Download Report

CONSULTANCY FOR SHARIAH COMPLIANT GROUP
SAVINGS AND LOAN ASSOCIATION (GSLA) MANUAL
(BIRMINGHAM, UK), MAY 2015
ISLAMIC RELIEF
BACKGROUND
Islamic Relief is an international aid and development charity, which aims to alleviate the
suffering of the world's poorest people. It is an independent Non-Governmental
Organisation (NGO) founded in the UK in 1984.
As well as responding to disasters and emergencies, Islamic Relief promotes sustainable
economic and social development by working with local communities - regardless of race,
religion or gender.
Our vision:
Inspired by our Islamic faith and guided by our values, we envisage a caring world where
communities are empowered, social obligations are fulfilled and people respond as one to
the suffering of others.
Our mission:
Exemplifying our Islamic values, we will mobilise resources, build partnerships, and
develop local capacity, as we work to:
Enable communities to mitigate the effect of disasters, prepare for their occurrence and
respond by providing relief, protection and recovery.
Promote integrated development and environmental custodianship with a focus on
sustainable livelihoods.
Support the marginalised and vulnerable to voice their needs and address root causes of
poverty.
We allocate these resources regardless of race, political affiliation, gender or belief, and
without expecting anything in return.
At the international level, Islamic Relief Worldwide (IRW) has consultative status with the
UN Economic and Social Council, and is a signatory to the International Red Cross and
Red Crescent Code of Conduct. IRW is committed to the Millennium Development Goals
(MDGs) through raising awareness of the issues that affect poor communities and through
its work on the ground. Islamic Relief are one of only 13 charities that have fulfilled the
criteria and have become members of the Disasters Emergency Committee
(www.dec.org.uk)
IRW endeavours to work closely with local communities, focussing on capacity-building
and empowerment to help them achieve development without dependency.
Please see our website for more information http://www.islamic-relief.org/
BACKROUND
Any microfinance programme, either delivered by a financial services institution or a village
bank requires credit appraisal, disbursement and recovery, the associated treasury
functions and portfolio management. In an Islamic microfinance operation banking
procedures also have to be compliant with Islamic contract law although there is no formal
standard of Shariah compliance available in the microfinance sector, the Islamic banking
industry generally adheres to the standards developed by the Accounting and Auditing
Organisation for Islamic Financial Institutions (AAOIFI).
Outside the commercial banking sector Group or Village Savings & Loan Associations
(GSLAs) are a pragmatic way to mobilize capital for financial inclusion. They provide both
a secure mechanism for managing disbursements and recoveries and also community
ownership over the proceeds. However, most existing approaches such as CARE’s VSLA
utilize financing models that are not entirely in line with Islamic ethical principles by
charging interest or service charges that may not be in line with AAOIFI standards.
Islamic Relief wishes to utilize such a village banking approach and is looking for a
suitable competent consultant who can carry out a desk-based review of an open-source
GSLA manual provided by IRW and make the necessary adjustments to bring it in line with
AAOIFI standards.
OBJECTIVE
The objectives for this consultancy are;
1. Identify key areas where existing methodology and techniques used for loan
disbursements and group savings under the GSLA are in immediate infringement of
shariah principles.
2. Recommend alternative shariah compliant processes/approaches, where possible
those that will emulate current GLSA methods and cause minimal disruption to the
original model.
3. Rework the identified areas of improvement in line with Islamic finance standards
such as AAOIFI
4. Particularize the implications of employing shariah compliant modes in the form of a
benefit cost analysis and overall financial implications on GSLA and the
implementing organisations.
5. Document in summary form all changes made to the manual.
SCOPE OF THIS PROJECT
With the planned expansion of an Islamic GSLA model in conjunction with IRW into new
geographical areas within Africa, the need to ensure that key shariah principles are
endorsed for the appropriate instruments will be tantamount in determining the future
success and failure of Islamic Microfinance in the identified location(s). More importantly,
the potential awareness and benefits it would bring to beneficiary communities will play a
significant role in contributing to IRW’s sustainable development agenda and may provide
an engine for economic growth in particularly rural Africa.
The project will enable the GSLA model to operate a more universal and pro – poor Sharia
compliant financial inclusion programme in the form of, for example, qard hasan and
murabaha, and perhaps even expand services provided by GSLAs by introducing
mudabaha, musharaka and takafulat a given stage of the group achieving certain financial
and managerial maturity. Essentially the group could expand its efforts either by increasing
potential size or offering services to a ‘well defined wider group’.
The present project will require the provision of the most appropriate and relevant
recommendations based on Islamic shariah principles to the existing GSLA format and the
re-development of the current open source manual provided by IR into a shariah
‘embedded’ programme manual that adapts as appropriate AAOIFI standards..
The project will not include the analysis and recommendation of any ‘subcategories’
outside the remit of shariah Islamic microfinance. This includes day to day operations,
policies, review of any documentations unrelated or associated to the existing saving and
lending modes. The project will not be required to provide any form of advice on portfolio
management including operations, financial, regulatory or legislative.
Given the development of the GSLA manual over several years including some basic
sensitisation along Islamic participatory financing lines, an Islamic finance advisory body
with in-depth understanding of banking operations and AAOIFI standards is required to
carry out a complete re-development. Conversely, taken into consideration the
inaccessibility of the market in which GSLA is looking to venture into and limited
knowledge of community culture in that area, the resultant manual must be sufficiently
generic to be operationalisable by non Islamic banking specialists.
CONSTRAINTS
The source document is a GSLA manual that is an open source document developed by a
consortium of NGOs. In any edited version the contribution of the original authors must be
acknowledged.
