Annex 1b - Ministry of Industry, Trade and Cooperatives · Annex 1b REPUBLIC OF KENYA MINISTRY OF...
Transcript of Annex 1b - Ministry of Industry, Trade and Cooperatives · Annex 1b REPUBLIC OF KENYA MINISTRY OF...
Annex 1b
REPUBLIC OF KENYA
MINISTRY OF INDUSTRY, TRADE AND COOPERATIVES
STATE DEPARTMENT FOR INDUSTRIALIZATION
REQUEST FOR EXPRESSIONS OF INTEREST
(CONSULTING SERVICES – FIRM SELECTION)
Project Name: Kenya Industry and Entrepreneurship Project (KIEP)
Project ID: P161317 (Credit No.: IDA 6260-KE)
Assignment Title: MANAGEMENT OF SUPPORT TO SMEs THROUGH
CAPACITY ASSESSMENT AND PERFORMANCE BASED
FUNDING
Reference No.: KE-SDII-61548-CS-QBS
TERMS OF REFERENCE FOR THE CONSULTANT
Terms of Reference: SME Linkages and Upgrading
Programme
1. BACKGROUND
The Government of Kenya (GoK) will be implementing the Kenya Industry and
Entrepreneurship Project (KIEP), designed with the assistance of the World Bank Group.
The Project Development Objective is to increase innovation and productivity in select
private sector firms, in line with Kenya’s Vision 2030 and its Second and Third Medium
Term Plan 2010-2017 (MTP2 and MPT3) that have set ambitious growth targets in private
sector employment generation and productivity.
The Project’s direct beneficiaries are primarily formal private sector firms in Kenya, but
also include incubators and accelerators, technology bootcamp providers, small and
medium-sized enterprises (SMEs), and corporates, as well as select tertiary education and
technology bootcamp students. It consists of three components: (i) Strengthening the
innovation and entrepreneurship ecosystem; (ii) SME Linkages and Upgrading; and
(iii) Project implementation support and M&E.
The SME Linkages and Upgrading component of KIEP (Component 2) aims to increase
productivity and innovation within established Kenyan SMEs by supporting select firms to
improve their managerial and technical skills and their access to and use of technology so
that they can link to and become suppliers to large firms in Kenya. This component will
work both with individual SMEs across various manufacturing and trade-exposed service
sectors, and with SMEs who already (or wish to) supply large firms in Kenya. Eligible
SMEs accepted into the program will receive an integrated package of diagnostic and
advisory services, and financial support for the implementation of changes necessary to
their innovation, increased productivity and competitiveness. This component will be
delivered as an integrated package by a consultant selected by the GoK through this
procurement process.
For the implementation of this component, the GoK is seeking to competitively select and
procure a Consultancy that will be responsible for all aspects of component delivery and
administration including: (i) outreach and engagement of target beneficiaries and key
stakeholders (bringing both SMEs and lead firms into the program); (ii) sourcing and
managing of Business Advisors used in the initiative; (iii) providing the initial diagnostic
service to SMEs; (iv) providing coaching to assist selected SMEs with implementing the
recommendations of the diagnostic; (v) reviewing deliverables and achievement of
performance contract targets, and conducting due diligence of beneficiary SMEs; (vi)
disbursing funding to beneficiaries via performance contracts; and (vii) establishing a
database of SME advisory firms.
Glossary
Consultant Entity that will administer the SME Linkages and Upgrading
Program, to be selected by the GoK through an open tender and
competitive process
Business Advisor Individuals working for the Consultant who will provide the
Business Diagnostic service and Implementation Support
Business Diagnostic
service
Initial diagnostic assessment of SMEs done by the Business
Advisors, results in a performance Plan
Implementation
Support
Post-Business Diagnostic Service coaching and support to client
SMEs provided by Business Advisors
Performance Plan Mutually agreed plan for SME to pursue upgrading, with
prioritized actions, milestones and performance targets
Financial
Disbursements
Financial support provided by program as part of Implementation
Support
2. STATEMENT OF OBJECTIVES
The overarching objective of KIEP is to increase innovation and productivity in select
private sector firms in Kenya.
