RFI-720621-20-HORT.pdf

REQUEST FOR INFORMATION

RFI Number: RFI-720621-20-HORT Issuance Date: March 4, 2020 Response Due Date and Time: March 20, 2020 at 16:00 East Africa Time Response Email Address: darnett@usaid.gov and usaidtzco@usaid.gov

Dear Prospective Applicants:

The United States Government (USG) represented by the Agency for International Development (USAID) Mission in Dar es Salaam, Tanzania, posts this Request for Information (RFI) to inform an upcoming horticulture activity designed to increase the commercialization, inclusiveness, and competitiveness of horticulture market systems in Tanzania. The purpose of this RFI is to 1) solicit feedback on the attached draft concept; 2) identify qualified organizations capable of implementing the program; and 3) identify potential areas of engagement with the private sector under this activity. However, the USG reserves the right to not issue a Request for Application/Proposal for this potential procurement.

The attached concept note presents the draft objectives and key elements of the activity. The level of funding allocated for this activity is expected to range between $25 and $39 million over a five-year implementation period.

This RFI is not a Request for Application/Proposal or Notice of Funding Opportunity (NOFO) and in no way commits USAID to issue an RFA/RFP or to make an award. Please note that responding to this RFI will not give any advantage to or preclude any organization or individual from any Request for Application/Proposal that may be subsequently issued as any/all comments received will be strictly for information gathering purposes only. USAID will not pay for any costs associated with responding to this RFI. Information received in response to this RFI shall become the property of USAID, therefore, information that cannot be shared should not be sent.

Responses to this RFI must be submitted by email only to David Arnett at darnett@usaid.gov with a copy to usaidtzco@usaid.gov no later than the date and time shown above. When responding, please include RFI- 720621-20-HORT in the email subject line. Responders will not receive individualized feedback. All inquiries concerning this RFI must be directed only to the email addresses identified above. Hard copy submissions will not be accepted nor will phone inquiries be entertained.

We look forward to receiving your comments.

Best Regards, David Arnett Contracting/Agreement Officer mailto:darnett@usaid.gov mailto:usaidtzco@usaid.gov

Response Requirements

Responses should include the following:

1. Cover page, not to exceed one (1) page, that includes:

a. Organization name and address

b. Point of contact name and contact information

c. Legal registration status in Tanzania

d. A brief statement of interest that indicates the organization’s interest in applying as a prime or sub-recipient. If a team or consortia is envisioned, please provide the names of the potential partner organizations.

e. USAID is also interested in receiving input from private sector entities who may not wish to apply for a USAID award. Private sector respondents are asked to provide a brief statement indicating how they envision potential participation in the activity.

2. Comments on the concept note are not to exceed two (2) pages. USAID is interested in feedback on the following:

a. The development hypothesis, including the purpose and sub-purposes: Do the sub-purposes adequately address the problem? Are additional and/or different sub-purposes needed?

b. USAID is interested to understand if this intervention has potential to engage and create profit generating activities for a significant number of youth (age 15 to 35). Are there barriers to youth that are not addressed in this concept? Are there best practices for youth inclusion that should be incorporated into the statement of work?

c. USAID wants to ensure that this intervention engages private sector actors throughout the horticultural value chain. Are there best practices for private sector engagement that should be included in this activity? Are there other bottlenecks to private sector engagement in horticulture that must be addressed for this activity to be successful? USAID encourages responses to this RFI from private sector companies involved in horticultural value chains.

d. Other questions and comments are also welcome. This is not a formal question period;

therefore, the government will not be providing responses. All comments and questions will merely serve to inform the government.

3. Past performance references: In table format not to exceed two (2) pages, please provide the following information for relevant projects implemented by the organization:

a. Donor/funder name

b. Role: prime or sub-recipient

c. Location of implementation

d. Period of performance

e. Award amount in United States dollars

f. Brief description of the activities and results

No other documents or information is requested at this time. USAID asks respondents to not send any additional information other than what is requested above and to adhere to the page limits mentioned.

