USAID Punjab Enabling Environment Project (USAID PEEP)

PEEP Matching Grants Program

Request for Applications (RFA) Matching Grants/RFA#005/2015

Mobilize Major Private Sector Investments in Horticulture, Livestock and Dairy Sub-sectors

Issuance Date:July 10, 2015

Dear Applicant:

Punjab Enabling Environment Project (PEEP) is seeking grant applicationsfor implementation of its matching grants program. PEEP entails provision of technical assistance and grants under its “Matching Grants Program”. The purpose of this RFA is to seek applications from Private sector involved in inputs manufacturing/supplies, production, processing, value addition, distribution, retail/exports of livestock, dairy and horticulture product lines or entrepreneurs considering new investments in the livestock, dairy and horticulture product chain or services rendered to enterprises in the three sub-sectors in the province of Punjab.

The grants will be awarded and implemented in accordance with USAID and US Government regulations governing grants under contracts and PEEP’s internal grant management policies.

Project and Chemonics employees may not ask for, and applicants are prohibited from offering, any money, fee, commission, credit, gift, gratuity, thing of value, or compensation to obtain or reward improper favorable treatment regarding this solicitation. Any improper request from a project employee should be reported to the chief of party .

Annexes included with this Request for Applications:

- Annex A – Grant Application Form

- Annex B – Implementation Timeline

- Annex C – Grant Application Budget Form

- Annex D– Applicant Self-Assessment Form

- Annex E – Required Certifications

- Annex F – Survey on Ensuring Equal Opportunity for Applicants(Optional)

- Annex G –Standard Provisions for Non-U.S. Nongovernmental Organizations (Simplified Grants)

- Annex H –Standard Provisions for Fixed Obligation Grants to Nongovernmental Organizations

SECTION I. PROGRAM DESCRIPTION

I.A. PROJECT BACKGROUND

Punjab’s agriculture sector, which includes livestock, dairy, and horticulture has long played a key role as the region’s main economic driver. The province, however, faces many obstacles to growth including power and water shortages, natural disasters, crime, and security concerns – all contribute to what has been a challenging business-enabling environment.

USAID’s Punjab Enabling Environment Project (PEEP) is a five-year effort to support the private and public sector stakeholders including the Government of Punjab in improving business environment for the livestock, dairy, and horticulture sub-sectors. The project is working to build a strong business enabling and policy environment to help boost private sector investment in the three subsectors. The project efforts arecontributing towards USAID’s development objective of Increased Incomes and Employment in target sectors.

PEEP’s aim, therefore, is focused on the following:

a)Accelerate advocacy for policy, regulatory and institutional reforms through the private sector, leading to early adoption and implementation of reforms;

b)Support institutional capacity building to sustain enabling environment reforms;

c)Mobilize major private sector investments in livestock, dairy, and horticulture projects in support of changes in the business environment.

Project interventions are meant to improve the business environment by influencing policy and regulatory reforms through consultative mechanisms. This would help spur private sector investments leading to increased employment and incomes in the target subsectors. PEEP stakeholders include private sector entrepreneurs, civil society actors, local universities, sector associations, business service agencies and the Government of Punjab. Core advocacy groups havebeen established involving the civil society and the private sector working together to help identify and advocate for better designing and implementation of various initiatives to improve Punjab’s business environment in the target subsectors.

I.B.GRANT OBJECTIVE AND SCOPE

In order to expand investment base in the three targeted sub-sectors of Punjab, namely livestock, dairy and horticulture, it is imperative to lower risks associated with particular business models or due to non-conducive environment as a consequence of policy or regulatory regime, prevalent in the province. USAID’s Punjab Enabling Environment Project (PEEP) recognize that in order to catalyze new investments, a necessary condition is to demonstrate technical, economical and commercial feasibility of business models/projects arising from the business opportunities emerged as a result of policy reforms. To achieve this, PEEP aims at working with prospective investors/businesses who are planning new investments to materialize emerging business opportunities.

