Financial inclusion is a key factor of economic and social progress and is high on the inclusive growth agenda. It has a proven impact on small business growth, local economic activity and job creation, on the reduction of financial vulnerability of people living in poverty, on women’s empowerment, on access to education, health and basic utilities, and generally on the formalisation of the economic activity. A lot remains to be done in the developing countries, where around 2 billion people do not have access to a basic bank account, among of them a high percentage of youth and of women (60%) -, and where more than 200 million micro, small and medium enterprises (MSMEs) lack adequate financing for their growth.
Globally sub-Saharan Africa remains the region with the largest portion of people excluded from formal financial services and the situation is not much better in the Caribbean and the Pacific. Africa’s financial systems are shallow, costly and with limited outreach. Only 12% of adults have a bank account and the situation is direst in rural areas where the large majority of the 1.2 billion people in Africa live. Cost, distance, and documentation requirements remain the main impediments to the development of inclusive financial systems. Low-income population depends on very expensive informal mechanisms for loans, savings and to protect themselves against risks such as uneven cash flows, seasonal incomes or sickness. Micro, small, and medium enterprises in African, Caribbean, and Pacific (ACP) countries, many of which are part of the informal economy, are important drivers of growth and employment in economies across ACP markets. However, the lack of access to finance is limiting their ability to sustain and grow their businesses due to a lack of working capital. Broadening the access to more adequate financial services will mobilize greater capital for investment, household savings, expand entrepreneurship, and enable more people to invest in themselves and their families (education, health, housing, energy, food).
The Caribbean offers diverse economic opportunities, and the countries have a lot to gain from mainstreaming digital payments, potentially saving US$110 billion per year from reduced leakage in public spending and tax collection as it indicated in relevant analysis. Recently, in May 2018, Caribbean Digital Finance and Free Trade System (CariNet) was launched – a digital financial services platform initiated by the Caribbean Free Trade Zone aimed at reinvigorating the declining financial industry in the region by using blockchain technology to simplify business processes and reduce risk and transaction costs.
Financial inclusion and digital financial services present significant opportunities for the Pacific, as it is one of the least banked continents in the world. According to estimates of the UNDP, in some Pacific islands, less than 10% of the population have access to basic financial services. Against the backdrop of increased broadband connectivity in the region, DFS could offer a game changer to turn the tables on the remoteness of the islands, and leapfrog into the digital age, to reliable, and cost-efficient banking solutions with clear cost and efficiency benefits for the local businesses sector.
The provision of financial services to people living in poverty , particularly women and youth, to informal businesses and in the remote areas has traditionally been limited by the high cost of transaction and of network extension. However, over the last ten years, digitalisation has brought dramatic improvement in financial inclusion. Digitalisation allows a reduction in transaction costs through disintermediation, reduced paperwork and increased safety. Digitalisation also allows extended outreach well beyond bricks and mortar points of sale, a leap summarised by one expression: “from brick to click”. One billion people in developing countries now have a mobile phone. Banks and non-banks have started to use digital financial services to overcome the limits of traditional banks to reach new customers in remote and underserved segments. By the end of 2016, there were 95 countries in the world with at least one active mobile money service. In sub-Saharan Africa, at least 19 markets have now more mobile accounts than bank accounts. Initially mobile phones were used to conduct payments, but recently have initiated to extend to other services, such as credit, savings, insurance and basic services such as energy, water and agriculture. Digitalisation has allowed the development of services between persons (P2P), such as money transfers, from people to business (P2B), for utility payments, but also from government to people (G2P) for instance for a fast and secure payment of social benefits, and from people to government (P2G) to pay taxes for example, and so on. The European Union, in its new Consensus on Development, recognises digitalisation as a key tool for increased access to financial and other such as training, skills development or energy. In spite of the great potential of digital finance, there are still many challenges to overcome, from policy and regulation, replication of responsible successful business models to issues related to consumer protection.
