Attachment__2_Revised_Trade_Hub_Sol_72062018R00011.pdf

Solicitation Number: 72062018R00011

Feed-the-Future West Africa Trade and Investment Hub Activity (Trade & Investment Hub)

Issuance Date: December 3, 2018

Due Date for Receipt of Questions: December 17, 2018

Due Time for Receipt of Questions: 4:00 p.m. Nigeria local time

Revised Closing Date for Receipt of Proposals: January 25, 2019

Closing Time for Receipt of Proposals: 4:00 p.m. Nigeria local time

Subject: Request for Proposals (RFP)

Solicitation Number 72062018R00011

Feed-the-Future West Africa Trade and Investment Hub (Trade and

Investment Hub) Activity

Dear Prospective Offerors:

The U.S. Agency for International Development (USAID) seeks proposals from qualified organizations interested in providing technical services under the Feed-the-Future West Africa

Trade and Investment Hub Activity (Trade and Investment Hub) for USAID/Nigeria’s Office of

Economic Growth and Environment (EGE) as described in the attached Request for Proposals

(RFP).

This procurement is being conducted through full and open competition for which the procedures described in FAR PART 15 of the Federal Acquisition Regulation (FAR), will apply. Proposals will be accepted from private for-profit firms, not-for-profit organizations, non-governmental organizations (NGOs) including universities, research organizations, professional associations, and relevant special interest organizations. USAID encourages participation to the maximum extent possible of small business concerns, small disadvantaged business concerns and women-owned small business concerns in this activity as prime contractor or as a subcontractor, in accordance with Part 19 of the FAR.

USAID/Nigeria intends to award a Cost-Plus-Fixed-Fee (CPFF) completion-type contract for a period of five (5) years from the date of award. The total estimated cost of the award will range from $86M - $96M and note that providing the range or estimated cost for the contract does not mean that offerors should necessary strive to meet the maximum amount estimated. The grant facility must be $60 million of the total estimated cost of the Activity. Offerors must propose costs that are realistic and reasonable for the work described in Section C of the RFP. The North

American Industry Classification System (NAICS) code for this acquisition is 541990 - All Other

Professional, Scientific and Technical Services. The small business size standard is $15 million.

The authorized geographic code for the prime contractor of this procurement is 937.

U.S. Agency for International Development

Office of Acquisition & Assistance

Plot 1075 Diplomatic Drive, US Embassy

P.M.B. 519, Garki, Abuja.

Tel: +234-9-4619300

Fax +234-9-4619400 www.usaid.gov/ng http://www.usaid.gov/ng

Feed-the-Future West Africa Trade and Investment Hub Activity (Trade Hub)

Please refer to Section L of the attached RFP, for information regarding proposal requirements.

You are advised to read this solicitation carefully. Proposals received after the closing date and time will be processed as late and handled in accordance with FAR 52.215-1. Faxed proposals are not acceptable, nor will they be reviewed or evaluated.

All questions related to the RFP must be submitted to e-mail: abujasolicitations@usaid.gov, on the date and time indicated above. Unless otherwise notified by an amendment to the RFP, no questions will be accepted after this date.

This solicitation and any future amendments can be viewed and downloaded in its entirety from http://www.fbo.gov. USAID bears no responsibility for data errors resulting from download or conversion processes. Offerors are encouraged to check this website (http://www.fbo.gov) periodically as acknowledgement of any such amendment is required to accompany the

Offeror’s proposal.

Pursuant to Block 12 of Standard Form 33 of this RFP, USAID requires that offers remain valid for 180 calendar days from the RFP closing date.

Issuance of this solicitation does not in any way obligate the U.S. Government to award a contract, nor does it commit the U.S. Government to pay for costs incurred in the preparation and submission of a proposal. Award of a Contract under this RFP is subject to availability of funds and other internal USAID approvals. The Government reserves the right to reject any and all offers, if such action is considered to be in the best interest of the U.S. Government.

Thank you for your interest in USAID programs.

Sincerely, //Signed//

Cheryl Hodge-Snead

Contracting Officer

Attachment: RFP Solicitation Number 72062018R00011 mailto:abujasolicitations@usaid.gov http://www.fbo.gov/ http://www.fbo.gov/

ABBREVIATIONS AND ACRONYMS

ADWG Agriculture Donor Working Group

AGOA African Growth and Opportunity Act

AMEP Activity Monitoring and Evaluation Plan

AIDAR Agency for International Development’s Acquisition Regulation

ATA Agricultural Transformation Agenda

BS Branding Strategy

CDCS Country Development Cooperation Strategy

CO Contracting Officer

COP Chief of Party

COR Contracting Officer’s Representative

DO Development Objective

DCA Development Credit Authority

DCOP Deputy Chief of Party

ECOWAS Economic Community of West African States

FAR Federal Acquisition Regulations

FMARD Federal Ministry of Agriculture and Rural Development

GAP Good Agricultural Practices

GCD Grand Challenge for Development

GESS Growth Enhancement Support Scheme

GON Government of Nigeria

GUC Grants under Contract

Ha Hectare

LOE Level of Effort

LPG Loan Portfolio Guarantee

MARKETS II Maximizing Agricultural Revenues and Key Enterprises in Targeted Sites II

