Attachment J-17 FtF IAM Year 1 Final Annual Report_Latest - Amendment 1..pdf

This publication was produced by the Inclusive Agricultural Markets Activity under Contract No. 720-617-19-C-00007 at the request of the United States Agency for International Development. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government.

USAID FEED THE FUTURE UGANDA

INCLUSIVE AGRICULTURAL MARKETS

ACTIVITY

Annual Report, FY 2020

This publication was produced by the Inclusive Agricultural Markets Activity under Contract No. 720-617-19-C-00007 at the request of the United States Agency for International Development. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government.

USAID FEED THE FUTURE UGANDA

INCLUSIVE AGRICULTURAL MARKETS

ACTIVITY

Annual Report, FY 2020

Program Title: USAID FtF Uganda Inclusive Agricultural Markets Activity

Sponsoring USAID Office: USAID/Uganda

Contract Number: 720-617-19-C-00007

Contractor: DAI Global, LLC (DAI)

Date of Publication: 30 October 2020

Contracting Officer’s

Representative: Kevin Namulembwa

Chief of Party: Collins Apuoyo

Author: DAI Global, LLC (DAI)

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CONTENTS

EXECUTIVE SUMMARY 8

1 INTRODUCTION 10

ECONOMIC AND POVERTY CONTEXT 11

POLITICAL ENVIRONMENT 12

COVID-19 12

2 YEAR 1 APPROACH 12

MARKET SYSTEMS DEVELOPMENT (MSD) 12

3 YEAR 1 IMPLEMENTATION 13

PHASE 1: START-UP ACTIVITIES AND DELIVERABLES 13

TECHNICAL IMPLEMENTATION AND MDF PORTFOLIO 21

4 MONITORING, EVALUATION, AND LEARNING (MEL) 27

ACTIVITY MONITORING EVALUATION AND LEARNING PLAN (AMELP) 27

BASELINE 27

MEL SUPPORT TO MDF PORTFOLIO 28

COLLABORATION, LEARNING, AND ADAPTATION (CLA) 29

YEAR 1 RESULTS 32

FINANCE AND OPERATIONS 36

HUMAN RESOURCES 36

SYSTEMS AND STAFF TRAINING 36

FINANCIAL PERFORMANCE 36

5 YEAR 2 OUTLOOK 37

YEAR 2 FOCUS AREAS 37

ANNEX 1: AREAS OF COLLABORATION WITH USAID IMPLEMENTING

PARTNERS 39

ANNEX 2: PORTFOLIO AND PIPELINE 41

ANNEX 3: DELIVERABLES AND DELIVERY DATES 44

ANNEX 4: EXAMPLES OF PARTNER PLATFORMS AND TOOLS 46

ANNEX 5: SUCCESS STORIES 49

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TABLES AND FIGURES

Tables

Table 1 Operational Lessons, Challenges, and Adaptations

Table 2 Performance Indicator Tracking Table

Table 3 FtF IAM Expenditures for FY 2020

Table 4 Areas of Collaboration between FtF IAM and USAID Implementing Partners

Table 5 Grant Portfolio and Pipeline

Table 6 Deliverables and Dates of Submissions

Figures

Figure 1 GEYSI Scorecard

Figure 2 List of companies to receive OCA support

Figure 3 Talanta Youth Prepare for a Class at Keyo P.S. in Amuru District

Figure 4 Excerpt from The Joseph Initiative Handbook

Figure 5 Open Capital Advisors Scenario Planning Tool Screenshot

Figure 6 Example of Map Produced utilizing aWhere's Weather Data

Figure 7 Ntuha Ride Application

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ACRONYMS AND ABBREVIATIONS

AGYW Adolescent Girls and Young Women

AMELP Activity Monitoring, Evaluation, and Learning Plan

B4R Biodiversity for Resilience

BDS business development services

BV baseline value

CDCS Country Development Cooperation Strategy

CLA collaborating, learning, and adapting

COP Chief of Party

COR Contracting Officer’s Representative

CPP crop protection products

DAI DAI Global, LLC

DFA Director of Finance and Administration

EoI expression of interest

EMMP Environmental Mitigation and Monitoring Plan

FtF Feed the Future

FtF IAM Feed the Future Uganda Inclusive Agricultural Markets

FY fiscal year

GBL Golden Bees Ltd

GDP gross domestic product

GEYSI Gender Equality, Youth, and Social Inclusion

GFSS Global Food Security Strategy

GoU Government of Uganda

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ICAN Integrated Community and Nutrition Activity

ICT information communication technology

IEE Initial Environmental Examination

IRB Iron Rich Beans

LOA life of Activity

MAAIF Ministry of Agriculture, Animal Industry, and Fisheries

M&E monitoring and evaluation

MDA ministries, departments, agencies

MDF Market Development Facility

MEL monitoring, evaluation, and learning

MSD Market Systems Development

MSR Market System Resilience

NAAC National Association of Agricultural Cooperatives

OCA Open Capital Advisors

PIM Partnership Intervention Manager

PO Producer organization

PWD persons with disabilities

Q Quarter

RFA Request for Applications

RFP Request for Proposals

SME small and medium enterprises

SOP standard operating procedure

STTA short-term technical advisor

UNBS Uganda National Bureau of Standards

USADF United States African Development Foundation

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USAID United Sates Agency for International Development

