RFI RCA December 2021.pdf

REQUEST FOR INFORMATION (RFI)

Subject: Request for Information No. RFI-117-22-000001

Issued Date: December 21, 2021

Comments Due Date and Time: January 17, 2021, 4:00 PM Chisinau, Moldova Local Time

Reference: Reference: Rural Competitiveness Activity (RCA)

The United States Government, represented by the U.S. Agency for International Development (USAID) in Moldova, is in the process of designing a new activity entitled Rural Competitiveness Activity. We are seeking public comments, clarifications, and suggestions on the DRAFT Statement of Work (SOW) to inform the design process. Pursuant to FAR 52.215-3 “Request for Information or Solicitation for

Planning Purposes”, responses to this request for information are not binding on the U.S. Government and do not obligate USAID to issue a solicitation, nor does it commit USAID to pay any cost incurred in the preparation and submission of comments.

Brief Project Description

The goal of the “Rural Competitiveness Activity” (RCA) is to accelerate the transformative, climate-resilient economic development of rural Moldova by further stimulating the competitiveness of key economic sectors – the wine industry, high value agriculture, and tourism – to act as drivers for sustainable economic growth. This five-year flagship activity will further integrate Moldova as a reliable EU/Western trading partner and will position Moldova as a competitive regional hub for sustainable and value-added products and services across the assisted sectors, ultimately underpinning an inclusive economic growth model for developing rural Moldova.

Requested Information

In order to inform the design and maximize potential program impact, USAID invites constructive feedback on the proposed SOW. These comments will be taken into consideration in the design of a final activity. Comments in response to this RFI must be submitted via email to the Acquisition and Assistance

Specialist, Lucia Sandefur at lsandefur@usaid.gov with the subject entitled: “Request for Information

(RFI): Rural Competitiveness Activity” no later than the date and time stated above.

Thank you for your interest in the subject request for information.

Sincerely, ______/s/_______

Robert Panell

Regional Contracting Officer mailto:lsandefur@usaid.gov

Rural Competitiveness Activity (RCA)

RFI-117-22-000001

Section C - DRAFT STATEMENT OF WORK (SOW)

USAID’s Rural Competitiveness Activity

C.1 Executive Summary

a. Activity Goal and Purpose

The goal of the “Rural Competitiveness Activity” (RCA) is to accelerate the transformative, climate-resilient economic development of rural Moldova by further stimulating the competitiveness of key economic sectors – wine industry, high value agriculture, and tourism – to act as drivers for sustainable economic growth. This five-year flagship activity will further integrate Moldova as a reliable EU/Western trading partner and will position Moldova as a competitive regional hub for sustainable and value-added products and services across the assisted sectors, ultimately underpinning an inclusive economic growth model for developing rural Moldova.

Design of the USAID RCA Activity comes at a critical juncture for Moldova, at which ensuring forward movement on enabling environment reforms and expanding the competitiveness of HVA agriculture, wine and tourism sectors are vital for Moldova’s economic growth in the post-pandemic environment and further economic integration with the EU. RCA places enhanced emphasis on the role of the private sector (PSE) through a market systems approach by building the capacity and leveraging sustainable partnerships with private sector actors, such as business and other associations, “anchor firms”, and

CSOs, among others, to become sustainable partners for the future. Underpinning all work in this area are efforts to counter malign influences by diversifying Moldova’s economy, so that it integrates closer with the EU and is less vulnerable to exploitative economic influences.

Through RCA, USAID will support the competitiveness in transformative sectors through increased access of private sector firms to public-private partnerships (PPPs), improved productivity and export sophistication, enhanced financial strength, and availability of a labor force better aligned with private sector needs. Meeting these conditions is an essential next-step in further strengthening rural-based high-value sectors – wine industry, high-value agriculture, and tourism – that are key to achieving enhanced access to Western markets and moving Moldova towards sustainable economic growth. A key pillar of this activity will focus on working with sector level agents of change – the sectoral/business associations

– and enhancing their financial sustainability and transparency; increasing their technical ability to advise constituent firms; and improving their co-partnering with constituents in lobbying the GOM for reforms.

In strengthening associations, as well as other key stakeholders in targeted sectors, RCA will address the

CDCS Self-Reliance and PSE goals.

RCA assistance will be critical to rebuilding the economic resilience of the affected beneficiaries in the wine, tourism and HVA sectors and to mitigate the pandemic-induced disruption of marketing channels.

RCA will continue USAID’s legacy of working directly with SMEs, vocational schools, sector associations, and youth, women and diaspora to strengthen their economic resilience to economic shocks.

a. RCA Development Hypothesis

The development hypothesis of this activity assumes IF productivity and firm-level export sophistication across targeted sectors in wine, tourism and high value agriculture is enhanced, through:

• provision of premium, higher value-added products and services,

• strengthening the capacity of Business Associations/Private Sector-Partners’ for PPP engagement, service provision, and policy reform,

• improving the availability of a skilled workforce aligned with the private sector needs --while at the same time aggressively expanding international market access for producers and businesses in key sectors, attracting investment and positioning Moldova as a source of premium, environmentally sustainable and climate resilient products – THEN the targeted sector competitiveness will increase, leading to sustainable economic growth and to Moldova’s Euro-

Atlantic integration.

