TERMS OF REFERENCE

CONSULTANCY TO CARRY OUT MARKET SURVEY FOR INKUNGA ON AGROFORESTRY FINANCING

List of Acronyms

Introduction

1.1. Project Background

Inkunga Finance Plc, in partnership with ADA, is developing financial products for the adoption of agroforestry to enhance sustainable agriculture and improve the livelihoods of small-holder farmers in Rwanda.

Agroforestry combines agriculture and forestry technologies to create more diverse, productive, and sustainable land-use systems by adding trees on farms. The project aims to implement agroforestry practices that will not only provide economic/ livelihood benefits to farmers but also improve environmental resilience and biodiversity.

1.2 Context of the Project

Inkunga Finance Plc's agroforestry financing pilot is part of a larger strategy to integrate customer-centric approaches in developing financial products that are tailored to the unique needs of smallholder farmers, while taking into account market opportunities.

In Rwanda, the challenge lies in reaching farmers and providing them with financial products that genuinely add value to their business-as-usual agricultural practices. ADA and Inkunga Finance Plc recognize that the key to success is understanding the specific needs, preferences of and opportunities for these farmers. Thus, this project aims to support Inkunga Finance Plc in developing and piloting an agroforestry financial product that is not only economically viable, environmentally sustainable and scalable to a large number of farmers in the Western Province.

1.3 Purpose of This Document

This document outlines the TORs for a consultancy to conduct a market survey that will inform the development of the agroforestry financial product. The assignment will identify customer needs, market demands, off-takers and potential areas for product adaptation or innovation. The findings will enable Inkunga Finance Plc to design product features that maximize value for both the farmers and the institution (co-design), ensuring the successful implementation of the pilot project.

Objectivesof the consultancy assignment

General Objective

To inform the development of an agroforestry financial product for Inkunga Finance Plc that meets the demands of current and potential agri-customers, ensuring it is customer-centric, supports environmental sustainability, and enhances farmer resilience.

Specific Objectives

• To assess the market (demand and supply) of key agroforestry products in Karongi, Rutsiro and Rubavu;
• To identify financial and non-financial needs of farmers transitioning towards agroforestry systems.
• To assess the market (the demand and the supply) of financial services and non-financial services in the target area
• To provide recommendations on how best can Inkunga Finance Plc can address the financial and non-financial needs of farmers transitioning towards agroforestry systems using existing and new products

Scope of Work

The market survey will mainly cover Inkunga Finance Plc’s areas of influence in pilot Rubengera and Rutsiro), and Rubavu (where agroforestry systems are better developed than the pilot areas, but will need perspectives from all our areas of operation including Kigali; focusing on:

• Characterizing the Context and Identifying Farmer Needs:To comprehensively assess the current agricultural context within Inkunga Finance Plc's geographic scope, including details on main crops, crop rotations, productivity, commercialization channels, and prices. Also, identify the primary needs of farmers for implementing agroforestry practices, understanding the challenges and barriers they face, such as awareness, access to resources, and financial constraints - covering market access issues, risks farmers face (environmental, financial, operational), and potential mitigation measures.
• Characterizing the Market for Agroforestry Product:To analyze the market demand for various agroforestry products, such as fruits, timber, and non-timber forest products, within the sampled areas (Rubavu, Rutsiro and Karongi districts) and other regions influenced by Inkunga Finance Plc while identifying potential off-takers and market opportunities for these products to inform product development and market strategy. Identify relevant stakeholders including potential partners (training providers, technical assistance providers, inputs suppliers, off-takers).
• Assessing Market Demand for Agroforestry Financial Products:To evaluate the current market demand for financial products related to agroforestry among farmers, determining the significance of the market opportunity – leading to an assessment will help tailor financial products to meet the specific needs and preferences of the target customer base. Making recommendations for developing/adapting Financial Products for Environmental and Farmer Resilience (delivery channels, accompanying non-financial services, possible partnerships, and needed adjustment key features of the product(s)).
• Identifying Non-Financial Services:To identify non-financial services (NFS) needed to support farmers in adopting agroforestry practices. This includes determining effective incentives, capacity-building services for different stages of tree growth life cycles, on-demand advice for tree-related issues, access to quality seedlings and inputs, mutualized equipment, and facilitation for the commercialization of tree produce at fair prices, while developing a brief methodology for delivering these NFS effectively.

