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Final Evaluation of the Digital Financial Services in Sierra Leone Project
Commissioning Unit: UNCDF
Evaluation Plan: 2018-2021
Evaluation Type: Project
Completion Date: 06/2022
Unit Responsible for providing Management Response: UNCDF
Documents Related to overall Management Response:  
1. Recommendation:
Management Response: [Added: 2022/08/01]

Management would like to thank the evaluation team for their evidence, analysis and insights presented in the Final Evaluation of the Digital Financial Services project in Sierra Leone. The Country team and broader UNCDF Management Team found the recommendations and feedback provided very useful to consider and will help in planning for the next phase of programming in the country.

Key Actions:

2. Recommendation:

Evaluation Recommendation or Issue 1:

More intensive support to build regulatory capacity should combine technical assistance for drafting of laws, regulations, and guidelines with institutional support for their implementation, including dissemination, monitoring and enforcement. This requires higher levels of investment but potentially also greater selectivity in terms of issues covered. Work on financial education, client protection, fintech regulation, digitising the credit bureau, for example, would require long term focus and investment to support both the drafting and implementation of conducive regulatory frameworks.

Management Response: [Added: 2022/08/01]

Agreed. UNCDF always highlights the importance of the policy/ regulatory as a key building block for the development of a digital finance ecosystem.  This has become one of the four pillars of the new UNCDF IDE strategy and UNCDF will continue to engage with regulators to support in the drafting and implementation of policies.

UNCDF raised 5,9 million $ from Gates Foundation to focus on Policy & Regulation in Africa and Sierra Leone is one of its focus countries. This is great evidence of UNCDF willingness to play a leading role on these topics.

UNCDF is also supporting the central bank in drafting a workplan under the new National Strategy for Financial Inclusion, the financial consumer protection policy and remains committed to supporting the Bank of Sierra Leone with implementation of conducive regulatory frameworks.

Under the new UNCDF program in Sierra Leone, the team will be focusing on implementing the regulations that passed recently, such as the agency banking guidelines.

UNCDF is also already extensively engaging with the policy makers/regulators for Sierra Leone’s Inclusive Digital Economy Scorecard (IDES) to be used by the government in assessing progress and identifying interventions needed to build Sierra Leone’s digital economy.

As part of the future proposal submitted for Sierra Leone, UNCDF has included activities aiming at providing support to build regulatory capacity and support for guidelines implementation, dissemination, and enforcement. These activities will be carried out, depending on the funding available in the country.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
1.1. Drive IDES adoption through the Digital Development strategy as a policy tool.
[Added: 2022/08/01]
IDE Country team 2022/12 Initiated
1.2. Implementation of the Financial consumer protection guidelines a) Communicate to FSPs the implementation plan and dates b)Template for data collection on complaints management for commercial banks, MNOs and non-banks c)Commission assessment of FSPs' existing capacity to report and comply with FCP Guidelines to optimize implementation
[Added: 2022/08/01]
IDE Country team 2022/12 Not Initiated
1.3 National Strategy for Financial Inclusion a)Define template for Financial Inclusion Indicators b)Review action plan for the implementation of NSFI based on Financial Consumer Protection implementation analysis
[Added: 2022/08/01] [Last Updated: 2022/10/07]
IDE Country team 2022/12 Not Initiated UNCDF continues to support the Bank of Sierra Leone in the implementation of the National strategy for Financial inclusion and the consumer protection policy. Please refer to the attached documents that have been developed with the UNCDF support. o NSFI Working group orientation PPT o Letter of invitation to the working group meetings o WG Workshop agenda o Secretariate TOR and TORs for the different WGs o Presentation of the working group with BSL to discuss implementation of the NFIS o Timelines for the implementation of the consumer protection policy History
3. Recommendation:

Evaluation Recommendation or Issue 2:

 

Supporting fintech through linkage with financial institutions. Small and innovative fintech companies, supported by development agencies, can face challenges in finding partner banks and MNOs for the piloting and roll-out of their innovations. It is recommended that future work to support fintech should combine financial support for technical innovation with brokering and networking support to link fintech innovators with potential commercial partners at an early stage.

