REPUBLIC OF KENYA MINISTRY OF INDUSTRY, TRADE AND COOPERATIVES STATE DEPARTMENT FOR INDUSTRIALIZATION

Transcription

1 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: Project ID: Kenya Industry and Entrepreneurship Project (KIEP) P (Credit No.: IDA 6260-KE) Assignment Title: Reference No.: MANAGEMENT OF SUPPORT TO SMEs THROUGH CAPACITY ASSESSMENT AND PERFORMANCE BASED FUNDING KE-SDII 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 (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

2 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.

3 Glossary Consultant Business Advisor Business Diagnostic service Implementation Support Performance Plan Financial Disbursements Entity that will administer the SME Linkages and Upgrading Program, to be selected by the GoK through an open tender and competitive process Individuals working for the Consultant who will provide the Business Diagnostic service and Implementation Support Initial diagnostic assessment of SMEs done by the Business Advisors, results in a performance Plan Post-Business Diagnostic Service coaching and support to client SMEs provided by Business Advisors Mutually agreed plan for SME to pursue upgrading, with prioritized actions, milestones and performance targets 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

4 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 womenlead 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

5 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

6 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.

7 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

8 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 womenowned or women-led SMEs. The consultant will work closely with the Project

9 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.

10 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 incash 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

11 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

12 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 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 Likely Staff inputs required in person months Average 12 months a year

13 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 Least 2) (At Experts with understanding of the shortcomings and opportunities within the operating and business environment of the entrepreneurship ecosystem BA or equivalent degree; At least 5 years experience working on the SME ecosystem in Kenya. Average 12 months per year 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

14 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 Legal experience in drawing official performance based contracts and managing Law degree; At least 5 years experience working with Average 6 months per year negotiation (At Least 1) performance-based funding in addition to the aforementioned; if not, experience managing corporates in emerging markets; Experience working with SMEs 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 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

15 preparing lessons learned reports, and course correct recommendations for consulting, preferably with prior experience in M&E 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 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 BA degree or equivalent; At least 5 years experience in finance and admin. Average of 12 months per year program overall in the last five years Academic background in business or finance would be preferred 9. PAYMENT SCHEDULE Inception report Service level agreement Annual lump sum 10% of Total Contract 10% of Total Contract 20% of Total Contract

16 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? 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 YES / NO Please elaborate on your response in the space below

17 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