RFP-AFI-2022-024 Consultation Services for BCEAO Studies for DFS, Taxation and Conducting Training in WAEMU

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).

In Country Implementation (ICI) is a strategic initiative under AFI Phase III Strategy reinforcing the second Strategic Objective that relates to supporting members to implement financial inclusion policies. The key policy focus on undertaking the ICI program is to enhance AFI’s peer learning approach in advancing member-based and endorsed accords that aim to accelerate financial inclusion in the AFI network. Under the ICI program, AFI is supporting its member institution – BCEAO to undertake studies in open banking and fiscal policy to improve digital payments to inform regulator in the West African Economic and Monetary Union (WAEMU) as well as build the capacity of its supervisors in fintech developments.

COMPONENT ONE (1) – STUDY ON THE CONTRIBUTION OF OPEN BANKING TO THE DEVELOPMENT OF DIGITAL FINANCIAL SERVICES IN WAEMU

2.0 Introduction and Context:

Open Banking, is defined by the Bank for International Settlements (BIS) as the sharing and leveraging of customer-permissioned data from banks with third-party developers and firms. This new procedure has the potential to transform the financial sector by enabling new non-banking entities, including FinTechs, to access the financial data of traditional bank customers, with a view to offering new products and services such as account aggregation and payment initiation. It can also enable traditional banks to improve their financial service offerings by creating the tools they need to provide a digital environment that is more responsive to their customers’ needs. This also applies in the WAEMU region, where partnerships between banks and FinTechs are growing in number, resulting in increased request to access, share and use customer data. However, open banking also carries operational risks, particularly in terms of protecting data against misuse.

To better grasp the issues and challenges pertaining to open banking in the Union, particularly in terms of its risks and opportunities, the Central Bank of West African States (BCEAO) intends to recruit a consultant to assist BCEAO in the conduct of a study on the contribution of open banking to the development of digital financial services (DFS) in the West African Economic and Monetary Union (WAEMU).

2.1 Objective

The objective is to understand the open banking landscape in jurisdictions under the Central Bank of West African States (BCEAO), specifically with emphasis on risks, opportunities and its potential to the development of digital financial services (DFS) and financial inclusion in the West African Economic and Monetary Union (WAEMU).

Specifically, the study will seek to develop,

• an assessment of the opportunities and risks associated with open banking in the Union;
• a review of open banking’s contribution to the development of digital financial services and financial inclusion in the Union;
• identification of possible gaps or challenges with existing regulations in the promotion of open banking;
• Provide high level contextual recommendations to enable open banking ecosystem.

2.2 Scope of Work

Undertake comprehensive desk research and in-depth interviews within the following scope:

• analyze the positive and negative impact of sharing personal/banking/financial services data with third parties in all eight (8) WAEMU member countries;
• measure the support provided by the region’s open banking initiatives with a view to the development of digital financial services;
• identify policy and regulatory actions to be implemented for the promotion and supervision of open banking in the Union;
• conduct an assessment to determine the degree of openness of banks with their non-banking partners, as well as the ability of the parties to secure the transactions and exchanges resulting from these partnerships;
• Develop a report highlighting the key findings (i.e. gaps, barriers, enablers, etc.), risks, opportunities and recommendations;
• Work with AFI and BCEAO to organize and implement a workshop (in French) on open banking with selected staff of BCEAO and stakeholders in the financial sector. The consultant is expected to take the lead on the following:
  • Draft agenda and session briefs for the workshop,
  • Facilitate identification and engagement of speakers for the workshop,
  • Lead, facilitate the workshop,
  • Along with BCEAO, validate findings of the study and assess willingness/readiness/capacity of banks and other stakeholders to adopt open banking,
  • Submit report on workshop with highlights of meeting and recommendations
• Develop a report on the desirability of promoting open banking with appropriate recommendations on procedures for its implementation in the WAEMU environment;
• Develop and submit project report and updates (preparing workplans, timelines, updating timelines, drafting minutes of project meetings etc.) as and when needed.

2.3 Deliverable

• A study report on open banking and finance
• Organise and deliver a virtual workshop to present the findings of the report.
• A report on outcomes of workshop on open banking and finance with stakeholders and BCEAO.
• Summary of in-depth interviews and any surveys undertaken.
• Periodic updates related to project progress and monitoring (timeline, timeline updates, meeting minutes, progress reports etc)

COMPONENT TWO (2) – COMPARATIVE STUDY ON THE TAXATION OF INNOVATIVE FINANCIAL SERVICES IN WAEMU COUNTRIES AND THE IDENTIFICATION OF REFORMS TO PROMOTE FINANCIAL INCLUSION IN THE WAEMU

3.0 Introduction and Context:

Financial inclusion refers to the process by which natural and legal persons can access basic financial services provided by formal financial institutions. It is an effective means of promoting sustained and inclusive growth, as well as a useful tool for combating poverty.

