DRAFT SLE Productive Use Assessment SOW.pdf

Sierra Leone Compact:

Agriculture Productive Use of Energy Consultant (PUE)

Scope of Work (SOW) The Millennium Challenge Corporation (MCC) seeks a consultant to assist in project design of the Sierra Leone Compact. While the proposed compact is focused on power, MCC and the

Government of Sierra Leone (GoSL) are proposing an activity to enable the productive use of power within agricultural value chains, especially downstream post-harvest in processing, including milling, preservation, and storage.

Sierra Leone’s unreliable electricity service carries heavy consequences for private sector investment in the agribusiness space, agro-enterprise productivity, and in rural access-expansion-potential. The most visible effects of the unreliable supply are frequent, prolonged outages. Nationally, only 26 percent of the population has access to electricity, and less than 5 percent of rural populations have access. A power sector investment that improves reliability and access will benefit a wide swath of Sierra Leone’s population. Greater reliability of service, through improvements in transmission and distribution infrastructure, will enable private firms and agribusinesses of varying sizes to exploit opportunities in aggregation, transformation, storage, and complementary value-addition activities. The goal is to obtain maximum benefits from the proposed energy investment to catalyze inclusive, job-creating private sector growth to reduce food insecurity and support agriculture-based economic growth in Sierra Leone.

The goal of this study is to identify best opportunities for value-addition and preservation stemming from increased access to electricity across select value chains. It should also prioritize the specific leverage points that would yield the greatest impact on incomes, employment, poverty reduction, food security, and nutrition obtained by improving access to processing, milling, and storage technologies and capacities made possible through improved access to power. This study should focus both on potential value-addition, and reductions in post-harvest-loss. It should identify key leverage points in post-harvest drying, milling, and storage technologies, human capacities in terms of skills required to optimize power exploitation, and appropriate associated technologies that can empower the “missing middle” between food production and consumption. To promote these changes, MCC and GoSL may also invest in blended finance, technical assistance, and other needed vehicles to enable the agricultural economy to benefit from increased access to power in association with its power investments.

A separate assessment on Sierra Leone’s agricultural value chains is underway, the findings of which will help inform this present study’s analysis of power’s productive use in agriculture, with an eye towards facilitating private investment in this sector. The goal of the other value chain study is to examine local, regional, and international market opportunities for key value chain products produced in Sierra Leone and validate the assumption that power-stimulated-growth would generate demand for Sierra Leone commodities in these agro-economic markets.

This study will look at the nexus between the agricultural economy and power, and its roll-out will entail an iterative process, integrating input from the value chains assessment referenced above.

1 Background

Situated on the tropical Atlantic coast of West Africa, Sierra Leone occupies an area roughly the size of West Virginia and is home to an estimated 8 million inhabitants. The country’s economy, valued in 2019 at just over $4 billion dollars, or about $500 per capita, revolves primarily around low productivity agriculture and extractive mineral exports. Like many countries with a similar profile, poverty dominates Sierra Leone’s economic landscape, with just over half the population living on less than $1.90 per day. Growth has averaged about 6 percent annually over the previous two decades, but this number masks several shocks—particularly disease outbreak and commodity price drops— that have rapidly undone gradually-won gains. Coupled with the country’s painstaking recovery from a devastating civil war that ended in 2002, Sierra

Leone has struggled to transform from a rural, subsistence, small-holder farm economy into a more urban, modern, and productive one.

Longstanding obstacles lie on Sierra Leone’s growth path. Inadequate power and water infrastructure constrain private sector investment and impose costly burdens on both firms and households. The specter of malaria, Sierra Leone’s leading cause of disease burden and death, looms over the country’s human capital development. And Sierra Leone’s growing population struggles to meet its food needs, particularly for staple crops like rice, contributing to a crisis of food security. Against this backdrop, the onset of the global COVID-19 pandemic has imposed unwelcome new challenges. Tourists have stayed home, exports have fallen, movement restrictions have choked the country’s farm sector, and food insecurity rates have risen. More than 1 million additional people reported emergency coping strategies in the wake of the pandemic, including selling property and other assets, to keep eating. Roughly half the country has reported downward adjustments in quantity and quality of food.

MCC’s Board of Directors first selected Sierra Leone as eligible for a compact in December 2012 but was moved to the threshold program in December 2014 with an agreement signed in

November 2015. The threshold program provided technical assistance to public utilities and the new regulator to establish a foundation for the more effective and financially sustainable provision of water and electricity services in greater Freetown. This was accomplished by establishing independent regulation, strengthening key institutions, improving and expanding customer service, and increasing transparency and accountability in the provision of these services in order to improve service delivery.

