establishment of two Savings and Credit Cooperatives (SACCOs) in Southern Province

For the establishment of two Savings and Credit Cooperatives (SACCOs) in Southern Province
1. Background
The dairy sub-sector in Zambia has made big strides since privatization and market liberalization of the industry in the 1990s. Although production has been steadily increasing, dairy processors are unable to meet the growing demand for milk and dairy products. Despite an increase from 128 million litres per year in 2005 to 452 million litres per year in 2013, 21 milk processors in the country only utilises 59% of the installed capacity and only about 15% of the country’s dairy potential tapped.
The industry is under severe threat from cheaper milk imports from countries such as Kenya, Uganda, and South Africa. As discretionary income levels grow, and population and urbanization rates continue to climb, the Zambian dairy industry, as it currently functions, will not be able to keep up with demand, nor compete with cheaper imports from the region. This presents tremendous opportunity to increase incomes, employment and food security by improving the capacity of local small scale dairy producers to respond to the growing market.
It is estimated that about 300 large- and medium-scale commercial dairy farmers produce the bulk (85%) of all raw milk (44 million litres per annum) supplied into the formal market. The remaining 15% is supplied by 3,000 smallholder/emergent dairy farmers (owning between 10 and 100 animals) per farmer. According to a World Bank study, the smallholder/emergent dairy farming system is more efficient and competitive than the commercial dairy system. This is mainly because emergent farmers make use of the natural advantage of grazing land and as such do not incur high overhead costs including the high cost of feed. Consequently, profit margins from emergent farming are higher than those of their commercial counterparts.
However, despite this potential, there are significant barriers to the development of the value chain that hinder smallholder (emergent) farmers from achieving full potential. These include:
  • Lack of organisation;
  • Weak dairy and business skills among dairy producer groups;
  • Lack of access to key services such as credit, feed, business advisory, Artificial Insemination, extension and veterinary services;
  • Unfavourable enabling environment perpetuated by the lack of government investment in livestock infrastructure such as dip tanks, milk collection centres, extension services and the absence of a national dairy board to play a regulatory role in the dairy subsector;
  • Inequalities and exclusion based on gender; and,
  • Geographic location.
There is therefore an urgent need to establish innovative solutions to overcome these barriers. It is for this reason that SNV initiated its Market-Led, Dairy Innovations Project (M-DIP) in 2015.
To address the problem of lack access to financial services for small scale farmers and more specifically for dairy farmers, M-DIP will promote the development of community owned financial institutions at selected viable dairy cooperatives in southern province. SACCOs are user-owned financial institutions that offer both savings and credit services to their members. Members of these financial institutions can be both net savers and net borrowers. It is envisaged that such institutions will the financial needs of the dairy sector whose performance has greatly increased over the past ten years.
2. Scope of Work
SNV seeks to engage a multi-disciplinary consultancy team/ organization to facilitate  the development of Savings and Credit Cooperatives (SACCOs) around two selected Dairy cooperatives in southern province. The consultancy team is expected to develop a clear road map and strategy on the development of two sustainable SACCOs over a two year period. The consultancy team will further develop a step by step process of supporting the growth of the two SACCOs including community sensitation/ mobilization, training and mentorship in SACCO development, development of systems and procedures and support to institutional development and governance for the board and management of the SACCOs.. This will further involve financial literacy programs and governance modeling to aid the cooperatives in creating financially viable Dairy enterprises.
3. Objectives of the consultancy assignment
The overall aim of the assignment is to support the establishment of two SACCOs around two selected dairy cooperatives in Southern province. The consultancy team is expected to define the process of SACCO establishment and develop a corresponding support mechanism for the mobilization; capacity building and institutional development of the two institutions. The consultancy team should ensure that sustainability considerations are enshrined in the SACCO business model to guarantee viability of the two SACCOs by the end of the project period. A detailed risk assessment and potential challenges with corresponding solutions of how to address them should be part of the consultant’s inception report
Specific objectives of the assignment are:
a)    Design a clear road map and strategy for the establishment of two SACCOs at Monze and Choma Cooperatives
b)    Design and implement a SACCO capacity building program at all levels (Community, management and board levels)
c)    Develop standardized training manuals for capacity building at all levels
d)    Provide financial education to Cooperatives.
e)    Develop a business model and sustainability plan for each SACCO as informed by their respective social, economic and cultural context
f)     Define and develop standard financial procedures including eligibility requirement for membership, savings, loans and shares.
g)    Develop a governance structure that will manage the SACCOs. This includes roles and responsibilities of the board, management and member relations.
h)   Provide comprehensive management training that will increase capacity utilization and skills matrix in the two Cooperative Unions. Topics must include; introduction to SACCOs, SACCO structures and responsibilities, financial statements, financial analysis, financial goals and planning, risk management and lending.