Mission USAID/Nigeria

MSME Micro, Small, and Medium Enterprise

M&E Monitoring and Evaluation

MP Marking Plan

NEXTT Nigeria Expanded Trade and Transport

PIND Partnership Initiatives in the Niger Delta

PPP Public Private Partnerships

RDCS Regional Development Cooperation Strategy

RFP Request for Proposal

R&D Research and Development

SOW Statement of Work

SME Small and Medium Enterprise

TA Technical Assistance

TEC Total Estimated Cost

USAID U.S. Agency for International Development

USD U.S. Dollar

USG U.S. Government

WATIH West Africa Trade and Investment Hub

ZOI Zone of Influence

PART I - THE SCHEDULE

SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS

1. PURPOSE

The purpose of this Contract is to provide technical services that fall within the scope of work specified in Section C – Description/Specification/Statement of Work for the Feed-the-Future

West Africa Trade and Investment Hub Activity (Trade and Investment Hub).

1. CONTRACT TYPE AND SERVICES

This is a Cost Plus Fixed Fee (CPFF) completion-type Contract in accordance with FAR

16.306(d). The Contractor must provide the deliverables described in Section C and the additional requirements of Section F and H in accordance with the performance standards specified herein.

1. ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

In accordance with FAR Part 52.232-22 - Limitation of Funds:

(a) The estimated cost for the performance of the work required hereunder, exclusive of fixed fee, if any, is TBD. The fixed fee, if any, is TBD. The estimated cost plus fixed fee, if any, is TBD.

(b) Budget

DESCRIPTION

TOTAL

US $

Personnel

Fringe Benefits

Allowances

Consultant

Travel, Transportation and Per-diem

Equipment/Supplies

Subcontract

Grants Under Contracts (GUC) $60,000,000

Participant Training

Security Cost

Other Direct Cost

Total Direct Costs

Indirect Costs

Total Estimated Cost

Fixed Fee

Total Estimated Costs plus Fixed Fee

The contractor will not be paid any sum in excess of the ceiling price.

(c) Within the estimated cost plus fixed fee (if any) specified in paragraph (a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the

Contractor (and payment of fee, if any) for performance hereunder is TBD. The Contractor will not exceed the aforesaid obligated amount.

(d) Funds obligated hereunder are anticipated to be sufficient through o/a TBD.

1. MULTI-YEAR CONTRACT

This contract is a multi-year contract as defined in FAR 17.103. Therefore, this contract is subject to the requirements of FAR 17.106.

Cancellation Dates and Ceilings:

Contract Year 2: Date TBD Amount: $ TBD_

Contract Year 3: Date TBD Amount: $ TBD_

Contract Year 4: Date TBD Amount: $ TBD_

Contract Year 5: Date TBD Amount: $ TBD_

This is a CPFF completion type contract where the contractor is authorized to be reimbursed for all costs which are allowable in accordance with FAR 52.216-7, “Allowable Costs and

Payment”. Therefore, the contractor is expected not to incur any costs which would have been amortized over the life of the contract, should the contract be cancelled in accordance with FAR

52.217-2. Therefore, the cancellation ceiling for each cancellation date is (TBD at time of award).

1. INDIRECT COSTS

Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs will be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases for prime contractors and their subcontractors.

For Prime Contractor:

Description Rate Base Type Period

1/ 1/ 1/

2/ 2/ 2/

3/ 3/ 3/

1/Base of Application: Type of Rate: Period:

2/Base of Application: Type of Rate: Period:

3/Base of Application: Type of Rate: Period:

Source:

For Major Subcontractors*

1/ 1/ 1/

2/ 2/ 2/

3/ 3/ 3/

1/Base of Application: Type of Rate: Period:

2/Base of Application: Type of Rate: Period:

3/Base of Application: Type of Rate: Period:

Note:

a. Contractors are allowed to recoup indirect costs (OH, G&A, etc.) as other direct costs if it is part of the contractor’s usual accounting procedures, consistent with FAR 31 and the contractor’s NICRA.

b. The Contractor will make no change in its established method of classifying or allocating indirect costs without the prior written approval of the Contracting Officer.

c. Reimbursement for indirect costs shall be at final negotiated rates, but not in excess of ceiling rates specified above.

d. The Government will not be obligated to pay any additional amount associated with indirect costs above the ceiling rates established in the Contract. This advance understanding shall not change any monetary ceiling, cost limitation, or obligation established in the Contract.

e. *“major subcontractors” are subcontractors whose proposed costs exceed 20% of the

Offeror’s proposed total cost or perform a key element of the scope of work.

1. ADVANCE UNDERSTANDING ON CEILING INDIRECT COST

RATES AND FINAL REIMBURSEMENT FOR INDIRECT COSTS

(To be filled in at award)

Reimbursement for indirect costs will be at the lower of the negotiated final or predetermined rates, or the following ceiling rates:

For Prime Contractor:

2/ 2/ 2/

3/ 3/ 3/

1/Base of

Application: Type of Rate: Period:

2/Base of

3/Base of

For Major Subcontractors*

2/ 2/ 2/

3/ 3/ 3/

1/Base of

2/Base of

3/Base of

a. *“major subcontractors” are subcontractors whose proposed costs exceed 20% of the

Offeror’s proposed total cost or perform a key element of the scope of work.

b. The Government will not be obligated to pay any additional amount should the final indirect cost rates exceed the negotiated ceiling rates. If the final indirect cost rates are less than the negotiated ceiling rates, the negotiated rates will be reduced to conform to the lower rates.

c. This understanding will not change any monetary ceiling, obligation, or specific cost allowance or disallowance. Any changes in classifying or allocating indirect costs require the prior written approval of the Contracting Officer.

