Annex I Terms of Reference Assessment of Institutional and Financial Management Capacity of Social Cash Transfer Payment Agencies and Feasibility of Payment Delivery Modalities in Yemen Summary Assess institutional and financial management capacity of social cash transfer Purpose payment agencies to recommend on the most appropriate and feasible payment delivery modality in Yemen. (i) Assess institutional and financial management capacity of social cash transfer payment agencies and feasibility of payment modalities to deliver social cash to Social Welfare Fund (SWF) beneficiaries across all governorates of Yemen. (ii) Assess potential risks, including fiduciary ones, and risk management/mitigation measures applied by existing payment agencies in delivering social cash, and identify opportunities for putting in place Specific Objectives additional, if required, financial controls and assurances to timely and effectively deliver SCTs to SWF beneficiaries. (iii) Recommend on the most appropriate affordable and feasible SCT delivery modality at governorate and district level, including in inaccessible and remote areas, by examining and weighting the costs and benefits of different payment delivery options from the perspective of both the payment delivery agent and the recipient. Type of contract Local, short-term institutional contract Budget Financial proposals to be submitted Location Strategy on geographic scope is to be proposed by an institutional contractor Duration Three months Start Date 01 February 2017 Reporting to Chief Social Policy (OIC), UNICEF Yemen Country Office Project and Activity Codes tbc 1. Introduction UNICEF Yemen Country Office (YCO) invites qualified institutions to participate in the bidding process to assess institutional and financial management capacity (incl., financial procedures and controls) of existing payment agencies across a few governorates of Yemen1; and to recommend on the most appropriate and feasible SCT payment delivery modality. This Terms of Reference (ToR) has been developed to guide interested institutional contractors on the purpose and objectives of this exercise as well as the scope of work, key aspects of the methodology to be used, and expected deliverables and qualifications of potential applicants. 1 The geographic scope strategy is to be proposed by an institutional contractor. It is suggested to choose one governorate in each region (e.g., Hadramaut, Marib, Abyan, Sa’ada, Taiz, Sana’a, Aden, Hodeidah), and 3-4 districts in each governorate with one being urban and the rest diverse rural districts. The strategy is suggested to focus on classifying governorates along some characteristics (to be proposed by an institutional contractor) that would matter for social cash payment delivery. Page 1 of 13 2. Background The SWF was established in Yemen in 1996 as a vital social protection mechanism. The SWF used to provide unconditional cash transfers (UCTs) to 1.5 million of the poorest and most vulnerable households (HHs) or 7.9 million direct and indirect beneficiaries (about 35% of the total population) across all 22 governorates. In 2012-2013, UNICEF Yemen Country Office (YCO) initiated a National Social Protection Monitoring Survey (NSPMS) that was aimed at evaluating the impact of the SWF’s UCT programme. The Survey has found that at least 70% of SWF beneficiaries depended on UCTs to purchase food and strengthen their livelihoods; cash assistance prevented vulnerable HHs from resorting to negative coping strategies; and social cash transfers helped beneficiaries improving their access to basic social services, including health, nutrition, water and sanitation, and education. The escalation of the crisis in March 2015 and a follow-on suspension of the SWF operation have resulted in leaving vulnerable people without any social protection support. Increasing prices of food and non- food basic commodities, loss of assets and livelihoods, and internal displacement, has further exacerbated the situation. In light of the above, emergency reactivation of the SWF cash transfer programme, as interim means of delivering cash transfers to vulnerable Yemenis on the SWF beneficiary list, has been recognized as a critical strategy to prevent the collapse of a key government social protection system, and as a confidence building measure. UNICEF currently collaborates with key partners on resuming the SWF cash transfer programme in Yemen. It is proposed that initially the overdue SWF social cash payments of 2015 will be resumed. A follow-on operation of the second year to cover payments related to 2016 is possibly envisaged. One of the key financial assurance activities associated with the emergency reactivation of the SWF cash transfer programme is the assessment of institutional