Attachment 1 - Applicable Documents_amended_0001.pdf

RPF No. 72052221R00001_0001

Attachment 1 - APPLICABLE DOCUMENTS

a. Annexes to Section C Annex 1. Development Problem Annex 2. FTF and Coordination

b. A&A Strategy

c. Honduras Market System Analysis

d. Global Food Security (GFFS) Honduras Country Plan

e. Honduras CDCS 2015 – 2019 updated 2020

f. Honduras Journey to Self- Reliance FY21 Country Road Map

g. Private Sector Engagement for Development Policy

h. Vulnerability and Resilience to Climate Change in Western Honduras: Annexes I – VI

i. Added in Amendment 1, after Questions were submitted

1. Question 12: Client Survey Migration

2. Question 26: FTF Indicator Handbook

3. Question 35 and 36: Due Diligence Guidance

4. TMS website: https://www.acdivoca.org/projects/transforming-market-systems/ https://www.google.com/url?q=https://www.acdivoca.org/projects/transforming-market-systems/&sa=D&source=hangouts&ust=1611420933286000&usg=AFQjCNFk9FYutl1HTt2bahYA_LnlFOkaaw

ANNEX 1. DEVELOPMENT PROBLEMS

INEFFICIENT MARKET LINKAGES BETWEEN PRODUCERS AND LOCAL ACTORS

Some input providers have emphasized short-term profits over long-term business growth by overselling ineffective and unnecessary inputs to farmers. This has resulted in eroded trust between the producers and the input providers and created a significant barrier to improved production.

Additionally, input suppliers face inherent risks of trying to provide services in a dispersed network of smallholder farmers.

Agriculture market systems are also constrained by poorly developed or inefficient post-harvest systems, which lower the profitability of VC activities and deter investments and development of related, downstream value-adding processing enterprises. Moreover, the cumulative effect of inappropriate post-harvest technologies all the way from the field to the end consumer, including handling, packaging, warehousing, and transportation of agricultural products, leads to a large amount of spoilage and reduction in product quality, which consequently is compensated by lower prices at each step of the value chain. The VCs do not have incentives for efficient production management to reduce post-harvest losses as the cost of these losses is embedded in lower prices paid to the grower and at each purchase in the VCs up to the retailer, and then the retailer embeds losses by increasing the price to the end consumer.

LACK OF RESILIENCE FOR PRODUCERS TO SURVIVE SHOCKS

Current agricultural practices produce poor yields and deplete soil nutrients. Antiquated crop management practices also leave households dependent on agriculture exposed to loss of income due to crop diseases such as coffee leaf rust. Recurrent droughts have had a drastic effect on agricultural production in Honduras, and most plots lack irrigation and rely on rain-fed agriculture, leaving farmers vulnerable to crop failures caused by drought. Beyond the general lack of financing to install irrigation that would allow farmers to produce higher-value crops and to withstand climatic variation, water is scarce in many parts of Honduras, especially in the Dry Corridor, such that there is often a limit to how much land could be irrigated even when other constraints are overcome. Where water is captured for irrigation or household use, water quality is a challenge due to inadequate watershed management and conservation practices. Western Honduras is at the front lines of climate variability, water scarcity, and natural resource governance efforts to improve resilience. A lack of capacity and resources at the municipal level creates challenges throughout western Honduras. There are continuing conflicts around natural resources, water, and indigenous rights in this area.

The COVID-19 pandemic is an unforeseen shock for the agriculture sector and the Honduran economy. The COVID-19 quarantine and mitigation measures completely disrupted the existing market system. The entire supply chain, starting with the availability of inputs for the producers, farm production, transportation and distribution, retail and wholesale markets was heavily impacted by the quarantine measures established by the GOH. Despite the GOH and private sector efforts to reactivate the agriculture VCs, actions seem disconnected and VC actors are not responding rapidly due to the high risk posed by the uncertainty of the market conditions and lack of trust among private and public sector actors. The lack of organization of the sector results in just the large actors (exporters, supermarkets, input suppliers) leading efforts to reactivate the VCs, but the solutions are not appropriate for the vast majority of growers.

Furthermore, local institutions in western Honduras are chronically weak. They have limited human, financial, and technical capacity to effectively manage natural resources and implement resilience-building processes. Institutions do not have climate-focused planning with gender-sensitive approaches; thus, equal rights of women and men stakeholders, equitable sharing of the costs and benefits of investments, and balanced data collection from men and women to ensure that plans and interventions capture their differentiated needs are often lacking. This situation exacerbates the poverty conditions in the region. In particular, planning and managing water is a challenge in Honduras. Institutions in charge of managing natural resources (e.g., municipalities, national government) lack efficient management systems needed to define who, where, when, and how much a user can utilize resources. The lack of communication and coordination between the managers of natural resources and a broad variety of users very often leads to resource overuse and depletion.

Resource depletion is starting to create social conflicts, as users are competing for the same resources. These circumstances hinder poverty reduction efforts in the area.

OVERRELIANCE ON TECHNICAL ASSISTANCE PROVIDED BY DONORS

One of the purposes of the 1992 LMSA was to move to a more efficient private sector delivery model of technical assistance to replace the public extension service provided by the GOH through the Ministry of Agriculture and other government institutions or projects. This expected efficiency did not occur as envisioned, and after almost 30 years of the elimination of the public agriculture extension service, the delivery of private-sector technical assistance failed. As a result, the majority of assistance is now provided by donors, including USAID, and NGOs which does not contribute to the long-term sustainability of the delivery of technical assistance, and growth beyond the cohort of beneficiaries of the projects is slow. To illustrate further the weakness of the agriculture sector resulting from the failed implementation of the LMSA, Honduras has not conducted an agricultural census since 1993.