The threshold program benefited from broad support by stakeholders. Some key achievements of the threshold program included finalized roadmaps for both sectors, a completed National

Resettlement Policy, the installation of piping and water kiosks in two test areas of Freetown, finalized Private Investment Policy and Integrated Resource plan for the power sector, and the implementation of an innovative Results-Based Financing pilot.

In December 2020, MCC again selected Sierra Leone for compact development.

1.1 Constraints Analysis

After selection, MCC and the GoSL carried out a constraints analysis in 2021 to identify the binding constraints to economic growth. The Constraints Analysis (CA) identified several binding constraints, of which the team focused on two for further development:

• Power: Sierra Leone lacks sufficient power resources, in terms of generation, transmission, and distribution, to support firm and household activities with heavy consequences to private sector investment, job creation, and the country’s fiscal balance.

• Food Insecurity and Supply: Low food production and high food prices force a large segment of the population to sacrifice elements of their diet and livelihoods to survive.

Given the strong preference for a power-focused compact by the GoSL, the CA was followed by an assessment of the “root causes” of the power constraint that concluded: “Sierra Leone has insufficient availability of affordable and reliable electricity to satisfy demand among households, businesses, and social institutions.” During subsequent stakeholder engagement, GoSL and MCC together defined a core problem with four principal dimensions: (1) an unreliable power supply, (2) the high cost of electricity, (3) low access to electricity for productive use, and (4) weak governance and regulation within the power sector.

The root causes of this core problem appear to be: (a) insufficient and costly generation sources; (b) dilapidated and insufficient grid infrastructure that is susceptible to climate risks;

and, at the root of these, the need for (c) institutional and inclusive technical capacity development in the sector and (d) financial viability of the sector (i.e., revenues sufficient to cover costs, including operational and maintenance requirements as well as new investments).

These root causes, which are interrelated, hinder the sustainable growth of the power sector, and deter much-needed private sector investment.

Sierra Leone’s unreliable electricity service imposes significant costs for the private sector, undermines investment, and reduces enterprise productivity. Poor reliability is driven by insufficient supply of electricity to meet demand, as well as a failing network and vulnerability to climate risks like changes in rainfall, flood and drought events, landslides, and extreme heat.1

Power sector assets in coastal areas are particularly exposed to climate-related erosion, storm surges and flooding. The most visible effects are frequent and prolonged outages and low

1 Princeton Energy Resources International (2020) CEC Africa (SL) Western Area Power Generation Project WAPGP (See 16.1, p231) (link); GoSL

(2010) initial National Adaptation Plan (iNAP); Asian Development Bank (2012) Climate Risk and Adaptation in the Electric Power Sector (link);

USAID (2020) Ghana’s Integrated Resource and Resilience Planning Program- A Case Study for Future Activity Design (link).

https://www3.opic.gov/Environment/EIA/ceca/ESIA.pdf https://www.adb.org/sites/default/files/publication/29889/climate-risks-adaptation-power-sector.pdf https://pdf.usaid.gov/pdf_docs/PA00X3HT.pdf connectivity to the electric grid. Self-provision of power through costly and polluting diesel generators is common.

1.2 Promoting Productive Use of Energy in the Agricultural Economy

While the GoSL and MCC are primarily focused on developing a power compact, they also recognize the opportunity to amplify the impact of these investments by linking climate-resilient investments in electricity infrastructure to the agricultural economy. The goal is to leverage the power sector investment to maximize economic benefits, poverty reduction, climate resilience, inclusion, and women’s empowerment while addressing Sierra Leone’s Food

Insecurity challenge. Within the agricultural economy, the GoSL and country team highlighted the potential from supporting the strategic deployment of power for off-farm agricultural commodity sector activities, particularly in storage and processing – either for food or other higher added products such as cosmetics or medicine.

The goal of this intervention is to reduce Sierra Leone’s high rate of post-harvest losses and value destruction, increase access to markets, and to add value through processing and other complementary activities targeted to SMEs, farmer-based organizations and cooperatives, and women and youth farm-based associations and cooperatives. In addition, reducing losses can also improve climate resilience by cutting waste the results in poor management of water and soil resources. With the reduction of post-harvest losses, it is also possible that improved market prospects will stimulate increases in productivity on-farm by boosting incomes and funds available for investment.

Interventions to boost access to power and enhance its productive use could potentially include blended finance, capacity building, business development services, training and highly targeted policy and institutional reform specifically focused on supporting post-harvest investments, utilizing new technologies, strengthening the capacity of farm-based organizations and associations. Such activities can help realize the power investment’s potential more fully within the food and agriculture sector. Specific options may include finance options for private investors, a grant facility to aid connection to new power and the acquisition of new equipment, outreach to impact investors for blended finance and/or work with DFC and others to finance anchor firms at key power infrastructure locations. Technical assistance may include training and capacity building, particularly for new machinery technologies, training on maintenance of existing equipment, as well as financial literacy, business development services, and other activities that can ensure the long-run, sustainable impact of the power investment.