1. COST REIMBURSABLE

The U.S. dollar costs allowable will be limited to reasonable, allocable and necessary costs determined in accordance with FAR 31 (Contract Cost Principles), 2 CFR, Part 220 (Cost

Principles for Educational Institutions), 2 CFR, Part 230 (Cost Principles for Non-Profit

Organizations), FAR 52.216- 7 (Allowable Cost and Payment), FAR 52.216-8 (Fixed Fee) if applicable, and AIDAR 752.7003 (Documentation for Payment), may be reimbursable under this contract.

1. PAYMENT OF FIXED FEE – FAR 52.216-8 (JUN 2011)

a. The Government will pay the Contractor for performing this contract, the fixed fee specified in the Schedule. The fixed fee payable under this contract will be tied to the completion of deliverables specified in the fixed fee payment schedule below which will be incorporated into the contract. Actual percentages, under the Fee percentage column, must be suggested by offerors in their proposals and this will be negotiated with the successful offeror.

Report Deliverables Serial

Numbering

Year of

Performance

Fee

Percentage

Frequency

Conflict Assessment Report 1 Year 1, Quarter 1

One time

Security Plan 2 Year 1, Quarter 1

One time

An Integration Plan for Gender and other Vulnerable Groups

3 Year 1, Quarter 2

One time

Environmental Mitigation and

Monitoring Plan (EMMP)

4 Year 1, Quarter 2

One time

Grants Manual 5 Year 1, Quarter 1

One time

Enhance business networks, institutions, and firms as outlined in the approved annual work plan.

6 Years 1-5 Quarterly (X

% each quarter from

Year 1, quarter 2).

Expand availability of private equity, venture capital funds, impact investing, and other non-bank financing for businesses including agri-

SMEs as outlined in the approved annual work plan.

7 Years 1-5 Quarterly (X

% each quarter from

Year 1, quarter 2).

Enable number of business start-ups and incubators as outlined in the approved annual work plan.

8 Years 1-5 Quarterly (X

% each quarter from

Year 1, quarter 2).

Multiple stages of R&D supported to increase smallholder productivity

Research and Development

(R&D) as outlined in the approved annual work plan.

9 Years 1-5 Quarterly (X

% each quarter from

Year 1, quarter 3).

Technical Assistance provided to strengthen the effectiveness of the Trade and Investment

Hub Fund as outlined in the approved annual work plan.

10 Years 1-5 Quarterly (X

% each quarter from

Year 1, quarter 2).

Total fee percentage payment

100%

For all deliverables, payment of fee is authorized following approval/acceptance of the deliverable by USAID/Nigeria, not simply submission of the deliverable by the Contractor to

USAID.

b. Payment of the fixed fee shall be made as specified in the Schedule; provided that the

Contracting Officer withholds a reserve not to exceed 15 percent of the total fixed fee or

$100,000, whichever is less, to protect the Government’s interest. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals.

- END OF SECTION B –

SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

FEED-THE-FUTURE WEST AFRICA TRADE AND INVESTMENT HUB ACTIVITY

(TRADE AND INVESTMENT HUB)

C.1 TITLE

The contract will be titled, “Feed the Future West Africa Trade and Investment Hub

Activity,” henceforth referred to as the “Trade and Investment Hub.”

C.2 PURPOSE

USAID seeks to improve private sector competitiveness in West Africa with a focus on increasing the agricultural productivity and profitability of smallholder farmers in Nigeria, and promoting West Africa’s regional and international trade. Toward this end, the Trade and

Investment Hub Activity is jointly established and funded by USAID/Nigeria, USAID/West

Africa, USAID/Cote d’Ivoire, USAID/Senegal and other USAID Missions. The Activity comprises two main components: (i) design and administration of a Grant-making Facility for private sector partnerships and (ii) technical assistance (TA) that directly supports, coordinates, and engages with qualifying recipients (i.e., partners and grantees) to achieve USAID’s trade and food security objectives.

USAID defines Grant-making Facility as grants awarded to private sector firm or research institution to catalyze new investment in viable economic opportunities that stimulate, rather than distort market development.

USAID defines partnerships as structured, time-bound activities in which (1) the Contractor and

(2) one or more private sector partners ((including but not limited to local firms, international firms active in or procuring from West Africa, local and international financial institutions

(including banks, non-bank financial institutions and private equity and social investment funds) and/or research institutions)) to jointly fund new or scaled-up interventions that will directly advance the goals of the Trade and Investment Hub Activity. Under the Trade and Investment

Hub Activity, partnerships will include a USAID grant and a matching contribution from a private sector firm or research institution.

The purpose of the Activity is to improve the competitiveness of West African farmers and firms. This will be accomplished by increasing productivity, market participation, investment and adoption of improved technologies. USAID defines agriculture competitiveness as the ability of a farm, firm, sector, or country to sell and provide goods and services in a given market – in relation to the ability and performance of other farms, firms, sectors or countries in the same market.