USG United States Government

VSLA village savings loan associations

WFP World Food Program

ZoI Zone of Influence

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EXECUTIVE SUMMARY

This report outlines the progress made during the first year of implementation for the USAID Feed the

Future Uganda Inclusive Agricultural Markets Activity (FtF IAM). The Activity is a 5-year project that seeks to increase incomes and improve the livelihoods of households through agricultural-led inclusive economic growth in the 38 FtF focus districts in Uganda. Inclusivity refers to the active participation and engagement of all actors looking to participate in the market system, including the poor, women, youth, ethnic minorities, and other marginalized groups who are often excluded – or even exploited – by traditional market systems. The Activity will contribute to the Global Food Security Strategy (GFSS)

Uganda Country Plan goal of reducing hunger, malnutrition and poverty and the USAID/Uganda Country

Development Cooperation Strategy (CDCS) 2016-2021 5-year goal of strengthening Uganda’s systems to accelerate inclusive education, health and economic outcomes.

Overall, the Activity has made remarkable progress during a period of difficulty and uncertainty. Modest results have been realized, and key milestones and work plan targets were achieved despite the unprecedented circumstances brought about by the COVID-19 pandemic and its resultant impact.

In March, the World Health Organization (WHO) classified the virus, COVID-19, a global pandemic and advised governments around the world to enact drastic measures to contain the spread of the virus.

Uganda recorded its first cases of COVID-19 in late February/early March, prompting the government to institute travel restrictions as well as non-essential business closures, and prohibiting large public gatherings. This action was further upgraded to a total lockdown with office closures. In line with government directives, the Activity had to close the FtF IAM office and terminate any field travel. This adversely impacted the Activity’s progress and implementation of planned activities during the latter half of the second quarter and throughout the third quarter.

Despite the lockdown and the shift to remote/virtual working, the Activity quickly adapted its implementation approach, adjusting its focus towards dealing with the emerging problem and its impact on the agricultural sector while continuing to examine the broad-based challenges that hold down the transformation of agriculture in Uganda and the Zone of Influence (ZoI).

Key achievements during the period under review include:

• Completion of the inception phase of the Activity despite the COVID-19 pandemic;

• Delivery of all milestones and deliverables within contractual deadlines, with extensions sought and granted in extenuating circumstances;

• Identification, recruitment, and induction of most key staff, with the exception of the MEL Advisor, whose onboarding is pending identification of the most appropriate candidate;

• Establishment of regional offices for the Activity in Gulu and Mbarara, and operationalizing those offices in preparation for occupation;

• Publishing grant solicitations and expressions of interest (EoIs), effectively building and engaging with a robust network of new partners while also ensuring that these calls were rigorously assessed to identify potentially transformative interventions;

• Engagement of a total of 5 partners and facilitating the implementation of interventions that have the potential to support businesses negatively impacted by COVID-19; and

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• Identification of 13 potential grantees and initiating co-creation processes.

During the same period, the Activity has had to adjust its modus operandi by focusing on contingency planning under uncertain circumstances, setting-up staff to work effectively from home, progressing recruitment and on-boarding staff and partners, and ensuring that financial and operations systems are robust enough to cope with remote working.

Despite the emergence of COVID-19 and the resulting movement restrictions, FtF IAM continued to make good progress and has used the lockdown period to put in place systems for partnership management as well as to reach out to several potential partners, exploring opportunities for interventions. The Activity has built a robust database of potential partners and interventions. To date, onboarded partners have enabled the Activity to achieve modest verifiable results as follows:

• Indicator 1 - Value of annual sales of farms and firms receiving United States Government (USG) assistance: a total of $119,369 USD in sales/revenue from 4 partners was realized from July to

August, two months into the implementation of the interventions.

• Indicator 3 - Number of persons receiving new or better employment (including better self-employment) as a result of participation in the USG-funded workforce development project: 272 employment opportunities were created; of the 272, 201 are youth and 115 are women.

• Indicator 4 - Amount of investment (USD) made by firms in transforming and upgrading of agricultural commodities in supported business models: $42,330 USD was reported by three partners, though this indicator is a lagging indicator and more investment is anticipated to be reported in Year 2 by partners engaged and working with FtF IAM in Year 1.

• Indicator 6: EG 3.2-24 - Number of individuals in the agriculture system who have applied improved management practices or technologies with USG assistance: the most promoted technologies by partners were digital payments and the use of digital-enabled information communication technology

(ICT) platforms which have reached 1,294 users reported to date. Of these, 492 are women (38 percent) and 540 are youth (42 percent).

• Indicator 7 - Number of suppliers of input and services offering new sales and distribution models to end users: new sales model for logistics services have been established in South Western Uganda. An alternative distribution channel using youth-based agro-dealers has been adopted in Northern Uganda utilizing online delivery to engage with more remote clients.