The private sector continues to invest in promoting competition that can work well for bringing affordable services for the bottom of the pyramid population. Leveraging public aid to bring in the private sector to attain developmental goals is the rationale of the new European External Investment Plan (EIP). The approach is two pronged: On the one hand, there is a need to develop or consolidate the appropriate business enabling environment through structured dialogue with the public and private sector and through specific support for the development of proper and inclusive regulation and services; on the other hand, there is a need to bring in private investors with adequate and conducive financial instruments such as investment grants or guarantees, but also through showcasing new and unexpected market opportunities. Digital financial services growth and sustainability also requires this two pronged approach: a proper environment to grow safely, bringing value without putting the financial sector or the clients at risk; and private sector involvement which can only be encouraged by the success of on-going initiatives that have reached scale and profitability through new products and partnerships with segments such as utility providers.
Objectives of the programme and priority issues
The global objective of this call for proposals is to deepen financial inclusion in ACP countries by promoting inclusive and responsible Digital Financial Services (DFS) ecosystems that can benefit people living in poverty and entrepreneurs (in particular women and youth).
The specific objectives of this call for proposals are:
Specific objective 1
Partnerships to promote Policy and Regulatory environment for digital financial inclusion: Promote public/public and public/private partnerships and multi-stakeholder alliances to support ACP countries in their efforts for responsive financial inclusion policies, regulatory frameworks and financial infrastructure for digital financial inclusion, namely the access to digital financial services for financially excluded and underserved populations. The expected outcome is improved capacities of ACP Countries to put in place policies and regulatory frameworks enabling the development of digital financial products and services in support of financial inclusion.
Specific objective 2
Partnerships to promote innovative and scalable digital financial solutions: Promote public/private partnerships and multi-stakeholder alliances to support ACP countries to scale digital financial solutions and advance their digital entrepreneurship ecosystems. Digital financial solutions can range from financial services (credit, savings, payments, insurance, remittances, etc.) to agricultural finance, rural electrification /clean energy finance, financial services for education and health, etc. The expected outcome is an acceleration of digital entrepreneurship ecosystems and appropriate digital financial solutions in ACP countries.
In an ACP perspective, specific objectives 1 and 2 complement each other to perform a market development strategy at regional level, which can stimulate private and public actors to partner and perform missing market functions in inclusive financial systems. While complementary, the two specific objectives might differ regarding their importance and specific needs in the various ACP countries. Policy, regulatory environments, ecosystems and DFS mobilisation are unevenly developed among the different ACP regions and countries. While in more mature markets (Kenya or Uganda for instance) regulation and support services still need development, there already is a framework and ongoing initiatives that can be brought to scale and/or targeted to new users or used as leading experiences in other ACP countries (Specific Objective 2). In less advanced contexts, the priority might be to build an enabling environment that sets the rules, reduces market failures, and provides safeguards for future developments on the basis of experiences and lesson in more advanced countries (Specific Objective 1).
In order to focus proposals on each specific objective, this Call for Proposals is divided in two lots.
In this context, Lot 1 shall correspond to Specific Objective 1 and Lot 2 to Specific Objective 2.
Lot 1 supports the development of a rights-based responsible market environment, required to set the stage of a healthy and sustainable DFS development, with the development of a regulation that is adequate, informed and enforceable, the setup of a framework for client education and protection. Or the development of supporting services such as payment systems, network interoperability or credit bureaus.
Lot 2 focusses on upscaling existing initiatives with new targets, new partnerships and technical innovation, to showcase sustainable and inclusive initiatives for replication. A preference will be allocated to those proposals addressed to women and youth.
In an ACP perspective, specific objectives 1 and 2 complement each other to perform a market development strategy at regional level, which can stimulate private and public actors to partner and perform missing market functions in inclusive financial systems.
The priority(ies) of this call for proposals:
Financial allocation provided by the contracting authority
The overall indicative amount made available under this call for proposals is EUR 24,500,000. The Contracting Authority reserves the right not to award all available funds. Likewise, this amount could be increased should more funds become available.
Indicative allocation of funds by lot:
If the allocation indicated for a specific lot cannot be used due to insufficient quality or number of proposals received, the Contracting Authority reserves the right to reallocate the remaining funds to other lot.
