Procurement Notices

General Background

UNCDF is the UN’s capital investment agency for the world’s least developed countries (LDCs). It creates new opportunities for poor people and their communities by increasing access to inclusive finance and investment capital. UNCDF focuses on Africa and the poorest countries of Asia and the Pacific, with a special commitment to countries emerging from conflict or crisis. It can provide seed capital (both grants and loans) as well as technical support to improve poor peoples’ lives.

UNCDF’s remittance strategy is designed with a goal to harness the potential and deepen the developmental impact of international remittances by improving domestic resource mobilization and advancing financial inclusion. It does so by encouraging mechanisms for convenient and affordable access to digital remittance channels and increased usage of remittance-linked financial products throughout the remittance value chain from the sender to the receiver.

All aspects of the UNCDF Migration and Remittances Programme are informed by a systematic gender mainstreaming strategy. UNCDF is convinced that remittances will never achieve their full potential unless gender dimensions are considered. If done right, digital remittances could be a powerful means to empower migrant customers and contribute to inclusive development

To accomplish this objective, UNCDF utilizes its internal technical capacity to provide remittance and financial service providers a strong business case for developing digital remittance products and remittance-linked financial products that not only cater to the needs of migrants and their families, but also improve the impact on the real economy, both in terms of economic inclusion and job creation.

Improving International Remittances by Supporting Interoperable Payment Systems

International remittances, defined as money transfers sent by migrants to their family members or other loved ones back in their country of origin, contribute towards achieving increased resource mobilization as committed in the Addis Ababa Agenda. Remittances also directly impact the following objectives in the Sustainable Development Goals (SDGs) Agenda:

• Indicator 10.c: By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent
• Indicator 17.3: Mobilize additional financial resources for developing countries from multiple sources
• Indicator 17.3.2: Volume of remittances (in USD) as a proportion of total GDP

Remittances help increase the disposable income of migrant families, which leads to increased consumption and investment, including investment in health, education, and local businesses. Therefore, remittances also impact SDG 1 (No Poverty), SDG 4 (Quality Education), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 16 (Peace, Justice, and Strong Institutions).

Despite their importance on attaining SDGs, international remittances still face many challenges for their potential to be fully realized, among which the lack of interoperable payment systems (or interoperability schemes) in the receiving countries – interoperable payment systems are defined here as national or regional retail instant payment systems incorporating banks, digital financial services providers, remittance services providers, and/or other financial service providers as platform participants. For example, despite the improvement of banking agents or mobile money agent networks in many countries, issues of lack of liquidity remain a serious challenge faced especially in remote areas. Interoperable payment systems could improve both the capacity of agents to remain liquid at lower costs and allow recipients to receive their money through the distribution agent that is closest to their location at a reduced price. Moreover, interoperable payment systems in receiving countries would allow Mobile Money Service providers, Remittance services providers and banks to build fruitful services that could allow recipients to receive money through the mobile money service provider of their choice and would improve the likelihood of remittances to be used as a solid tool for the financial inclusion of beneficiaries. Indeed, they would be able to use seamlessly the amounts received to benefit from other value-added services: merchant payment, credit, insurance, etc.

However, building interoperable payment systems is a complex task that requires a consensus around the market failure problem to be solved and the proposed solution by participants, regulators, and others with a stake in the success of a scheme and the buy-in of the stakeholders to the plan (CGAP 2021).

The experience of UNCDF in improving international remittance by supporting Governments, Central Banks, or Regional Economic Community (REC) stakeholders in building interoperable payment systems has revealed the need for more capacity building literature on the topic.

To confirm this empirical conclusion, UNCDF conducted an initial review of existing literature to identify the form and structure of a possible engagement framework with governments and other stakeholders.

There are many resources in the public domain on building interoperable payment networks – for example,

GSMA (“Groupe Special Mobile” Association), ITU (International Telecommunication Union), BTCA (Better Than Cash Alliance), World Bank Group, IFC (International Finance Corporation), CGAP (Consultative Group to Assist the Poor), WEF (World Economic Forum), BIS (Bank for International Settlements), USAID (United States Agency for International Development).