• Indicator 10 - Number of individuals trading with the farms and firms directly supported with USG assistance: of the 408 trading partners reported, 364 are youth and 123 are women (this figure under-reports women in male-headed households due to how the figure was reported by a partner.

• Indicator 15 - EG.3-2 Number of individuals participating in USG food security programs: 7,164 beneficiaries participated through Market Development Facility (MDF) partnerships; 5,267 women

(73 percent) and 3,388 (47 percent) youth.

As would be expected in any market systems development (MSD) activity, the results are modest and the impact of the amount of investment made by the Activity will be realized in subsequent periods of performance. However, the results are a good indication of viable opportunities with the potential to scale sustainably, and act as a demonstration effect to catalyze further investments and growth.

Additionally, with the portfolio of partners developed in Year 1, the Activity is well-positioned going into

Year 2.

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While good progress has been made, there were instances and cases where certain deliverables, plans and activities had to be adjusted. For instance, some of the activities that were planned in the Year 1

Annual Workplan and have to be pushed out include:

• Activity Launch. It was not possible to hold an Activity launch due to restrictions occasioned by the lockdown and the uncertainty presented by the COVID-19 pandemic.

• Baseline Report. The Activity requested extensions to the Baseline Report to ensure an agreed-upon

Theory of Change (ToC), Results Framework, and Activity Monitoring, Evaluation and Learning Plan

(AMELP) was in place, and subsequently because of challenges presented by COVID-19.

• Recruitments. Some recruitments took longer than expected, largely because the field of applicants were not sufficiently qualified for the positions being advertised. To date, the Activity continues to actively recruit for a Monitoring, Evaluation, and Learning (MEL) Advisor, a highly specialized and competitive position.

• Field Office Openings. Opening and operationalizing all of FtF IAM’s 3 field offices has been delayed due to movement restrictions and safety precautions to protect staff health amidst COVID-19.

• Partner Engagement. It has been very difficult to engage with partners and undertake detailed due diligence and environmental assessments of their activities and systems. However, the Activity has managed to adopt online/remote approaches to continue engaging partners. While the Activity is confident in these measures, online/remote approaches increase the Activity’s investment risks when no physical inspections are done at a partner’s premises.

The achievements, lessons, and challenges faced during the first year of implementation has positioned the Activity to be in a good place and has set-up the appropriate operational systems and technical approach to deliver expanded results in the second year of implementation. The outlook for Year 2 is promising as the Activity has learned how to better engage with market actors and has already started identifying ways to deliver better results. These lessons are critical to informing FtF IAM’s actions in the coming year.

1 INTRODUCTION

FtF IAM (or the “Activity”) is a 5-year program implemented by DAI Global, LLC (DAI) in partnership with TechnoServe and MarketShare Associates. The Activity seeks to increase incomes and improve the livelihoods of households in 38 districts across four zones in Uganda (South Western, Mount Elgon area, Karamoja, and parts of Northern Uganda) through more competitive, resilient, and inclusive market systems. Inclusive growth fosters opportunities for all actors looking to participate in the market system including the poor, women, youth, refugees, or other marginalized groups who are often excluded or even exploited by the traditional market systems.

The Activity is expected to contribute to the GFSS Uganda Country plan goal of reducing hunger, malnutrition and poverty and the USAID/Uganda CDCS 2026 5-year goal of strengthening Uganda’s systems to accelerate inclusive education, health, and economic outcomes. The Activity has three objectives: 1) increasing the institutional (leadership, management, technical, and adaptive) capacity of

Government of Uganda (GoU) institutions and agencies; 2) increasing the institutional capacity of member-based private sector and civil society organizations; and 3) creating incentives for agro-industry and agribusiness firms to respond to changes in the market.

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FtF IAM adopts a facilitative MSD approach that empowers local actors - especially the private sector -business associations, government, and producer groups, among others, to align incentives for improved market performance. The investments funded under the Activity are expected to contribute to 5 key results areas as follows:

• increased transformation and upgrading of agricultural commodities;

• increased and equitable utilization of quality inputs and services;

• increased capacity of market actors to profitably engage in the agricultural marketplace;

• strengthened implementation and enforcement of rules and regulations; and

• strengthened and more inclusive inter and intra-actor relationships.

The Activity is implemented by a consortium, and as the prime contractor, DAI is responsible for the delivery of the Activity, taking the lead in ensuring that all of the Activity’s technical, operational, and financial requirements are delivered and that the Activity’s objectives and results are achieved efficiently.

Within a “one-team” approach, TechnoServe supports the strategic design and implementation of MSD partnerships, the strategy for the engagement and capacity building of membership-based organizations, and improving the capacity of food processors, and MarketShare Associates provides leadership on

Collaborating, Learning, and Adapting (CLA), a methodology that generates learnings the Activity can share internally and externally and strengthens the Activity’s adaptive management. MarketShare

Associates also provides significant support in developing frameworks for gender, youth, and social inclusion for the Activity.

FtF IAM has operated since October 2019 and has now completed its first year of implementation.

