Ifrs 9 expected credit loss (ecl) impairment model validation and review services for KZN growth fund agency

Kwazulu-Natal Growth Fund Agency (KZNGFA) is an Agency, established and capitalised by the

Provincial Government to provide debt and equity. The main objective of the KZNGFA is to provide

support for creating and enabling environment for activities that create jobs and accelerate the economic

development of KZN whilst promoting Broad Based Black Economic Empowerment (B-BBEE).

2.1 Procurement Philosophy

It is the policy of KZNGFA, when purchasing goods and obtaining services to follow a course of optimum

value and efficiency by adopting best purchasing practices in supply chain management, ensuring that

open and fair competition has prevailed, with due regard being given to the importance of:

a) The promotion, development and support of businesses from disadvantaged communities (small,

medium, micro enterprises, as well as established businesses within those communities) in terms

of its BEE Policy;

b) The promotion of national and regional local service providers and agents before considering

overseas service providers and;

c) The development, promotion and support for the moral values that underpin the above, in terms

of KZNGFA Business Ethics and Guidelines which requires that all commercial conduct be based

on ethical and moral values and sound business practice. This value system governs all

commercial behaviour within KZNGFA.

The KZNGFA wishes to engage with service providers who are equally committed to maintain high quality

services and competitive pricing.

3. SCOPE OF SERVICES REQUIRED

In preparation for the KZNGFA financial year-end audit, annual validation and review of the Expected

Credit Loss (ECL) Impairment Model calculation in line with IRF9 requirements. The annual validation

and review of the ECL impairment Model is in preparation for the Auditor General Audit of the Annual

Financial Statements of the KZNGFA.

Bidders must provide detailed proposal on the validation and review approach of the Model which

comprise of seven projects.

• Review of the KZNGFA’s IFRS 9 ECL Impairment model – the service provider is expected to

conduct a thorough review of the KZNGFA IFRS 9 ECL model in its entirety through verification of

formulas to confirm accuracy, validity, and reliability of the model outputs. Data collection and

stakeholder consultation within the organization will be done to provide an initial overall assessment

of the models’ veracity and applicability given market conditions and KZNGFA internal operations.

• Validation of the KZNGFA’s IFRS 9 ECL Impairment model – the service provider to conduct a

thorough examination of the model and confirm if the model is still fit for use through detailed desk

review of the documentation and risk-based approach for spot checks.

• Benchmarking and model validation – to align with best practice, KZNGFA requires the service

provider to conduct a desktop benchmark analysis to give insight into approaches and methodologies

being used by similar institutions. Recommendations are required from the service provider to give

further guidance in adherence with market standards.

Data and assumptions

• Review of the data and assumptions, the adequacy of the data controls and data governance

procedures in place.

• Identify any implications or limitations of the data used to develop the model, on the ECL output.

• Identify all data inputs required to run the IFRS 9 models and check if all input requirements and

formats are properly documented.

• Assess the criteria used for initial staging, the curve used for changes in PD and perform stage test

for reasonability; and

• Assess the qualitative factors used for Significant Increase in Credit Risk (SICR) (i.e., Watch List

only reds included).

Model Application, code and Mathematics

• Assess the integrity and appropriateness of the model, including the accuracy of underlying

calculations and formulae.

• Assess if the execution of the model on the processing platform is aligned to the mathematical

model.

• Assess the adequacy of the model results for the business decisions they are required to inform.

• Benchmark model outputs against financial services industry outcomes, including reasonableness

of the impairment values

• Assess the integrity and appropriateness of the model, including the accuracy of underlying

calculations and formulae.

• Assess if the execution of the model on the processing platform is aligned to the mathematical

model.

• Assess the adequacy of the model results for the business decisions they are required to inform.

• Benchmark model outputs against financial services industry outcomes, including reasonableness

of the impairment values.

• Examine the model’s code and mathematical formulae, including calculations performed during

data preparation or other applications external to the primary model, for potential flaws in logic or

coding; and

• Produce comparable results from alternative models or mathematical equations that are

appropriate for the task.

Technical assessment of the methodology

• Assess the statistical, financial & economic soundness of the theories underpinning the model,

including adherence to best practice and IFRS 9.