Management Response: [Added: 2022/08/01]

Agreed. UNCDF recognizes that at the heart of digital innovation, brokerage is a key success factor, most especially for early -stage innovators. Innovation brokerage involves building relationships, evaluating fit between potential collaborators, and making judgements about the strategy to deploy. As a neutral convenor and market facilitator, UNCDF continues to bring together early innovators with potential commercial partners and successful innovators from mature markets to allow cross learning and transfer of knowledge. Through its investment platform, UNCDF continues to identify viable Fintechs and other technology firms to facilitate access to concessional, semi commercial, and commercial capital.

Depending on funds availabilities and donor priorities, UNCDF is planning on implementing more activities to support fintech through linkage with financial institutions.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
2.1 Review activities and funding in future programming to ensure that activities linking SMEs and Fintech are included
[Added: 2022/08/01]
IDE Country Team 2022/12 Not Initiated Depending on the availability of funds for future programming activities
4. Recommendation:

Evaluation Recommendation or Issue 3:

 

Supporting government capacity to collect, analyse and disseminate data relevant to the financial sector. UNCDF could build on the success of the Annual Provider Survey to develop Bank of Sierra Leone capacity in collecting both supply and demand side data. The recent decision to establish a Research and Data Department by the Bank of Sierra Leone has created an opportunity for UNCDF to support this important initiative.

Management Response: [Added: 2022/08/01]

Agreed. UNCDF has budgeted in its new program in Sierra Leone another two years of Annual Provider Survey and will be working on the transition phase to build BSL’s capacity. Ideally, they should become independent with supply side data collection and analysis.

This shall be facilitated with the recruitment of a Results Measurement resource in the country.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
3.1 Identify BSL resources who will conduct the Annual Provider Survey 2022 alongside the UNCDF team. The two counterparts will participate in the APS process, from data collection to report writing.
[Added: 2022/08/01] [Last Updated: 2022/10/07]
IDE country team 2022/12 Initiated The two counterparts have been identified and have been participating in the Annual Providers Survey process, from data collection to report writing. The draft report is underway. We will share a final report once its ready towards the end of this month. History
3.2 Present the findings of the APS 2022 during the presentation of the Research and Data Department by the Bank of Sierra Leone and propose that the APS be included as part of the Research and Data Department’s responsibilities
[Added: 2022/08/01]
IDE Country team 2022/12 Not Initiated
3.3 Commence the process to build the capacity of the central bank to collect and analyze data starting with the handover of the state of Digital Financial services report published annually by UNCDF
[Added: 2022/08/01]
IDE Country team 2023/03 Not Initiated Depending on the availability of funding for future programing activities
5. Recommendation:

Evaluation Recommendation or Issue 4:

 

In addition to supporting regulatory capacity and fintech innovation, UNCDF should examine opportunities to work with DFS providers to develop, pilot and prove a more diverse range of uses cases for DFS. The DFS Sierra Leone project has attempted this in work with local government on P2G payments but faced challenges in the form of political barriers. Working with a wider set of partners might help to overcome these barriers.  Historically, UNCDF has supported work to develop G2P payment systems particularly for Ebola response workers and social bulk payments remains an important market for mobile money providers. Other opportunities could be researched and explored, including digitisation of agricultural value chains and linkages with international remittance services for the diaspora.

Management Response: [Added: 2022/08/01]

Agreed. UNCDF has recognized the importance of Innovation and it is a new workstream under the global IDE strategy, which focuses on accelerating the development and usage of digital services in various sectors – ie new range of use cases.

. Through its market systems development approach UNCDF already supports a wide range of providers (e.g., microfinance institutions, banks, cooperatives, money transfer companies) and a variety of financial products and services (e.g., savings, credit, insurance, payments, and remittances). For instance, in November 2021, UNCDF Sierra Leone signed a contract with Orange Financial services the biggest mobile money provides to pilot digital credit among women SMEs under the joint SDG Fund project.