An assessment, currently underway, of market opportunities, energy needs, and climate vulnerabilities will help to identify the value chains with the best prospects for strategic support. While other work is focused on the viability of value chains, this assignment will focus on the power-driven value-addition potential for value chains in Sierra Leone. The consultant will investigate value added by power at the various levels of the value chain for agricultural inputs and outputs, including producers, buyers, bulkers/aggregators, processors, wholesalers, and retailers as well as the economic returns from use of electricity in various stages of the value chain (with a focus on post-harvest technologies) and changes in carbon emissions from increased electricity access. The consultant will separately assess the costing of associated capacity building and identify needs by types of machinery/technology users (ABCs, private sector entities, agricultural cooperatives etc.)

1.3 Assumptions

Since this is a power-focused compact, neither MCC nor GoSL envision any on-farm interventions. The energy access for productive agriculture investments will be designed to reduce post-harvest losses, increase productivity in processing, improve product quality, enable market access, and add value downstream from the farm. The goal is to have the power and access investments boost the productive use of energy in the agricultural sector to increase the value of production, reduce food insecurity, boost on/off-farm income and employment, and catalyze private sector growth.

The project is based on the following assumptions that should be considered in this study:

• Power-driven technologies exist in Sierra Leone, or the market would offer them, if power were more readily available at the appropriate price, quantity, and locations.

• Domestic, regional, and global markets exist for targeted value chains, and Sierra Leone’s farmers could be competitive with targeted interventions downstream from the farm. This will come from the value chain study.

• Improved value chains could contribute significantly to an increase in the disposable income of participants (including landowners, tenant farmers, those engaged in small and medium agribusinesses, including associations based on Farmer Based Organizations (FBOs), cooperatives and workers linked to the processing/storage, etc.), in the targeted rural areas, and are likely to substantially benefit women (as landowners or workers in post-harvest processing facilities, especially in rural areas).

• Improved value chains are financially sustainable based on the substantially increased savings of labor use in mechanized processing, drying, smoking and improved prices for stored perishable foods.

• Investors and communities can agree on investment arrangement(s) that are economically viable, sustainable, and promote economic and social equity for local communities and landholders.

• Farmers will respond to improved markets facilitated by increased access to power by increasing production enough to make the downstream investments feasible.

• The regulatory milieu will enable actors along value chains to respond to markets and remain profitable. This assumes other challenges in the policy and regulatory environment do not undermine the ability of power/ag investments to be sustainable.

1.4 Risks

Due diligence into the agricultural economy in Sierra Leone identified several major constraints that could undermine the ability for value chain actors to benefit from a power investment.

One of the most important was a lack of power, which strongly aligns with the overall compact logic. Input markets, especially for seed and fertilizer, were another major constraint that impedes the ability of farm systems to improve productivity and income. However, this constraint may be mitigated by the fact that the GoSL is working to reduce the public sector role in these markets through policy reforms. Other challenges to improved agricultural sector performance include a labor shortage, poor labor and working conditions, and little access to credit. Lack of access to extension services and poor agronomic practices were other constraints. A final major risk is ensuring there are viable markets for value chains.

The goal of this assignment is to investigate which types of power-driven post-harvest interventions (from post-harvest technologies and capacities to financial mechanisms), or combinations thereof, will yield the greatest rates of return as measured by power-driven value-addition, value preservation, poverty reduction, and climate resilience for the value chains in Sierra Leone.

While recognizing the important income growth and poverty reduction opportunities offered by commercial agriculture, due diligence so far and literature on agriculture in sub-Saharan Africa point to risks that can challenge successful transitions from subsistence to cash crops for poor farmers and women. Poor farmers, less powerful smallholders, women, and other disadvantaged groups such as youth, may not be well-positioned to benefit from investments in the productive use of energy if not properly and early engaged in the process.

MCC has a poverty reduction mandate, a strong corporate commitment to Women’s Economic

Empowerment and gender and social inclusion. To be successful, investments in the productive use of energy in the agricultural economy must include inclusive consultation processes and institutional arrangements to adequately engage local communities and ensure that smallholder farmers, women, and other vulnerable groups such as youth, substantially benefit from the schemes.

In its due diligence process, MCC has identified some potential risks that could impede the ability to make the most of the productive uses of energy in the agricultural economy. These include:

• Affordability – both the fixed, and recurring costs of electricity may constitute barriers to entry for would-be post-harvest agribusiness entrepreneurs.

• Overall beneficial economic impacts may not justify the investment in processing technology facilitation, capacity building, finance instrument or policy adjustment as determined by MCC’s 10 percent minimum economic rate of return criterion. The proposed interventions may not be sufficient to ensure a transition to higher value-added agriculture given other constraints to agricultural investment and productivity.

