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Tanzania Agribusiness Window (TZAW): Round 4. The Presentation Introduction to the AECF ...

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Tanzania Agribusiness Window (TZAW): Round 4

The PresentationIntroduction to the AECFGoal/Purpose of the AECFFunders and PartnersFinding the right projects TZAW R1-R3Tanzania Agribusiness Window Round 4Introduction Selection CriteriaCompetition ProcessContact Information

2What is the AECF?The AECF is a fund of donor money available to the private sector on a competitive basis

It is a special partnership initiative of the Alliance for a Green Revolution in Africa (AGRA)

Funded by a multi-donor consortium (Dutch, DFID, DANIDA, SIDA, IFAD, CGAP). The donors form the Governing Council of the AECF

Managed by a KPMG led team (the Fund Manager). Triple Line services provides M&E support.

Initial capital was US$36m; now over US$245m3Aims & ObjectivesGoal: accelerate pro-poor growth in Africa increasing employment, livelihood opportunities and income thereby reducing poverty.

Purpose: to make agribusiness, finance, renewable energy and information market systems work better for the poor in rural areas in Africa

Result: by improving the way market systems work, we aim to have a positive impact (jobs and incomes) on large numbers of people living in rural areas.

Modus Operandi: The AECF works by supporting private sector companies to develop and test new and innovative business ideas44

AECF is a special initiative of

Funded by

The members of donor consortium of the AECF include:How the AECF works6Starting Races rather than Picking WinnersWe seek projects that are commercially motivated & innovative to get systemic impact

Commercial Motivation: Scale required for systems impact; scale will only be reached if business model is (very) profitable Disruptive Innovation: as a key indicator of systemic change potentialUpsetting the market such that others will copy and replicate the more innovative the better

Principle: Start races rather than picking winners

7What is Tanzania Agribusiness Window (TZAW)?A special funding window for business ideas in agribusiness and information or financial services that will be implemented in Tanzania

Goal: Contribute to wealth creation and rural poverty reduction in Tanzania

Objective: To catalyse private sector investment and innovation in agribusiness and rural financial services projects that are commercially viable, have significant developmental returns and wider systemic impact.8What types of ideas are eligible?Agribusiness under the broadest possible definitionFarmers, planters, horticulturalists, livestock keepers & outgrower scheme operatorsInputs manufacturers, distributors & suppliersTraders, merchantsAgro-processors and value adders

Information services projects related to agriculture

Financial services projects related to agriculture9TZAW To DateThree rounds of the competition completed with 37 businesses selected for funding

US$ 22.9 million in grants and interest free loans committed

US$ 57.3 million committed by awarded businesses as matching funds

Funded by DFID and the Swedish Embassy

Over 60,000 households reached in 201410TZAW R1-3 Competitions37741547892,852Business plansShortlisted for ICConcept notes submittedRegistered companiesAwarded grants11Agribusiness Projects in TanzaniaTangaPwaniLindiMtwaraRuvumaIringaMbeyaMorogoroDodomaSingidaArushaMaraKageraShinyangaTaboraRukwaKigomaManyaraKilimanjaro= GW/AAW Projects (5)= TZAW R1 Projects (10)= TZAW R2 Projects (10)Rungwe Avocado CoQuality Food ProductsTanga FreshExport TradingAfricadoGreenbeltKilimo MarketsTanfeedsKilombero PlantationsSao HillSerengeti FreshMSKNsagaliMtanga FarmsRuaha FarmsDarshMisenaniChoboNgongosekeVerbruggenUncle MiloSmartMoneyMwanzaMeatKingSeedCoSibesonke LtdKagera TeaAKM GlittersMruazi HeiferMgololeAgriseedBeth EquisolutionsKokoa KamiliDorfra TradingRift Valley TeaSoko FreshDSM Corridor Group= TZAW R3 Projects (17)Lima LimitedEquity for TanzaniaOlivado EPZMount Meru MillersMeru AgroOut-Growers Ltd

12More geographical spread. Tie to region we are in. If webinar, talk about southern highlands, Zanzibar, central zone, Mtwara/Lindi, and western part of TZ.12TZAW R4!Applications due by 15 December!!!

