Consultancy services to develop credit risk management framework in Kakuma-Kalobeyei Area – May 2025

Request For Proposal: Consultancy services to develop credit risk management framework in Kakuma-Kalobeyei Area – May 2025

Closing date: 12/06/2025

1.0 The Africa Enterprise Challenge Fund

The AECF is a leading development organization that supports innovative enterprises in the agribusiness and renewable energy sectors with the aim of reducing rural poverty, promoting climate-resilient communities, and creating jobs.

We catalyze the private sector by surfacing and commercializing new ideas, business models and technologies designed to increase agricultural productivity, improve farmer incomes, expand clean energy access, reduce greenhouse gas emissions, and improve resilience to the effects of climate change. We finance high-risk businesses that struggle to access commercial funding; we are committed to working in frontier markets, fragile contexts, and high-risk economies where few mainstream financing institutions dare to go.

To date, we have supported over 510 businesses in 26 countries in Sub-Saharan Africa, impacted more than 33 million lives and created over 35,000 direct jobs.

AECF is headquartered in Kenya and has offices in Côte d’Ivoire, Tanzania, Nigeria, South Sudan, Benin, and Somalia.

2.0 About Kakuma Kalobeyei Challenge Fund (KKCF)

Kakuma Kalobeyei Challenge Fund (KKCF) is a five-year Program of the International Finance Corporation (IFC), implemented with Africa Enterprise Challenge Fund (AECF), Turkana County Government, and UNHCR. KKCF originates from the market data from IFC’s “Kakuma as a Marketplace” study which quantified Kakuma’s economy and confirmed that it was a dynamic and potential market-place. This triggered a lot of interest that contributed to KKCF’s conceptualization and Program development.

KKCF is designed to support private sector investment and unlock the economic potential of refugees and their hosts in Kakuma Kalobeyei refugee hosting area in Turkana West District of Turkana County. KKCF aims to attract private companies and grow the local entrepreneurship potential to create job opportunities, present more consumption choices, and contribute to fair pricing of products and services. KKCF targets all sizes of companies from small to medium-sized family businesses to social enterprises and large firms. For more information, visit https://kkcfke.org/

KKCF applies a competitive financing mechanism for disbursing donor funding to incentivize companies to start or scale existing operations in the Kakuma-Kalobeyei area. The process begins by advertising a call for proposals, applicants are then subjected to a competitive selection process leading to identification of companies that are best aligned to the Kakuma-Kalobeyei market dynamics to then deliver intended socio-economic impact to the host and refugee communities while also contributing to the development of Turkana County.

With the Kakuma-Kalobeyei area being a marginalized and fragile setting, KKCF supports these companies to manage business limitations prevalent in such challenging environments including limited access to financing, low availability of technically qualified and experienced staff, complex social and cultural conditions, slow and bureaucratic regulatory environment and fragmented, low income and remote markets with poor infrastructure. KKCF support includes provision of concessional capital, technical assistance and policy advocacy to improve the business environment. This collaborative Program focuses on building commercially viable and sustainable businesses that can:

• Increase incomes for both refugees and host communities.
• Provide essential goods and services.
• Create jobs and stimulate economic growth.
• Improve living standards for those in the refugee camp and surrounding communities.
• Promote financial inclusion efforts focused on increasing access to finance for women and youth.

KKCF is currently working with 105 commercially viable and sustainable microenterprises and 19 Small and Medium Enterprises (SMEs) across diverse economic sectors. One of the 19 SMEs is a Sacco Societies Regulatory Authority (SASRA) deposit-taking Savings and Credit Cooperative Society (SACCO). The SACCO has been in operation for a year in Kakuma and is looking to set up a credit management system and processes customized for the Kakuma Market.

3.0 About the Assignment

AECF is seeking the services of a Consulting Firm to support the SACCO in setting up a credit risk management system and processes customized for the Kakuma Market. The assignment will commence with a comprehensive review of its existing credit policy and procedures and loan underwriting capacity to identify gaps, and end with a customized credit policy framework and supporting manuals. The SACCO has a national membership of over 33,000 members, 3,500 of whom have been enrolled from the Kakuma–Kalobeyei area.

3.1 Purpose of the assignment

The purpose of these TORs is to define the scope, responsibilities, expectations, and deliverables of the engagement expected by AECF from the selected Consultant. The successful service provider must demonstrate experience and understanding of the refugee context and the Islamic banking/finance practices.

