Background

UNCDF

UNCDF is the UN’s capital investment agency for the world’s 48 Least Developed Countries (LDCs). UNCDF uses its capital mandate to help LDCs pursue inclusive growth. UNCDF uses ‘smart’ official development assistance to unlock and leverage public and private domestic resources; it promotes financial inclusion, including through digital financial services (DFS), as a key enabler of poverty reduction and inclusive growth; and it demonstrates how localizing finance outside the capital cities can accelerate growth in local economies, promote sustainable and climate-resilient infrastructure development, and empower local communities. Using capital grants, loans and credit enhancements, UNCDF tests financial models in inclusive finance and local development finance; ‘de-risks’ the local investment space; and provides proof of concept, paving the way for larger and more risk- adverse investors to come in and scale up.

With its capital mandate and instruments, UNCDF offers “last mile” financing models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local development. UNCDF’s targets low-income and underserved populations and areas in the LDCs where the available resources for development are the scarcest; where market failures are most pronounced; and where benefits from national growth tend to leave significant portions of the population behind. UNCDF has a strong track record in local development finance and inclusive finance, using its capital mandate in combination with strong technical and policy support to help communities and individuals save, borrow and invest.

Mobile Money for the Poor (MM4P)

Since 2008, UNCDF has supported the development and roll-out of digital financial services (DFS) in the countries it operates by working with governments, private and non-profit partners to hasten the scale-up of services and improve the variety of products and services needed reach rural and low income households.

UNCDF provides support to the development of DFS via global thematic initiatives, such as the Mobile Money for the Poor (MM4P) and other programmes.  MM4P aims to develop scalable models for DFS, using a mix of technical support, capacity building and grants (or loans) to leading providers, agents and partners on a competitive basis, in markets where access to finance is mostly limited. MM4P also includes support to regulators and governments to better enable and use these services.  

MM4P uses a theory of change approach to DFS development, which focuses on making shifts between phases of market development, moving from Inception to Start-Up to Expansion and eventually to a mature market known as Consolidation. Through each phase, MM4P considers the entire DFS ecosystem. This means MM4P plans activities at the levels of Policy & Regulation, Infrastructure, Providers, High Volume and Customers to improve market conditions and facilitate shifts.

MM4P Zambia was launched in 2015 and the programme is focuses on accelerating uptake and usage of DFS and moving the Zambian market which is currently in the Start-Up phase of DFS market development to the Expansion phase by 2019.

FSDZ

A wide range of supportive efforts are required to accelerate DFS in Zambia.  At present, a few organizations are providing such support, most notably MM4P’s implementing partner, the Financial Sector Deepening Zambia (FSDZ), which will complement MM4P’s work by providing, amongst other areas, policy and regulatory, as well as infrastructure support for DFS.  FSDZ is a DFID-funded program for expanding financial inclusion in Zambia using a Making Markets work for the Poor (M4P) approach to sector support through regulatory, infrastructure and provider technical and financial support.

FSDZ seeks to expand and deepen the financial markets so that all Zambians can benefit from affordable financial services. It works with financial service providers, policy makers and civil society to expand Zambia’s financial sector, making the market more robust, efficient and, above all, inclusive. FSDZ’s thematic areas includes SME finance, agriculture finance, savings groups, digital financial services and women and financial services. Through its interventions on inclusive insurance FSDZ has an objective to developped a vibrant inclusive insurance sector making access to valuable insurance services to micro, small, medium enterprises, smallholder farmers and low-income households possible.

EXPLORING THE ROLE OF DIGITIAL FINANCIAL SERVICES IN MICRO - INSURANCE

An analysis of the DFS market in Zambia suggests that despite the early start, the promise of DFS remains largely unrealized.  The market potential is considered high, with low levels of financial inclusion, relatively high levels of mobile penetration and a promising urban/rural population distribution. There are a few regulatory impediments to bank and non-bank DFS, with many guidelines currently in draft form, guided by extensive consultations within the industry.  While branchless banking is limited in size and scope, several different types of providers are offering DFS, including two large regional MNOs; India’s Airtel and South Africa’s MTN.  However, both are stuck in a “sub-scale trap”, albeit a third-party payment service provider is making steady progress.  Most mobile money agents are inactive and there are few organizations with a national reach.  There is a largely unexploited opportunity to convert high volume payments transfers, such as regular payments of insurance premiums, to electronic, if political will and some levels of interoperability or real time reconciliation can be implemented.