The RCA Activity objectives are well aligned with the three elements of the market systems[1] conceptual framework[2]: 1) the core value chain; 2) value chain supporting functions; 3) rules and regulations.

Objective 1 - Productivity and Market Access in Target Sectors Improved o Intermediary Result 1.1: Quality and value-added of products and services improved o Intermediary Result 1.2: Positioning and promotion of value-added products in strategic markets improved o Intermediary Result 1.3: Climate resilience and environmental sustainability of target sectors increased

Objective 2: Key Value Chain Supporting Functions Improved o Intermediary Result 2.1: Industry-led Workforce Development and Skills improved o Intermediary Result 2.2: Increased private sector investments through PPPs addressing critical value chain gaps o Intermediary Result 2.3: Industry Associations/Private Sector-Partners’ Capacity for engagement and service provision Strengthened

Objective 3 - Enhanced Sector Enabling Environment to sustain growth and drive innovation o Intermediary Result 3.1: Improved capacity of local institutional actors to sustain PPPs, drive reforms and achieve self-reliance o Intermediary Result 3.2: Strengthened national policies and regulations conducive to sector development

The funding that will be implemented through the RCA contract is estimated to be $30 million with a range of $6 mln under Grants Under Contract. The illustrative budget below shows the proposed alignment to the three objectives:

RCA TECHNICAL AREA %

Amount

LOP

Objective 1: Productivity and Market Access in Target Sectors

Improved 50% $15 million

2 Objective 2: Key Value Chain Supporting Functions Improved 30% $9 million

Objective 3: Enhanced Sector Enabling Environment to sustain growth and drive innovation 20% $6 million

TOTAL $30 million

b. Development Challenge and Problem Statement

Moldova’s overall economic outlook has deteriorated sharply due to the COVID-19 pandemic and a severe drought, with GDP declining by 7 percent. The lockdown measures have halted trade and industrial production, while a severe drought has impacted agriculture. The financial viability of many agribusinesses has been severely affected due to revenue losses. The lack of seasonal labor was further exacerbated by the COVID-19 pandemic and has put increasing pressure on rural agribusinesses. As a result of the economic disruptions caused by the pandemic, total exports fell by 11% in 2020. The

Moldovan wine sector has also been impacted by the COVID-19 crisis, with a 9% reduction in exports in

2020, while the tourism industry has suffered a 74% decline. Moreover, the GOM support measures aimed at mitigating the economic and social impact of the pandemic were insufficient at compensating the losses incurred by businesses and the population. In the absence of adequate response policies, the

Covid-19 crisis has deepened the economic and social inequalities in Moldova, leading to increased poverty rates among vulnerable groups, such as rural youth, women and migrants.

The pandemic has further exacerbated the outmigration trends. The lack of economic opportunities especially in rural Moldova, the deepening inequalities could trigger another migration wave in the post-pandemic environment, depleting Moldovan economy of the most economically active and productive cohort with potentially disastrous long-term effects[3]. Research shows that approximately 25% of the active labor force has migrated abroad for better economic opportunities. These negative trends could be reversed by generating robust economic opportunities and stimulating economic growth at the regional and rural level, creating poles of growth outside the capital of the country.

A key sector of the economy that has the potential to emerge as an engine of growth accelerating the economic prosperity of rural Moldovans is the agricultural sector. Agriculture employs a third of the

Moldovan labor force and generates 10 percent of GDP (2019) or 17 percent of GDP, if food-processing is included. Agricultural produce and food products account for 45 percent of exports, and most exports still comprise commodity crops, such as oil seeds and cereals. Although Moldova is transitioning towards a more diversified economy, opportunities from a higher-value agriculture are not fully realized. A two-pronged approach is required to ensure the full benefit of outcomes from water in agriculture: first, to accelerate the transition toward irrigated high-value agriculture focused on export markets, and second, to increase the adaptive capacity of rainfed agriculture to droughts to ensure resilient livelihoods and food security.

Despite significant gains made with USAID support on the productivity, product quality and safety, critical soft and hard infrastructure investments and the markets access and diversification front, more progress is needed to firmly anchor the Moldovan HVA and wine sectors in more lucrative and stable

Western markets and to strengthen their competitiveness and climate change resilience. As a next development step, Moldovan HVA agribusinesses and wineries must adopt new technologies and innovations closing the productivity gaps, generating higher value-added for the economy, and effectively competing in the EU and Western markets. To achieve this objective, it is critical to invest in a competitive workforce, in product quality and compliance with European and international food standards, and aggressively develop market linkages to facilitate trade and investment, especially in the framework of the DCFTA trade liberalization with the EU. The significant EU trade liberalization prospects offered by the EU DCFTA[4][5] and Association Agreement have opened a major window of opportunity and incentive for the sector to modernize, resulting in a significant export diversification. In

2019 the share of Moldovan exports to the EU reached an impressive 70% threshold, while exports to CIS dropped to only 15%. Accelerating the integration with EU markets will further reduce the dependency of the Moldovan agricultural sector on highly volatile traditional markets and instill a European culture of entrepreneurship and transparency among Moldovan agribusinesses, contributing to the CDCS CMKI objectives.

