Trade_Hub_Quarterly_Report_Quarter_1_FY_2015_Jan_28_Final.pdf

Southern Africa Trade Hub Quarter 1 FY 2015 Report 1

SOUTHERN AFRICA

TRADE HUB

QUARTER 1 FY 2015 REPORT

OCTOBER - DECEMBER 2014

January 30, 2015

This publication is prepared for USAID by AECOM International Development to report on the work and milestones of the USAID Southern Africa Trade Hub under Contract No. 674-C-00-10-00075-00.

Southern Africa Trade Hub Quarter 1 FY 2015 Report i

SOUTHERN AFRICA

TRADE HUB

QUARTERLY REPORT FOR QUARTER 1

OCTOBER - DECEMBER 2014

FY 2015

Contract No. 674-C-00-10-00075-00

Submitted to:

USAID Southern Africa

Prepared by:

AECOM International Development

DISCLAIMER:

The authors’ views expressed in this document do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

Cover photo: Product from Tsonga Footwear Company, one of the companies the Trade Hub is supporting to exhibit at the MAGIC Las Vegas trade show in February 2015.

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I. TABLE OF CONTENTS

QUARTER 1 FY 2015 REPORT

I. TABLE OF CONTENTS ...............................................................................................................................II

II. INTRODUCTION AND OVERVIEW

III. HIGHLIGHTS & RESULTS

IV. TRADE FACILITATION

V. AGRICULTURAL VALUE CHAINS

VI. TEXTILES & APPAREL

VII. CLEAN ENERGY

VIII. ENABLING ENVIRONMENT

IX. ANNEXES

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ACRONYMS

ACE (Malawi) Agricultural Commodity Exchange ACTE Africa Competitiveness and Trade Expansion AGOA African Growth and Opportunity Act AgRED Agricultural and Rural Development AGRISETA Agricultural Education Authority for South Africa ANSI American National Standards Institute ASIF Agricultural Storage Investment Fund ATI African Trade Insurance B2B Business-to-Business BITC Botswana Investment and Trade Centre BOBS Botswana Bureau of Standards BURS Botswana Unified Revenue Service CASS Central African Seed Services CE Clean Energy CMS Customs Management System CMT Cut Make Trim COP Chief of Party CPI Investment Promotion Institute CTFP Comprehensive Trade Facilitation Program DCA Development Credit Authority DFI Direct Foreign Investment DOE Department of Energy (Swaziland) DRSP Department of Policy and Strategic Planning (Lesotho) EATIH East Africa Trade and Investment Hub ERB Energy Regulation Board ETG Export Trading Group FTF Feed the Future FY Fiscal Year GRP Good Regulatory Practice HS Harmonized System ICT Information and Communications Technology INNOQ Instituto Nacional de Normalização e Qualidade (Mozambique) IPA Trade and Investment Promotion Agency IPP Independent Power Producers JSE Johannesburg Stock Exchange LNDC Lesotho National Development Corporation LTE Leaders in Trade Exhibitions MBS Malawi Bureau of Standards MCC Maputo Clothing Company MCM Mozambique Cotton Manufacturers

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MMEWD Ministry of Mines, Energy and Water Development (Zambia) MT Metric Tons MTICM Ministry of Trade and Industry, Cooperatives and Marketing (Lesotho) NASFAM National Smallholder Farmers’ Association of Malawi NCE Namibia Customs and Excise NEP National Enquiry Point NSW National Single Window PMI Project Management Institute PMU Project Management Unit PS Permanent Secretary PTF Partnership for Trade Facilitation RE Renewable Energy REA Rural Electrification Authority REFIT Renewable Energy Feed-in Tariffs RERA Regional Electricity Regulators Association of Southern Africa RFP Request for Proposals RUCF Ready to Use Complementary Food SACAU Southern African Confederation of Agricultural Unions SACU Southern African Customs Union SADC Southern African Development Community SADCSTAN SADC Cooperation in Standardization SAGL Southern African Grain Laboratory SANSOR South African National Seed Organization SARS South Africa Revenue Service SCCI Seed Control and Certification Institute SERA Swaziland Energy Regulatory Authority SESA Strategic Environmental and Social Assessment SIPA Swaziland Investment Promotion Authority SME Small and Medium Enterprise SPG Strategic Partnership Grant SPS Sanitary and Phytosanitary SOW Scope of Work SWASA Swaziland Standards Authority TBT Technical Barriers to Trade TC Technical Committee TFA Trade Facilitation Agreement TIFI Trade Industry Finance and Investment TRALAC Trade Law Centre UNCTAD United Nations Conference on Trade and Development USAID United States Agency for International Development USG United States Government USTR United States Trade Representative WCO World Customs Organization WRS Warehouse Receipt System

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WTO World Trade Organization ZABS Zambia Bureau of Standards ZAMACE Zambia Agricultural Commodity Exchange

Southern Africa Trade Hub Quarter 1 FY 2015 Report 1

II. INTRODUCTION AND

OVERVIEW

The key objective of the USAID-funded Southern Africa Trade Hub (Trade Hub) project is to increase international competitiveness, intra-regional trade, and food security in Southern Africa.

The Trade Hub is supported by USAID under Contract No. 674-C-00-10-00075-00 awarded to AECOM International Development with a period of performance from 2010 until 2015. The initiatives of the United States Government that provide context and support for the Trade Hub’s activities are:

African Competiveness and Trade Expansion (ACTE);

Feed the Future (FTF);

Clean Energy (CE); and Partnership for Trade Facilitation (PTF).

