/ Integrated Growth Poles, Mozambique /

Project director

/ Geert van Boekel

Assignment

/ To improve the ability of smallholder farms/MSMEs in the Zambezi Valley and Nacala Corridor to access markets through market-oriented private and complementary public investments.

Project location

/ Tete, Tete Province and Nacala, Nampula Province

Client

/ Government of Mozambique

Financing Agency

/ World Bank

Partners

/ Nomad (international); Eurolatina Mozambique (national)

Participation

/ As lead firm

Composition of Team

/ BMB Mott MacDonald: Team Leader, Fund Manager, M&E Expert, Project Manager

Period of Assignment

/ From 01-Sep-2015 to 31-Aug-2019

Continuous or intermittent

/ Continuous

Staff months

/ BMB Mott MacDonald: 172
Partner(s): 46
Total: 218

Background

/ For more than a decade now Mozambique has achieved impressive growth rates and its economy continues to grow strongly, at rates above those of many Sub- Saharan African countries. Annual growth has averaged 7.2% over the last decade, with projected growth rates of 7.2% in 2013 and even 8,5% in 2014.
The country’s high economic growth rates are largely driven by capital-intensive projects, particularly in the extractive industries. Other dynamic sectors are construction, services, transport and communication, broadly correlated with infrastructure development and very large-scale, ‘mega’ projects. This growth has however not translated in lower poverty rates and a more equal distribution on wealth, and more than 50% of the population still lives below the poverty line. Growth over this period was mostly concentrated in urban areas and in the south of Mozambique. Inequality has increased and growth has not always been sufficiently inclusive.
The current Innovation and Demonstration Catalytic Fund (IDCF) project has been developed focussing on the growth potential of small holders and MSME’s that can in one way or another benefit from the large investment projects in the central parts of the country.
The IDCF will showcase a number of innovative and effective approaches to improve the performance of enterprises and small holder farmers in the Zambezi Valley and Nacala Corridor, among others, by increasing their access to markets, through private and complementary public investments. A key and innovative feature of the IDCF is that it is also aimed at strengthening the capacities of two Development Agencies ZVDA and GAZEDA (the two main counterparts, under responsibility of the Ministry of Planning and Development) in order that they will be able to manage similar facilities in the future.