The Moldovan agricultural sector lags behind its regional competitors in the adoption of innovative digital technologies, agtech and e-commerce solutions. The pandemic has further underscored the need for rapid deployment of such solutions to boost productivity and competitiveness. Digitization of the Moldovan agricultural sector can have a big impact on boosting productivity, mitigating climate change and enhancing the environmental sustainability of production. Rapid response digital communication and marketing campaigns, as well as implementation of e-commerce solutions are critical to economic and market expansion in the post-pandemic trade environment across all sectors. Widespread adoption of international standards, such as GLOBALG.A.P. and GRASP, is essential for the rapid expansion on the

Western export markets, as well as for ensuring streamlined business processes and environmental compliance at the company level.

Among other development challenges, Moldova’s largely rainfed agriculture remains vulnerable to climate change, with volatile outputs that expose the economy and affect rural livelihoods. Climatic conditions are affecting in a significant way the agricultural sector. In the last two decades, the Republic of Moldova has faced five particularly severe droughts, which have led to a contraction of the agricultural sector by at least 10 per cent. In 2020 the agricultural sector contracted due to a severe drought, with the agricultural production decreasing by 27% compared to 2019. Recent assessments[6] show that the

Moldovan agricultural sector is ill equipped to face climate change challenges and the resilience of the targeted agricultural sectors needs further strengthening. This will require the large-scale adoption of climate-smart agronomical management and of conservation agriculture principles and risk mitigation instruments, such as weather-based insurances, and associated incentive and extension programs.

Building on synergies with the wine and the HVA agricultural sectors, the tourism sector is a rural-based economic sector that has the potential to unlock the development of the depopulated rural areas of

Moldova and to spur rural economic opportunities. Moldova has a distinctive culture, rich heritage and natural sense of hospitality, the basis for a thriving tourism economy, but suffers from severe under-investment in product development and destination promotion. In 2019 the expenditure by foreign tourists visiting Moldova was valued at $500 million, or 4.4 percent of GDP. Largely underestimated, the

Moldovan tourism industry employs 23,409 people, mostly women and youth. Addressing the policy and institutional constraints and attracting investment to this nascent sector, while concurrently ensuring cross-pollination with the wine, HVA horticultural, honey and organic sectors in diversifying the tourism product offering, could prove a game changing factor that may jump-start this sector beyond the foundational support already provided by USAID starting 2013.

C.2 Background

a. General Economic and Country Context

Moldova is a landlocked country bordered by Romania and Ukraine in Eastern Europe, with a population of 2.6 million and 60 percent of its population residing in rural areas. It is faced with a challenging development path, exacerbated by the current COVID-19 pandemic and economic recession. The country needs to sustain macroeconomic stability and revive private sector growth and job creation, but its growth model is unsustainable and losing strength. A reliance on remittances, weather-dependent agricultural products, and high exposure to internal and external shocks pose exacerbating pressures on the country, further stressed by declining population numbers.

The Government of Moldova (GOM) development priorities are outlined in the Government Action Plan

(GAP) 2021-2022 and the National Development Strategy (NDS) 2030, which include a durable and inclusive economy, robust human and social capital, honest and efficient institutions, and a healthy and secure environment. However, progress has been inhibited by many factors including kleptocratic interests, malign influences, and an almost complete absence of government accountability. Given that these priorities have not yet been realized, USAID has chosen to address on-the-ground roadblocks that prevent progress.

To address the binding developmental problems affecting Moldova’s economic growth, and in line with the newly approved CDCS, USAID seeks to improve Moldova’s integration with Western markets and the competitiveness of transformative economic sectors in order to foster sustainable and Western-oriented economic prosperity in Moldova. RCA aims to fortify efforts in the key rural-based economic sectors of Moldova, such as wine, tourism and high value agriculture in order to ensure equitable, gender-balanced access to economic opportunities and to mitigate the economic impact of the COVID-19 pandemic on the rural regions of Moldova, where the resources of communities and businesses are already strained due to high out-migration and lack of labor force, increasing poverty levels and decreasing incomes. USAID supported the development of these sectors, each with a different magnitude of technical assistance by providing firm level direct support, industry association development, international marketing, international expert short term technical assistance (STTA), workforce development, and policy support.

b. Linkage to USG and GOM Priorities

Relationship to the USAID/Moldova CDCS

The proposed activity supports USAID Moldova’s recently approved CDCS and is aligned with US

Embassy Chisinau’s Integrated Country Strategy (ICS). Under the CDCS, USAID’s goal for the strategy period 2020 – 2025 is that Moldova will be a competitive and democratic European country that resists malign influences while being powered by an aspiring citizenry and robust private sector partnerships. As part of this goal, “USAID seeks to improve Moldova’s integration with Western markets and the competitiveness of transformative economic sectors in order to foster sustainable and Western-oriented economic prosperity in Moldova.”