In line with these initiatives and the technical direction in Contract Modification No. 8, Section C: Scope of Work of November 20, 2012, the Trade Hub provides needs-driven assistance to the Southern African Development Community (SADC), the Southern African Customs Union (SACU), governments, and private sector organizations in eight countries.

With offices in Gaborone, Botswana; Centurion (Pretoria), South Africa; and embedded advisors in offices in Malawi and Namibia, the Trade Hub works primarily in Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, and Zambia. Starting in FY2013, and in line with Modification No. 8 of the project contract, the Trade Hub reduced its technical assistance delivery from 13 to five indicative result areas, which are described below:

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IR1.1: Trade Facilitation aims to improve efficiency in trade administration covering import, export and transit goods procedures, and transparency of border administration by promoting and facilitating the adoption of simplified trade processes and modern tools.

IR1.2: Agricultural Value Chains focuses on improving storage and structured trade; standards and quality;

investment and adoption of modern technologies; and strengthening regional organizations to enhance production and availability of tradable maize, groundnuts and soy to enhance food security.

IR1.3: Textiles and Apparel focuses on business linkages between regional and international buyers and African-based garment and textiles manufacturers; and providing technical and advisory support to Botswana and Mozambique to position themselves as attractive and viable investment locations.

IR1.4: Clean Energy works in collaboration with the Regional Electricity Regulators Association of Southern Africa (RERA) and country energy regulatory bodies to build capacity to develop and implement policies, regulations and feed-in tariffs that will enable and attract new investments in clean energy generation.

IR1.5: Enabling Environment supports measures that improve the business climate, environmental compliance and gender integration as enablers of competitiveness and sustainability.

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III. HIGHLIGHTS & RESULTS

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Trade Facilitation

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IV. Trade Facilitation The Trade Hub’s trade facilitation activities are guided by the WTO’s Trade Facilitation Agreement that was negotiated in December 2013. According to the WTO, the “Trade Facilitation Agreement contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.”1

As the Trade Facilitation Agreement has to be implemented among SADC’s member states, whose trade capacities are in various stages of development, the Trade Hub is engaged in a number of activities.

Throughout the quarter, the Trade Facilitation team continued extensive consultations with the Malawian and Namibian governments to agree on a road map, action plans, resources and organizational decisions and structures needed to start implementation of the National Single Window (NSW). The Trade Hub was also engaged in the drafting of a new customs law and the implementation of a customs modernization program in Botswana in anticipation of a new SADC Comprehensive Trade Facilitation Program.

The work of the Trade Hub’s Trade Facilitation team ensures that the modernization tools the Trade Hub is promoting and facilitating address the following elements:

Efficiency of customs administration;

Efficiency of import-export procedures;

Transparency of border administration;

Availability and use of ICT; and Improved regulatory environment.

NATIONAL SINGLE WINDOW

According to the World Customs Organization, a “Single Window Environment is a cross border, ‘intelligent’ facility that allows parties involved in trade and transport to lodge standardized information, mainly electronic, with a single entry point to fulfill all import, export and transit related regulatory requirements.”2

The establishment of a National Single Window is seen as a key element of customs modernization and trade facilitation. Following the guidelines of the World Customs Organization, the Trade Hub set the goal of facilitating the adoption of a National Single Window as a trade modernization program in Botswana, Malawi and Namibia. A number of milestones were set to measure and track progress towards the key results.

1 http://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm 2 http://www.wcoomd.org/en/topics/facilitation/activities-and-programmes/single-window/single-window.aspx

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MALAWI NATIONAL SINGLE WINDOW

In October 2014, the Trade Hub’s National Single Window Advisor in Malawi met with key senior management in the Malawi Ministry of Industry and Trade to discuss the formation of the Malawi NSW Steering and Technical Committees. Discussion focused on the urgency of establishing these committees in order to commence technical training of the committees on their Terms of Reference, NSW familiarization presentations, and the commencement of project management and change management training.

By the end of Quarter 1, the Steering Committee had been appointed and various technical committees were still being finalized.

The NSW Advisor also met with the Hon.

Joseph Mwanamvekha, Minister for Industry and Trade, Malawi, to provide him with an in-depth briefing regarding the NSW, the Trade Hub’s role is providing technical assistance, and progress made to date.

During the working session, a number of key items were discussed including:

The National Single Window and how other countries have implemented the process;

Where Malawi is in relation to the NSW road map;

The role and support of the Trade Hub project for the NSW in Malawi; and The immediate actions, activities, and resources required to move forward successfully with NSW.

The Minister noted that soon there would be an announcement regarding the formation of a Cabinet Committee for Doing Business to which the NSW National Steering Committee will report. The Trade Hub will be available to provide a detailed briefing and presentation to the National Steering Committee on the NSW with an analysis of other countries' implementation experiences as well as the benefits and options for Malawi’s NSW.

In Lilongwe, the Trade Hub conferred with the Minister and the Permanent Secretary for the Ministry of Industry and Trade regarding their active support for a National Single Window in Malawi. A presentation regarding the NSW project was delivered, and the request was made to move forward with the establishment of a NSW Steering Committee and its technical committees.

