Technical assistance to support the Cooperative Financial Sector Modernisation

Reference: PX/VCT/0639
Location: St Vincent and the Grenadines
Duration: 6 Months
Closing Date: 23 Nov 2012

Background

A limited number of institutions, especially the credit unions, currently dominate the provision of finance to the small business sector in St Vincent and the Grenadines. The importance and need for effective and creative financing for catalysing small business was a key recommendation of the Micro, Small and Medium Enterprise (MSME) Policy and Strategy which was approved by the Government of St. Vincent and the Grenadines in 2010.

The recent global financial crisis (2007/08), together with the collapse of a number of major financial institutions in the Caribbean, has had a direct impact on the St Vincent and the Grenadines cooperative sector, including on those credit unions which held overseas investments. These experiences underscored the need for enhanced supervision and regulation of all financial institutions, including non-bank financial institutions, across the Caribbean. The revised Cooperatives Act (2012) and the new consolidated regulatory arrangements for the financial sector (including the Financial Services Authority Act (2011) means that all financial institutions in St Vincent and the Grenadines are now under great pressure to modernize (including their governance and management structures) and operate with greater efficiency and openness (e.g. with respect to financial reporting etc.). A new regulatory agency for oversight of financial institutions, including credit unions, has been created.  The Financial Services Authority (FSA) is expected to become fully operational in the near future.

The apex body for credit unions in St Vincent and the Grenadines, the St Vincent and Grenadines Cooperative League Limited (SVG Cooperative League), faces a number of challenges including ensuring adequate leadership succession for credit unions as well as enhancing membership (especially from those within the 18 – 35 age bracket). At the same time, the performance of a number of its member credit unions, particularly those operating in more rural locations, has been poor for a number of reasons. These include undeveloped governance structures, weak operational and management systems (e.g. weak risk-based loan appraisal), an outdated and limited range of financial products and services on offer as well as inadequate regulatory compliance and financial monitoring. The SVG Cooperative League has also recently been involved in facilitating discussions with respect to the potential amalgamation of a number of credit unions.

In November 2010, the St Vincent and the Grenadines Small Business and Microfinance Cooperative Limited (COMFI) was incorporated as a limited liability second-tier financial cooperative co-owned by the SVG Cooperative League and its nine member credit unions with the aim of expanding affordable financing, efficient transactional services and reliable development support to MSMEs throughout St Vincent & the Grenadines. The COMFI Board has been formally constituted and is charged with taking the organisation forward.

In response to a request from the Government of St Vincent and the Grenadines, the Commonwealth Secretariat has agreed to support a programme of technical assistance with a view to strengthening and modernising the cooperative sector. The SVG Cooperative League has agreed to work with the Commonwealth Secretariat and will play a key role in supporting the process.

Objective

The objective of the project is to strengthen the provision of financial services to small business in St Vincent and the Grenadines. This is to be achieved by the provision of technical assistance designed to enhance the organizational capabilities and service delivery of the SVG Cooperative League and selected credit unions.

Outputs

Three outputs are envisaged: 

• SVG Cooperative League Strengthened : Assistance will be provided to enable the SVG Cooperative League to better respond to the changing service and product needs of its members. Interventions will also be designed to identify ways to make the SVG more financially self-sufficient as well provide clear recommendations for staff reorganisation and the enhancement of internal procedures. This will require, amongst other things, an examination of the operation of the Central Finance Facility.
• Structural and Operational Deficiencies of Credit Unions Addressed:  Guidance and advice is to be provided to a selected number of credit unions with a view to addressing any critical structural weaknesses (e.g. strategies to enhance capital adequacy requirements in line with relevant international standards etc.) and operational shortcomings (e.g. ways to upgrade risk management and financial control mechanisms, etc.). The identities of the credit unions to be analysed will be agreed during the Inception Mission. However, it is expected that at least one of the credit unions will have a significant rural constituency or presence.
• Awareness of Financial Services Legislation, Regulations and Reporting Standards Raised: Working with staff of the newly created FSA where necessary, the project will support a number of events, including training, designed to facilitate a better understanding of the new legislation, regulations and reporting standards by all relevant financial institutions currently servicing the needs of small business. 

Activities

Undertake Comprehensive Institutional Assessments
A detailed institutional analysis of the SVG Cooperative League will be undertaken to identify risks and weaknesses in its structure, governance, management and operations (including IT systems). At least three credit unions will be subject to detailed financial and institutional analyses with a view to identifying structural and operational deficiencies in the light of the new Financial Services Regulation Act, including with respect to their operating strategy, credit risk, financial reporting and legislative compliance.