Certain markets for agricultural goods are relatively well-developed, even in poorer and more remote parts of Honduras; in fact, one of the major successes of USG support to Honduran agriculture in the 1990s was the creation and strengthening of VCs for many non-traditional export crops such as melon and other vegetables. However, many farmers lack the money to participate fully in these and other markets either as sellers or consumers of high-quality, high-value crops. Technical assistance for farmers is generally lacking, and where it is present, assistance is provided by a mosaic of NGOs, donors, private sector actors, and some residual public institutions. By most accounts, the USG is the largest provider of agricultural extension services in Honduras. The Ministry of Agriculture does not have a robust presence in rural areas and is thus unable to fill a key part of its mandate to oversee and coordinate different extension actors.11

LACK OF CAPACITY AND/OR INCENTIVE FOR LOCAL ACTORS TO PROVIDE TECHNICAL ASSISTANCE

AND/OR FINANCE

USAID and international donors have been providing technical assistance to farmers for decades.

USAID has used US-based and international implementing partners through contracts and assistance

11 Global Food Security Strategy Honduras Country Plan Stakeholder interviews to provide technical assistance to achieve FTF goals. The GOH and the private sector have benefited from these interventions that have lifted many farmers out of poverty and improved production capacity. However, due to the risk involved (private sector) and lack of funding (GOH), USAID has provided inputs into the agriculture sector that scale up slowly. In the case of working with the poorest farmers, when activities end, some farmers are likely to slip back into poverty unless follow-on activities continue to provide assistance. This Activity will use a market systems approach by utilizing existing local actors or help create new local actors to provide assistance, demonstrating economic viability and return on investment to the private sector.

LACK OF ACCESS TO FINANCE

Many farmers and businesses in the coffee and horticulture VCs lack access to finance to invest in more productive systems. This problem is starting to be addressed by many actors, including a national trust fund for agricultural investment and input suppliers and produce buyers that provide operating capital to growers. A robust network of village banks (cajas rurales) represents a promising source of finance that is self-sustaining and well-adapted to local micro-contexts.12 However, the private sector remains an untapped resource that could provide critical finance necessary to improve productivity and stimulate employment. Interest rates for growers remain among the highest, to a level that the profitability of agriculture ventures remains unviable. The dispersion and size of growers, along with the low-tech production systems make this sector unattractive to formal financial institutions. Therefore, the size of the loans remains very low, limiting the potential for growth.

IMMIGRATION

Dramatic spikes in illegal immigration in 2014 from Central America to the United States by tens of thousands of families and unaccompanied children led the USG to develop an interagency strategy that addresses the underlying factors that contribute to illegal immigration. USG investments in the region focus on three interrelated objectives: prosperity, security, and governance. The objective of this approach is that a secure, democratic, and prosperous Central America will provide an environment in which citizens choose to remain in their countries and are able to thrive. Thus, in alignment with the USG’s Central America Strategy, as well as the GFSS, the Activity builds resilience through linking efforts to accelerate agricultural growth and more deliberately create jobs for marginalized populations, including young people, indigenous groups, women, and those that are prone to immigrate illegally. The agricultural economy is recognized as the most immediate means of generating income and employment for large numbers of people.

12 Field workshops and stakeholder interviews

ANNEX 2. FTF AND COORDINATION

The Activity results align with the U.S. Government Global Food Security Strategy Results Framework and will be focused on two objectives shown below: Objective 1 - Inclusive and sustainable agricultural-led economic growth and Objective 2. Strengthened resilience among people and systems.

Fig. 2 - U.S. Government Global Food Security Strategy Results Framework

Previous FTF Activities included USAID and other donors inside the system providing direct assistance via implementing partners that provided credit, technical assistance, and capacity building, key drivers in the system. This new approach brings USAID outside of the system and will facilitate local partners (private sector, local NGOs, and micro-finance institutions) providing those critical drivers.

The Activity will be one of a suite of investments to reduce poverty in the whole FTF ZOI. Existing and future activities, their linkages, and coordination mechanisms are described below. Similarly, the Activity will also work with other donors in the area avoiding duplication.

Continues next page

Table 1. Bilateral and Centrally-Funded Activities and Linkages

ACTIVITY DESCRIPTION

COORDINATION

MECHANISMS

Transforming Market Systems (TMS) 2018 - 2022

The purpose of the “Transforming Market Systems” IDIQ, is to foster competitive, resilient, and inclusive market systems that provide increased economic opportunities (jobs and income) that incorporate poor, marginalized Hondurans and reduce incentives to migrate.