The Minister invited the Trade Hub to make a presentation to the Malawi Doing Business Committee, which took place in late December 2014. This Committee is comprised of key ministers and private sector actors who make major decisions about improving Malawi’s international standing on foreign direct investment and ease of doing business rankings. At the meeting, the Minister committed to taking the NSW project forward to the President of Malawi for endorsement and priority action.

The Ministry of Foreign Affairs in Malawi

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The Trade Hub worked with the Commissioner General of the Malawi Revenue Authority and the Commissioner of Customs and Excise to prepare a briefing paper and work plan presentation to the Cabinet Committee for Doing Business in Malawi chaired by Malawi’s Minister for Foreign Affairs.

The presentation covered the benefits of Single Window to the trading community, the government, and Malawi’s ranking on the World Bank’s “Trading Across Borders” index; the five evolutionary stages of Single Window implementation; how the WTO’s Agreement on Trade Facilitation points to the need for Single Window; and the Trade Hub’s Single Window Roadmap.

The Trade Hub also provided the Cabinet Committee for Doing Business with an overview of progress against the Trade Hub’s Roadmap. Points of progress include the following:

• Engagement of multiple government agencies and private sector entities; and

• The launch of the first meeting of the National Single Window Steering Committee since December 2013. The meeting enabled a number of strategic decisions to be made that allow the Malawi Revenue Authority to lead the way forward in completing the activities of the NSW Roadmap and detailed work plan.

The Trade Hub’s presentation covered the required next steps for implementing a National Single Window in Malawi, as follows:

• The need for the Cabinet Committee for Doing Business to seek or provide the National Single Window project with a “Champion” as its public supporter;

• The need for the Cabinet Committee for Doing Business to consider how best the government could fund a National Single Window and to ensure that the relevant government agencies include a budget allocation for its implementation;

• Acceptance of the impending invitations from the Trade Hub to a number of government agencies to participate in Project Management and Change Management Training in 2015;

• Implementation of the Trade Hub’s Communication Strategy, with public awareness presentations commencing in 2015; and

• Providing assistance with a feasibility study and the ASYCUDA World project.

Finally, a joint Malawi Revenue Authority/Trade Hub presentation was delivered to the Private Sector Development Donor Group that yielded encouraging feedback from donors.

Meeting with Malawi government officials to move forward with the National Single Window

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NAMIBIA NATIONAL SINGLE WINDOW

From November 3-14, the Trade Hub provided Project Management training to the Namibian National Single Window project team and delegates from Customs and Excise and the Ministry of Trade and Industry in Windhoek, Namibia.

Dr. Andre Malan led the training using a Namibian-tailored syllabus derived from the Project Management Institute (PMI), a leading global organization providing standards for project management.

Dr. Malan is one of only nine PMI Project Management Professionals registered in Namibia and, in addition to training and consultancy, is striving to build national awareness and recognition of project management.

BOTSWANA NATIONAL SINGLE WINDOW

In this quarter, the Trade Hub proceeded with a customs modernization program in response to BURS’ request for technical assistance. The customs modernization strategy will lay the groundwork for implementing NSW. The Trade Hub embedded a customs modernization advisor with BURS in September 2014.

Botswana’s Parliament passed the Electronic Communications and Transactions Bill and the Privacy and Data Protection Bill in May 2014 and submitted both to the president of Botswana for signature. These two statutes will provide the legislative authority for Botswana to move forward on their NSW vision. The Trade Hub and USAID have planned technical assistance for FY 2015 to support further productive engagement going forward.

In addition, the Trade Hub has been assisting BURS in the development of their technical specifications for selection of a new Customs Management System (CMS). The Trade Hub will help BURS draft an RFP to implement a CMS that is adaptable to incorporating NSW system applications.

The Trade Hub also coordinated closely with BURS in support of the anticipated decision by the Cabinet of Ministers in support of the NSW.

NAMIBIA TRADE INFORMATION PORTAL

Work on the Namibia Trade Information Portal is well underway. During this quarter, Namibia Customs and Excise (NCE) approved the technical specifications for the portal, and the Trade Hub supported NCE to garner greater support from other government agencies to provide necessary documentation. The primary trade content catalogue is now almost complete, providing a detailed description of all the trade documentation and information to be collated for uploading to the Trade Information Portal.

Project Management Training for NSW in Windhoek, Namibia

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3CE Technologies, Inc. (Canada) joined the Namibia Trade Information Portal project at the start of Quarter 1, bringing with them globally recognized tools and expertise in Harmonized System (HS) tariff management and goods classification. Throughout the quarter, 3CE worked closely with the Trade Portal website developer, iWits cc (Namibia) to integrate 3CE’s classification tools into the Trade Portal website structure.

The results of this collaboration will be tested by Namibian stakeholders at the start of Quarter 2.

The HS classification tool is a critical element of the Trade Information Portal, allowing users to search and query the Namibian Customs Tariff using natural language and without requiring specialist knowledge or experience. In addition to increasing transparency for traders, the tool will help reduce misclassification of goods, which in turn boosts customs revenue.

Also during the quarter, the Trade Hub and Namibia Customs & Excise enlisted the help of the Southern Africa Customs Union (SACU) in securing electronic copies of the SACU/Namibia Customs Tariff Schedule. These electronic documents are essential foundation data required for effective operation of the HS classification tool and Customs duty calculator tool.