UNCDF IDE will keep looking at how to better encourage and engage with non-traditional financial service providers, such as FinTechs, to help them develop new use cases, and this will be imbedded into future program designs: In the new five-year program in Sierra Leone, UNCDF has prioritized the piloting of Agent banking and other innovative digital finance use cases.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
4.1 Review Sierra Leone Country strategy and include a dedicated workstream on Inclusive Innovation
[Added: 2022/08/01]
IDE Country team 2022/12 Not Initiated
4.2 Work with DFS providers to develop, pilot innovative digital products like agent banking, handset financing etc.
[Added: 2022/08/01]
IDE Country team 2023/03 Not Initiated Depending on the availability of funding for future programing activities
6. Recommendation:

Evaluation Recommendation or Issue 5:

 

Improve the results measurement system.  In future projects, a results framework should be developed with realistic impact objectives which are distinct from project outcomes.  Output targets should be set that are not just a means of ensuring that activities have been completed but measure the result of these activities.  To measure regulators capacity to regulate the Fintech market, possible indicators might include speed and quality of licensing decisions and regularity and content of supervision reports. The results framework should be revisited and, where necessary, revised intermittently to ensure its continued relevance. Reporting against the results framework should be as comprehensive as possible. Follow up is needed with partners to ensure they submit agreed regular reports.

Management Response: [Added: 2022/08/01]

Agreed. UNCDF recognizes that there is room for improvement in the design and implementation of the results framework. These are mostly due to limited RM resources available. Budget proposals for new programming includes an in-country resource dedicated to Result Measurement and Learning.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
5.1 Update ToC and RMF for future programs in Sierra Leone
[Added: 2022/08/01]
IDE Country team 2022/12 Not Initiated
5.2 Finalize recruitment of RM resource in Sierra Leone
[Added: 2022/08/01]
IDE Country team 2023/03 Not Initiated The timeline is subject to change depending on the signature of the agreement with the EU
5.3. Review RM processes and templates to better monitor intervention results, capture lessons learnt on failures and challenges along the project life cycle (quarterly) and within the country strategy (annual reviews).
[Added: 2022/08/01]
IDE Country team 2023/06 Not Initiated The timeline is subject to change depending on the signature of the agreement with the EU
7. Recommendation:

Evaluation Recommendation or Issue 6:

 

Streamline accountability and administrative procedures. Procedures for grant selection, approval by the Investment Committee and signature by the Executive Secretary is currently causing delay and inefficiency. Measure should be considered to reduce these delays without compromising accountability requirements. Consideration should be given to establishment of a local Investment Committee in circumstances where project scope, budget and duration merited such a step. Similarly, processes for international recruitment by the headquarters Human Resources team should be reviewed to minimise delays and staffing gaps

Management Response: [Added: 2022/08/01]

Partially agree.

We believe that local investment committees are not always the right solution as they risk putting additional burden and workload on the country team. This is particularly problematic for smaller program, like the IBSA program. However, UNCDF will use this guidance for the development of future projects in Sierra Leone and other countries, looking at the scale and size of the projects. Regarding international recruitments, the human resources team at headquarters has already developed a new contract type (IPSA) which should hopefully solve some of the staffing delays. We are yet to see improvements, as part of Sierra Leone future program recruitments.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
6.1 Review and finalize ToRs of future positions to speed up recruitment processes when funds are received
[Added: 2022/08/01]
IDE Country team 2022/12 Initiated History
6.2 Recruitment of Ops team on EU funding budget
[Added: 2022/08/01]
IDE Country team 2023/03 Not Initiated Timeline subject to change based on signature of EU program
8. Recommendation:

Evaluation Recommendation or Issue 7:

 

Improve communication and co-ordination with the World Bank. While co-ordination of related support from diverse development partners is ultimately the responsibility of the government of Sierra Leone and the Bank of Sierra Leone, it is evident that greater efforts should be made by both the World Bank and UNCDF to ensure regular communication and co-ordination of activities.

Management Response: [Added: 2022/08/01]

Agreed. UNCDF has already started to tackle this recommendation as part of the new program and other on-going initiatives in the country. We are already extensively engaging with the World Bank in the country in the implementation of funded projects like the financial Inclusion project intended to develop a national payment and interoperable infrastructure and the Sierra Leone Economic Diversification project. However, UNCDF also believes that this recommendation should apply to other IFIs and development partners in the country.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
7.1 Improve coordination with all IFIs in the country by making use of available coordination platforms such as the WB-led private sector coordination platform
[Added: 2022/08/01]
IDE Country Team 2022/12 Completed UNCDF has joined the Private Sector coordination group hosted by the World Bank and IFC
7.2 Set-up quarterly meetings with the World Bank to improve co-ordination
[Added: 2022/08/01] [Last Updated: 2022/10/07]
IDE Country Team 2022/12 Not Initiated o UNCDF is a member of the World Bank Private Sector Development Coordination Group meeting. History

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