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STIMULATING AGRICULTURAL MARKETS AND NUTRITION OPPORTUNITIES

IN BIO-FORTIFIED CROPS, LIVESTOCK AND LIVESTOCK PRODUCTS, FRUITS

AND VEGETABLES AND PROCESSING AND RETAILING OF NUTRITIOUS FOODS

Request for Concept Notes

BACKGROUND

Musika, a non-profit company and Zambia’s foremost agency in agricultural market development, will

between 2018 and 2022, implement a project that integrates the maximisation of nutrition outcomes

for the rural poor, and women and children in particular, into agri-food market development funded

primarily by Irish Aid. In accordance with its focus on facilitating private market-based solutions to

poverty and poverty-related issues, Musika aims to align incentives and create opportunities with the

agricultural and agri-food economies for the private sector to sustainably and profitably integrate

nutrition objectives into its pro-poor business models.

The ultimate goal of the project is increased consumption of a diverse range of nutritious foods among

poor Zambians, especially amongst women and children and within smallholder farming and rural

communities.

Aligned with Musika’s wider methodology, this will be achieved through the development and

improvement of robust and inclusive private sector-driven supply chains for nutritious food products

from agricultural production to processing and marketing functions.

INTERVENTION TITLE

STIMULATING AGRICULTURAL MARKETS AND NUTRITION OPPORTUNITIES IN BIO-FORTIFIED

CROPS, LIVESTOCK AND LIVESTOCK PRODUCTS, FRUITS AND VEGETABLES AND PROCESSING AND

RETAILING OF NUTRITIOUS FOODS

MAXIMUM VALUE

The maximum value to any grant made in this competition is $150,000, but the evaluation of proposed

initiatives, and therefore Musika’s funding capacity, will depend heavily on the potential benefits to the agri-food market as a whole of a proposed initiative. Further, the value will also depend on the

tangible benefit to rural smallholders particularly women farmers and children, and women-run small agribusinesses and on the scale of the investments being made by the individual bidders themselves.

INTERVENTION OBJECTIVES

The interrelated sub-objectives of the initiative are:

Objective 1: Increased production, retention and consumption of an increasingly diverse range of nutritious foods throughout the year by smallholder agricultural households

Objective 2: Increased capacity of the small and medium scale, rurally based food-processing sector to produce a range of high quality nutritious foods to target the ‘bottom of the pyramid’ food retail

market

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Objective 3: Improved capacity of the food-processing sector to create commercially viable distribution channels for affordable nutritious foods and accompanying nutrition information into the

rural market.

INTERVENTION BACKGROUND

Globally, 820 million people are undernourished and over 2 billion people are overweight or obese (FABLE 2019). Therefore, to tackle this problem of malnutrition will require urgent and concerted effort. The United Nations has put in place the 17 Sustainable Development Goals to address the

various developmental challenges including ending hunger and malnutrition, particularly SDG 2 (Zero hunger) that targets to end hunger, achieve food security and improved nutrition and promote sustainable agriculture. Zambia is one of the countries that has signed up to meet the 17 SDGs.

Further, the Zambian government has been making efforts to reduce malnutrition in all its various forms for the majority of the population through its long-term vision (Vision 2030) and the Seventh

National Development Plan (7NDP). These two documents are aligned to the attainment of the SDGs. Vision 2030 postulates the importance of a well-nourished and healthy population by 2030 whereas 7NDP places emphasis on enhanced food security and nutrition.

Malnutrition is a national crisis in Zambia, with up to 35% of children under the age of five showing signs of stunted growth. 12% of under-fives are underweight and 4% are acutely undernourished (ZDHS 2018).

Malnutrition in Zambia has many causal factors, with poverty obviously being a major driver. Some households simply do not have access to sufficient food (from their own production as well as

purchased food) to be able to eat nutritionally dense meals each day. Other households have adequate access to food across the year, but eat a nutritionally poor diet owing to entrenched behaviours. Across both cohorts, diets are predominantly plant‐based (especially starchy plants) and

proteins and vitamins are not consumed regularly and in sufficient quantities. Zambians consume the highest percentage of maize as a proportion of diet globally.