ECONOMIC AND POVERTY CONTEXT

During fiscal year (FY) 2020, Uganda’s economy experienced a slowdown in growth due to the severe impact of the COVID-19 pandemic, a locust invasion, and flooding caused by heavy rains. Uganda’s real gross domestic product (GDP) in 2020 is projected to be between 0.4 percent and 1.7 percent compared to 5.6 percent in 2019. Exports, tourism, remittances, foreign direct investment, and portfolio flows shrunk during the second half of FY 2020 due to international trade disruptions and the restrictions on the movement of people. This has created significant fiscal and external imbalance, and a deceleration in growth in services, primarily in real estate activities and information and communications technology.

1 in 5 Ugandans still live in extreme poverty and more than a third live on less than $1.90 USD a day.

Providing social safety nets to Uganda’s vulnerable citizens can support investments in human capital, reduce vulnerability to shocks, and, thereby, help drive inclusive economic growth, according to the latest World Bank Economic analysis. However, such social safety nets are not adequate and therefore might not stimulate the level of investment required to drive inclusive growth.

The Activity has had to operate under such bleak economic circumstances during the year, which meant that few private sector players have been forthcoming with new investments in agriculture. A number of potential partners have intimated that they have had to re-direct funds meant for investing into new venture towards securing current investments.

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Should this economic situation extend into Year 2 of the Activity’s implementation, there will be a need to review the Activity approach and investment model to adapt to the realities of 2021.

POLITICAL ENVIRONMENT

Uganda is considered to have a relatively stable political environment. During the early parts of 2020, political discussions and debates revolved around the constitutional amendments to drop the age limit in order to allow the sitting President to contest in the next general election. This generated some heat in the urban areas but had limited impact on agriculture. The general elections are slated for February

2021 and the electioneering has been ongoing in earnest over most of 2020. However, public campaigns and canvassing has been halted due to government-imposed restrictions to curb the spread of COVID-

19. This may have contributed to a very subdued pre-election period in the country.

One major risk associated with the political environment is that the current economic growth realized in Uganda has failed to include young people, and young people may see the coming election as their only pathway into economic inclusion. This may generate a level of passion and youth involvement that could spill over should the results fail to reflect the outcome preferred by youth.

Heightened uncertainty around the upcoming February 2021 election further exacerbate the other risks already discussed above.

COVID-19

COVID-19 has resulted in negative economic impacts for most sectors of the economy. As Uganda’s economic performance is influenced by developments in the global economic environment, a slowdown in the global economy as a result of COVID-19 has negatively impacted Uganda’s economy.

Beyond the general economy, the pandemic has disrupted agriculture. While the government provided a waiver to allow the movement of agricultural commodities during the lockdown, prices of essential inputs and transport services increased, labor costs doubled for most farms, and the closure of institutions – the biggest consumers of grains and pulses - meant that some produce had no access to markets. Overall, the pandemic threw most actors into a new and unparalleled environment and few are investing in new investments as they maintain a “wait and see” attitude.

Currently, there is no immediate solution to the pandemic in sight. The infection cases are rising in

Uganda and globally. Further lockdowns and restrictions are likely to put the agricultural sector into a further state of depression.

The Activity will continue to monitor the emerging scenarios and adjust plans and strategies to support resilience in the ZoI.

2 YEAR 1 APPROACH

MARKET SYSTEMS DEVELOPMENT (MSD)

Activity implementation uses an MSD approach. The MSD approach provides a set of principles, frameworks, and good practices that guide the analysis of market systems and development

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interventions. The MSD approach has the explicit rationale and objective of creating a more efficient and more inclusive market system by leveraging the incentives and financial resources of public and private sector actors to facilitate investments and behavior change while building the capacity of market actors

(e.g. input dealers, traders, millers, wholesalers, exporters, importers, policy makers, youth, women, marginalized communities, and business associations, etc.) to own and drive inclusive economic growth.

The MSD approach begins by identifying the root causes of systemic failures (problems and weaknesses in the way the market works) and the types of behavior changes (adopting new technologies, developing longer-term mutually beneficial relationships with farmers, improving record keeping, etc.) that are most critical to addressing these challenges. In Year 1, FtF IAM leveraged previous analysis completed by

USAID and other programs and completed a rapid market systems assessment to identify cross-market functions (e.g. transportation, value addition, seed and input distribution, etc.) that impact many value chains in Uganda. Based on this analysis, FtF IAM then leveraged a flexible and adaptive MDF to facilitate market actors to develop and implement solutions. In Year 1, FtF IAM worked with a small number of key market actors to identity market failures and their causes, and to co-design solutions to address the identified constraints.

Using the MSD approach, FtF IAM sought to build more competitive, inclusive and resilient agricultural market systems in the ZoI that increase smallholder farmer incomes. FtF IAM actions during the first year of implementation aimed to set up a firm foundation for the identification, design, and implementation of appropriate interventions with capacity to create a(n):

• Competitive agricultural market system that offers opportunities for market actors to earn increased incomes through improved productivity;

• Agricultural market system that is more inclusive, which creates opportunities for participation and engagement of all actors, especially the traditionally excluded; and

• Resilient agricultural market system that has stronger market governance mechanisms, diversity, and where commercial norms that drive better, more productive behavior.

