Terms of Reference on Assessment of Selected Saving and Credit Cooperatives (SACCos)

Context And Rationale

After years of technical, financial, and capacity-building support provided through the SOS Children’s Villages Ethiopia (SOS CVE) Family Strengthening Programme, there are indications that some Savings and Credit Cooperatives (SACCOs) 3 in Jimma and 2 at Gode are not achieving the level of sustainability originally envisaged. Consequently, a comprehensive assessment is required to examine the factors affecting their performance, identify potential risks, and recommend appropriate corrective measures to improve their long-term viability.

The SACCOs were established and supported with the objective of strengthening household economic resilience, improving access to savings and credit services, promoting financial inclusion, and contributing to the long-term self-reliance of participating families and communities.

This assessment seeks to determine the underlying reasons why SACCOs that have benefited from sustained support over an extended period are showing signs of underperformance or potential failure. Particular attention will be given to key areas of concern, including governance and leadership weaknesses, inadequate financial management practices, high loan default rates, low levels of member participation and ownership, dependence on external support, socioeconomic and contextual challenges, weak institutional partnerships and linkages, as well as concerns related to sustainability and preparedness for programme exit.

The findings of the assessment will provide evidence-based recommendations to strengthen SACCO performance, enhance institutional sustainability, and inform future support and transition strategies.

Description of programme locations and context

Jimma, Agaro, Bedelle, and Kelafo represent diverse program contexts across Ethiopia, ranging from productive agricultural highlands to pastoral and post-conflict settings. In Jimma, Agaro, and Bedelle, where coffee production and smallholder agriculture are the primary sources of livelihood, economic empowerment interventions focus on enhancing agricultural productivity, strengthening value chains, promoting entrepreneurship, improving access to markets, and supporting savings and income diversification opportunities for vulnerable households. In Kelafo, where communities largely depend on pastoral and agro-pastoral livelihoods, programming emphasizes resilience building, livestock and livelihood development, climate adaptation, and financial inclusion initiatives that help households better withstand recurrent droughts, floods, and economic shocks.. Across all locations, programming integrates economic empowerment and financial inclusion approaches—including savings groups, financial literacy, access to credit, entrepreneurship development, and market linkages—with efforts to improve child well-being, strengthen family resilience, enhance access to education and health services, and promote sustainable community development.

Objective of the Assessment

Overall objective

To assess the institutional, financial, operational, and governance performance of the SACCOs to determine their sustainability, effectiveness, risks, and opportunities for growth and improved service delivery to members.

Specific objectives

• To analyze targeted SACCO’s financial health, profitability, and liquidity
• To assess their compliance with SACCO bylaws, policies, and regulatory requirements.
• To identify the challenges, opportunities, areas for improvement, operational strengths and inefficiencies affecting performance.
• To examine systems for identifying, mitigating, and monitoring financial and operational risks.
• To provide recommendations to strengthen governance, financial sustainability, member services, and institutional growth.

Scope of the Assessment

The assessment will examine the status, needs, gaps, and opportunities related to 5 SACCos across the two target locations—Jimma, and Gode—with consideration of their distinct socio-economic, cultural, and overall contexts. The stakeholders to be consulted should include representatives of SACCos’ members, executive committee members, representatives from the respective cooperative offices, and staff.

Methodology

The consultant shall employ a mixed-methods approach, integrating both qualitative and quantitative data collection and analysis techniques. The assignment will include a comprehensive review of financial records and related documentation dating from the establishment of each SACCO. The consultant shall conduct interviews with carefully selected key informants, facilitate focus group discussions, and undertake direct observations where appropriate. In addition, the consultant shall perform financial ratio analyses, assess governance structures and practices, and evaluate institutional capacity. The assessment process shall culminate in a stakeholder validation workshop to review, verify, and refine the findings and recommendations.

The commissioned consultant should further list relevant, tailored and possible assessment questions for both quantitative and qualitative methodologies. He/she is expected to refer to the documents of SACCos in programme locations. Sampling

A purposive sampling approach will be used for this assessment. The sample comprises five pre-selected SACCOs, including three from SOS Children’s Village Jimma PL and two from SOS Children’s Village Gode PL.

