Request for Proposals: Terms of Reference for Legal and Governance Structure Consultancy for Project Continuum, February 2022

About AECF
The AECF, LLC (Formerly Africa Enterprise Challenge Fund) is a leading development finance organization that supports businesses to innovate, create jobs and leverage investments to build resilience and sustainable incomes for rural and marginalized communities in Africa. AECF’s goal is to bridge the investment gap between early-stage enterprise and business maturity for entrepreneurs serving the poorest communities.

The AECF provides patient capital to new and innovative business models in the agribusiness and renewable energy sectors across Sub-Saharan Africa through various financing instruments, which include grants, zero-interest loans, guarantees, and working capital facilities. AECF’s financing products are supplemented by three additional growth support services to improve the viability and sustainability of our investees, namely, (i) Advisory Services to improve investee internal capabilities (ii) Investment Support in raising commercial capital in significant volumes and (iii) Knowledge and Insights for learning and evidence gathering for policy influencing and advocacy.

AECF has successfully implemented programs across 26 countries in Sub-Saharan Africa, supporting over 343 enterprises, raising US$ 422 million in funding for programs, leveraging US$ 754 million in additional capital and impacting 28 million lives.

To date, AECF has primarily focused on investments in early-stage business ideas that typically lack the cash-flows to service repayments but hold potential for commercial viability and development impact. However, after our initial investment, many investees struggle to access follow-on investment because they are unable to take on amounts large enough to attract commercial investors, nor can they support the high-interest rates required to access commercial debt. To bridge this gap, AECF has launched the “Project Continuum” to roll out new products that provide early-stage and growth-stage SMEs with capital in the form of working capital, debt, and equity, while maintaining our previous mandate of providing grants and interest-free loans to high-potential, high-impact businesses.

Objective of Assignment
The objective of this assignment is to provide legal advice, opinion, and guidance on the legal and governance structure for an entity or fund for Project Continuum designed to provide the abovementioned instruments to SMEs across Africa. The setup and governance structure should ensure that the entity or fund is able to:
• Provide financing to SMEs in the form of working capital, debt, mezzanine instruments and equity.
• Operate across Africa and can take collateral and other forms of security to secure investments and ensure repayment of the loans as well as hold equity positions in the SMEs.
• Meet international standards of environmental and social responsibility, tax efficiencies and transparency.
• Assure long-term financial commitment in both open-ended and fixed-term facilities.

• Enter fund management agreements to participate in fund management contracts and special purpose vehicles as a general partner or limited partner.
• Play a catalyzing role in attracting other investors and being complementary to other public and private financing initiatives.
• Raise investment capital from key fundraising partners and be able to receive and deploy funds from both concessional and commercial sources from across key markets, including Africa, North America, Europe, Asia, and other markets.

Scope of Work
The Consultant firm is expected to present the above with a compelling and clear value proposition. The scope of work should include:
a) Advice on a fit-for-purpose legal structure, domicile, regulatory framework, governance structure and processes – highlighting the advantages and disadvantages of each proposed option. The advice should be clear on home country and domicile regulatory frameworks
b) Advice on the shareholding, partnerships, and governance structure of the proposed legal constructs as well as the regulatory and tax implications in dealing with stakeholders (including local and international investors).

Deliverables and Outputs
The assignment is expected to commence in March 2022 and the Consultant will be directly supervised by the Head of Legal and Company Secretary.

Key Deliverables of the assignment:
a) Draft report highlighting proposed legal setups, domiciles, structures, and governance for Project Continuum, as well as respective regulations and tax requirements for each and the legal justification, advantages, and disadvantages for comparison.
b) Final report summarizing iterations that lead to the identified legal setup, domicile, structure, and governance for Project Continuum, highlighting key drivers of the decision.
c) Prepare set up documents including the constitution, required agreements, and any other documents for the approved legal setup, domicile, structure, and governance.
d) Implement the setup of the approved legal entity and structure.

Detailed milestones and outputs to be finalized prior to signing the contract.

Qualifications
The successful firm is required to meet the following criteria with a specific focus on work in Africa:
e) 15+ years in advisory and setup of legal structures for international entities and funds operating in Africa.
f) Experience in developing investment fund legal and fiscal structures, policies, processes, and governance.
g) Understanding of existing legal and regulatory frameworks for setting up and management of a fund/entity deploying different financial instruments including debt, mezzanine, and equity.
h) In-depth knowledge of structures of financial institutions, impact investment funds and other Funding agencies, deploying capital to SMEs in Africa.
i) A firm with a network of associations across borders and with a deep understanding of preferred countries for fund domicile including (but not limited to); Kenya, Luxemburg, Mauritius, Netherlands, United States of America, and Germany.
j) Good knowledge of venture capital industry, SME investment funds, social impact funds and other entities and structures they operate under.

Proposal Instructions
Interested and qualified Consultants (individual or firm) should submit their proposal(s) comprising of the following:
a) An understanding of the consultancy requirements.
b) A succinct, well-documented approach and work plan for performing the assignment, broken down into work packages.
c) A clear description of the team, relevant experience, and time allocation per team member
d) Primary contacts of associated institutions and role in the assignment
e) Detailed reference list indicating the scope and magnitude of similar assignments with signed reference letters
f) Registration and other relevant statutory requirements.
g) Financial proposal clearly showing the budgeted cost for the work to be conducted in USD
h) Preferred format for the submission: PowerPoint and Word.
i) Financial and technical proposal must be submitted as separate documents

Pricing: AECF is obliged by the Kenyan tax authorities to withhold taxes on service contract fees as well as ensure VAT, at 16%, is charged where applicable. Applicants are advised to ensure that they have a clear understanding of their tax position with regards to provisions of Kenya tax legislation when developing their proposals.

Evaluation Criteria
An evaluation committee will be formed by the AECF. All members will be bound by the same standards of confidentiality. The vendor should ensure that they fully respond to all criteria to be comprehensively evaluated.

The AECF may request and receive clarification from any Vendor when evaluating a proposal. The evaluation committee may invite some or all the Vendors to appear before the committee to clarify their proposals. In such an event, the evaluation committee may consider such clarifications in evaluating proposals.

In deciding the final selection of qualified bidders, the technical quality of the proposal will be given a weighting of 75% based on the evaluation criteria. Only the financial proposal of those bidders who qualify technically will be opened. The financial proposal will be allocated a weighting of 25% and the proposals will be ranked in terms of total points scored.

The mandatory and desirable criteria against which proposals will be evaluated are identified in the table
below.

Application Details
The AECF is an Equal Opportunity Employer. The AECF considers all interested candidates based on merit without regard to race, gender, colour, national origin, religion, sexual orientation, age, marital status, veteran status, disability, or any other characteristic protected by applicable law.

a) Interested firms are requested to submit their technical and financial proposals to aecfprocurement@aecfafrica.org by 2359 EAT on 7th March 2022.
b) The Subject of the email should read “Project Continuum Legal and governance structure consultancy – 2022/001”.
c) All Questions and clarifications should be sent to aecfprocurement@aecfafrica.org

Disclaimer
AECF reserves the right to determine the structure of the process, the number of short-listed participants, the right to withdraw from the proposal process, the right to change this timetable at any time without notice and reserves the right to withdraw this tender at any time, without prior notice and without liability to compensate and/or reimburse any party. In case you do not hear from us in a month, please consider your application unsuccessful… http://www.aecfafrica.org/work-with-us