The list of documents reviewed is presented on Annex 1.

This research has indicated that the current literature would benefit from additional resources. Specifically, the research revealed that few resources:

• Presented the topic from the perspective of Governments, Central Banks, or REC stakeholders willing to introduce interoperable payment systems
• Provided practical, step-by-step approaches to build the capacity of stakeholders introducing the interoperability schemes and
• Proposed decision-making tools that would help championing stakeholders to proactively factor in the ambition to spur the growth of international remittances in their countries/regions.

UNCDF intends to bridge that gap by drafting a handbook on the implementation of interoperable payments schemes led by Governments, Central Banks, or Regional Economic Community (REC) stakeholders. Doing so, UNCDF will address the interoperability topic with the aim of ensuring countries/regions are capable to build or to evolve their payment systems with the view of both creating more opportunities for themselves and to mobilize additional financial resources, in particular through inbound remittances, towards facilitating affordable access to formal remittance and financial services for migrants and their families.

Objectives

UNCDF is looking for a consulting firm to develop a handbook on the implementation of interoperable payments schemes led by Governments, Central Banks, or Regional Economic Community (REC) stakeholders.

The handbook should guide these stakeholders through the process of planning, designing, launching, and governing a local/regional interoperability scheme.

The handbook will build on the extensive existing literature. It will make appropriate use of this public knowledge (with clear eferencing and permissions where required) and will provide easily adaptable guidelines, frameworks, and checklists that can transform this Body of Knowledge into a guide for action for the Governments, Central Banks, and RECs.

To initiate this handbook assignment, UNCDF has identified an initial set of learning questions that may be of interest to Governments, Central Banks, or RECs when building an interoperability scheme:

• Legal, regulatory and oversight frameworks:

1. What are the legal and regulatory considerations to support the operations of the domestic and regional interoperability solutions? Including overcoming gender biases and exclusion of marginalized customers?
2. What are the key considerations to ensure that the interoperability scheme aligns with the intent of protecting data ownership, ensuring safe storage, promoting privacy & security?
3. What are the key considerations for developing/updating an effective oversight framework for testing and monitoring new types of payment services offered through the domestic or regional interoperability solution?

• Customer Empowerment:

1. What is the importance of domestic and regional interoperability solutions as the basis for financial inclusion and resilience of (women) migrants and guaranteeing inclusive and gender responsive remittance services? In particular, how can interoperability solutions benefit women and other 'last mile groups' and how will they lead to new kinds of specialized remittance products that meet women migrant’s specific needs with more convenience?

• Investment:

1. How much does it cost to implement/enhance a domestic interoperability or regional interoperability solution? What are the considerations for pricing of services, i.e., how will the system participants pay for the services utilized – on a cost recovery basis or for profit?
2. How can governments estimate the benefit of implementing/upgrading a domestic or regional interoperability solution, especially on the flow of inbound remittances?
3. Is a link to the national ID, digital ID, eKYC and/or credit registry platform required to improve cost effectiveness and transaction processing speed?

• Governance:

1. What would be the starting point for governments when coordinating with different departments/line ministries who may be involved in the implementation of the domestic or regional interoperability solution (key considerations include, but not limited to, who should take ownership of the assessment/investment in such a solution (Central Bank/Line ministry), responsible departments for procurement, implementation, risk management, clearing and settlement function, and supervision)?
2. What are some of the key considerations for deciding, by the government/central bank, whether to operate an interoperability platform in-house or outsource the same to a public or private entity?
3. What are the key considerations to ensure that the interoperability scheme aligns with the intent of protecting data ownership, ensuring safe storage, promoting privacy & security?
4. What are the unifying metrics that would bring public and private sector stakeholders to better analyze the returns on this investment – for example long-term government savings, private sector efficiencies, increased speed, reduced transaction costs for customers, increased market competition – as it can take years to materialize and how can these metrics be incorporated in a logical results measurement framework over an extended period of time?

