File size: 851.9 kb
About Savings Groups and the Project
The Government of Rwanda, has recognized Saving Groups as first entry financial access points toward financial inclusion as their members receive basic financial education (savings, loans, insurance) that can be leveraged on to introduce them the formal financial market. Based on this understanding, AFR previously partnered with CARE International Rwanda to implement a “Village Savings and Loan (VSL) Scale-Up Project” in 17 districts with the main goal of improving the livelihoods options, social capital and financial capabilities of poor and vulnerable Rwandans (70% women) by facilitating them to join community-based saving groups.5, 580 VSL groups with 172,142 members were created.
According to Finscope 2016, 72% of the Rwandan adult population use informal saving groups together with other formal financial products and services and 21% solely use informal groups. As noticed, majority of the members in the saving groups are women and smallholder farmers and they find it easier and friendlier to use SG for their financial transactions.
Despite their vital importance, Savings Groups are limited in terms of scope and capacity to deliver a wide range of financial products and services to their members. For example, as groups mature, they increasingly require more sophisticated products that cannot be offered by their Savings Groups, hence the need to formally include SGs members to Financial Services Providers (FSPs) that are well equipped to provide adequate financial products and services to the underserved low income segment of the Rwandan population.
In view of the above, AFR and CARE have entered into a partnership to build the capacity of 120,000 smallholder farmers organized into Village Saving and Loan Groups on financial education, business and hands-on agronomic skills and link them to formal FSPs.
The project will also support FSPs develop and provide agriculture and non-agriculture financial products that respond to the needs of the SGs members; thus farmers will be able to access and use appropriate financial products to increase productivity and access more rewarding markets and bringing a change in their livelihoods.
Though the problem statement seems to be well understood, CARE International in Rwanda and AFR seek the services of an Expert consultancy firm to assess the financial needs of the SG members and evaluate the capacity of selected FSPs to respond to the identified needs with a focus on agriculture financial products.
Scope of Work.
The consultant should be able to respond to the following two big questions:
More specifically, the consultant will closely work with the CARE Rwanda team, VSLA members and the selected Financial Institutions to assess and make recommendations on the following:
(i) Demand side: understanding the financial needs of the SG members
The assessment should help to understand the financial needs of the SG members and
provide responses to the following key questions :
What are the different sources of finance for SG members and what would be the
most important considerations for them when choosing a financial service provider?
What is the relative importance of MFIs and SACCOs to the SG members?
What are the nearest MFIs or SACCOs available to the SG members?
What products and services are needed by SG members in comparison to what is
currently supplied by MFIs/SACCOs?
What is the actual effective cost (direct and indirect) of accessing financial services
for the SG members? What are the key factors that smallholder farmers/VSLA
members consider before deciding to apply for a financial product or service?
What are the experiences of the members in accessing loans through their groups?
Focus should be on the process, good/ bad experience;
(ii) Supply side: Understanding the supply of financing to small holder farmers with a focus on
Specifically, the study will explore the following supply-side questions:
Which institutions are providing group lending services in its true sense?
What are the different products on offer, how are they developed and are they
adapted to the profiles of the target client segments?
Which MFIs (if any) are providing credit to borrowers without formal collateral? How
does the portfolio quality of these MFIs compare with the others that insist on
Do they exclude lending to SG members? and if so what is the reason behind this
What are the MFIs and SACCOs loan terms and conditions; to what extend are they
meeting needs of smallholder farmers?
What are the gaps (both institutional and regulatory) that may be preventing FSPs
from lending to smallholder farmers and how can these gaps be effectively bridged?
To what extent do the FSPs incorporate Financial Education in their services to
stimulate demand for financial products?
How long does it take to process customer feedback from the SACCO/MFIs?
(iii) Legal and Regulatory enablers and hindrances
Besides the effort of the Government of Rwanda to established a conducive environment, to support
the development of the Microfinance sector, the level of formal financial inclusion in Rwanda is still
at 68% according to FinScope 2016; therefore if there are any legal and regulatory hindrances that
prevent the performance of the microfinance sector;
Are there any shortcomings in the market set up that need to be addressed?
Are there any ‘leakages’ in the legal framework which need to be corrected?
How has the regulation and level of supervision influenced the performance of the
4. Approach and methodology
The consultant will determine appropriate methods to collect the necessary data and views from
stakeholders such as key informant interviews, focus group discussions with clients,
questionnaires, documentation review, as appropriate. The methodology will be shared with
CARE and AFR at a kick-off meeting for validation.
An inception report detailing the approach, methodology and work plan
A detailed report of the financial needs of the SG members and identified gaps of the FSPs to
support linkage activities
Recommendations on how FSPs can be supported to offer appropriate financial products and
services to SG members.
A detailed implementation plan of the above recommendations with clearly defined timelines
6. Required competences
The following key competences are required for this assignment:
Significant prior experience with conducting similar assignments in Rwanda or within
Demonstrated familiarity with regard to research relating to financial inclusion or
access to financial services;
An academically qualified team led by a principal with relevant Masters level
qualifications and a track record of at least minimum of 8 years in the field of saving
groups and microfinance;
Demonstrated ability to work in a multicultural setting;
Excellent report writing and communication skills in English and ability to
communicate in French and Kinyarwanda (local language) for some of the team
The consultant will be engaged for a period of 20 working days