CSF has a Market Entry and Expansion project which aims to support high-potential tech companies to accelerate their entry and expansion into emerging markets or grow their business through expanding into new verticals or (sub-)sectors. Under this project, IFC is working with a fintech company (the “Company”) in Afghanistan that facilitates a suite of multi-channel payments, including mobile payments, card payments and online payments. The Company’s platform is integrated with the Afghan Payment Switch (APS), enabling it to function across all banks and AfPay card users. Clients can transfer and access funds domestically via a smartphone application (Android and iOS) or a QR code, a USSD interface, or evoucher. Afpay cards do not require a mobile phone. Having demonstrated a good track record, the Company aims to revolutionize digital financial transactions in Afghanistan and is now focusing on its next phase of growth, which includes defining new value-added services and integrating into its platform a Point-of-Sales (POS) device that can meet the needs of the local market while adhering to international standards.
While Afghanistan has significant potential for digital financial services, only 7.9% of adults used digital transactions in 2021. The sector’s growth is sluggish due to underdeveloped digital infrastructure and payment systems, along with low financial literacy, a huge urban/rural financial services gap, and mistrust and concerns around reliability of services, and preference for cash transactions. Other barriers to digital financial adoption include limited mobile phone penetration, poor internet/cell coverage, limited awareness and understanding of digital finance functionality, benefits and types of services, limited financial resources, as well as the perception that the documentation requirements for signing up for services are too cumbersome.
It is within this context that IFC is now seeking to recruit an experienced consulting firm to support the Company to develop a business plan for their next phase of growth, which will include defining their strategy, operational and financial plan, defining near-term and medium-term service offering, and establishing a roadmap to set up an organizational structure and necessary skills to execute the plan, and develop a fundraising strategy. In parallel, the Consulting firm will work with the Company to determine a POS strategy and deployment plan.
A. Scope of Services
All work will be conducted remotely, based on desk research and virtual interviews. IFC and the Company understand that there may be gaps in information and will try to facilitate data gathering and local introductions as feasible. Consultants are to note any assumptions and gaps in information, and the related implications on analysis/recommendations.
The consulting firm’s duties and responsibilities under this assignment will include, but may not be limited to the following areas:
1. Market Assessment
· Conduct an assessment of the Afghan financial services market, with primarily emphasis on the digital financial services segment. Assess market size and expected growth potential, and demand potential for various digital products and services.
· Conduct key stakeholder mapping, including potential strategic partners, relevant government agencies, key competitors–including noting their product offering, strengths and weaknesses.
· Undertake a customer and geographic market segmentation, noting key customer segments and potential related product offering, including value-added services. Assessment to include gender considerations and product positioning to enhance access to financial services for women. Consultants to conduct interview with key clients (both intermediaries like agents, and end clients) to assess their current and future needs/demand for product/services, and their willingness to pay.
· Conduct a review of relevant local laws and regulations, related to financial services as well as information security, customer and data protection standards, etc. Note any regulations or policies that limit or encourage adoption of solutions/services.
· Analyze the Company’s current product offering, client base, track record, strengths and weaknesses.
2. Strategy Planning
· Based on market assessment and company positioning and potential comparative advantages within the Afghan market context, evaluate potential business and revenue models, including options for products and services offerings, customer segments, various revenue streams, etc. Identify top opportunities in the short, medium-and long-term, noting potential profitability per client/segment, challenges, risks and mitigants. Consultant to present options and recommendations to Company and IFC at a virtual Strategic Planning Workshop.
· Based on feedback, work with Company to develop a strategic plan along three-time horizons:
o Long-term: ~5-year plan/vision for company. Identify key opportunities/risks, and expected trends, economic, demographics, technology and regulatory changes.
o Medium-term: 3-5 years, noting steps and stakeholders needed to realize vision, and products and value-added services to develop over medium-term.
o Short-term: define goals, approach, initial priorities and actions. Initial products and services to focus on, with emphasis on generating business for intermediary clients (i.e., merchants) and creating customer ‘stickiness’.