Design and implement training programme for SVG Cooperative League and selected Credit Unions
A programme of specific in-country development programmes as well as any necessary off-site mentoring will be developed and implemented. This will include: i) designing and implementing relevant leadership development training programmes for senior SVG Cooperative League members ii) designing and implementing ‘fitness for purpose’ training for staff and Directors of credit unions in line with Financial Action Task Force (FATF) and other regulatory requirements.

Design and implement awareness-raising programme (New Legislation, Regulations and Reporting Standards)
This will involve hosting a small number of events (e.g. symposia) across the islands as well as through the training courses developed for current and potential credit union leaders. 

Key Deliverables

Institutional Development Plans (Credit Unions & SVG League)
Detailed Institutional Development Plans will be produced for each of the credit unions reviewed as well as the SVG Cooperative League. The plans will be developed in close involvement and participation of senior managers in the relevant credit unions and will be realistic, containing specific recommendations and remedial actions.

Updated SVG League Business Plan
The SVG League Business Plan will be designed to address deficiencies identified from the assessment of the SVG Cooperative League, including actions to enhance the League’s organizational structure, policies and internal procedures, and staffing arrangements in keeping with its revised mandate and strategic goals.

Member Education and Leadership Development Programme for SVG Cooperative League and Credit Union Leadership
A number of leadership development courses for current and potential credit union leaders will be organised. A number of ‘fitness for purpose’ training courses will also be organised. Recommendations for staff development, including attendance at relevant forthcoming seminars and conferences within the region, will also be made.

Reports

A number of reports will be produced for monitoring purposes. All reports will be submitted in advance in draft formats to the Commonwealth Secretariat and the SVG Cooperative League for consideration. During the Inception Mission, agreement will be reached with the SVG Cooperative League on the format to be adopted for keeping the credit unions informed and updated on project progress.

• An Inception report will be produced setting out a detailed timetable and programme of work taking into account any new significant developments. The Inception report will be concise and shall not exceed 15 pages (A4), excluding annexes. The Inception report will be submitted within two weeks of the Inception Mission.
• A Mid-term Report shall be submitted within three months of the Inception Mission.
• A Final Report shall be submitted at least two weeks before the end of the project (scheduled June 2013).

All reports will provide an update on COMFI’s latest development including any evidence of support being provided to small business.

Duration

The project is expected to be implemented over a six month period commencing December 2012 or thereabouts. In any event, the project shall not extend beyond the end of June 2013.

Professional qualifications and experience

Bids are invited from individual consultants, consultancy firms and other legally established entities in the Commonwealth.

All experts will be educated to Masters’ level and possess relevant qualification(s) in economics, accountancy, law, finance, business administration or other relevant disciplines. Practical experience in the day-to-day management/ administration of a successful credit union will be highly desirable.

The lead consultant, or team leader, will be a recognised finance expert with considerable practical experience (at least 15 years) in the setting up of and/or restructuring of financial institutions, especially credit unions and other microfinance institutions, in developing countries. The team Leader is required to have significant relevant working experience gained in the Caribbean region and to have an intimate knowledge of the credit union system as it operates across the Region. Familiarity of the work of other relevant technical assistance programmes in the Caribbean, including the Caribbean Regional Technical Assistance Centre (CARTAC), as well as other development assistance programmes (e.g. World Council of Credit Unions), would also be a significant advantage.

The team leader is also expected to possess excellent communication skills, including the ability to present some complex legal and technical language into simpler terms for more lay persons.

A good knowledge of systems used for monitoring the performance of credit unions, especially the PEARLS monitoring system, is essential. At least one team member must be able to demonstrate practical experience in delivering training in the use of the PEARLS Monitoring System and the ability to assess the technological requirements for full implementation would also be an advantage.

Budget

The maximum funding available for this project will be £84,000 payable through an all-inclusive contract.

The consultant is expected to have good access to local administrative and backstopping services. Evidence of this will be sought.

SVG Cooperative League will be responsible for obtaining all relevant permissions, including from government authorities, needed to support project implementation. Limited office space and other facilities, e.g. internet access, will also be made available to the consultants at the SVG Cooperative League.

Further Information

How to apply

Terms of Reference - Technical assistance to support Cooperative Financial Sector Modernisation