ROLES AND RESPONSIBILITIES
The IRW Micorfinance Sharia and Compliance Manager will act as the project manager for
this project and will liaise with the internal client(s) for this project. The consultant is
responsible for the delivery of the project objectives, including the obtaining of Shariah advice
in line with AAOIFI standards. Islamic Relief will provide access to the open source GSLA
manual.
REPORTING
The consultant will report into the project manager at agreed intervals/against specified
milestones.
METHODOLOGY
Desk-based review and reworking of manual by suitable Sharia advisors to certify AAOIFI
compliance where appropriate.
DELIVERABLES
1. Report highlighting key features that require changes, signed off by project
manager before next stage.
2. Report of recommendations for alternative shariah compliant processes
/approaches, where possible those that will emulate current methods and cause
minimal disruption to the original model, signed off by project manager before next
stage.
3. Cost benefit analysis on new Islamic Finance (IF) modes and projection of financial
implications of employing
shariah
compliant modes of saving and loan
disbursement.
4. Reworking the identified areas of improvement, upon agreement with IRW project
manager in line with Islamic finance standards, including internal certification as
AAOIFI compliant where appropriate.
5. Summary report of all the changes made.
DEPENDENCIES
Islamic Finance Shariah advisory body with micro banking/finance expertise.
Open source document intellectual property rights allow for amendments
PROJECT REQUIREMENTS
Access to open source GSLA manual, included in this tender.
TIMESCALES
Timescales for this particular project are as follows;
Task
Completion date **
STAGE 1: Report highlighting key features
that require changes .
2 weeks from
consultancy
initiation
STAGE 2: Recommend alternative shariah
compliant processes /approaches, where
possible those that will emulate current
methods and cause minimal disruption to the
original model - – signed off by project
manager before next stage
Up to 4 weeks
from sign off
by
project
manager
Cost benefit analysis
Finance (IF) modes
financial implications of
compliant modes of
disbursement
on new
Islamic
and projection of
employing shariah
saving and loan
Up to 2 weeks
from sign off
by
project
manager
STAGE 3: Rework the identified areas of
improvement in line with Islamic finance
standards, including certification as AAOIFI
compliant where appropriate
Up to 4 weeks
from stage 2
sign off by
project
manager
PROJECT OUTPUT
Revised Shariah-compliant GSLA manual .
PAYMENT TERMS
Our preferred payments terms are printed below, if unacceptable, consultants are
expected to propose generous payment terms.


30%: Upon signing of contract and initiation of the assignment;
70%: Upon submission of final report and presentation.
CONSULTANCY CONTRACT
This will be a consultancy contract for a certain term and may be extended further, the
selected firm/consultant is expected to work from a location that is yet to be confirmed.
The consultant will report directly to the Microfinance Sharia & Compliance Manager.
The terms upon which the consultant will be engaged are as per the consultancy
agreement. The invoice is to be submitted at the end of the month and will be paid on net
payment terms 28 days (preferred).
The applicant will need to provide all equipment required to undertake the necessary tasks
and this must include suitable IT and communication equipment.
All potential applicants must fill in the table beneath in appendix 1 to help collate key data
pertaining to this tender. The applicant must be clear about other expenses being claimed
in relation to this consultancy and these must be specified clearly.
A copy of the terms of reference is available upon request though all the data contained
within the TOR has been included in this tender document, a copy of the consultancy
contract is also available on request. The successful applicant will be required to sign two
copies of the consultancy contract and retain a copy for his/her perusal and the second
copy to be submitted (must be signed) to Islamic Relief Worldwide within 48 hours of
receipt.
For this consultancy all applicants are required to submit a covering letter with a
company profile(s) of all stakeholders and a CV of the lead consultant(s).
A proposal including , planned activities, methodology, outline areas of work within
the GLSA manual, proposed deliverables, timeline, and cost proposal are imperative
including appendix 1 beneath.
Other relevant supporting documents should be included as the consultant(s) sees
fit.
All applicants must have a valid visa or a permit to work in the UK (if travel is
required to the UK). A valid visa/work permit is also required for those areas
required to be visited as part of this consultancy.
TENDER DATES AND CONTACT DETAILS
All tenders are required to be submitted before Monday 1st June 2015 10.00am (UK
time) and be returned to [email protected]
For any issues relating to the tender or its contents please email directly to;
[email protected]
Quotations must include the following information for assessment purposes;
1.
2.
3.
4.
5.
Payment terms (28days preferred)
Full break down of costs including expenses and VAT
References (two are preferred)
Technical competency
Demonstrable experience of working in similar environment
Note; The criteria are subject to change.
ATTACHMENTS
GSLA Programme Guide: Field Operations Manual (Modification of Version 3.2
Produced in April 2009 © VSL Associates for use by Islamic Relief Worldwide (IRW)
APPENDIX 1
Please fill in the table below it is essential all sections be completed and where relevant
additional expenses be specified in detail.
Cost evaluation of shariah
compliant GSLA manual
consultancy (Birmingham),
May 2015
Applicants name
Company name
No of proposed hours per week
No. of proposed days
Preferred days
Earliest available start date
Non preferred days
Hourly rate
Total per week
VAT inclusive (Total)
Other expenses (please specify)
Other expenses (please specify)
Other expenses (please specify)
Preferred payment terms (IRW UK
terms are normally 28 days).
Total cost for consultancy (for
one month)
Total cost for consultancy (for
proposed period)
Note
The applicant is expected to pay full taxes in his/her native country (s), native country is
referred to here as the country of residence.