• Commercials:

1. What are the key considerations when selecting platform vendors?
2. How can the core design of interoperability solutions incorporate the right set of incentives so as to enable and facilitate the inclusion of the diverse set of local and international players operating in the market (banks, fintech, e-money providers, etc.) including those whose business models might face pressures, in the short-term, with the introduction of the platform?
3. What are the potential opportunities for including these diverse players – private sector banks, foreign banks, rural banks, public sector banks, payment banks and other specialized banking institutions, non-banking financial institutions (remittance service providers, mobile network operators, etc.), payment system operators and service providers - and creating a stake for them in the platform’s success?

Based on the above, how can the design of the interoperability scheme (domestic and/or regional) facilitate inbound/outbound remittances through formal channels to their full potential and contribute to the reduction of remittance transaction costs for migrants and their families (last mile of distribution costs - liquidity, agent commission structure, etc. or better earning potential and economies of scale for market participants due to increased revenues and liquidity that may allow for the benefits to be cascaded to the end customers)

The handbook will build and expand on the initial literature review performed by UNCDF mentioned in the Scope of Work and Deliverables Section. The consulting firm is expected to:

• Review the existing set of learning questions and draft the relevant frameworks, guidelines, and checklists identified by UNCDF’s team.
• Identify additional practical learning questions that are relevant at every phase: Planning, Design and Launch phase.
• Identify and draft frameworks, guidelines, and checklists for the additional sets of learning questions. At minimum, the content drafted must address scheme design and governance structure, including scheme rules, participant eligibility, settlement, and dispute resolution.

The handbook and its different components will be considered a public good for the broader global effort to improve remittances. These outputs will be disseminated and placed in the public domain after appropriate consultation, with the intent that they be freely and widely used by Governments, Central Banks, and REC stakeholders.

Scope of Work and Deliverables

The consulting firm with demonstrated experience in payments infrastructure and financial services will perform the following activities:

• Desk research on domestic and regional interoperable payment schemes:

1. From the standpoint of governments, and considering the various possible governance models, provide an overview including pros and cons of national and regional interoperable payments schemes. Examples may include, and not limited to, the GIMAC (Groupement Interbancaire Monétique de l’Afrique Centrale) Pay platform and TCIB (Transactions Cleared on an immediate Basis) payment scheme from the SADC (Southern African Development Community) Banking Association, amongst other similar solutions across geographies. For reference, a list of existing interoperability schemes is provided in Annex 2 of this document
2. Document the success and failure factors from existing regional interoperable payment scheme implementation around the globe. Augment with learnings from national interoperable payment schemes from widely published literature.
3. Identify new learning questions
4. Identify new guidelines, frameworks, checklists that can address the new learning questions identified.
5. Draft detailed handbook outline, including section headings and checklists anticipated to be included in the drafting stage.
6. Identify key individuals involved in the interoperability schemes, at different stages of design, implementation, and supervision, that will be contacted during the key informant interview phase including, but not limited to:

• Financial regulators and policymakers from major migrant corridor countries
• RECs
• Interoperability service providers (e.g., platforms, hubs, etc.)
• Remittance service providers (Money Transfer Operators)
• DFS providers, both cross-border and local.
• Global industry experts and interoperability thought leaders

• Conduct interviews with minimum 50 identified key stakeholders and finalize the outline of the handbook:
  1. Gather insights from government and industry stakeholders that were directly involved in building domestic and, especially, regional interoperability schemes. The insights from these interviews should enable the consulting firm to identify additional learning questions of particular interest to government, Central Bank, and REC stakeholders.
  2. Gain an understanding of global research on domestic and regional interoperability schemes. The insights from these interviews should enable the consulting firm to propose frameworks, guidelines, and checklists that will expand the global Body of Knowledge on interoperability.
  3. Finalize the list of learning questions for the planning, design and launch phase
  4. Finalize the list of frameworks, guidelines, and checklists for each phase
  5. Finalize handbook outline using insights from interviews.