The indicative allocation for the two lots is as follows:
Size of grants
Any EU contribution requested under this lot must fall between the following minimum and maximum amounts:
Any EU contribution requested under this lot must fall between the following minimum and maximum percentages of total eligible costs of the action:
Any EU contribution requested under this lot must fall between the following minimum and maximum amounts:
Any EU contribution requested under this lot must fall between the following minimum and maximum percentages of total eligible costs of the action:
The balance (i.e. the difference between the total cost of the action and the amount requested from the Contracting Authority) must be financed from sources other than the European Union Budget or the European Development Fund.
The requested EU contribution may cover the entire eligible costs of the action if this is deemed essential to carry it out. If that is the case, the lead applicant must justify full financing in Section 2.1 of Part B of the grant application form. The validity of the justification provided will be examined during the evaluation procedure. The absence of any justification may lead to the rejection of the application. If the evaluation committee considers that the justification is not valid, only the maximum percentage allowed (70%) will be accepted.
Note that the lead applicant can either ask for a maximum co-financing of 70% or exceptionally 100% (under the conditions described above). A percentage between 70.01% and 99.99% is not allowed and it will lead to the rejection of the application.
As per section 6.3.10. of the Practical Guide, the grant must not give rise to profits for neither the Beneficiaries (Coordinator/lead applicant and co-beneficiaries/co-applicants) nor any affiliated entity (in the context of this call, profit is defined as a surplus of the receipts over the eligible costs approved by the Contracting Authority when the request for payment of the balance is made). Expected revenue of the action may be accepted as co-financing. However, action revenues in excess of the total costs will be considered as profit. As such, it will need to be deducted when calculating the final amount of the EU grant.
Rules FOR thIS call for proposalS
These guidelines set out the rules for the submission, selection and implementation of the actions financed under this call, in conformity with the Practical Guide, which is applicable to the present call (available on the internet at this address http://ec.europa.eu/europeaid/prag/document.do?locale=en) .
There are three sets of eligibility criteria, relating to:
Eligibility of applicants (i.e. lead applicant and co-applicant(s))
(1) In order to be eligible for a grant, the lead applicant must:
For British applicants: Please be aware that eligibility criteria must be complied with for the entire duration of the grant. Unless sector-specific eligibility rules provide otherwise, if the United Kingdom withdraws from the EU during the grant period without concluding an agreement with the EU ensuring in particular that British applicants continue to be eligible, you will cease to receive EU funding (while continuing, where possible to participate) or will be required to leave the project on the basis of Article 12.2 of the grant agreement’.
This obligation does not apply to international organisations.
The specific experience of the Lead Applicant will be assessed under section 1.1 and 1.2 of the Evaluation Grid of the Full Application.
(2) Potential applicants may not participate in calls for proposals or be awarded grants if they are in any of the situations listed in section 18.104.22.168 of the Practical Guide.
Lead applicants, co-applicants, affiliated entities and, in case of legal entities, persons who have powers of representation, decision-making or control over the lead applicant, the co-applicants and the affiliated entities are informed that, should they be in one of the situations of early detection or exclusion according to Section 22.214.171.124 of the practical guide, personal details (name, given name if natural person, address, legal form and name and given name of the persons with powers of representation, decision-making or control, if legal person) may be registered in the early detection and exclusion system, and communicated to the persons and entities concerned in relation to the award or the execution of a grant contract.
In Part A, Section 3 and Part B Section 8 of the grant application form (‘declaration by the lead applicant’), the lead applicant must declare that the lead applicant himself, the co-applicant(s) and affiliated entity(ies) are not in any of these situations.
The lead applicant must act with co-applicant(s) as specified hereafter.
If awarded the grant contract, the lead applicant will become the beneficiary identified as the Coordinator in Annex E3h1 (Special Conditions). The Coordinator is the main interlocutor of the Contracting Authority. It represents and acts on behalf of any other co-beneficiary (if any) and coordinate the design and implementation of the action.
The lead applicant must act with at least three (3) co-applicants.