4.0 Specific duties and responsibilities (the “Services”) of the Consultant

The Consulting Firm will be expected to deliver on the following scope of the assignment:

a. Credit risk management needs assessment

• Conduct a comprehensive review of SACCO’s existing credit management policies and procedures applicable to the Kakuma Branch operations. This will include identifying gaps in knowledge, skills, and practices related to to loan portfolio monitoring
• Review the Kakuma Branch operations with a focus on risk identification, including concentration risk, operational risk, cybersecurity risk, market risk and, credit risk.
• Identify Kakuma Branch’s capacity to employ best practices in loan origination, loan portfolio monitoring and mitigating risk of loan defaults and loan recovery. This will include assessment of the loan origination process, loan underwriting skills, loan approval, disbursement, portfolio management, loan recovery and, compliance.
• Based on the assessment findings, develop a multiday training program for  SACCO staff involved in the entire loan life cycle. The program should enhance SACCO’s staff capacity in adopting best credit management practices across the loan life cycle. Clearly outline the expected outcomes and learning objectives of the training program.

b. Development of a credit risk management framework

• Design a market-specific credit management framework that aligns with Kakuma Branch operational context, particularly the fragile nature of the market it is operating in given the forced displacement setting.
• Incorporate risk mitigants in the credit policies, procedures and processes that help in identification and management of the various risks identified in managing Kakuma Branch’s loan portfolio. This should also include instituting compliance checks that ensure monitoring and adoption of these mitigants.  Design credit scoring models that will guide digitalization of lending in the MSME fragile market context.
• Develop detailed manuals and guidelines for loan origination and credit administration, incorporating industry best practices and compliance requirements including SASRA regulations.
• Establish clear performance metrics to evaluate the effectiveness of the newly developed framework.

c. Capacity building and training delivery

• Prepare training and capacity-building materials (decks, templates, tools) that address the identified gaps and new framework requirements.
• Facilitate training sessions for the SACCO teams, ensuring practical, hands-on learning and the application of new credit management processes.
• Assess the effectiveness of the training through feedback and post-training evaluations.

d. Reporting and insights

• Prepare and submit a comprehensive report outlining insights gained from the assignment, focusing on challenges and strategies specific to credit management in refugees and other fragile market contexts.
• Include actionable recommendations for sustaining improved credit management practices post-training.
• Provide an executive summary that highlights key findings, outcomes, and strategic recommendations.

e. Stakeholder engagement and communication

• Engage with relevant stakeholders, including loan officers and management, throughout the assignment.
• Conduct periodic progress updates and a final presentation of key deliverables to the company’s management team.

f. Evaluation and monitoring

• Develop a monitoring and evaluation plan to track the impact of the implemented credit management framework and training programs. Include measurable KPIs to assess improvements in credit appraisal and loan origination practices.

4.0 Deliverables

The Consulting Firm is expected to deliver the following:

1. An assessment/analysis report for the SACCO’s credit policies and procedures and loan officers’ skills with a gap analysis. This report will include recommendations on how to improve existing credit management policies to address the Kakuma Branch market dynamics.
2. Fit-to-purpose credit risk management tools that include frameworks and manuals for loan origination and administration and recovery customized for the Kakuma-Kalobeyei business environment and financial industry trends. These will also include clear paths to the attainment of competitive advantage and sustainability.
3. A training and capacity-building program and training materials for use by the SACCO for onward refresher training for their teams.
4. Metrics and tools to track and evaluate improvements made in the implementation of the credit management system over time.
5. An insights paper from this assignment highlighting the expected impact of adoption of the enhanced credit management framework for the SACCO.

5.0 Duration of the Assignment

The assignment is expected to be completed in three (3) months from the commencement date.

6.0 Reporting

The Consultant will report to the Senior Advisory Officer at the AECF and the KKCF Program Manager.

7.0 Proposal Submission

Interested and qualified consulting individuals or teams are invited to submit their proposal(s) comprising the following:

a) A technical proposal, max 10 pages (excluding annexes)

• An understanding of the consultancy requirements.
• Methodology and work plan for performing the assignment underpinned by a demonstration of value for money
• Detailed reference list indicating the scope and magnitude of similar assignments.
• Relevant services undertaken in the last five (5) years.
• Letters of reference from at least 3 previous companies/assignments
• Registration and other relevant statutory documents (this applies to Institutional consultants).
• All documents related to the technical proposal must be compiled into a single PDF file, organized with a clear Table of Contents

b) A financial proposal

• Clearly showing the proposed team member, roles, and proposed days and the proposed professional fee (daily rate and total amount per team member). The financial proposal shall also include an indication of reimbursables (travel, communication etc.). Currency to be in KES.