With website and tool development over 90% complete, the focus is on Namibia Customs and Excise to provide narrative text, photographs, and institutional information to ensure the Trade Information Portal has plenty of useful content in time for launch.

SADC COMPREHENSIVE TRADE FACILITATION PROGRAM

The Southern Africa Development Community (SADC) is working closely with the Trade Hub to develop a Comprehensive Trade Facilitation Program (CTFP). The CTFP will act as a roadmap for SADC and member states on how best to address impediments to the cross-border flow of international goods in compliance with the WTO Agreement on Trade Facilitation, the WTO’s Revised Kyoto Convention, and other international and regional trade facilitation initiatives.

The Trade Hub met with the SADC TIFI (Trade Industry Finance and Investment) Director and her team on November 14, 2014 to receive SADC’s views and concurrence on the Inception Report, which was approved.

OTHER TRADE HUB ACTIVITIES

BOTSWANA LEGAL REVIEW OF THE CUSTOMS ACT

During the quarter, the Trade Hub worked on drafting the new Botswana Customs Act. The Trade Hub provided the resource on a cost sharing arrangement, in which BURS provided facility and incidental costs associated with the involvement of BURS business and legal analysts to support the Trade Hub advisor. The first reading of the draft law is expected to be completed by March 2015, and the second reading will commence immediately after that time.

WTO TRADE FACILITATION AGREEMENT WORKING GROUP

The Trade Hub accompanied four representatives of the Customs Administrations of Malawi, Botswana, Namibia, and SADC to Brussels, Belgium in September 2014 to attend the Second WTO Trade Facilitation

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Agreement (TFA) Working Group. The working group was held to update WCO members on the status of TFA negotiations, discuss the WCO Mercator Program for TFA technical assistance, and plot the way forward on WCO members adopting modernization programs required to comply with the TFA.

Approximately 170 participants attended, including WCO members and donors (World Bank, UNECE, UNCTAD, European Commission). All participants were eager to move forward on TFA compliance measures despite the stall in progress of the TFA by WTO members.

Bevan Simataa, Commissioner of Customs, Namibia, was a panelist on the WCO Mercator Program panel while Willie Shumba, Senior Customs Advisor, SADC, engaged the Working Group on a number of discussion issues related to the “regional” implications for the TFA. Overall, the Working Group was a huge success that paves the way for strategic planning efforts by WCO members to address the TFA and its requirements proactively.

During the Working Group, the Trade Hub arranged for its beneficiary partners to attend a meet and photo opportunity with the Secretary General of the WCO, Kunio Mukirya, and other Executive Branch members.

The Secretary General expressed delight at the level of assistance currently being provided by USAID to assist SADC members in moving forward with Customs Modernization efforts.

The Trade Hub also arranged meetings with key representatives of the WCO Risk Management, Cargo Targeting System, and WCO Publications units to familiarize the visiting customs officials with technical assistance available through the WCO itself. Meetings were also arranged with the Director of the WCO Capacity Building section managed by Erich Kieck, former senior manager for the South Africa Revenue Service (SARS), who is well-known to SADC and its members.

TRALAC CENTER SEMINAR ON TRADE LAW

The Southern Africa Trade Hub participated in the “Enhancing US-South Africa Trade and Investment Seminar” in Cape Town, South Africa, which was hosted by the Trade Law Center (TRALAC) at the University of Cape Town School of Business. Attendees included representatives from the National Retail Clothing Federation of South Africa, the US government, private sector actors, and local policy makers.

The keynote speaker was Laird Treiber, Economic Counselor from the Economic Affairs Section of the US Embassy/South Africa, who discussed the desire of the US government to engage further with South Africa to enhance trade and investment between the two countries.

As part of the discussion, the Trade Hub provided participants with a summary of the Hub’s activities related to trade in Malawi, Namibia, and Botswana. The proposed SADC-USAID Trade Facilitation Conference planned for May 2015 in Johannesburg was also discussed, with widespread support voiced by the TRALAC attendees.

ISSUES, CHALLENGES AND LESSONS

NSW. National elections delayed the process in Namibia, and there were delays coordinating the arrangements between the Ministry of Finance and the Ministry of Trade and Industry. As a result, despite cabinet memoranda in place, the Trade Hub continues to work closely with counterparts to identify NSW “champions” in Namibia and Malawi to act as the link to the upper reaches of government, to spearhead inter-agency cooperation and coordination, and to drive meaningful engagement with the private sector.

The Trade Hub’s current strategy and approach includes the following elements, which should expedite the implementation schedule:

Aligning technical assistance with the government’s operational environment and processes;

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Facilitating meaningful dialogue and consultation between the government and private sector, and promoting participation by traders in reform processes; and

Providing technical assistance to improve agency management skills and capacity in project management, change management, and human resources management.

The Trade Hub’s objective is to create a NSW environment that enhances private sector (trader) acceptance and support, allowing the NSW to develop with the confidence that it will succeed.

The Trade Hub has determined that the best approach in Namibia is to encourage and support customs modernization and creation of a customs clearance single window as “phase one” of establishing a National Single Window.

Customs organizations generally have greater autonomy, resources, and advanced systems to make decisions and investments and to lead the way towards NSW. Working with other donors and SADC to support the Trade Hub’s mandate will go a long way to ensuring success.

Customs Law Review in Botswana. The Trade Hub experienced delays in completing the first reading of the Customs Act due to the absence of government lawyers, either from BURS or from the Ministry of the Attorney General.