The lead applicant must act with at least two (2) co-applicants.
For both lots, partnerships must include at least one (1) applicant, either the lead applicant or a co-applicant, established in each of the ACP regions where the action will take place (see section 2.1.4. “Location”) in order to ensure geographical coverage among the ACP regions selected for the Action.
Given the regional scope of the action, partnerships reflecting regional and institutional diversity as well as deep sector knowledge are strongly encouraged.
Co-applicants participate in designing and implementing the action, and the costs they incur are eligible in the same way as those incurred by the lead applicant.
Co-applicants must satisfy the eligibility criteria as applicable to the lead applicant, except for criteria related to specific experience described above.
In addition to the categories referred to in section 2.1.1, the following are however also eligible:
Given the objectives of this call, partnerships with co-applicants having experience in the field covered by this call will receive a higher score under section 1.2 of the Evaluation Grid of the Full Application.
Co-applicants must sign the mandate in Part B Section 4 of the grant application form.
(3) Applicants included in the lists of EU restrictive measures (see Section 2.4. of the PRAG) at the
moment of the award decision cannot be awarded the contract.
If awarded the grant contract, the co-applicant(s) will become beneficiary(ies) in the action (together with the Coordinator).
Please note that all information encoded in PROSPECT must be exhaustive and in line with the content of the concept note/full application. The administrative check will be performed taking into consideration only the information available in sections 1 - Contact, 2 - Project and 3 – Co-applicants. Please make sure that there are no inconsistencies between the information in PROSPECT and the text in the concept note/full application.
Complaints about administrative rejections related to this kind of inconsistencies will not be considered and will not lead to a modification of the decision.
The lead applicant and its co-applicant(s) may act with affiliated entity(ies).
Only the following entities may be considered as affiliated entities to the lead applicant and/or to co-applicant(s):
Only entities having a structural link with the applicants (i.e. the lead applicant or a co-applicant), in particular a legal or capital link.
This structural link encompasses mainly two notions:
(i) Control, as defined in Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings:
Entities affiliated to applicant may hence be:
(ii) Membership, i.e. the applicant is legally defined as a e.g. network, federation, association in which the proposed affiliated entities also participate or the applicant participates in the same entity (e.g. network, federation, association) as the proposed affiliated entities.
The structural link shall as a general rule be neither limited to the action nor established for the sole purpose of its implementation. This means that the link would exist independently of the award of the grant; it should exist before the call for proposals and remain valid after the end of the action.
By way of exception, an entity may be considered as affiliated to an applicant even if it has a structural link specifically established for the sole purpose of the implementation of the action in the case of so-called “sole applicants” or “sole beneficiaries”. A sole applicant or a sole beneficiary is a legal entity formed by several entities (a group of entities) which together comply with the criteria for being awarded the grant. For example, an association is formed by its members.
What is not an affiliated entity?
The following are not considered entities affiliated to an applicant:
How to verify the existence of the required link with an applicant?
The affiliation resulting from control may in particular be proved on the basis of the consolidated accounts of the group of entities the applicant and its proposed affiliates belong to.
The affiliation resulting from membership may in particular be proved on the basis of the statutes or equivalent act establishing the entity (network, federation, association) which the applicant constitutes or in which the applicant participates.
If the applicants are awarded a grant contract, their affiliated entity(ies) will not become beneficiary(ies) of the action and signatory(ies) of the grant contract. However, they will participate in the design and in the implementation of the action and the costs they incur (including those incurred for implementation contracts and financial support to third parties) may be accepted as eligible costs, provided they comply with all the relevant rules already applicable to the beneficiary(ies) under the grant contract.
Affiliated entity(ies) must satisfy the same eligibility criteria as the co-applicant(s). They must sign the affiliated entity(ies) statement in Part B Section 5 of the grant application form.
Associates and Contractors
The following entities are not applicants nor affiliated entities and do not have to sign the "mandate for co-applicant(s)" or "affiliated entities' statement":
Eligible actions: actions for which an application may be made
An action is composed of a set of activities.
