Financial Sector Technical Assistance - P122616
Financial Sector Technical Assistance Project (FSTAP) | Published April 30, 2015 - Deadline May 22, 2015
To Design A Transaction Processing Hub For The Microfinance
And Financial Cooperatives Industry In Malawi
RESERVEBANK OF MALAWI
FINANCIAL SECTOR TECHNICAL ASSISTANCE PROJECT
REQUEST FOR EXPRESSIONS OFINTEREST
Name of Project: Financial Sector Technical Assistance Project (FSTAP)
Consulting Services: To Design a Transaction Processing Hub for the Microfinance and Financial Cooperatives Industry in Malawi
Credit No. 4897 Mw
Project ID No. P122616
Date of Issue: 4th May, 2015
The Government of the Republic of Malawi has receivedfinancing from the World Bank toward the cost of the FinancialTechnical Assistance Project (FSTAP), and intends to apply part of the proceeds of this credit towards eligible costs for therecruitment of a consulting firm to design aTransaction Processing Hub for the Microfinance and Financial Cooperatives Industry in Malawi
The Government of Malawi recognizes the vital role that the microfinance sectorplays in the social economic development of the Country. Noting that the formal financial sector in Malawi remains small and thatoutreach remains concentrated to a narrow client base, Government has, through the Reserve Bank of Malawi taken a leading role inthe development of the infrastructure, a policy and institutional framework aimed at growing the financial sector's capacity toincrease outreach.
A key intervention in these reforms is the implementation of the five-year FinancialSector Technical Assistance Project (FSTAP) which thegovernment is financing with credit from the International DevelopmentAssociation (IDA) of the World Bank implemented by the Reserve Bank of Malawi. The project aims at increasing access to finance forthe currently unbanked but bankable population of Malawi.
The Malawi Microfinance and Financial Cooperatives sector comprises 10 non-deposittaking microfinance institutions, 19 of credit only agencies concentrated in specific urban areas and some 46 savings and creditcooperatives operating under the Malawi Union of Savings and Credit Cooperatives (MUSCCO). In addition, a number of deposit takingmicrofinance institutions are expected to be licensed in the coming 12 month period. The operators in the industry process smallbut numerous financial transactions using manual or rudimentary processing mechanisms as most cannot afford the initial capitalcost of setting up sophisticated management information systems (MIS) and the personnelthat are qualified enough to manage robust systems. It is for thisreason that one of the key interventions envisaged under FSTAP is the establishment and operation of a microfinance transactionprocessing hub(the Hub) that will enable the sector share interoperable electronic data processing infrastructure for their MISrequirements. The Hub will help institutions reduce operating costs, streamline lending processes, scale up rapidly and integratewith other entities such as: creditbureaus, other financial institutions, regulators and international payment networks. It willreduce related infrastructure costs, facilitate timely and accurate reporting to the regulator, apex bodies, financiers and otherstakeholders and data security will be guaranteed.
The effective design, development and implementation of an efficienthub willcomprise investment in hardware, software and integration/interface to deliver a robust (resilient and high availabilityinfrastructure) platform that allows a consortium of MFIs and financial cooperatives to share transaction processing infrastructure(payment system connectivity, core banking application, mobile-banking integration, account opening, loan disbursements, paymentprocessing, customer acquisition, customer complaints logging, compliance and reporting) in accordance with set governance rulesand regulations; Audit trail with time stamps & access control; integrated with analytical & reporting tools; compliantwith open system concepts; Supports multi channels (branch and branchless banking delivery channels).
The consulting firm will carry out all tasks outlined in this terms of reference, aswell as any other related tasks that may be required to achieve the objectives of this consultancy.
2. Objectives of theassignment
The objectives of this assignment are as follows:
· To assess management informationsystem needs of MFIs and Financial Cooperatives.
· To design a viable transactionprocessing hub that would improve, among other things, the processing efficiency of small-value transactions, microfinancecore-banking and mobile phone based applications while allowing for down streaming of services such as credit referencing servicesand interconnection to national switch.
