Consultancy Services to Update the Microfinance Regulatory Framework for Sudan

1. Background

The Alliance for Financial Inclusion

The Alliance for Financial Inclusion (AFI) is the world’s leading organization on financial inclusion policy and regulation. Currently, nearly 100 member institutions make up the AFI network including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 85 developing countries and emerging markets. AFI empowers policymakers to increase the access and usage of quality financial services for the underserved through sustainable and inclusive policies and an effective use of digital technologies.

Policies developed and implemented by the members of the Alliance contribute to a range of the Sustainable Development Goals. by Setting their own agenda, AFI members harness the power of peer learning to develop practical and tested policy reforms that enhance financial inclusion with strategic support from both public and private sector partners.

AFI has 7 Working Groups (WGs): Consumer Empowerment and Market Conduct Working Group (CEMCWG), Digital Financial Services Working Group (DFSWG), Financial Inclusion Data Working Group (FIDWG), Financial Inclusion Strategy Peer Learning Group (FISPLG), Global Standards Proportionality Working Group (GSPWG), Inclusive Green Finance Working Group (IGFWG) and SME Finance Working Group (SMEFWG).

As the key source of policy developments and trends in financial inclusion and as the primary mechanism for generating and incubating technical content in the network, the Working Groups serve as “communities of practice”. Providing a platform for knowledge exchange and peer learning among policymakers to share, deliberate and deepen their understanding, the working groups offer leadership and expertise in their respective policy fields and support the network to monitor new developments in emerging fields.

The knowledge generated via the working groups is disseminated for implementation by a range of capacity building activities such as Joint Learning Programs, Member Trainings, Trainings by Private Sector Partners. The practical experience members garner from engaging in peer learning based capacity building is then applied by members as in country implementation projects which are supported by the provision of financial or technical support to AFI member institutions in conducting activities that aim to deliver financial inclusion policies, regulations, supervisory tools or enablers for the development of policies, such as national financial inclusion strategies

The working groups receive strategic guidance and insight from the High-Level Global Standards & Policy Committee, while the Gender Inclusive Finance Committee, supports WGs in integrating gender considerations into all aspects of their work and support members in fulfilling their Denarau Action Plan (2016) commitment to promote women’s financial inclusion.

AFI members have made further commitments in a range of other accords which can be read here.

The AFI’s five regional initiatives support policy implementation in Africa (AfPI), Latin America and the Caribbean (FILAC), the Pacific Islands (PIRI), Eastern Europe and Central Asia (ECAPI) and the Arab Region (FIARI).

2. The Central Bank of Sudan (CBoS):

The Central Bank of Sudan established through the Bank of Sudan Act of 1959 started its activities in 1960 around the objectives of maintaining and sustaining the financial and monetary stability of the financial sector. In 2006, a comprehensive organizational and administrative restructuring of the Bank was carried out to achieve an improved coordination, which paved the way to the inception of new departments, among them, the Microfinance Unit which was established in 2007. Even though the microfinance sector in Sudan has existed since the 1970s it has really started to develop formally since the establishment of the Microfinance Unit in Central Bank of Sudan, and the Unit has the mandate to regulate, supervise and promote the microfinance sector in Sudan.

The Microfinance Unit was established through the implementation of the first strategy to support the microfinance sector led by the Central Bank of Sudan, the “Vision for the Development and Expansion of the Microfinance Sector (2007-2011)”. This strategy called for the establishment of a specialized entity in the Central Bank of Sudan to supervise the sector. Since then, Central Bank of Sudan has launched two other strategies to support the microfinance sector:

1. Comprehensive Strategic Plan for the Development of Microfinance in Sudan (2013-2017)
2. Microfinance Strategic Plan for Growth (2021-2025)

The Microfinance Strategic Plan for Growth (2021-2025) is a growth-oriented strategy aimed at advancing the microfinance sector in line with international standards and best practices. The main goal of this strategy is to elevate the Sudanese microfinance sector to an international level regarding and is built around the five main pillars of 1) regulations, 2) microfinance practices, 3) microfinance infrastructure, 4) networking, and 5) linkages to international specialized agencies.

In this context, the Central Bank of Sudan has requested AFI to provide technical assistance to the Microfinance Unit to support them in their objective to implement pillar 1 of the current microfinance strategy which is to “enhance a conducive policy environment”.

In parallel, the Central Bank of Sudan is currently formulating the first Sudanese National Financial Inclusion Strategy (NFIS) which aims at building on digital financial services to achieve more financial resilience and expand the access to and increase the use of quality formal financial services.