In view of its contribution to the economic and social development of the population, several initiatives are being implemented by different countries, with a view to developing new mechanisms for people to access financial services that meet their needs.

In most cases, these initiatives have resulted in the adoption of financial inclusion strategies aimed at facilitating the achievement of financial inclusion goals. On June 24, 2016, the West African Economic and Monetary Union (WAEMU) adopted Decision No 012/24/06/2016/CM/UEMOA, a Regional Financial Inclusion Policy and Strategy for the WAEMU. This Strategy is a roadmap intended to lay the foundation for a joint vision of financial inclusion in WAEMU and set priorities for the promotion of the people’s access to financial services. The vision underpinning this Strategy is one of “permanent access to financial services and effective use, by the people of the Union, of a diversified range of suitable financial products and services at affordable costs”.

In order to implement this Strategy, the following five priority areas were defined:

• Priority 1: promoting an effective legal & regulatory framework and supervision;
• Priority 2: reforming and reinforcing the microfinance sector;
• Priority 3: promoting innovations that foster financial inclusion;
• Priority 4: reinforcing financial education and protection for consumers of financial services;
• Priority 5: setting up an enabling tax and policy framework for financial inclusion.

This last priority is particularly salient, as taxation is essential in a modern economy to finance public spending aimed at meeting key economic and social objectives. However, it is important to take due note of the efficiency losses it can entail, as well as the fairness of the tax system to the public, the practical applicability of tax legislation and the enforcement of the obligations it sets out.

The actions identified vis-à-vis the implementation of Priority 5 therefore include a comparative tax framework study with a view to promoting financial inclusion in WAEMU.

3.1 Objectives

The overall objective of the comparative study on the different fiscal frameworks for innovative financial services in WAEMU is to provide support to the Member States of the Union by helping them define and implement structural reforms that promote the development of financial inclusion on a sustainable basis.

3.2 Scope of Work

1. The study will be conducted in all eight (8) WAEMU member countries.
2. Undertake extensive desk research on the scope of policy on taxation of innovative digital financial services in the WAEMU.
3. Undertake relevant in-depth interviews with relevant regulators, policy makers, financial service providers in the WAEMU.
4. Undertake in depth-interviews with regulators and relevant stakeholders in jurisdictions across Africa and other regions to provide a benchmark for the WAEMU.
5. Develop a comprehensive study report with the following components/ deliverables.
6. Develop an inventory and analyze national and regional initiatives on taxation of innovative financial services, including an international benchmark.
7. Identify and analyze tax reforms undertaken or being validated in WAEMU countries, with a view to promoting SME financing and the development of factoring in the area,
8. Document the tax reforms undertaken or in the validation process in each country to promote financial inclusion, including through the establishment of a suitable tax framework for microfinance institutions and incentives for large billers, with a view to the adoption of digital payments.
9. Identify the main obstacles to initiatives aimed at reforming the tax framework for innovative financial services.
10. Study governments’ interest in undertaking tax reforms that can promote financial inclusion for the people, as well as financial institutions’ interest in submitting to such reforms (demonstrating the advantages or benefits as well as the costs of the reforms identified or suggested),
11. Make proposals for specific reforms to be undertaken at the national and regional levels to promote a tax incentive framework for innovative financial services geared towards promoting financial inclusion in WAEMU.
12. Work with AFI and BCEAO to organize and implement a validation workshop with selected staff of BCEAO and stakeholders in the financial sector. To this end the consultant will lead on the following:
    1. Draft agenda and session briefs for the workshop
    2. Facilitate identification and engagement of speakers for the workshop
    3. lead, facilitate this workshop
    4. Submit minutes with highlights of meeting and recommendations.
13. Submit a final study report incorporating outcomes of the validation workshop.
14. Develop and submit project report and updates (preparing workplans, timelines, updating timelines, drafting minutes of project meetings etc.) as and when needed.

3.3 Deliverable

• A report on the comparative study on the taxation of innovative financial services in WAEMU countries and the identification of reforms to promote financial inclusion in the WAEMU.
• Successful completion of eight rounds of workshops (One-day workshop for 60 representatives in each of the eight WAEMU countries);
• A report on outcomes of validation workshop with stakeholders and BCEAO.
• Summary of in-depth interviews and any surveys undertaken
• Periodic updates related to project progress and monitoring (timeline, timeline updates, meeting minutes, progress reports etc)

4.0 Timeline for components one & two:

Work is proposed to be undertaken from August 2022 to March 2023. The estimated level of effort for each component within this period would be sixty five (65) working days (per component).

The key timelines are summarized in the table below:

Timeline

Deliverable Activities and Deliverables

Refer link in ‘How to Apply’ section for more detailed information.

