Attachment 5 - Revised Attachment J-1_SOO_final.pdf

Attachment J-1: Statement of Objectives

Title: Feed the Future Ghana Trade and Investment Activity

1. PURPOSE

The purpose of the Feed the Future Ghana Trade and Investment Activity is to improve the enabling environment for Ghana’s economic growth, including, but not limited to: i) facilitating growth in export-oriented trade; ii) improving and developing product standards; iii) catalyzing investments in private enterprises related to high-value commercial crops; iv) promoting job creation, particularly among women and youth; v) promoting economic diversification; and vi) increasing foreign exchange revenues from high-value export crops. The Feed the Future Ghana Trade and Investment Activity will facilitate investing in firms that trade goods across borders, spur innovation, and build the capacity of the entire trade sector.

This activity will form part of USAID/Ghana’s Global Food Security Program (GFSP) and will promote trade and investment as a critical component to developing Ghana’s agricultural sector.

2. SCOPE

The Contractor must use a systems approach to address: i) Investment Promotion and Facilitation; ii) Trade Facilitation; and iii) Small and Medium Enterprise (SME) Development. The Contractor must work with businesses and the Government of Ghana (GOG) to undertake targeted interventions in trade policy, trade facilitation, international trade regulations, and other enabling environment factors to develop the private sector. Through these interventions, the Contractor must catalyze private sector investments in agriculture and provide technical support and small grants to SMEs tol enable them to access new market opportunities. The Contractor must partner with the GOG to reduce trade barriers that impede trade in high-value crops and private sector investment. The Contractor must support adherence to World Trade Organization (WTO) articles; support capacity building and policy initiatives of the Secretariat of the new African Continental Free Trade Agreement (AfCFTA) and Ghana’s alignment to the Agreement; and facilitate coherence between GOG agriculture, trade, and industrial policies.

3. BACKGROUND

Ghana is on a strong economic growth trajectory. From 2008 to 2017, Gross Domestic Product (GDP) growth averaged 7.3 percent and per capita GDP grew nearly 60 percent despite a population growth of

2.3 percent. 1 Currently, per capita GDP is around $2,200, which makes Ghana a lower-middle income country. 2 Continuous and strong economic growth has helped Ghana achieve the Millennium Development Goal of halving poverty. In the 1990s and the beginning of the 2000s, Ghana made great strides to reduce overall poverty, which declined to 23.2 percent, while the incidence of extreme poverty decreased by half, from 37 percent in 1992 to 18 percent in 2006. The poverty headcount continued to decline by about 8 percent from 2006 to 2013 before slowing to 0.8 percentage points between 2012 and 2016. From 2012 to 2016, the total number of poor people still increased by about 400,000, however, and will continue to increase unless the GOG adopts policies to sustainably reduce the poverty headcount.3 Persistent inequality in household consumption (the top decile of the population consumes seven times more than the bottom percentile), regional disparities in welfare (one out of three people

World Bank national accounts data, and OECD National Accounts data files

USAID Economic Analysis and Data Services (EADS). Country Dashboard Ghana. 2019

3 Ghana statistics live in rural areas), and a worsening macroeconomic environment (loose fiscal policy, high budget deficits, and a depreciating currency)4 are the main hurdles to sustained progress in Ghana.5 The agricultural processing sector could support inclusive and sustainable economic growth, given urban demand for prepared foods and processed products. The agri-food manufacturing sector comprises small- and medium-sized firms with low productivity and faces significant challenges to obtain reliable supplies of good-quality raw materials from producers.6 The rapidly growing services sector, the largest economic sector in Ghana, could be a source of competitive advantage if the GOG and development partners invest in the right capacity-building efforts. Getting to this point will be a challenge because the service sector draws upon the informal economy which has labor productivity on par with, or even lower, than the agriculture sector. 7

Trade is the most important component of Ghana’s services sector, accounting for more than 90 percent of GDP. Gold, petroleum, and cocoa account for the bulk of exports (around 75 percent), but wide swathes of the population do not benefit from the income that these industries accrue to the national coffers, primarily due to poor public financial management practices. Export concentration on three commodities and the GOG’s inability to effectively distribute revenues from these sectors through its public financial management systems limit the gains from trade. Although Ghana has realized significant revenue in extractive industries and raw material exports (such as cocoa and shea), it has not succeeded in developing manufacturing and other opportunities to add value to goods in global markets. Ghanaian firms cannot compete with international firms in rice, poultry, processed foods, or manufactured consumer goods that take large shares of its rapidly-growing domestic market and account for high foreign exchange outflows. Enhancing exports and increasing the competitiveness of Ghanaian firms in manufacturing and value addition could create more jobs, diversify the economy, allow Ghana to retain foreign exchange, increase national per capita income, reduce inequalities, absorb the growing young labor force, and enable more workers to shift out of traditional subsistence agriculture.