• Output may be negatively affected by the potentially reduced availability of input supplies such as fertilizer, disrupted due to volatility resulting from the economic effects of the Russia-Ukraine conflict.

• The potential impact on poverty reduction may be limited. Specifically, improvements post-harvest, for example large scale processing facilities may not increase, but instead reduce employment of women and youth, and additional incomes might flow to those already well-off, and thus may not result in enough distribution of project benefits among various segments of the population, especially smallholders, women, and youth.

Without strong employment effects and improved labor and working conditions for those engaged in post-harvest jobs2, the benefits of the project may be limited. Women, children, and disadvantaged groups are often victims of forced labor or inhumane working conditions in Sierra Leone3. The poor, women, and others with weaker capacity to value and negotiate around land may become more vulnerable as land values increase. Increased large and medium scale processing may lead to high demand for increased agricultural production and land. This may lead to increased commercial farming which can have negative impacts on small holder farmers and may even lead to evicting them from their land to make land available to large scale commercial farming.

Without broadly shared economic benefits, the justification for MCC funding of the projects would be weak. It will be important to understand what activities women and children who might be employed in non-profitable, manual post-harvest activities would move into following mechanization of these activities, and how these activities would affect their labor and working conditions.

1.5 The Food Security Challenge

Sierra Leone imports more than 70 percent of food consumed, with an average milled rice import of 360,000 thousand tons compared to domestic production of 890 thousand tons per year over the 2014–2020 period. Rice prices have risen from about SLE 1.5 million per tons to

5.5 million over the last 10 years (constant 2014-2016 prices) (USDA, 2022). As a result, the food share of total expenditures remains very high with one source estimating that about 31 percent of all households spend at least 75 percent of their budgets on food (WFP, 2020).

Productivity, especially after post-harvest losses, and value addition are low. Other than the power constraint, a primary driver of low productivity comes from a highly fragmented and public-sector driven input supply system. Nearly 60 percent of surveyed farmers reported difficulties in accessing seeds. There is also the issue of the timely availability and quality of seeds and the lack of demonstration sites to show farmers the potential of improved varieties.

This has made farmers unwilling to apply modern practices.

Fertilizer in Sierra Leone is exceedingly expensive, and the supply system is inefficient. Prices are among the highest in the world because fertilizer is almost entirely imported as a pre-blended, pre-bagged product sent in shipping containers. The supply chain for fertilizer is inefficient, and high soil acidity in Sierra Leone reduces the impact of fertilizer on yields by 50- 70 percent, further driving up the real cost of fertilizer for agricultural producers. The government’s policy is to increase private sector representation in the market, but it has yet to come to fruition.

2 MCC formally adopted the International Finance Corporation’s (IFC) Performance Standards (PS) on Environmental and Social Sustainability in 2012 as part of the MCC Environmental Guidelines. IFC PS 2 on Labor and Working Conditions focuses on identifying and managing risks related to forced labor, child labor, unfair treatment of workers, among others. MCC can provide additional guidance on PS 2.

3 https://www.dol.gov/agencies/ilab/resources/reports/child-labor/sierra-leone https://www.dol.gov/agencies/ilab/resources/reports/child-labor/sierra-leone

Most of the post-harvest processing and handling is confined to processing activities set up by a handful of external investors, primarily in coffee, cocoa, and basic food commodities where few benefits accrue to the poor. Other products receive almost no modern post-harvest handling, resulting in high losses and product value destruction. Most of the extant small number of rice and cassava processing is supported by generators, firewood, and mechanical equipment – which is largely a workaround to compensate for a lack of reliable power. A key question is whether these workarounds are inefficient and add costs that could have been reduced significantly with better power access.

Consequently, inadequate storage and underdeveloped processing currently lead to high losses of rice and perishable products, ultimately reducing the supply and raising the price of food.

This also diminishes value-preserving/adding opportunities, reduces farm income, and raises dependence on imports that increases vulnerability to price volatility, international trade conflicts, and other supply disruptions. It would be important to estimate how many rice mills and other mechanized post-harvesting structures could be linked with the project, and which establishments would run these (based on current structures as well as alternative options).

The focus on relaxing power constraints coupled with complementary activities in the food value chain downstream from the farm could address the food insecurity constraint that is also impeding Sierra Leone’s economic growth. The provision of power along with other targeted interventions could boost specific activities around storage, packaging, and processing that can play a key role in reducing food spoilages, losses, value destruction and the loss of market access—all are critical drivers behind Sierra Leone’s food insecurity challenge.

The approach also envisions a special focus on the application of technologies to address Sierra Leone’s critical food insecurity challenge, particularly within post-harvest value chains.

Technologies for both storage and processing rely heavily on affordable, reliable electricity, without which investments in post-harvest food chain activities cannot commence or expand.