3 YEAR 1 IMPLEMENTATION

PHASE 1: START-UP ACTIVITIES AND DELIVERABLES

3.1.1 MARKET SYSTEMS ASSESSMENT

Several market assessments were completed in a phased manner throughout the year. A two-phased approach was adopted:

• Desk Reviews: Desk and document reviews helped FtF IAM understand who the key market actors are, what markets they participate in or are excluded from, what cross-market functions are critical to their participation, and which opportunities for upgrading and transformation can eliminate the constraints to growth. This provided the basis for identifying key cross-market functions, as well as the key actors with capacity to influence behavior within those cross-market function. The assessment also enabled the Activity to identify key sectors and value chains where most poor and vulnerable households participate or are excluded from.

• Context and Actor Mapping: This phase of the assessment involved mapping actors within the ZoI, understanding the context of their operations, identifying key actors with potential to invest and

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influence service delivery, and identifying quick win opportunities for investments. This also involved identifying unique circumstances within each ZoI that the Activity should consider in designing interventions with the actors. The context mapping built upon the initial desk review and involved extensive field visits and interviews.

3.1.1.1 INITIAL MARKET SYSTEM ASSESSMENT

As mentioned above, the Activity’s initial rapid assessment and ground-truthing mission built on existing research and leverage from prior USAID investments to identify initial entry points and opportunities for potential FtF IAM investments. The Market Systems Assessment Team Lead Catherine Johnston

(DAI STTA), FtF IAM Chief of Party (COP) Collins Apuoyo, and the FtF IAM Market Systems Advisor

John Rachkara conducted a literature review and field assessment to: 1) identify potential agroindustry/agribusiness firms, GoU institutions and agencies, and market actor organizations such as trader networks, civil society, producer/farmer organizations, and associations; and 2) identify leverage points where FtF IAM can apply grants, subcontracts, and technical assistance to align incentives, build capacity, and facilitate upgrading through behavior change that creates market system change. FtF IAM used agreed-upon selection criteria to prioritize market actors who may be effective entry points for the Activity.

The Activity integrated a Gender Equality, Youth, and Social Inclusion (GEYSI) lens and explored emerging innovations in the ICT ecosystem in Uganda. GEYSI Advisor Uloma Ogba (MarketShare

Associates STTA) deployed in January 2020 to ensure that GEYSI issues were appropriately integrated throughout FtF IAM’s assessment, entry points, and potential interventions. The GEYSI Advisor provided guidance to the team and customized assessment tools to address specific constraints faced by these groups. The assessment informed the development of the GEYSI Action plan.

During the same period, a Digital Acceleration Specialist, Araba Sapara-Grant, (DAI STTA) was also mobilized in January 2020 to provide a rapid assessment of the ICT ecosystem in Uganda as it relates to structural constraints in the agriculture market system and the delivery of cross-market functions. Her work was to map the current use of digital tools, support the design of FtF IAM ICT interventions that build on existing ICT platforms and tools in Uganda that could be strengthened and scaled, and share innovative solutions from DAI’s Center for Digital Acceleration (CDA)’s global experience.

The above activities culminated into three key reports that were used as the basis for the first FtF IAM validation workshop in which a number of market actors were invited to review the findings of the report as well as to enrich the findings and recommendations.

3.1.1.2 VALIDATION WORKSHOP

The Activity organized a key stakeholder validation workshop in late January 2020, drawing from the contacts made during field assessments as well as key national stakeholders (agriculture-related organizations, large agribusiness firms, etc.) from within the ZoI and nationally. This workshop provided the opportunity for a comprehensive review of the information and insights gathered during the field assessment. This was the first application of the Activity’s CLA principles, engaging with the market system actors to refine and shift the program’s technical direction and focus as necessary. It also provided an opportunity to get feedback from the participants on whether the issues identified and solutions/recommendations proposed resonated with the key actors in the agricultural sector and from the ZoI.

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A total of 78 stakeholders from the agricultural sector such as input dealers, traders, millers, wholesalers, exporters, importers, policymakers, youth, women, and business associations, etc.

participated in the workshop to provide input and feedback to the market systems assessment's findings.

The validation workshop also introduced the MDF and provided the opportunity for initial brainstorming and relationship-building among stakeholders. During the workshop, the participants also pointed the Activity towards the main priority areas of interventions, identified key challenges to lasting transformative change, and also underscored the need for joint/collaborative action among actors to improve the functioning of the agricultural sector in Uganda.

3.1.1.3 MARKET SYSTEMS ASSESSMENT REPORT

The market systems assessment team integrated learning from the field assessment and validation workshop into a brief start-up report that provided a concise review of findings and a clear roadmap for

FtF IAM’s initial market system interventions. The major findings are summarized below:

5 market systems challenges. The assessment and validation workshop identified 5 market sub-system problems: a) high prevalence of counterfeit inputs and widespread low-quality inputs; b) limited value addition and upgrading; c) weak relationships between market participants; d) low levels of profitability of market participants; and e) weak enforcement of formal and informal rules. The above market failures lead to a mismatch between supply and demand, constraining markets from delivering the right products at the right time, place, and price to meet demand. Throughout the surveyed areas, farmers had limited purchasing power and often chose lower-priced counterfeit products, not understanding the risk of using fake and low-quality inputs. The findings and workshop recommendations were consistent with the specific areas of interest as outlined by USAID.