COMPONENT THREE (3) – TRAINING FOR FINANCIAL SECTOR SUPERVISORS ON BUSINESS MODELS OF E-MONEY AND FINTECH MARKET PARTICIPANTS

5.0 Introduction and Context:

Electronic money is a fast-growing business in the Union. In fact, over the period from January 2018 to the end of December 2020, the number of holders of electronic money accounts rose from 62 to 94 million, while the volume of transactions increased from 1.9 to 3.5 billion, respectively valued at 23.5 billion CFA francs and 41.5 billion CFA francs in total.

In addition to the diversification of e-money services and issuers, this strong growth also stemmed from the widespread adoption of digital financial services by people traditionally excluded from the formal financial sector.

The e-money ecosystem is marked by a preponderance of partnerships between banks and technical operators, particularly telecommunications companies. At the end of December 2020, there were forty-two (42) electronic money issuers, including seventeen (17) bank-operator partnerships, twelve (12) bank-FinTech partnerships, twelve (12) electronic money institutions and one micro-finance institution.

Several categories of partnerships can be observed, namely:

• partnerships for e-money issuance, management and distribution, in which electronic money is issued by a bank in collaboration with a technical operator. Under this type of partnership, in addition to a technical operator, banks also use distributors to market their services, and
• partnerships around innovative service offerings, such as digital credit and savings services, rapid money transfer services, operation of intra-regional and international service corridors, artificial intelligence, mass payments, insurance services, payment aggregation services and contactless payment services (QR codes, NFCs).

An analysis of these partnerships has highlighted a need to clarify the roles and responsibilities of the partners in relation to the authorizations defined by the current regulations, a lack of knowledge of the technologies used by financial institutions and the failure of digital credit to comply with usury rate regulations.

The emergence of FinTech and the sophisticated payment services on offer have prompted the Central Bank of West African States (BCEAO) to set up a FinTech Committee to promote the harmonious development of financial innovation in WAEMU and to analyze trends and issues with regards to regulation and supervision in that area. As part of this process, there are plans to develop a system for the monitoring of financial innovation with a view to controlling the risks inherent in such activities.

Market participants request advice from BCEAO on products that are increasingly complex because they combine several technologies or several types of instruments governed by different regulations (digital credit services, payment aggregation, artificial intelligence, etc.).

Capacity building for BCEAO staff on the business models developed by market participants is intended to help supervisors identify the risks associated with the innovative new products and services offered by market participants in recent years.

5.1. Objectives

The main objective of the training is to strengthen the capacities of BCEAO officials with a view to better understand the emerging FinTech and financial innovation ecosystem, identify and manage the risks related to the development of emerging fintech business models and put forward an approach to effective supervision in the Union.

5.2 Expected results of the training

The main result expected is the strengthening of the capacities of BCEAO officials vis-à-vis the business models developed by market participants. Specifically, at the end of the training, supervisory staff’s capacities will be strengthened with in order to:

• better understand the issues and risks associated with the business models developed by market players,
• revise the supervisory framework for Electronic Money Payment Services (EMPS), and
• improve oversight of the innovative new systems, instruments and services on the market.

5.3 Location and duration of the training

The training would be organized as an online/virtual course. The participants will mainly include staff from Central Services directorates in charge of monitoring and supervising e-money issuance and distribution activities at BCEAO Headquarters and in the Union’s Main Branches.

The duration of the training will be five (05) working days.

5.4 Scope of Work

• Undertake a comprehensive compilation /documentation of the business models within the e-money and fintech industry;

• Develop a relevant risk based training curriculum/agenda for financial sector supervisors on the business models;

• Plan and develop the following materials for virtual training under the guidance of AFI and BCEAO:

  • Develop training materials which address/provide the following;
    1. provide theoretical and practical appreciation of the business models from a risk perspective,
    2. Provide industry relevant lessons, use cases etc. on supervising the identified business models and risk issues,
• • Draft session briefs for the speakers and participants,
    – Prepare presentation materials/slides.

• Deliver virtual training to officials of BCEAO:

  • Facilitate identification and engagements of speakers. This should cover industry experts including AFI members. Work with AFI to identify relevant experts from within the AFI network,
  • Work with BCEAO to identify relevant officials for the training through a structured criteria,
  • Assist with facilitating sessions or providing technical expertise as speaker(s),
  • Provide a report on highlights and key learning post the training – training and evaluation report,
  • Develop and submit project report and updates (preparing workplans, timelines, updating timelines, drafting minutes of project meetings, etc.) and when needed.

5.5 Deliverable

• A risk-based agenda/curriculum on the fintech industry and its business models in the WAEMU
• Plan, organise and deliver virtual/online training
• Presentation slides for the training
• Report on the training with key outcomes
• Period updates related project progress and monitoring (timeline, minutes, project reporting etc)

5.6 Timeline for component three:

Work is proposed to be undertaken for a period of three months, starting from the onboarding of the consultant. The estimated level of effort within this period would be twenty (20) working days. The key timelines are summarized in the table below:

Timeline

Deliverable Activities and Deliverables

Refer link in ‘How to Apply’ section for more detailed information.