BACKGROUND: Problem and Opportunity Statement

According to the World Bank, prior to 2018 Tanzania sustained relatively high economic growth over the last decade, averaging 6–7% a year. While this overall growth led to a reduction in the poverty rate in the country,1the absolute number of poor citizens has not declined due to high population growth rate.2 The World Bank and the International Monetary Fund note that the Tanzania economy has slowed since 2018,3while, malnutrition remains high with over 34% of children under age five stunted and nearly 45% of women of reproductive age are anemic.4

Both the Government of Tanzania’s (GOT’s) Agriculture Sector Development Programme II (ASDP II) and USAID/Tanzania’s Country Development Cooperation Strategy (CDCS)5 call for deepening and broadening the impacts of investments and economic growth. The ASDP II argues that after 15 years of growth, not much has changed in terms of rural poverty rates in Tanzania.6 USAID/Tanzania’s CDCS Development Objective 2 (DO2) calls for inclusive broad-based economic growth achieved through reducing binding constraints to private sector investment (IR 2.1) and increased agricultural productivity and profitability (IR 2.2).

The horticultural sector offers key advantages for contributing to broad-based, inclusive economic growth and addressing poverty. According to the Tanzania Horticulture Association (TAHA), horticulture is the fastest growing industry within the agricultural sector in Tanzania, recording an annual average growth rate of 11% over the past five years.7 TAHA further states that the industry largely depends on smallholder farmers for production, with export of fruits and vegetables alone being 70% dependent on farmers with land holding capacity of less than two hectares.8 In other words, the commercialization and increased competitiveness of horticulture has the potential to benefit large numbers of the rural poor both through returns to horticulture commercialization and the value addition activities.

RATIONALE FOR NEW GENERATION ACTIVITY

USAID/Tanzania has invested for many years in the horticulture sector. Most recently, substantial progress has been made in upgrading farmer productivity, fostering linkages between farmers and agrodealers, and among agrodealers. Also, GOT extension officers are engaged in promoting improved varieties and other technologies. Collectively, this work has set the stage for further commercialization of the sector and a more intensified focus on addressing the market fragmentation of the chain from farmers to buyers. Strengthened relationships are key to incentivizing investments in improved productivity, aggregation, grading and standards, and innovations in improving the overall competitiveness of horticulture market systems.

1 The most recent Government of Tanzania (GOT) Household Budget Survey notes that poverty dropped from 28.2% in 2011/2012 to 26.4% in 2017/18,[1]before the drop in growth post 2018.

2 https://www.worldbank.org/en/country/tanzania/overview.

3 https://www.tanzaniainvest.com/economy/gdp-growth-2018-wb.

4 Tanzania Demographic and Health Survey Survey 2015-16 .

5 USAID/Tanzania Country Development Cooperation Strategy, 2014- 2019.

6 ASDP II Programme, May 2016, p 1 7 ibid.

8 Match Maker Associates, 2008.

STATEMENT OF WORK

Targeted Geography, Beneficiaries and Value Chains:

The Zone of Influence (ZOI) will include the regions of Morogoro, Iringa, Mbeya, Njombe, and Zanzibar.

It will also include market sheds outside of this ZOI, such as Dar es Salaam, Songwe, and Arusha, all of which have potentially important transport and marketing facilities. Target beneficiaries will include both direct beneficiaries that receive USG assistance, indirect beneficiaries who copy those assisted directly, and businesses which capitalize on opportunities developed by USG investments. Interventions will prioritize inclusion and expanded opportunities for youth involvement. Beneficiaries could include:

private sector: producers, input suppliers, service providers, processors, traders/resellers, buyers, and financial institutions; public sector actors such as the GOT national and local governments, including GOT extensions workers; and civil society, including Tanzania Horticulture Association (TAHA) as well as other producer and buyer associations. Target value chains will be selected from the horticulture subsector, potentially including products for export and for local markets. The specific value chains will be selected by the offeror based on existing and new analysis, available economic and geographic opportunities, and the offeror’s strategy for upgrading9 the horticulture sector. Final selection of value chains and geographic focus to be approved by USAID.