Increasing access to affordable electricity in high food supply production sites across the country coupled with private sector facilitated investments in storage facilities and other technologies and enablers (business development support, training, access to finance, etc.) will create opportunities for income generation and job creation along the value chain, while increasing food supplies and lowering prices, improving food safety, and increasing access to nutrient-dense foods. Various cost scenarios might need to be considered based on alternative reliabilities of electricity access. Processing firms will assume that electricity will not be reliable and thus also maintain (or purchase new if a new establishment) generators. Thus, economic rate of return calculations should consider alternative options combining electricity access with options of power outages for longer and shorter timeframes.

1.6 Electrification Impact on Value Chains of Interest

Agricultural value chains are organizational schemes that enable a primary product to get sold and transformed into end-products available for consumers, adding value at each step of a gradual process of transformation and marketing. According to the 2019-2025 National Agricultural Transformation Plan (NAT) of the Ministry of Agriculture of Sierra Leone, the overall goal is to make the country food self-sufficient by increasing production in five value chains – rice, livestock, cash crops, and forestry, through an improved policy environment, investments in energy infrastructure, promoting women and youth in agriculture and agribusiness, and greater private sector involvement.

• Staple crops – rice and cassava

• Cash crops – coffee and cocoa

• Livestock, poultry, dairy, and small and large ruminants

• Forestry (which will not be covered in this study)

• Riverine and artisanal fisheries and aquaculture

Priority value chains could present opportunities for economic growth when power is made available. The following table presents value chains, known potential growth opportunities and benefits, pros, and cons as they relate to marginalized groups, and climate change risks and opportunities. (See Annex 1 for a sample list of intervention areas and a draft policy analysis matrix for possible interventions/intervention-types)

Value chains Impact of electrification

Qualitative value to marginalized groups

Climate risks/ opportunity

Rice Threshing, Drying and Milling

Increase milled rice for domestic consumption Produce higher quality, thereby fetching more income for farmers Increase in area under cultivation

Women involved in rice parboiling.

Non-mechanized rice milling = female dominated vs. mechanized rice = male dominated. What are the implications for income and time use for women, youth, and other marginalized groups with shift to mechanization? What are the implications for labor and workings conditions in the sector?

Reduced dependence on diesel generators or smoking/firewood

Reduced risk of temperature-driven impacts to harvest

Less time in storage can mean reduced exposure to other climate risks to products, such as flooding

Cassava Grating Decrease operations cost Increase production of gari for domestic market and exports Increase income, especially for women Increase employment

Do women control mechanized cassava graters, including income from mechanized grated cassava?

What are the implications for labor and working conditions in the sector?

Reduced dependence on diesel generators or smoking/firewood

Vegetable Storage Reduction in spoilage Increase market access

What are opportunities for women and youth in vegetable (cold) storage or other preservation methods? How

Reduced risk of temperature-driven impacts to harvest

Value chains Impact of electrification

Qualitative value to marginalized groups

Climate risks/ opportunity

Increase income for veg farmers can marginalized and landless participate in associations and cooperatives link to such efforts?

What are the implications on labor and working conditions in the sector?

Emerging VC opportunities (as mentioned in the Dahlberg Private Sector Opportunities Assessment)

• Cashews

• Groundnuts

• Soybeans

• Sweet Potatoes

• Maize

• Palm Oil

Greater facility in post-harvest processing, storage, preservation

What are opportunities for women and youth in processing and preservation methods? How can marginalized and landless participate in associations and cooperatives link to such efforts? What are the implications on labor and working conditions in the sector?

Some require firewood for processing = Reduced dependence on diesel generators or smoking/firewood.

Reduced risk of

Fish Processing Increase in shelf life Reduction in losses Improved ecosystem health Reduced deforestation, especially in coastal areas

What would be women’s roles in mechanized fish processing, including fish smoking? What are the implications on labor and working conditions?

What opportunities exist for more sustainable use fisheries and their ecosystems given electrified processing?

Fish Storage

Reduction in spoilage Extension of shelf-life Availability of fish in the domestic market

How does storage (or mechanized drying) of fish affect women and vulnerable groups’ income and labor use/practices/working conditions and how can youth and other marginal groups benefit?

Reduced dependence on diesel power

Reduced risk of temperature-driven impacts to harvest

Fruit Processing Reduction in spoilage Establishment of fruit processing factories Availability of fruit products

How mechanized fruit processing affects women and vulnerable groups’ income and labor use/practices/working conditions and how can youth and other marginal groups benefit?

Reduced dependence on diesel power

Livestock, small and large ruminants

Reduction of spoilage, lengthening shelf life Increased supply processed feed

How could increased access to refrigeration, value addition, preservation, drying, and processing of meat and dairy products open opportunities (increased prices, Possibly less reliance on open grazing if greater feed supply

Value chains Impact of electrification

Qualitative value to marginalized groups

Climate risks/ opportunity

Dairy value addition/preservation market opportunities) for small-scale (women and marginalized) agribusinesses?