The objective of the SME Linkages and Upgrading component is to help strengthen the
productivity and internal capabilities for innovation of select SMEs, by improving their
managerial and technical skills and their use and access to technology, in order to
significantly increase their competitiveness. It is also to strengthen local supply chains and
sales by Kenyan SMEs to large companies.
3. AN OUTLINE OF THE TASKS TO BE CARRIED OUT (SCOPE OF THE
SERVICES)
The intervention will consist of three phases of tasks over 4-5 years, and to end no later
than December 31st, 2024:
Phase I: Participation of lead firms, investment funds, business/industry
associations and other stakeholders for sourcing of SME beneficiaries
● The selected consultant will identify lead firms, investment funds, business/industry
associations and other stakeholders to become strategic partners and participate in the
program.
● The Project will utilize lead firms as one of the ways to identify SME beneficiaries.
The aim will be to identify and select lead firms with existing or potential local supply
needs based on industry reviews, International Financial Corporation’s (IFC)
references, and other project experience. Lead firms will be asked to identify SMEs in
their supply chain (or with interest in becoming part of their supply chain) that can
potentially benefit from the program.
● Business/industry associations, investment funds and other stakeholders will also be
used to identify high-potential SMEs who may not be part of supply chains but who
may benefit from the initiative, and a portion of each cohort may be made up of such
firms. The Consultant can also propose other ways to identify high potential SMEs
during the life of the program for the consideration of the Project implementation Unit.
● In order to raise awareness about the program, a series of outreach events will be
organized through lead firms and business associations. High-potential SMEs would
then be invited to participate in the upgrading support scheme, they may also be sourced
from investor and bank referrals if the initial threshold number of firms for each cohort
is not met.
● Business development for later cohorts should draw on early exemplary clients of the
initiative in marketing and outreach.
● Specific target for the participation of women-led or women-owned SMEs is at a
minimum of 10% of the total beneficiaries in the program. Women-owned or women-
lead enterprises are defined as firms with a) 51% or more ownership/stake by a
woman/women; or b) greater than or equal to 20% owned by a woman/women and 1
or more woman/women as CEO/COO (President/Vice President) as well as 30% or
more of the board of directors being women if a board exists. The consultant should
gather key lessons on outreach and retention of women-owned SMEs during the first
round of applications and propose modifications on the program design to the Project
Implementation Unit as needed, to increase the number of participating women-led or
women-owned SMEs.
Phase II: Diagnostics and action plan preparation
● A Business Diagnostic service will be provided to beneficiary SMEs to identify
managerial, technical, production, and supply chain relationship gaps and
opportunities. The service will also utilize benchmarking to enable SMEs to compare
themselves and their performance empirically against Kenyan and international peers.
● The consultant will be provided with an outline of the features and preferred outcomes
of the diagnostic service and diagnostic tool and the consultant will then develop the
business diagnostic service (including the selection of a benchmarking tool).
● A cohort of experienced Business Advisors will be selected and provided by the
consultant to serve as the interface between the program and SMEs and engaged by the
program. They will administer the Business Diagnostic service, whose output will be
an Implementation Plan that identifies key constraints and opportunities and prioritizes
implementation actions to address them. The Advisors will tailor the Business
Diagnostic service when lead firms are involved to include specific elements of specific
relevance to those lead firms as well as to any available information on export
opportunities for Kenyan SMEs.
● When lead firms are involved, the program will be demand-driven, involving lead firms
(potential customers) throughout the process to ensure that SMEs secure additional
business at the end of the diagnostics and upgrading process. Potential role of lead
firms, including large corporations, will involve: sharing purchasing needs and
requirements, nominating SMEs to participate in the program, providing feedback on
diagnostics service exercise, contributing to training or acting as a mentor, participating
in the program management in an advisory capacity, and committing to increasing local
supply if requirements are met (in a written memorandum of understanding). The team
of Business Advisors will strategically analyze and target market opportunities
presented by lead firms to drive the program.
● When investment funds, business and industry associations are involved, the program
will try and involve these parties in an advisory or mentorship capacity where required.
Phase III: Performance contract and implementation
● Upon the delivery of the Implementation Plan, if the participant SME wishes to utilize
the financial subsidy, a performance contract will be incorporated into the
Implementation Plan. This will be drafted, mutually agreed and signed, under which
Financial Disbursement to participant SMEs will be tied.