 Methodology

The market survey methodology will be described by the consultant to address the following research questions:

i) Characterising the context and identifying the needs of farmers in the context of agroforestry:

•  What is the current context of farmers in the geographic scope of Inkunga Finance Plc’s business (main annual crops cultivated, typical crop rotations, annual productivity/ha/crop, commercialisation channels and prices, self-consumption, main difficulties?
• What are the primary needs of farmers when it comes to implementing agroforestry practices (e.g. financial, non-financial)?
•  What challenges do farmers face in adopting agroforestry practices?
• What are the risks farmers transitioning to agroforestry systems face? What can be the mitigation measures?

ii) Characterising the market for produce from agroforestry systems:

• What is the market demand for products from agroforestry system that can be implemented by customers of Inkunga Finance Plc?
•  Who are the off-takers sourcing in the pilot area and in the other areas of influence of Inkunga Finance Plc in the Western Province for agroforestry products?

iii) Assessing the market demand for agroforestry-related financial products:

•  What is the current market demand of farmers for financial products related to agroforestry?
•  How significant is the market opportunity for agroforestry-related financial products? Who are the main competitors? What products do they offer? What is their market share?
•  How can the financial products be tailored to enhance:
• resilience and adaptive capacity of farmers to environmental challenge (for example, climate change, soil erosion, land degradation) and
• environmental benefits 
•  What specific features should be included to ensure the products support environmental sustainability?
•  What de-risking mechanisms should Inkunga Finance Plc consider?

iv) Identify and design non-financial services needed/applicable and methodology of delivery:

• What non-financial services (NFS) are needed to support farmers in adopting agroforestry?
• What is the best methodology for delivering these non-financial services?

v) Providing recommendations for designing or adapting the financial product for the pilot phase:

•  What are the key recommendations for designing or adapting the financial product for the agroforestry pilot phase?
•  How can the financial product be structured to best meet the needs of farmers and ensure successful implementation of the pilot?

Expected Results and deliverables

• An inception report describing the methodology to be used, and the tentative calendar for data collection; assorted with tools to collect information
• A draft report including the analysis of data and highlighting key findings, and recommendations for Inkunga Finance Plc
• A final report integrating comments from different stakeholders on the draft report
• Conduct agroforestry product development and refinement workshop where all the feedback from clients and stakeholders will be incorporated into the already existing product prototype features.

Timeline

The assignment should be completed within a period of 35 days starting from the approval of the inception report and tools.

Consultant Selection

Desired profile:

• Proven experience in microfinance product design and analysis.
• Proven experience in agricultural financing product design.
• Expertise in customer perception analysis and customer-centered design.
• Knowledge of socio-economic dynamics in the target area.
• Strong experience related to the domain of agriculture, agroforestry, forestry or environmental management and conservation in general.
• Experience in managing demand studies and product design with an environmental and gender perspective.
• Knowledge of the market for service providers and technical assistance.
• Credentials: good completion certificates of similar work(s), tax clearance certificate (TCC) both for RRA and RSSB for companies, at least 2 references.

Submission of Proposal

You can bid as individual, team (specify team leader) or company.

Proposals must include:

• Technical and financial proposal.
• CV(s) of proposed consultant(s).
• References to relevant work.
• Any other relevant information.

Proposals (technical and financial) should be sent to Inkunga Finance Plc by email at recruitment@inkungafinance.com; copy to info@inkungafinance.com& agaba@inkungafinance.com by 23:59HRS on August 9^th, 2024.

Done at Karongi; le, 30^th July, 2024

Muhawenimana Abed Cherif

MANAGING DIRECTOR