• Handbook drafting
  1. Build guidelines, frameworks, checklists already identified addressing the initial learning questions:
• Legal, regulatory and oversight frameworks:
  1. What are the legal and regulatory considerations to support the operations of the domestic interoperability solution?
     • Based on global good practices, identify different laws and regulations that are needed to support operation of interoperable platform.
  2. What are the key considerations for developing/updating the oversight framework for new types of payment services offered through the domestic or regional interoperability solution?
     • From experience of different countries, what are good practices for the financial regulator to oversee such platforms?
     • What are the considerations for data localization, given that some platform providers (if they are third-party platforms) may store consumer/transaction data outside the country?
• Investment:
  1. How much does it cost to implement a domestic interoperability or regional interoperability solution? Whether the investment in such a solution may improve or not the flow (and termination) of inbound remittances in digital channels?
     • From experience of different countries, especially those where FSPs have integrated with global payment networks and international hubs (such as Ripple, MFS Africa, Thunes, TerraPay, etc.), provide a Cost-analysis tool allowing governments to assess the cost of implementing a domestic interoperability or regional interoperability solution?
     • A framework to help governments decide whether to build national interoperable payment systems or join existing regional/global payment systems. The framework will enable governments to 1) assess market conditions; 2) build their interoperability strategy; and 3) clearly identify the pros and cons of different interoperability options, especially if improving remittance (forex) flows through affordable digital channels in a key objective for the government.
     • A cost-benefit analysis of integrating such platforms with existing ID, digital ID, eKYC and/or credit registry platforms versus having the developer provide a solution that already incorporates a KYC utility in the solution.
  2. How can governments estimate the benefit of implementing a domestic or regional interoperability solution, especially on the flow of inbound remittances?
     • Build a framework allowing governments to estimate the benefits of implementing a domestic or regional interoperability solution on the flow of inbound remittances with key metrics on resource mobilization, increase in government revenues, reduction in public expenditure, resource rents, etc.
  3. How can governments improve the benefits of implementing a domestic or regional interoperability solution to facilitate inbound/outbound remittances through formal channels to their full potential?
     • Build a framework allowing governments to improve the benefits of implementing a domestic or regional interoperability solution to facilitate inbound/outbound remittances through formal channels to their full potential with key metrics from experience of different countries that may include scheme- pricing, volumes, use-cases, competition, market participation, etc.
• Governance:
  1. What would be the starting point for governments when coordinating with different departments/line ministries who may be involved in the implementation of the domestic or regional interoperability solution (key considerations include, but not limited to, who should take ownership of the assessment/investment in such a solution (Central Bank/Line ministry), responsible departments for procurement, implementation, risk management, clearing and settlement function, and supervision)?
     • Practical guidelines for building and sustaining momentum amongst the platform participants and other public and private-sector stakeholders. For example, the guidelines will allow governments to assess priorities of the stakeholders (platform participants, regulators, other stakeholders involved in interoperability).
  2. What are some of the key considerations for deciding, by the government/central bank, whether to operate an interoperability platform inhouse or outsource the same to a public or private entity?
     • Decision making framework
  3. How will the remittance and payment services be priced for system participants? A high-level cost benefit analysis of how cost recovery and for profit options compare, especially in the context of the public policy objective of promoting low cost remittance flows.
  4. What are the key considerations to ensure that the interoperability scheme aligns with the intent of protecting data ownership, ensuring safe storage, promoting privacy & security?
     • Decision making framework
• Commercials:
  1. What are the key considerations when selecting platform vendors?
     • Define the criteria that governments and regional central banks/economic communities can use for procurement of domestic and regional interoperability services.
  2. How can the core design of interoperability solutions incorporate the right set of incentives so as to enable and facilitate the inclusion of the diverse set of players operating in the market (banks, fintechs, e-money providers, etc.) including those whose business models might face pressures, in the short term, with the introduction of the platform. What are the potential opportunities for including these diverse players – private sector banks, foreign banks, rural banks, public sector banks, payment banks and other specialized banking institutions, non-banking financial institutions (remittance service providers, mobile network operators, etc.), payment system operators and service providers - and creating a stake for them in the platform’s success?
     • Based on a detailed analysis of successful experience from top 5 countries, especially where governments/central banks have taken a lead role, provide clear guidelines allowing government to choose the right incentives to include the diverse players of the market.
  3. Based on the above, how can the design of the interoperability scheme (domestic and/or regional) contribute to the reduction of remittance transaction costs for migrants and their families ( last mile of distribution costs - liquidity, agent commission structure, etc. Or better earning potential and economies of scale for market participants due to increased revenues and liquidity that may allow for the benefits to be cascaded to the end customers)
     • Provide a design framework allowing the government to factor in the scheme, the intention to reduce the cost of remittance for migrants and their families
     • Build additional guidelines, frameworks, checklists that were not previously identified but that address the initial learning questions.
     • Build various guidelines, frameworks, checklists to guide governments and regional central banks/economic communities to address the remaining learning questions identified.
     1. Compilation of the guidelines, frameworks, checklists into a comprehensive handbook.
     2. Update the handbook after reviews from UNCDF and external stakeholders.