A few DFS providers and insurance companies in Zambia have already attempted to work together to create and market mobile-based insurance products. Most partnerships between DFS providers and insurance companies have be triggered through the on-going micro-insurance development process spearheaded by the Technical Advisory Group (TAG) and which was initially financially supported by FinMark Trust and ILO’s Impact Insurance Facility and now FSDZ. One initiative worth citing is the partnership between African Life (now Sanlam Life) and Airtel Zambia which covered over 3+ million Airtel subscribers with a loyalty life insurance policy. Despite this great outreach, the product faced several challenges such as inadequate product awareness which left many subscribers unware of their coverage. Although the claims ratios ranged from 30-40%, low product awareness could have affected this performance. Further, Airtel’s expectation on significant increase of the Average Revenue Per User (ARPU) for airtime could not be met. The product was launched in 2014 and discontinued in 2016. MTN also launched an insurance product ‘life after life’, a voluntary paid product. The product also faced several challenges including data management issues which caused lags in claims processes. Despite MTN’s investments in marketing, the product was not widely known, the scale was limited. Other attempts of mobile based micro-insurance products include MTN’s Edusure and DriveSure which have equally not performed well.

While most of the mobile-based insurance products that were implemented in the past failed due to supply side (lack of capacity by providers to roll-out, inadequate understanding of the market and as such inability to design appropriate products for consumers) and demand side (low experience with insurance, low financial literacy levels and connotation of “insurers don’t pay”) reasons, we have not yet seen in this market a proof of concept to follow when it comes to the design, creation and marketing of such products to different segments of the Zambian population. To fill in the gaps in knowledge, and to provide the industry with a more nuanced understanding of the role of digital financial services in insurance, MM4P would like to commission an action research study. To better understand the markets and uncover the reasons behind the failure of the previous versions of DFS-supported insurance products that were discussed earlier, MM4P Zambia in partnership with FSDZ would like to undertake a research project to study the factors surrounding the introduction of these products into the market, how they were designed, marketed and implemented, what the roles of the implementing MNOs and insurance service providers were and why the products failed to gain traction amongst the target consumer groups. The results of this study alongside a scoping study to determine the current state of the market will show whether there is a business case for mobile-based insurance products in Zambia, and if that is the case provide business models and profit sharing models that could serve as a guide to providers wishing to enter this space. In addition, the research project will also consider the role of value-added services (VAS) in contributing to the success of mobile-based insurance products.

Outcome and objectives of the assignment

The exercise will be mainly qualitative, but the research will also undertake an analytics exercise. The methodological approach and scope of analysis are described below: 

Approach

• Qualitative fieldwork: Representatives from the DFS and insurance providers will be interviewed to gain insights into why the previously existed mobile-based insurance products that were launched failed. The fieldwork will be preceded by desk review of supply side research that has previously been done by FINSCOPE and FINMARK Trust of the Insurance landscape in Zambia. The fieldwork will also try to sketch out what a win-win situation would look like for both DFS and insurance providers when it comes to building a business case for future mobile-based insurance products. This will include research into what the expectations of both parties are, what roles and functions they would like to hold on to and why, mapping out different strategies to achieve a cost-efficient partnership and a product that is both relevant to and accepted by the end users. The sample size, make-up and location of informants, will be proposed to the MM4P/FSDZ team before the qualitative research kicks off.

Scope of analysis

• Business modelling assessment:  Investigation into viability of business models for mobile-based insurance products. The consultant must use lenses of best practices on mobile based insurance models to make recommendations on what models can work for Zambia. The assumptions of the business models will be agreed on by MM4P / FSDZ before the consultant can proceed with developing the models. The consultant will also carry out SWOT analysis for each for each of the business models.
• Risk analysis: In-depth analysis of risks associated with deliver insurance through DFS providers. Use the findings from the qualitative fieldwork identify factors that can drive success of mobile-based insurance products as well as partnerships between DFS providers and insurance companies. The risk analysis should also explore internal external risks.

Through quantitative, and qualitative analysis, the study will aim to answer the following research questions:

• Is there a business case for DFS providers when it comes to adopting mobile-based insurance products?
• What is the underlying motivation for DFS providers to be engaged in distribution of micro-insurance?
• Does loyalty play a factor in the success of mobile-based insurance products?
• Would paid mobile –based insurance products work in Zambia? What factors would drive success?
• What is the role of Mobile-based Value-Add Services (VAS) to insurance? What types of Value-Add Services complement mobile-based insurance products?
• What types of insurance products are most suitable for distribution through DFS providers? Do DFS providers have preferences?
• What is expected level of engagement of DFS providers in the product development processes for insurance products that will be distributed through their platforms?