In the next quarter, the Trade Hub will continue to work with BURS to arrange its own legal service review of the draft legislation.

Goods depot outside Lilongwe, Malawi

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MILESTONES AND RESULTS PLANNED FOR QUARTER 2

NATIONAL SINGLE WINDOW

Project Management delivered in Malawi – PMU established and operational;

PMU operational in Namibia;

NSW Champion, Steering and Technical Committees, and PMU established in Malawi;

NSW Launch events in Malawi and Namibia;

Change Management training completed in Malawi and Namibia;

BPR training underway in Malawi and Namibia;

NSW Readiness Assessments developed and underway in Malawi and Namibia; and Botswanan Cabinet of Ministers approval of NSW.

SADC COMPREHENSIVE TRADE FACILITATION PROGRAMME (CTFP)

Comprehensive Trade Facilitation Program development completed;

Consultative meeting on CTFP organized;

SADC sign-off on the CTFP and translation activities underway; and SADC/USAID/WTO Trade Facilitation Conference concept approved and planning underway.

BOTSWANA CUSTOM LAW REVIEW

First reading of Customs Law completed; and Second reading of Customs Law completed.

TRADE REPOSITORY IN NAMIBIA

Completion of website and tool development;

Narrative and photographic content finalized;

Trade documentation prepared for publication;

BPR of existing documentary maintenance procedures to ensure portal is regularly updated; and Official public launch.

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Agricultural Value Chains

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V. Agricultural Value Chains As a partner of the Feed the Future program, the Trade Hub works hand-in-hand with FTF countries (Malawi, Zambia and Mozambique) to develop their agriculture sectors and break the vicious cycle of poverty and hunger to promote global prosperity and stability.

The Agricultural Value Chains component focuses on the following four primary result areas across the targeted value chains of maize, groundnuts and soybeans:

Improved storage and structured trade;

Improved standards and quality;

Increased investment and technology transfer; and Strengthened regional organization.

IMPROVED STORAGE AND STRUCTURED

TRADE

The following are the key activities undertaken and results achieved by the Trade Hub in improved storage facilities and financing and structured agricultural trade in Quarter 1, FY 2015:

WAREHOUSE RECEIPT SYSTEM

The Trade Hub is working in three countries to establish a Warehouse Receipt System (WRS), which enables the creation of certified warehouse receipts storage facilities. The WRS allows farmers to store grain and sell when prices are favorable, using their warehouse receipt as collateral for inputs and other expenses in the meantime. Warehouses must meet accreditation standards to comply with insurance requirements and to access bank financing. The system rests on a guarantee of definite quality and quantity.

MOZAMBIQUE

In November, the Trade Hub presented its final report for the WRS Risk Assessment survey to Agricultural and Rural Development (AgRED), the agriculture sector development partner working group chaired by USAID Mozambique. The Export Trading Group (ETG) Pilot WRS was approved, and implementation commenced following the AgRED stakeholders’ meeting. SOWs were developed for the further work required on WRS, including pilot implementation support and ATI membership; and

The Trade Hub facilitated a joint effort with African Trade Insurance Agency (ATI) to support Mozambique’s membership to ATI. A Trade Hub consultant will manage the implementation process. In November, meetings were held in Maputo with commercial banks, insurance companies and regulatory bodies to map the way forward. ATI offers Surety Bonds to member countries that include Warehouse Bond Insurance to support the WRS and provide insurance coverage to lending institutions financing warehouse receipts.

Removing groundnut skins greatly reduces the amount of aflatoxin contamination

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MALAWI

ACE Malawi has continued to operate WRS in the country;

ATI and the Trade Hub are working jointly to develop Surety Bonds (warehouse bonds) to support ACE and commercial banks in financing the Warehouse Receipt System. Warehouse bonds have the potential to increase trading volumes in the grain sector by making WRS finance more available; and

An SOW for follow up work for a consultant on warehouse bonds was developed in the quarter.

ZAMBIA

In 2010, the Agricultural Credits Act No. 35 established a legal framework for WRS development in Zambia, but the act had remained unimplemented since its creation. On November 7, the required Statutory Instrument was signed by the government of Zambia. As a result, effective development and operation of the Zambian WRS can now take place, with ZAMACE as the appointed authorized agent to operate and coordinate the system;

ZAMACE has requested that the Trade Hub facilitate the development of a WRS to be active by

April 2015. The Trade Hub is providing critical technical support to stakeholders and the industry in WRS training and sensitization, while working closely with SA-based partner JSE; and

ATI Zambia and the Trade Hub will develop Surety Bonds (warehouse bonds) in Zambia following successful meetings held in Lusaka in the quarter. ATI has an office in Lusaka, which will expedite the process to support SOWs for follow up work on WRS and warehouse bonds development.

AGRICULTURAL STORAGE INVESTMENT FUND (ASIF) DEVELOPMENT

The Trade Hub is working with the Agricultural Commodity Exchange for Africa (ACE) to develop the Agricultural Storage Investment Fund (ASIF) for Malawi, with subsequent regional replication, including as a priority into Zambia.

The fund will offer commercial long-term finance at competitive US dollar rates to storage operators to finance the development of decentralized storage in the region. The storage will be open to third-party operators and is conditional upon participation in the Warehouse Receipt System.