The Activity is expected to achieve these objectives as measured by the following mandatory

USAID standard and custom indicators (See Attachment J12: Feed-the-Future Indicator

Handbook (March 2018):

● Value of exports in targeted agricultural and non-agricultural commodities;

● Value of new private sector capital investment in the agriculture sector or food chain leveraged by Feed the Future implementation (EG 3.2-22, a Feed the Future

Standard Indicator);

● Value of new private sector investment in non-agricultural targeted sectors leveraged by USAID implementation;

● Creation of new jobs in project assisted firms;

● Value of new financing to clients in targeted sectors;

● Value of smallholder incremental sales generated with USG assistance (EG.3.2-

19, a Feed the Future Standard Indicator );

● Number of hectares under improved management practices or technologies with

USG assistance (EG.3.2-25, a Feed-the-Future Standard Indicator)

The Activity will promote and expand trade opportunities, both within the West African sub-region, as well as to external export markets, with a particular focus on value-added processing in West Africa. The Activity will facilitate this projected trade growth by increasing smallholder access to key inputs and services such as improved post-harvest handling and labor saving technologies, including on-farm mechanization. The Activity will further strengthen relationships between and among key value chain stakeholders, such as producer associations, financial institutions, and agribusinesses (including input suppliers, contractors, transporters, manufacturers and agro-processors) working with business service providers to improve agricultural competitiveness and create strong linkages with end markets.

C.3 BACKGROUND

C.3 (a) Regional and Country Development Strategies

Nigeria Country Development Cooperation Strategy The USAID/Nigeria Mission’s Country Development Cooperation Strategy (CDCS) 2015-2020 promotes the goal of Reduced Extreme Poverty in a More Stable, Democratic Nigeria through three Development Objectives (DOs) of Broadened and Inclusive Growth; A Healthier, More

Educated Population in Targeted States; and Strengthened Good Governance. (See Attachment

J13: USAID Nigeria Mission 2015-2019 Country Development Cooperation

Strategy) Envisioned as the Mission’s new flagship Feed the Future Activity, the Trade and

Investment Hub will increase the agricultural competitiveness of Nigeria’s smallholder farmers and contribute to CDCS DO 1: Broadened and Inclusive Growth, specifically Intermediate

Result 1.1 : Agricultural Competitiveness Increased.

The Activity aligns with the Government of Nigeria’s (GON) Agriculture Promotion Policy

(APP) 2016 – 2020, which seeks to operationalize the Comprehensive Africa Agriculture

Development Program (CAADP) principles. The APP seeks to boost productivity, intensify the role of private sector investments, and build the capacity of the Federal Ministry of Agriculture and Rural Development (FMARD) to formulate and administer policy. Positioning agriculture as a business, the policy aims to improve agricultural production with the goal of increasing domestic food production and expanding the export of key commodities.

Building off the GON’s Agricultural Transformation Agenda that was initiated in 2012, the APP addresses issues with inputs, financing, storage, transport, and market access in the targeted value chains. However, with less than 2 percent of the 2016 national budget allocated for agriculture, GON support for the sector remains significantly underfunded, far below the 10% level committed in the Malabo Declaration/CAADP Principles, and inadequate to support agricultural development and transformation. The GON may set aside NGN 40 billion (about

$200 million) for farmers at interest rate of 9.0% under its new Anchor Borrowers Program, as managed by the Central Bank of Nigeria. Under this program, farmers would be given financial assistance through a bank loan. That loan would be held in an account where agricultural input suppliers will be paid directly based on the cost of supplies (e.g. seeds, fertilizer, and equipment) provided to farmer. (See Attachment J14: USDA Foreign Agricultural Service. "Nigeria: Grain and Feed Annual." Global Agriculture Information Network, April 2017)

The Government of Nigeria is implementing its strategy under the APP through the Nigeria

Agricultural Investment Plan (NAIP). This Plan focuses on five strategic areas, namely:

developing agricultural policy and regulatory systems; strengthening an agricultural commodity exchange market; maximizing agricultural revenue in key enterprises; and water, aquaculture, and environmental resource management. Agricultural development reforms represent a major area of CAADP implementation in Nigeria. Input-related problems (such as access to land, fertilizer, and credit) plague the Nigerian agricultural sector and require urgent reforms. Nigeria has also turned its attention to these priorities as well as to output-related problems, such as post-harvest losses, which have significantly reduced the availability and accessibility of food in the country.

Domestically, FMARD seeks to improve the productivity of a number of priority value chains:

rice, wheat, maize, fish (aquaculture), dairy milk, soybeans, poultry, horticulture (fruits and vegetables), and sugar. For export markets, the Ministry is focused on cowpeas, cocoa, cashew, cassava (starch, chips, and ethanol), ginger, sesame, palm oil, yams, horticulture (fruits and vegetables), beef, and cotton.

The Trade and Investment Hub will work closely with key stakeholders in the GON to implement interventions that will complement the CAADP compact of long-term partnership in the agricultural sector and activities planned under NAIP. The Activity will be designed to align with the CAADP framework and NAIP to help the GON achieve its goals.