6. Travel:

Travel will not be required for component 3 of the assignment. However, travel within the WAEMU region would be required for components one and two. The cost for travel would be directly covered by BCEAO. Hence it should not be included in the financial proposal.

7. Consultant Experience:

The consultant/consulting firm undertaking this assignment should have the following qualifications at minimum:

• The Consultant must have at least 8 years proven experience in the area of digital financial services, Fintech or financial sector regulation;
• Experience in the field of open banking, taxation in the financial sector, financial sector supervision would be preferred;
• Experience in the development of financial sector policy or related research;
• Experience in conducting training for financial sector players, especially regulators.
• Proficiency in quantitative and qualitative research;
• The Consultant must hold a diploma at the master’s level in at least one of these fields, provide relevant references;
• Consultant/ consulting firm must have excellent French and English language proficiency with experience conducting research and academic/policy writing in French.

The following experience would be desirable:

• strong knowledge of the fintech and financial sector and regulations in WAEMU;
• proven experience in conducting studies on the economic and financial sector in WAEMU.

8. Additional Information:

• In bidding for this project, prospective consultants may:
• Bid for 1 of the 3 components;
• Bid for 2 of the 3 components; or
• Bid for all the 3 components.
• A consulting firm or consortium of consultants with capacity to undertake all 3 components concurrently would be preferred.
• The Consultant must respect the confidentiality of all the information communicated. With this in mind, he or she shall undertake:
  • to keep confidential all documentation and information of any kind which may be communicated to him or her by BCEAO or of which the Consultant may be apprised in the performance of his or her work;
  • to use such documentation and information for the sole purposes of performing the assigned work and not to any other purpose, even in part. Accordingly, even after the completion of the Consultant’s work, he or she may in no case share such documentation or information with third parties or use it in connection with third parties without prior written authorization from BCEAO; and
  • to return, without delay or upon request by BCEAO, any document deemed confidential.

9. Reporting:

The consulting team will be accountable to the project committee which comprises of representatives from BCEAO and AFI. Further – through out the contract period, the consulting team will report to the project implementation leads from AFI and BCEAO.

11. ADMINISTRATIVE INFORMATION:

11.1 Disclaimer

The final decision on selection of a consultant/consulting firm for this project rests with AFI management team and with the Inquiry. Only shortlisted and successful firms will be contacted.

11.2 Proposal Submission Information

Proposals will be due with the following requirements for submission:

Submission Deadline:

27 July 2022

Documents to be submitted with Annexure 1 and 2:

Firm

• Company Registration.
• Company Profile.
• List of previous or current clientele on similar work.
• Proposal (if any besides Annexure 1);
• Working papers/writing sample or research relevant to this assignment.

Individual

· Full CVs with list of previous similar work;

· Disclosure if individual have a full time or part time employment contract with any organization or government official or indirect involvement in this tender

· Joint or Partnership Agreement (if any)

· Conflict of Interest Disclosure form

· Reference letter (if any)

· References with email contact

· At least one (1) sample work (link or attachments)

Method of Submission:

By email to AFI’s Procurement & Contracts Office at

[email protected]

Submission of Technical and Financial:

Kindly submit the followings:

1. Using the template/format given in Annexure 1 (Technical) and Annexure 2 (Financial) and/or additional technical proposal for more information.

2. Technical and Financial proposal must be separated in different pdf.

3. Financial proposals must be USD only. Whereas for Malaysian applicants with Business Registration under Suruhanjaya Syarikat Malaysia (SSM), please submit your financial proposals in MYR.

4. Proposal to be submitted to the designated email address.

5. AFI does not tolerate copyright infringement, including but not limited to infringement, in the form of plagiarism. Consultant or Consulting entity awarded a contract by AFI shall take responsibility to ensure that the authored works, produced in parts or as an entirety of the deliverables stated in this RFP does not infringe on copyrights.

AFI reserve the right to disqualify incomplete submission, overlapping submission, non-compliance to the above requirements. Notification of results will only be sent to shortlisted candidates upon completion.

11.3 Retention of Proposals

All proposals submitted become the property of AFI. AFI will make all reasonable efforts to maintain proposals in confidence and will release proposals only to personnel involved with the evaluation of the project. Proprietary information should be identified in each proposal.

11.4 Criteria for Evaluation

Refer link in ‘How to Apply’ section for more detailed information.

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:

a) Technical Proposal: 70% (Seventy percent)

b) Financial Proposal: 30% (Thirty percent)

How to apply

Interested applicants are expected to submit a proposal