ASIF will open up financing for warehouses in rural areas

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While supporting the continued growth and efficiency of commercial value chains, the fund will also help to reduce grain losses for smallholder farmers and enable farmers, traders, and other value chain players to leverage finance against their grain stocks, increasing food security and farmer incomes.

In this quarter, terms for warehouse financing were confirmed with three leading DFIs (EIB, FMO, AFD) and three Malawian banks (NBM, FMB, CDH) for credit lines to banks for on-lending to agribusiness and SMEs. The focus is on the allocation of funding earmarked for rural and SME warehousing to boost development impact, especially for smallholder farmers. Other activities included:

Information from the three banks was gathered and submitted—including three full year financials, management and governance information—to the interested DFIs to initiate the due diligence process;

The Trade Hub coordinated with USAID

Pretoria and USAID Malawi on the application of the DCA facility to loans from Malawian banks to agribusiness and SMEs;

The Trade Hub devised and disseminated materials in coordination with ACE to develop a detailed

SME pipeline of warehousing transactions in Malawi;

A work plan for ASIF Zambia was agreed upon with Musika (a Zambian non-profit company that works to stimulate private sector investment in the smallholder market), and the Trade Hub shared templates to empower Musika to develop both the main and the SME pipeline, and to engage Zambian banks;

The Trade Hub devised a strategy in coordination with UFF, the agricultural investment management subsidiary of Old Mutual, to develop a regional agri infrastructure fund, backed by AMSCO’s establishment of a Technical Assistance fund; and

Following a well-attended and successful ASIF conference in Johannesburg in September 2014, the Trade Hub and AMSCO are now facilitating the process of taking ASIF Malawi to market. If fully subscribed, the fund may total over US$40 million.

IMPROVED GRAIN STORAGE MANAGEMENT

The Trade Hub completed a two-year certified grain management training program for the region, which included 12 ten-day intensive courses in Zambia, Malawi, and Mozambique implemented by Ybema Grain Services.

There were 253 direct participants in the program, 74% of which passed certification requirements to result in the issuance of 187 accredited competency certificates in Basic Competency Grain Management, Storage and Grain Handling.

The Trade Hub meets with AMSCO to facilitate the Agricultural Storage Investment Fund

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The stringent level of the certification was based on AGRISETA (Agricultural Education Authority for South Africa) standards and was verified by the Trade Hub’s accredited training consultant. Gender mainstreaming played an important role in the program with 15% female participation resulting in 28 certifications earned by women.

In this quarter, the Trade Hub also completed the Agco Zambia Bags2Bulk project, which provided certified training in bulk grain management and storage to participants.

The Bags2Bulk project targets emerging grain traders with the capacity to trade bulk grain, providing training and market linkages to larger commercial grain traders such as Cargill, Olam, Bunge-Senwes (BTI), AFGRI, NWK, and CHC– Zdenake. Trainings were conducted in Kabwe, Mkushi and Petauke covering the Central, Northern and Eastern Provinces of Zambia.

More than 60 traders attended these courses.

Ybema Grain Services has been able to develop a sustainable regional business platform offering mobile training and certification for storage owners and agents with remote grain storage warehouses or bulk silos. In Zambia, Ybema Grain Services already negotiated a separate contract with AGCO Zambia for certified bulk grain training.

DEVELOPMENT OF E-CERTIFICATION SYSTEM FOR AGRICULTURAL EXPORTS

A draft SOW was developed and shared with USAID Pretoria.

INCREASED INVESTMENT AND TECHNOLOGY TRANSFER

The Trade Hub continued to put major emphasis on increased investments and technology transfer through the development of the Strategic Partnership Grants Program by tightening up administration of ongoing grants, implementing new grants signed in FY2014, and signing seven grants during the quarter. Key highlights include the following:

SPG ADMINISTRATION AND MANAGEMENT

Reorganized the filing system both on soft and hard copy;

Ensured that all Environmental Screening Forms were duly signed;

Restructured the checklist to conform to the current AECOM grantee practices;

Ran the grantees on MK Denial, to certify whether they have been excluded from participation in US

Federal procurement activities, before awarding any contract (grantees) in line with USAID requirements; and

Maintained grantee files.

CLOSE-OUT OF GRANTS AWARDED IN 2013

Two years of training courses throughout Southern Africa resulted in 187 new certified grain managers

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Capstone/Peacock Malawi

Seed trials in Mozambique commenced on November 17, 2014 in Manica province with Capstone supplying 23 varieties (maize, soya and sugar beans) for trials in three points in Mozambique: the northern Nampula province, the south in Maputo province, and the center of Manica province in Chimoio.

The seed trials are conducted to provide agronomic data on adaption of new varieties being introduced in order to develop extension messages that are appropriate for farmers. The information includes yield potential and adaptability in different agronomic zones. Verification will be done during FY2015 Q2, followed by grant close out.

SAGM/Jungle Beat Zambia

The final milestone has been achieved, and the grant is in the last stage of close out.

NWK/NWK Zambia

The final milestone has been achieved, and the grant is in the last stage of close out.

IMPLEMENTATION OF GRANTS AWARDED IN FY2014

PMD Packaging/Valid Nutrition Malawi

Valid Nutrition Malawi (VNM) is developing a new product: RUCF (Ready to Use Complementary Food), which targets children under five and pregnant women. The grant is also enabling Malawian farmers to supply and market aflatoxin-compliant groundnuts as they compose a major ingredient of the RUCF. The grant has made a new packaging line at PMD possible, the components for which have been shipped to Malawi and will be commissioned in Q2 FY 2015.