Major Assessment Questions

The following analytical framework guides the consultant in answering the questions below:

• Root Cause Analysis
• SWOT Analysis
• Institutional Capacity Assessment
• Governance Assessment
• Financial Ratio Analysis
• Risk Assessment Matrix
• Sustainability Assessment Framework

Financial Health, Profitability, and Liquidity

• What is the current financial position of SACCOs in terms of assets, liabilities, and equity?
• How profitable have the SACCOs been over the last three years?
• Is SACCO generating sufficient income to cover its operational and financial costs?
• What is the SACCOs’ liquidity position, and is it adequate to meet short-term obligations?
• How effective are the SACCOs in managing loans, savings, and investment portfolios?
• What trends can be observed in key financial performance indicators?

Compliance with Bylaws, Policies, and Regulatory Requirements

• To what extent does SACCO comply with its bylaws, operational policies, and procedures?
• Are governance practices aligned with applicable regulatory and cooperative requirements?
• Are statutory reports, audits, and filings completed accurately and on time?
• How well are board and management decisions documented and implemented?
• Are members adequately informed about their rights, responsibilities, and SACCO policies?
• How SACCOs partnership looks like (such as working with different stakeholders and execute actions timely such as audit, general assembly, planning (strategic, annual,M&E, etc),reporting,etc

Administrative Systems, Record Management, Internal Controls, and Service Delivery

• How effective are the SACCOs’ administrative and management systems?
• Are financial and operational records complete, accurate, and properly maintained?
• What internal control mechanisms are in place, and how effective are they?
• Are roles and responsibilities clearly defined and implemented?
• How efficient and member-responsive are SACCO’s service delivery processes?
• Does SACCO utilize appropriate technology and information management systems?

Operational Strengths and Inefficiencies

• What are the key operational strengths contributing to SACCOs’ performance?
• What operational bottlenecks or inefficiencies affect service delivery and growth?
• How effectively are human, financial, and physical resources utilized?
• Are processes streamlined and cost-effective?
• What factors limit productivity, member satisfaction, or outreach?

Challenges, Opportunities, and Areas for Improvement

• What are the major internal and external challenges facing SACCO?
• What opportunities exist for growth, diversification, and improved member services?
• Which areas require immediate improvement to enhance performance and sustainability?
• How do members and stakeholders perceive SACCO’s effectiveness?
• What emerging trends or market conditions could influence future performance?

Risk Management Systems

• What processes are in place to identify financial and operational risks?
• How effectively do SACCOs monitor and mitigate identified risks?
• Are there adequate controls to prevent fraud, errors, and financial losses?
• How are credit, liquidity, governance, and operational risks managed?
• Is there a documented risk management framework, and is it regularly reviewed?
• How are SACCO prepared to respond to unexpected financial or operational shocks?

Recommendations for Governance, Sustainability, and Growth

• What governance improvements are needed to strengthen accountability and transparency?
• How can the SACCOs enhance their financial sustainability and profitability?
• What measures can improve member satisfaction and service quality?
• What strategies can strengthen institutional capacity and operational efficiency?
• How can risk management practices be enhanced to ensure long-term resilience?
• What actions are required to support sustainable growth and increased membership participation?

Work Plan and Expected Deliverables

Work plan

The SACCo assessment task is expected to be finalized within 45 days after the contractual agreement is signed.

The consultant is expected to develop her/his detailed work plan based on the following table.

Deliverables

• Inception report which includes Objective, Assessment questions, Indicators, Data Sources, Data Collection method, Respondents, and analysis approaches.
• Assessment tools
• Data collection plan
• First draft report
• Presentation of the findings
• Validation workshop
• Final report
• Raw data, which has been cleaned (both qualitative and quantitative, including original field notes for in-depth interviews and focus group discussions, and recorded audio material), should be submitted with the report. SOS CVE will have sole ownership of all final data, and any findings shall only be shared or reproduced with the permission of SOS Children’s Village in Ethiopia.

Roles and responsibilities of the consultant

• The consultant/firm shall deploy a team for the gathering and analyses of data
• The consultant will prepare inception report within 5 days after the agreement is signed.
• Complete the task properly as per the agreement signed.
• The firm will submit the findings of SACCos assessment within the agreed timeframe.
• Facilitate the validation workshop on the findings of SACCos assessment.
• Finally, incorporate the comments, reflections and feedback, and submit the final market and livelihood assessment report.