N/B: TECHNICAL AND FINANCIAL PROPOSALS BE SUBMITTED SEPARATELY. COMBINING THE FINANCIAL AND TECHNICAL DOCUMENT AS ONE DOCUMENT WILL AUTOMATICALLY DISQUALIFY THE APPLICANT.

8.0 Qualifications and Experience

The Consulting Firm should possess the following skills and/or credentials:

• Minimum of 5 years of experience in working with SACCOS and MSMEs in credit risk management or similar assignments for lead consultants.
• Experience in developing a credit management framework and manuals for SACCOs.
• Strong understanding of SACCO operations and business model.
• Experience in training teams and developing effective credit risk management policies and procedures.
• Experience in providing implementation oversight and staff training.
• Excellent analytical, communication, and reporting skills.
• Knowledge of the development sector and in particular, working in the Kakuma/Kalobeyei area is an added advantage.
• An advanced degree in credit risk management, banking, or a related field for the lead consultant(s) will be a plus.
• Experience in Islamic Finance will be a plus.

9.0 Evaluation Criteria

MANDATORY EVALUATION CRITERIA.

a)  Mandatory Requirements for firms: –

1. Company profile.
2. Trading license or Certificate of incorporation or Certificate of Registration and other statutory documents.
3. Valid Tax Compliance certificate (Applicable to firms).
4. Passport/National Identification of the lead consultant and key personnel

N/B: FAILURE TO ATTACH AND ADHERE TO THE ABOVE REQUIREMENTS WILL RESULT IN AUTOMATIC DISQUALIFICATION

An evaluation committee will be formed by the AECF and may include employees of the businesses to be supported. All members will be bound by the same standards of confidentiality. The consultant should ensure that they fully respond to all criteria to be comprehensively evaluated.

The AECF may request and receive clarification from any consultant when evaluating a proposal. The evaluation committee may invite some or all the consultants to appear before the committee to clarify their proposals. In such an event, the evaluation committee may consider such clarifications in evaluating proposals.

In deciding the final selection of qualified bidder, the technical quality of the proposal will be given a weighting of 80% based on the evaluation criteria. Only the financial proposal of those bidders who qualify technically will be opened. The financial proposal will be allocated a weighting of 20% and the proposals will be ranked in terms of total points scored.

The mandatory and desirable criteria against which proposals will be evaluated are identified in the table below.

10.0 Pricing

The AECF is obliged by the Kenyan tax authorities to withhold taxes on service contract fees as well as ensure that VAT, is charged where applicable. Applicants are advised to ensure that they have a clear understanding of their tax position with regards to provisions of Kenya tax legislation when developing their proposals.

11.0 Application Details

The AECF is an Equal Opportunity Employer. The AECF considers all interested candidates based on merit without regard to race, gender, colour, national origin, religion, sexual orientation, age, marital status, veteran status, disability, or any other characteristic protected by applicable law.

• Interested consultancy firms are requested to submit their technical and financial proposal to aecfprocurement@aecfafrica.org by 12^th June, 5pm EAT
• All questions should be directed to the procurement email by 5^th June 2025, 5pm EAT.
• The subject of the email should be “TERMS OF REFERENCE FOR CONSULTANCY SERVICES TO DEVELOP CREDIT RISK MANAGEMENT FRAMEWORK IN KAKUMA-KALOBEYEI AREA”. The AECF shall not be liable for not opening proposals that are submitted with a different subject or responding to questions that did not meet the deadline as indicated.

 12.0 Disclaimer

AECF reserves the right to determine the structure of the process, number of short-listed participants, the right to withdraw from the proposal process, the right to change this timetable at any time without notice and reserves the right to withdraw this tender at any time, without prior notice and without liability to compensate and/or reimburse any party.

The AECF does not charge an application fee for participation in the tendering process and has not appointed any agents or intermediaries to facilitate applications. Applicants are advised to reach out directly to the AECF Procurement Department.