Ybema Grain Services

The grant enables Ybema to provide commercial grain management training services within the FTF countries to improve grain storage and reduce post-harvest losses, providing a sustainable way for the Trade Hub to phase out its direct support of grain storage management training while ensuring the activity continues. Agco Zambia Bags2Bulk is paying for the training program, in which 60 traders were trained during the quarter.

Deltamune/VETLAB

The Deltamune/VETLAB grant provides accredited grain and oil seed laboratory services (including aflatoxin) in Zambia: a first for the SADC region except for South Africa. A Deltamune manager has been assigned to Zambia to commence the training program. See the section on aflatoxin mitigation below for more information.

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DEVELOPMENT AND IMPLEMENTATION OF FY2015 STRATEGIC PARTNERSHIP GRANTS

Ammtech/COMACO

This quarter, the Trade Hub signed a Strategic Partnership Grant with Ammtech/COMACO for groundnut (peanut) processing development in Zambia. The grant is designed to produce peanut butter for the Zambian market and provide extension services to smallholder farmers in Zambia’s Eastern Province.

Ammtech is a high precision agricultural machinery manufacturer based in South Africa who is partnering on the grant with COMACO, an agricultural venture based in Lusaka, Zambia.

The grant will build the capacity of COMACO by training their staff and developing a 250kg per hour peanut butter processing line at the COMACO premises in Chipata, Eastern Province. As part of the grant, smallholder farmers will be trained in best agronomic practices, post-harvesting handling techniques to mitigate aflatoxin contamination, and methods to increase productivity.

The grant will allow COMACO to produce peanut butter as fortified food for the market in Zambia and the region, and provide stable market and extension services to 42,000 smallholder farmers and their rural households, of which 51% are women. An agreement has also been put in place with major retailer ShopRite enabling COMACO to expand its market throughout the region.

Zhauns/Lumuno Organic Farms

The Trade Hub signed a new Strategic Partnership Grant with Zhauns Business Opportunities. Zhauns Business Opportunities—a high precision agricultural machinery manufacturer based in South Africa—will partner with Lumuno Organic Farms, an agricultural venture based in Lusaka, Zambia.

The grant will upgrade Lumuno’s processing capacity and develop its small-scale vegetable farmer outgrower network. As part of the grant, Lumuno has already organized 300 smallholder farmers into an outgrower scheme to cultivate chilies, tomatoes, garlic, and onions and has begun training the farmers on good agronomic practices.

The grant includes the following activities:

Southern Africa Trade Hub Quarter 1 FY 2015 Report 20

Purchase and installation of an upgraded vegetable processing plant at Lumuno Farms in Zambia;

Lumuno staff trained in the operations of the plant;

300 organic farmers trained by Lumuno in organic farming and post-harvest handling;

Employment creation; and Increase in market capacity for Lumuno.

The grant will make locally processed vegetable brands available in local markets with the possibility for regional export. Lumuno is expected to increase its annual vegetable purchases by 350,000 ZMW (US$58,333) in the first year of grant operation; afterwards, outgrower purchases are projected to increase by 30% annually.

The 300 smallholder farmers in the outgrower network (60% of whom are women) will have a guaranteed market for their product, and the grant will also result in increased investment in technology through improved processing equipment.

Standards and quality will be improved with the development of a quality control system and Hazard Analysis Critical Control Points (HACPP) certification for Lumuno—a systematic approach to prevent food safety hazards during food production before they occur.

Boerdery/NASFAM

A Strategic Partnership Grant was awarded to improve smallholder groundnut marketability in Malawi to MH Boerdery Konsultante in partnership with the NASFAM (National Smallholder Farmers’ Association of Malawi) this quarter.

NASFAM, a farmer-directed business system based on the individual participation of over 100,000 Malawian smallholders, is an active Trade Hub partner.

The grant will be utilized to address production and marketing challenges caused by poor aflatoxin management, high post-harvest losses, and inferior crop aggregation, sorting, and grading. Raising awareness of aflatoxins and introducing mitigation best practices form critical parts of the Trade Hub’s intervention strategy to manage this problem and expand overall groundnut production. Over 7,000 local smallholder groundnut farmers, the majority of whom are women, are expected to benefit from this grant.

CASS/Agseed

The CASS/Agseed Strategic Partnership Grant implementation commenced, focusing on certified groundnut and soy bean seed development within Mozambique. The grant addresses one of the major impediments for development of these FTF target crops in Mozambique.

Vermeulen Aandele Trust

A Strategic Partnership Grant for soy product upgrading and marketing development in Malawi was awarded this quarter and implementation commenced. The grant will enable the installation of a sorting, grading, and cleaning plant in Malawi to address post-harvest handling challenges. The activity will help build confidence

The grant to Boerdery Konsultante is designed to benefit over 7,000 farmers, most of whom are women.

Southern Africa Trade Hub Quarter 1 FY 2015 Report 21 in the South African market for the purchase of soy and groundnuts from Malawi and increase market opportunities for these commodities.