The initial planned duration of an action may not be lower than 36 months nor exceed 60 months.
Sectors or themes
Develop and implement financial consumer protection and financial education strategies in partner countries.
Under Lot 1 actions will need to ensure a regulatory framework enabling Digital Financial Services in the widest sense, including Digital Finance Plus.
Under Lot 2 action will need to ensure the scaling-up of sustainable and successful digital financial model. Partnerships will need to ensure the engagement of the private sector.
The rationale for the selection of the action locations will be evaluated under section 1.2 of the Evaluation Grid of the Concept Note.
Geographical balance will be taken into account by the Evaluation Committee at any stage of the technical evaluation.
Types of action
Proposals need to be relevant to the particular needs and constraints of the target country(ies) or region(s) (including synergy with other EU initiatives and avoidance of duplication).
For Lot 1: They must relate to the build-up of an enabling environment for Digital Financial Services, with adequate and efficient regulation, adapted infrastructure and upgraded financial consumer capability and protection. A public and private dialogue mechanism between the key private actors (innovators, utilities, telecoms) and the public authorities (regulators, supervisors, legislators, etc) should also be foreseen.
Actions might include:
For Lot 2: They must relate to the development to new markets or products of existing successful sustainable DFS technology business models with one or more ongoing deployments. Technical platforms can be mobile phones (including but not only smartphones) and other handheld devices, computers or any other remote terminals. Services relate to financial but also other services such as utility installation or payment, or access to a service (health, school, vocational or financial education). Flows can be of any combination between individuals, businesses or government (B2P, G2P, B2B, etc.). It should be ensured that the access to DFS is at minimum cost for users, particularly for the persons in the most vulnerable situations, ensuring the maximum inclusivity.
Actions might include:
For both lots, the following types of action are ineligible:
Types of activity
For Lot 1: Activities may include but are not limited to:
For Lot 2: Activities may include but are not limited to:
The action will contribute to gender equality and women’s empowerment and will be informed by a gender analysis in line with the EU Gender Action Plan 2016-2020. Each selected proposal will have to report against relevant "SMART" sex-age disaggregated and gender sensitive indicators. Application proposing funds as above mentioned for climate change-related actions will receive a higher score under section 6 of the Evaluation Grid of the Full Application.
Monitoring and evaluation
Financial support to third parties
Applicants may propose financial support to third parties.
The maximum amount of financial support per third party is EUR 60 000, with a maximum support to all third parties limited to 10% of the EU contribution.
Under this call, financial support to third parties is not considered essential to achieve the objective of the action.
In compliance with the present guidelines and notably of any conditions or restrictions in this section, the lead applicant should define mandatorily in section 2.1.1 of the grant application form:
(iv) the criteria for selecting these entities and giving the financial support
In all events, the mandatory conditions set above for giving financial support (points (i) to (vii)) have to be strictly defined in the grant contract as to avoid any exercise of discretion.
The applicants must take all necessary steps to publicise the fact that the European Union has financed or co-financed the action. As far as possible, actions that are wholly or partially funded by the European Union must incorporate information and communication activities designed to raise the awareness of specific or general audiences of the reasons for the action and the EU support for the action in the country or region concerned, as well as the results and the impact of this support.
Applicants must comply with the objectives and priorities and guarantee the visibility of the EU financing (see the Communication and Visibility Manual for EU external actions specified and published by the European Commission at https://ec.europa.eu/europeaid/communication-and-visibility-manual-eu-external-actions_en).
Number of applications and grants per applicants / affiliated entities
In case two (2) applications from the same lead applicant are provisionally selected under two different lots, the application with a higher score will be selected.
*Should this be the case, the Evaluation Committee will only consider the first proposal arrived on the basis of submission date and hour. Any other proposal submitted by the applicant/co-applicant/affiliated entity will be rejected.
It is the responsibility of each lead applicant to verify that its co-applicants/affiliated entities are not involved as lead applicant or co-applicant/affiliated entities in other proposals.