PEEP also recognizes that showcasing a successful business model/ pilot project opens up gates for new investments, especially when the financial feasibility has been proved practically. PEEP matching grants program therefore would help to accelerate the process by lowering the risk for private sector investors for business opportunities that have emerged due to evolved situation in the livestock, dairy and horticulture sub-sectors. The idea is to practically demonstrate success of such investments/business models by supporting entrepreneurs/businesses who otherwise shy away from such opportunities due to perceived high risk or challenges due to policy or regulatory regimes in place. PEEP matchinggrants Program would aim to:

  • Mobilize investments in livestock, dairy and horticulture sub-sectors;
  • Strengthen the capacity and competitiveness of private sector enterprises in the target sub-sectors/products lines;
  • Support new investments arising from policy and regulatory reforms for an enabling environment;
  • Support efficiency and productivity enhancement in the targeted sub-sectors, lowering risk associated with adoption of new techniques and innovations;

Specifically, to:

  • Demonstrate success of business models emerging as a result of reforms initiated for an enabling business environment. The business opportunities arising from issues addressed by public policy, regulatory reforms and improved service delivery may be considered;
  • Demonstrate success of improved practices, technologies resulting in more profit for a part of value chain;

PEEP is offering a range of customized matching grants to all the actors, across the targeted sub-sectors, including input suppliers, farmers/farmer cooperatives/producers’ associations, processors, transporters/logistic service providers including cool-chain facilities/consulting service providers/technology providers, business development service providers including extension service providers, wholesale market operators, retailers, exporters, etc. under the following categories:

a)Matching grant to mobilize investments for production enhancement;

b)Matching grant to mobilize investments to processing/value addition businesses;

c)Matching grant to mobilize investments to enhance business development/enabling services commercially;

d)Matching grant to mobilize investments to product, process innovations or market development by supporting research and development;

e)Matching grant to mobilize investment for integrated business models/diversification;

1.C.CATEGORIES FOR MATCHING GRANTS PROGRAM

a) Matching Grant to Mobilize Investments for Production Enhancement:

This grant aims to assist existing businesses with expansion or new producers with startup costs related to enhancement in production capacities in the livestock, dairy and high value horticulture sub-sectors, with special focus on adoption of innovative practices or techniques for high yields, improved quality and/or value-addition.This matching grant can be utilized for procurement of technical and business development services and/or procurement of equipment, or improvement of productive assets to implement expansion/improvement/development plans/strategies. The support will be provided to assist producers/ producers’ consortia/cooperatives/clusters and corporate producers to develop their farms/set ups into commercially viable operations and to diversify into the high-value products. This matching grant will enable participating producers to access innovative technologies to improve production, handling, and storage of produce. All activities supported under this grant will primarily be carried out at the production level. Examples of possible activities includes;

  • Dairy and meat production and processing,
  • Private sector input supply enterprises (such as semen production, animal vaccine production, seed production or nurseries),
  • Livestock production and processing,
  • Post-harvest handling and processing of high-value fresh fruits and vegetables, and on-farm storage and production.

The above list is illustrative and not exhaustive.

Who can apply?

Eligible applicants including producers and enterprises interested in setting up and / or enhancing production and allied facilities at the primary input or production stage. Producers/ producers’ consortia/cooperatives/clusters and corporate producers may apply for this category.

b) Matching Grant to Mobilize Investments in Processing/Value Addition Businesses:

This grant aims to support new enterprises that may have an innovative approach to business but facing difficulty in finding investors or obtaining finances to turn their idea into a working product or a business model. This grant will focus on support for the introduction of new business models to improve the ability of commercial/industrial processors to add value to livestock, dairy and high value horticulture produce. This grant will also be available to existing businesses such as processors, exporters, cool chain operators, packagers and to suppliers of goods and services to producers and processors, who are attempting to reach new clients in difficult to serve or underserved domestic or export markets.

Examples of possible activities includes;

  • Vegetable and fruit canning / packaging,
  • Juice production,
  • Frozen vegetables, meat processing (sausages, canned, value added cuts),
  • Dairy processing and livestock byproducts processing etc.

