including funding requirements and available sources.Required improvements to guidelines, procedures, products and manuals in particular in relation to bank transformation. Expert ProfileAt least ten-year demonstrated leadership in strategic and business planning, financial planning and analysis, program development and business development requiredSolid experienced in project management, development and facilitation of planning sessions with senior leaders, directors and management.Solid working knowledge of Ethiopian and East African microfinance and banking sectorLocation and Time ScheduleThe Technical Assistance project is expected to start in January 2020 and end in April 2020 ( (max. 3 - 4 months). Supervision and ReportingThe lead expert will report to the CEO of Somali MFI and will coordinate his/her activities. The lead expert will keep the parties informed on the progress of the Technical Assistance Assignment and discuss any challenges s/he is facing. Administrative InformationSomali MFI will be providing the necessary logistics support, namely the training infrastructure in terms of projectors, workstations, training room, training materials (and stationeries), local transport during working hours, access to phone lines, internet and photocopying facilities. Somali MFI will be providing all the necessary documents and promptly and timely response to the TA Operator.Instructions for the Technical and Financial Proposal Technical and Financial Proposal Standard Forms shall be used for the preparation of the Proposal according to the instructions provided in the bidding documents of the Request for Proposal (RFP). The potential TA Operator should prepare a budget based on the proposed methodology and resources required for the assignment. It shall indicate full fees requested together with per diems and transport cost.USD is the currency to be used in the financial proposal and the currency in which the contract will be paid.Needs and deliverables may change throughout the course of the consultancy. It is expected that the consultant be able to adjust as needed in coordination with the STEDE and RiPA program team. All deliverables must be approved by William Baron, MC Director of Programs Patrick Cantin, Chief of Party – RiPAKhadar Ahmed Abdi, CEO, Somali MFINour Mohammed Ismail, Deputy CEOto be considered final.The Consultant(s) will report to: Khadar Ahmed Abdi, CEO, Somali MFINour Mohammed Ismail, Deputy CEO, Somali MFIDiyad Hujale, STEDE program, Consortium Manager Mahlet Seifu, RIPA program The Consultant(s) will work closely with:Khadar Ahmed Abdi, CEO, Somali MFI, (khadmaydh@)Nour Mohammed Ismail, Deputy CEO, Somali MFI, (nurmax426@)Meseret Tefera, MC Ethiopia Senior Advisor – Market Systems DevelopmentTender details:The consultant or firm should submit a proposal including the proposed methodology and approach, relevant experience and references and financial proposal. The consultant(s) should propose the number of days required for each of the deliverables in this Terms of Reference.The consultant(s) CV(s) should also be submitted as an attachment to the proposal to SMFI and Mercy team by 11th January 2021 by 17.00 East Africa Time (EAT). Clarification and questions can be emailed to et-tender-questions@ until 7th Jan. 2021 5:00pm. Eligible companies/firms have to submit the following:CV of consultant(s) and company profile (if relevant);Statement of interest, proposed methodology and work plan;Copies of renewed business registration certificates;Financial proposal with a detailed breakdown of costs (including all related costs) in Dollar mentioning the terms of payment;Technical and financial proposal separately and in a sealed envelope; to Mercy Corps Ethiopia head office, P.O.Box: 14319, Addis Ababa or Electronic copy can be sent to tenders@ Failure to comply with any of the conditions indicated above will result in automatic rejection;Application deadline is 11th January 2021 at 17.00 East Africa Time and proposals sent after this date may not be considered;Please collect the Tender package from Mercy corps Addis Ababa office located around 22, AddisAbaba or request by email from et-tender-questions@ Mercy Corps reserves the right to reject the bid fully or partially. ................
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