3. Define Operating Model
· Work with Company to define an operating model that can deliver on the agreed strategy, taking into consideration the goals defined on different time horizons. To include:
o Define product positioning and requirements for each key customer segment, including value-added services / premium services.
o Define needed technologies, including Point-of-Sales (POS) functionality, scale and related operating model (see 7 below for details).
o Recommendations on how to ‘productize’ services to be plug & play with minimum effort and costs.
o Define value proposition (services and messaging) for different clients, including inclusive solutions, and recommendations on marketing approaches/campaigns to acquire customers and increase usage of services (segmented and tailored to different customers and products/services).
o Define optimal organizational structure and required staffing and skills, provide recommendations on inclusive workplaces.
o Define distribution and logistics model, including any required infrastructure needs.
o Define key processes, including monitoring systems, how to manage agent liquidity, etc.
o Include a risk analysis – regulatory, operational, financial, and mitigation strategies. Based on risks/mitigants, iterate on Strategy and Operating model as needed.
4. Develop Financial plan
· Based on strategy and operating model, work with Company to develop a financial plan including developing a financial model with detailed forecasts based on best, worst and base-case scenarios. Financial plan to include revenue projections, cost structure – capital expenditure, operating costs, return on investment (RoI) analysis, and timeline for break-even under the different scenarios. Financial plan to be across the three-time horizons: short, medium (3-5 years), and long-term (5+ years), with varying degrees of detail (more detail in short-term).
5. Develop Comprehensive Business Plan
· Taking the strategic vision, operating model and financial plan into account, work with the Company to develop a comprehensive, actionable Business Plan. Stand-alone document. Plan to include/summarize:
o Company strategy
o Market analysis
o Description of products and services (current and planned)
o Customer segments
o Distribution channels
o Competitive analysis / comparative advantages
o Organizational structure and staffing (current and planned)
o Marketing and sales strategy
o Risks & Mitigants analysis
o Financial plan & Forecast
o Fundraising strategy (see 6 below – iterative process)
o Time-bound implementation / expansion roadmap.
6. Fundraising Strategy & Support
· Based on the business plan and financial requirements, work with Company to develop a fundraising strategy, including Company positioning, building the investment case, reviewing Company materials, pitch deck, etc., and providing feedback, identifying potential investment partners, and facilitating introduction when relevant.
7. Technology/Point of Sale (POS)
In parallel to and as part of developing the business plan, work with Company to define what technologies, including Point-of-Sale (POS) devices and more will be needed to deliver on strategic plan. Iterative process. Develop a POS strategy and management framework, this will include:
· Based on strategy, product offering and customer segmentation, work with Company to define technical and operational specifications of POS device to enable various functionalities such as card payments, mobile airtime sales, bill payments and other financial transactions. Consultants to provide details on good practices, options, and any additional considerations.
· Based on strategy and operating plan, forecast demand for POS devices. Define sales/pricing strategy that ensures accessibility and affordability for merchants and service providers, while ensuring profitability for the Company. Determine optimal number of POS devices in the immediate, short and medium-term, and where to deploy (phased approach), and criteria to deploy and maintain a device, expected transaction volume per POS, POS payback period, RoI per device, metrics and means to monitor productivity rate per POS, etc.
· Develop optimal POS network design and distribution channels – leveraging online and offline sales channels, urban/rural coverage, determine logistics, infrastructure requirements, customs implications, maintenance and customer support functions/plans.
· Based on defined requirements, identify a shortlist of top POS device manufacturers based on quality, cost and capability of meeting the Company’s technical and operational requirements, and that meet the functional and regulatory requirements for deployment in Afghanistan. Provide details on manufacturers products, functionalities, pricing, after sales support, pros/cons, risks, mitigants.
· Provide input on optimal POS device manufacturer terms and conditions, key considerations (i.e., software integration, future upgrades, technical support, warranty considerations, after sales support, etc.).
· Define POS roll-out plan, and how to onboard merchants and agents to catalyze widespread adoption of digital payments and branchless banking. Note key implementation requirements and considerations, including marketing strategies for customer acquisition and use of POS services, and key elements of support and training programs for merchants and end-users. Develop device deployment plan and monitoring process.
B. Deliverables & Level of Effort
The assignment is expected to take approximately 3 months, commencing in late-December 2024. All work will be conducted remotely.
Deliverables include:
· Market Assessment
· Strategic Planning workshop and related inputs
· Business Plan, including operating model, financial plan, and financial model with best, worst, and base-case scenarios
· Fundraising Strategy
· POS Strategy and Implementation Plan