Specifically, RCA falls under CDCS Development Objective 2: Sustainable Economic Growth Rooted in Euro-Atlantic Integration, IR 2.2 Competitiveness in transformative sectors enhanced, and will support Sub-IR 2.2.1 Private Sector Capacity for Engagement and Service Provision Strengthened, I.R.

2.2.2. Productivity Increased, I.R. 2.2.3 Access to Finance Increased and I.R. 2.2.4. Workforce Skills

Improved. RCA will further address Sub-IR 2.1.1 Targeted Regulatory Implementation Strengthened.

The Activity will also contribute to CDCS DO 1, IR 1.1 Citizen Engagement Catalyzed, Sub-IR 1.1.3

CSO constituent engagement and financial viability improved, as well as to Sub-IR 1.3.3 Integrity mechanisms strengthened.

The Activity will also address CDCS Cross-Cutting Priorities: Out-Migration, Inclusion of Youth and

Women.

The causal relationship to the DOs, the IRs and the linkages between the IRs are described in the Results

Framework of the CDCS attached below.

At the same time, both improved job skills and increased job opportunities are necessary to help respond to the problem of out-migration of Moldovan workers seeking employment abroad. The CDCS recommends supporting the competitiveness of industries/sectors which both have the capacity to be competitive domestically and regionally and to lead to job creation.

Relationship to the GOM National Strategy for Agriculture and Rural Development for the period

2014-2021: RCA is fully consistent with the Strategy’s General Objective No. 1: Increase competitiveness of the agri-food sector through modernization and market integration.” RCA interventions will specifically support the three core objectives under the Strategy’s Increased

Competitiveness Objective:

Specific Objective 1.1. Modernization of agri-food chains in order to meet EU requirements on food safety and quality.

Specific Objective 1.2. Facilitate access to capital, inputs and output markets for farmers.

Specific Objective 1.3. Reform education, scientific research and rural extension services in the agri-food sector, and creation of an integrated agriculture information system.

RCA is also consistent with the GOM strategy focus on developing competitive agribusinesses, and building their capability to take advantage of opportunities created by the shift to a market economy and

EU accession. RCA reinforces and complements the development priority stated in the GOM strategy, recognizing that individuals benefiting from the program are expected to be family commercial farms which are members of producer cooperatives and associations, and the employees of agribusiness firms.

RCA will be contributing directly to the achievement of the DCFTA’s goal to help Moldovan economy

“diversify production; expand trade and investment to enhance productivity and competitiveness”.

RCA is also directly aligned and complementary with the GOM’s Horticulture Development Program

(2020-2025) that aims at boosting the competitiveness and resilience of the horticultural sector by increasing the value of production and deepening the integration of the value chain to contribute to the sustainable development of the rural environment.

The GOM’s objectives of the development of the horticultural sector by 2025 are:1) improving market access;2) accelerating development through investment and innovation;3) competitiveness of the workforce;4) competitiveness of the business environment.

RCA shall further complement the objectives of the GOM’s National Tourism Development Program

(NTDP). The Program aims to develop Moldova as a competitive and sustainable tourist destination, bringing economic, environmental and social benefits to local communities and future generations.

NTDP has three general objectives:

1) Increasing the contribution of the tourism sector to the national economy.

2) Increasing the value added of inbound and domestic tourism services.

3) Extending the benefits of tourism development to regional and local communities and sustainable tourism development.

c. Coordination with other Donors

USAID is the leading agency supporting the development of the HVA agriculture, wine and tourism sectors in Moldova. The implementer shall also explore synergies and coordinate with the donor-funded projects listed below. The RCA implementation mechanism is specifically designed as an instrument to leverage development funds from other partner donors, such as the Government of Sweden, the

Government of Romania, the UK and other emerging donors, such as Estonia, Poland, etc. The RCA interventions should be designed allowing for flexibility in accommodating scaling up as a result of inflows of donor funds that may wish to co-fund certain subsets of activities under the RCA.

A key strategic donor that has engaged in supporting the wine and tourism sectors is SIDA that has channeled funding through the MCP jointly funded project, as well as through a UNDP-implemented and

EU-funded Confidence Building Measures Project that seeks to bring closer together the two banks of the

Nistru river and to integrate Transnistria economically with the right bank. Another key donor that has co-funded USAID tourism sector activities through the MCP mechanism is the UK.

In the tourism sector, under the UNDP project, as part of economic development projects, several tourism destinations are being developed in Transnistria, including the renovation of the Bender Fortress historic site. The Swiss Development Agency is funding a Making the Most of Migration Project that supports local community development projects for local diaspora groups. To date, Home-Town Associations, established in 38 municipalities across the country, mobilized over 10,000 migrants to develop community projects, including tourism-related projects, benefiting over 250,000 people in Moldova. The

EU is also active in the tourism sector at the regional/local level through its EU for Growth Project targeting economic cluster development in the Cahul and Ungheni regions.