Improving trade facilitation is one of the most important enabling environment factors because it can bring more small and medium businesses into the global economy and enable inclusive, private sector-led growth. Ghana has several competitive advantages, such as its coastal location, ports, and road network, that make it an ideal location for regional and international trade. In addition, Ghana has the potential to be competitive in the agricultural sector, given its production capacity. For example, non-traditional export crops, such as shea, can capitalize on a $2.5 billion export market, and vegetables and other horticultural crops (e.g., mango, pineapple, papaya) can become important sources of export revenue. Investment and growth in these has the potential to accelerate trade, and Ghana’s agricultural sector transformation, and have the potential to put Ghana on a pathway to self-reliance.

Ensuring that Ghanaian goods are competitive and meet international standards requires the development, enforcement, and establishment of standards within tradable value chains to sustain them and create new market opportunities for the products. Supporting the development and enforcement of sanitary and phytosanitary requirements will facilitate continued access to export markets and improve food safety protocols to ensure availability of safe foods that will improve nutrition.

Moody’s Analytics. Ghana - Economic Indicators.

5 World Bank. Poverty Reduction in Ghana: Progress and Challenges. 2015 Ghana’s Economic and Agricultural Transformation Past Performance and Future Prospects. 2019 Edited by Xinshen Diao, Peter Hazell, Shashidhara Kolavalli, and Danielle Resnick.

Ghana’s Economic and Agricultural Transformation Past Performance and Future Prospects. 2019 Edited by Xinshen Diao, Peter Hazell, Shashidhara Kolavalli, and Danielle Resnick.

Improving Ghana’s customs regime with an eye toward improving risk management practices in order to increase efficiency and safety can improve economic competitiveness. In international practice, customs efficacy depends on skilled staff, informed by access to data, organized to allocate time and attention proportionate to compliance risks, all with a minimum impact on the movement, release, and clearance of goods. Risk management is typically supported by data analysis which guides activities in the field and risks observed by skilled inspectors fed back into the risk identification and analytic operation. Ghana’s risk management regime under the Ghana Revenue Authority‘s (GRA) Customs division is not fully aligned with the specifications of the World Customs Organization (WCO) and the requirements of Article 7.4 of the World Trade Organization (WTO) Trade Facilitation Agreement (TFA) that specifies the mandates for the release and clearance of goods. Risk management within GRA Customs is often conducted informally, without regular documentation in the GRA Customs automated systems. GRA Customs’ organizational structure does not directly address risk management in a Customs-specific formalized unit, or with specified risk management roles and responsibilities. GRA Customs does not have a risk management policy, related standard operating procedures, or a comprehensive Customs risk management implementation plan.

To improve access to markets and efficiency, Ghana must reduce the time and cost of trade. According to the World Bank Doing Business report, exporters spend on average 108 hours to comply with regulations at the border, including 89 hours just to complete the required documentation. In addition, Ghananian customs and border agencies have complied with fewer than 10 percent of their commitments under the Trade Facilitation Agreement. While the Organization for Economic Cooperation and Development (OECD) Trade Facilitation Index, which measures the performance of border procedures and policies, shows Ghana making steady improvements over the last two years, putting it slightly above the sub-Saharan African (SSA) mean, trade in agricultural products remains cumbersome. Ghana has fully notified only three of 16 articles important for agricultural trade. Ghana’s average weighted agricultural tariff is 15.9 percent, which is the 14th highest of 35 SSA countries. In 2016, Ghana restricted imports of rice and in 2018 made permanent a ban on imports of frozen poultry.

Prior and current trade and investment activities are contained in Annex A of the SOO.

4. PROBLEM STATEMENT

Lack of trade and investment in the agricultural sector has negatively affected Ghana’s economic growth, including low job creation, a poorly diversified economy, and reduced access to foreign exchange.

Harnessing political will to improve the agriculture and food trade sector is a critical component to support Ghana’s journey to self-reliance. If Ghana is to be a global competitor and an important trade destination and partner, especially as the site of AfCFTA’s secretariat, then the GOG must work in concert with the private sector to reduce barriers to trade, particularly non-trade barriers, improve the ease of movement of goods, and increase the quality of food and agricultural products in order to foster greater private investment. The lack of enforcement and maintenance of quality standards within the sector affects the competitiveness of Ghanaian products. Ghana cannot effectively compete in the global market unless it establishes measures to address quality standards to sustain food and agriculture value chains and create new market opportunities for high-value products. In addition, improving the quality standards of food and agriculture products could have positive spillover effects on the availability of safe nutritious foods in domestic markets.

