Terms of Reference 49 views

To hire a Service Provider/Consultancy service to support Primary SACCOs and SACCO Unions in Oromia region for increased membership and financial service to young men and women

BACKGROUND

Savings and credit cooperatives (SACCOs) are semi-formal financial institutions providing financial service to underserved population in rural and urban areas. SACCOs are established to provide saving, credit and other financial service to its members by introducing saving culture in the community and proving credit to its members to promote investment. SACCOs play a crucial role in creating employment opportunities for lower-income groups through improving their saving habits, meeting their credit needs and increasing income through business expansion. They promote self-employment opportunities for members by providing quick and affordable business loans, which enable their members to start new businesses and expand existing business.

The sector has been supported by the Federal Cooperative Agency and its equivalent structures at regional, district and kebele level. Different development programs and other national flagship programmes such as RUFIP and PSNP/HABP also supports SACCOs in Ethiopia. These SACCO support structures and programs have created the establishment and growth of many SACCOs in Ethiopia. Currently, there are 21,328 SACCOs operating in Ethiopia with 6.4 million members.

Various assessment conducted on the performance of SACCOs in Ethiopia revealed different impediments for SACCOs to serve the financial needs of its target groups including young populations. The challenges arise both from the demand and supply side. From the demand side: weak or no awareness on the benefits of SACCOs; low membership participation; and misconception of SACCOs, especially RuSACCOs, as not being trustworthy, causing a shrink in total deposits. From the supply side: weak governance and management with no strategic plan; limited product and services (not demand driven); weak financial and risk management (credit and portfolio risk); lack of professional and qualified personnel; and lack of sufficient liquidity to satisfy members credit demand.

In a more generic note, SACCOs in Ethiopia generally have Four core constraints. 1) Lack of well-aware and active members that translates to higher deposits and credit. The average SACCO member size currently stands at 300, way below even the neighbouring Kenya, with half of Ethiopia’s population, have average member size of 636. 2) Lack of capacity – manifested through weak governance and management; weak risk management, especially credit and portfolio risk; and limited options of products and services to their members. Most of the financial products offered by SACCOs lack diversity, flexibility and quality. The products are often blanket type with “one-size fit all” instead of “customer centricity and client segmentation” approach in financial service development. SACCOs have very limited capacity to design and deliver tailored and diversified financial services to their members, and products are often defined by boards and general assembly but not by appropriate market assessment. 3) Lack of sufficient liquidity to satisfy members credit demand. SACCOs are very small and independent financial institutions with a very small membership size to mobilize resources and manage liquidity. They don’t have the benefit of economies of scale like MFIs in terms of saving mobilization and liquidity management. Although members size and number of SACCOs have increased over the years, deposits, which are one of the main sources of loanable funds, have shrunk tremendously by CAGR of -7%. 4) Regulations that hampers SACCOs from operating outside of a defined geographical area.

BRIDGES PROGRAMME

BRIDGES is a job creation programme funded by the Mastercard Foundation and implemented by First Consult PLC. It envisages supporting the creation of close to 600,000 jobs for the youth (80% women) and 15,000 MSMEs, with 300,000 unemployed youth trained through supporting IP job creation initiative and market linkage between IPs and MSMEs.

The BRIDGES Programme works on different markets to unlock the potential for job creation such as labor market, MSME market and financial sector markets.

Labour Market: BRIDGES will scale-up proven and successful worker recruitment and retention interventions to six further industrial parks (to be selected in consultation with GoE and other development partners) increasing the total number of IPs that BRIDGES works with to ten.

MSMEs Market: BRIDGES will work with MSMEs to enable them tap into major market opportunities around the 10 major IPs and Anchor Enterprises outside IPs. The work will involve a major information, coordination, capacity development and access to finance initiatives to be undertaken in partnership with key IP, AE and MSME stakeholders at various levels including Demand (IP markets), Supply (MSMEs), Linkage (information, transaction and payment platforms) and Ecosystem (macro and other meso level actors).

Access to finance sector:  primarily focuses on; bridging the supply and demand side gaps by facilitating linkages, bringing innovative means, building capacities of both the demand and supply sides, and incorporating policy and rule changes to narrow the financing gap. A2F envisions increased access to finance for Micro, Small and Medium Enterprises (MSMEs) through improved capacity of financial institutions to meet the needs of the MSMEs in outreach, products, and innovative solutions. This will result in increased access to finance, and the creation of dignified and fulfilling jobs for young Ethiopian men and women.

OBJECTIVE OF THE ASSIGNMENT The general objective of this assignment is to provide technical assistance and capacity building support to Primary SACCOs and SACCO unions in Oromia region, East Showa Zones (Adama and Modjo towns and surrounding woredas) and South west Showa zone (Wolliso town and surrounding woredas through financial education and literacy training  to young men and women, recruit and register young men and women in SACCOs and facilitation of access to finance for increased job opportunity and enterprise development.

More specifically the assignment aims to deliver technical assistance on different areas such financial education, membership promotion, youth centric product improvement/development and delivery, etc. to create access to appropriate financial service for young men and women to start and expand their business. As a result of this assistance, primary SACCOs will increase their membership by recruiting and serving young men and women in their catchment areas.

The target for this assignment is to increase membership of primary SACCOs by recruiting and registering a total of 30,000 young men and women to SACCO memberships in one-year period in the three intervention areas indicated above.

SPECIFIC TASK

The service provider will be responsible for:

• Organize and facilitate membership promotion activities in coordination with SACCO unions and SACCO promoters at cooperative promotion office
• Provide technical support on marketing and customer service strategy of SACCOs through targeted promotional activities and campaigns to attract and serve young men and women in their catchment areas
• Support young men, women and MSMEs to register as a member of existing SACCOs or form a new one depending on their preference.
• Facilitate financial education training to young men and women to raise awareness about the available financial services, terms and conditions and membership of SACCOs
• Training and technical assistance to SACCO promoters and leaders on youth centric product improvement and/or new product development
• Assist SACCOs and their unions on loan appraisal and portfolio management training and provide the necessary tools
• Facilitate workshops and trainings on internal and external fund mobilization; and meditate or negotiate with other financial intuitions for whole sale lending to SACCOs Unions

QUALIFICATION AND EXPERIENCE

•  The consultant(s) will have recognized expertise in SACCOs capacity building including but not limited to detailed knowledge of financial cooperative systems in Ethiopia.
• Proficient in Afaan Oromo language
• The consultants must have at least 10 years’ experience in providing training and financial education focusing on Saving and Credit Cooperatives.
• Experience in product development for SACCOs
• Must also incorporate consultants which hold an advanced University degree in Finance, Management, and Economics or any other related field of study.
• The service provider must be a firm

DELIVERABLES

• List of young men and women trained on financial education
• List of young men and women who became a new member of SACCOs
• List of SACCO members (young men and women) who get access to credit service from SACCOs
• List of SACCO promoters who are trained
• Product features developed and adopted by SACCOs/Unions

The assignment will take one year starting August 1, 2022 to July 1, 2023.