The above list is illustrative and not exhaustive.

Who can apply?

Eligible applicants include start-ups or exiting businesses legally registered as sole proprietorships, partnership concerns, private limited companies and public limited companies engaged in businesses activities mentioned above.

c) Matching Grant to Mobilize Investments to Enhance Business Development/Enabling Services Commercially:

This grant aims to support those entities which are involved or intend to be involved in the provision of business development services including extension services to farmers as part of their business. The support will cover, equipment, capacity building, overheads, and other related costs incurred by the service providers in delivery of these services. The private sector business development services may be stand-alone commercial services or part of an integrated services program encompassing the entire product value chain (inputs, production, packing, logistics and market access). The services may include (but not be limited) to training and development of farmers in good agriculture practices (GAPs), training and development of livestock and dairy producers in good animal husbandry practices, market linkages and access, bulk buying facilities for inputs, market intelligence services, advice on livestock, dairy or horticulture production, product handling and processing etc.

Who can apply?

Existing private sector service providers,or firms commencing business development services.

d)Matching Grant to Mobilize Investments to Products, Process Innovations or Market Development by Supporting Research & Development;

This grant aims to support demand-driven research and development leading to increased and better quality production and improved production processes to meet an identified market demand or research export markets for expansion/diversification. Examples of potential projects may include: pilot scale processing units, experimentation with new/improved varieties and participatory on-farm research. Certifications like HACCP, Halal etc., required to tap into international export markets. PEEP may provide Technical Assistance to those seeking exposure to international best practices / markets etc. However, PEEP will in no circumstances bear any costs associated to boarding & lodging related to such international visits/exposure.

Who can apply?

Eligible applicants include individual producers, processors, private sector research institutions and other relevant private sector entities. Applicants can also collaborate with private sector service providers or academic institutions.

e) Matching Grant to Mobilize Investments for Integrated Business Models/Diversification;

This grant will provide additional capital toexisting businesses intending to grow and expand their enterprises. This grant will primarily focus on the stimulation of large-scale private sector investment in the livestock, dairy and high value horticulture sub-sectors with specific focus on high potential strategic investments to modify product value chains for enhanced competitiveness. An essential prerequisite for partnership under this support category will be the need to demonstrate that the investment will integrate smallholder farmers into the value chain, create job opportunities, enhance incomes and effectively contribute to enhancing value chain competitiveness, making the product line more attractive for further private sector investments, therefore enabling investments segments considered high risk previously. The program targets agro-processing companies with interest in innovative and market driven investment opportunities, and it will serve to mitigate the costs and risks for prospective investors. Examples of possible activities include milk pasteurization in fringe areas of Punjab or fruit/vegetable processing near production clusters away from the consumption centers.This list is illustrative and not exhaustive.

Who can apply?

Eligible applicants include expansions by partnership concerns, private limited companies, public limited companies engaged in livestock, dairy and horticulture based processing businesses.

I.D. ILLUSTRATIVE ACTIVITIES UNDERPEEP’S MATCHING GRANTS PROGRAM

PEEP’s goals will be achieved by extending support for the following activities:

  1. Engage services of technical experts/consultants to recommend and implement improvement plans for the participating businesses;
  2. Expand production, handling, processing, and storage of products;
  3. Systems development and implementation, certification for product or process improvement;
  4. Procure technologies, systems for productivity enhancement;
  5. Undertake, development and implementation of training programs for the capacity development of human resources;
  6. Undertake activities/projects to develop new markets or expand into existing markets, especially to the up-end markets;

The above is an illustrative list of areas for support through this RFA. It is by no means exhaustive and creativity is encouraged from applicants;

I.E.EXPECTED OUTCOMES

  • New investments in Livestock, Dairy and Horticulture subsectors of Punjab mobilized/materialized;
  • Competitiveness of target sub-sectors enhanced by demonstrating commercial viability of innovative projects supported under the program for a multiplier effect.
  • More investments catalyzed through profitability demonstration and enhanced competitiveness of enterprises.