Theory of Change and Development Hypothesis:

To sustainably enhance the commercialization, competitiveness, and inclusiveness of horticulture value chains, the market system must be transformed:

● from a governance structure by which prices are determined merely by volume, and transactions are

“arms length,”meaning buyers and suppliers (e.g., farmers, input suppliers, and/or produce buyers) have little knowledge of each other;

● to a governance structure that entails more efficient transactions from aggregation, enhanced cooperation and trust between buyers and suppliers, and increased incentives for buyers and suppliers to invest in quality, productivity and service provision (e.g., willingness to provide services such as credit and/or extension).10

A competitive market system is achieved not only through increases in agricultural productivity and improved technologies and/or improved linkages to inputs and buyers but also through a transformation of the organization of the market system that transforms the relationships between end-market buyers and smallholder suppliers, on the one hand, and agrodealers and smallholders, on the other. The result of strengthened relationships among value chain actors includes the willingness of end-market buyers and agrodealers to provide technical services and in-kind credit to smallholders as well as more efficient and cost-effective transactions in output and input markets.

Goals, Purpose and Objective(s):

Goal: Sustainably reduce poverty and hunger in Tanzania

Purpose: Increase the commercialization, inclusiveness, and competitiveness of horticulture market systems

Sup-purpose 1 Strengthen the organization of horticulture market systems

9 Upgrading refers to the acquisition of technological capabilities and market linkages that enable firms to improve their competitiveness and move into higher-value activities 10 https://gvcc.duke.edu/cggclisting/value-chain-governance/

Sup-purpose 2 Increase nutrition-sensitive horticulture productivity and technology commercialization

Sup-purpose 3 Strengthen the enabling environment for market systems development

Sup-purpose 4 Increase collaborative learning and adaptation

Technical Approach:

Market systems approach - focuses on structural and behavioral changes to horticultural value chains.

Structural changes will enhance the cooperation among actors to increase the efficiency of transactions (between buyers and sellers) and the exchange of information and knowledge among actors and their ability to respond and innovate in the face of market changes. Behavioral changes include greater transparency in transactions, related—for example—to grading and price setting, perceptions of fairness in transactions, and greater trust to enhance the willingness of market actors to invest and provide financial or non-financial services by buyers to suppliers, for example. Behavior change also relates to how families make decisions about consuming nutrient-rich produce, and how income is used to improve nutrition and other nutrition-related behaviors, such as breastfeeding, handwashing, and consistent use of latrines.

Market facilitation - stimulates systemic change without taking a direct role, by working through market actors and ensuring that these actors are drivers of the change process. The approach fosters ownership by local actors and empowers the private sector to innovate and invest. As such, the approach aligns with USAID’s Journey to Self-Reliance.

Collaborative learning and adaptation - enables reflection on ‘what is working’ and ‘what is not.’ It incorporates monitoring processes with quick feedback loops that generate iterative learning that implementers can use to adjust activities in real-time and track progress in achieving objectives.

Results Framework

Sub-purpose 1: Strengthen the organization of horticulture market systems

This sub-purpose will use a market systems approach to transform the organization of the market system to increase the efficiency of transactions between actors as well as the change behaviors that contribute to improvements in quality, use of grades and standards, post-harvest handling, aggregation, and coordination and collaboration among linked actors. The improved cooperation accrues from greater transparency, perceptions of fairness, and trust, which in turn enable greater sharing of information, innovation and a willingness to cooperate in order to add value. Inclusion will be advanced not only by creating opportunities for women and youth but by addressing behaviors in the market system that exclude individuals based on cultural, political or social biases. Changing behaviors to reward economic actors based on their performance is key to making meaningful inroads towards inclusion.

The market systems approach includes private sector strengthening along the entire value chain as well as social and behavior change communication to influence attitudes and perceptions and promote social inclusion, including of women and youth, and greater dietary diversity. Facilitating change in the broader institutional environment to improve access to information, financial services, insurance, and business services will be needed to achieve the objective of improved market system commercialization and competitiveness.

Expected Outcomes

- lead firms (wholesalers, processors, agrodealers, or lead farmers) engage suppliers and/or clients formally or informally (e.g., buyers’ club, season long deals, repeat and expanded season-long deals, or preferred supplier networks) to reduce the costs of transactions, manage risks and stimulate investment and innovation in the value chain

- strengthened post-harvest handling and aggregation increases the efficiency, profitability, and shared benefits from improved market system competitiveness

- expanded use of grades and standards leading to improved product quality

- increased collaboration, transparency, and trust increases lead firm provision of financial (value chain finance) and nonfinancial services

- improved access to affordable finance and business services or skills increase profitability of input and output market businesses

- greater inclusion of youth and expanded entrepreneurial opportunities for youth throughout the horticulture market system.

