Expression of Interest for Agricultural Small and Medium Enterprises

USAID Zambia Enterprise Development and Growth Enhanced (EDGE) Project

PILOT Expression of Interest for Agricultural Small and Medium Enterprises

The five-year United States Agency for International Development (USAID) Funded Enterprise Development and Growth Enhanced (EDGE) Activity is looking for motivated entrepreneurs & small-medium enterprises (SMEs) to partner with for a duration of 1-2 years. Are you an innovator, mover and shaker, risk take, creative spirits, business-savvy dreamer, go-getter, game changer, enabler, leader and transformer? If so, join us on a journey to enhance Zambia’s Agricultural systems and value chains, market systems development and enterprise growth!
This USAID EDGE Activity Expression of Interest (EOI) is a PILOT EFFORT aimed at generating potential partners who are seeking to expand, improve, grow and/or diversify their businesses, products and services with the goal of generating sustainable livelihoods and more jobs, and increased profits and revenues. This must be demonstrated via viable business plans/cases, and self-driven interest to enhance their competitiveness, using a “hand up” vs “hand out” approach to partnership. Partnership will also provide opportunities to participate in follow-up, complementary activities/events led by partner organizations

EDGE partners must be genuinely inclusive in their make-up, philosophy and governance, exercise full transparency and accountability, embrace climate smart principles and approaches, have strong potential to create sustainable employment opportunities for all, especially women and youth. They must also be able to clearly articulate the systems change that they intend to effect, based on reliable data/evidence.

PROJECT BACKGROUND, DESCRIPTION AND PURPOSE:

The USAID Zambia Enterprise Development and Growth Enhanced (EDGE) Activity is a five-year activity aimed at increasing the profitability for agricultural small- and medium-sized enterprises (SMEs) by addressing their key investment constraints on access to finance, limited business management skills and technology, and access to markets, thereby increasing SMEs’ productivity and ability to create new jobs. The EDGE Activity is implemented by ACDI/VOCA and its partners Agova, Open Capital Advisor and Dimagi.
Over the next five years, EDGE will boost SMEs’ competitiveness by addressing key constraints that they face. The Activity will use a facilitative approach and work closely with, and through, local partners to drive lasting systemic changes that create sustainable impact at scale. EDGE will also apply its inclusive market systems approach, which addresses the root causes, rather than the symptoms, of a poorly performing market.

ALIGNMENT WITH USAID’S JOURNEY TO SELF-RELIANCE POLICY:

USAID’s EDGE Activity is built on investments to date designed to ease constraints for agricultural SMEs to access financial services and build competitiveness for SMEs’ products. To champion Zambia’s Journey to Self-Reliance Policy, EDGE will use a facilitation approach, working through partnerships to achieve EDGE’s goal of creating jobs and increasing the profitability of agricultural SMEs.

The EDGE facilitation approach moves away from providing direct project assistance and input subsidies, working instead with the private sector, market actors, government institutions, communities, Feed the Future (FTF) partners, and others to drive lasting systemic changes that create sustainable impact at scale. The approach emphasizes stimulating systemic change, identifies effective incentives to prompt behaviour change and self-selection, commits to adaptive management principles and integrates learning throughout the Life of Activity (LOA).

EDGE’s PRIORITIZED VALUE CHAINS AND SME TARGETS:

Over its life of project, EDGE is expected to support 450 agricultural SMEs across six (6) different value chains namely: Poultry, Aquaculture, Groundnuts, Honey, Horticulture (annual vegetables and fruits) and Animal feed (sunflower, soybeans, maize, etc.) in the Lusaka, Central and Eastern Provinces of Zambia, which will become the main vehicle to promote economic growth in the agriculture sector.

By the end of the Activity, EDGE is expected to have a) increased the number of full-time equivalent jobs across targeted SMEs at, (incl. specific youth/women targets); b) increased SME revenue by 40% from the baseline.; c) increased SME profit by 30% from baseline; d) facilitated financing for SMEs, with 80% of SMEs independently accessing financing; and e) Ensured that 20% of SMEs supported are women-owned. SMEs we partner with must have business ambitions that will assist EDGE in meeting these targets.

WHAT SELECTED SME PARTNERS STAND TO GAIN:

SME applications will undergo a review/assessment process using a tailored Score Card mechanism to determine SME rankings under various Tiers (B &C, as per the table below), with selected SMEs being absorbed into the EDGE Activity, where they will receive tailored capacity development, increased connectivity to market actors (input suppliers, intermediary services, etc.) and networking support, as well as linkage opportunities to financial Service providers.

The EDGE Project will deliver this capacity development package to SMEs in two main ways:

Training: Group trainings to increase the SMEs knowledge and skills in business management and in planning for growth, and to leverage connections with other SMEs in the same value chains and in related business activities.
Coaching: One-on-one coaching to SMEs to provide them with more intensive, personalized guidance and skill building support, tailored to their specific needs. By learning from those with expertise and experience, the aim is for SMEs to build their skills, confidence and build their own professional and social networks.
The capacity building package to SMEs will include support, to be provided based on SME and market system needs, constraints and leverage points, and according to verifying frequencies, depths and schedules, in the following, but not limited, thematic areas. Business and financial management, sales and marketing, traceability, codes/regulations, standards, end market requirements, productive capacity, customer service and HR, business governance, planning for investment and financing, evidence-based decision making, contracts and negotiation, human resource management, leadership skills, and other soft skills.

