Terms of Reference for Expression of Interest (EoI) to develop the Horticulture Enterprise in Uganda

The Embassy of the Kingdom of the Netherlands, Kampala

Please take note of additional information:

- corrected information on deadline date of submission

- supportive documents can be added as annexes

- sweet and Irish potato are not eligible”

1. Background

1.1 Policy context

Food and Nutrition Security and Sustainable Trade and Development are key thematic priorities in the Multi-Annual Country Strategy (MACS) of the Netherlands in Uganda for the period 2019-2022.

One of the new activities in the 2019-2022 Country Plan is to develop a new horticulture value chain project. The project is to start mid-2020. Through this call for Expression of Interest, the Netherlands Embassy is soliciting interested parties to indicate their interest to develop and implement the new project.

1.2 Ambition

EKN is considering investing in interventions that aim at unlocking the binding constraints in the Ugandan horticulture sector thus contributing to improved food security, strengthened business growth, increased incomes, creation of employment opportunities and sustainable market-based growth in the horticulture sector.

The requirements of the new program are elaborated in the Terms of Reference for the call for Concept Notes that is annexed as guidance.  

2. The process

For the development of the program, a three-stage process will be followed:

  1. In stage one applicants (organizations or consortia) that are interested to take up the role as lead implementing partner, are requested to submit an Expression of Interest. Parties have to indicate to what extent they comply with a set of organizational threshold criteria.
  2. In stage two, a closed Call for submission of Concept Notes for shortlisted organizations is organized. Those who comply with the threshold criteria, are invited to submit a Concept Note following the specifications of this ToR (annexed).
  3. In stage three, from the Concept Notes received, the Embassy invites one applicant or a consortium of applicants to prepare a full proposal. The successful applicant, being the lead party, will be invited to sign a grant agreement with the Embassy to implement the project. Other consortium partners will arrange contracts/MoU with the lead partner.

At any point in the Call for Ideas procedure, the Embassy may decide to halt the process without accepting any Concept Note and without awarding any contract. This may, for example, be motivated by Dutch policy changes.

2.1 Submission of Expression of Interest (EoI)

The Embassy of the Kingdom of the Netherlands (EKN) in Kampala invites interested organizations/entities to submit an Expression of Interest for the development of a horticulture support program in Uganda.

The EoI concerns the interest for applying as lead partner, responsible for designing and eventually implementing the project. Lead applicants may associate with other partners as they seek to complement their competence. However, the embassy will sign the agreement with one party only (the lead applicant) which will therefore be responsible and accountable (to EKN) for the entire project.

Organizations or companies that have an interest in being a partner within a consortium, are advised to link up with candidate lead applicants, either as part of the EoI process or as part of the Call for Concept Notes. The embassy can avail, on request, information on the short listed candidates that qualify as lead partner.

Eligibility criteria for lead partner

  • Any capable institution of any nationality, be it a profit or not-for-profit private or public company, or an NGO, an International Organization established by intergovernmental agreement, with a presence in Uganda, may apply.
  • Applicants must implement the project themselves (with partners if applicable) and not simply act as an intermediary channel to provide financing to other implementing parties or subcontract those to execute most of the work.
  • Applicants should have an office in Uganda for at least 3 years. Scanned copy of the organization’s registration certificate should be included in the submission package.
  • The applicant(s) should provide evidence and share relevant and specified details of work/assignments undertaken in the horticulture sector in the last 5 years, in Uganda or elsewhere.
  • Interested organization(s) should provide evidence demonstrating that they have the required ability and relevant experience (minimum 4 years) to design and implement the program.
  • Interested organization(s) should provide evidence demonstrating that they have the required ability and relevant experience to manage a consortium (if applicable).