Description of project

/ The World Bank‘s World Development Report 2009 highlights the notion of economic growth emanating from agglomeration economies within nations. It stresses that production becomes concentrated geographically within nations as economies grow. Successful governments then implement policies that redistribute and raise living standards across space within nations. The concentration of economic activity into growth poles, does not necessarily bring agglomeration effects and productivity gains though. Concentration may increase the possibility of agglomeration but coordination between economic agents may be required for this potential to be realized.
Consequently, the growth poles concept emphasizes an integrated approach (across sectors, space and time) focussing on the delivery of basic services in areas with actual or demonstrated growth potential, creating synergies with existing projects, optimizing the utilization of new infrastructure, forging public private partnerships and leveraging private and public sector investments.
The objective of the IDCF is to improve the ability of smallholder farms/MSMEs in the Zambezi Valley and Nacala Corridor to access markets through market-oriented private and complementary public investments. The IDCF investments will have a catalytic role, demonstrating the incremental returns that can be achieved through access to technology and markets.
The IDCF will therefore support linkages between medium and large firms and smallholder farms/MSMEs through targeted investments in public goods and services7 that will be executed by the private sector.
The Project Development Objective (PDO) is to improve the performance of enterprises and smallholder farms in the Zambezi Valley and Nacala Corridor, focusing on identified high growth potential zones (growth poles). The IDCF has been designed as a demand-driven competitive fund, with the competitive selection process based on demonstrated evidence of benefits to smallholder farms and MSMEs through business linkages. The IDCF has two sub-components or funding windows:
1. Linking smallholder farms to agribusiness value chains:
The objective of the IDCF here is to catalyze business models where individual smallholder farmers or farmer associations partner with agribusiness firms to access existing or new markets. A typical qualifying investment for IDCF support would have a significant farm outreach component with the estimated value of direct support to farm households of at least 50 percent of the total investment, to be monitored by the IDCF Fund Manager. The direct involvement of farmers needs to be an essential part of the commercial partnership for eligibility of IDCF support. IDCF investments are expected to increase the number of smallholder producers who are able to enter the new and demanding markets in the Zambezi Valley and Nacala Corridor. The IDCF will support investment proposals, where agribusinesses together with farmers develop partnership agreements for the production and commercialization of high quality farm products, with the agribusiness investor expected to perform the marketing role in partnership with the farmers. Examples of supported activities are outgrower schemes, packing houses, grading centers, processing warehouses and cold storage facilities. These investments will be implemented by the private agribusiness firm under a contractual arrangement with the Government through the IDCF Manager. Each IDCF investment is expected to range in cost from approximately $500 000 - $1.5 million which will include investments in infrastructure, equipment and services.
2. Linking MSMEs to natural resource-related value chains:
The objective of the IDCF here is to catalyze partnerships between private and public service providers and MSMEs to access existing and new market opportunities emerging from the large investments. The IDCF investments are expected to increase the number of MSMEs that are able to provide services as sub-contractors or vendors to Tier 1 or Tier 2 suppliers to the large investors. The investments are also expected to increase the number of skilled workers and the range of skills available in the local labor market. Examples of typical activities are the establishment of training centers and skills programs and quality certification programs. The IDCF investments will support a private service provider, or a public institution that demonstrates a partnership with the private sector or international service provider to deliver these services. This is to ensure that public sector proposals are market-tested and meet the immediate requirements of the local economy as well as the services provided are of acceptable quality. Each sub-project is expected to range in cost from approximately $300 000 - $1.0 million which will include investments in infrastructure, equipment and services.

Services provided

/ The objective of the performance-based consultancy assignment is to ensure the establishment and management of an efficient, effective and transparent Innovation and Demonstration Catalytic Facility.
The Fund Manager’s responsibilities include:
a. Fund material and development
b. Operational management of the Fund
c. Marketing, communication and pipeline development
d. Application and grant allocation process management
e. Contracting and management of grants
f. Monitoring and evaluation of project implementation
g. Distillation and dissemination of learning
h. Financial fund management
i. Asset management

Results

/ To ensure the establishment and management of an efficient, effective and transparent Innovation and Demonstration Catalytic Fund, the Fund Manager will:
a. support the output side of agricultural productivity by linking small holders to agricultural Value Chains, through the provision of grants for a number of activities, examples of which are set out clearly in the TORs, and;
b. foster partnerships between private and public service providers and MSME’s to access existing and new market opportunities emerging from large investments currently happening in Central and Northern Mozambique.
This will be done alongside many other initiatives in which ZVDA and GAZEDA are involved, and thus our actions need careful planning and programming. The IDCF will also support the agencies in the communication of results to build accountability and transparency in relation to the general public. At the same time the Fund will strengthen the state-citizenship relationship and enhance accountability and domestic revenue generation. This, we expect, should lead to more prosperity in defined Growth Poles in Central and Northern Mozambique and beyond.
The expected results for the IDCF will be, first, the promotion and facilitation of that service leading to a dynamic and competitive trading sector that can compete to offer the best prices to producers and the lowest prices to consumers. Second, products are often currently sourced from smallholders by agents of a limited number of large buyers which can already access development services since they have the necessary communications (email, internet) and capacity to prepare viable business plans, including matching finance where appropriate. It also means incorporating smaller businesses beyond this group (whilst not precluding larger companies’ participation) that can promote a more competitive market place, allowing the ultimate beneficiaries – rural households – to have a real choice and a realistic price.

Senior staff and functions

/ Walter Urbina - Team Leader (40 working months)
Graciano Mahumane - Fund Manager (40 working months)
Anthony van de Loo - M&E Expert (40 working months)
Jose Cassamo- Project Manager (40 working months)

BMB Mott MacDonald

«CompanyName»