Targets:

● 25,000 people with new or better employment

● $50 million in incremental sales of supported enterprises

● $50 million mobilized in public and private resources for investment

● 35,000 program participants with improved economic sustainability and social mobility

● 75% of the Market Systems Diagnostic indicators showing a positive change

1. Common client/beneficiary lists and partners

2. Spatial map of activities down to the community

3. Municipal Food Security Mesas

4. Quarterly meetings with mayors, private sector leaders, and CSOs

5. Semi-annual FTF implementer coordination meetings

6. USAID/Washington sponsored workshops and training

Coffee Alliance 2018 - 2022

The alliance among USAID, COHONDUCAFE, the COHONDUCAFE Foundation and JDE (the “Coffee Alliance”) is intended to address challenges related to poor market access, a lack of financial services, low coffee productivity, poor processing, ineffective marketing practices, and rapid ecosystem degradation as a result of coffee rust and other shocks. This strategic, commercial alliance seeks to leverage COHONDUCAFE, the Foundation’s and JDE’s expertise in production, marketing and commercialization of coffee to increase the income of at least 80 percent of the 4,800 targeted coffee grower households by 25 percent, generating over $9.5 million in incremental sales and improving the management and conservation of at least 8,000 hectares of coffee.

Prospective Youth Employment for Migration Prevention

The goal of this activity is to increase employment of youth at risk of irregular migration, including youth from high out-migration areas, returned migrants, and others, in support of Mission efforts to reduce irregular migration while at the same time having a significant impact on the reduction of violence as a contributor of irregular migration. The target population includes young people from high out-migration areas as well as other youth who may be considered at risk of irregular migration, including, among others, returned migrants and youth at risk of violence. This activity focuses on the supply side of employment, strengthening youth competencies and skills and providing links to employment, and must be integrated with other activities with an emphasis on job creation.

1. Common client/beneficiary lists and partners

2. Spatial map of activities down to the community

3. Implementer coordination meetings (including at the work plan development phase)

USAID/Bureau for Resilience and Food Security (RFS), USAID/El Salvador, through the Central American and Mexico Regional Program (CAM), and Development Finance Corporation are implementing a number of contributing activities. Each Activity will help to increase incomes and reduce undernutrition.

Table 2. Regional and Centrally-Funded Activities and Linkages

ACTIVITY DESCRIPTION

Regional Trade and Market Alliances Project (USAID/CAM); short-term assistance, supported by grants to local organizations to carry out activities in Honduras

Will help to remove policy and trade obstacles for agricultural exports to El Salvador and Guatemala

CAM funding to Central American Integration System organization RUTA, which supports full-time consultant assistance to SAG, complemented by short-term specialized assistance

Regional policy support to SAG that will support the development of a monitoring system for the Country Investment Plan, as well as coordination of donor responses to the coffee rust crisis

RFS: NEW FTF Innovation Lab (IL) for Legume Systems

The Legume Systems Research Innovation Lab addresses GFSS objectives around sustainability in agricultural systems, resilience among people and systems, and food security and nutrition, especially among women and children.

RFS: Alliance for Resilient Coffee (BAA) (Neumann Foundation)

The project aims to elicit greater private sector engagement in Climate Smart Agriculture strategies, such as diversified production, conservation agriculture or adaptive farming practices that support smallholders to withstand changing weather and climate patterns.

RFS: Coffee Farmer Resilience Initiative This alliance between USAID, Root Capital, and Keurig Dr. Pepper leverages private sector engagement with the help of public sector investment in order to improve the capacity of agricultural communities to withstand economic and environmental shocks, thereby improving the lives of over 90,000 smallholder farmers.

RFS: FTFIL for Horticulture The Horticulture Innovation Lab has worked with Zamorano University for 7 years on promoting technology for better income and increased nutrition. In recent years, the Horticulture Innovation Lab has taken a closer look at the interaction between women and horticulture and how women and their families can better reap the known benefits of fruits and vegetables.

RFS- FTFIL for Grain Legumes The Feed the Future Legume Innovation Lab ended in November 2018. It supported collaborative research and institutional capacity strengthening around four strategic objectives: (1) to enhance grain legume productivity through genetic improvement and integrated pest management; (2) to improve smallholder farmer decision making and to strengthen grain legume value chain performance; (3) to improve the nutritional quality of diets through increased consumption of nutrient-rich grain legumes; and (4) to improve outcomes of investments in grain legume research and human resource development.

RFS- Innovation in Agricultural Training and Education (InnovATE)

The purpose of the study is to research linkages between livelihoods, youth violence, climate change, and migration in rural and peri-urban communities in Honduras’ FTF ZOI. It will increase the understanding of changing rural livelihoods, pathways into violence, and potential mitigating factors in rural and peri-urban populations.

RFS- Coffee Rust Support The project focuses on addressing short-term needs as well as establishing the groundwork for long-term needs. Short-term needs include standardizing and disseminating information regarding improved varieties and coffee rust control practices as well as evaluating currently existing varieties from other countries for performance in the project countries. Long-term projects are focused on genetic studies to guide future coffee breeding efforts and establish a professional seed and seedling sector.

RFS: FTFIL for Reduction of Post-harvest Loss The FTFIL for Post-harvest Loss engages with stakeholders throughout the value chain to confront and reduce key constraints to the marketability and safety of important crops. In each of the focus countries, the activity partners with universities and other organizations at the front lines of food security to conduct research and assessments on the prevalence of insect pests and mycotoxins, and on drying, storage, and other post-harvest technologies aimed at mitigating them. As technologies are adapted through field testing and piloting with end-users, the activity further develops partnerships with government, non-governmental organizations, and the private sector; local producers, aggregators, and organizations provide a path to integrating these new technologies into the local market system through accelerated adoption.

RFS- Integrating Gender and Nutrition within Agricultural Extension Services- INGENAES

The primary focus in Honduras was field-based research projects based on partner organization and USAID requests from the initial stakeholders’ planning meeting. Results from these projects helped local organizations increase their awareness and capacity around integrating gender and nutrition into their fieldwork.