The assessment also revealed that farmers do not always achieve optimum results from investing in agriculture, that their incomes do not increase proportionately from investing in inputs, and that they were therefore unable/unwilling to make future investments. The weak enabling environment (policy, regulation, infrastructure) was identified as a major contributor to the high incidences of counterfeit products in the agricultural sector given the weak enforcement of anti-counterfeit rules. Participants also pointed out the potentially negative impact of government-led agricultural interventions that, at times, reinforced the distribution of low quality inputs to farmers. They additionally noted that poor organization and weak coalition-building among various actors in the agricultural markets limit the ability to have effective bargaining power among actors, leading to the emergence of crafty business in agriculture.

Regional variation. While the major market systems challenges were common across Uganda, there were also regional variations revealed by the market systems assessment and the validation workshop;

• South West: the region has good availability even at the last mile and there was a growth of inputs as a retail business. There is a good presence of input agent networks connecting producers to suppliers, but there are major problems with counterfeits and unqualified input retailers. In food trade, the region was found to have well-organized supply chains linked to processors or end markets in Kampala, competition from Rwandan traders for purchasing grains, use of ICT solutions for managing aggregation, and a prominence of logistics.

• Mt. Elgon: the region enjoys good availability of agricultural inputs in larger towns and a good reputation for high-quality inputs imported from Kenya, but is also known as a major source of

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counterfeit production. The absence of “last mile” distribution limits availability and access to quality inputs in rural districts. On food processing and trade, specific challenges to fresh food aggregation/cold storage is needed even for trade to South Sudan. Short-termism and aggressive competition from Kenyan buyers for grains act as disincentives for investment in quality management.

The assessment also discovered some relatively strong producer organizations (POs) and cooperatives, and good examples of using ICT solutions for bridging gaps in market information.

• Northern: the long supply chain in northern Uganda increases costs and lowers the quality of inputs.

Although the region has good availability in larger towns, major problems with counterfeits and unqualified input retailers is also very common. In food trade, the region had underutilized storage capacity, especially those supported by donor projects, as storage investments are far from growing centers making it difficult to use them fully. The market system assessment also noted that post-harvest handling challenges (harvesting and drying) is a major cause of food loss in the region.

• Karamoja: the region had limited availability of input suppliers, not even the “last ten miles” distribution was functioning. The market was highly distorted by the subsidized distribution of inputs via GoU programs and donors, and there is a high prevalence of counterfeits mostly with veterinary drugs. On value addition and food trade, the assessment revealed that aggressive traders buy and transport most products out of Karamoja during harvest and bring them back at very high prices.

Although storage investments have been made, they need to be commercialized. Simple storage technologies such as hermetic bags were not available.

FtF IAM has taken these regional variations into consideration in designing various interventions targeting each region.

3.1.2 SOCIAL INCLUSION

The market system assessment also encompassed a GEYSI assessment. The findings from the assessment led to the development of the GEYSI action plan which outlines strategies for embedding inclusion. In addition to the GEYSI action plan, the team also developed a GEYSI integration manual. Together, these tools have guided the FtF IAM team on integrating GEYSI in the design and implementation of the

Activity and have complemented the CLA Plan and the AMELP.

FtF IAM has also ensured that partners brought on board are supported to champion inclusivity in their own activities. Within the grants management process, FtF IAM integrated inclusion factors into the application, review of proposals, and co-creation/deal note and agreement stages. As a result, a good portion of applications to the MDF have a very strong GEYSI integration component in their proposed activities. So as not to exclude partners who do not have the knowledge or capacity to meet inclusion requirements, FtF IAM put in place a support system to help mainstream and integrate inclusivity right from the design phase and through to the implementation of their business models.

To identify, co-design, and monitor GEYSI-specific opportunities and needs for MDF partners, FtF IAM developed a GEYSI framework and score card. FtF IAM seeks to de-risk private investments and encourage private-sector driven models initiated and scaled with private sources of funding. The GEYSI processes and tool have been derived from gender-lens investing approaches and applies six lenses to determine how businesses can contribute to the advancement of women, youth, and other marginalized groups as company leaders, workers, suppliers, and customers. The GEYSI scorecard is not just an evaluation tool; rather, it serves as a tool to structure discussions around GEYSI with potential and selected private sector partners. The ultimate goal of the tool is to help investors and agribusinesses identify opportunities that benefit women, youth, and marginalized groups as shown in the figure below:

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Figure 1 GEYSI Scorecard

This tool will be used throughout the life of Activity (LOA) in the monitoring, evaluation, and adaptation of partnerships alongside other program monitoring and evaluation (M&E) quantitative tools. The tool has been designed to be administered bi-annually. As a baseline, the tool was piloted with 6 FtF IAM partners looking at the parameters of capacity and commitment to inclusive business models.