Feed the Future Initiative in Nigeria Nigeria has been considered to be a Feed the Future “aligned” country since 2010. In 2017, the

USAID Bureau for Food Security selected Nigeria as a Global Food Security Strategy target country. As such, the Mission’s agriculture strategy will continue to implement a demand-driven, private-sector led, value chain approach – facilitating forward and backward linkages

(e.g., among agro-processors, off-takers, and input suppliers) to smallholder producers. To sustain economic growth and broaden its benefits, USAID/Nigeria focuses on smallholder farmers and small and medium enterprises (SMEs) that have the capacity to be linked to high-value commodities markets. USAID defines smallholder farmers as those with less than 5

Hectare of land. Recognizing that agriculture in Nigeria is labor-intensive, the Mission will focus on increasing agricultural productivity, facilitating value chain integration, and directing investment toward the sector. This approach may enhance employment opportunities for unskilled labor, contribute to regional food security and stability, and provide one of the most useful vehicles for moving populations out of extreme poverty.

The Nigeria Mission will support the aquaculture, maize, rice and soybean value chains. Cowpea has also been identified as a focus commodity, as it provides additional value to soil fertility, household nutrition, and women’s empowerment. The Feed the Future initiative in

Nigeria will prioritize working in the following states: Benue, Cross River, Delta, Ebonyi, Kaduna, Kebbi and Niger. This geographic prioritization results from extensive analysis and consultations. USAID considered various criteria in this selection, including: alignment with focus value chains; social and developmental needs; commitment of states to prioritize and diversify agriculture; previous USAID work in the Nigerian agricultural sector; the potential to leverage private sector partnerships; and security considerations. As the security situation improves, the Mission may also extend activities into the Northeastern states of Adamawa, Borno, Gombe, and/or Yobe.

Feed the Future supports partner countries in the development of their own agriculture sectors in order to generate opportunities for economic growth and trade, which can help reduce poverty and hunger. Feed the Future connects USG efforts that promote global food security and nutrition. Led by USAID, Feed the Future draws on the resources and expertise of the U.S.

Departments of Agriculture, Commerce, State and Treasury; the Millennium Challenge

Corporation; the United States African Development Foundation; the Peace Corps; the Overseas

Private Investment Corporation; the Office of the United States Trade Representative; and the

U.S. Geological Survey.

Feed the Future invests in creating enabling policy environments and physical infrastructure that facilitate investment by agricultural producers, SMEs, and larger businesses. The initiative serves as the principal vehicle through which the USG contributes to the New Alliance for Food

Security and Nutrition, a global partnership between African governments, donors, and the private sector to increase investment in agriculture and reduce poverty in the sub-continent. The

New Alliance outlines various commitments by partners: (i) Africa’s leadership – to drive effective country plans and policies for food security; (ii) private sector – to increase investments where conditions are right; and (iii) donors – to expand Africa’s potential for rapid and sustainable agricultural growth. In Nigeria, USAID continues to engage with the GON, donors, and the private sector to fulfill their New Alliance commitments. By coordinating with the private sector and sharing risks in pursuit of food security, Feed the Future increases its overall impact.

West Africa Regional Development Cooperation Strategy USAID/West Africa’s goal is the West African-led advancement of social and economic well-being. This goal is supported by several development objectives, including “Broad-based

Economic Growth and Resilience Advanced Through West African Partners.” It reflects

USAID/West Africa’s commitment to support African-led, regional development; and underscores the West Africa Mission’s commitment to capacity-building with the direct aim of supporting regional organizations, including regional private sector associations, to better deliver on their respective mandates.

This Activity is expected to contribute to the achievement of USAID/West Africa’s

Development Objective 2 (per the 2015-2019 Regional Development Cooperation Strategy

(RDCS)) through Intermediate Result 2.3: Regional Trade and Investment in Targeted Products and Services Increased. (See Attachment J15: USAID West Africa Mission Regional

Development Cooperation Strategy). The Activity will partner with leading buyers, processors, and producers to demonstrate the commercial viability of West African farmers and firms, and catalyze greater private sector investment into the region. By linking small West African farmers and firms to regional processors and international buyers, the Activity will build the capability of local suppliers to meet international standards, expand their production, and thereby achieve greater incomes. With respect to regional trade, value-chain opportunities are clearly present in agribusiness, including in horticulture, cashew, cocoa, shea, livestock and cereals.

The Activity will, however, have the flexibility to identify other high potential export product opportunities in the agribusiness sector as well as in light manufacturing (such as apparel) and supporting services (packing and labeling, logistics, etc.) where those partnerships cost-effectively achieve the targeted results of the project. Through these interventions, thousands of new direct jobs will be created from targeted staple foods and value added sectors.

C.3(b) Problem Statement

Nigeria For a lower-middle income country, Nigeria experiences high levels of poverty (53.3% of the population), with significant income inequalities along the north-south divide. Rural populations suffer the most (70.0% poor), as compared to those in urban centers (28.1%). The poorest states are located in the North, particularly in Zamfara (91.9%), Yobe (90.2%), and Jigawa

(88.4%). The least poor region encompasses the Lagos area (8.5%) in the Southwest. In 2015, Nigeria’s rate of multidimensional poverty stood at 53.3% of the population. A person is identified as multi-dimensionally poor (or 'MPI poor') if s/he is deprived in at least one third of the weighted MPI indicators (in Education, Health, and Standard of Living). Linked to poverty, malnutrition remains high. According to the 2015 Nigerian National Bureau of Statistics, national stunting rates are 32% for children under five (soaring to 54% in the Northwest).