Eligibility of costs: costs that can be included
Only ‘eligible costs’ can be covered by a grant. The categories of costs that are eligible and non-eligible are indicated below. The budget is both a cost estimate and an overall ceiling for ‘eligible costs’.
The reimbursement of eligible costs may be based on any or a combination of the following forms:
Simplified cost options may take the form of:
Applicants proposing this form of reimbursement, must clearly indicate in worksheet no.1 of Annex B, each heading/item of eligible costs concerned by this type of financing, i.e. add the reference in capital letters to "UNIT COST" (per month/flight etc), "LUMPSUM" or "FLAT RATE" in the Unit column. (see example in Annex K)
Additionally in Annex B, in the second column of worksheet no.2, "Justification of the estimated costs" per each of the corresponding budget item or heading applicants must:
Recommendations to award a grant are always subject to the condition that the checks preceding the signing of the grant contract do not reveal problems requiring changes to the budget (such as arithmetical errors, inaccuracies, unrealistic costs and ineligible costs). The checks may give rise to requests for clarification and may lead the Contracting Authority to impose modifications or reductions to address such mistakes or inaccuracies. It is not possible to increase the grant or the percentage of EU co-financing as a result of these corrections.
It is therefore in the applicants' interest to provide a realistic and cost-effective budget.
Eligible direct costs
To be eligible under this call for proposals, costs must comply with the provisions of Article 14 of the General Conditions to the standard grant contract (see Annex G of the guidelines).
The budget may include a contingency reserve not exceeding 5 % of the estimated direct eligible costs. It can only be used with the prior written authorisation of the Contracting Authority.
Eligible indirect costs
The indirect costs incurred in carrying out the action may be eligible for flat-rate funding, but the total must not exceed 7 % of the estimated total eligible direct costs. Indirect costs are eligible provided that they do not include costs assigned to another budget heading in the standard grant contract. The lead applicant may be asked to justify the percentage requested before the grant contract is signed. However, once the flat rate has been fixed in the Special Conditions of the grant contract, no supporting documents need to be provided.
If any of the applicants or affiliated entity(ies) is in receipt of an operating grant financed by the EU, it may not claim indirect costs on its incurred costs within the proposed budget for the action.
Contributions in kind
Contributions in kind mean the provision of goods or services to a beneficiaries or affiliated entities free of charge by a third party. As contributions in kind do not involve any expenditure for beneficiaries or affiliated entities, they are not eligible costs.
As an exception, contributions in kind may include personnel costs for the work carried out by volunteers under an action or work programme (which are eligible costs).
Contributions in kind from third parties in the form of volunteers' work, valued on the basis of unit costs defined and authorised by the contracting authority, shall be presented in the estimated budget, separately from the other eligible costs (i.e. as an accepted costs together with other contributions in kind).
Volunteers' work may comprise up to 50 % of the co-financing. For the purposes of calculating this percentage, contributions in kind and other co-financing shall be based on estimates provided by the applicant.
When the estimated costs include volunteers' work, the grant shall not exceed the estimated eligible costs other than the costs for volunteers' work.
Contributions in kind may not be treated as co-financing.
However, if the description of the action as proposed includes contributions in kind, the contributions have to be made.
The following costs are not eligible:
Ethics clauses and Code of Conduct
a) Absence of conflict of interest
The applicant must not be affected by any conflict of interest and must have no equivalent relation in that respect with other applicants or parties involved in the actions. Any attempt by an applicant to obtain confidential information, enter into unlawful agreements with competitors or influence the evaluation committee or the contracting authority during the process of examining, clarifying, evaluating and comparing applications will lead to the rejection of its application and may result in administrative penalties according to the Financial Regulation in force.
b) Respect for human rights as well as environmental legislation and core labour standards
The applicant and its staff must comply with human rights. In particular and in accordance with the applicable act, applicants who have been awarded contracts must comply with the environmental legislation including multilateral environmental agreements, and with the core labour standards as applicable and as defined in the relevant International Labour Organisation conventions (such as the conventions on freedom of association and collective bargaining; elimination of forced and compulsory labour; abolition of child labour).