• Assess the appropriateness of IFRS 9 PDs and assess the reasonableness of the difference

between internal PD’s and IFRS 9 PD’s.

• Assess the appropriateness of the LGD model and applied haircut assumptions.

• Assess the appropriateness of the EAD model.

• Assess the macro-economic model appropriateness, applicability, reasonability and completeness;

and

• Assess the forward-looking adjustments.

Other

• Any other procedures the service provider may deem necessary to conduct a satisfactory validation

of the model, if not contained in the procedures above.

The service provider is required to provide a written report (executive summary and detailed working

papers) detailing findings of any identified model steps or outputs that are in contravention with the

requirements of the IFRS 9 standard, highlighting those that could lead to a material misstatement of the

ECL calculation.

4. CONTRACT DURATION

The contract duration is for 36 months

The appointed service provider(s) will be required to start immediately after signing the contract and

provide the services till completion of the project. The project should be executed within six (6) weeks

post appointment. It is also expected that the Service Provider Presents the final results to the Executive

Committee and be available for questions and discussions until 31 August 2026.

5. REPORT

The service provider is required to provide a written report (executive summary and detailed working

papers) detailing findings of any identified model steps or outputs that are in contravention with the

requirements of the IFRS 9 standard, highlighting those that could lead to a material misstatement of the

ECL calculation.

6. AWARD OF THE RFQ

KZNGFA is not obliged to accept and award this RFQ to the lowest bidder or any other bidder.

7. EVALUATION PROCESS AND CRITERIA

Selection will be conducted over three stages as detailed below:

Stage 1 – Compliance with Minimum Requirements

Stage 2 – Functionality Evaluation

Stage 3 - Price and Specific Goals

7.1 STAGE 1 – COMPLIANCE WITH MANDATORY REQUIREMENTS

All proposals must be completed and accompanied by the below compliance requirements:

7.1.1 Signed Proposal document

7.1.2 Signed and completed SBD 1, SBD 4 and SBD 6.1

7.1.3 Evidence of registration on the National Treasury Central Supplier Database (MAAA) with

Tax Compliance Status

All proposals must be accompanied by the below mandatory requirement:

7.1.4 Company Profile detailing the company’s experience and expertise

All bids duly lodged as specified in this RFQ will be examined to determine compliance with the

mandatory requirements and conditions. Failure to provide any mandatory information as

requested above will results in the submission being deemed non-responsive.

7.2 STAGE 2 – FUNCTIONALITY EVALUATION

Scores will be tabulated to 100 points. Respondents must score 70 points and over to be assessed on

their financial offer and preference score.

The allocation of points for the evaluation of quality/functionality is set out in Table 1 below:

FUNCTIONAL EVALUATION CRITERIA Weight

Company experience as valuation company

The bidder must have experience in the validation and review of IFRS 9 ECL models

for Developmental Finance Institution (DFI’s) or other Financial Institutions (FI’s) both

locally and internationally.

• 0 > 5 years = 5 points

• 6 > 7 years = 10 points

• 8 > 10 years = 15 points

• 11+ = 20 points

Company experience must be detailed in the company profile

Reference Letters

Letters of reference for ECL review and validation in relevant industry or similar

companies noted on number 3 (scope).

a) 5 Letters of Reference relevant to the scope of work – 15 points.

b) 4 Letters of Reference relevant to the scope of work – 12 points. 15

c) 3 Letter of Reference relevant to the scope of work – 9 points.

d) 2 Letter of Reference relevant to the scope of work – 6 points.

e) 1 Letter of Reference relevant to the scope of work – 3 points

***Letters must be on client letterhead, signed, and dated. Letters must not be

older than 5 years.

FUNCTIONAL EVALUATION CRITERIA Weight

Proposed Methodology and project Plan

The proposal should reflect a clear demonstration a thorough understanding of the

objectives and deliverables of this project.

The bidder must provide a detailed proposal of the methodology/ approach to be used

to carry out the scope of work outlined above, related timelines / project plan and

clearly demonstrate how the deliverables will be achieved.

The timelines should clearly outline the stages of validation: Final draft report to be

completed within 3 weeks of project start date. Refinement and final report

incorporating responses from management to be completed within week 4.

***The bidder is required to be available for any technical questions that may

arise from the Audit and risk committee and the Board at the time of presenting

the Impairment figures for approval.