Where appropriate, the implementer should consider and leverage collaboration with other USG efforts related or potentially related to tourism, such as those launched by the US Embassy and US Forest

Service. For example, the US embassy supported cultural preservation in the past and the US Forest

Service is planning new programs around civil society development and environmental preservation in the Old Orhei reservation.

The RCA activity will complement the efforts of other donors working in the HVA agricultural sector.

The activity will particularly focus on creating a strong coordination mechanism and building synergies with the UNDP, IFAD, FAO and World Bank agricultural support programs.

d. Relationship to other USAID Activities

The newly launched USAID’s five-year Future Technologies Activity (FTA) is designed to enhance the competitiveness of Moldovan transformative sectors, including, but not limited to, light manufacturing, Information and Communication Technology (ICT), precision engineering, creative industries, and digital media production, and to improve the country’s integration with Western markets in these sectors. It will do so by facilitating sustainable partnerships between Moldovan business associations, centers of excellence, and similar institutions and anchor firms and regional and international business associations and investors; improving the productivity and export sophistication of local companies; fostering the introduction of green technologies and sustainable best practices; enhancing the access to affordable finance, and by creating a labor force that is better aligned with the private sector needs, especially for youth, women, and vulnerable populations. The RCA Contractor shall coordinate closely with the FTA team, exploring synergetic linkages between the FTA and RCA targeted sectors. Specifically, the RCA

Contractor shall explore linkages between tourism and the cultural and creative industries in developing innovative tourism products, as well as integrating ICT and digital technologies as enablers across the high value agriculture, tourism and wine sectors.

RCA shall coordinate with USAID’s upcoming MESA Activity specifically related to activities assisting rural guesthouses transition towards green energy technologies (adoption of renewable energy or energy efficiency technologies) in line with the circular economy principles. Given that rural guesthouses are big energy consumers in their communities, they can serve as adopters of renewable/energy efficiency technologies for other community entrepreneurs and leaders.

RCA shall coordinate with USAID’s Moldova Competitiveness Transition Activity (MCTA) in transitioning of MCTA tourism sector legacy activities and policy work RCA to ensure continuity of

USAID support to the tourism sector.

In the access to finance field, the RCA Contractor should explore synergies and activities utilizing the

DFC toolkit, as well as the available DFC LPG programs launched by the USAID/Moldova mission.

Specifically, through the Development Finance Corporation (DFC), USAID enables Moldovan financial institutions to improve access to finance for SMEs through a loan guarantee mechanism. These guarantee agreements support lending in the SMEs with a focus on energy efficiency and ICT. A DFC loan portfolio guarantee allows a financial institution to share the risk associated with long-term loans, allowing local companies to have access to financial resources, difficult otherwise to be accessed. A

DFC-supported financial transaction can also create additionality as financial institutions initiate lending into new sectors and to new borrowers, such as start-ups, women and youth. By encouraging local channels of financing, USAID empowers individuals to improve their lives and Moldovan entrepreneurs to grow their businesses and increase sector competitiveness - a pillar for economic growth.

A $16.66M, seven-year Loan Portfolio Guarantee with Moldova-Agroindbank (MAIB) and Prime

Capital was established to incentivize lending to micro, small and medium enterprises (MSMEs), with particular focus on MSMEs in sectors which have, and will continue to be most impacted by COVID-19, as well as MSMEs in sectors of strategic importance to USAID/Moldova.

To mobilize private investment for development, the USAID/INVEST facility began working with

USAID/Moldova to assess and prioritize private sector engagement (PSE) opportunities that could unlock capital to support the Mission’s development objectives. A rapid scoping assessment identified high potential sectors and viable PSE mechanisms for development of ~60 investment opportunities.

C. 3 Statement of Work

C. 3.1 ACTIVITY OBJECTIVES AND EXPECTED RESULTS

The following section describes the objectives and the results that the Contractor must accomplish under this contract. The following sections provide a brief description of the development context under each of the three objectives, as well as a set of guiding principles that should guide the Contractor in addressing the objectives proposed below. The Contractor must propose a set of interventions to realize systemic changes in targeted sectors and accelerate the growth of the HVA, tourism, and wine sectors, which should be tailored to the Moldovan development context and maturity of the targeted value chains. The approach should also prioritize the institutional and environmental sustainability of the proposed interventions.

