FSA TRANSFORMATION III: PROJECT MANAGER

1. BACKGROUND
Financial Services Associations (FSAs) are membership based financial organisations offering credit, savings and money transaction services to their members. The basic model is similar in many respects to other types of decentralised financial institutions, such as savings and credit co-operatives or credit unions and village banks, with local ownership of the share capital and a strong emphasis on user-owner governance and management. While there is significant variation in the size of FSAs seen around the world, typically membership is measured in hundreds, although large FSAs with several thousand members are now being seen.

In Kenya, the FSAs have been principally promoted by K-Rep development Agency (KDA), an NGO, with donor support since 1997. There are now about 80 operating FSAs in various parts of the country. KDA’s primary objective in establishing the FSA model in Kenya was to significantly push forward the frontier of sustainable financial service provision in more remote geographical areas where mainstream micro-finance institutions (MFIs) and commercial banks were not operating. Financial service providers operating on a conventional formal, centralised organisational model were for long unable to offer services on a sustainable basis in areas characterised by low population densities, high incidences of poverty and poor infrastructure. Before the relatively recent introduction of mobile banking and agency banking, these factors resulted in a very significant proportion of the population remaining beyond the formal financial access frontier. In contrast to the few service providers (typically MFIs) working in these remote marginalised areas, FSAs have been able to provide a much broader range of financial services to their members.

At the outset the premise had been that once an FSA had been established and supported over a reasonable inception period, the organisation would become self-reliant and KDA as promoter would be able to withdraw. The evidence from experience has shown that this was optimistic. Problems rapidly appeared in the management and governance of a large number of FSAs, often resulting in unsustainable levels of non-performing loans and fraud. From a market development perspective the key advantage of the FSA model is its promise of sustainably delivering services beyond the formal financial frontier. Addressing the governance and management problems necessitates preserving this cost based advantage and thus finding low cost solutions to providing effective support to individual FSAs.

KDA has developed a model for the commercialisation of the FSA network based on a management contract arrangement. Under this model KDA established a specialist FSA management company, K-Rep Fedha Services Ltd (KFS) to provide management services and supervision to the FSAs on a commercial basis. The aim was to create a highly cost-effective approach to delivery of support and supervision services in order to assure sustainability of individual FSAs and KFS itself. Underpinning the approach was the premise that a commercial environment would produce greater incentives for efficiency in service delivery at the level of the support organisation. The new approach represented a transformation of KDA’s strategy for promotion of the FSA model.

FSD has been providing support to KFS to create a commercially viable support network for the FSAs. In the first phase to implement this transformation, FSD supported the development of the model through a pilot in Makueni and Kitui regions, while simultaneously providing support to the rest of the FSA network in preparation for transition to the emerging commercial model. Initiated in late 2005, the objective was to demonstrate the basic viability of a re-engineered FSA system supported by low-cost supervision and support services provided by a specialist service provider. This first phase laid strong foundations for the transformation of the FSA network into a sustainable decentralised financial system.

A second phase project was then put in place in 2007 to further refine the new FSA model developed in the first phase and roll it out across the wider FSA network. A key part of this phase was implementation of an appropriate automation solution in the FSAs to both enhance reporting and hence oversight and enable business growth. The aim in the second phase was to further test the efficacy of the model with the target of demonstrating full operational sustainability at the regional/branch level of KFS and covering 75% of total costs, including the head office. It was expected to position KFS for a third and final phase under which the network would be further expanded with full operational and institutional sustainability achieved. The core targets were achieved and this second phase has now been concluded with 44 FSAs covered and a total outreach of 126,000.

Institutionally the FSAs can be regarded as a hybrid of SACCOs and semi-formal MFIs. FSAs generally start small with about 300 members but grow gradually, depending on the economic potential and population density of the area. Although some FSAs have over 4,000 members, they are all registered as self-help groups. This presents a growing problem since a self-help group does not have legal personality and thus cannot enter into a legally binding contract. Meanwhile the Microfinance Act 2006 and the related regulations effected in 2009 require that all deposit-taking MFIs (DTMs) be regulated. Subsequently, the SACCO Societies Act 2008 and the SACCO regulations have been effected mandating prudential regulation of all deposit-taking SACCOs. The FSAs are clearly mobilising deposits from their members in a similar fashion to SACCOs that operate FOSAs (the ‘front office service activities’). It is difficult to see how the evolved FSA model can realistically continue to operate outside the current formal regulatory framework. Developing an appropriate way to regulate the FSAs network to assure the security of members’ deposits in line with the current policy framework is thus essential to achieving the final long-term objective of transformation here.

The last few years have seen a significant increase in mobile network coverage and the emergence of the linked mobile banking services. Even before the introduction of agency banking in 2009, commercial banks were already retracing their steps into the rural areas, driven by competition in the urban areas. Agency banking implementation by the largest banks (Equity, Co-op, KCB and Barclays) is underway with agents coming up in most of the rural areas were FSAs are located. The two main deposit-taking MFIs, in particular KWFT, also have operations in some of the areas where FSAs are located. Although the DTMs have not started rolling out agency networks, this is expected to happen soon .Based on a market analysis undertaken with a view to understand who FSAs are serving and where their competitive strength lies, the ability to offer a “one-stop shop” for financial services to this lower income segment has clearly been a key competitive advantage for them when compared with the credit only providers. Despite the low contribution to income and hence

sustainability and the related risk, the savings product is evidently a highly valued service to the majority of FSA members. Interestingly however the perceived closeness of the members to the FSAs is seen as an essential characteristic and strongly suggests that even as technology enables centralised, formal providers to reach out further, the FSA institutional form remains highly relevant to reaching poorer households in rural areas.