3. Overall Objective:

The overall objective of this technical assistance is to support the implementation of the first pillar of the microfinance strategy in Sudan, through the upgrading of the microfinance policy and regulatory framework to be in line with international standards and best practices and providing recommendations for the development of gender sensitive policies and regulations for the microfinance sector.

4. Project Components:

a. Rationale

The objective is to develop an enabling set of regulations and policies to sustain a harmonious development of the microfinance sector with a focus on women’s financial inclusion. One of the main targets of the microfinance strategy is to increase the number of female clients of microfinance institutions from 30% in 2021 to 50% by 2025.

Moreover, the technical assistance will ensure that the upgraded microfinance regulatory framework and the Microfinance Strategy currently existing will highly contribute to the main objectives of the national financial inclusion strategic objectives increasing the quality of financial services offered to a majority of the population.

In this regard, the CBOS is requiring the services of a Consultant to conduct a landscape review of the Microfinance sector in Sudan, as well as provide appropriate gender sensitive recommendations, upgrade microfinance policies and regulations and propose new regulations to support mesofinance.

b. Activities

There are three main activities :

i. Assessment of the current microfinance regulatory framework: The consultant will provide an overview of the authorities involved in the regulatory framework of the microfinance sector (insurance authority, ministry of finance…) and will review the key microfinance policies and regulations and make recommendations considering in particular the following priorities for the MFU :

• Prudential and supervisory regulations supporting a sustainable development of different financial services (microloans, micro-savings, micro-insurance, remittances), supervision practices including the overall enforcement policies and sanctions for microfinance institutions,
• Consumer protection and market conduct supervision to guarantee fair and transparent conditions to customers and users, proper redress mechanisms, and avoid the risks of over-indebtedness,
• Digitization of the microfinance sector and development of digital financial services regulatory requirements, supporting the development of agent network,
• Gender considerations to enhance women financial inclusion through the microfinance sector.

The consultant will also take into consideration the ongoing development of the national financial inclusion strategy and the needs to harmonize policies and promote financial inclusion through the microfinance regulatory framework.

ii. Benchmarking of micro and mesofinance regulations and policies : The consultant will analyse the microfinance and mesofinance regulation and applicable policy framework of AFI member countries with a similar institutional and economic context (such as, Tunisia, Kenya, Rwanda among others) that have managed to create an enabling and gender-sensitive microfinance and mesofinance regulatory framework. Particular attention needs to be paid to pandemic-related issues related to microfinance in general and the integration of new international developments regarding relevant policies and regulations, e.g. financial consumer protection standards, complaint handling procedures including sanctions and compliances requirements. This analysis will also take into consideration AFI members countries that have developed a regulatory framework enabling the inception of DFS and Digital Financial Services Providers.

iii. Upgrading of microfinance policies and regulations / brand-new regulation for mesofinance : Building on the results of the benchmarking exercise (including lessons learned and recommendations provided) and the current regulatory framework assessment, the consultant will identify gaps and provide recommendations to ensure a conducive regulatory framework including gender-sensitive policies and an enabling legal environment for digital financial services. The consultant will also support the draft of policies and regulations needed to complete the regulatory framework and build a sound, digital and gender sensitive legal environment for the development of the microfinance and mesofinance sector. The regulations should be drafted in Arabic as institutional language is Arabic in CBOS, while regular updates and final report summarizing the results of the consultancy should be presented in English language.

5. Scope of Work:

The consulting firm/consultant will produce a report on a conducive microfinance regulatory framework for CBoS and the MFU to implement the pillar 1 of the microfinance strategy.

The following sets out the scope of work and specific deliverables :

• Inception meeting : Preliminary discussions with CBoS – MFU and AFI teams on the scope of work, deliverables, partners, support needed, reporting process, and related timelines.
• Assessment of current regulatory framework (report): Overview of stakeholders and review of microfinance policy and regulatory framework including some initial recommendations for an upgraded set of policy and regulations including gender-sensitive policies and DFS policies. The consultant will need to have a part of his mission onsite to understand the institutional context and legal environment.
• Benchmarking of microfinance and mesofinance regulatory framework (report) : Presentation and lessons learnt from different microfinance and mesofinance policy and regulation frameworks in place in AFI members institutions. The selection of countries as part of the benchmarking exercise will take into consideration countries with institutional, political, and economical contexts which are similar to Sudan
• Upgrading of microfinance policies and regulations and proposal of new regulation supporting mesofinance (report and drafts) : Recommendations for upgrading microfinance policy and regulatory framework, and new mesofinance regulation, including an action plan for the upgrading of the policies with the outcomes expected from the updated regulatory framework. Drafts of important and essential regulations will be presented to CBoS – MFU for their review and validation.

