Consultancy Services for the Development of a Guideline Note on the MCR & Alternative Financing for Women’s Financial Inclusion

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. Project Background:

Advancing financial inclusion for women and closing the gender gap in access to finance has been at the forefront of the financial policy and regulatory work of AFI members and is part of their commitment to Gender Inclusive Finance (GIF). This commitment was codified on September 9th, 2016, in Nadi, Fiji, where the members of AFI adopted the ten point Denarau Action Plan (DAP) , at the annual AFI Global Policy Forum (GPF). The DAP has a strong focus on access to finance for women-owned and -led Micro, Small & Medium Enterprises (WMSMEs), the collection and use of sex disaggregated data and point four which highlights the role of appropriate financial infrastructure, such as interoperable payment systems, credit bureaus and electronic collateral registries, in enabling women’s financial inclusion.

While significant progress has been achieved globally toward increasing financial inclusion, women remain disproportionately excluded, representing more than half of the world’s unbanked population. The gender gap in access to finance is estimated to have remained stuck at 9 percentage points across developing economies since 2011, with the 2017 World Bank Global Findex Data stating that 65 percent of women have a bank account, compared to 72 percent of men. Alongside the DAP, AFI members have also pledged to work towards halving the gender gaps in their respective jurisdictions.

Overview

Financial regulators and policymakers are taking urgent action to address the systemic barriers women face in accessing finance. One of the identified reasons for the significant financing gap is that, in many member jurisdictions, women have limited to no access to or control over land/property, thus limiting their ability to pledge land/property as security for borrowing needs. Historically, men have owned land/property in a large number of jurisdictions, often due to existing land and property right regimes and cultural norms that discriminate against women. “And because women are more likely than men to report joint ownership, gender gaps in property ownership are even more pronounced when only sole ownership is considered.” “Instead, many women own “movable” assets, such as equipment and machinery, livestock, accounts receivables, intellectual property and inventories that do not come with a registered certification of ownership, and are not generally accepted by financial institutions as collateral for credit.

The complex issue of which forms of collateral can be used to access credit and therefore close the gender SME financing gap, has called for new ways of thinking and innovative solutions to overcome the intricate challenges it presents. It also brought to the forefront the urgent need for more inclusive policies and regulations that allow for alternative sources of collateral and alternative finance mechanisms to address the structural barriers to women’s financial inclusion and support the sustainable growth of the WMSME sector. Among the key alternative finance mechanisms are digital finance, the use of the capital market (equity finance, angel capital, venture capital, mezzanine capital and initial coin offering, asset-based financing, factoring, unsecured loans, supply-chain financing) from banks and finance houses other than secured loans and grant.

Movable asset-based lending (MABL) or lending secured by movable assets, in particular, is gaining traction as a unique alternative financing mechanism for the underserved and an innovative way to provide working capital financing to support WMSME and WSME growth and access to markets. MABL is a specialized type of finance that accepts movable assets as collateral and the primary source of repayment for loans. For women and women-owned and led businesses in developing and emerging countries who typically face barriers to the ownership and use of land/property as collateral, this financing instrument may be their first opportunity to access credit.

A modern, unified registry for movable collateral that records and tracks security interests is one of the critical components of a healthy and inclusive credit market. The growing acceptance of movable assets as collateral for lending has improved access to finance for women in a number of countries including Ghana, Liberia, and Malawi, where MCR have been operationalized. Case studies in Ghana and Liberia demonstrate that the establishment of collateral registries and frameworks for a MCR have enabled women-owned enterprises to receive financing under more favorable terms. “Since collateral registry has been introduced in Ghana in 2010, approximately USD3 billion in loans were secured with movable assets. The collateral registry in Liberia has also facilitated over USD 230 million in funding, with 30 percent of the funds allocated towards women entrepreneurs.”

Similarly, China and Colombia have in place registry systems and legal frameworks to facilitate use of movable assets as collateral for a number of years now and preliminary studies show that these tools have helped unlock financing opportunities for women-led and women-owned businesses.

There have also been instances where MCR have been introduced without the holistic involvement of the financial ecosystem or where market acceptance in the financial system is low and these have not been so successful. However, the early successes emerging from AFI member countries have prompted the AFI Management Unit to further explore how the implementation of MCR as part of an enabling and gender sensitive financial ecosystem for MABL in AFI member jurisdictions can effectively foster opportunities and synergies that will contribute to improving women’s financial inclusion. This will allow for good practice examples as well as the specific policy and regulatory challenges to enable members who are thinking of developing and implementing enabling financial infrastructure the best chance of making it highly successful.

Objective

The objective of this Guideline Note is to provide financial regulators and policymakers practical guidance on the potential for MCR to expand access to affordable credit for women and WMSMEs through MABL, as well as to promote wider financial inclusion overall.

To achieve this objective, the following actions are recommended going forward:

• Take stock of the types of assets that are accepted as mainstream forms of collateral in developing and emerging economies
• Take stock of the various types of movable assets that women have ownership of and control over in developing and emerging countries
• Take stock of the legislative (i.e. secured transaction law) and regulatory frameworks that surround the ownership, use and recovery of those assets as well as any legal and regulatory barriers that hinder the ownership, use and recovery of those assets.
• Identify the financial infrastructure enablers related to movable assets (i.e. MCR, credit information system) that have contributed to the uptake of lending secured by movable assets in AFI member jurisdictions;
• Undertake an in-depth analysis on existing literature, body of knowledge and current case studies of AFI members that have leveraged MABL as an alternative finance mechanism to advance access to credit for women and WMSMEs;
• Document how AFI members have successfully developed and passed regulatory and legal reforms and implemented enabling financial infrastructure, as well as how financial regulators and policymakers have successfully leveraged these components to facilitate MABL for women and WMSMEs.
• Document key legal, regulatory, infrastructural and institutional challenges that AFI members and its regulated financial institutions have faced in the uptake for MABL.
• Provide specific policy focused recommendations to assist financial sector regulators and policymakers in developing an enabling environment for MABL that would increase access to credit for women and WMSMEs.
• Provide recommendations on how financial sector policy makers and regulators can create an enabling environment to facilitate MABL for women and WMSMEs and engage with the wider financial ecosystem (i.e. legislators, financial institutions, borrowers, issuers of creditor for such assets) and key stakeholders to achieve this desired outcome.