Would increased access to refrigeration lead to greater overall supply and market surplus = decreased cost to consumers and more access to higher protein products for women/children/ vulnerable/marginalized groups

Poultry Reduction in spoilage Availability of animal protein in domestic market Increase income for poultry

How could refrigeration/processing/preservation (both eggs and poultry) affect women’s and marginal group incomes and labor and working conditions – both on farm and in processing?

Reduced risk of temperature-driven impacts to harvest

Dairy Reduction in spoilage Availability of animal protein in domestic market Increase income for farmers

How could processing affect women’s and marginal group incomes – both on farm and in processing? What are the implications for labor and working conditions in the sector?

Reduced risk of

This study should clearly identify and quantify, as applicable, the opportunities for value addition through electrification at the various post-harvest levels of feasible value chains across Sierra Leone, regardless of proximity to existing or planned electrification infrastructure.

It will also assess who will benefit from electrification, compared to manual post-harvest (and lack of cold storage facilities) and how women’s and youth time use would be affected from both a shift from manual to mechanized processing and the development of additional storage and processing operations.

1.7 Post-Harvest Management

This analysis will build upon the value chain work noted earlier. This exhaustive assessment of potential value chains underway will help identify the private and public sector investments needed for agribusinesses, including farmers, cooperatives or associations, packers, processors, transporters, warehouses, distributors, wholesalers, and retailers, to pursue profitable opportunities in the agricultural sector. In as much as it affects value chain prospects, an assessment of the GoSL’s relevant regulatory and legal framework may also be needed, as well as an assessment of the work other donors are doing and have recently done in this space.

There is very little post-harvest and cold chain capacity present in the country. While a high volume of perishable products is imported, there appears to be little to no Sierra Leone-based refrigerated transportation in which to move products throughout the country. Retail grocery stores and their captured storage areas inside the stores account for nearly all the cold storage capability in the country.

1.8 Other Planned Studies

1.8.1 Agriculture Market Assessment Study

Under a separate contract as noted above, GoSL and MCC will seek a consultant to understand

Agricultural markets, conduct market mapping, and identify market opportunities in Sierra Leone. This study will inform design of power investment to identify key, high-return value chain investments. The

Agriculture Market Assessment will identify opportunities and inform this study by pointing to which commodities, value chains, and regions that hold the most promise for further development through electrification. This study will look further into the processing and post-harvest value-retention potential within the value chains identified in the market assessment.

1.8.2 Technical Assistance Facility and Blended Finance Design

A third study will examine the current finance environment and identify what types of financial instruments will best suit the development of an electrified post-harvest sector. This will focus on designing ways to overcome barriers to improved performance in the post-harvest space. It will evaluate ways to enable the food sector to take advantage of the power investment to reduce poverty, boost inclusive economic growth, and reduce food insecurity. This could include surveys of currently operating firms, a landscape analysis of the financial services available to such firms, and a technical assessment of skills or training necessary to functionally operate the equipment and technologies necessary for operation. It will also evaluate firms’ abilities to access finance and training critical to bridging any remaining gaps between the power infrastructure and its productive use by looking at possible blended finance modalities and technical assistance interventions. This study will recommend impactful and actionable interventions that can promote transformation in the post-harvest sector made possible because the energy investment.

1.8.3 Energy infrastructure feasibility study

A separate, concurrent study will focus on the technical, environmental, social, financial, and economic feasibility of proposed energy infrastructure investments in Sierra Leone. As noted previously, the binding constraint identified in MCC’s constraints analysis for Sierra Leone was high cost, poor reliability, and low access to electricity. The purpose of this study is to ensure the link between the infrastructure identified and improvements to cost, reliability and access to electricity and provide the clear linkage between proposed activities and outputs to these desired outcomes

1.9 Impacts of the Novel Coronavirus

In early 2020, the World Health Organization (WHO) declared COVID-19, a global pandemic. The global economy has been significantly affected as each country attempts to fight the pandemic by minimizing the risk of community spread transmission. The consultant must undertake the tasks in this consultancy considering the evolving global pandemic. The consultant will need to consider methodologies appropriate to conduct this work considering the restrictions in Sierra

Leone. The recommendations for the compact program should also consider emerging trends in the investment climate because of the pandemic. Ultimately, MCC hopes that the compact program helps Sierra Leone in the economic recovery from the pandemic and builds long-term resilience to future global economic disruptions.

2 Tasks

To fulfill this task order, the consultant will carry out the following tasks:

1. Host a virtual kickoff, review background documentation, develop workplan and inception report.

2. Validate opportunities for power-driven value-addition in Sierra Leone among key value chains for agricultural commodities and related processed products for the domestic and export markets, looking at backward and forward linkages in the value chains within the context of power.