● Beneficiary SMEs will be eligible for Financial Disbursements of up to US$150,000 if
they meet their agreed implementation targets. These project funds will partially cover
the cost incurred in achieving the target, and the beneficiary SME will be expected to
also monetarily contribute in achieving the target. The consultant will verify that the
targets are met, and manage these disbursements. Disbursements will only be done
upon target completion. The funds for Disbursements are additional and separate from
the funds available for this consultancy.
● A Business Advisor will coach each SME throughout the improvement process to
ensure implementation progress, alongside lead firms, investment funds and
business/industry associations that will also be encouraged to provide general coaching
and mentorship to SMEs. Business Advisors will also provide support to SMEs
regarding the purchase and use of BDS and technology by providing tips on how to
scope projects, assessing providers, and providing simple templated contracts. They
will also collect performance information and provide referrals to other potential
sources of help.
● Participating SMEs will be asked to provide feedback on BDS providers, and the
consultant will develop and maintain a database of BDS providers in order to assist
other SMEs with choosing BDS providers.
● The improvement efforts by individual SMEs will be made public on a dedicated
program website and social media account including the BDS used for additional
transparency and awareness building. Selected participant SMEs and their
improvement story will be used to showcase the program to prospective clients, and
demonstrate best practice.
Based on the above scope of work, indicative tasks and activities that are to be delivered
are listed below. Prospective consultants are expected to apply their experience and
perspectives and provide their views on the detail of design and delivery arrangements for
all components, how (and why) they will deliver these components, overall management
and program coordination, the potential design and implementation risks, and how they
will address these risks. Further, once operating, the consultant is expected to be proactive
in identifying areas of potential project design and delivery improvement and
communicating these to the Government.
The consultant will be responsible for the following:
● Recruiting and involving the lead firms, investment funds, business/industry
associations throughout the life of the program;
● Gathering information on the supply chain needs of lead firms;
● Developing a database of eligible SMEs based on the recommendations of lead firms,
investment funds, business and industry associations and banks;
● Recruiting SMEs into the program, including through outreach events and workshops;
● Recruiting, training and managing at least ten Business Advisors to deliver the Business
Diagnostic Service, and the Implementation Support coaching;
● Conducting the Business Diagnostic Service, including the assessment of the
productivity and growth potential of each participating SME, as well as generating a
Performance Plan for each SME with agreed upon milestones;
● Assisting beneficiary SMEs to access BDS and equipment providers in order to
implement their upgrading plans;
● Collecting firm-level productivity improvement data every six months for SMEs still
in the program, SMEs who dropped out, and for graduates of the program for up to 2
years after engagement;
● Managing the Financial Disbursements to SMEs;
● Creating and managing a database of BDS providers and periodically conducting
customer satisfaction surveys with SMEs on these providers;
● Repeating and rolling out the program to new cohorts of potential SMEs; the timeline
for each cohort will be flexible based on the performance contracts drawn for
participating SMEs
● Periodically revisiting proposed financial disbursement and upgrading arrangements
after gaining some operational experiences
● Compiling information and images/videos on participating firms, their action plans,
and implementation progress for dissemination on a project website and publishing it
externally, i.e., through SME Linkages and Upgrading website, Facebook page, or
database. Coordinate with the overall communications firm for the project.
● Collecting baseline performance data on participating SMEs as part of the Business
Diagnostic Service, and tracking changes by Business Advisors over the life of the
engagement to measure progress or changes against the baseline, as well as conducting
surveys after the end of the engagement. Coordinate with the overall M&E firm for the
project.
4. SCHEDULE FOR COMPLETION OF TASKS
● The consultant shall provide quarterly update reports to the PIU summarizing
project activities progress and next steps.
