STAPLES VALUE CHAIN NAFAKA ACTIVITY

Transcription

1 STAPLES VALUE CHAIN NAFAKA ACTIVITY TASK ORDER NO. AID-621-T Alex Pavlovic - Senior Private Sector Partnership Specialist Follow Up CONSULTANT REPORT March 20, 2014 This publication was produced for review by the United States Agency for International Development. It was prepared by ACDI/VOCA in compliance with the terms and conditions of Task Order No. AID-621-TO

2 STAPLES VALUE CHAIN NAFAKA ACTIVITY TASK ORDER NO. AID-621-TO Alex Pavlovic - Senior Private Sector Partnership Specialist Follow Up CONSULTANT REPORT March 20, 2014 Written by: Alex Pavlovic, Public/Private Partnership Specialist, ACDI/VOCA DISCLAIMER The author s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

3 1. Executive Summary This trip report provides a summary of the assignment that was conducted to follow up on efforts of the initial public private partnership assignment in November of The original assignment was projected to last from February 24 March 21, 2014; however, since the expansion/construction RFP document was not released by the Mission during that time and consultant s other professional obligations, the consultant advanced his departure date to March 11th. The assignment was conducted against the following SOW: Follow up with marketing and finance teams on tasks and implementing plans developed during previous assignment Develop concrete linkages with two teams as outlined in the partnership framework; develop and release RFAs for grants for supporting finance initiatives Draft and release RFAs for grants for funding input industry and building sustainability models for supporting input sales agents on the ground Mobilize for immediate implementation of initial pilot activities for warehouse upgrading/construction and expansion into Mbeya and Iringa Finalize work plan for expansion into Mbeya and Iringa based on the upcoming USAID RFP Draft strategy for warehouse rehabilitation/construction also based on the upcoming USAID RFP Recommendations & Next Steps 1. Follow up with marketing and finance teams on tasks and implementing plans developed during previous assignment Marketing: The team followed up the strategy for engaging NFRA (under P4P) in a broader, more structured manner. A meeting was held on March 12 th with NFRA and WFP at the NFRA office, and also in attendance were reps from Yara and Technoserve. The discussion was centered around the topic of 30,000 MT of maize that NFRA has to procure this year s contribution to P4P.

4 Key points of the discussion related to NAFAKA: a. Project s suggestion for delivery of 5,000 MT from Mvomero (1,500 MT), Kiteto (2,000 MT) and Kongwa (1,500 MT) was accepted by NFRA. A coordinating team for the entire effort has been created, represented by all stakeholders from that meeting. For the upcoming meeting in Dodoma, NAFAKA will facilitate visits by the representatives of FOs from the three regions and prepare a power point presentation that will highlight the following entities we are partnering with, their current constraints to deliver the product and our plan of action to support them. b. Forward contracts, which will be signed in May 2014 after NFRA has identified surplus regions together with Food Security Directorate, will also be discussed during this event so we should probably prep our partners on this topic. c. Some preparatory work is to be done on figuring out how NAFAKA will structure our delivery points. - In Kongwa, project identified CGA as the central point for the contract and this brought to light the issue of a MOU which needs to be signed with them. This MOU can serve as a strategy document for our long term engagement with CGA and can also give them direction on how to apply to RFA for Associations that is about to be released. - In Kiteto, NAFAKA has a pending grant with KINNAPA and this activity gives us an opportunity to tailor it with specific targets for FOs/AMCOS against this delivery, with gradually increasing target projections for the following seasons. This will allow us to establish strong market demand/pull for all production activities on the ground, ensuring uptake and incentives for adaption. o Important to note here is that NFRA has expressed interest in building a major collection point/warehouse in this region with our support, which would open up a good marketing outlet for AMCOs on the ground. - In Mvomero, MVIWATA is working on flushing out strategy for delivering maize, hopefully using crop banks with SACCOs and build a model that we could replicate (simple commodity financing) with our construction efforts. NFRA can issue contracts directly to associations but they are numerous since this is a large order - NAFAKA should probably try to focus on only few contracts to larger entities (i.e., existing APEX bodies, SACCOs) that can aggregate product from associations. This is why: - NFRA currently sources only 5-6% on average, depending on a cluster, from FOs. This keeps their costs of pick up negligible. They claim that they wish to increase this percentage drastically, which will surely increase cost exposure and reduce their capacity to collect from numerous small associations.