Objective 1 - Productivity and Market Access in Target Sectors Improved o Intermediary Result 1.1: Quality and value-added of products and services improved o Intermediary Result 1.2: Positioning and promotion of value-added products in strategic markets improved o Intermediary Result 1.3: Climate resilience and environmental sustainability of target sectors increased

Objective 2: Key Value Chain Supporting Functions Improved o Intermediary Result 2.1: Industry-led workforce development and skills improved o Intermediary Result 2.2: Increased private sector investments through PPPs addressing critical value chain gaps o Intermediary Result 2.3: Industry associations and private sector-partners’ capacity for engagement and service provision strengthened

Objective 3 - Enhanced Sector Enabling Environment to sustain growth and drive innovation o Intermediary Result 3.1: Improved capacity of local institutional actors to sustain PPPs, drive reforms, and achieve self-reliance o Intermediary Result 3.2: Strengthened national policies and regulations conducive to sector development

Program Beneficiaries and Geographic coverage

The focus of RCA is increasing the firm-level and sector-level competitiveness in high-potential sectors throughout Moldova, including Gagauzia and the left-bank region of Transnistria. While the activity shall not include a stand-alone component supporting Transnistrian beneficiaries, it is expected that the

Contractor will also include cross-cutting support to Transnistian beneficiaries/emerging sector associations/producer groups on a demand-driven basis, given the realities of the operating environment in the region. The emphasis will be on building cross-bank cooperation and developing business opportunities between the two banks and building on the significant progress and successes made under past USAID support in this region. In the tourism industry, RCA will support the integration of

Transnistria and Gagauzia into key tourism routes including their tourism attractions in the newly launched nationwide Wine Routes of Moldova, promoting these regions through the recently launched

#Neampornit initiatives; and assisting new guesthouses to open doors to tourists. In the high-value agricultural sector, RCA will build on the HVAA legacy and established partnerships in Gagauzia and

Transnistria regions.

Primary RCA program beneficiaries are expected to be primarily small and medium agricultural producers, small winemakers, transition wineries, tourism sector operators and rural businesses engaged in tourism services in the regions, sector industry associations, and individual agribusinesses engaged in agricultural input supply, processing, service provision, marketing, storage, branding, transport, export, etc. On the workforce development side, program beneficiaries are expected to be agricultural education and research bodies, public and private extension bodies. On the policy/enabling environment side, primarily project beneficiaries are expected to be local NGOs active in policy development area, relevant

Government bodies such as the Investment Agency, ONVV, such as the Ministry of Agriculture and local sector associations, such as Moldova Fruct Association, the Honey Sector Association, Berry Sector

Association, ANTRIM, PGI Wine Associations and others.

The Contractor is expected to assess and propose activities and interventions that engage women, youth and diaspora across all the RCA objectives, including as beneficiaries of the Climate Change, Innovation and Technology Transfer Fund. The Contractor shall identify and propose specific interventions that promote youth and diaspora engagement in targeted value chains that offer opportunities for youth productive employment and income generation.

RCA Targeted Sectors

RCA assistance shall support transformative interventions in the high value agriculture (table grapes, apple, berries, stone fruit, honey sub-sectors), organic agriculture, wine, and tourism. Assistance shall be geared towards building greater synergies and cross-pollination between these sectors resulting in greater resilience and economic inclusiveness of rural regions of Moldova. The Contractor shall propose the types of interventions needed to further grow the competitiveness of the target value chains and the rural development of the regions.

The proposed solutions should be viable and scalable, that would drive change across an entire value chain using the market systems development lens. The contractor is expected to develop exit and sustainability strategies for each of the targeted value chains and implement these within the project performance period.

● Wine Sector. For the past 15 years of wine sector support, the Wine of Moldova (WoM) country brand was developed and the industry governing body – National Office for Vine and

Wine – has been organized, which plays a leading role in positioning Moldova as a quality wine producer in the international marketplace. Resulting from USAID’s investments in production, export promotion, and sustainable governance, for the past 6 years the Moldovan wine industry has been entering new markets and is reoriented exports to the European Union and other high value international markets. The USAID-funded wine product quality upgrade programs, as well as the ONVV’s Wine of Moldova (WoM) Academy, along with the Protected Geographic

Indication (PGI) Associations’ extension services have been focused on generating an impactful transformation which supports the industries` shift from quality over quantity and expanding the

WoM national portfolio to enter into new quality markets.

● Tourism Sector. USAID interventions have played a pivotal role in accelerating development of the tourism sector in Moldova. It addressed failures of the free market that the

GOM could not address due to lack of resources and appropriate capacity. USAID projects allowed the start of consolidation of the fragmented sector by creating an industry association.

USAID also helped promote Moldova as a destination for the inbound tourism, and de facto created this sector of the economy. Pilot projects started by USAID demonstrated potential for

SME development in the sector, particularly outside the capital. The sector benefited from the cross-pollination with other sectors supported by USAID assistance, in particular the wine sector.