6. Timelines:

The scope and tentative timelines for this assignment is detailed below :

Activity – Output/ Deliverable Timeline

1. Appointment of Consultant and start of consultancy – April 2022

• Signed Agreement with Consultant

2. Inception Meeting – April 2022

• Agreement scope, expected deliverables, support needed, reporting and related timelines

3. Analysis of Sudanese microfinance regulatory framework including stakeholders – April 2022

• Report on the current organization : lessons and recommendations

4. Analysis of microfinance and mesofinance regulatory best practices among AFI members – May 2022

• Benchmarking of microfinance and mesofinance policy and regulatory frameworks

5. Support to the drafting/ or drafting of microfinance and mesofinance policies and regulations – June 2022

• Action plan for upgrading the regulatory framework / Action plan for adding new mesofinance regulation Microfinance policy framework updated / Mesofinance regulation drafted**6. Review of the policy and approval from CBoS – June 2022**

• Microfinance and Mesofinance policy framework approved by CBoS – MFU

During the assignment, CBoS – MFU and AFI teams will closely oversee, guide, and support the consulting firm/consultant by sharing internal expertise; linking them with key stakeholders; and providing inputs to deliverables. This assignment involves interactions with key stakeholders.

7. Travel:

This consultancy includes a five-day travel to Sudan to engage with national stakeholders and assess the regulatory and institutional framework. Considering the political situation and health condition in the country and elsewhere, this will be carefully assessed by the consultant and the authorities in CBOS to guarantee sound and safety travel conditions for all the parties involved. The travel budget is required to be included in the financial proposal.

8. Consultant Experience:

• The applicant should be a consultant or consulting firm with a proven record in financial sector development, financial inclusion policies, or related field.
• The consultant or consulting firm should have expertise and working knowledge in law and microfinance policy and regulatory framework.
• Good understanding of the Arab region financial inclusion policies and challenges. A knowledge of the Sudan’s microfinance strategy would be an advantage.
• Proven skills in drafting regulation and policy frameworks, with a good knowledge of processes and collaboration with legal department in central banks, ministries and public authorities.
• To have done similar exercises and achieved similar assignments is an added advantage.
• The team leader should have at least 7+ years of relevant experience and hold a master’s degree in a relevant field.
• Fluent written, spoken and presentation skills in Arabic and English.
• Experience working with governmental institutions and public authorities.
• Ability to maintain and keep confidential information within the scope of the project.
• Ability to complete assignments within deadline.

9. Reporting:

Throughout the contract period, the consultant will be reporting to the Project Lead from the CBoS – MFU supported by the Technical Lead from the AFI team supporting this assignment**.**

10. Proposal Submission Information:

• Conflict of Interest acknowledgement & sign off [Mandatory]
• Workplan [Mandatory – if stated/required]
• Company Registration [Mandatory]
• Company Profile
• Full CVs of lead and support consultant highlighting relevant work
• List of previous or current clients with whom similar work has been conducted
• At least one (1) sample (link or attachments) of a published technical paper on financial inclusion authored exclusively by the lead consultant.
• Reference letter (if any);
• Disclosure statement, if individual has full time or part time employment contract with any organization or government official or indirect involvement in this tender;[Mandatory – for individual participant]

Submission of Technical and Financial Proposals:

• Kindly submit technical proposal using the template given in annexure 1 and financial proposal using the template given in annexure 2, along with the documents listed above
• Technical and financial proposal must be submitted in two separate PDF files, using the given
• The two proposals are to be submitted to the designated email

AFI reserves the right to disqualify incomplete submission and

non-compliance to the above requirements. Notification result will only be sent to shortlisted candidates upon completion.

11. Criteria for Evaluation:

Technical Scoring

1.

Academic Qualification – 20%

• Academic qualification and CV of the team (10%)
• Demonstrated understanding of the scope of work (5%)
• Writing and oral presentation of similar work (5%)

2. Experience and technical competence of the key staff for the assignment – 50%

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• *Adequacy for the assignment (*30%)

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• *Regional/Global experience (*20%)

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3. Adequacy of the proposed work plan and methodology in responding to the Terms of Reference – 30%

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• *Technical approach and Methodology (*20%)

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• *Workplan (*10%)

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Evaluation of technical and financial proposals

The evaluation and decision on the best proposal will be made based on the combined criterion, where companies are qualified by means of a score that takes into account the combined valuation of the technical and financial proposals, with the following weights:

1. a) Technical Proposal: 70% (Seventy percent).
2. b) Financial Proposal: 30% (Thirty percent).