Report criteria

The reporting criteria for the SACCos assessment shall be in line with the SOS Children’s Villages result based management (RBM) toolkit and Service description guideline. The assessment report shall follow the outline below:

• Executive Summary, Background, Methodology ,Findings ,Financial Analysis, Governance Assessment ,Operational Assessment, Risk Assessment ,Sustainability Analysis ,Conclusions Recommendations and Annexes

Child Safeguarding and ethical issues

SOS Children’s Villages is committed to ensuring that all research, evaluation and data collection processes (i.e. evidence-generating activities) undertaken by SOS Children’s Villages and its partners are ethical and respect child safeguarding policy and procedure.

The consultant must respect the rights, dignity and protection of children and other vulnerable population groups and should ensure special protection for children and other vulnerable groups during any data-generating activities to minimize any potential risks. Any research, assessment, evaluation and data collection SOS Children’s Villages is directly carried out or is involved in as a partner.

Ethical practices need to be ensured in the following circumstances:

• Any research, assessments, baseline, midterm or final evaluations and data collection SOS Children’s Villages has commissioned for ethical oversight of these processes.
• Any research, assessment, evaluation and data collection carried out by researchers/consultants on SOS Children's Villages programmes and participants.

Hence, relevant project coordinators and MEAL coordinators at the locations will ensure that any researchers, evaluators and data collectors should receive awareness training on sign and adhere to SOS Children’s Villages core policies:

Obtaining consent from research participants is central to the research relationship and signals respect for the research participant's dignity, their capability to express their views and their right to have these heard in matters that affect them. Informed consent is an explicit agreement which requires participants to be informed about and understand the research/assessment. This must be given voluntarily and be renegotiable, so that participants may withdraw at any stage of the research process.

Logistical arrangements

The awarded consultant shall show feasible logistical arrangements for the assignment as part of the technical proposal. National or location-level staff (SOSCV) will be available to help organize the interviews including contacting SOSCV, announcing and local preparation of evaluation, and linking to community duty bearers and national authorities if required.

Duration of the contract and terms of payment

Payment will be made only upon SOS Children’s Villages' acceptance of the work performed in accordance with the above-described deliverables. Financial proposals should include proposed stage payments. Payment will be affected by bank transfer in the currency of birr.

Funding and Payment: The consultant will be paid by SOS Children’s Villages as follows:

• 30% on the submission and approval of the inception report.
• 30% on completion of the draft report.
• 40% on completion of the final report.

Duration of contract: the contract is effective from the moment it was signed until the acceptance of work by the SOS Children’s Villages in Ethiopia management team.

Notice of delay

Shall the successful bidder encounter a delay in the performance of the contract which may be excusable under unavoidable circumstances; the contractor shall notify SOS Children’s Villages in writing about the causes of any such delays within one (1) week from the beginning of the delay.

After receipt of the Contractor's notice of delay, SOS Children’s Villages in Ethiopia shall analyze the facts and extent of the delay and extend the time for performance when in its judgment the facts justify such an extension.

Copyright and other proprietary rights

SOS Children’s Villages shall be entitled to all intellectual property and other proprietary rights including, but not limited to, copyrights, and trademarks, with regard to products, processes, inventions, ideas, know-how, or documents and other materials which the Contractor has developed for SOS Children’s Villages under the Contract and which bear a direct relation to or are produced or prepared or collected in consequence of, or during the course of, the performance of the Contract. The Contractor acknowledges and agrees that such products, documents, and other materials constitute works made for hire for SOS Children’s Villages.

All materials: interviews, reports, recommendations, and all other data compiled by or received by the Contractor under the Contract shall be the property of SOS Children’s Villages and shall be treated as confidential and shall be delivered only to SOS Children’s Villages authorized officials on completion of work under the Contract. The external consultant is obliged to hand over all raw data collected during the assessment to SOS Children’s Villages in Ethiopia.

Termination

The termination of the service agreement for the assignment will be in accordance with the contractual agreement to be included at the formal agreement's actual signing.

Signing of the contract

The signing of the contract will follow the awarding of the assignment.

Rights of SOS Children’s Villages

SOS-CVE has the right to cancel the service contract if the consultant cannot comply with any standards articulated in the service agreement, SOS-CVE has the right to hold the impact assessment result as its own sole property.