The cross-pollination and pilot projects resulted in stimulating private investment of small wineries in tourism attractions and infrastructure, which should result in the development of the sector in the future. USAID also stimulated the GOM to pay attention to the sector and implement improvements that are critical to the sector development, such as updating road infrastructure and improving infrastructure for the tourist. There are several issues in the sector that require investment and collective action that the free market will not be able to address. First, improving the cultural heritage sites and other natural attractions and updating infrastructure will benefit tourism in general. Second is the promotion of Moldova as a tourist destination. Promotion benefits all companies in the country, but none individually will be willing to invest in this common good beyond the activities that will bring them individual advantage. Lastly, monitoring of the business environment for the industry and legal or regulatory improvements are necessary for the industry to be competitive. These issues are addressed either by the industry associations like ANTRIM or the country government in developed economies. However, in Moldova, neither have sufficient capacity and resources to address these issues and continuing USAID support for these issues would be extremely beneficial.

High-Value Agricultural Sector, including:

● Horticultural Sector remains an important structural element in the national economy, with a clear multiplier effect on other sectors of the economy along the entire value chain, starting with those who are suppliers of raw materials and resources for horticultural producers, as well as partners who later support them in processing, packaging, distribution, logistics, transport and marketing of horticultural products on the domestic and export markets. Economic operators in the horticultural sector are a source of jobs and income in rural areas. The export value of fresh and processed horticultural products represents a significant share of the total export of the

Republic of Moldova (12.4% in 2017), reaching the maximum level of 300.3 million US dollars in 2017. In the horticultural sector, USAID support has focused on increasing quality and productivity; investing in gaining more recognition on high-value markets, especially in the EU and Middle East; strengthening the industry public-private partnerships; and assisting the HVA sector stakeholders in rethinking the development strategies with a focus on sustainable, green production and value-added, premium products.

● Honey Sector in Moldova has a large footprint (7,500 beekeepers and more than 250,000 bee families) providing economic opportunity and a source of income for many rural families.

USAID has implemented a range of activities to educate producers and others about the importance of bees and to improve their protection, increase the number of bee families and develop the beekeeping sector as a profitable business. During 2017-2021, USAID assisted the sector to increase production, improve product quality, and expand exports. USAID has also supported the development of sustainable training programs to train specialists and workers for the beekeeping sector, as well as launched a modern laboratory for queen bee artificial insemination, which will help improve bee health and ultimately, honey production.

● Organic Agriculture Sector: Niche export market opportunities in the EU exist for organically-grown fruits and vegetables from Moldova. Market development efforts could be placed on this product line, for both fresh and agro-processed products.

The Contractor shall address the following USAID/Moldova Mission priority programmatic themes in its technical approach:

INTEGRATE CLIMATE CHANGE RESILIENCE AND ENVIRONMENTAL

SUSTAINABILITY, CONSERVATION/ORGANIC AGRICULTURE AND CIRCULAR

ECONOMY PRINCIPLES AS CORE PILLARS

Ensuring the resilience of agriculture to climate change is critical, as climate change has the potential to drastically affect the agriculturally dependent Moldova. Increasing water scarcity and high variability of climatic conditions are affecting in a significant way the agricultural sector. The severe droughts and other types of weather and climate anomalies (like very hot waves, late spring and early autumn frosts, hail and heavy rains, etc.) affecting the entire territory of the country have intensified. In the last two decades, the Republic of Moldova has faced five particularly severe droughts (with high temperatures and a low level of precipitation), which have led to a contraction of the agricultural sector by at least 10 per cent. In 2020 the agricultural sector has contracted due to a severe drought, with the agricultural production decreasing by 27% compared to 2019. Recent sectoral assessments demonstrate that the

Moldovan agricultural sector is ill equipped to face climate change challenges and the resilience of the targeted agricultural sectors needs further strengthening. In addition to modernizing irrigated agriculture, the development of climate-resilient rainfed agriculture is equally, if not more, important for Moldova.

This will require the large-scale adoption of climate-smart agronomical management practices, the use of risk mitigation instruments, such as weather-based insurances, and associated incentive and extension programs.

Through RCA, USAID will work to improve landscapes sustainability and strengthen climate adaptation and resilience of the targeted agricultural sectors. RCA will address this vulnerability by ensuring the sustainability of USAID investments and promoting value-added and environmentally sustainable

Moldovan brands and products to enable Moldovan sectors to compete globally. RCA shall promote cleaner production and environmentally friendly approaches, including smart irrigation based on data for decision-making and climate-smart technologies that optimize the use of water and protect the soil and biodiversity.

RCA will work with the business community to promote best practices, energy efficiency, green technologies and inclusive economic growth. Private sector partners will be encouraged to apply and promote environmentally friendly technologies, improve energy efficiency, develop resilient business practices and make investments that help mitigate any perceived risks.[1]

A NEW MODEL FOR RURAL DEVELOPMENT USING CROSS-SECTORAL POLLINATION:

HVA AGRICULTURE, VITICULTURE AND TOURISM Under RCA USAID will pilot a new cluster-based model of rural development by reinforcing the cross-sectoral synergies between rural tourism, high value agriculture/organic agriculture and wine sectors, and capitalize on transferring the wine tourism success models and lessons learned to other tourism clusters: experiential, rural, soft adventure, etc. Focusing on cross-pollination with the wine, HVA horticultural, honey and organic sectors in diversifying the rural tourism product offering, could be an important ingredient to the rural development model to be piloted under this activity.