● In addition, at various stages for each implementation cycle, the consultant shall
provide short concise reports in an agreed upon format to the Ministry as follows:
○ Diagnostic Stage reporting
○ Selection Stage reporting
○ Negotiation and Verification documents specification
○ Funds disbursement and performance report
○ Lessons learnt and program replication report
Component 2: Level of reporting basis schedule for completion of tasks
5. DATA, SERVICES AND FACILITIES TO BE PROVIDED BY THE CLIENT
Specific services to be made available to the consultant by the Ministry are as follows:
● Provide recommendations on sectors to target and SMEs, lead firms, investment
firms, business/industry associations to engage;
● Provide documentation from any prior piloting and database of lead firms, SMEs
and other relevant organizations engaged through project preparation;
● Provide basic selection criteria of program participants;
● Provide no objection to the SMEs, lead firms, investment firms, business and
industry associations engaged;
● Review and provide no objection to the final disbursement conditions and
performance contract milestones with selected SMEs;
● Review and provide no objection on the individual disbursements to SMEs and
following disbursements based on evidence provided by the consultant on
milestones met and disbursements maid;
● Support reporting & monitoring and evaluation; oversee impact evaluation as
appropriate;
● Review reports and data provided by the Consultant.
Selection criteria for program participants
The selection of beneficiary SMEs as well as lead firms, investment funds,
business/industry associations and BDS providers will be based on objective criteria as
described below (to be fine-tuned and adjusted during the life of the project as needed by
the consultant in coordination with the Project team):
SMEs:
● Who have been nominated by lead firms or third parties such as business or industry
associations, banks, and/or investment firms;
● Whose annual turnover fall between KSH 50m-1b (US$0.5 m and US$10 m). This
turnover may be from the previous fiscal year, or an average turnover from the previous
three years;
● Priority will be given to SMEs in the manufacturing and trade-exposed service sectors
among others;
● Whose management is committed to participating in the program (with a written
commitment to the program by senior management/owners);
● Who have been incorporated and in existence for at least two years, and are not
insolvent;
● Specific criteria should be put in place to ensure a higher participation rate for women-
owned or women-led SMEs. The consultant will work closely with the Project
Implementation Unit in iterating the program design in such a way that allows for a
growing number of women-owned or women-led SMEs to participate.
Lead firms:
● Who belong to sectors with potential for local supplies and exports (participating lead
firms will need to provide information on what they buy from suppliers locally and
internationally, and define their purchasing requirements, standards and specifications,
as well as nominate existing and potential SMEs or suppliers that fit the program’s
selection criteria);
● Those with strategic alignment to areas of government priorities;
● Those that are domiciled in Kenya, growing, or having the potential to grow, exporting
or having the potential to export, and willing to commit to the program;
● Those that have part of their supply chain in Kenya and ideally beyond Nairobi, have
suppliers that are SMEs that add value in Kenya, and have a significant supply chain
(i.e. the lead firms have at least 10 SME suppliers in their supply chain), or want to
build their local supply chain.
Investment funds, business and industry associations:
● Those that are domiciled in Kenya, and have investments or members within Kenya;
● Those that are willing to commit to the program, and nominate existing and potential
SMEs that fit the program’s selection criteria;
● Those with investments or members with strategic alignment to areas of government
priorities.
Business Advisors:
The Business Advisors will have a key role in the initiative, undertaking diagnostics,
providing help with the performance plan implementation and being involved in business
development. In order to ensure Business Advisors understand their product offering and
are providing a high-quality service, the consultant will be expected to provide training
both at the start of the initiative, and professional development and coaching through the
life of the initiative. A broad outline of their expected skill set is below:
● Who have a Business or related degree or experience;
● Who possess at least 5 years’ experience in relevant business roles, preferably in Kenya
or similar countries;
● Who have an understanding of, and ability to effectively communicate with SMEs in
Kenya, including the provision of diagnostic services (use of diagnostic and
benchmarking tools) and coaching;
● Who have the ability to work effectively with large (lead) firms and undertake effective
business development.
Potential consultants are expected to propose their preferred employment/ engagement
structure for the Business Advisors, as there are various potential options. Three of these
options are listed below:
▪ Option 1: Employ full time Business Advisors on salary, with Key Performance
Indicators (KPIs) that include business development as well as providing
diagnostic services and follow-on coaching.
▪ Option 2: Employ a few business development consultants who would engage
individual SMEs, and also seek to identify groups, lead firms, supply chains to
work with. Under this model, Business Advisors provide the diagnostic work
part-time for the program.