Across all measurement parameters, rural Zambians are more exposed to malnutrition than the urban counterparts. At over 70% of the rural population, poverty levels are higher than in urban areas, and the proportion of income spent on food can reach over 70% in some rural provinces.

However, poverty is only one factor that influences rural malnutrition, and not one that will be directly addressed by this project, though the impact of Musika’s wider work on nutrition will be tracked through the learning agenda of this project. In line with its market-based approach to development,

Musika aims to focus on other factors that can be addressed by changes to the way that rural markets work, including:

1. Dominance of maize in rural food systems 2. Availability and seasonality of nutrition-dense foods in the rural market, influenced by

reliance on one, short agricultural season, commercial incentive to ‘export’ nutritious food

out of the rural market, and poor storage 3. Poor access to nutritious foods in the rural retail markets thereby affecting its affordability

among rural consumers

Cutting across all of these key constraints are three issues that can be addressed to varying degrees by market forces, namely income levels, cultural preference and gender inequality

INTERVENTION SCOPE

Through this challenge fund window, Musika is able to support, catalyse and stimulate investments by private Zambian agri-food companies in testing, developing and rolling out innovative products,

services, technologies and business models that specifically target women, children and rural farmers and rural consumers as a whole.

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Challenge fund proposals can be submitted for one or more from the four proposed intervention areas:

1) STIMULATING THE PRODUCTION, RETENTION AND CONSUMPTION OF BIO-FORTIFIED CROPS IN KABWE, MAZABUKA, MUMBWA AND MONGU DISTRICTS

Malnutrition that is related to micronutrient deficiencies is widespread in Zambia. Through this challenge fund, Musika is able to support, the demand creation, popularization as well as development of business models for the production, retention and consumption of bio-fortified

crops by smallholders in Kabwe, Mazabuka, Mumbwa and Mongu districts.

2) STIMULATING THE GROWTH OF THE HORTICULTURE VALUE CHAIN IN KABWE, MAZABUKA, MUMBWA, AND MONGU DISTRICTS

Among the core value chains that Musika works in is that of horticulture. Horticulture plays a key role in reducing micronutrient deficiencies arising from reduced consumption of fruits and vegetables.

This challenge fund will allow Musika to provide support to clients that would like to set up outgrower schemes that would enhance the production of fruits and vegetables and encourage retention and consumption of both local and indigenous fruits and vegetables.

3) STIMULATING POULTRY AND LIVESTOCK PRODUCTION AND PROCESSING IN KABWE, MAZABUKA, MUMBWA AND MONGU

Sources of protein in the rural parts of Zambia are largely from poultry. A recent study covering

Kabwe, Mazabuka, Mumbwa and Mongu showed that poultry was the most consumed source of protein followed by small livestock (goats). Musika, through this intervention, will aim to promote

the production and processing of poultry and poultry products as well as small livestock and livestock products particularly dairy.

4) STIMULATING THE PROCESSING AND RETAILING OF NUTRITIOUS FOODS IN KABWE, MAZABUKA,

MUMBWA AND MONGU

Accessibility and availability of nutritious foods at the bottom of the pyramid tends to be lower. This

is exacerbated by the fact that most processors have their operations in the bigger cities of Lusaka, the Copperbelt and generally along the line of rail. Through this challenge fund, Musika aims to enhance the participation of rural based processors in the agri-food markets to increase their

processing capacity and retailing of nutritious products to the bottom of the pyramid

NOTE: 1. Concept notes that will have strong focus on gender, youth, Climate resilient sustainable agriculture for adaptation to and /or mitigation of climate change will have high chances of being

shortlisted. 2. The concepts should be targeted primarily at the core districts indicated above. However, if there are other rural districts of interest which the bidder intends to operate those

should be additional

KEY CRITERIA

As with all of its interventions, Musika places an emphasis on the following criteria:

1. Sustainability – Any investment support from Musika must be seen as catalytic to the long-term development of a commercial market opportunity that will be sustained beyond the life of the ‘subsidy’. Any financial support requested from Musika must be seen as mitigating a proportion

of the commercial risk of establishing the business model, not as necessary to sustain the business operation. Submissions should demonstrate that, if the initial investment is successful, there are

opportunities for expansion and/or replication. Submissions that are driven primarily by corporate social responsibility rather than commercial opportunity will be unsuccessful.

2. Ownership – Any successful grantee remains the full and sole ‘owner’ of its investment. Musika is

very clear that its partner companies design, develop and execute their own business strategies

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and manage all risks associated with their investment. Musika is not in any way contracting companies to deliver services on its behalf.

3. Co-investment – Related to the above two points, Musika wishes to see its support bringing down a portion of the initial risk for a company making its own investment in developing the market and

as such is interested in the ‘cost share’ ratio between the company and Musika. In any successful submission, Musika will base its own limits for financial support on the value of the company’s own investment.

4. Scale and/or Demonstration – Musika will place a priority on supporting investments that involve or can potentially involve large numbers of women farmers to create scale. However, Musika is also interested in supporting pilot projects that test innovations that, if proven successful, have a

direct trajectory to scale.

5. Added Value – The offering to the market need to ‘add value’ to women farmers participating in

that market opportunity and not simply involve a ‘buy’ or a ‘sell’ transaction. Such elements of added value can include, but are not limited to, the provision of extension and training, provision of nutrition messages, assured off-take/contracted production, facilitation of access to finance

and other market services that provide farmers with the technical knowledge, confidence and support to be able to maximise that market opportunity.

6. Innovation – The development of new business models and technologies that can benefit more

women farmers are strongly encouraged, as is the innovative use of any financial support requested.

7. Collaboration – Strategic alliances between companies in the agricultural inputs, services, agricultural commodities, agri-processing companies, distributors of nutritious foods and finance sectors are encouraged

8. Traceability – For its own purposes and for ensuring on-going improvements in agricultural supply chain traceability and management, Musika requires that its partner companies are able to track

the number of farmers – including women farmers - that they engage. Musika therefore request bidders to outline their intended measurement processes.

ELIGIBLE AND INELIGIBLE COSTS FOR FINANCIAL GRANT SUPPORT

Musika’s granting procedures permit it to cost share certain budget lines and to consider other budget lines as eligible cost share on behalf of the investment it is supporting. A basic, non-exhaustive

breakdown is outlined in the table below:

Budget Item

Eligible for cost sharing by

Musika AND eligible to be pledged as a cost

share contribution by

the bidder

Not eligible for Musika

funding BUT eligible to be pledged as a

‘cost share’ contribution

by the bidder

Not eligible for

Musika funding NOR eligible to be pledged as a ‘cost

share’ contribution by the bidder

Short term technical assistance ✔

Assets and infrastructure required for direct use in initiating the investment

✔

Training of farmers and other supply

chain actors, promotional activities ✔

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Marketing, promotional exercises, short term discounting exercises to bring down costs/risks of farmers

investing in a new technology/service/market

opportunity

✔

Salaries and other costs associated with directly involved technical and operational staff

✔

Costs associated with the running of

vehicles, motorbikes, storage, etc. directly related to the investment

✔

The purchase of land ✔

Working capital costs (e.g.

procurement of commodity, value of inventory, etc.)

✔

Overhead/management costs ✔

NB: Any assets bought by Musika for use in supported interventions are offered to successful bidders on a ‘no-cost loan’ basis for the duration of the support period, with ownership retained by Musika.