3. Scope of work
The scope will include:
1. Assess MFIs and Financial Cooperatives to determine participants, collaboration andbusiness model for a transaction processing hub;
2. Analyze and map appropriate structures to support the integration of the transactionprocessing hub to support microfinance core banking applications;
3. Develop a business model/ business plan for the hub that will help decide on the form thehub should take for it to be operationally sustainable and viable;
4. Design the processing hub;
5. Develop an implementation plan and bid documentation.
Details of the tasks and their related activities to be conducted are asfollows;
Part 1 ?Assessment of MIS Processing Needs and Design of an Appropriate Hub for theMicrofinance Sector in Malawi
In thisphase the firm will undertake the following tasks:
TASK 1: PREPARATORY AND BACKGROUND RESEARCH
This taskwill require the consulting firm to:
i. Conduct background research of the sector which includes MFIs and SACCOs to understand itslandscape;
ii. Meet with beneficiary MFIs and financial cooperatives to:
a. understand the sector expectations and advise on the overall implementation of the Hub project, and
b. gain an appreciation of technical and business requirements of the processing hub;
iii. Survey the management information systems currently in use in the sector, MIS requirements, HR support, connectivityissues, etc;
iv. Conduct an analysis of the sector's management Information capacity needs and the role of a multi-usertransaction processing hub in meeting such needs;
v. Identify options available to meet current and future needs of thesector; and
vi. Assess the operational environments and how these will need to adapt to the new Hub arrangements.
vii. Supportefforts already underway to establish and formalize project management structures for the initiative that includes the involvementof executive-level officials at both RBM and beneficiary institutions in order to strengthen outcomes, address expectedimplementation obstacles, speeding-up and securing authority and approvals needed to progress the initiative at each successivephase
Deliverable 1: Needs/RequirementAssessment document
TASK 2: DEVELOP FUNCTIONAL SPECIFICATIONS, ARCHITECTURE AND BUSINESS MODELFOR THE HUB
This taskwill require the consulting firm to:
i. Analyze the findings from Task 1 above and develop specifications regardingthe architecture and design of the hub;
ii. Developprecise estimates of hub design, equipment needs and capacity,resulting capital expenditure and operating costs needed for the infrastructure to meet the identified present and future needs ofthe sector;
iii. Create adetailed operational model of the hub including management structure, security details of the platform needed. The model shallclearly provide:
a) a Technological Definition of theappropriate hub;
b) an analysis of the technological environment available and required for the hub;
c) a definition of the skills and knowledge sets required for the successful implementation of the hub;
d) essential technical conditions and options for the project; an outline of Project Metrics,performance, benchmarks to be used; and,
e) Technological Standards to be followed.
iv. Design anddevelop a business model that takes into consideration the rapid and continuing technological evolution and convergence in thecommunications sector and the microfinance sector as well as its impact on the costs, pricing, and development of services. Thismodel should be scalable, expandable and include mechanisms that make it possible to plan for technological changeat least 10 yearsinto the future, so that the investment in the hub is made without fear of being trapped into a situation of sunk costs despite thefact that technological advances, paradigm shifts cannot beaccurately projected;
v. Developminimum standards to connect with existing/running MIS of other institutions as well as ability to facilitate reporting toRegistrar, Credit Reference Bureau; and linkage to National Switch, Automated Transfer System (ATS)and Telecommunication ServiceProviders; and
vi. Prepare apresentation on the needs identified and the model design recommended for the appreciation of the Steering Committee andStakeholders.
Deliverable 2: Design, TechnologyDefinitions, Business Model of the Hub & Presentation onthe same
Part 2: Demonstration of the Economic, Operational and Financial Viability ofthe Hub
In this phase, the firm will undertake the following tasks:
TASK 1: ECONOMIC AND FINANCIALANALYSIS OF THE HUB
This task will require the consultingfirm:
i. Prepare estimates of rates of return for the hub's initial investment costs,including the embedded data handling, transmission, control, storage and services housing as well as conducting scenario analysisoftrends, project risks and total cost;
ii. Analyzethe budgetary and financial impacts of the Project and estimatinginvestment requirements (including import content) of the project over the first five years of operations;
iii. Quantify the amount of counterpart funds needed to be contributed by theproject as wellas by players (users) of the hub;
iv. Assess all aspects of project feasibility (technical, economic, financial, political, legal and organizational) and theirinterrelations;
v. Prepare economic scenarios, risk analysis, rate return analysis, analysis oftotal cost of operation for the first five years of operations;
vi. Quantify the economic development benefits to the sector and the country that would arisefrom the project;and
vii. Identify and assess the developmental outcomes that would be expected if the Project is implemented in accordance with therecommendations of the Study. The analysis of potential developmental benefits should be as concrete and detailed as possible andinclude at least one specific example of developmental impact for each area highlighted.