▪ Option 3: The implementing consultant meets the KPIs and states in their
proposal how they will meet this requirement.
Financial Disbursements
● Each SME will be eligible for up to US$150,000 in support of their Performance
Plan. The SMEs can directly purchase the specialized consulting and training
services from local and international BDS providers, and also purchase any relevant
equipment.
● Disbursement will be based on the achievement of milestones, and is envisaged to
work as follows:
o An initial disbursement of up to US$5,000 following the award of the
Performance Plan to stimulate implementation with no expectation of an in-
cash or in-kind contribution by the SME (i.e. to 250 SMEs over the life of
the component);
o A second disbursement will be made upon the achievement of the first
milestone set out in the Performance Plan. The participating SMEs that have
shown willingness and capacity to improve and that have met the milestones
specified in their implementation plan would be entitled to a grant not
exceeding US$40,000. It is estimated that 60 percent of the SMEs reach this
stage (i.e. 150 SMEs over the life of the project).
o SMEs that have met more advanced milestones, and that have shown above
average performance in improving productivity, would be entitled to
additional grants (not exceeding US$50,000 additional). With this funding,
SMEs could potentially finance more complex upgrading projects and the
sophisticated technical assistance needed to reach the next milestone in their
performance contract. It is estimated that 30 percent of participating SMEs
reach this stage of implementing improvements (i.e. 75 SMEs over the life
of the project). SMEs would receive a grant of up to 65% of the total cost
they had incurred in achieving the milestone.
o In the end of participation in the Project, the SMEs will be eligible for a
final disbursement of up to US$55,000 for the most complex projects. It is
estimated that 10 percent of participating SMEs reach this stage (i.e. 25
SMEs over the life of the project). SMEs would receive a grant of up to 65%
of the total cost they had incurred in achieving the milestone
.
● These proposed disbursement arrangements are not final, and can be revisited during
the life of the project, both with the winning consultant and potentially after operational
experience, to accommodate lessons learned and maximize impact. For instance, there
may be cases where clients wish to embark on major upgrades relatively early in the
improvement process, in these cases staggering payments may not be the most sensible
approach.
Component 2: Illustration of the disbursement schedule each year*
*The disbursement schedule will differ for each SMEs based on individual performance contract.
This timeline is meant to be an illustrative sample
Monitoring & Evaluation
● Baseline performance data on participating SMEs will be collected as part of the
diagnostic service, and changes will be tracked by Business Advisors over the life
of the engagement to measure progress or changes against the baseline. After the
end of the engagement, data will be collected through surveys for another 2 years,
also through the Business Advisors. The set of required information to be collected
for the project will be provided to the consultant.
6. FINAL OUTPUTS (i.e., REPORTS, DRAWINGS, etc.) THAT WILL BE
REQUIRED OF THE CONSULTANCY
The consultant shall provide a completion report at the end of the consultancy. This will
include handover manuals and materials to manage the project, as well as analysis based
on the rich data set from the diagnostics, performance plans and the performance contract
reports and recommendations on how to best support the ecosystem moving forward.
7. PROCEDURE FOR REVIEW OF PROGRESS REPORTS, INCEPTION, STATUS,
FINAL DRAFT AND FINAL REPORTS
All reports should be submitted to the PIU at the Ministry of Industry, Trade and
Cooperatives within an agreed timeframe.
8. LIST OF KEY PROFESSIONAL POSITIONS WHOSE CV AND EXPERIENCE
WOULD BE EVALUATED.
S.
No.
