RFP-AFI-2023-10 Consultancy Services for the Development of Knowledge Tools and Capacity Building for the Implementation of ESRM in Ecuador

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 90 member institutions make up the AFI network including central banks, ministries of finance and other financial policymaking or regulatory institutions from over 76 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. Project Overview:

Climate change and its effects are considered one of the main problems affecting humanity, since it constitutes a critical risk, not only for people but also for savings and credit unions, since the increase in temperature, changes in Rain cycles, landslides and floods generate various environmental impacts such as loss of livestock and crops, increases in the prices of agricultural products, diseases, and unemployment, which compromise the payment capacity of partners or clients.

All these affectations aggravate the poverty, inequality and insecurity that persists in the country. These events are accompanied by the displacement and migration of the population, with repercussions that can reach alarming magnitudes in the agricultural and maritime sectors, mainly affected by environmental impacts.

The presence of savings and credit unions in rural areas contributes to the channeling of resources towards various sectors, especially agriculture, turning the sector into a powerful ally to implement climate change mitigation and adaptation policies.

To support the country’s climate change mitigation and contribute to its commitment to the Paris Agreement, the Superintendence of Popular and Solidarity Economy (SEPS) saw the potential of working on inclusive green finance in the entities of the popular and solidarity financial sector, so through the resolution SEPS-IGT-IGS-IGJ-INFMR-INR-INGINT-2022-003 in May 2022, with the support of AFI, the control standard for environmental and social risk management in savings and credit cooperatives and mutual savings and credit associations for housing was issued, with the purpose of ensuring that the entities carry out a correct environmental and social risk management of credits based on the economic activity of the member or client as part of the financial intermediation process, reducing economic risks and protecting financial stability.

The issued standard is to be applied progressively over a period of two years. However, given that the resolution is new, the entities of the popular and solidarity financial sector need more guidance for its adoption and application. It is also necessary to have a minimum monitoring and information framework to ensure the understanding and correct application of such standard.

3. Project Background:

In Ecuador, the Savings and Credit Unions have an important presence in rural areas, their products and services have diversified, and they place more than 60% of the microcredits in the country. While in 2012 its assets were USD 6,027 million, at the end of 2019 its assets reached USD 15,569 million and the number of partners (clients) also increased, from 5 million to 7.8 million in 2019. Seven years ago, these entities granted USD 4,562 million in loans to their partners and in 2019 they reached USD 11,861 million, equivalent to around 30% of all formal credit delivered in the country.

Ecuador has a rich biodiversity, ranking 17th in the world, being a privilege for the country, but at the same time it represents a huge environmental responsibility for its citizens, considering that it is also an oil exporting country. Its agricultural sector represents 6% of its Gross Domestic Product in 2018. The country also recognizes that climate change is also affecting its agricultural sector which originally accounted for 21% of the country’s GDP in 1990. Climate change has increased risks with global warming leading to an increase in drylands that are no longer suitable for agricultural production, if no climate adaptation efforts were made to mitigate this risk.

The Superintendence of Popular and Solidarity Economy (SEPS) in order to support the mitigation of climate change in the country and contribute to its commitment to the Paris Agreement, promotes sustainable and inclusive finances with the purpose that entities have access to green financing, in order to promote the development of the agricultural sector and MSMEs; reducing exposure to risk derived from the environmental and social risks of their partners or clients, so financial institutions have to ensure that the financial and operational sustainability of those who have benefited from a loan is not undermined by adverse impacts on environment.

Through AFI support, RESOLUTION No. SEPS-IGT-IGS-IGJ-INFMR-INR-INGINT-2022-003 (CONTROL REGULATION FOR ENVIRONMENTAL AND SOCIAL RISK MANAGEMENT IN SAVINGS AND LOAN COOPERATIVES AND MUTUAL SAVINGS AND LOAN ASSOCIATIONS FOR HOUSING) was issued by SEPS which mandates these financial institutions to integrate environmental and social risks into their institutional credit risk management framework. However, as the guideline is new and this topic is new as well to the sector, there is a need to expand or clarify the text of the guideline to ensure uniform understanding and implementation of the guideline. This is also the same with the reporting requirements that are covered by the guideline. The next step for SEPS is to support the implementation of the guidelines through capacity building workshops for the sector. Through this support and the workshops that will be facilitated, a guidance note (manual) on ESRM implementation and reporting tools needs to be developed.

It is essential that the entities have an adequate understanding and clear knowledge of the standard, as well as having mechanisms or strategies that the entities can use to implement the ESRM standard as well as report green accomplishments for the benefit of the members and the general public.

