Terms of Reference. A Study on the Impact of SADC Integrated Regional Electronic Settlement System (SIRESS) on the transaction costs and practices

Transcription

1 File Ref: Terms of Reference A Study on the Impact of SADC Integrated Regional Electronic Settlement System (SIRESS) on the transaction costs and practices 13 June 2016

2 1. Introduction Page 2 Created with initial funding from UKaid from the Department for International Development, FinMark Trust is an independent trust whose business is controlled by five trustees from countries in Southern Africa. FinMark Trust s purpose is Making financial markets work for the poor, by promoting financial inclusion and regional financial integration. It does this by conducting research to identify the systemic constraints that prevent financial markets from reaching out to these consumers and by advocating for change on the basis of research findings. Thus, FinMark Trust plays a catalytic role, driven by its purpose to start processes of change that ultimately lead to the development of inclusive financial systems that can benefit all consumers. 2. Background. In line with the objective of the SADC Protocol on Finance and Investment FIP, to create an integrated payment system in the region, the Southern African Development Community Payment Sub-committee was mandated to develop regional payment solutions required in the High-value/Wholesale Cross-border Payment System. On 22 July 2013 the SIRESS became operational in the four countries of the Common Monetary Area (CMA): South Africa, Namibia, Lesotho and Swaziland. This was a first step to implementing a common electronic cross-border payment system across all member states of the SADC. By the end of April 2016, SIRESS has achieved the following: 9 SADC Central Banks subscribed and participate in the SIRESS; 73 commercial banks drawn from 9 SADC Member states participate in SIRESS and A total value of two Trillion Rands has been settled through SIRESS. The implementation of the system supports the aims and objectives of SADC, such as facilitation of trade, smoother and efficient execution of cross border transactions, and integration in information and communications technologies. This project introduces a regional interbank payment settlement system. The initial key strategic objective of the initiative was to enable each Southern African Development Community State to have an efficient and effective payment system that is: Internationally acceptable; Interlinked within the region and Supporting the trade and investment aims of the Southern African Development Community. Although the SIRESS system has been a huge success with more countries and commercial banks joining the settlement arrangement and the transactions and volumes settled being impressive, there has to date not been any independent verification of the impact that the system has had on transaction prices, volumes, turnaround times etc. FMT in partnership with the SADC Payments Sub committee wishes to better understand what the impact of SIRESS has been on participating banks and the efficiency of transaction processing within the region. 3. Project objectives The objective of the project is to assess both positive and negative impacts of the use of SIRESS on participating banks and the region, including but not limited to; transaction turnaround times (end to end), pricing of the transactions, impact of other regulatory requirements, transaction

3 Page 3 processing arrangements in order to inform and further improve the overall functioning of SIRESS to ensure that it continue to meet its overall objectives. Specific objectives are as follows: Assess pricing arrangements; Impact of SIRESS on transaction turnaround time; Impact /likely impact of correspondent banking in the region; Impact of SIRESS correspondent banking arrangements in the region and Impact of SIRESS on financial sector governance arrangements in SADC. 4. Project Scope A sample of 4 (Zambia, South Africa,Zimbabwe and Swaziland) participating countries and 2 banks per country will be chosen for the study based on the criteria elaborated in the proposal and in consultation with the Payments Systems Subcommittee of the CCBG. The study will compare the costing and pricing of the banking charges before and after the implementation of SIRESS. Furthermore the study will determine the following: Whether SIRESS has resulted in a change in transaction and settlements costs; If there has been a reduction in transaction costs and whether the benefit has been passed on to companies and individuals performing the transfer; Whether there has been a change in the time taken to perform the transfers and o Any other impacts the system has had on participating banks including capacity required to manage the system internally. o Why only banks drawn from 9 countries are currently participating. What will be the impact if all the SADC countries had joined SIRESS. What are the factors delaying them to join the system. o Will the impact be greater if multi-currency settlement is introduced? o What are the types of banks participating and the drivers for participation? o What are the factors that inhibit the participation of some of the banks? 5. Deliverables The deliverables for the project will be: An inception report in which the detailed plan and methodology for the implementation of the project has been elaborated; A comprehensive research into the impact of SIRESS

4 Page 4 Powerpoint Presenation Presentation of the findings to relevant committees and incorporating comments. 6. Methodology The methodology for this research will be a desk top study of all the available information, interviews with key regulators and participating banks, mystery shopping, and any other methods of collecting relvant information that will be suggested by the successful bidder. 7. Timing 7.1. Proposals: Proposals for the project should be submitted by 12 noon on 24 th of June Electronic proposals are required with one hard copy to be delivered to the Project Manager and Financial Coordinator, Block J East, Central Park, th Road, Randjies Park, Work: It is envisaged that the project will be let by the last week of June and be finalised by the end of October Contents of proposal Proposals to undertake this project must include: 8.1. Statement of qualifications of firm(s) (if no previous work record for FinMark Trust) Name and CV of staff members responsible (i) for overseeing the work; (ii) for undertaking the work Proposed approach to the work Fee proposal and costs estimate, indicating the basis of calculation of fees Capacity empowerment is a key objective of FinMark Trust. In rendering the service the consultant must endeavour to achieve this goal. The proposal must comment on the manner in which the consultant intends to give effect to the capacity empowerment objective. An understanding of a Making Financial Markets Work for the Poor approach will be required. See Porteous D, 2004, Making Financial Markets Work for the Poor, An understanding of the SADC Protocol on Finance and Investment will be required. 9. Basis of award FinMark Trust will award the contract based on: 9.1. Relevant, demonstrated competence of firm(s) in this area (15%) 9.2. Demonstrated expertise of key individuals to be involved in this project (25%) 9.3. Content, quality and originality of proposal (25%) 9.4. Affirmative action scorecard (if South African firm) or use of local professional capacity if non-south African firm (consulting, analysis, coordination etc.) (15%) 9.5. Fee basis (20%) Guidance notes to bidders FinMark Trust reserves the absolute right to use its discretion in the interpretation of these award criteria. The following notes are

5 intended to provide broad guidance only on how proposals will be evaluated. Bidders may be required to clarify their proposals by way of a telephone call or presentation. Relevant, demonstrated competence of firm(s) in this area - you should aim to demonstrate how the firm s collective past experience can be applied (or adapted) to address the specific brief set out in the terms of reference. You are welcome to describe the firm s general experience of financial sector development issues (e.g. in other geographies or topical areas) but the evaluation will focus particularly on the application of that experience for the specific task at hand. Demonstrated expertise of key individuals to be involved in this project the evaluation places considerable emphasis on the role and demonstrated expertise (i.e. track record) of the key individuals to be involved on the project rather than on the expertise of the firm itself. Content, quality and originality of proposal proposals should address the brief set out in the terms of reference in a comprehensive manner. Bidders should aim for innovation as well as professional presentation. Whilst similar, relevant experience in other markets will be an advantage for a bidder, each market is different and so proposals need to reflect the particular characteristics of that market, as well as the challenge set by the terms of reference. Affirmative action scorecard - ownership, management, staff development and Use of local professional capacity (consulting, analysis, coordination etc.) FinMark Trust wishes to ensure that local capacity is used and developed. International firms are therefore encouraged to partner with local organisations. Fee basis value for money, as well as absolute cost, will be taken into account. Page Contact: Questions or comments in respect of these terms of reference should be directed to: Contact person : Mojgan Derakhshani address : mojgand@finmark.org.za Cellular number : Office number : Fax number :