Key Position Area of Specific Expertise required Minimum
Qualification and
Professional
Experience
Required
Likely
Staff
inputs
required
in person
months
1. Team Leader
(1)
● Minimum 5 years of
experience in overall project
execution and management
● Experience in working with
governments in three or
more similar projects in the
last five years
● Experience working with
SMEs in Kenya, preferably
in evaluating business plans
and developing
performance improvement
plans
● Experience in leading a
team and providing
quarterly update reports
summarizing project
activities progress, next
steps as well as the project
completion report in
previous assignments over
the last five years
MBA or similar
degree; At least 7
years or similar
project management
experience
Average
12
months a
year
● Experience in project
leadership, with a focus on
strategy
● Proven expertise in
partnerships with lead firms,
business associations,
investment funds,
partnerships with technical
assistance providers, as well
as working with SMEs on
performance improvement
Strategic
Business
Analysts (At
Least 2)
● Experts with understanding
of the shortcomings and
opportunities within the
operating and business
environment of the
entrepreneurship ecosystem
in Kenya in assignments
undertaken in the last five
years
● Expertise in gathering
strategic data and
undertaking business
analysis for organizational
development including
strategic business analysis
frameworks and elaboration
of strategic performance
plans in previous
assignments
● Experience in working with
diagnostic tools to
administer the diagnostic
exercise and evaluate
performance plan proposals
in at least three similar
projects in the last five years
● Experience in working
across the lifecycle of a
BA or equivalent
degree; At least 5
years experience
working on the SME
ecosystem in Kenya.
Average
12
months
per year
project of similar nature -
i.e. conducting the initial
diagnostic, creating a
performance improvement
plan, administering the
disbursements and setting,
individual disbursement
milestones throughout the
contract length
● Experience in verifying
milestone achievement
through evidence collection
in previous similar
assignments
Legal expert on
contract
framing and
negotiation (At
Least 1)
● Legal experience in drawing
official performance based
contracts and managing
performance-based funding
in addition to the
aforementioned; if not,
experience managing
performance-based funding,
experience managing
complex contract
negotiation processes
through at least 2 prior
assignments
● Experience managing
qualitative results-based
contracts/P4R programs.
● Experience in the capacity
of providing legal expertise
where required and
negotiating and framing
performance contracts
Law degree; At least
5 years experience
working with
corporates in
emerging markets;
Experience working
with SMEs
Average 6
months
per year
Knowledge
Management
Specialist (At
Least 1)
● Experience in consolidating
and managing M&E data,
verifying participant data,
analyzing the data and
BA degree or
equivalent; At least 5
years’ experience in
finance and
Average
of 6
months
per year
preparing lessons learned
reports, and course correct
recommendations for
program design in previous
assignments over the last
five years
● Experience in analyzing rich
data sets from the
diagnostics, performance
plans, and the performance
contract reports o coordinate
activities in previous
assignments over the last
five years
consulting,
preferably with prior
experience in M&E
Funds
Disbursement
and
Monitoring
Specialist (At
Least 1)
● Experience in managing
fund disbursements to
intermediaries in multiple
assignments over the last 5
years
● Experience in monitoring of
performance contracts and
program overall in the last
five years
● Academic background in
business or finance would
be preferred
BA degree or
equivalent; At least 5
years’ experience in
finance and admin.
Average
of 12
months
per year
9. PAYMENT SCHEDULE
Inception report 10% of Total Contract
Service level agreement 10% of Total Contract
Annual lump sum 20% of Total Contract
Annex 1B1: Expression of Interest Response to Criteria Form
Consultants expressing interest in managing the implementation of performance-based
funding must fill the form below:
# Required Information Response
a Does your organization have a
proven track record of at least three
projects of similar nature (i.e.
organizational capacity assessment,
SME strategy, performance-based
contracting, or grant management for
SMEs) during the last five years?
YES / NO ______________
Please elaborate on your response in the space
below.
b Does your organization have
experience working with SMEs in an
advisory capacity over the last five
years?
YES / NO ______________
Please elaborate on your response in the space
below.
c Does your organization have a strong
understanding of the shortcomings
and opportunities within the
operating and business environment
of the SME ecosystem in Kenya and
in the region?
YES / NO ______________
Please elaborate on your response in the space
below
c Does your organization have 10
years of experience undertaking
consulting engagements focused on
organizational capacity development
and formulating performance plans
focused on business operations,
ideally with SMEs?
YES / NO ______________
Please elaborate on your response in the space
below
d Does your organization have
experience managing long term (2
year or more) projects including
disbursement of funds?
YES / NO ______________
Please elaborate on your response in the space
below
e
Have you worked with government
counterparts in the past five years?
YES / NO ______________
Please elaborate on your response in the space
below
I certify that the information provided in the responses above is true and accurate. I
understand that withholding of information or giving false information will result in
immediate disqualification.
___________________________________________
Authorised Representative of Interested Consultant