RFS: Developing Local Extension Capacity (DLEC) The Feed the Future DLEC project stimulates diverse extension and advisory service (EAS) stakeholders to measurably improve extension programs, policies, and service delivery. DLEC accomplishes this objective through three interrelated sets of activities: conducting targeted diagnostics on aspects of country EAS systems to identify gaps and opportunities and potential areas for investment; implementing on-the-ground or action research activities (engagements) that generate evidence and build local capacity to improve EAS, and mobilizing durable communities of practice to advocate for scaling proven approaches.

RFS- FTFIL for Climate Resilient Bean The goal is to accelerate the release of climate-resilient beans, demonstrate to developing country seed companies how to produce and market seed, and ultimately increase participation in local and regional markets and enhance the food security of smallholder farmers.

Development Finance Corporation - $100 million Global Loan Portfolio Guarantee to smallholder coffee farmer groups

$100 million loan guarantee with Neumann Gruppe GMBH and its subsidiaries to finance short-, medium- and long-term advances to smallholder coffee farmer groups and individuals, with the objective of enabling such farmers to run their farms at full potential and to ultimately improve their livelihoods.

PRIVATE SECTOR ENGAGEMENT

FOR DEVELOPMENT

USAID is undertaking a major cultural and operational transformation to expand Private Sector Engagement Agency-wide. Through its new Private Sector Engagement Policy, USAID is issuing an Agency-wide call to action and mandate to work hand-in-hand with the private sector to design and deliver our development and humanitarian programs in all sectors. This policy signals an intentional shift towards enterprise-driven development as a more sustainable way to empower people, communities and countries on their journey to self-reliance.

ENTERPRISE-DRIVEN DEVELOPMENT

This policy comes at a time in which the private sector is playing an unprecedented role in creating and shaping opportunities that improve the lives of the people and communities USAID supports. The private sector creates nine out of 10 jobs in the developing world, providing the best pathway out of poverty. It is the driving force behind new innovations that solve problems. Its scale and resources match the complexity of the challenges that countries face on the journey to self-reliance.

At the same time, emerging markets have become increasingly attractive to private businesses and investors as places to sell their products, invest their money, and do business. Enterprise-driven development means aligning with the private sector as co-creators of market-based solutions, with shared risk and shared reward. Engaging the private sector in this way can shape solutions that achieve sustained impact and carry forward long after USAID’s support has ended. Building on our history of working with the private sector in key areas of our work, we are committing to collaborate with the private sector and seek market-based approaches across all areas of our work – from economic growth, energy, agriculture and global health to gender equality, education, and addressing crisis and conflict.

Private enterprise is the single most powerful force for lifting lives, strengthening communities, and accelerating self-reliance.

— USAID Administrator Mark Green

Private Sector Engagement (PSE) Concepts Defined

- PSE is a strategic approach to planning and programming whereby USAID consults, strategizes, aligns, collaborates, and implements with the private sector for greater scale, sustainability, and/or effectiveness of development or humanitarian outcomes across all sectors.

- The private sector includes for-profit, commercial entities and their affiliated foundations; financial intermediaries; business associations; large, medium and small businesses; American, multinational, regional and local businesses; and for-profit approaches which generate sustainable income (e.g., a venture fund run by an NGO).

- Market-based approaches or solutions are interventions that address development and humanitarian challenges and also provide a return on investment for the private sector.

WHAT’S NEW ABOUT THIS POLICY?

At its core, this policy signals an intentional shift to pursue market-based approaches as a means to increase sustainability. For every development or humanitarian issue, USAID will ask three questions:

By asking these questions in this order, USAID will first focus on seeking more sustainable and enterprise-driven outcomes from the outset. Second, we will look for how and why the private sector may be interested in collaborating to address an issue, and what unique capabilities and resources private sector actors might bring. Third, we will actively identify ways in which we can work with the private sector to understand and address barriers to investment and market development.

OPERATIONAL PRINCIPLES

Principle 1: Engage Early and Often. Early and ongoing engagement with local and international private sector actors is essential to achieving better outcomes. This engagement allows USAID to identify market-based solutions, understand the role of the private sector and its barriers to investment, and identify the private sector’s potential role in building country capacities.

Principle 2: Incentivize and value PSE throughout planning and programming. Integrating PSE at every stage of strategic planning, design, and execution better positions USAID to understand private sector interests and capabilities, and continuously adapt to new evidence, opportunities or circumstances. USAID also recognizes that this shift in focus requires USAID to increasingly prioritize outcomes over inputs and outputs. To effectively institutionalize and incentivize PSE, USAID will adapt its talent strategy as well as operational and performance measurements of success to support and incentivize integration of financial and non-financial PSE approaches.

Principle 3: Expand the use of USAID approaches and tools that unlock the potential of the private sector. From leveraging our convening power to connect investors and businesses, to providing a grant as a first-loss guarantee to extend affordable healthcare services to the poor, there are many ways to engage the private sector to achieve our intended outcomes and catalyze market-based approaches. This policy calls for consideration of the full breadth of USAID’s financial and non-financial resources and core competencies in PSE. It also recognizes that as the Agency seeks to deepen its engagement with a broader set of private sector partners, it may need to enhance its tools and approaches to better align with the constraints and risks these partners face.