Other Requirements

  • The applicant(s) should provide a 2-page cover letter (same as the EoI requested) signed by the head of the organization or legal representative of the lead organization in case of a consortium.
  • The EoI (or cover letter) should indicate why the applicant complies with the eligibility criteria. Evidence for relevant experience, details of assignments in the horticulture sector and Scanned copy of the organization’s registration certificate can be presented as annexes.
  • Expression of interest must be submitted in English and sent by email.
  • Emails need to be sent to the following address: kam@minbuza.nl before 12:00 noon Ugandan time on Monday 25th November 2019.
  • All submissions received after the deadline will be rejected.
  • Please note that the cost of preparing an Expression of Interest or a Concept Note is not reimbursable.

The embassy will carry out an evaluation of the submitted EoI documents based on the eligibility criteria.

2.2 Feedback on Expression of Interest

Final approval for applications is at the discretion and responsibility of the embassy. Decisions of embassy are final and binding and not open for appeal. Written feedback for acceptance/rejection of an application will be communicated to the applicant.

Shortlisted applicants will be invited to participate in the second stage for submission of Concept Note. 

3. Time frame

  • Deadline for submission of EoI is 25th November 2019.
  • From 25th November – 9th December, reviewing and assessing the submitted EoI and subsequently, selection of the best EoI’s.
  • Shortlisted applicants will then be requested to submit Concept Notes. Deadline for submission of Concept Notes is 30th January 2020.
  • From the received Concept Notes, one Concept Note will be accepted for development into a full proposal.
  • Approval full proposal and contracting Q2 2020.

ANNEX 1: Terms of Reference Concept Notes Horticulture Enterprise program

1. Policy Background

The Food and Nutrition Security strategy of the Netherlands Embassy in Kampala aims at contributing to more resilient food systems, commercialization of the agricultural sector, higher youth employment and an enhanced Dutch-Ugandan trade and investment relationship. Interventions include a focus on improvement of economic performance and resilience of farming systems and increasing quality of private sector development. Aid and trade are combined: on local level, entrepreneurial farmers increase their income, expand their network and businesses. Dutch businesses can provide services and knowledge with entrepreneurial farmers and consequently grow their businesses. 

As part of the Multi Annual Country Strategy 2019 - 2022, the Embassy plans to start a new program for the horticulture sector.

The justification for choosing the horticulture sector is based on several considerations:

  • Potential for high returns/income due to high value of horticulture products (high economic returns per unit of land). According to the report, studied vegetable farmers obtain average calculated profit margin between 50 and 80% (depending on the vegetable or fruit selected).
  • High women and youth involvement due to low land requirements and short maturing periods.
  • The horticulture sector offers good opportunities for increasing resilience and climate smart agriculture through high productivity and efficient resource utilization.
  • Potential to limit food losses and create off-farm jobs by investing in strategies to improve shelf life of horticultural products.
  • Dutch investment potential (knowledge institutions, seed companies, machine/equipment suppliers, greenhouses, irrigation technology suppliers, controlled storage/cold chain storage, food safety infrastructure etc.).
  • Increasing urbanization, rapid upcoming middle class in Uganda, mushrooming supermarkets, and increasing consumption of horticultural crops (more conscious consumers of healthy foods) especially in urban areas offer increased demand and market opportunities.

Moreover, The Netherlands embassy has been approached by MAAIF to step up its engagement in the horticulture sector, based upon the track record of the Netherlands and its high level of expertise.

1.2 Current engagements of the Netherlands Embassy in the horticulture sector

Currently, the embassy is supporting the horticulture sector through several projects and activities;