Expected Outputs and Deliverables

Timeline, Duration of Assignment, Duty Station and Expected Places of Travel

• Timeline and duration of assignment: Six (6) months, from 20 June 2022 to 30 December 2022
• Duty station: home-based
• Expected places of travel: If travel is required of the consulting firm, payment of travel costs including tickets, lodging and terminal expenses shall be agreed upon as per UNCDF policy, between the respective business unit and consulting firm, prior to travel.

Provision of Monitoring, Progress Controls and Payments

Payment shall be made only upon satisfactory completion and UNCDF’s written acceptance of each deliverable duly approved by the Lead Specialist, Migration and Remittance portfolio.

Disbursement of the final payment shall require a signed performance evaluation of the consulting firm.

Application:

Technical proposal:

The firm shall submit a signed technical proposal outlining the experience of the firm relevant to the assignment; the methodology and work plan for performing the assignment; and management structure and qualification of key personnel. The technical proposal, which will account for 70% of the total score, should be based on the following aspects, which will also form the basis for evaluation:

1. Expertise of the Firm [weight of 20% of technical score]
   • Relevant experience in national and regional interoperable payments schemes. Examples may include, and not limited to, the GIMAC (Groupement Interbancaire Monétique de l’Afrique Centrale) Pay platform and TCIB (Transactions Cleared on an immediate Basis) payment scheme from the SADC (Southern African Development Community) Banking Association, amongst other similar solutions across geographies. (10%)
   • Relevant experience in conducting market research and interviews at the global level. (10%)
2. Methodology, Its Appropriateness to the Condition and Timeliness of the Implementation Plan [weight of 45% of technical score]
   • Overall and detailed approach to the work, including the sequencing of the work, engagement with UNCDF and external stakeholders, and the review process of deliverables. (as per TOR in Section 5) (45%)
3. Management Structure and Qualification of Key Personnel [weight of 35% of technical score]
   • A Master’s degree or equivalent in technology, economics, finance, public/business administration, social sciences, or related discipline or the equivalent experience. (5%)
   • Minimum of five (5) years of progressively responsible experience in payment systems is mandatory. Minimum of two (2) years of progressively responsible experience in banking, financial service sector, international remittances or related experience in the private sector or an international organization is mandatory. (10%)
   • Functional understanding of payment systems, banking, and other retail financial services is mandatory. (5%)
   • Experience working with the mass market, including rural or low-income communities, related to payments and financial services is mandatory. (5%)
   • Experience in conducting qualitative research, particularly related to financial inclusion. (5%)
   • Experience engaging diverse set of public and private sector stakeholders, government departments, and industry associations. (5%)

Financial proposal

For the Evaluation, the financial proposal will be weighted at 30%. The financial proposal must be submitted in the format as described in Form F.

Evaluation

The formula for the rating of the Proposals will be as follows: