Economic Recovery for Conflict-Affected Population

Consultancy Title: Inclusive Financial Services Analysis

Project Location(s): Ethiopia Afar (Abala) and Tigray (Mekelle) for Internally Displaced People (IDP) and Returnee Women, Youth, and Other Marginalized Groups. Tigray and Afar regions.

1.Introduction & background

First Consult (FC) is a leading development consulting firm based in Ethiopia, designing and implementing economic development projects in partnership with the private sector, governments and donor programmes. FC has been delivering innovative and private sector-based solutions across a range of sectors, including enterprise development, resilience, job creation, agriculture and access to finance for over 15 years. FC has worked in the finance and investment sectors since its earliest days. They have experience in designing and implementing SME finance programmers, building the capacity of finance sector personnel, designing and supporting the operations of target group-tailored financial products, research and evidence generation, facilitating private equity funding - including advisory services, and availing grant facilities through a crowdsourcing platform.

The Economic Recovery for Conflict-Affected Population Project (ER-CAP) is a five-year project aiming to improve the economic adaptation, protection, and recovery of populations affected by conflict. The programme, led by Mercy Corps in collaboration with the Danish Refugee Council (DRC) and First Consult, uses an integrated conflict-sensitive, systems-strengthening, climate-smart, and inclusive approach to enhancing systems that support the economic recovery of communities in three regions: Afar (Abaala), Tigray (Mekelle), and Amhara (Woldiya). The programme is designed to have a 9-month inception period followed by a phased implementation whereby the first two years will focus on Tigray and Afar regions and starting from year 3, it will expand to the Amhara region. The programme aims to benefit 43,540 individuals, with a specific focus on Internally Displaced Persons (IDP) and returnee women, youth, and other marginalized groups. The expected outcomes include resilient livelihoods, improved access to financial products and services, and enhanced capacity to mitigate protection risks through access to justice and psychosocial support. ER-CAP will support conflict-affected communities and improve their livelihoods by strengthening Micro, Small, and Medium Enterprises (MSMEs) including women and youth-led MSMEs, improving crop and livestock and other potential value chains, and facilitating access to off-farm non-farm income-generating opportunities. Our plan includes assessing relevant agricultural and non-agricultural market systems, facilitating market-driven short-term technical skills training, and improving inclusive employment opportunities through input-output market linkages and advocacy. The programme will also facilitate access and use of affordable and innovative financial products and technology for conflict-affected communities and MSMEs through strategic partnerships with financial services providers and layering on existing government initiatives, the aim is to facilitate Know-Your-Customer requirements, integrated financial literacy training, and expand mobile and agent banking. Finally, the ER-CAP programme will enhance the protection capacity of conflict-affected communities in Afar and Tigray by establishing protection desks and information hubs, providing access to legal solutions, psychosocial support peer support mechanisms, technical support, and coaching for marginalized groups, and conducting Gender Equality and Social Inclusion (GESI) dialogues. Additionally, it will pilot early economic recovery approaches to support vulnerable groups in displacement settings and identify viable business ideas for economic development activities

2. Objectives of the study

Understand the existing and emerging financial institutions including their services, products, and innovations.

Understand the financial needs of IDPs, returnees, and host communities; and the needs of MSMEs in the target area, focusing on women and youth owned MSMEs.

Understand any legal/regulatory gaps preventing the uptake and usage of financial services and products from both a demand and supply-side perspective.

Align and create access to financial resources for participants engaged in the value chains identified during the market systems analysis.

3. Scope:

The Program team in Addis and Field based team members from all the consortium partners will be part of the assessment during information gathering, analysis, and intervention design.

The consultant will take the lead role in intervention design and report writing by taking into consideration the findings and recommendations from the other complementing study focusing on Market System, Political Economy Analysis, and Conflict Sensitivity Analysis that Mercy Corps has contracted in addition to the tasks listed below this ToR.

The study will be conducted in Tigray region -Mekelle city Administration and surrounding kebeles and Afar region- Aballa town and surrounding kebeles.

4. Deliverables

Task 1: Inclusive Financial services

Identify and map the existing and emerging financial service providers (formal, informal, semi-formal FIs, and mobile money operators) in the operational regions.

Identify and map opportunities and constraints for serving conflict-affected communities including assessing the relevance of the existing products and services that the institutions are providing currently to conflict-affected populations.

Assess the current capacity/capabilities and challenges financial institutions face in developing new products that are attractive to MSMEs, IDPs, and returnees and protect the interests of both borrowers and lenders.

Assess gender-based supply-side challenges and obstacles including FIs' capacity to serve the women-owned MSMEs using standard credit policies and procedures.

Assess whether the institutions are capable and willing to develop and/or provide innovative financing tools to IDPs and returnees (E.g.: a matrix approach like the WILL-SKILL framework to identify potential).

Assess the legal requirements of financial institutions by considering the ease of doing business towards the inclusion of conflict-affected populations.

Assess the capacity-building initiatives that are required to spur IDPs, returnees, and host communities' uptake and usage of financial services from formal financial institutions.

Assess the interest and capacity of the target groups (women, youth, and marginalized groups) about savings, loans, insurance, and other financial services needs to engage in economic activities.

Assess the barriers, behaviors, and motivations of the target groups towards access and use of financial services and products.

Assess the legal/regulatory gaps preventing these segments from the usage of formal financial services from both demand and supply-side perspectives.

Provide market intelligence that would build a sound business case for FIs to profitably serve IDPs, returnees, and host communities.