5 - NAFAKA can start working on a model that allows them to pick up from few central points in our districts from the beginning, which they will eventually have to do as their capacity grows. - Building capacity of cereal growers associations and crop banks to deliver large quantities and manage associations on the ground, NAFAKA phases out of direct support for those associations, establishes market opportunity based system for supporting those associations and thus maximizes possibilities of making efforts sustainable on the ground. Rice marketing initiatives are still focused on local milling/trading options as creation of an APEX body by RUDI is still pending, and activities to the end should commence in the next quarter. This will be necessary for bigger bulk orders to take place. The second option for promotion of rice trading is pending release of the enterprising RFP by NAFAKA to which millers can apply for construction of storage space (in communities) which will be used to broker close ties with associations for sourcing paddy and rice (case in point KPL model). Two discussions have been followed up on with RAFA in Mbeya, as a part of expansion strategy, and with Julius Wambura of FRABHO ENTERPRISES LTD for direct sourcing. Finance: Two models that have been identified during the previous assignment will still be pursued, and partners have been identified. However, the activities will commence with release of the enterprise RFP by the project (currently pending to finalize the language on construction options as this has changed because of the recent addition of a FAR close limiting options for contracting firms to do construction). - Regional banking model for MFIs and banks to expand in areas where banking services are not available ( light facilities, low overhead and staffing) and YOSEFO is still considered as the go-to partner for this activity, and - Commodity financing through crop banking model currently implemented by Mvomero SACCO to be replicated in other project areas where SACCOS have the capacity to manager this effort (this is also an opportunity for construction of storage facilities that will be used specifically for commodity trading) will both bring formal banking/financing options closer to farmers. The targets will be set to respond to real needs and promote achievable, meaningful impact that is in line with development trajectory of NAFAKA project areas. They will include, but will not be limited to: - More people signed up to open up bank accounts, which will create access to savings and borrowing options - Saving mobilized, to ensure that new customers are building wealth and learning critical financial skills - And amount of loans issued specifically for agricultural services

6 II. Develop concrete linkages with two teams as outlined in the partnership framework; develop and release RFAs for grants for supporting finance initiatives Please see above about linkages. During this assignment, NAFAKA s RFA for associations was reviewed and submitted to ACDI/VOCA HQ team for approval, and RFA for enterprises (which includes call for WH construction support) was delayed due to research being done to respond to FAR language change under the SFSA task order related to construction. III. Draft and release RFAs for grants for funding input industry and building sustainability models for supporting input sales agents on the ground A report for this initiative was developed and submitted by Mr. Dan White. summary of activities accomplished against this task. The following is the Over the past two seasons, the project has stimulated demand for improved inputs in project implementation areas and tested pilots on improving input delivery systems with various partners. A common result of these pilots is that the lack of availability of these inputs still remains a major constraint preventing their adoption. However, several models have shown promise for sustainability and scale. NAFAKA s strategy for improving input availability at the village level in a way that will continue expanding scale at the end of the project is through grants to develop incentive mechanisms for some of the successful pilots to link promising NAFAKA VBAAs to existing and potential input suppliers as outreach sales and knowledge representatives. The project is targeting total grants to be disbursed, in the range of $20,000--$40,000 each. Each sales network will most likely consist of 3-5 sales agents per wholesaler in initial stages to mitigate risk of failure, dependent on geographic spread and perceived demand in target communities. There are 8 phases to this strategy: a. Release of rolling application Enterprise Development Grant estimated target completion date March 30 b. FIPs and IFDC will conduct a ranking and geographic distribution assessment of all current VBAAs and network of agro dealers receiving training under the Agro dealer Network component. Those VBAAs and agro dealers who show the greatest interest and potential for the pilot program will be encouraged to apply through the enterprise development grant RFA. Estimated completion date of March 30. c. Grantees apply (assisted by FIPS and IFDC) and are shortlisted by the independent grant committee. Estimated completion date of April 25. d. Shortlisted grantees will go through a rigorous business plan development exercise led by a team of local (and, if necessary, regional) STTA business development officers. Based on the capacity gaps identified in the business planning exercise, individual grants will be custom tailored to each grantee. e. Grant packages will be finalized and necessary training and material capacity gaps will be delivered to both the wholesale input suppliers and their network of VBAA sales reps. Actual content of these training plans will depend on the needs identified in the business