Principle 4: Build and act on evidence of what works and what does not in PSE: USAID will develop a knowledge base on what types of PSE work best under different circumstances. Fundamental to the success of operationalizing PSE, USAID will work with partners to establish metrics that measure, value, and incentivize PSE which delivers increased sustainability and deeper impact.

UNDERSTANDING OUR VALUE PROPOSITION

Effective PSE leverages USAID and the private sector’s comparative advantages to deliver more effective and sustainable outcomes.

USAID Offers Private Sector Offers Enabling Environment Support Working with governments, USAID can help create a stronger enabling environment for inclusive market growth through support for policy & regulatory reform, fair & open competition, adoption of standards, and government capacity-building.

Unique Expertise and Capabilities Businesses and investors can bring innovation and technologies, entrepreneurship, industry expertise, market-based solutions, managerial and operational expertise including risk management, distribution networks, and investment capacity.

Sector Expertise and Knowledge USAID has wide-ranging technical expertise across development and humanitarian sectors. It also offers deep understanding of developing markets, providing insights and market intelligence that can inform and shape private sector investment.

Risk Mitigation and Flexible Authorities USAID can use its funds, authorities, and technical expertise to de-risk investments and crowd in public and private investors to support investments that further development goals.

Ability to Influence Policy The private sector’s ability to deliver what host country governments seek to achieve—such as jobs, investment, and tax revenues—gives businesses and investors a strong, knowledgeable voice to inform policy.

Scale and Sustainability The private sector’s vast financial resources and market-based approaches have the potential for achieving scale and sustainability in tackling systemic societal challenges.

Reputation and Credible Convening Power USAID can lend authority to private sector investments and convene actors around business opportunities that address challenges.

Strong In-Country Networks and Relationships USAID has relationships with national and local governments, businesses, and civil society that are useful to the private sector in making plans for market entry, collaboration, and co-investment.

Efficiency and Effectiveness With improved project systems and processes, the private sector can bring more efficiency and effectiveness to achieving outcomes.

Flexibility and Pace The private sector is often inherently more flexible, as they have a financial incentive and interest to move quickly and to respond immediately to opportunities and develop new markets.

ROLE OF USAID IMPLEMENTING PARTNERS

WHAT’S NEXT?

This policy makes a bold statement and represents a major shift for USAID and its implementing. It is also just the first step in the process of institutionalizing PSE as a core tenet of USAID’s operating model. Following on this policy, USAID will strengthen its tools and resources to ensure staff are prepared to engage the private sector in new ways. For example, USAID will:

- Shift away from an over-reliance on traditional procurement-focused models, and begin to prioritize collaborative solutions which unlock private investment.

- Seek to increase the evidence on what works and what doesn’t when engaging the private sector to achieve development outcomes.

- Evaluate potential of models that focus on both financial returns and impact, through blended public and private capital.

- Adapt its talent strategy, as well as operational and performance measurements of success to support and incentivize integration of financial and non-financial PSE approaches

- Go beyond measuring the leverage of engaging the private sector, and seek to measure their development impact without creating burdensome reporting for the private sector.

To learn more, contact: partnerships@usaid.gov

RELEVANT ACROSS SECTORS

USAID recognizes that supporting countries in achieving their development goals requires the unique contributions of all sectors: governments, civil society, philanthropy, faith-based organizations, academia and the private sector.

In fact, many philanthropic and development-focused organizations have been frontrunners in embracing market-based approaches and integrating the distinctive capabilities of the public and the private sectors to achieve greater development impact, including: launching impact investment and venture funds, business franchising models, and targeted value chain interventions leveraging unique corporate capabilities, as well as holding the private sector to account for making responsible, inclusive business investments which make a positive social and environmental impact on communities in which they operate.

For this reason, USAID believes that all sectors have a vital role to play in implementing this policy and engaging the private sector to address humanitarian and development issues in our work together.

Over time, USAID expects that implementation of this policy will diversify USAID’s partner base to include more private enterprises (e.g., financial investors and businesses of all sizes from across many industries), in addition to strong continued collaboration with traditional development partners.

Honduras

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

Capacity 0-1 Score

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

C o m m it m en t

-1

S co re

Honduras's Score 0-1, least to most advanced globally

Other Low- and Middle-Income

Countries' Scores

Average Score for Low- and Middle- Income Countries

HONDURAS

JOURNEY TO SELF-RELIANCE:

FY 2021 COUNTRY ROADMAP

LOW- & MIDDLE-INCOME COUNTRY SNAPSHOT

LEGEND

0-1 Score

COMMITMENT

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

OPEN AND ACCOUNTABLE GOVERNANCE

Liberal Democracy

0.22

Open Government

0.30

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

INCLUSIVE DEVELOPMENT

Social Group Equality

0.47

Economic Gender Gap

0.72

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

ECONOMIC POLICY

Business & Investment

Environment 0.41

Trade Freedom 0.72

Environmental Policy

0.33

RISK OF EXTERNAL DEBT DISTRESS

CAPACITY

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

GOVERNMENT CAPACITY

Government Effectiveness

0.39

Tax System Effectiveness

0.35

Safety & Security 0.49

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

CIVIL SOCIETY CAPACITY

Civil Society & Media

Effectiveness 0.78

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

CITIZEN CAPACITY

Poverty Rate ($5/Day)

0.53

Education Quality 0.39

Child Health 0.89

0-1 Score 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

CAPACITY OF THE ECONOMY

GDP Per Capita

(PPP)