3. Assess value addition opportunities, especially those holding potential for facilitation and amplification through the introduction of greater accessibility to power and highlight relevant risks in Sierra Leone’s agricultural value chains and the institutions and policies that affect value-addition.

4. Integrate the findings of the assignment into a final report and recommendations to be used for final project design and implementation planning. The findings will play a crucial role in informing two other studies on productive use of energy and project design, as well as the energy infrastructure feasibility studies, as noted above in 1.8.

Document Review and Planning

The consultant will conduct necessary research, interview key stakeholders, and review the reports and other documentation provided by MCC and GoSL to plan for the completion of this assignment. The consultant will prepare an inception report outlining the detailed methodology, schedule to complete the assignment, and any foreseen risks to the completion of the assignment.

Assess power-related constraints and opportunities related to agro-economic growth

To begin the work, MCC would like a better understanding of the existing opportunities and constraints related to power-driven post-harvest value-addition in Sierra Leone. This assessment is broken into subtasks to examine power constraints and opportunities in the ag/food production sector; power constraints and opportunities in reducing post-harvest loss, power constraints and opportunities in processing along key value chains, as well as power-related constraints in upstream and downstream market opportunities.

The agriculture sector would benefit from a power compact as it will likely open opportunities for farmers and investors to reduce post-harvest losses. Evidence shows that electricity is a crucial input that can transform the agriculture sector as it supports post-harvest activities to add significant economic value to yield, and increase farmers’ income (Falchetta, 2021).

One key challenge inhibiting the agriculture sector from making a significant contribution towards reducing food insecurity is the availability of reliable and affordable power to support post-harvest activities. The agriculture sector in Sierra Leone is underpowered, stymies productivity, increases post-harvest losses, and reduces income-earning opportunities, especially for women who provide the vast majority on-farm labor. It remains less clear to what extent women and men are involved in post-harvest activities beyond the fact that women tend to be more involved in manual labor, and men more in mechanized post-harvest activities.

Additionally, manual post-harvest value-addition activities require more labor than mechanized activities. However, in contrast with mechanical processing, when post-harvest activities are performed manually, productivity and profitability are significantly reduced in agricultural value chains, even when manual labor is significantly discounted. An assessment of the value-addition impacts on labor – both in terms of demographics but also in terms of labor and working conditions as defined by IFC Performance Standard 2 – will be required as part of this task.

The unavailability of reliable and affordable energy in rural areas is a fundamental obstacle to reducing poverty. Without reliable, affordable, and sufficient energy and technologies to transform energy into profitable opportunities to harvest and process crops; farmers’ profits will remain low, and disincentivize expansion of production, hindering agroeconomic growth in rural communities. Evidence shows that many Agriculture Business Centers (ABC) are not operational due to several challenges, among which power-access difficulties are key. Furthermore, women are responsible for providing the bulk of ag sector labor. It remains less clear what opportunities women and youth would have in a more medium to large scale mechanized post-harvest sector.

Current perceived primary constraints:

• Lack of grid connectivity

• Unreliable, unstable grid-connected electricity service that necessitate back-up generation or another costly workaround

• High cost of access/connection

• Potential for increased electricity-related GHG emissions from increased preservation facilities, post-harvest processing, and cold-storage facilities

Power-driven opportunities to be investigated:

Opportunity: Questions:

Increased availability of preservation facilities (drying, cold storage)

Preservation/storage:

How many value-preservation facilities can the economy support with introduction of power?

What is the value-addition? What would facilities be able to charge for services?

Where is market for value-added product? (local, rural, urban/peri-urban) How long would product need to be stored for positive ROI on preservation technologies?

What are energy needs (kwh) and costs of electricity for grid, mini grid and captive power?

Fixed (i.e. hookup, base rates) vs. variable costs (seasonal fluctuations in rate of use, length of storage) What is optimal length of storage for optimal rate of return? (How do prices fluctuate from season to season?)

Increased post-harvest processing Processing:

How many processing facilities (large, medium, and small scale) can economy support in Sierra Leone’s priority sectors?

What are the value-addition opportunities?

Rice? Cassava? Cocoa? Horticulture?

Livestock/poultry/dairy/riverine fish?

Creation of employment How many jobs would a storage facility produce?

(full time, part time, seasonal) How many jobs would processing facility produce?

(full time, part time, seasonal)

Quality-of life considerations:

Time Education Nutrition Multiplier effects in rural peri-urban economies

What are nutrition-related outcomes of increased storage/preservation?

Reduced climate risks to preservation facilities or post-harvest processing

Resilience benefits

What is the value of climate resilience benefits with electrification in comparison to the cost of direct impacts without electrification?

Are there any anticipated water use efficiencies (e.g., reduced agricultural losses and resulting water losses) or benefits to climate-threatened ecosystems (e.g., reduced damage to mangroves)?