KFS has received support from a development partner for a final transformation phase (FSA III) which is expected to realise transition of the KFS-FSA network into prudential regulation and growth to support operational self-sustainability. This is a complex undertaking with a number of closely linked components and a wide range of activity, many of them on the critical path, which must be closely co-ordinated and tracked to ensure the project objectives are realised. The current staff are fully involved in operations and hence KFS is looking for a dedicated and strong project management resource to drive this crucial transformation project.

2. OBJECTIVES
The Project Manager will spearhead the implementation of the FSA transformation III project activities to ensure the project objectives and related goals are realised. Specific project objectives, outputs and targets are outlined in the project document to be shared at a later stage in the recruitment process.

3. SCOPE OF WORK
The scope of work under this position will include but not be limited to:

3.1. Project planning
 Firm up the overall project plan in close consultation with KFS Chief Executive Officer, functional heads and regional managers.
 Cascade planning to the various levels of KFS, and FSAs and get buy-in for the project.
 Carry-out quarterly planning for project activity based on the master project plan.
 Participate in KFS’s operational planning – operations are closely tied to this project.

3.2. Manage FSA III project implementation for effectiveness
 Support implementation of project activity by ensuring that all necessary resources are available on time.
 Identify, engage and liaise with the various stakeholders – service providers, FSAs, regulators, and the project development partner.
 Co-ordinate implementation of various activities to realise project objectives.

3.3. Project monitoring and evaluation
 Work with KFS’s CEO, functional heads and regional managers to rationalise project targets and cascade these to other levels within the network.
 Track project activities and performance against plan and targets through discussions with operations staff, progress reports and field visits.
 Monitor actual expenditure against project budget and lead necessary action to manage any adverse variances.

3.4. Procurement management
 Identify needed services and goods for the project in time to avoid delays.
 Draw up terms of reference for all procurements under the project.
 Supported by the CEO and other KFS head office staff, identify appropriate goods and service providers in line with KFS’s procurement policies and procedures.
 Provide quality control in procurement of both goods and services to ensure value for money before payment. This will include review of contracts and deliverables (such as reports from consultants) for assignments undertaken under this project.
 Ensure timely delivery of services and goods.
 Organise and participate in relevant project activities such as workshops.

3.5. Reporting
 Generate a project activity progress report, tracking achievement against plan and targets, for the steering committee.
 Working in close collaboration with KFS’s finance manager, generate the project’s financial report.
 Generate relevant project activity reports for incorporation into KFS management accounts.
 Generate necessary project activity related reports for key stakeholders e.g. the regulator and the development partner.

3.6. Communication and dissemination of project information
 Draw a project communication plan to the various stakeholders, highlighting specific objectives, audience, channels, and budget.
 Implement the communication plan/create awareness about project activity to KFS staff, FSAs and other key stakeholders as identified with the KFS CEO.
 Regularly communicate project progress to stakeholders using appropriate channels.

3.7. Other related activity
The project manager will carry out other related activity that is necessary for realisation of the transformation’s objectives. This will include rendering necessary support to the KFS CEO and functional heads in undertaking activity directly related to this project.

4. CONDUCT OF THE WORK
The FSA transformation III Project Manager will be a full-time member of the KFS staff, formally reporting to the Chief Executive Officer and will work in close collaboration with other members of the head office team.

Office accommodation and a computer will be provided at KFS offices together with the necessary administrative support and transport. All travel for work outside the KFS offices will be directly booked and provided by KFS. Where necessary, expenses will be reimbursed against receipts in accordance to KFS’s policies and procedures.

5. OUTCOMES AND DELIVERABLES
The primary outcome sought from this work is the effective implementation of the FSA transformation III project to enable successful transition of the KFS-FSA network into prudential regulation, and business growth for full sustainability. The Project Manager will specifically be responsible for managing this transformation as outlined in the scope above. The project manager’s performance will be measured against targets to be agreed between KFS and the successful candidate after contracting.

6. REQUIREMENTS
The Project Manager must have:
Mandatory requirements
At least a Bachelor’s level degree in a business related field
Demonstrate track record in project management
Experience working in and strong knowledge of the Kenyan financial sector and related legislations.
Ability to work independently and deliver against strict deadlines
Strong PR and communication (oral and written English) skills
Assessment criteria Weighting (%)
Relevant background (including qualifications) and knowledge of Kenyan financial sector:20
Project management skills, ability to work independent and deliver against deadlines :40
PR and communication skills: 10
Cost and availability: 10 
Total 100

7. TIMETABLE
The Project Manager is expected to start work immediately. The tenure for this position is 24 months and will be subject to KFS’s normal human resource policies and procedures.