Sub-Purpose 2: Increase nutrition-sensitive horticulture productivity and technology commercialization

The FTF/Tanzania Horticulture Activity will build on years of work disseminating nutrition-sensitive, productivity-enhancing technologies and good agricultural practices. It will advance previous work by facilitating greater collaboration and cooperation between private-sector input companies, agrodealers, local government extension officers, and horticulture producers. Investments will include improved seed varieties, climate-smart agriculture, sustainable soil and water management approaches, greenhouses, drip irrigation and multiple-use water systems, and social behavior change interventions. Investments will also include interventions to increase smallholder incentives for improved productivity and quality upgrading, by building on past efforts to combine technical solutions with market opportunities and identify ways to enhance trust and transparency between producers, seed companies and agrodealers.

These types of interventions can drive repeat sales, develop loyal customers, and create trust between market actors. They can also increase productivity, improve quality, increase dietary diversity, and enhance the capacity of the horticulture food systems to adapt to climate change.

Expected Outcomes:

- Increased trust between buyers, agrodealers, and seed companies leading to more in-kind credit accessible to producers

- Increased number of demonstration plots being set up by agrodealers, seed companies, and government extension officers

- Expanded smallholder adoption of improved technologies and practices through the private sector

- Crowding -in of seed companies and agrodealers

- Increased sales of improved seed and fertilizer

- Increased yields, sales and consumption of high-quality horticulture crops.

Sub-Purpose 3: Strengthen the enabling environment for inclusive horticulture market systems

Reform is needed to address three sets of constraints (1) Regulation of output markets and trade policy:

(i) restrictive output marketing requirements, such as requirements to sell through closed auctions that reduce competition; and (ii) discretionary trade policies, including export bans or stringent export licensing, that restrict trade and erode producer incentives; (2) Regulation of input markets: (i) fertilizer regulation to make fertilizer registration less restrictive, improve arrangements for fertilizer imports and distribution, and improve fertilizer quality control; and (ii) seeds regulation to improve plant breeding, variety registration, seed quality control.(3) Sanitary and phytosanitary control: Reforms are needed to (i) establish an institutional mandate for pest surveillance and risk analysis; (ii) ensure more efficient issuance of phytosanitary certificates for cross border trade; and (iii) strengthen institutional arrangements for risked based food safety regulation.11 In collaboration with other donors, FTF Tanzania will support SAGCOT, TAHA, and ASPIRES to address a number of these policy issues at the national level, especially relevant to the horticulture sector. At the local level, this activity will support partnerships with local governments, private sector, farmer organizations, and TAHA to improve the enabling environment and address policy bottlenecks to market systems development, including tax levies, grades and standards, and the high cost of transporting produce.

Expected Outcomes:

- Increased number of partnerships between local government, producers and TAHA dealing with policy and enabling environment issues.

- Improved environment for private sector investment in the horticulture sector.

- increased private sector investment in the horticulture market system.

- Increase volumes and sales of high-quality horticulture products in domestic and regional and international markets.

Sub-purpose 4: Increase collaborative learning and adaptation (CLA):

This activity will undertake iterative learning and adaptation, including the use of real-time information and analysis to continuously assess progress and adjust interventions or approaches as necessary, including engagement with value chain actors, with development partners to learn about what is working across the system; and with the GOT officials and extension officers to create an enabling environment for market systems development.

Expected Outcomes:

Better understanding of:

- Successful models of market organization that provides incentives to farmers for production and sale of high quality horticulture products.

- The incentives buyers need in order to enter into formal or informal supply agreements with producers.

11 Maximizing Finance for Development of Agriculture in Tanzania: A Note In Support Of ASDP, June 2019

- How to increase trust and transparency among market system actors.

- How to increase the willingness of value chain actors to provide financial and/or nonfinancial services to their suppliers or customers, particularly youth.

- How to improve the enabling environment at the local level for the production and sales of high quality horticulture products.

- How to implement the domains of women’s empowerment in the WEAI.

- How to increase dietary diversity and consumption of nutrient-rich foods.

- How to remove entry barriers to youth throughout the horticulture market system.

- How to increase profitable opportunities for youth throughout the horticulture market system.