Agriculture can become a strong force in alleviating poverty and malnutrition.

An agricultural powerhouse at its independence in 1960, Nigeria gradually succumbed to dependence on revenues from petroleum exports to fund GON operations. The country has not exploited its comparative advantage in agriculture. The sector has suffered from decades of neglect, diminishing its productivity, yet it accounts for some 22% of Gross Domestic Product.

In maize, for example, Nigeria suffers from performance gaps in relation to peer developing economies. The country’s benchmark yield averages about 1.5 tons/Ha, well below India (2.5), Brazil (4.2), South Africa (4.4), and China (5.7).(See Attachment J16: McKinsey Global

Institute, "Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy " report

July 2014) . FMARD itself reports that Nigeria’s overall yield per hectare for all crops is a mere

20 to 50 % of that obtained in similar developing countries.

According to the Nigerian National Bureau of Statistics, 2010 Labor force statistics, agriculture is the largest employer by sector and absorbs nearly a third of the formal labor force (and more in the informal sector). Agriculture also remains a pillar of the country’s non-oil economy.

Formidable challenges and constraints along the supply chain continue to hamper the sector from reaching its full potential.

● Inputs. An estimated 52% (of 70.8 million hectares) of agricultural land remains largely unutilized. Some 95% is effectively untitled, disincentivizing land management. The 1978

Land Use Act gives states control over urban land use and local governments’ management of rural land. Most land for agriculture hold 50-year leases, if properly titled. However, this process requires 14 steps and 6-9 months to complete. The use of land for collateral to access credit remains out of reach for most farmers.. End users of inputs in rural areas remain poorly linked to urban suppliers. Low quality seeds reduce yields and hamper productivity gains. Farmers lack access to improved seed varieties, which have seen slow development and release by research institutions and companies into the market. Hampered by its high costs and poor quality, most farmers make little use of fertilizer (average of only 17.8 kg/Ha). In rural areas, only some 40% of farm plots use fertilizer. According to the Nigerian

National Bureau of Statistics, LSMS-Integrated Surveys on Agriculture: General Household

Survey Panel 2012/13, about 20% of Nigerian men farmers and 27% of women plant improved seeds. These figures compare with 25% in East Africa and 60% in Asia. Many smallholder farmers lack general knowledge about the appropriate use of fertilizer and improved seeds. Crop protection measures also see low utilization rates, or are simply inappropriate when applied at recommended levels. The 2014 World Bank, Nigeria

Economic Report, states irrigation covers only 1% of farmlands, which mostly rely on rain-fed supply. The absence of clear title to land for collateral precludes access to formal credit, and limits opportunities for commercial agricultural enterprises to receive security on investments. As a result, most smallholder farming operations have limited access to commercial financing to scale operations. More challenging still, market interest rates rarely drop below 18 to 25%; microfinance loans fare no better, at 3-4% per month. According to an Enhancing Financial Innovation and Access, "Access to Financial Services in Nigeria

2014 Survey," many in Nigeria lack access to any formal banking services (women: 60%;

youth aged 15-24: 90%).

● Production. Farming takes place mostly on small-scale (< 2 Ha) plots that account for 90% of all farms in Nigeria. Mechanized technologies have not been widely adopted. For example, the use of tractors remains rare in Nigeria. In the 2010 rainy season, only 6% of farmers used tractors. (See Attachment J17: 2013 International Food Policy Research

Institute Agricultural Mechanization Patterns in Nigeria: Insights from Farm Household

Typology and Agricultural Household Model Simulation report). Most farmers have limited access to tractors, reapers, threshers, or winnowers. Likewise, agriculture production makes little use of labor-saving and appropriate technologies. While the country enjoys relatively low labor costs, labor productivity remains low, resulting in stagnant yields that are only 20 to 50% of those in other countries. Across Nigeria, many smallholder farmers remain uncompetitive, lacking access to productive assets and skills to increase the quality and quantity of production.

● Processing. Unsafe food threatens public health and undermines food security at local, regional and global level. In Nigeria, the food safety system is outdated and is unable to enforce compliance with international standards and global best practices. After harvesting, the limitations of aging and inefficient processing equipment compound challenges in agriculture. The country lacks specialized storage facilities, conditioning centers for perishables, and processing facilities. The cost of imported equipment is high and the availability of working capital is low, limiting farmers’ ability to procure and install adequate processing machinery and leading to concern over the quality and safety of farming output

(e.g., aflatoxin contamination). The high cost and unreliable supply of electricity rendered processing companies uncompetitive when compared with peers overseas. Processors struggle to source a consistent supply of high-quality inputs on the domestic market due to the low quality of on-farm produce. They also face significant obstacles importing inputs from abroad due to high tariff rates as well as restrictions on financing for the importation of many commodity items. Because of inefficient techniques for harvesting, processing, and storage, post-harvest losses account for an estimated 20 to 40% of total food production and some 60% of perishable goods. This data is based on the 2014 Nigerian Institute for Social and Economic Research report called, “Reducing Food Crop Losses through Post-harvest

Management in Nigeria”.