FORMAT AND SCOPE OF CONCEPT NOTE

Companies registered as Zambian for-profit legal entities interested in working with Musika on this intervention are requested to develop a concept note (not more than 5 pages). Submissions from consortiums of companies are welcome and in such cases, in the format below ‘company’ would

necessarily imply ‘companies’. Note that Musika will only consider supporting ‘start-ups’ in extreme cases where the potential innovation outweighs the risks of potential failure.

The concept note should follow the following format and order, and include all key components. Submissions that exceed space limits and/or miss critical components will be penalised:

1. Company profile (no more than half a page)

a. The name of the company involved and a short profile demonstrating relevance to this intervention and competency in implementing the proposed initiative

b. Name, position/title of the contact person c. Contact numbers and email address d. Zambian company registration number and T-PIN number

2. Outline of proposed investment

(no more than four pages in

total, including

addressing each component)

a) The business case for the initiative - i.e. what it is and why it is important to the company that it makes the investment, how it fits within the existing business, why it is important to engage in agri-food markets and how the proposed intervention

will become commercially sustainable

b) The geographical area covered by the proposed initiative and rationale for the choice.

c) An outline of the innovation within the proposed initiative, i.e. what elements does it incorporate that are not present in the market currently and how this initiative can ‘move the market’ forwards

d) The ‘added value’ that the initiative brings to farmers participating in the agri-food market opportunity beyond simply a ‘buy’ or ‘sell’ transaction

e) The Strategy on ensuring that women sustainably participate in the intervention

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f) The estimated number of smallholder farmers (women and men) that could participate and benefit from the improved market access offered by the initiative

g) The measurement plan the company will deploy to capture the number of

farmers and women farmers involved

h) An outline of any partnership opportunities for collaboration with other private sector and non-private sector players in the agri-food market

i) The proposed timeline for the key activities and investments

j) Any opportunities for increased direct/indirect employment as a result of the

investment

3) Simple budget in the format below, which should be divided into: e. Total cost

f. Company’s own contribution g. Funds requested and purpose for those funds

h. Brief explanatory notes to each requested budget line

EVALUATION

Concept notes will be evaluated on the above points and more generally in terms of the capacity of the companies submitting proposals to both successfully implement the proposed initiatives and to

provide a ‘return on investment’ for Musika’s support in terms of long term and widespread benefit to the agri-food market as a whole and to women farmers in particular.

Points will be gained by:

Offering of market opportunities in the proposed core districts suggested in the call for proposals

Consideration of value chains of focus including bio-fortified crops (bio-fortified orange maize

and bio-fortified beans), fruits and vegetables, poultry and poultry products, livestock and livestock products (including aquaculture), processing and retailing of processed nutritious foods

Consideration of any potential impacts on the natural environment and how any negative impact might be mitigated.

Consideration of any negative potential impacts on Gender dynamics and how any impact may be

mitigated.

SELECTION PROCESS

1. Musika will acknowledge receipt of all submissions

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2. Musika’s Grants Committee will evaluate all submissions based on the criteria outlined above.

3. Musika will contact bidding companies with successful concept notes, which will then be

invited to a meeting at Musika to understand the requirements of Musika, undertake a very basic due diligence process and to work with Musika’s technical team to develop a more

detailed strategy and financial support package. Musika does not commit to contact the unsuccessful applicants. Note that this stage does not imply any guarantee of future support.

4. Musika’s technical team will present any proposals that pass Stage 3. to the Musika Grants

Committee for final review

5. If proposals pass Stage 4. , the companies submitting those proposals will be subject to a due diligence exercise with the rigour and detail dependent on the value of the budget requested.

Note: Musika reserves the right to reject all or any proposals, or to award support without further discussion or negotiations if it is considered in the best interests of Musika’s objectives.

CLARIFICATION AND SUBMISSION

Interested companies may seek clarification or any other information at the email address grants@musika.org.zm

The concept notes are acceptable in electronic copy only and should be submitted by e-mail to grants@musika.org.zm only, not copied to any Musika addresses, by 17.00 hours on Friday May 8th, 2020.

Faxed responses and physical copies will not be considered, as will late responses.