3.1.3 OPERATIONAL ACHIEVEMENTS

FY 2020 has been characterized by a slow but successful start-up period despite the advent of the

COVID-19 global pandemic. Adapting to COVID-19 circumstances and still being able to deliver on key deliverables has been a key achievement for the Activity. FtF IAM has had to quickly adjust to accommodate staff and other personnel working remotely, recruiting and inducting staff remotely, rapidly onboarding subcontractors and grantees, and ensuring that all operational systems remain robust and effective under the atypical working circumstances. The team has maintained momentum and pushed forward despite lockdown and the disruption caused by the pandemic. FtF IAM has successfully recruited its operational field team and provided remote training courses to the team in procurement, anti-trafficking-in-persons, MSD, ethics and anti-harassment, and on DAI’s Technical and Administrative

Management Information System (TAMIS). Under the prevailing pandemic circumstances, these are not small achievements.

In terms of procurement, the team has successfully negotiated with key service providers, such as health insurance vendors, office equipment suppliers, and others. The Activity has provided staff with the technological tools to successfully work from home and maintain a steady pace of Activity implementation, such as mobile phones, internet dongles, and laptops, and has built staff capacity in the skillful use of online communication and collaboration tools such as Microsoft Teams, WebEx, and

SharePoint. These tools have also been used with solicitations and co-creation meetings with partners, stakeholders, vendors, suppliers, and grantees at a time when face-to-face meetings were and are not possible. In terms of systems and processes, the operations team has put in place remote solutions to address work challenges associated with COVID-19. For example, training on DAI’s internal administrative, procurement, Human Resources, Finance, and inventory management systems were conducted virtually to ensure that the field team would be able to use these tools proficiently, and an

Activity-specific COVID-19 Risk Assessment Tool was developed and implemented to enable FtF IAM to respond professionally, safely, and robustly to the pandemic by continually assessing the situation and adapting as needed. All of the above has ensured that Activity operations and technical delivery have continued with minimal disruptions.

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Quarter (Q)1 of FY 2020 concentrated on the Activity’s start-up, led by Start-up Manager Amanda

Scannell, and supported by DAI STTAs with expertise in the areas of finance, recruitment, procurement and contract deliverables. Key milestones were achieved, such as the opening of bank accounts, setting up finance and operations systems including TAMIS, identifying and fitting out the FtF IAM Kampala office, shortlisting FtF IAM staff, and meeting initial contract deliverables. FtF IAM faced a few Start-up challenges, including two key personnel positions – DCOP and MEL Advisor – withdrawing from the

Activity, and delays due to the December/January holiday season.

Q2 concentrated on onboarding the wider team, including the HR and Administration Manager, the

Finance Manager, Grants Manager, Procurement Officer, ICT Specialist, and the Director of Finance and

Administration (DFA). During the quarter, the team identified field offices in both Mbarara and Gulu, two key locations for the Activity. However, by the end of the quarter, East Africa recorded the first of its COVID-19 cases and Uganda quickly locked down by mid-March. This led to an immediate closing of the FtF IAM office, initiation of remote work, the stoppage of all travel and face-to-face meetings, and the rapid repatriation of the DFA and his family to his home of record in the United Kingdom before border closures.

By the start of Q3, the team had the necessary tools and equipment needed to effectively work from home and was working with the DAI home office to ensure that the Activity developed standard operating procedures to keep the team safe. It was during this period when it became apparent that

COVID-19 was likely to negatively impact Uganda’s economy, and the agricultural sector was the most vulnerable. This meant that FtF IAM needed to rapidly focus efforts on the impact of COVID-19 on the agricultural market and address USAID’s objective and interest for projects to adapt quickly and proactively to the new realities. During the quarter, the team successfully issued an EoI and received over 100 responses, including from non-governmental organizations (NGOs) and the public and private sectors, to garner ideas to address the impact of the pandemic on the agricultural market system. The

EoI led to 5 requests for proposals (RFPs), the co-creation of innovative responses, and the issuance of

5 Firm Fixed Price subcontracts to 5 partners who commenced implementation in Q4.

The Activity also held its first Pause and Reflect session in Q3 to consolidate and gain a mutual understanding on FtF IAM’s approach. During the session, staff reflected on the lessons of working remotely and how efficiency and staff productivity could be improved. The session further looked at how project implementation and partner on-boarding could be improved to ensure that FtF IAM effectively assesses each partner and undertakes the necessary due diligence to pick the best partnerships possible to increase the Activity’s chances of achieving its overall targets and results. The outcome was improvement in team members’ abilities to evaluate, co-design, and negotiate the Year 1 pipeline of partnerships under the MDF - leveraging colleagues’ knowledge across technical areas of learning, GEYSI, and MEL - and design Year 2 work plan interventions.