0.40

Information & Communication

Technology (ICT) Adoption

0.22

Export Sophistication

0.40

Low Moderate High In Debt Distress

Honduras's Most Recent Score

0-1, least to most advanced globally

Honduras's Prior Year Scores 0-1, least to most advanced globally

Average Score for Low-and Middle-Income

Countries

HONDURAS

JOURNEY TO SELF-RELIANCE:

FY 2021 COUNTRY TRENDS

LEGEND

0-1 Score

0-1 Score

COMMITMENT

2013 2014 2015 2016 2017 2018 2019

OPEN AND ACCOUNTABLE GOVERNANCE

Liberal Democracy

0.26 0.29 0.27 0.27 0.26 0.24 0.22

Open Government 0.40 0.35 0.30 0.30 0.30

2013 2014 2015 2016 2017 2018 2019

INCLUSIVE DEVELOPMENT

Social Group Equality 0.36 0.36 0.36 0.36 0.36

0.47 0.47

Economic Gender Gap

0.62 0.59 0.59 0.66 0.66 0.72

2013 2014 2015 2016 2017 2018 2019

ECONOMIC POLICY

Business & Investment

Environment

0.41 0.42 0.43 0.42 0.42 0.41

Trade Freedom

0.81 0.72 0.72

Environmental Policy 0.33 0.33 0.33 0.33

FY 2021 Country Roadmap results (darker shaded points) and prior year results (lighter shaded points) are normalized in the same manner to ensure comparability. In some instances, USAID has taken several additional measures to maximize comparability of results across time, including adjusting source reporting year to actual year of measurement and removing historical data that are no longer comparable due to methodological revisions. For more detail, please see the USAID J2SR Country Roadmap Methodology Guide.

METHODOLOGICAL NOTES

CAPACITY

2013 2014 2015 2016 2017 2018 2019

GOVERNMENT CAPACITY

Government Effectiveness 0.37 0.35 0.35 0.37 0.42 0.39

Tax System Effectiveness

0.26 0.30 0.31 0.35

Safety & Security 0.55 0.48 0.49 0.50 0.49 0.49

2013 2014 2015 2016 2017 2018 2019

CIVIL SOCIETY CAPACITY

Civil Society & Media

Effectiveness

0.82 0.82 0.82 0.81 0.82 0.83 0.78

2013 2014 2015 2016 2017 2018 2019

CITIZEN CAPACITY

Poverty Rate ($5/Day) 0.48 0.49 0.49 0.50 0.50 0.53

Education Quality Trend data unavailable

Child Health Trend data unavailable

2013 2014 2015 2016 2017 2018 2019

CAPACITY OF THE ECONOMY

GDP Per Capita

(PPP) 0.38 0.38 0.39 0.39 0.40 0.40 0.40

Information & Communication

Technology (ICT) Adoption 0.18 0.20 0.22

Export Sophistication 0.40 0.46 0.44 0.44 0.45 0.40 https://selfreliance.usaid.gov/docs/FY_2021_USAID_Journey_to_Self-Reliance_Country_Roadmap_Methodology_Guide.pdf

SELF-RELIANCE

ROADMAPS

INDICATOR DEFINITIONS AND SOURCES

COMMITMENT

Liberal Democracy: Measures freedom of expression, freedom of association, suffrage, elections, rule of law, judicial constraints on the executive branch, and legislative constraints on the executive branch. Source: Varieties of Democracy (V-Dem).

Open Government: Measures the degree to which a government shares information, empowers people with tools to hold the government accountable, and fosters citizen participation in public policy deliberations. Sub-factors include:

publicized laws and government data, right to information, civic participation, and complaint mechanisms. Source: World Justice Project, Rule of Law Index.

OPEN AND ACCOUNTABLE GOVERNANCE

Social Group Equality: Measures political equality with respect to civil liberties protections across social groups as defined by ethnicity, religion, caste, race, language, and region. Source: Varieties of Democracy (V-Dem), Social Group Equality in Respect for Civil Liberties.

Economic Gender Gap: Index comprising five components: (1) wage equality between women and men for similar work; (2) the ratio of female estimated earned income to male income; (3) the ratio of female labor force participation to male participation; (4) the ratio of female legislators, senior officials, and managers to male counterparts; and (5) the ratio of female professional and technical workers to male counterparts. Source: World Economic Forum, Global Gender Gap Report, Economic Participation and Opportunity Sub-Index.

INCLUSIVE DEVELOPMENT

Business & Investment Environment: A composite measure gauging the conduciveness of a country’s (1) enterprise conditions—the degree to which market, entrepreneurial, tax, labor, and other regulations enable businesses to start, compete, and expand—and (2) investment environment—the extent to which investments are protected adequately through the existence of property rights, investor protections, and contract enforcement, as well as the availability of domestic and international capital. Source: Legatum Institute, Prosperity Index.

Trade Freedom: Measures a country's openness to international trade based on average tariff rates and non-tariff barriers to trade. Source: Heritage Foundation, Index of Economic Freedom.

Environmental Policy: Gauges the soundness of environmental stewardship and natural resource management, factoring a wide array of macroeconomic policies with environmental consequences, such as energy and tax policies, and incentives at the firm and household levels. The metric also factors whether legislation and regulations are effectively executed, as well as the influence of societal stakeholders beyond the government, including the private sector and civil society. Source: Bertelsmann Stiftung Transformation Index (BTI).