4. Overall Objective:

The general objective of the project is to develop a practical manual to adequately and optimally implement the guidelines for the management of environmental and social risk by financial entities of the Popular and Solidarity Economy. The objective also contributes to achieve a more plural, sustainable and inclusive financial sector; reducing transaction risks resulting from social and environmental risk factors associated with the business activities of the partners or clients of these financial institutions.

To achieve this objective, it requires:

1. Development of a guidance note to prepare the manual that, according to article 7 of the ESRM standard (SEPS-IGT-IGS-IGJ-INFMR-INR-INGINT-2022-003), the financial entities of the popular and solidarity financial sector must develop.
2. Development of Monitoring and Reporting Tools for Credit Unions (which includes at least an implementation checklist and reporting requirements/tools and the respective M&R manual).
3. Workshops will be provided to SEPS supervised institutions to allow them to acquire the necessary knowledge for the implementation of environmental and social risk management systems in their institutions and be able to report their green related activities.

For the development of the deliverables described, it is necessary to have highly qualified and trained personnel in the implementation of environmental and social risk management systems oriented to the popular and solidarity sector. They must have knowledge of the sector’s operation, processes, regulations, etc. In addition, they must show proven experience in the construction of environmental and social risk management systems applied to the popular and solidarity financial sector.

5. Scope of Work:

The desired outcome of this project is to strengthen institutional capacity of SEPS to implement Environmental and Social Risk Management (ESRM) Guidelines and to develop Monitoring and Reporting tools within the cooperative sector in Ecuador.

To achieve such an outcome, two physical documents will be developed in conjunction with workshops on ESRM adoption:

Output 1: Guidance Note on how to implement the Standard on Environmental and Social Risk Management for Credit Unions supervised by SEPS (manual).

1. Provide a comprehensive step-by-step manual that help members implement the recently launched ESRM standard (SEPS-IGT-IGS-IGJ-INFMR-INR-INGINT-2022-003).
2. Conduct one-to-one SEPS expertise staff consultation meetings on a weekly basis to garner feedback and to ensure being aligned with institutional mandate.
3. The final deliverable should be approved by SEPS.

Output 2: Guidance Note on Monitoring and Reporting Tools for Credit Unions (which includes a checklist and a minimum reporting requirement to disclose to SEPS)

1. Conduct desk research to identify similar data reportingmechanisms in other jurisdictions to disclose ERSM implementationprogress.
2. Conductone-to-one SEPS expertise staff consultation meetings to define data and indicators that can be included in the Management Information System.
3. Outline the key points and potential information forfinancial institutions (FI) to comply with the IGF-related reporting requirements.
4. Provide examples of data or indicators that can be collected and reported.
5. Review and ensure that the information requested can be collected by financial institutions and, in agreement with SEPS, define the implementation timeline.
6. Include relevant resources or references, if applicable.
7. Develop a checklist for easy identification of key data elements that will be verified by SEPSas part of its surveillance process.

Output 3: Conduct workshops on ESRM adoption for credit unions and Monitoring and Reporting Tools

1. Define the objectives and scopeof the workshops in consultation with SEPS.
2. Determine the workshops format and duration. It is important to consider the audience who the workshop is intended to and use proper jargon. It is also important to define dates and number of participants per workshop depending on the location of the FI’s headquarters.
3. Outline the flow and duration of the workshop. Prepare workshop materials and resources in consequence. This may include slides, worksheets, reference materials, or interactive tools. Ensure that all materials are well-organized and easily accessible during the workshop. Ensure that materials are clear, concise, and visually appealing.
4. In consultation withSEPS, determine the date and suitable venue where workshops will take place, arranging necessary audiovisual equipment and providing refreshments if needed. Consultancy firm will cover workshops and travel expenses for them and SEPS staff and will be reimbursed supported by the original, itemized receipts where require.
5. Produce the workshop minutes for SEPS reference.
6. It is important to consider that there will be three face-to-face workshops with approximately 200 participants each. SEPS will guide consultants on the venue and logistic arrangements for such workshops.

6. Deliverables:

Deliverable 1:

1. First Draft must contain, at least, but not limited to, the GN outline, objective, scope, brief text in each GN section.
2. Second Working Draft must be close to final version and this one will be reviewed and commented by SEPS technical staff.
3. Final Draft is the final version of the GN that will be approved by SEPS.

Deliverable 2: A Guidance Note on Monitoring and Reporting Tools for Credit Unions (which includes a checklist and a minimum reporting requirement to disclose to SEPS).