KEY RESOURCES/TEAM

• The bidder must provide a team structure and comprehensive CVs of the key

personnel who will be deployed for this assignment.

• The bidder’s proposed team to be deployed for this assignment must demonstrate

relevant experience in model validation and review and particularly IFRS 9 model

validation and review.

• The team members’ experience should include, but does not have to be limited to,

the interrogation of underlying model documentation, validating the accuracy of

underlying calculations and/ or formulae and assessing reasonability of model

outputs.

• The team members should have gained the relevant experience preferably within

the financial services industry.

Team Lead (15 points)

• Equal to or more than 10 years’ experience in similar work = 10 points

• Less than 5 years’ experience as a in similar work = 5 points

• Accreditation and or affiliation with a professional body = 5 points

Support member(s) (15 points)

• Equal to or more 10 years’ experience in similar work = 10 points

• Less than 5 years’ experience in similar work = 5 points

• Accreditation and or affiliation with professional body= 5 points

The team’s experience shall be determined using a simple average whereby the

aggregate experience of the team members in years, is divided by the size of the

team.

A one-page CV must be attached (CV must be on the provided Annexure A template)

FUNCTIONAL EVALUATION CRITERIA Weight

Location

Office in KwaZulu-Natal – 20 points

Office outside of KwaZulu-Natal – 10 points

Lease agreement or CSD

Total points allocation 100

Note: Failure to obtain the minimum of 70 out of 100 on functionality will result in

disqualification from further evaluation.

7.3 STAGE 3 – PRICE AND SPECIFIC GOALS

7.3.1 Proposals will be subject to an evaluation based on an 80/20 – 80 points for price and 20 points

for specific goals.

7.3.2 Fixed price is required; price must be inclusive of VAT and all costs relating to disbursements and

accommodation. See Annexure B

Evaluation Maximum points to be awarded

Relative competitiveness of the price 80

Specific Goals (see the below table) 20

Total Price and B-BBEE Points 100

SPECIFIC GOALS TABLE

SPECIFC GOAL POINTS

51% - 100 % 10

30% - 50% 6

Black Ownership 5% - 29% 4

0% - 4% 0

51% - 100 % 4

30% - 50% 2

Black Women Ownership 5% - 29% 1

0% - 4% 0

30% - 100 % 3

Black Youth Ownership 5% - 29% 2

0% - 4% 0

30% - 100 % 3

Disability 5% - 29% 2

0% - 4% 0

TOTAL POINTS 20

The following may be used as proof for claiming preference points

• BBBEE Certificate or BBBEE Affidavit

• CSD Report

• ID Documents of the owners of the company

• Doctors Certificate / disability database from relevant institutions (for more research)

8. THE INFORMATION REQUIRED

You are required to provide the KZNGFA with a proposal, by no later than 12:00pm on 19 February

2026.

9. SUBMISSION DETAILS

▪ Submissions must be emailed to [email protected] attention Sijabulile Ntshangase by no

later than the stipulated time above.

▪ For technical queries, you can contact Nothando Mabunda on [email protected] during

Approved by

______________________

Nothando Mabunda

Acting Chief Risk Officer

Annexure A

Curriculum Vitae

1. Role – Key Resource

Name and Surname

Residential Address

Project Role

2. Relevant Qualifications/Certifications

Name of Certificate Institution Year Obtained Expiry Date (if any)

3. Relevant Experience

Company Name Position Key responsibility Start End

Date Date

4. References

Name Company Name Position Relationship

Annexure B

NAME OF BIDDER: __________________________________________________________

OFFER TO BE VALID FOR 90 DAYS FROM THE CLOSING DATE OF RFQ.

DESCRIPTION HOURS RATE PER TOTAL COST

HOUR

Review of the KZNGFA’s IFRS 9 ECL

Impairment model

- Updates to address auditors’

recommendations

- Model parameter updates

- Model updates for macroeconomic

forecasts

- IFRS ECL model review and

- Assist KZNGFA with audit queries for

year end audit

*OTHER COST

TOTAL EXCL. VAT

15% VAT

TOTAL INCL. VAT

*DETAILS FOR OTHER COST MUST BE PROVIDED

DECRIPTION YEAR 2 ESCALATION % YEAR 3 ESCALATION %

Review of the KZNGFA’s IFRS 9 ECL

Impairment model

TOTAL COST FOR 3 YEARS_____________________

Tenderers signature..............................