3. Key Deliverables:

The consultant is expected to undertake the following activities:

1. Deliver a literature review report (up to 7 pages, 11-point font) summarizing the current literature and data (both from within the AFI network and outside of it;
2. Develop a preliminary outline of the Guideline Note;
3. Develop research tools, including 1 online survey questionnaire (uploaded on SurveyMonkey) and up to 2 interview guides, to guide the virtual key informant interviews with AFI members and relevant stakeholders;
4. Provide all interview transcription and recordings;
5. Develop a survey report communicating detailed findings and analysis based on the data collected;
6. Draft and edit, as necessary, the Guideline Note incorporating comments from AFI Management Unit, AFI members and relevant key stakeholders; and
7. Create one (1) Presentation deck containing key findings and recommendations from the Guideline Note.
8. Compile dataset containing data indicators from desktop research, publicly available datasets, surveys and Key Informant Interviews (KII) conducted with AFI members and select stakeholders, presented in an Excel format

The consultant is expected to deliver the following:

1. 1 Literature Review Report;
2. 1 Report Outline;
3. 1 Online Survey Questionnaire and up to 2 interview guides;
4. 1 Survey Report;
5. 1 Guideline Note;
6. 1 dataset;
7. Present the findings of the Guideline Note to the high-level Gender Inclusive Finance Committee and one other fora as identified by AFI to solicit feedback and comments before finalizing the above outputs.

4. Timelines:

The consultant team is expected to commence the assignment in early May 2021 and will complete the deliverables by the end of August 2022. The contract has a total duration of 55 days, and the tentative timelines and key deliverables are listed below:

Timeline – Duration (Working Days)

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Deliverables by Consultant

Early May – 1 Day

Kickoff discussion with AFI Management Unit held

Early May – 5 Days

Preliminary outline of the Guideline Note drafted and finalized

Mid May – 5 Days

Literature review report

Mid May – 5 Days

Online survey instrument and interview guide

Late June – 12 Days

Key informant interviews

Late June – 15 Days

First draft of the Guideline Note

Early July – 5 Days

Second draft of the Guideline Note with relevant feedback incorporated

Mid July – 2 Days

Presentation slides and dataset

Mid July – 1 Day

High-level presentation to the GIF Committee

Late July – 1 Day

Technical level presentation to AFI members and/or AFI Management Unit

Late July – 5 Days

Final draft of the Guideline Note

During the assignment, the AFI MU will closely support the consultant by sharing internal expertise and existing research; contacting or connecting AFI members and key stakeholders to assist in arranging the consultant’s communications and key informant interviews; and providing inputs to deliverables. This assignment is expected to involve extensive desk research, data collection, and virtual interaction or consultation with AFI members and key stakeholders.

5. Consultant Experience:

• Advanced degree in a field related to Economics, Public Policy, International Development or a closely related field.
• At least 10 years of knowledge and technical experience in gender and women’s economic empowerment, financial inclusion or a closely related field.
• Proven knowledge and experience on financial regulations and policies on gender inclusive finance and MSME finance.
• Experience in qualitative and quantitative data collection and research on gender inclusive finance and MSME finance.
• Previous experience working with global and national institutions involved in financial sector policy and regulation, financial inclusion and gender inclusive finance policy and regulation, particularly in the developing and emerging countries.
• Highly proficient written skills in the English language.
• Fluency in French and Spanish is a significant asset but not essential.

6. Reporting:

The consultant will report directly to Head, Gender Inclusive Finance.

7. 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:

• Using the template/format given in Annexure 1 (Technical) and Annexure 2 (Financial) and/or additional technical proposal for more information.
• Technical and Financial proposals must be separated in different pdf.
• Financial proposals must be in USD only. If AFI receives any other currency other than USD, it will be converted based on the InforEuro Exchange rate. Whereas for Malaysian applicants with Business Registration under Suruhanjaya Syarikat Malaysia (SSM), please submit your financial proposals in MYR.
• Proposal to be submitted to the designated email address.
• Consultant and service provider should note that AFI will run plagiarism checks using software for all knowledge products that are produced – in parts or as an entirety of the deliverables stated in this RFP.

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.

8. Criteria for Evaluation

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

Technical Scoring – 100%

1. Academic Qualification – 10%

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

• Knowledge and technical expertise relevant to the assignment (20%)

• Experience in qualitative and quantitative data collection and research on gender inclusive finance and MSME finance (20%)

• Experience working with global and national institutions involved in financial sector policy and regulation, financial inclusion and gender inclusive finance policy and regulation, particularly in the developing and emerging countries (10%)

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3. Adequacy of the proposed work plan and methodology in responding to the Terms of Reference – 35%

• *Technical approach and Methodology (*25%)

• Workplan of the technical components of the assignment (10%)

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3. Sample work – Writing experience and English – 5%

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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:

a) Technical Proposal: 70% (Seventy percent).

b) Financial Proposal: 30% (Thirty percent).