1. First Draft must contain, at least, but not limited to, the GN outline, objective, scope, brief text in each GN section.
2. Second Working Draft must be close to final version and this one will be reviewed and commented by SEPS technical staff.
3. Final Draft is the final version of the GN that will be approved by SEPS.

Deliverable 3:

Minutes of each workshop delivered, which may include meeting details, attendees, agenda and provide a concise summary of what was discussed, actions to be taken, and any other important information.

7. Timeline:

The consultancy firm work will begin on the 1st July 2023 and last until 31st October 2023.

Deliverables – Timeline

Guidance Note on how to implement the Standard on Environmental and Social Risk Management for Credit Unions supervised by SEPS.

By 31st August 2023

A Guidance Note on Monitoring and Reporting Tools for Credit Unions (which includes a checklist and a minimum reporting requirement to disclose to SEPS)

By 31st October 2023

Conduct workshops on ESRM adoption for credit unions and Monitoring and Reporting Tools

By 31st October 2023

8. Travel:

The development of the workshops may imply that the consultants, as well as the , travel to carry out the necessary training and workshops for the credit unions. Consultancy firm will cover workshops and travel expenses for them and SEPS staff and will be reimbursed supported by the original, itemized receipts where required.

Air Travel Policy: Air travel is to be arranged by the Consultant if needed. All air travel expenses shall be approved by AFI’s Travel & Sponsorship Administrator ([email protected]) before booking, for the expense to qualify for reimbursement. AFI shall reimburse travel expenses for economy class only by the most direct and economical routing. The Consultant should form part of the proposed cost, and is free to reroute or upgrade, where possible, at his or her own expense.

Per Diem Policy: Per diem depends on the location and days spent in the country of assignment. The daily per diem rate is capped at USD 300 per day per pax and reimbursable based on actual incurred basis. Per diem includes allowance for meals and accommodation. The Consultant should form part of the proposed cost.

9. Reporting:

Throughout the contract period, the consultant firm will be reporting to AFI IGF Manager and SEPS on the mentioned deliverables.

10. Consultant Experience:

• 8+ years of professional experience in broad financial regulatory and financial portfolio risk management, green finance, public policy, financial inclusion, climate policy and international development.
• Sophisticated understanding and experience in analyzing the issue of regulatory oversight and supervision around financial inclusion, stability, integrity, climate-related risk assessment.
• Strong knowledge of environmental and social development policies.
• Experience working directly with central banks on policy development and implementation, preferably in regulatory oversight, supervision, reporting and enforcing policies and mandates.
• Knowledge of green finance and climate change policies and development.
• Excellent oral, writing and presentation skills in the English and Spanish language is compulsory.
• Previous experience writing is desirable.
• Advanced university degree in social science, international economics, environmental policy, development finance or another related field.

11. Payment Terms:

Kindly refer to RFP document.

12. Administrative Information:

12.1 Disclaimer

The final decision on selection of a vendor for this project rests with AFI management team and with the Inquiry. Only shortlisted and successful consultants will be contacted.

12.2 Proposal Submission Information

Proposals will be due with the following requirements for submission:

Submission Deadline:

2nd June 2023

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]

(This RFP is only open to Consultancy Firms)

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.

12.3 Contract and Reporting

Throughout the contract period, the Consultant will be reporting to AFI’s Head of Inclusive Green Finance. The contract will be from AFI with the individual consultant (or consulting firm with specific names of the team members) that would be working on the assignment. The consultant is expected to have a technical background on regulatory issues on green finance, climate change, and financial inclusion.

12.4 Confidentiality

This document is released for the sole purpose of responding to this request for proposal (RFP) and must be considered confidential. Use, reproduction, or disclosure of the requirements, specifications, or other material in this RFP is strictly prohibited.

12.5 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.

12.6 Evaluation Criteria

The proposals submitted will be evaluated based on the following criteria:

Technical Scoring

1. Academic Qualification; 10%

2. Experience and competence of the key staff for the assignment related; 50%

• Financial regulation, financial risk management, green finance or financial inclusion policies 25%
• Financial regulation and/or its links to sustainable development 25%

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

• Technical approach and Methodology 10%
• Conceptual framework of the proposal including a demonstration of logical and clear planning to execute tasks and complete deliverables 10%
• Risk Assessment linked to the consultancy 10%

4. Sample work – Writing experience English and Spanish; 10%

Total: 100%

How to apply

Interested applicants are expected to submit a proposal with an updated CV and using the template given by email to AFI’s Procurement & Contracts Office at [email protected] by 02nd June 2023.

Note: AFI does not tolerate copyright infringement, including and 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.

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