In the same period and into Q4, the team held a successful virtual procurement training, MSD training, TAMIS training, and ethics and anti-harassment training. Also within Q3 and Q4, the Activity received a number of disposed equipment from closing FtF Uganda activities, including vehicles, printers, computers, satellite telephones, and generators. This enhanced the capacity of the Activity to operate effectively and efficiently with minimal additional investments in such equipment.

The final quarter has seen the Activity solidify its team, shortlisting additional staff for the field offices, and preparing for field office openings in the first quarter of 2021.

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3.1.4 DELIVERABLES AND DELIVERY DATES

Despite the disrupted operating environment, the FtF IAM Activity managed to achieve and submit all the contract deliverables for the first year. All deliverables were submitted to the Mission on time, with the Baseline Report submitted according to the timeline set forth by Contracting Officer-approved extension. See Annex 3 for details of all deliverables met and delivery dates.

As mentioned above, the Contracting Officer approved an extension for the Baseline Report. The extension enabled FtF IAM to continue to work with USAID and the Uganda Learning Activity (ULA) to finalize the AMELP and fully agree upon the ToC, Results Framework, and systems- and intervention-level indicators such that a high-quality, detailed baseline survey with enough flexibility to measure impact using the Activity’s CLA approach could be undertaken. The extension also allowed FtF IAM to adapt and collect the data required amidst an atypical working environment. During work on the

Baseline Report, the COVID-19 outbreak emerged. Amidst government-imposed social distancing measures and travel restrictions, FtF IAM faced difficulty in collecting sufficient data. For example, FtF

IAM encountered challenges with the remote identification of respondents and with getting identified respondents that were able and willing to talk to researchers virtually. Although FtF IAM employed the use of online surveys, telephone interviews, and Skype calls, this approach was new to many respondents. Many expressed reservations with speaking about their businesses to researchers they had not met in person. Moreover, in conducting data collection from a distance, FtF IAM’s researchers found it difficult to secure the availability and obtain the commitment of respondents to answer all questions posed.

3.1.5 STAKEHOLDER ENGAGEMENT

FtF IAM adopts an inclusive MSD approach that aims to generate opportunities within the agricultural sector for all market actors including women, youth, and other marginalized groups to effectively participate in the marketplace. FtF IAM focuses on constraints and opportunities to upgrading and creating efficiencies in the market system that will have a sustainable impact on the agricultural sector and the country. The approach empowers local actors, especially private sector, government, and market actor organizations, to align incentives for improved market performance.

Key entry points for FtF IAM include: 1) agro-industry/agribusiness firms, 2) GoU institutions and agencies, and 3) market actor organizations (trader networks, civil society, producer/farmer organizations and associations, etc.), who are constantly engaged to invest in the market and create inclusive growth opportunities that increase participation and involvement of market actors. In Year 1 of implementation, stakeholder meetings were an important part of evidence gathering, mobilizing market players to engage in the Activity, and finding points of leverage. The following text discusses the stakeholders FtF IAM has met with.

3.1.5.1 LOCAL GOVERNMENTS

The Activity held a meeting with 12 local governments staff from the Mt. Elgon districts in Eastern

Uganda in February 2020. The meeting was intended to introduce the Activity to production and marketing departments as well as the local governments’ departments for commercial services. During the meeting, a number of potential issues for engagement were identified. Specifically, the meeting highlighted the need to implement ordinances that were developed under the FtF Enabling Environment for Agriculture Activity (FtF EEA) and to build on the successes of other past FtF activities such as the

FtF Commodity Production and Marketing Activity (FtF CPMA) and the FtF Agricultural Inputs Activity

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(FtF Ag-Inputs). Of keen interest to local governments were capacity building initiatives for trade facilitation in the region, capacities for management information systems, and capacities to regulate the activities of the private sector players in the region without stifling trade.

3.1.5.2 BANKS AND FINANCIAL INSTITUTIONS

The Activity engaged with 8 commercial banks between February and March 2020. Given the importance of access to finance in furthering investments in agriculture, the Activity intended to influence financial institutions to innovate or scale-up financial products that have scope for inclusivity and scale. Several banks expressed interest in partnering with the Activity to increase outreach with inclusive and revolutionary products, such as agency banking and other forms of financial services, to the farming populations. Some banks also expressed interest in partnering with the Activity to develop new financial products that resonate more with the needs and requirements of players in the agricultural market. A joint market entry assessment for financial services for cooperatives and POs was also conducted with a leading financial service provider. Further co-creation with some of the banks will be undertaken in Year 2.

3.1.5.3 INPUT MARKET PLAYERS

The Activity met with 17 players in the agricultural input supply chain including large and leading international suppliers such as SeedCo, East-West Seeds, and Bayer Crop Science with the intention of mobilizing them to invest in Uganda's agricultural market. To improve the distribution systems of quality inputs and services, the Activity also met with leading local distributors such as El Shaddai International

Limited, Acila Enterprises, and Faith Agro among others. Given the role that membership-based associations - such as CropLife, Uganda Agro-Input Dealers Association, Uganda Seed Traders

Association - play in the efficient functioning of the input market, the Activity also held 4 meetings with these associations to map capacity needs to improve their role in the inputs market.