Displacement of self-powered diesel or woodfire smoking methods

Avoidance of GHG emissions from displaced diesel and smoking

What is the estimated reduction in use of self-powered diesel anticipated from electrification?

What is the estimated reduction in use of woodfire smoking anticipated from electrification?

What are the anticipated avoided emissions from displaced diesel or smoking methods?

Environmental and Social Vulnerability considerations:

Do proposed interventions in the value chain reduce environmental and social risks?

Do proposed interventions in introduce new areas of vulnerability?

What are those new areas of vulnerability?

What kinds of labor and working conditions exist in the sector currently and how would the proposed interventions in the value chain change those conditions?

In addition to addressing the above questions, during the assessment, a premium will be placed on determining whether increases in access to power in the pre- or post-harvest sectors will result in degrees of the following:

• Creates employment, potentially for young men

• Increase in income, especially for women and other disadvantaged groups

• Change in time allocation, especially for women

• Transform the rural economy to reduce poverty

• Increase forward and backward linkages within value chains

• Reduce the drudgery of labor, especially for women and marginalized groups

• Reduce the risks of unsafe or inhumane working conditions, especially for vulnerable groups

• Reduce climate risks and displace dirtier energy sources

Note that the electrification and commercialization of the agriculture sector and the selected value chains could potentially exacerbate gender inequalities, such as gender differences in control over income, if not countered with programs designed to involve women and other marginalized groups and ensure that they benefit from their participation. For example, when mechanized rice milling (or other processing) is done by ABCs that are managed solely by men, then the quantity of women’s labor may decrease, but their income might substantially decline.

Production and post-harvest loss reduction potential

Agricultural production is a critical element of Sierra Leone’s food security and is the bedrock of the rural economy. The agriculture sector employs about 70 per cent of the national labor force and contributes more than 40% of the Gross Domestic Product (GDP). However, production is still at the subsistence level as the self-sufficiency gap for rice, which is the main staple, was over 40 percent in 2020. Since 2012, rice imports have on average exceeded US$ 350 million annually.

An assessment of post-harvest loss-reduction-opportunities for promising products identified above by the GoSL and MCC will help identify the private and public sector interventions needed for agribusiness growth along the value chains. Clients/beneficiaries include female and male farmers, cooperatives, or associations (male/female membership), packers and processors, transporters, warehouses, wholesalers, and retailers, to pursue profitable opportunities in the sector.

Examples of where the lack of energy has held back the food and ag sector include:

• Lack of storage facilities, including cold storage facilities, reducing the efficiency of ag-processing businesses - reducing land under cultivation and decreasing output.

• Irrigation becomes costly with only diesel-generator-powered irrigation – leaving irrigation unattainable to farmers unable to front high input costs- and producing GHGs and negatively impacting local air quality where diesel generation is used.

• Lack of energy means ABC/FBOs are unable to undertake post-harvest activities like milling and drying to help optimize output, consumption, and marketing potential.

o Lack of electricity hinders the efficiency of farmers to add or conserve value in produce that can be stored and later sold under favorable market conditions. As a result, many farmers are forced to sell their products quickly due to high perishability. This is particularly the case for vegetable growers but also for fishermen and women and fruit growers.

• Use of firewood for smoking of fish or drying of produce in the absence of electricity, which exacerbates coastal vulnerability, negatively impacts air quality, and degrades ecosystem health and productivity.

Questions to be addressed in the post-harvest agribusiness industry include:

• Who are the suppliers of small to medium scale processing-machinery products?

(i.e. threshers, millers, destoners, graters, packaging machinery – specifically the agribusiness capital that adds value to commodities to the benefit of women and other marginalized groups)

• What, if anything might be done to facilitate the post-harvest value-addition machinery market? i.e. What could render small-medium scale agribusiness value-adding machinery more accessible, more serviceable, lower price, increase quantity/selection?

o What have/are other donors done/doing?

o What has worked and why?

o What has not worked and why?

o What success stories have come out of from Sierra Leone in this space?

• What does it mean to have bad or no energy access/supply (Production/transformation context)

• What does it mean to have energy access if the service is unreliable and unstable?

• What geographic locations and which industries are at risk of extreme weather events and potential climate impacts potentially disrupting post-harvest processing systems?

• In what ways would increasing energy access reduce climate impacts to the post-harvest agriculture sector?

• In what ways would increasing access exacerbate existing climate impacts or introduce new climate risks to the post-harvest agriculture sector?

• If electricity is available:

o What are the connection costs for a three phase?

o What are the costs of regular use?

o Who may afford equipment run on electricity (small medium and large-scale agribusiness value-adding operations)?

o Who will be capable of running electrical appliances/machines?

o What is the fuel mix of the planned generating…