ECONOMIC POLICY

Rates a country's risk of public sector debt distress on a four-tier scale: "low risk", "moderate risk", "high risk", and "in debt distress". Ratings are based on countries' debt and market structures, fiscal and macroeconomic outlook, and institutional capacity to manage debt burden. Ratings help guide the borrowing decisions of lower-income countries to meet development needs while reducing the chances of excessive debt build-up. Ratings are shown for 66 lower-income countries for which the IMF prepares risk ratings and are not scored components of Commitment or Capacity. Source: International Monetary Fund, Debt Sustainability Analysis for Low-Income Countries.

RISK OF EXTERNAL DEBT DISTRESS

CAPACITY

Government Effectiveness: Measures the quality of public services, the quality of the civil service and its independence from political pressure, the quality of policy formulation and implementation, and the credibility of the government's commitment to its stated policies. Source: World Bank, Worldwide Governance Indicators.

Tax System Effectiveness: Ratio between a country's actual tax collection and the estimated level of tax revenue that a country could achieve, given its macroeconomic, demographic, and institutional features. Source: USAID, Collecting Taxes Database, Tax Effort Indicator.

Safety & Security: Measures the degree to which individuals and communities are free from war and civil conflict, terrorism, politically related terror and violence, violent crime, and property crime. Source: Legatum Institute, Prosperity Index.

GOVERNMENT CAPACITY

Civil Society & Media Effectiveness: Measures the range of actions and mechanisms that citizens, civil society organizations, and an independent media can use to hold a government accountable. The mechanisms include using informal tools such as social mobilization and investigative journalism. Source: Varieties of Democracy (V-Dem), Diagonal Accountability Index.

CIVIL SOCIETY CAPACITY

Poverty Rate ($5/Day): Measures the percent of the population living under $5/day in purchasing power parity (PPP) terms. Source: World Bank, PovCalNet.

Education Quality: Gauges both the quality of education—using harmonized scores across major international student achievement testing—and the quantity of schooling received—using age-specific enrollment rates—to evaluate the relative performance of educational systems worldwide. Source: World Bank, Human Capital Index, Learning-Adjusted Years of Schooling Indicator.

Child Health: A composite measure that aggregates child mortality, access to at least basic water sources, and access to at least basic sanitation facilities. Source:

Columbia University Center for International Earth Science Information Network

(CIESIN).

CITIZEN CAPACITY

GDP Per Capita (PPP): Measures the flow of resources available to households, firms, and government to finance development as the country's total Gross Domestic Product (PPP) divided by the country's population. Source: World Bank, World Development Indicators.

Information & Communication Technology (ICT) Adoption: Index comprising: (1) mobile-cellular telephone subscriptions; (2) mobile-broadband subscriptions; (3) fixed-broadband internet subscriptions; (4) fiber internet subscriptions; and (5) internet users. Source: World Economic Forum (WEF), Global Competitiveness Index.

Export Sophistication: Measures the diversity and ubiquity of a country’s exported goods, key markers that can help gauge economic sophistication and resilience. Source: Center for International Development at Harvard University, Economic Complexity Index.

CAPACITY OF THE ECONOMY

The FY 2021 Country Roadmaps draw on the latest data available as of July 1, 2020, with latest results typically covering the 2019 or 2018 period. All source data are derived from third-party institutions. All indicators are weighted equally in the calculation of the overall Commitment and Capacity scores. Map boundary representations are not necessarily authoritative.

For more information on definitions and sources, please visit selfreliance.usaid.gov.

https://www.v-dem.net/en/ https://worldjusticeproject.org/our-work/wjp-rule-law-index/wjp-rule-law-index-2017%E2%80%932018/factors-rule-law/open-government-factor-3 https://www.v-dem.net/en/ http://reports.weforum.org/global-gender-gap-report-2020/ https://www.prosperity.com/ https://www.heritage.org/index/ https://bti-project.org/en/home.html https://www.imf.org/external/pubs/ft/dsa/lic.aspx http://info.worldbank.org/governance/wgi/#home https://idea.usaid.gov/domestic-revenue-mobilization https://www.prosperity.com/ https://www.v-dem.net/en/ http://iresearch.worldbank.org/PovcalNet/povOnDemand.aspx http://www.worldbank.org/en/publication/human-capital https://sedac.ciesin.columbia.edu/data/set/nrmi-natural-resource-protection-child-health-indicators-2019 https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD http://reports.weforum.org/global-competitiveness-report-2019 http://atlas.cid.harvard.edu/ https://selfreliance.usaid.gov/

Country Development Cooperation Strategy

2015– 2020 Updated: May 11, 2016

Table of Contents EXECUTIVE SUMMARY ..................................................................................................................... i

DEVELOPMENT HYPOTHESIS AND CONTEXT

DEVELOPMENT OBJECTIVE 1: CITIZEN SECURITY INCREASED FOR VULNERABLE

POPULATIONS IN URBAN, HIGH-CRIME AREAS

INTERMEIATE RESULT 1.1: RESILIENCE OF COMMUNITIES AND INDIVIDUALS TO CRIME INCREASED . 9 Sub-Intermediate Result 1.1.1: Community Structures that Mitigate against Crime Increased Sub-Intermediate Result 1.1.2: Quality Services that Protect against Violence Increased