I.F.AUTHORITY/GOVERNING REGULATIONS

USAID’s PEEPgrant awards are made under the authority of the U.S. Foreign Affairs Act and USAID’s Advanced Directive System (ADS) 302.3.5.6, “Grants under Contracts.” Awards made to non-U.S. organizations will adhere to guidance provided under ADS Chapter 303, “Grants and Cooperative Agreements to Non-Governmental Organizations” and will be within the terms of the USAID as well asthe PEEP’s grants procedures.

ADS 303 references three additional regulatory documents issued by the U.S. Government’s Office of Management and Budget (OMB) and the U.S. Agency for International Development:

-OMB Circular A-122: Cost Principles for Nonprofit Organizations

-OMB Circular A-133: Audits of States, Local Governments, and Nonprofit Organizations

Full text of the OMB circulars can be found at PEEPis required to ensure that all organizations receiving USAID grant funds comply with the guidance found in these circulars, as applicable to the respective terms and conditions of their grant awards.

Under the PEEPgrant program, USAID retains the right at all times to terminate, in whole or in part, PEEP’sgrant-making authorities.

SECTION II. AWARD INFORMATION

PEEPanticipates awarding matching grants to mobilize investment for new and existing private sector investments and businesses in the target sub-sectors of livestock, dairy and horticulture. PEEP anticipates to issue matching grants amounting to an average of PKR 2,000,000 to 5,000,000 in following grantcategories.The award funding can be increased depending on the nature and size of the project/grant.These matching grants program will be geared towards private sector entities to promote investments in horticulture, livestock and dairy sub-sectors in the following categories:

a)Matching grant to mobilize investments for production enhancement (PKR 2,000,000 to 5,000,000)

b)Matching grant to mobilize investments to processing/value addition businesses (PKR 2,000,000 to 5,000,000)

c)Matching grant to mobilize investments to enhance business development/enabling services commercially (PKR 2,000,000 to 5,000,000)

d)Matching grant to mobilize investments to product, process innovations or market development by supporting research and development (PKR 2,000,000 to 5,000,000)

e)Matching grant to mobilize investments for integrated business models/diversification (PKR 2,000,000 to 5,000,000)

In exceptional cases PEEP may consider requests for higher funding, subject to the availability of funds and USAID approvals.

PEEP matching grants have a minimum leveraging requirement of 1:2. To clarify, the applicant will arrange 2/3 of the total activity budget from non-USG sources (e.g. own equity, non-USG donors, bank finance, or private sector investments etc.) to support the proposed project while PEEP will fund 1/3 of the proposed project’s budget. The higher amounts of leveraging will be strongly encouraged. Leveraging represents all of the non-USAID resources that are expected to be applied to a program. It may include resources that third parties bring to the program. Leveraging is further described in ADS 303.3.10.2.

Duration of grant awards under this solicitation will vary depending on the nature and size of the project/grant. It is expected that these grants will be issued for a period of up to 36 months. PEEP may increase the period of grant and funding depending on performance of the project, availability of funds and USAID approval. The estimated start date of grants awarded under this solicitation is to be determined later.

II.A.TYPE OF GRANT

PEEP anticipates to issue Simplified Grants or Fixed Obligation Grants (FOG) to successful applicants.

Simplified Grants:

This type of grant is described in ADS 303.3.24. Following are the key features of simplified grants:

  • No advance shall be provided under simplified grants.
  • The grantee shall receive payment on a reimbursement basis.
  • PEEP may audit the procurement process of grantees.
  • The costs will be determined during a pre-negotiated budget. All the costs incurred will have to be supported by backup documents. In addition, each month the grantees will do a financial reconciliation and all costs incurred must be within the approved budget. The grantee will also submit an excel report that shows the expenses incurred against the budget
  • All costs to be charged to the grant are identified in the grant narrative and budget.
  • PEEP may provide assistance for financial capacity-building of the organization.
  • The grant shall not include sub-awards and cannot include grantee indirect costs.
  • No construction activities.

Fixed Obligation Grants: