Thematic Area: Knowledge Management
Project Title: Policy Brief – Identifying Regulatory Bottlenecks for Digital Financial Services in Pakistan
Expected Start Date: May 2017
End Date: June 2017
Task Manager: Director KMC, Karandaaz Pakistan
KARANDAAZ PAKISTAN, a not-for-profit company established in August 2014, promotes access to finance for small businesses through a commercially directed investment platform, and financial inclusion for individuals by employing technology enabled digital solutions. The company has financial and institutional support from leading international development finance institutions; principally the United Kingdom Department for International Development (DFID) and the Bill & Melinda Gates Foundation.
Karandaaz Pakistan has three core work streams:
The State Bank of Pakistan (SBP) and the Pakistan Telecommunication Authority (PTA) are the two main regulators of branchless banking in the country. Both organisations, primarily the SBP, have developed mobile banking / branchless banking regulations and rules in the following order:
Identification of Need Analysis
The National Financial Inclusion Strategy (NFIS) aims to expand financial access to at least 50 percent of Pakistan’s population by 2020. The NFIS prioritizes the potential role of digital financial services (DFS) in achieving this target. The SBP has played a vital role in fostering and enabling growth and expansion of DFS. As the sector has grown and more players have entered this space, the SBP has consistently introduced and amended policies and regulations ensuring healthy growth and competition, with a keen focus on improving access to finance across multiple income and business segments.
Since the introduction of branchless banking regulations in 2008, Pakistan has seen exponential growth in digital service accounts and transactions. Mobile wallet accounts grew by 16 percent in quarter 3 of 2016 (July to September), to an estimated 16.9 million. In a country with more than 100 million unbanked individuals, DFS offer a promising solution. Rapid growth in the industry however, is accompanied by the need for a constantly evolving regulatory and policy environment. As technology-enabled solution have mushroomed in a variety of sectors around the world, from the financial industry to transport and travel, regulators across the board have struggled to keep pace.
To facilitate with this process and in keeping with the objective of the NFIS to improve financial access via DFS, Karandaaz Pakistan intends to develop a series of policy briefs focused on regulatory and policy gaps, bottlenecks and challenges.
As a first in a series of policy briefs, the primary aim of this assignment is to identify regulatory bottlenecks faced by digital service providers (DSPs) in Pakistan. To ensure that the regulatory landscape is adequately assessed, it is recommended that regulations in the following categories are assessed and gaps and/or bottlenecks identified:
The Consultant may recommend alternative categorizations, which will be shared with Karandaaz Pakistan. Gaps and bottlenecks within each category will be identified based on expert consultations and international experience and then prioritized. The gaps and/or bottlenecks may be prioritized based on selected criteria e.g., impact (number and type of DSP’s impacted, growth), need (is it skewing the sector and competition), timeliness (quick wins), etc. Recommendations for the gaps and bottlenecks will also be given.
The assignment will be divided into three distinct phases, regulatory and secondary literature review, stakeholder consultations and analysis and documentation:
The contractor is to undertake a regulatory review supplemented with a secondary literature review. In addition to local regulations and literature, the consultant should also review regulations and literature pertaining to at least three countries leading in the DFS space e.g., Kenya, Indonesia, Argentina, Brazil, etc.
Consultations with heads of DFS departments of major players in the industry are to be undertaken (banks and telcos). Consultations will also be held with regulators and policy makers, donors, associations. The purpose of the consultations will be twofold:
A two-fold process is suggested for developing the policy brief:
Both documents will be submitted to Karandaaz. The finalisation of the documents will be subject to approval by the KM and Digital Team at Karandaaz.
The engagement shall commence in May 2017 and expected to be concluded by June 2017 (8 weeks). The Contractor shall provide a detailed background paper (20-25 pages) from which the final policy brief, no longer than 4-6 pages, will be extracted. The policy brief should be clearly and concisely written, identifying:
During the assignment the consultant will also share a stakeholder consultation plan with Karandaaz for approval prior to starting industry consultations. The Karandaaz Pakistan team shall participate in primary research activities where possible. The Contractor shall be responsible for making all logistical arrangements required with respect to the engagement.
The consultant will remain available to respond to any queries thereafter, including one presentation at a Karandaaz event (date TBC at a later stage). A blog will also be authored and submitted in partnership with Karandaaz for upload to the company website.
The tentative timeline for this study is May 2017 to June 2017 unless the appointment is extended or a new appointment is made. While the timeline can be adjusted, the unit cost of the project may stay the same. The tentative payout schedule will be as below:
1. Updated Work Plan
2. Stakeholder Consultation Plan
3. Detailed Background Paper
4. Final Policy Brief
The ideal consultant will bring the following key elements:
Applicants will need to meet the following pre-requisite criteria:
Proposal/Documents Submission Protocol
All applicants should submit an updated CV, proposed work plan (indicating research steps, assignment duration, and schedule for submission of deliverables) and budget in PKR. The application should also include:
Document specifications: Font Calibri, Font Size 11.
Soft and hard copy of application documents must be mailed to the following email addresses no later than May 26, 2017:
Postal Address: Procurement, Karandaaz Pakistan, Mezzanine Floor, Ali Plaza, Nazimuddin Road (D Chowk), Islamabad
Envelops should be marked: “Policy Brief – Identifying Regulatory Bottlenecks for Digital Financial Services in Pakistan”.
All queries should be directed to firstname.lastname@example.org no later than May 23, 2017.
Late submissions will not be entertained.