Deliverable 3: Report oneconomicoperational and financial viability of the Hub
TASK 2: ORGANIZATIONALISSUES
This task will require the consulting firm to:
i. Design and propose the organizational structure and requirements that wouldmeet the needs of the project as an entity.
ii. Identify and prioritize corporate governance issues that are necessary andcritical to support the business plan of the hub.
iii. Define the qualifications of the personnel needed to carry out theproject.
iv. Define the respective roles and relationships of the staff, user institutions, RBM, etc
v. Outline key success factors and foreseeable, barriers to success, bothexternal and internal
Deliverable 4: Organizationalstructure, governance structure and human resources plan
TASK 3: IMPLEMENTATION PLANNING AND BID DOCUMENTPREPARATION
Thistask will require the consulting firm to:
i. Assess and determine the critical success factors for the implementation of the hub
ii. Define successful change management process(es) for thesector;
iii. prepare a bidding document that cover all of the goods and services neededforproject implementation.; and,
iv. Develop a timetable for project implementation including a timeline forpublicizing the bids and for awarding the contract(s) for the goodsand services required in line with World Bankprocedures.
Deliverable 5: Implementationplan and bidding documents, ready for publication.
TASK 4: PREPARATION, PRESENTATIONAND APPROVAL FOR PUBLICATION OF A FINAL REPORT
Upon concluding the preparation and publishingof the project bidding documents, the firm, while stillin Malawi will formally present the findings and recommendations and a nearfinal version of the report to the Reserve Bank of Malawi, MAMN, MUSCCO and the project Steering Committee. The firm will, at thispresentation, answer questions and take comments and suggestions based on the presentation and the draft Final Report providedhowever that the draft report shall be circulated to the stakeholders, one week before the date of thepresentation.
After the Presentation, the contractor willmake the final changes suggested by the Steering Committeeand submit the Final Report to the Reserve Bank of Malawi throughtheSteering Committee. The Contractor shall ensure that the Final Reportis a substantive and comprehensive report of all of thework performed in accordance with these Terms of Reference for Phase II, including all deliverables and shall cover and synthesizethe findings of all the preceding tasks, information, recommendations and guidelines. The report shall be delivered in soft copy (Microsoft word document and pdf) andduly signed three hard copies.
Deliverable 6: Final Report andPresentation Notes:
4. Expected outputs/ Summary of Deliverables
4.1 Deliverable 1: Inceptionreport
4.2 Deliverable 2: Needs/Requirement Assessmentdocument.
4.3 Deliverable 3: Design, Technology Definitions,Business Model of the Hub & presentation on the same
4.4 Deliverable 4: Report on economic, operationaland financial viability
4.5 Deliverable 5: Organizational structure,governance structure and Human Resources Plan
4.6 Deliverable 6: Implementation plan and biddingdocuments, ready for
4.7 Deliverable 7: Final Report and PresentationNotes.
The consulting firm shall interact and communicateas need arises, render services and produce the deliverables stipulatedabove under the general technical direction of the DirectorMicrofinance and Capital Markets of Reserve Bank of Malawi who will work closely with Director, National Payments.The reports shall bedelivered in bothhard and soft copies and duly signed.
6. Key staff and Qualifications
Interested consulting firms should provide information demonstrating that they have the required combination ofqualifications and relevant experience in conducting a consultancy of this nature.
Team members should include:
· Team Leader: Business and processanalysis/software developer and must hold a recognized university degree in a related field, preferable master's degree from recognized university in informationtechnology/computer science/and business information systems. He should have at least fiveyears' experience in business processes, designing and systems development. Experience in similar assignment elsewhere will be an addedadvantage
· Business/Financial Analyst, musthold a recognized university degree in a related technical field, preferably to master's degree level infinance/banking/economics/business administration
Allmembers of the team must have no less than five years of work experience in business analysis, business development, anddevelopment of technical and functional requirements.
7. Contract duration
Theassignment is for a maximum of 3 calendar months from the date of signing the contract.
8. Selection of Consultant
The consultant firm will be selected in accordance with Quality and Cost BasedSelection (QCBS) procedures set out in the World Bank's Guidelines: Selection and Employment of Consultants by World Bank Borrowers, of January, 2011revised in 2014. Furtherinformation can be obtained at the address below during office hours (8.00 hours to 16.00 hours Malawi time).
9. Submission of Expressions of Interest
Interested consulting firms must provideinformation indicating that they are qualified to perform the services (i.e. brochures, description of similar assignments,experience in similar conditions etc.).
Expressions of interest must be delivered to the addressbelow by Friday, 22nd April2015.
The Project Manager
Financial Sector Technical Assistance Project (FSTAP)
Reserve Bank of Malawi
P.O. Box 30063.
Tel: +265 1770 600/924
FAX: (265) 1 773 752
E-mail: firstname.lastname@example.org and copy email@example.com