BENEFITS OF EDGE SME PARTNERS:

• Capacity building support, monitoring and follow-up provided over 12 months (as a start);
• Opportunities to participate in future USAID EDGE business development networking and training events;
• Tailored meetings and mentorship with investors, FSPs, potential partners and entrepreneurial and thematic/sector-specific experts;
• Guidance on how to formalize and scale businesses with appropriate markets;
• Connectivity to various funds, financial products, etc. that could potentially support de-risk business and accelerate growth. *It must be emphasized that EDGE will play a facilitative role in linking financial institutions and financial service providers to Agri-SMEs requiring financial services and financing. Financial institutions will conduct their due diligence processes and ultimately use their own decision to determine whether the SME is eligible/qualify to receive financing.

EXPECTATIONS OF PARTNERING SMES:

1) Attend business capacity building and technical advisory training sessions to be provided by the EDGE project (with expectations of cost coverage by SMEs) and leveraged from local experts.
2) Apply the learnings received from the capacity building package. This could include but is not limited to: Assessing their business needs and identify challenges that could be addressed through the EDGE capacity building support package; Keeping records of and track of business performance, sales, revenue and profit figures and other information as required by the EDGE project; Applying proposed business strategies by EDGE project to improve business operations; Identifying other SMEs in the value chain that you could partner with, to take advantage of economies of scale in supply contracts and other schemes that may require combined efforts for their successful delivery.
3) Contribute to the improvement of input-output network relationships with other SMEs in relevant value chains by participating in or establishing a) out-grower schemes, b) sales on consignments agreements, c) production and harvesting planning, d) transport services engagements and agreements and/or e) joint contract agreements cross credit guarantees.
5) Identify relevant financing/investment opportunities for business development and growth.

EXPRESSION OF INTEREST (EOI) APPLICATION PROCESS:

The expressions of interest will be evaluated using EDGE’s Score Card mechanism, along Tiers (these being B or C, as per the table below). Applications will initially be screened to ensure applicants meet the eligibility requirements described above and are relevant to the EDGE project objectives. Following this initial screening, the EDGE team will review the applications and evaluate them according the following, general, criteria:

Feasibility and bankability: The extent to which the business idea is viable, creative, innovative in expanding livestock related market opportunities and can attract financing. Innovation and Sustainability: The degree to which the business activities and its impact will continue to be felt beyond the grant period. Market system and socio-economic impacts: The extent to which the proposed investment will benefit the community and create crowding-in, pull effects and/or spin-off opportunities. Cross-cutting issues/themes: The extent to which the proposed investment integrates female and youth empowerment and/or (as per USAID Mission priorities for Zambia) nutrition and water sanitation objectives.

PROFILE OF SMEs ELIGIBLE FOR EDGE:

• Preference given woman or youth led/owned 15-29 (or having 80% of workers women and/or youth);
• Registered as a business or willing to register as a business in Zambia;
• Have business experience of a minimum of 1 year with concept of a viable business opportunity for Tier C business and a minimum of 2 years for Tier B with concept of a viable business opportunity;
• Have prototype of product/service or minimum viable prototype of product/service;
• Be an active and registered local entrepreneur/business operating in the following provinces: Central, Lusaka and Eastern provinces of Zambia.
• Be knowledgeable about the agricultural sector and must be operating in at least one of the following value chains: Aquaculture, poultry, groundnuts, honey, animal feed (soybeans, sunflower, and maize) and horticulture (annual vegetables and fruits).
• Demonstrate knowledge of business management, operation and strategic planning.
• Have some level of business proficiency in analyzing budgets and preparing financial reports.
• Dedicated to addressing key gaps in above mentioned value chains and enhance market systems;
• Willing to submit regular progress reports to the USAID FTF guidelines and the sharing of information, data on value and volume of sales, profits, revenue, and employment figures (including disaggregates of gender/youth), as well as supply chain networks.

SME Level

Characteristics of SMEs by Tiers

SME B Level

• Growth-oriented
• Limited collateral capacity
• Intermediate managerial skills
• Limited but sound supply channels
• Local or regional market focus and semi-specialized
• Loan need: $50,001–$250,000

SME C Level

• Basic collateral capacity
• Limited managerial skills
• Focused on local markets
• Multiple functions within VCs
• Loan need: Up to $50,000
• Not a start-up

Successful applicants will be contacted by the EDGE team and advised on the next steps, which will include requests for documents and site visits at the business location. Interested individuals or businesses wishing to apply to this EDGE project call and be eligible to receive capacity building support should apply by sending an application letter expressing their interest to this call of the EDGE project, clearly explaining why their business represents a good candidature for partnering, including business cases/plans for growth, expansion, diversification, and demonstrate that they meet the above profile.

Applications are open until JANUARY 17, 2021, at 11:59 pm, and should be sent via email to [email protected] and clearly titled “EDGE SME APPLICATION”. Follow this link to download the application: https://drive.google.com/file/d/1x5OM9yDuRdK74yI7RbCLMWulKH9kB6E5/view?usp=drivesdk

Applications will be accepted starting from the day of the release of this EOI. Depending on the success of this pilot EOI, additional announcements may be reinitiated automatically, or annually for subsequent years 2 and 3 of the USAID EDGE Activity. This EIO is approved by EDGE Chief of Party, Jean-Frederic (JF) Beauchesne.