TOR: Shariah-Compliant Financial Service Providers (FSPs) Partnering with HEVA Fund LLP to Support Financial Inclusion for Muslim Participants under the Sanara Program at HEVA

• To enhance financial access and inclusion for Muslim participants in the cultural and creative industries through Shariah-compliant financial products, including Islamic loans and Takaful (Islamic insurance) solutions. The partnership will ensure that all products and services offered align with Islamic financial principles and meet the needs of diverse Muslim communities.

Scope of Work: The selected Shariah-compliant FSP will be responsible for the following:

• Client Acquisition and Onboarding:
• Identify and onboard eligible Muslim youth and women in CCIs, including those from vulnerable or marginalized communities.
• Ensure that onboarding adheres to Shariah principles and HEVA’s ethical and inclusion standards.
• Financial Product Development and Delivery:
• Design and deploy Shariah-compliant financial products (e.g., Murabaha, Mudarabah, Ijara, Qard Hasan) that align with Islamic finance principles.
• Provide Takaful solutions for risk coverage in accordance with Islamic guidelines.
• Offer flexible, culturally sensitive product features including repayment structures and grace periods.
• Capacity Building and Financial Education:
• Deliver financial education programs tailored tMuslim youth and women entrepreneurs, incorporating Islamic finance principles.
• Conduct outreach and awareness activities in Muslim communities to promote participation.
• Monitoring and Evaluation:
• Implement a robust monitoring and evaluation framework ttrack the performance and impact of the financial products and services delivered.
• Submit regular reports tHEVA Fund, including data on loan disbursements, repayment rates, social impact outcomes, and client feedback.
• Risk Management and Compliance:
• Maintain full compliance with Shariah financial guidelines, regulatory requirements, including approval by relevant Islamic finance advisory boards and relevant authorities, including the Central Bank of Kenya.
• Operate with transparency, fairness, and accountability, ensuring protection of clients’ rights and dignity

Selection Criteria: FSPs will be evaluated based on the following criteria:

• Shariah Compliance
• Demonstrated experience delivering Islamic finance products tMSMEs or low-income communities.
• Certification or approval by recognized Shariah boards or Islamic finance authorities.
• Product Offering and Innovation
• Range of Islamic financing instruments (Murabaha, Mudarabah, etc.).
• Provision of Takaful or Islamic risk-sharing alternatives.
• Innovative delivery models, including use of digital finance tools.
• Reputation and Track Record:
• Demonstrated experience in providing financial services tMSMEs, particularly within the creative industries.
• Positive references and recommendations from industry stakeholders and clients.
• Strong track record of managing microloan programs, particularly in underserved communities.
• Financial Stability and Capacity:
• Financial stability, including sound capitalization, liquidity, profitability, and risk management practices.
• Ability tmobilize and deploy financial resources effectively.
• Transparent fee structures, interest rates, and terms and conditions for financial products and services.
• Product and Service Offerings:
• Range and diversity of financial products and services tailored tthe needs of CCIs.
• Flexibility in product design, repayment options, collateral requirements, and grace periods.
• Integration of digital channels, technology solutions, and innovative financing mechanisms.
• Compliance and Risk Management:
• Compliance with regulatory requirements, licensing, and accreditation from relevant authorities.
• Robust risk management frameworks, including credit risk assessment, loan monitoring, default management, and recovery procedures.
• Adherence tethical standards, AML policies, customer data protection, and client confidentiality.
• Fraud management system and processes.
• Social Impact and Inclusivity:
• Commitment tpromoting financial inclusion, gender equality, youth empowerment, and support for marginalized communities within a Muslim context.
• Evidence of social impact initiatives, community engagement, capacity building, and financial education programs.
• Inclusivity in serving diverse client demographics, including young entrepreneurs, women-led businesses, refugees, and persons with disabilities.
• Fair Practices
• Shariah-aligned policies tsupport clients facing financial hardship
• Implementation of a transparent and ethical recovery process that ensures clients are treated with dignity and respect.
• Clear communication with clients about repayment expectations and recovery procedures.
• Provision of support and guidance tclients facing financial difficulties, including the possibility of restructuring repayment terms.
• Use of recovery practices that prioritize the long-term sustainability and success of client businesses, rather than immediate repayment.

Deliverables:

• Detailed Shariah-compliant business plan outlining the strategy, target market, sustainability, and growth projections.
• Evidence of certification by a Shariah board or council.
• Audited financial statements for the past three tfive years.
• Impact reports demonstrating past social impact achievements and Islamic programs.
• Regular performance reports and client feedback surveys.