7 planning process, but will most likely include: inventory & distribution logistics management; employee/personnel management; product knowledge & input dealer negotiating; etc. Grants to be issued by June 15. f. Each grantee will be linked with a long-term business development officer (two under FIPS and one under IFDC) to intensively facilitate their roll out of the sales rep network during the 2015/2016 growing season input sales period (from roughly August 2014 January 2015). g. At the end of the 2014/2015 production season, the grantees will be assessed. NAFAKA anticipates that a certain percentage of grantees will not succeed in securing a profit from the activity, and will elect to no longer participate. The project will conduct a detailed lessons-learned activity with those grantees to refine the grant process moving forward. h. For those grantees which are successful, the project will conduct a rigorous assessment of how best to facilitate their scale-up of their network for the following production season. IV. Mobilize for immediate implementation of initial pilot activities for warehouse upgrading/construction and expansion into Mbeya and Iringa. The project is currently expecting a release of RFA by the Mission outlining requirements for proposal and funding available. NAFAKA in meantime has already developed a list of preliminary partners and areas that it will target for construction work and is currently following up on procedures to respond to the recent change in FAR clause, as mentioned above. The target partners for WH construction and rehabbing are listed below. - Rehabbing some village level storage as per BRN plan, and to support associations building activities on the ground (but preferably in areas where ownership is clearly vested with legal farmer groups). A meeting was held with BRN and details on 275 community storage facilities has been collected (all maize, rice study is currently being conducted). Currently, there is no overlap between project intervention areas and BRN plan, but this could change with projects expansion to Iringa and Mbeya. - SACCOS and possibly AMCOS/associations for replication of crop banking model these will be bigger, commercial storage facilities. Iringa Hope SACCOS (for expansion) and SACCOS supported by MVIWATA (in current project regions) are still the target for these initiatives. The model that will be used, as indicated earlier, is currently applied by Mvomero SACCOS and provides a good showcase of how efficient credit and saving operation on the ground can support additional services such as storage/cleaning) for their members and surrounding communities. - Traders/millers, willing to cost share storage building in communities or centralized points, based on cost share principles and transparent contractual relations with associations. This model holds highest promise of success as it s

8 built on existing but growing/expanding trade relationships between farmers and processors. If implemented well in a way that ensures competitive pricing for a competitive product, it will serve as a model for transparent and equitable growth in rural areas. - NFRA central collection points, based on cost share, in project areas where these facilities do not exist. NFRA still provides the highest organized demand source for maize in the country and is looking to shift focus to sourcing directly from associations and farmers. If this linkages between their collection points and NAFKA associations are structured well to mitigate possible issues (such as delay in payments from NFRA), it would open up access for premium pricing for associations. V. Finalize work plan for expansion into Mbeya and Iringa based on the upcoming USAID RFP Issuance of this RFP by the Mission is pending. VI. Draft strategy for warehouse rehabilitation/construction also based on the upcoming USAID RFP Issuance of this RFP is pending, but please refer to the details above under point IV.