The competition is funded by the UK Department for International Development (DFID) approx. $5.4m funds available (approx. 10 companies)

Companies may be from Tanzania or domiciled outside of Tanzania, but all projects must take place in Tanzania

13Application ProcessOnline applicationThe competition launches at Stage 1

1414Eligibility CriteriaApplicants must be for profit company, partnership or sole trader

Project must be implemented in Tanzania

Applications must be for new and innovative business ideas

Request range from US$100,000 to US$1m and companies must match the funding requested in cash & kind (cash is preferable)

Project must have significant development impact in rural areas

Applicants must demonstrate that they would not go ahead without AECF funding or, if they would, that it would me at a much reduced pace or scale

15New businesses (start-ups) may be considered by AECF TZAW. However, the businesses must provide strong evidence that the new company has credible and experienced investors and demonstrable capacity to implement the project.Your company may partner with other organizations, including NGOs and Community organizations. However it is a condition that the lead applicant and implementer of the business idea must always be a commercial company/business. Partnerships, cooperatives and sole traders are also eligible.AECF aims to achieve significant leverage on its funds. Applications where companies provide a higher percentage (>50%) of total project funding from their own resources (including 3rd party investments or loans) will, all other things being equal, be treated more favourably. In addition, applications in which the majority of matching funds are to be provided by you or financial institutions as debt or equity capital, rather than in-kind matching funds, will be considered more favourably.15Selection Criteria for Stage 1CriterionWeightingCapacity of company20%Strength of business case25%Development impact35%Innovation20%1616How much can I apply for?Applications can be for a mixture of grants and repayable loans

Minimum amount US$100,000 maximum amount US$1mRemember:

You must at least match the amount requested

We are also looking for leverage scores a better mark

17AECF aims to achieve significant leverage on its funds. Applications where companies provide a higher percentage (>50%) of total project funding from their own resources (including 3rd party investments or loans) will, all other things being equal, be treated more favourably. In addition, applications in which the majority of matching funds are to be provided by you or financial institutions as debt or equity capital, rather than in-kind matching funds, will be considered more favourably. Mix of grant and loan should be determined based on the capacity of the project to repay the loan.17How do I apply?Go to www.aecfafrica.org and register using your email address

Download the guidance notes essential for completing application form

Fill out the application in Microsoft Word you must submit in Word. Extra information (attachments, etc) will not be read

Submit the application to [email protected] by 15 December 2015

18Email address should be the one that you use18Sections of ApplicationBrief SummarySection A: Applicant Company InformationSection B: Project InformationSection C: Proposed Business IdeaSection D: InnovationSection E: AdditionalitySection F: Project ImpactsSection G: Risks & Assumptions19Stick to word limits as closely as possibleAnswer the questions in the guidance notes!19Brief SummaryComplete at the endConcisely summarize key points of idea and expected impact and outcomes20This is the elevator pitch after reading this, we should be mostly convinced that we should support your idea20Section A: Applicant Company InformationProvide basic data about your companyNote: all contact will go to the person and contact information listed on this formRegistration details, current business, past financial performance, financing21Section B: Project InformationBasic project details (title, location, etc.)Funding information both AECF and matchingAECF funding is US$ 100,000 US$ 1,000,000Matching funds must be equal to or greater than the amount requested from AECF22Section C: Proposed Business IdeaConcise description of ideaConcise business case include numbers!Explain your market and your strategy for reaching it i.e., distribution, logistics, sales, etc. Capacity of the team be specific but do not paste CVsList and justify how AECF funding will be used23Capacity: We are counting on your information we will not look you up online so provide us with the info we need. If you have gaps in capacity, explain them and how you will fill them23Section D: InnovationAECF defines innovation as a new product, service or business model being introduced in a country or to a target group where it has not been tried beforeMake sure to substantiate your claims of innovation 24Consider different levels of innovation is it the first time in your region?If you say you are the only one in the country, please make sure you have done your research24Section E: AdditionalityTZAW R4 will not consider projects which could and would be funded fully by other, more commercial, sources of fundingAnswer the listed questions specificallyThis section is not about why AECF should be interested in your project and should not repeat what you have said in other sections about the innovation, impact, etc.