The theory of change for this activity is: IF Ghana increases the quality and quantity of its crops, processed, and manufactured goods; grows investment; establishes forward links with value chain actors; reduces its trade barriers; improves its business enabling environment; and improves and enforces standards; THEN its domestic and international investment and market opportunities will increase, its economy will grow, and the GOG will reap greater revenues to fund its development.

5. PERFORMANCE OBJECTIVES

The Contractor must achieve the following three major objectives:

A) Quality standards in domestic value chains improved and enforced.

B) Time and cost to move goods across borders decreased.

C) Investment increased, especially among small and medium enterprises (SME).

Objective A: Quality standards in domestic value chains improved and enforced

Sanitary and phytosanitary standards (SPS) and food safety standards remain the main constraints for Ghanaian firms to access global high-value markets. The Contractor must help stakeholders to improve SPS measures in Ghana to facilitate market access and help the GOG to implement science-based SPS standards, as agreed under the World Trade Organization.

At a minimum, the following results are to be accomplished:

Result A1: An operational Traceability system for fruits, vegetables, and other agricultural products effectively administered, connected and able to trace products from their origin through the supply chain, isolate threats, and recall contaminated products when needed.

Result A2: Local certification standards for plant safety, sanitary, and phytosanitary qualities, aligned with international standards, established with the private sector to improve market access for high-value export commodities.

Result A3: At least 50 firms increase their exports to diverse markets, including exporting to the U.S. under

AGOA.

Result A4: Enforcement system strengthened to effectively administer and to ensure compliance with GOG food safety standards and regulations.

Objective B: Time and cost to move goods across borders decreased

To improve access to markets and efficiency, the time and cost of trade must be reduced in order to move Ghana from a lower-middle income country to an upper-middle income country and advance its journey to self-reliance. The contractor must work with the GOG including the GRA and private sector to improve current risk management practices to effectively address non-tariff barriers to trade, and lower the time and costs to safely and securely move goods across borders.

At a minimum, the following results are to be accomplished:

Result B1: Reduced time to securely move imports and exports to and from Ghana by at least 35 percent.

Result B2: Reduced cost of securely moving imports and exports to and from Ghana by at least 35 percent.

Result B3: Ghana’s trade and investment policies harmonized with AfCFTA regulations.

Objective C: Investment increased, especially among SMEs

SMEs dominate Ghana’s industrial landscape and can accelerate its economic development for wealth creation and poverty reduction. They constitute about 92 percent of businesses in Ghana, account for about 85 percent of manufacturing employment,8 and contribute about 70 percent of GDP.9 The contractor must target SME development and work with the GOG and the private sector to support entrepreneurs, particularly women, youth and persons with disabilities, access finance and basic services to expand their businesses.

At a minimum, the following results are to be accomplished:

Result C1: At least 75 percent of businesses, especially SMEs, report increased incremental income.

Result C2: A minimum of 50 firms completing business transactions valued in excess of $2 million per firm.

Result C3: Exports from SMEs increased by at least 50 percent, including through, but not limited to those using AGOA.

Result C4: Businesses employ at least 10 percent more skilled workers, especially women, youth, and people with disabilities.

6. RESULTS AND INDICATORS

The Contractor must measure and track indicators for each objective. The Contractor must track and report on standard indicators in the Standard Foreign Assistance economic growth indicator reference sheets and the Feed the Future Indicator Handbook. In addition, the Contractor is required to include at least one standardized "F" indicator from the Bureau for Foreign Assistance F. The Contractor may develop custom indicators and review indicators included in reports of previous USAID agricultural activities found on the Development Experience Clearinghouse. The Contractor must ground truth and update the final baseline indicators and targets in consultation with USAID and must indicate proposed baselines and targets, where available or appropriate. In addition, the Contractor is required to include standardized indicators from Feed the Future, the U.S. Government’s global hunger and food security initiative (GFSS).