Duties and Responsibilities

The research project will take place over a period of 8 weeks. It will be run in the Zambian market. The proposed timeline is below:

Phase 1 (Week 1-2: 05 June – 16 June, 2017)

Activities:

• Detailed research plan scoped, methodology defined, research instruments created and fieldwork planned;
• A thorough review of literature will also be undertaken to ensure that the study fills critical gaps in the understanding of impact.

Deliverables:

• Detailed research plan including methodology & assumptions;
• Fine-tuned research template / questionnaire.

Phase 2 (Week 3-6: 19 June - 14 July, 2017)

Activities:

• Analyzing the data available;
• Qualitative field work in Zambia.

Deliverables:

• Analyzing the data available;
• Qualitative field work in Zambia.
• Any relevant datasets used to create reports. This includes field notes or transcribed interviews

Phase 3 (Week 7-8: 17 July – 28 July, 2017)

Activities:

• Final draft of deliverables submitted to MM4P/FSDZ;

Deliverables:

• Final research report;
• Finalized business models.
• A business case presenting the various business models and pricing models (that will be focused on) that could be presented as a go-to-market strategy to DFS/insurance providers. The strategy should present clear and compelling use cases in a manner that can be easily understood and acted upon by the stakeholders involved in this study.
• A final research report and a visually compelling PPT summarizing the key findings from the research.  This output is also meant to communicate the key research findings to a broad audience clearly and concisely. Photos from the research should be used to enhance the messaging.
• Knowledge outputs such as blogs or short briefing notes will also be produced as part of this engagement. The type of knowledge outputs delivered will be agreed upon with the MM4P team at the start of the project

The above schedule might change and only serves as for giving a picture on the desired timeline.

Competencies

Professional:

• Takes on innovation and new approaches and fosters innovation in others;
• Creates an environment that fosters innovation and innovative thinking;
• Conceptualizes more effective approaches to programme development and implementation and to mobilizing and using resources.

Management/Client Orientation:

• Anticipates constraints in the delivery of services and identifies solutions or alternatives;
• Ability to interact and adapt communication with various management level with partners.
• Proactively identifies, develops and discusses solutions for internal and external clients, and persuades management to undertake new projects or services;
• Demonstrates openness to change and ability to manage complexities, and resolve problems;
• Focus on impact and results for clients and stakeholders;
• Builds trust in interactions with others, facilitates partnerships; excellent networking capabilities to link people/businesses from diverse horizons;
• Approaches work with energy and a positive, constructive attitude and responds positively to feedback;
• Committed to team work, working with other stakeholders.
• Strong ability to communicate and function effectively in local/international/multicultural environment;
• High level planning, organizational and time management skills, including flexibility, attention to detail and the ability to work under pressure to meet changing deadlines.

Required Skills and Experience

Education:

• Post graduate degree in economics, technology, engineering, finance, banking, development, insurance or related fields or equivalent experience is mandatory.

Experience:

• At least five years of proven experience working within the micro insurance space with a focus on both product development and financial modelling is mandatory;
• At least five-years of demonstrated experience in in digital financial services and/or telecommunications field is mandatory;
• At least three -year experience in quantitative research, qualitative research, human-centered design, mobile, technology, and/or big data related to low-income customers and digital financial services is mandatory;
• Knowledge and experience in working or evaluating mobile-based insurance business models; 
• Experience of researching in-depth the financial lives of individuals in low-income settings;
• Familiarity and proven experience with business analysis and presenting business cases and studies and conducting in depth market research;
• Experience creating business plans and profit sharing models;
• Strong passion for and knowledge of technology and digitization
• In-depth understanding of end-to-end business processes in micro-insurance business and the obstacles towards digitalization
• Extensive public speaking/presentations experience particularly in interactive adult education settings
• Experience working in Africa is preferred.

Language:

• Excellent command of spoken and written English is mandatory;

Timeline, duration of assignment and total number of working days, duty station and travel:

Timeline: 05 June 2017 – 28 July 2017;

Duration of assignment and total number of working days: 40 working days within 8 weeks;

Duty stations: Lusaka, Zambia and home-based.