INTERMEIATE RESULT 1.2: PERFORMANCE OF NATIONAL AND MUNICIPAL JUSTICE AND SECURITY

SYSTEMS IMPROVED

Sub-Intermediate Result 1.2.1: Citizen Engagement with the Security and Justice Sectors Improved Sub-Intermediate Result 1.2.2: Efficiency of Security and Justice Systems Improved Sub-Intermediate Result 1.2.3: Effective Community Police Presence Increased

DEVELOPMENT OBJECTIVE 2: EXTREME POVERTY SUSTAINABLY REDUCED FOR

VULNERABLE POPULATIONS IN WESTERN HONDURAS

INTERMEIATE RESULT 2.1: RESILIENCE OF LIVELIHOODS INCREASED

Sub-Intermediate Result 2.1.1: Natural Resource Management and Biodiversity Protection Improved Sub-Intermediate Result 2.1.2: Adaptation of Poor Households to Climate Risks Increased

INTERMEIATE RESULT 2.2: INCOMES INCREASED

Sub-Intermediate Result 2.2.1: Agricultural Productivity Improved Sub-Intermediate Result 2.2.2: Market Demand and Access Increased

INTERMEIATE RESULT 2.3: HUMAN CAPITAL IMPROVED, WITH A FOCUS ON CHILDREN

Sub-Intermediate Result 2.3.1: Basic Education and Nutrition Service Delivery Improved Sub-Intermediate Result 2.3.2: Local Service Management Systems Improved

MONITORING, EVALUATION, AND LEARNING

ANNEXES

ANNEX A: LIST OF ANALYSES CONDUCTED

ANNEX B: USAID FORWARD

ANNEX C: TARGET AREA MAP

ANNEX D: BIBLIOGRAPHY

ANNEX E: DEVELOPMENT OBJECTIVE 3

i

ACRONYMS

AECID

A4P

Spanish Agency for International Development Cooperation Plan of the Alliance for Prosperity in the Northern Triangle

CABEI Central American Bank for Economic Integration CARSI Central American Regional Security Initiative

CIDA

CNA

Canadian International Development Agency National Council for Anti-Corruption

CSOs civil society organizations DOs development objectives DG democracy and governance EFA Education For All EU European Union FAO Food and Agriculture Organization FHIS Honduran Social Investment Fund FOPRIDEH Federation of Private Development Organizations of Honduras FTF Feed the Future FUNADEH National Foundation for the Development of Honduras FY Fiscal Year G2G government to government GiZ German Agency for Cooperation GOH Government of Honduras IDB Inter-American Development Bank IFPRI International Food Policy Research Institute INL Bureau of International Narcotics and Law Enforcement Affairs IR intermediate result JICA Japanese International Cooperation Agency KfW German Development Bank

LGBT

MACCIH

lesbian, gay, bisexual, and transgender Mission to Support the Fight against Corruption and Impunity in Honduras

MCA-H

MP

Millennium Challenge Account of Honduras (now known as INVEST-H) Public Prosecutor’s Office (Ministerio Publico)

MSMEs micro, small and medium enterprises

NGO

OAS

OGP

non-governmental organization Organization of American States Open Government Partnership

OTI

ONADICI

USAID Office of Transition Initiatives The National Office of Integrated Internal Controls

PAHO Pan-American Health Organization PIO public international organization RNP National Registry of People

TSC

TSE

Supreme Audit Institution Supreme Electoral Tribunal

USAID United States Agency for International Development USG United States Government i

EXECUTIVE SUMMARY

Honduras’ fragile democracy is increasingly threatened by alarming levels of crime and violence, high levels of poverty and food insecurity, corruption, and generally weak governance.

These threats to citizen security and economic development are so severe that the Government of Honduras (GOH) has requested outside assistance to address them. Failure to adequately counter these threats directly impacts U.S. security and other national interests. The USAID/Honduras Country Development Cooperation Strategy (CDCS) goal is a more prosperous and safer Honduras that advances inclusive social and economic development among vulnerable populations. USAID /Honduras’ emphasis extends to the social and economic development of vulnerable populations, those most at risk of crime and violence and those living below the poverty line, within Honduras to ensure that the economic trajectory of the country is not only upward but also equitable, inclusive, and sustainable. In order to achieve the CDCS goal, USAID will work towards three Development Objectives (DOs):

• DO 1: Citizen Security Increased For Vulnerable Populations In Urban, High-Crime Areas

• DO 2: Extreme Poverty Sustainably Reduced For Vulnerable Populations In Western

Honduras

• DO 3: National-level public administration is more transparent and accountable

The CDCS in many ways anticipated the principles of the U.S. Strategy for Engagement in Central America, approved by the U.S. National Security Council in late 2014. The three pillars of security, prosperity, and governance are reflected in our CDCS: security issues are reflected for the most part in Development Objective 1; prosperity as it relates to poverty reduction is reflected in Development Objective 2; and governance is both integrated throughout DO1 and DO2 and is also reflected in DO3 with its focus on strengthening national-level public administration and enhancing civil society’s influence on government decision-making.

Complementing the USG strategy, the GOH, together with the Governments of El Salvador and Guatemala, presented their own strategy, the Alliance for Prosperity, which calls for more rapid economic growth to mitigate poverty and crime in order to reduce the underlying causes behind migration to the USA. The USAID/Honduras CDCS for FYs 2015-2019 also reflects the goals of the U.S. Embassy’s FY 2014-2016 and FY 2017-2019 Integrated Country Strategies.

Indeed, the momentum that has led to increased attention to the serious issues that persist in Honduras provides an opportunity for USAID/Honduras to…