● Trading and Distribution. Nigeria continues to suffer from an over-dependence on commodity exports (particularly crude oil) and increasingly recognizes the need to diversify the economy through other sectors including agribusiness. Major barriers to trade persist, including restrictions on foreign exchange that act to reduce imports. In addition, inefficient logistics and limited connectivity exacerbate post-harvest losses, limiting both the quantity and quality of goods available for trade. High transport costs and limited transportation options inhibit agricultural trade and distribution. According to the 2015 World Bank, “African Competitiveness Report”, only one-fourth of the Nigerian roads are paved even though the national road network extends over 200,000 kilometers. Farmers have limited access to good feeder roads and markets. Inadequate and deteriorating infrastructure (e.g., electricity, water, and road transport) contributes to high transaction costs of inputs and high delivery costs to output markets.

Compounding these issues, climate change continues to wreak havoc on the tenuous and vulnerable farm-to-market supply chain, flawed policies reinforce disincentives to invest in the sector, and weak and fragmented institutions limit the effectiveness of local extension services and agricultural support offices. According to the Journal of Human Ecology, climate change continues to affect agricultural resilience in northern regions with declining rainfall, desertification (encroachment by 10 km/year), and contracted rainy season. As a result, Nigeria remains a nation with major food deficits that relies on imported grains, livestock, and fish to meet the dietary needs of a rapidly growing population. Issues related to productivity, efficiency, quality, and price all negatively affect the agribusiness investment climate. After decades of underinvestment, the agribusiness sector remains uncompetitive. (See Attachment

J21: Oxford Business Group, Nigeria 2017)

If Nigeria can boost agricultural sector growth, it can significantly increase economic growth and stability. With higher productivity, rising farm incomes would play a significant role in reducing rural poverty. A healthier rural economy can produce a strong positive spillover effect, supporting a more gradual urbanization process that results in less urban poverty. In economics, spillover effects refer to externalities (either positive or negative) that impact unrelated third parties.

West Africa

West African trade is generally characterized by high levels of concentrated exports in unprocessed commodities. Although West Africa as a whole is a globally important exporter in many commodities including cocoa, cashew, cotton, shea, and some tropical fruits, it is hampered by low levels of productivity on the production side and relatively limited investment and export of value-added processed commodities. Numerous assessments and reports from current USAID activities, such as the past and current West Africa Trade and Investment Hub(s), identify both the challenges and high potential opportunities for export diversification and regional trade. (See also Attachment J18: Inclusive Economic Transformation, "Regional

Integration and High Potential Value Chains in West Africa" report December 2016 and

Attachment J19: OECD Publishing, West African Food Systems and Changing Consumer

Demands West African Papers" December 2016)

International buyers and existing processors frequently have issues securing sufficient quantities and quality of these commodities. The large number of smallholders and cooperatives active in the supply chains for these commodities presents an opportunity to increase incomes for the poor. Their diffuse nature makes aggregating sufficient quantities challenging and significantly increases the transaction costs for the buyers in comparison to buying from commercial-scale farmers.

For processors, securing supplies across countries in West Africa is extremely challenging and often cost-prohibitive due to different currencies, languages, excessive transportation costs, roadblocks, formal and informal charges, and a lack of developed infrastructure in services such as cold-chain logistics. Vertical integration into farming to guarantee at least minimal supplies to keep processing facilities running is a common adaptation to supply challenges but is complicated by lack of secure land rights. Working capital requirements for processing industries (such as cashew) where the supply of raw material must be purchased up front for year-round processing is particularly difficult for locally based firms who can’t compete with the lower cost of capital available to foreign operators. The cost and availability of energy is also relatively high in the region in comparison to competitor countries.

The integration of small holders and firms into international and regional supply chains requires investments in upgrading and certification that are difficult to finance in much of the West

African region. Many financial institutions are reluctant to lend to the agriculture sector and the applicants often do not have adequate financial documentation, business plans, or credit history to qualify for commercial loans.

International market regulatory and buyer requirements are also changing rapidly, requiring much greater levels of traceability in the food supply chain to ensure food safety. There are concerns that small-scale farmers and producers will not be well-positioned to either continue exporting or enter into developed country markets if their facilities and capacities are not upgraded. Opportunities exist to support the integration of small producers into regional and international supply chains by partnering and leveraging resources alongside of major buyers and processors who have significant financial investments at stake. In addition, these same pressures make locally processed goods more attractive by shortening the supply chain, improving traceability, and reducing costs currently captured by traders and middlemen.

C.3(c) USAID Assistance in Trade and Support of Food Security: Relationship with other

Activities

This Activity will coordinate and leverage resources with other USAID and non-USAID assistance in support of trade and food security in Nigeria and West Africa in other to avoid duplication of effort, and maximize impact in the sector. Highlights of these activities are detailed in Attachment J.31.

C.3(d) Relationship to Other Donor Activities

Beyond USAID and the Government of Nigeria (GON), other donors are currently investing or planning to invest in the region (Please see highlights in Attachment J.31). The investments of other donors should incentivize rather than discourage USAID to invest, as they will allow space for USAID to focus and lead, more pointedly, on an innovative vision to self-reliance for beneficiaries.