Travel and visa:

• If the consultant is not based in Zambia, 1 travel to Lusaka, Zambia is to take place: 1 return air ticket from home station to duty station is to be quoted in the financial proposal;
• Please note that UNCDF cannot guarantee residence permits or visa´s for consultants. Consultants are responsible for securing their work documentation. In the case of national consultants, applicants that are not nationals of the duty station requested will have to prove their residence status.   
• Please note that consultants residing in the duty station will not be compensated for living expenses. 
• For unforeseeable travel, payment of travel costs including tickets, lodging and terminal expenses should be agreed upon, between the respective business unit and Individual Consultant, prior to travel and will be reimbursed.

Provision of Monitoring, Progress Controls & Payments:

The progress of the contractor for this project shall be monitored jointly by UNCDF and FSDZ.

• The consultant must secure approval from UNCDF´s in-country Regional Technical Specialist prior to deployment of staff and trips.  The contractor will provide in advance the names of the consultant’ employees conducting the mission. 
• The consultant will conduct briefings to the MM4P/FSDZ team prior to going into the field
• The consultant will organize progress call with MM4P and FSDZ at least bi-weekly
• The consultant will provide timely updates to MM4P and FSDZ if there are any changes to the activities schedule.
• Payment will be made on periodical basis in accordance with number of days worked and upon satisfactorily achieved deliverables. All payments are subject to the clearance and approval of the direct supervisor.
• Final payment shall require a signed performance evaluation of the consultant.

Application:

Interested individuals must submit the following as proposals in order to demonstrate their qualifications: (NOTE: the system does not allow multiple uploads of document. Applicants must make sure to upload all documents in one PDF file).

All applications must contain the following information:

• Cover letter with a summary statement of competencies in relation to the TOR;
• Earliest availability and proposed schedule for consultancy;
• Curriculum Vitae;
• One technical writing sample where the primary author is the candidate;
• Completed and signed Personal History Form (P11) with names and current contacts of 3 referees (available from http://sas.undp.org/documents/p11_personal_history_form.doc);
• Fully completed and signed financial proposal for the assignment outlining - Total professional fee (including professional fees, per diems in Zambia (if applicable), Other professional expenses (such as insurance, taxes, etc.), Duty travel (1 return ticket from country of origin to Lusaka, Zambia). Available at http://procurement-notices.undp.org/view_file.cfm?doc_id=29916).

Incomplete applications will not be considered. Please make sure you have provided all requested materials.

Individual consultants will be evaluated based on the following methodology:

Evaluation:

Individual consultants will be evaluated based on the following methodology:

Preliminary Evaluation - Step I: Screening

Technical Evaluation Weight - 70% x (Step II: 20 Points + Step III: 80 Points = 100 Points)

Financial Evaluation Weight - 30% = Step IV.

Step I: Screening

Applications will be screened and only applicants meeting the following minimum criteria (listed under education and experience) will progress to the pool for shortlisting.

Step II: Shortlisting by Desk Review

UNCDF will conduct a desk review to produce a shortlist of candidates and technically evaluate them.

As applicable, only the first top 4 ranked applicants achieving 70% of the points at this stage shall be considered for a desk review.

Step III: Desk Review:

A competency-based desk review shall be conducted for the top 4 shortlisted candidates.

Only candidates obtaining a minimum of 70% on the total of Steps II (20 points) +III (80 points) will be considered as technically qualified and will be reviewed further for financial evaluation.

Step IV: Financial Evaluation

The following formula will be used to evaluate financial proposal:

Lowest priced proposal/price of the proposal being evaluated x 30%.

Award Criteria:

The contact shall be awarded to the best applicant whose offer have been evaluated and determined as: responsive/compliant/acceptable and having received the highest combined weight (technical proposal & Desk Review) 70% + financial 30%= 100%.

Please note that UNCDF cannot guarantee residence permits or visa´s for consultants. Consultants are responsible for securing their work documentation. In the case of national consultants, applicants that are not nationals of the duty station requested will have to prove their residence status.  

Any individual employed by a company or institution who would like to submit an offer in response to a Procurement Notice for IC must do so in their individual capacity (providing a CV so that their qualifications may be judged accordingly). Please not that in such case the company institution will be asked to issue a Reimbursable Loan Agreement (RLA): http://www.undp.org/content/dam/vietnam/docs/Legalframework/Reimbursable%20Loan%20Agreement.doc.  

Women candidates or women-owned businesses are strongly encouraged to apply.

UNDP is committed to achieving workforce diversity in terms of gender, nationality and culture. Individuals from minority groups, indigenous groups and persons with disabilities are equally encouraged to apply. All applications will be treated with the strictest confidence.