7. CROSS-CUTTING TASKS

Investment promotion is the anchor to catalyzing opportunities for inclusive and sustainable growth. The Contractor should develop investment opportunities across USAID/Ghana focus sectors of nutrition and agriculture where applicable, targeting women, youth and persons with disabilities. Investment

8 Abor, J and Quartey, P. “Issues in SME Development in Ghana and South Africa” International Research Journal of Finance and Economics; Issue 39. 2010 9 International Trade Centre (ITC). “SME Competitiveness in Ghana: Alliances for Action”. 2016 opportunities should include U.S. investments and reflect the Prosper Africa, Clear Choice, and Global Food Security Strategy parameters.

7.a. Implementation of Training & Commodities Procurement

Developing human and institutional capacity is critical to implementing this contract. The Contractor should work with its counterparts to develop their capacity in the activities stated above. Both off-shore (U.S. based and third country training) and in-country training must be part of the Contractor’s annual training plans. The majority of training programs should be conducted in-country, to include workshops, public awareness seminars and roundtables as well as training provided to job seekers to improve their employability skills. Off-shore participant training (in the U.S. or third countries) is subject to USAID regulations.

7.b. Grants to U.S. and Non-U.S. NGOs

The Contractor is authorized to use a Grants Under Contract (GUCs) component to issue grants to governmental and non-governmental partners (including non-profit and for-profit entities) to support approaches under relevant objectives of the activity. Specifically, the activity will employ GUCs to help develop the capacity of GOG institutions, private sector firms, and associations dedicated to trade and investment. GUCs should also serve to increase the safety of exported agricultural goods, the efficiency of international trade, the quantity of business investment, and of GOG bodies that seek to boost the safety of the ports.

Groups not registered with the GoG, specifically NGOs not registered with the Registrar General’s Department and/or the Social Welfare Department, will not be eligible for grants. See Section H.21 clause for additional details (ADS 302.3.4.13).

8. OPERATING PARAMETERS

8.a. Sustainability

The Contractor must integrate sustainability in the activity, such as by promoting private sector development and unlocking catalytic investments to expand the agriculture sector. This is important as the private sector will continue to thrive, grow and provide income-generating opportunities for women, youth, and other marginalized populations. Partnering with GOG agencies to address policy and regulatory issues while building government capacity and expertise to support trade and investment in Ghana will be key.

The anticipated results from this activity must include more diversified agricultural exports from Ghana.

The ease of doing business in Ghana and the movement of goods across borders and at the ports must be greatly improved. As a result of this activity, Ghana must be able to attract greater and diversified income sources to sustain its journey to self-reliance.

8.b. Gender Integration

The Contractor must facilitate equal opportunities within the trade sector. Address constraints to trade and create opportunities for growth in the sector for men, women, and youth. For example, access to credit is one of the most important factors that prevent SMEs, particularly those headed by or significantly involving women and youth, from developing their businesses and participating in high-value export markets. Generally, only women with significant capital can produce and aggregate enough products and reap substantial profits from export-oriented activities. The Contractor must include interventions with women and youth as main actors and create avenues for equal access to finance and improved skills. The Contractor must partner with GOG initiatives to train women-owned SMEs on entrepreneurial skills and support opportunities to grow their business. The Contractor must promote activities that improve basic infrastructure (e.g. storage facilities and other labor-saving infrastructure) and address cross border and road harassment which constrain women to develop and expand their businesses.

Facilitating business relationships for women ensures access to income-generating opportunities. Women are generally less well-connected to central actors and are less likely to act as intermediaries than men.

Promoting local policies to increase the number of business connections within communities in which women live can support more inclusion. Women’s relationships are strongly rooted in the local culture, and are based on solidarity and protection against the multitude of uncertainties that characterise trade.

The Contractor must prioritize partnering with the private sector to identify and facilitate low-cost post-harvest processing and storage technologies that can be sold and used to minimize female traders’ loss, especially of fruits and vegetables and whose availability can improve household dietary diversity. The Contractor must promote value chains that can improve women’s income (e.g. shea butter) and value chains that can improve diets (e.g. fisheries) for greatest market system results.

8.c. Youth Integration

Unemployment rates in the formal sector are higher among the educated, as finding a well paid job is their top priority and fewer of those exist relative to the lower paying jobs in the informal sector.10 Young women face the additional challenges of early marriage and pregnancy, and as a result, less schooling and social networking, which makes it harder for them to benefit from some form of productive employment.