and financial management capacity of existing and potential cash payment delivery modalities. Given the current armed conflict as well as the poor development and low accessibility of the Yemeni financial sector in general and in the rural areas in particular, finding a reliable and cost effective system for social cash transfers is a key challenge. This challenge is exacerbated by poorly developed payments and telecommunications as well as damaged physical infrastructure, and limited access to formal and informal financial services. The assessment will include the following social cash payment agencies: General Authority for Post and Postal Savings (GAPPS) and its Post Offices, Cooperative Agricultural Credit Bank (CAC), and Al Amal Bank (these three entities were used by the SWF in the past when delivering UCT to their beneficiaries), as well as Al Kuraimi Islamic Microfinance Bank (AIMB)*, Yemen Bank for Reconstruction and Development (YBRD)**, National Bank of Yemen (NBY)**, International Bank of Yemen (IBY)*, and Tadhamon International Islamic Bank (TIIB)2*. This exercise aims at assessing institutional capacity and financial management processes of payment agencies. The assessment also aims to identify the key weaknesses and gaps as well as strengths and opportunities, so that, if required, additional financial assurances are put in place, including more frequent financial spot-checks and audits. Besides, it intends to identify the most appropriate and feasible SCT cash payment delivery modality/-ies (by using clear criteria that also recognize existing safety and security concerns and social norms) from the perspective of both the SCT payment agent and the recipient. UNICEF and their partners 2 * Private bank ** Public bank Page 2 of 13 intend to ensure that cash assistance to be provided to eligible beneficiaries in an effective, secured, efficient, flexible, transparent and accountable manner. At the same time, it is intended that such exercise would contribute to streamlining institutional mechanisms to enable joint ownership and maximize efficiencies and strengths of each of these stakeholders, thereby ensuring maximization of benefits to Yemen’s population. 3. Purpose and Objectives The main purpose of this exercise is to assess institutional and financial management capacity of SCT payment agencies, and recommend on the most appropriate and feasible payment delivery modality in Yemen. Specific objectives are as follows: i) Assess institutional and financial management capacity of SCT payment agencies and feasibility of payment modalities to deliver social cash to SWF beneficiaries across all governorates of Yemen. ii) Assess potential risks, including fiduciary ones, and risk management/mitigation measures applied by existing payment agencies in delivering social cash and identify opportunities for putting in place additional, if required, financial controls and assurances to timely and effectively deliver SCTs to SWF beneficiaries. iii) Recommend on the most appropriate, affordable and feasible SCT delivery modality at governorate and district level, including in inaccessible and remote areas, by examining and weighting the costs and benefits of different payment delivery options (using clear criteria/assessment checklist to be suggested by a contractor) from the perspective of both the payment delivery agent and the recipient. 4. The Assignment a. Scope of the Work The institutional contractor is tasked to assess institutional and financial management capacity of local payment agencies delivering social cash transfer assistance to the poorest and most vulnerable people in Yemen, and recommend on the most appropriate, affordable and feasible payment delivery modality. The assessment aims at focusing on various social cash payment agencies and payment delivery modalities, including the ‘traditional’ ones (i.e. used previously by the SWF), such as GAPPS/POs, CAC, and Al Amal Bank, and non-traditional ones, including AIMB, YBRD, NBY, IBY, TIIB (the existing cash transfer delivery modalities and its geographical distribution are enlisted in Annex I), at both central and local levels. In addition, it would be also important to interview a cohort of SWF beneficiaries to hear their prior experiences related to receiving cash to get insight on effectiveness existing payment delivery modalities. UN agencies, INGO, NGOs and other stakeholders are also meant to be interviewed to learn their experiences on dealing with social cash payment agencies and payment delivery modalities. The assessment will map out social cash payment agents and understand whether they have required institutional and financial management capacity and arrangements to deliver and monitor SCT payments to SWF beneficiaries at central