Align the inclusive financial services analysis with the market systems analysis.

Propose potential interventions (through designing alternative financing mechanisms) for early recovery, tailored to the needs of the target populations with capable and willing financial institutions to improve the delivery of inclusive and innovative financial services.

Task 2: Cross-cutting issues: Gender Equality and Social Inclusion

Identify the barriers or the stigma towards lending to women, youth, and other marginalized groups (people with disabilities, elders).

Assess the current dynamics and how the post-conflict scenario affected the ability of women, youth, and other marginalized groups to access basic financial services.

Defining interests, needs, and capacities of women, men, and youth in the conflict-affected areas

Recognize and analyze intersecting factors such as gender, age, disability, and socio-economic status (current settlement situation, family status, economic engagement, etc.)

Design well-integrated and gender-sensitive intervention based on the findings from Task

5. Methodology

The assessment will deploy a qualitative survey using different tools for both primary and secondary data sources. Purposive sampling based on data saturation (collecting data from a range of different sites and stakeholders until you start receiving the same information). The data collection will consider all the operation areas including Abaala and surrounding districts and Mekelle and surrounding districts. Some of the tools proposed includes but not limited to:

Semi-structured interviews with market stakeholders

Semi-structured interviews with formal and informal community leaders

Focus group discussions with community members.

Market mapping

Desk review from trusted sources including NGOs, Govt, Universities, Research outputs, and others.

Before deciding on the best-fit methodology for the assignment, consulting the GESI toolkit and other internationally accepted frameworks is very critical.

N.B: Gender lens is expected to be critically taken into consideration across all the specific technical tasks mentioned above.

6. Coordination and Partners Involved

Proper coordination with key partners at the field level is of paramount importance for the success of the assessment. Hence, it is required to closely work with all potential partners, the local community, IDPs, Returnees, Women, youth, other marginalized groups of the community, and the consortium members (MC, FC, and DRC) throughout the whole process of the assessment. Some of the key partners include:

Target population (IDPs, Returnees, and host community women and youth)

Women's social and development groups

Religious and traditional leaders

Micro, small, medium, and large enterprises including, Traders, retailers, and aggregators.

Government representatives and regulatory bodies

Financial Institutions and Service providers

Digital technology providers (Money transfer, job matching, e-commerce, etc.)

Technical Training Providers (Public and private)

Business Development Service Providers

Producers (Crop and livestock producers)

Employers and employment agencies

7. Responsibilities

Consultant

The consultant is expected to:

v Submit an inception report detailing the methodology to be used including the main research methods, the sampling techniques, the proposed source of data, procedure for data collection and analysis. The proposed assessment tools will be discussed and approved by the consortium partners (First Consult and Mercy Corps) before the commencement of the actual data collection.

v Conduct assessments based on the details as discussed under each task.

v Submit a first draft report incorporating suggestions and recommendations of the reference groups.

v Submit a final report (electronic copies of PDF and Word formats).

v Submit an electronic copy of all data collection tools, raw data, and data sets used.

First Consult

First Consult is expected to:

Recruit the consultant and finalize the consultancy agreement.

Share relevant documents with the consultant.

Provide inputs for the assessment, methodology, data collection tools, and report.

Provide relevant arrangements to ensure that the study is conducted in the shortest time possible including facilitation of local transportation during the assessment.

Facilitate/Support the consultant in the execution of the assessment i.e., communication with relevant stakeholders, and arranging appointments of respondents (KIIs & FGDs).

Closely follow up the assessment process ensuring quality control, daily debriefing, and meeting timelines.

Engage the consortium members in every step of the assessment to ensure inclusive intervention design and quick implementation immediately after the assessment is completed.

Consortium Members: Mercy Corps and Danish Refugee Council as consortium members for the ER-CAP project, will assign their staff who will work jointly with the consultant during interviews and give their inputs, technical support, and other assistance as deemed necessary including reviewing the deliverables.

Timeframe / Schedule and Location:

The consultancy firm will work with ER-CAP project teams and its partners in the Afar and Tigray regions and national teams. The study is expected to be completed within a maximum of forty-five days upon signing of the agreement.

The potential consultant will report to: First Consult, ER-CAP Senior Access to Finance Lead

Expert Profile

Having a team of experts for each technical capacity and practice across the humanitarian sector in IDP and host community settings in Ethiopia, especially the Afar and Tigray Regions.

Previous experience of at least 5 years with NGOs and INGOs working on related assignments in the context of IDPs and host communities.

Experience in facilitating in undertaking qualitative data collection and analysis.

Excellent presentation and representation skills in multicultural contexts.

Ability to work under pressure and meet tight deadlines.

Ability to translate complex technical ideas to a non-technical audience both verbally and in writing.

Knowledge and experience of embedding cross-cutting approaches as an aspect of organizational change.

Fluent written and spoken English and team members fluent in Tigrigna and Afarii language is required.

Evaluation Criteria

Those candidates who scored below 50% on the technical evaluation will not be considered for financial evaluation.

Instructions for the Technical and Financial Proposal

Interested consulting confirms to send a technical and financial proposal detailing the experience and qualifications of your firm to execute the assignment. The potential consultant should prepare a budget based on the proposed methodology and resources required for the assignment. The financial proposal should include daily fees for the assigned personnel and the total cost to execute the assignment. Following the selection of competent applicants, the detailed terms and conditions of agreement will be outlined in the Mercy Corps contract of agreement with the consulting firm.