In the case of agribusiness activities, due to the lack of opportunities in the formal sector, young people tend to engage in a mix of informal and self-employment opportunities along with household-level agricultural activities.11

Ghanaian youth face multiple challenges to participate in and benefit from the economic growth. In agribusiness-related activities, including trade, youth participation tends to be on informal, mostly street trade12 which causes a persistent poverty cycle of low productivity and low income.13 The Ghana Women's Empowerment to food security and youth assessment states the most important barriers to increase agribusiness and trade participation are lack of: (1) access to financial services, (2) collateral, and (3) ability to obtain skills and technologies.14

10 African Sector for Economic Transformation; https://acetforafrica.org/highlights/jobless-growth-is-ghanas-biggest-youth-challenge/

Ghana Women’s Empowerment to Food Security and Youth Assessment: Feed the Future Advancing Women’s Empowerment Activity. Final

Report 12 Rethinking Youth, Livelihoods, and Fragility in West Africa: One Size Doesn’t Fit All. (2015) Fortune, Francis; Olawale, I and Stephen, M.

World Bank Publication 13 Ghana’s Economic and Agricultural Transformation Past Performance and Future Prospects (2019) IFPRI Edited by Xinshen Diao, Peter Hazell, Shashidhara Kolavalli, and Danielle Resnick 14 Ghana Women’s Empowerment to Food Security and Youth Assessment: Feed the Future Advancing Women’s Empowerment Activity. Final

Report https://acetforafrica.org/highlights/jobless-growth-is-ghanas-biggest-youth-challenge/

The Contractor must explore innovative financing activities that can create opportunities for young Ghanaians to expand their opportunities and effectively participate in high-value trade activities. The contractor must also partner with the private sector to target skilled internships and technology training for access to employment.

8.d. Environmental Considerations

The Contractor must work with agricultural firms and recommend appropriate approaches to promote good agricultural practices and meet required quality standards. The Contractor must also provide support to SMEs that addresses processing and other related activities. These mitigation measures must address workplace safety practices, awareness of environmental hazards, and proper waste disposal practices.

8.e. Adaptive Management

It is critical that the Contractor use adaptable systems and work plans in case of unanticipated changes, and an approach that allows for flexibility as new priorities arise during the course of this contract.

The Contractor must include co-creation in developing approaches to address the objectives of this contact.

The COVID-19 pandemic led to the establishment of COVID 19 prevention and safety protocols. These include social distancing and lockdowns that have led to a non-traditional operating environment. The Contractor response must reflect operating in this new environment and include measures to address and mitigate expected challenges.

9. Prosper Africa Optional Contract Line Item Number (CLIN) Services

The Feed the Future Ghana Trade and Investment Activity contains a $10 million optional CLIN for additional programmatic interventions as part of this planned contract. The optional CLIN is an opportunity to scale-up programmatic interventions and increase firm level interventions. This optional CLIN serves to enhance and broaden baseline services as well. The Contractor must propose distinct and innovative ideas for the use of these funds under the Prosper Africa initiative designed to boost two-way trade between the U.S. and Ghana, take advantage of U.S. trade incentives like the Africa Growth and Opportunity Act and the Development Finance Corporation, and support the Clear Choice initiative to level the playing field for firms and investors who would like to engage in U.S. - Ghana bilateral trade. This includes investment opportunities in the health and education sector, as well as in the agriculture sector through the Global Food Security Strategy and the energy sector through Power Africa. Prosper Africa asks local firms to establish durable trade and investment links with U.S. supply chains and promote services trade to accelerate trade promotion efforts and align with international trade standards and protocols, including ones set forth by AfCTFA. Interventions undertaken through the Optional CLIN must align with Trade Hub’s existing goals and objectives, as well as those through the Ghana Mission’s CDCS.

SOO Annexes:

A. Background for Trade and Investment in Ghana

B. Global Food Security Strategy (GFSS) - hyperlink found here:

https://www.usaid.gov/documents/1867/global-food-security-strategy-gfss-ghana-country-plan

C. Country Development Cooperation Strategy (CDCS) - hyperlink found here:

https://www.usaid.gov/ghana/cdcs

D. Ghana Women’s Empowerment to Food Security and Youth Assessment: Feed the Future Advancing Women’s Empowerment Activity - Final Report

E. Private Sector Landscape Assessment

F. Ghana DRM Activity on Customs Management - Summary Report

G. Feed the Future Indicator Handbook - hyperlink found here:

https://www.agrilinks.org/post/feed-future-indicator-handbook

H. IFSSP Final Report, plus Annex A and Annex B

I. TATFP - Ghana - Final Report

J. SPS Embedded Advisor for PPRSD https://www.usaid.gov/documents/1867/global-food-security-strategy-gfss-ghana-country-plan https://www.usaid.gov/ghana/cdcs https://www.agrilinks.org/post/feed-future-indicator-handbook