The consultant will be expected to carry out the following activities;
  1. Design a clear road map and strategy for the establishment of two SACCOs at Monze and Choma Cooperatives
    February to March 2016
  2. Design and implement a SACCO capacity building program at all levels (Community, management and board levels) February 2016 to June 2017
  3. Develop a business model and sustainability plan for each SACCO as informed by their respective social, economic and cultural context February to April 2016
  4. Community mobilisation and sensitization on importance of SACCOs. February to September 2016
  5. Facilitate creation of SACCOs at the two cooperative unions in compliance with regulatory requirements. March to December 2016
  6. Develop structures, systems, policies and procedures for operation of the SACCOs. March to August 2016.
  7. Conduct detailed management training for the running of the SACCOs. June 2016 to March 2017.
  8. Facilitate savings group formation for the SACCOs in the two cooperative unions. March to December 2016.
  9. Facilitate mentorship of two SACCOs in SACCO management and development September 2016 – August 2017
a)    Main Deliverables and Expected Outcome of the assignment:
The consultant will be expected to produce the following deliverables:
a)    Activity plan/ inception report outlining all activities.
b)    SACCO road map and strategy report
c)    Two SACCO business plans and models
d)    Capacity development plan for the development of SACCO
e)    Completed copies of training manuals at various stages of SACCO Capacity building
f)     Training report containing the training process taken and topics covered for each cooperative.
g)    Training manuals on Governance and financial institution management
In addition to the above deliverables, the consultant is expected to provide quarterly financial and narrative progress reports to SNV.
b)   Reporting line
The consultant will report to the Dairy Project manager, Brian Kapotwe, who is the appointed supervisor for the assignment.
c)    Payment terms
Payment terms shall be based deliverables as outlined in the activity schedule under section 4 above.
d)   Level of effort
The total maximum number of days for completion of the assignment, including travel, desk study, field work, and report writing, is 173 working days spread between February and September 2017.
e)    Timeframe
The assignment is expected to be undertaken between February 2016 and September 2017.
f)     Consultant’s Profile
Seasoned business development team/firm with proven experience of building the capacity of farmer groups, associations and cooperatives. The organisation should have competencies and specialisation in Business development, Cooperative governance and development, SACCO establishment, Institutional development, NGO management and financial management. The consultant organisation should detail the following:
  • History of specialized services offered by the team/firm to business and development organizations in the areas of financial services and more specifically SACCO establishment.
  • Capacity and profiles of proposed team members.
  • Projects and assignments undertaken in the last 3 years.
  • Projected work plan and schedule of activities.
  • Detailed costing of activities and total budget broken down by activity.
  • Contacts and references of the consultation team/firm.
g)   Criteria for approval
A two-stage procedure shall be adopted in evaluating the proposals. The technical evaluation shall be carried out first, followed by the financial evaluation. The technical evaluation has 60% and financial proposal 40% weights. The evaluation items expectation and maximum score are presented in the table below.
Organizations Experience: A brief of past relevant assignments (in similar regions) indicating scope, geographic coverage, staff involved, budget, and client (name and contacts) (20)
Understanding of TOR and Proposed Approach and Methodology: Organizations perspective of what the assignment entails and the key considerations that should be made to implement it successfully (30)
Work-plan: Clear sequencing of activities, staff role distribution and time planning (20)
Qualification & Experience of Staff: CV’s for nominated staff indicating their academic qualification and clear relevant experience summary (30)
Financial Costs: A breakdown of costs detailing proposed staff days, daily rates, taxes and other direct costs related to the assignment in Zambia Kwacha using the attached template
h)   Submission of proposals
A technical proposal detailing the interpretation of the Terms of References, methodology, to be used including the tools to be used and the financial budget should be submitted by 25th January 2016 to: with a copy to
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