C.3 (f) Development Hypothesis

Nigeria’s agriculture is characterized by poor quality inputs, minimal use of technology, low yields and productivity due to inadequate knowledge of agriculture best practices, and minimal value-added processing. The seasonal and sub-optimal production, in quantity, quality and variety, contribute to lean seasons for farming households which lead to inadequate diets. Most farmers sell their produce in informal, local markets with minimal quality standards. Not only is the produce usually underpriced, but also potentially in violation of health and safety standards for human consumption. The Activity’s development hypothesis presumes that the inadequate use of technology, low private sector investments in smallholder farming, inadequate knowledge of agriculture best practices, and lack of value addition activities constrain agricultural productivity and profitability. IF the Activity strengthens the capacity of agricultural sector business service providers (including private firms, research institutions, and other stakeholders), expands the use of improved farming technologies, increases participation in agricultural markets, and increases private sector investment to improve productivity and profitability of smallholder farming, THEN Nigeria’s agricultural competitiveness will be strengthened, contributing to broad-based and inclusive growth. This development hypothesis assumes:

improved resilience and market-readiness of vulnerable households; increased access to financial services; and improvement in the enabling environment for agriculture and agribusinesses. These challenges will be addressed largely through other Feed the Future activities.

West Africa’s trade is characterized by a reliance on imported staple foods, a low degree of intra-regional trade, and reliance on extractive and raw commodities rather than value-added exports. IF the Activity can build successful partnerships with leading buyers and processors that expand production quantities and improve quality through upgrading of producers, THEN

West Africa will successfully increase trade and investment and contribute to broad-based economic growth and resilience through increased job creation and improved incomes. Complementary policy work addressing trade barriers and regional market integration will be undertaken by USAID/West Africa under different activities.

C.4 SCOPE OF WORK

The Trade and Investment Hub Activity comprises of two main components: (i) design and administration of a Grant-making Facility for private sector partnerships and provide grants; and

(ii) technical assistance (TA) that directly supports, coordinates, and engages with qualifying recipients (i.e., partners and grantees) to achieve USAID’s trade and food security objectives.

This activity is jointly established and funded by USAID/Nigeria, USAID/West Africa, USAID/Cote d’Ivoire, USAID/Senegal and other USAID Missions.

This Activity takes a partnership approach as a means to increase productivity, capacity, and investment. For the purposes of this Activity, USAID defines partnerships as structured, time-bound activities in which (1) the Contractor and (2) one or more private sector partners

((including but not limited to local firms, international firms active in or procuring from West

Africa, local and international financial institutions (including banks, non-bank financial institutions and private equity and social investment funds) and/or research institutions)) to jointly fund new or scaled-up interventions that will directly advance the objectives of the Trade and Investment Hub Activity. Partnerships will typically include a USAID grant to a private sector firm or research institution, with the requirement of matching investment by the partner.

These grants may follow, be supported by, or be followed by, technical assistance and capacity building. USAID defines a grant as a legal instrument used where the principal purpose is the transfer of money, property, services or anything of value to the recipient in order to accomplish a public purpose of support or stimulation authorized by Federal statute and where substantial involvement by USAID is not anticipated.

These anticipated partnerships can take a wide range of forms, including jointly funded investments in training for third parties ( USAID via this contract) and a local processor partner investing in strengthening cooperative suppliers to the partner); jointly funded investments to enhance the capacity of the partner (USAID and a private financial institution partner conjointly funding the development of a new leasing product at the financial institution), and jointly funded projects to benefit a broader sector (such as a joint funding between USAID and a research institution of a new research program).

Component I: The Contractor shall design a USAID grant-making facility to (a) form partnerships with private sector actors along the value chain such as international/domestic buyers, supermarkets, agro-processors, traders, trade associations, financial institutions, and smallholder farmers; and (b) form partnerships with research institutions, universities, and other technology service developers and providers to improve the availability and accessibility of technologies that will boost agricultural productivity.

The prime contractor shall lead the administration and management of the grant-making facility on behalf of USAID to qualifying awardees. Grants can fund non-sovereign entities (enterprises and organizations, both local and international – inclusive of public-private alliances) to strengthen private sector competitiveness across West Africa. This grant administration will entail direct outreach to potential partners to explain the program, issuing grant notices of funding opportunities, reviewing and pre-screening applications, awarding grants, monitoring and evaluating recipient performance, and closing out grants. These actions will be managed by the prime contractor in consultation with and approval from the Contracting Officer, through the

Contracting Officer’s Representative. Recipients must be chosen through a competitive process.

The grant-making facility [C.4(c)(I) Design and Administration of the Private Sector

Competitiveness Activity Fund] must be cumulative $60 million of the total estimated cost of the Activity – Nigeria ($27 million, 40% of which is to be used to implement component B), Senegal ($8 million), Cote d'Ivoire ($4 million) and $21 million for West Africa Region. The

Contractor must make grants pursuant to ADS 303, Grants and Cooperative Agreements to Non-governmental Organizations, in accordance with ADS 302.3.4.13 (Grants under Contracts) (See

Attachment J26) and Section H.41 Grants under Contract (GUC). The Contractor, not subcontractors or subawardees, shall administer GUCs.