COMPANY STAMP

SBD 1

PART A

INVITATION TO BID

YOU ARE HEREBY INVITED TO BID FOR REQUIREMENTS OF THE (NAME OF DEPARTMENT/ PUBLIC ENTITY)

BID NUMBER: KZNGFA RFQ 2025 - 30 CLOSING DATE: 19 FEBRUARY 2026 CLOSING TIME: 12h00pm

DESCRIPTION EXPECTED CREDIT LOSS IMPAIRMENT MODEL REVIEW AND VALIDATION FOR 36 MONTHS

BID RESPONSE DOCUMENTS MAY BE DEPOSITED IN THE BID BOX SITUATED AT (STREET ADDRESS)

Via email to [email protected]

BIDDING PROCEDURE ENQUIRIES MAY BE DIRECTED TO TECHNICAL ENQUIRIES MAY BE DIRECTED TO:

CONTACT PERSON Sijabulile Ntshangase CONTACT PERSON Nothando Mabunda

TELEPHONE NUMBER TELEPHONE NUMBER

FACSIMILE NUMBER FACSIMILE NUMBER

E-MAIL ADDRESS [email protected] E-MAIL ADDRESS [email protected]

SUPPLIER INFORMATION

NAME OF BIDDER

POSTAL ADDRESS

STREET ADDRESS

TELEPHONE NUMBER CODE NUMBER

CELLPHONE NUMBER

FACSIMILE NUMBER CODE NUMBER

E-MAIL ADDRESS

VAT REGISTRATION

NUMBER

SUPPLIER TAX CENTRAL

COMPLIANCE STATUS COMPLIANCE OR SUPPLIER

SYSTEM PIN: DATABASE No: MAAA

B-BBEE STATUS TICK APPLICABLE BOX] B-BBEE STATUS LEVEL SWORN [TICK APPLICABLE BOX]

LEVEL VERIFICATION AFFIDAVIT

CERTIFICATE Yes No Yes No

[A B-BBEE STATUS LEVEL VERIFICATION CERTIFICATE/ SWORN AFFIDAVIT (FOR EMES & QSEs) MUST BE SUBMITTED IN

ORDER TO QUALIFY FOR PREFERENCE POINTS FOR B-BBEE]

ARE YOU THE ACCREDITED Yes Yes No

No ARE YOU A FOREIGN BASEDREPRESENTATIVE IN SOUTH

SUPPLIER FOR THE GOODS [IF YES, ANSWER THE

AFRICA FOR THE GOODS [IF YES ENCLOSE QUESTIONNAIRE BELOW ] /SERVICES /WORKS OFFERED?

/SERVICES /WORKS OFFERED? PROOF]

QUESTIONNAIRE TO BIDDING FOREIGN SUPPLIERS

IS THE ENTITY A RESIDENT OF THE REPUBLIC OF SOUTH AFRICA (RSA)? YES NO

DOES THE ENTITY HAVE A BRANCH IN THE RSA? YES NO

DOES THE ENTITY HAVE A PERMANENT ESTABLISHMENT IN THE RSA? YES NO

DOES THE ENTITY HAVE ANY SOURCE OF INCOME IN THE RSA? YES NO

IS THE ENTITY LIABLE IN THE RSA FOR ANY FORM OF TAXATION? YES NO

IF THE ANSWER IS “NO” TO ALL OF THE ABOVE, THEN IT IS NOT A REQUIREMENT TO REGISTER FOR A TAX COMPLIANCE STATUS

SYSTEM PIN CODE FROM THE SOUTH AFRICAN REVENUE SERVICE (SARS) AND IF NOT REGISTER AS PER 2.3 BELOW.

PART B

TERMS AND CONDITIONS FOR BIDDING

1. BID SUBMISSION:

1.1. BIDS MUST BE DELIVERED BY THE STIPULATED TIME TO THE CORRECT ADDRESS. LATE BIDS WILL NOT BE ACCEPTED

FOR CONSIDERATION.