There is a strong link between tourism and the wine industry, since wine tourism remains one of

Moldova’s key attractions. With USAID assistance, important steps towards defining Moldova’s tourism offerings, as well as branding and promoting Moldova as a tourist destination were taken. The strong linkage with the wine sector and increasing demand for organic products can provide opportunities for further growth with the wine and agricultural sectors. The RCA activity should capitalize on the success of Moldova’s wine tourism as an anchor in accomplishing the RCA activity’s objectives.

SYSTEMIC DIASPORA, WOMEN AND YOUTH ENGAGEMENT Both high value agriculture, especially the berry and honey sectors, and rural/agritourism tourism have significant potential for diaspora investment attraction and for the productive employment of rural women and youth.

Rural tourism is one of the main tourism products in the country; this provides opportunities for women providing hospitality and catering services as well as those producing local handicrafts. Given the low level of entrance required for some of the jobs required in the tourism sector, it can also provide opportunities for youth. RCA will place increased focus on supporting employment opportunities for rural women and youth through targeted interventions and designated grant assistance. As is proven in

Moldova, as well is in other countries, returning members of the diaspora are especially interested in starting rural-based businesses capitalizing on their existing assets (agricultural lands, rural homes, knowledge of foreign languages and cultures, diaspora networks in the EU, knowledge of local culture and traditions, strong local heritage). Returning migrants can bring in innovation and capital, but also remain engaged with their communities and families, while contributing to the economic prosperity of their communities. Under RCA, the Contractor shall propose and design specific interventions and programs targeting diaspora engagement in the agriculture and tourism sectors. Such programs could be, for example, centered on diaspora involvement in promoting Moldova as a source destination in target markets with high Moldovan diaspora presence (such as Italy, UK, Ireland) or facilitating diaspora investment in the rural tourism sector through access to finance mechanisms and tools.

USING MEDIA TO MAXIMIZE DEVELOPMENT GAINS

RCA will explore innovative partnerships with traditional and digital media to address the RCA development objective, enhance the visibility of USAID programming in all regions of Moldova, including Gagauzia and Transnistria, and to scale up adoption of innovative technologies and practices across the targeted sectors. RCA will explore partnerships with FTA’s digital media partners to multiply the development impact through robust communication interventions and magnify results. In the HVA sector RCA will develop educational media content for farmers and students in partnership with national and regional media and television channels to develop in-depth coverage of agriculture issues in Moldova and educational programming for farmers interested in adopting new technologies.

PRIVATE SECTOR ENGAGEMENT THROUGH SUSTAINABLE PPPs – ANTI-

CORRUPTION AGENDA

RCA will address corruption through three dimensions: “watchdog” entity and stakeholder engagement, transparency solutions, and government functions. This holistic approach to helping combat corruption ensures that all stakeholders are part of anticorruption efforts. “Watchdog” entity and stakeholder engagement solutions may include industry association advocacy, service provision, and self-regulation capacity building. RCA activities will contribute to catalyzing citizen engagement across targeted rural sectors but will also mobilize CSO constituent engagement and will improve CSO financial viability, as well as lead to strengthening of integrity mechanisms both in the public and private sector space through

PPP models. Transparency solutions may focus on digitalization and ICT integration in the agricultural sector, digitalization solutions for MSMEs and ecommerce solutions, private sector oversight over public spending in targeted sectors through PPP models such as ONVV, Tourism Board, Horticulture Office.

Government-led solutions could include public access to information, streamlining of legal and regulatory approaches and functions through digitalization, or improvements to evidence-based policy development through better data collection.

MAINSTREAMING SME DIGITIZATION AND E-COMMERCE

The pandemic has further underscored the need for rapid deployment of such solutions to boost productivity and competitiveness. Digitization of the Moldovan agricultural sector can have a big impact on boosting productivity, mitigating climate change and enhancing the environmental sustainability of production. Artificial Intelligence (AI) techniques such as machine learning, digital technologies, and big data including satellite and remotely sensed data provided innovative ways to fill knowledge gaps and address numerous threats facing agricultural production systems. Rapid response digital communication and marketing campaigns, as well as implementation of e-commerce solutions are critical to economic and market expansion in the post-pandemic trade environment across all sectors. Widespread adoption of international standards, such as GLOBALG.A.P. and GRASP, is essential for the rapid expansion on the

Western export markets, as well as for ensuring streamlined business processes and environmental compliance at the company level.

Objective 1 - Productivity and Market Access in Target Sectors Improved o Intermediary Result 1.1: Quality and value-added of products and services improved o Intermediary Result 1.2: Positioning and promotion of value-added products in strategic markets improved o Intermediary Result 1.3: Climate resilience and environmental sustainability of target sectors expanded

Illustrative Outcomes 1.1:

● Increased private sector capacity for product certification and standardization in line with EU standards and market requirements

● Increased adoption of new production/processing/PHH technologies and management practices among farmers, processors, agribusinesses

● Increased producer access…