25Section F: Project ImpactsAECF monitors a set of standard quantitative and qualitative Key Performance Indicators (KPIs) for all TZAW projectsProvide figures on what you have achieved so far (i.e. the baseline numbers) and estimates of what your project is expected to achieve by the end of the 6 year AECF project periodNumbers should address only AECF project26Please consider these figures carefully as they form a large basis for the evaluation of your project. Try not to overestimate to make your project look more attractive be realistic26Section F: Project Impacts Financial IndicatorsTurnoverEBITDA27Ensure you consider what is possible given your starting point, production capacity, market, etc. Consider your costs in some level of detail to ensure that the EBITDA is reasonable27Section F: Project Impacts Development IndicatorsNumber of Households ReachedDirect beneficiaries either your customers or suppliers; not employees!Net Benefit per HouseholdCalculation of cost benefit or cost savings compared to situation if project did not go aheadNumber of Household with Reduced Risk to Extreme Weather EventsOnly if appropriate to your business; do not try to fit something into this if it does not make sense28Households examples: people buying your seed, people selling you cotton to gin, etc. NOT employees, NOT consumers of eggs you buy from farmersNet benefit examples:Farmer as consumer (maize seed):Your target farmers have always grown 1 acre of maize:Opportunity cost: Prior to the project, farmers yielded 5 bags/acre and sold each bag for US$30 = US$150Cost of project: Farmers purchase your seed at US$20/acre. There are no additional costs of participating. Revenue from project: Farmers are expected to yield 10 bags/acre with your seed and the price will remain US$30/bag = US$300NET BENEFIT: US$300 - US$20 - US$150 = US$130Farmer as supplier (potato processor):Your target farmers used to grow 1 acre of tomatoes but you will encourage them to switch to potatoes:Opportunity cost: Farmers earned a profit of US$150/acre growing tomatoes.Cost of project: It costs US$50/acre to grow potatoes.Revenue from project: Farmers earn US$300/acre growing potatoes.NET BENEFIT: US$300 - US$50 - US$150 = US$10028Section F: Project Impacts Employment IndicatorsTotal number of people employed (full-time)Total number of people employed (part-time) as full-time equivalentsPercentage for womenPercentage for under 35Wage bill29Full time equivalent notes:Full-time equivalents can be calculated based on the percentage of the year that the part-time employee works. For example, if 100 part-time employees work during the harvest season for 3 months (25% of the year), then you have 25 full-time equivalents.

29Section F: Project Impacts Wider ImpactImpact on other businessesImpact on laws, policies, regulationsPhysical infrastructureSources of informationReduction in other adverse business factorsReplication of your ideaWill anyone be crowded out?

30Impact on other businesses: how will your market change? Will there be crowding in in your value chain?Impact on laws, policies, regulations: start by considering the constraints before you consider how you might address themPhysical infrastructure: start by considering the constraints before you consider how you might address themSources of information: start by considering the constraints before you consider how you might address themReduction in other adverse business factors: start by considering the constraints before you consider how you might address themReplication of your idea: Will you or someone else copy this idea?Will anyone be crowded out? An example of this would be smallholder farmers seeing reduced sales as a result of cheaper high quality produce from a large estate.

30Section F: Environmental ImpactIndicate whether or not an EIA is requiredIf required: explain the progress to date and plans for completionIf not: explain why not and include information on any clearances from the government that can confirm this

3131Section G: Risks & AssumptionsBusinessEnvironmentalHealth & SafetySocial

32Be honest in your risk assessment. We are not afraid of risks but are afraid of businesses that dont understand the risks and have plans to mitigate them32 +254 20 269 9137/8/9

www.aecfafrica.org

[email protected]

www.facebook.com/AecfAfrica

www.twitter.com/AecfAfrica

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