1.2. ALL BIDS MUST BE SUBMITTED ON THE OFFICIAL FORMS PROVIDED–(NOT TO BE RE-TYPED) OR IN THE MANNER

PRESCRIBED IN THE BID DOCUMENT.

1.3. THIS BID IS SUBJECT TO THE PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT, 2000 AND THE

PREFERENTIAL PROCUREMENT REGULATIONS, 2017, THE GENERAL CONDITIONS OF CONTRACT (GCC) AND, IF

APPLICABLE, ANY OTHER SPECIAL CONDITIONS OF CONTRACT.

1.4. THE SUCCESSFUL BIDDER WILL BE REQUIRED TO FILL IN AND SIGN A WRITTEN CONTRACT FORM (SBD7).

2. TAX COMPLIANCE REQUIREMENTS

2.1 BIDDERS MUST ENSURE COMPLIANCE WITH THEIR TAX OBLIGATIONS.

2.2 BIDDERS ARE REQUIRED TO SUBMIT THEIR UNIQUE PERSONAL IDENTIFICATION NUMBER (PIN) ISSUED BY SARS TO

ENABLE THE ORGAN OF STATE TO VERIFY THE TAXPAYER’S PROFILE AND TAX STATUS.

2.3 APPLICATION FOR TAX COMPLIANCE STATUS (TCS) PIN MAY BE MADE VIA E-FILING THROUGH THE SARS WEBSITE

WWW.SARS.GOV.ZA.

2.4 BIDDERS MAY ALSO SUBMIT A PRINTED TCS CERTIFICATE TOGETHER WITH THE BID.

2.5 IN BIDS WHERE CONSORTIA / JOINT VENTURES / SUB-CONTRACTORS ARE INVOLVED, EACH PARTY MUST SUBMIT A

SEPARATE TCS CERTIFICATE / PIN / CSD NUMBER.

2.6 WHERE NO TCS PIN IS AVAILABLE BUT THE BIDDER IS REGISTERED ON THE CENTRAL SUPPLIER DATABASE (CSD), A

CSD NUMBER MUST BE PROVIDED.

2.7 NO BIDS WILL BE CONSIDERED FROM PERSONS IN THE SERVICE OF THE STATE, COMPANIES WITH DIRECTORS WHO

ARE PERSONS IN THE SERVICE OF THE STATE, OR CLOSE CORPORATIONS WITH MEMBERS PERSONS IN THE SERVICE

OF THE STATE.”

NB: FAILURE TO PROVIDE / OR COMPLY WITH ANY OF THE ABOVE PARTICULARS MAY RENDER THE BID INVALID.

SIGNATURE OF BIDDER: ...................................................

CAPACITY UNDER WHICH THIS BID IS SIGNED: ...................................................

(Proof of authority must be submitted e.g. company resolution)

DATE: ...................................................

SBD 4

BIDDER’S DISCLOSURE

1. PURPOSE OF THE FORM

Any person (natural or juristic) may make an offer or offers in terms of this invitation to bid. In line

with the principles of transparency, accountability, impartiality, and ethics as enshrined in the

Constitution of the Republic of South Africa and further expressed in various pieces of legislation,

it is required for the bidder to make this declaration in respect of the details required hereunder.

Where a person/s are listed in the Register for Tender Defaulters and / or the List of Restricted

Suppliers, that person will automatically be disqualified from the bid process.

2. Bidder’s declaration

2.1 Is the bidder, or any of its directors / trustees / shareholders / members / partners or any person

having a controlling interest1 in the enterprise,

employed by the state? YES/NO

2.1.1 If so, furnish particulars of the names, individual identity numbers, and, if applicable, state

employee numbers of sole proprietor/ directors / trustees / shareholders / members/ partners or

any person having a controlling interest in the enterprise, in table below.

Full Name Identity Number Name of State

institution

2.2 Do you, or any person connected with the bidder, have a relationship with any person who is

employed by the procuring institution? YES/NO

2.2.1 If so, furnish particulars:

................................................................................................

................................................................................................

2.3 Does the bidder or any of its directors / trustees / shareholders / members / partners or any person

having a controlling interest in the enterprise have any interest in any other related enterprise

whether or not they are bidding for this contract? YES/NO

2.3.1 If so, furnish particulars:

........................................................................................

........................................................................................

No specific requirements found