Solidaridad

The Trade Hub awarded a Strategic Partnership Grant to Solidaridad, a regional NGO based in South Africa, for maize and groundnut value chain development (including outgrower linkages) in Mozambique. The grant will improve food security and revenue generation for smallholder farmers in the districts of Guro, Machize, Mossourize, Tambara and Bárué in Manica Province.

Solidaridad will utilize the grant to introduce a crop rotation system to local farmers, which will alleviate the loss of soil fertility by incorporating soy and groundnuts into the local cotton and maize value chains. In addition, the highly nutritional soy and groundnuts will enrich the limited diet in the province while the surplus crops provide a high-value, alternative revenue stream for the farmers.

Commodity traders from Olam Mozambique, a leading Mozambican agriculture trading and supply c ompany that currently assists more than 40,000 farmers with inputs and financing, have agreed to provide marketing facilities for the surplus soy and groundnuts produced by the farmers.

Solidaridad will implement the project through “farmer leaders” who will provide sustainable extension training to other farmers through demo-plots. The 100 farmer leaders will then provide extension services to over 5,000 smallholder growers.

Forty percent of the lead farmers as well as beneficiaries of the project will be women. The farmers will have the added benefit of accessing improved seed varieties through a revolving loan program.

Cargill

A Strategic Partnership Grant for maize and soy marketing development in Mozambique was awarded and implementation commenced.

Intertek

A Strategic Partnership Grant for laboratory development in Mozambique was awarded and implementation commenced. The grant will enable Intertek to add aflatoxin and wet chemistry testing to its menu of services so that commercial traders can have their commodities tested in Mozambique rather than sending it away to another country for testing. The grant is designed to improve Mozambique’s competitiveness and promote regional trade. See the section on aflatoxin mitigation below for more information.

ETG Mozambique. The ETG Strategic Partnership Grant enables ETG to establish WRS (including third party storage) in four locations within Mozambique. This constitutes the first WRS development in the country.

IMPROVED STANDARDS AND QUALITY

The following are the key activities undertaken and results achieved by the Trade Hub in improved standards and quality in Quarter 1 FY 2015:

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AFLATOXIN MITIGATION

Aflatoxin Removal in Groundnuts Training

During the quarter, the Trade Hub carried out an impact assessment exercise related to its training on aflatoxin removal, which resulted in the following key findings:

The direct training of 140 farmer group representatives by the Trade Hub has resulted in significant further outreach as up to 25,000 farmers have consequently been provided with exposure on the aflatoxin issue;

Farmers are adopting the technologies for reduction in aflatoxin contamination as taught by the Trade Hub; and

Local NGOs (e.g., OLIPA-ODES) are further upscaling the aflatoxin removal trainings and methodologies.

Promotion of In-shell Groundnut Trading

The Trade Hub developed an SOW for promotion of in-shell trading, and a consultant was contracted for this activity to take place in Malawi. Due to illness of the consultant, the training program had to be postponed until Q2 FY2015.

An SOW for promotion of in-shell groundnuts trading for Mozambique was completed during the quarter.

ACCREDITED LABORATORY TESTING SERVICES

Deltamune/VETLAB Zambia Strategic Partnership Grant for Accredited Lab Development

A Strategic Partnership Grant was awarded in the quarter to Deltamune, a South Africa-based biotechnology company, to establish ISO 17025 accredited test laboratory services in Zambia, the first of their kind to be available in the country.

Currently, SADC businesses in the region are forced to send their samples to South Africa for testing, which is expensive and time-consuming. The new grain and oil seed lab services will speed trade for Zambian exporters, improve food safety, and support the agricultural community at large, especially the groundnut industry as aflatoxin testing is being developed as a priority for the lab.

The grant will enable Deltamune to make appropriate investments in the lab, attain accreditation, conduct training, finance a senior management person, and hire a Zambian apprentice who will assume management responsibilities once all qualifications are met. In addition, Deltamune South Africa will serve as the reference and calibration laboratory for the Zambian lab.

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TABLE 3: Strategic Partnership Grants Pipeline

Grantee Committed Country Amount Description

Obligated

CASS 12/1/2012 Zambia 100,000 Provision of groundnut sorting / grading equipment / export

CAPSTONE 9/27/2012 Malawi 100,000 Introduction of new hybrid maize variety to Malawi

AFGRI 12/7/2012 Zambia 100,000 Installation and operation of 15,000 MT of grain storage

SAGM 12/1/2012 Zambia 100,000 Groundnut seed provision and outgrowing / export

NWK 5/22/2013 Zambia 100,000 Soy seed provision and outgrowing

SPINTELLIGENT 11/21/2013 Zambia 100,000 Agritech Expo

PMD 06/01/2014 Malawi 100,000 Production of Ready to Use Complimentary Food (RUCF)

Ybema 08/01/2014 Regional 100,000 Regional Mobile Grain Training Service

Cass/AG Seeds 10/01/2014 Mozambique 100,000 Agro-seed multiplication and Processing in Mozambique

Deltamune 09/18/2014 Zambia 90, 000 Establishment of ISO 17025 Accredited laboratory Services in Zambia

ETG 12/01/2014 Mozambique 100,000 Trade, Storage and Processing of Agricultural Commodities in Mozambique

Cargill 12/10/2014 Mozambique 100,000 Agriculture Commodities Trading and Storage

H A Amman T/A Ammtech

12/11/2014 Zambia 60,000 Manufacture of Food Processing and Packing Machinery

Zhauns Business Opportunity

12/11/2014…