  • ISSD plus (Integrated Seed Sector Development): The core of this project, executed by the Wageningen University/CDI, is focused on making available quality declared improved seeds for a number of key food crops.  For the second phase of the project (2018-2022), a horticulture development component has been added to the project to promote horticulture production following a high input/high output approach. The project comprises ToT and farm field demonstrations in collaboration with 6 commercial seeds companies in a public-private partnership.
  • NIGI (Nutrition and Income Generation Intervention): this project, executed by the Wageningen University/CDI works in the refugee areas in West Nile where it promotes horticulture production at homestead fields (improved nutrition) and in larger fields for commercial purpose and livelihood improvement. It collaborates with East West Seed Knowledge Transfer Foundation.
  • Phyto Sanitation: The embassy co-finances a WTO/STDF funded project to improve the Phytosanitation Services of the Ministry of Agriculture, Animal Industry and Fishery (MAAIF). It is a capacity development program, including modest hardware support and executed by CABI Africa, UAA and MAAIF.
  • Market study: In order to prepare for the newly to develop horticulture project, a market study has been commissioned. The study made an analysis of the competitiveness of the Ugandan horticulture sector and made recommendations for interventions.
  • OKP (Orange Knowledge Program): The OKP is the Netherlands knowledge and educational capacity development program. One modality of this program concerns the institutional partnerships between Dutch and Ugandan knowledge institutions. Recently two partnerships have been launched focusing on capacity development of Ugandan educational institutions on horticulture.

It is the expectation that the new horticulture project, takes into account the experiences of the current projects and studies and where possible builds upon its activities. More information on these initiatives is available.

2. Situation analysis

2.1 Problem analysis

The Ugandan agriculture sector provides 68% of the population with income and jobs and is served as the main engine of sustainable and inclusive growth. The sector is dominated by small holders which are a relatively ageing farming population and mainly subsistence farmers. The potential for agriculture in Uganda is huge, including job creation for youth.

Horticulture is a promising sector for rural and peri-urban development. The market for horticultural products is growing within Uganda. This is a result of urbanization and a growing middle class that is diversifying its diet. In the East African Community, the most promising is the sizeable and fast-growing export market to neighboring countries like South Sudan, Rwanda and the Democratic Republic of Congo, where production costs are much higher than in Uganda. 

The sector is characterized by weak producer - market linkages. Horticulture entrepreneurial farmers (commercial/business oriented) are unable to grow the profitability of their horticulture business due to limited access to competitive markets (for their products) while at the same time traders and processors (SMEs) face critical obstacles to profitability and growth due to inadequate supply of quality raw material in sufficient volumes and at the right time.  

This challenge is further worsened by the small size and fragmentation of farms, limited business and entrepreneurial skills of value chain actors (subsistence mindset), low productivity, low commercial participation of famers in agri-business, weak farmer organizations/cooperatives for aggregation, inadequate capacity of processing & (cold chain) storage facilities, high post-harvest losses, limited participation of youth in farming, limited access to agricultural finance and technologies, inadequate market information, limited irrigation infrastructure, and ineffective government regulation (input markets) and support.

At export level, Ugandan fruits and vegetables face serious problems regarding food safety. Farmers and exporters are unable to comply with EU Sanitary and Phytosanitary standards, which is weakening the export position of Uganda to EU markets.

Tor Horticulture
The root causes for most of the above market frictions and failures are the following: 1. Lack of an enabling environment, both in the public sector as well as in the business climate 2. Low level of organization of the value chain: poor forward and backward linkages, low organizational capacity of actors, poor availability of market information, inadequate provision of quality services, poor post-harvest handling and little value addition 3. Low production and productivity at farm level

3. Features of the new program

3.1 Objectives

Although applicants are free to propose their projects as they wish, all projects must contribute to the overall policy goals as follows:

Expected Impact level:

Contributing to poverty reduction, adequate food security and job creation through an inclusive competitive and transformed horticulture sector.  

Proposed Overall goal:

To transform the horticulture sector from subsistence sector to a modern, efficient, competitive, technology, and knowledge-driven sector through increased productivity, reduced food losses, improved access to rewarding markets, strengthened resilience to shocks and a strong and facilitating government.

Outcome level

  1. To improve productivity and sustainable supply of high-quality horticulture products
  2. To improve the competitiveness and access to the domestic, regional and export markets for horticultural products
  3. To strengthening service provision within the horticulture value chain
  4. To strengthen producers’ and other organizations for better coordination, aggregation of supplies, and to enable them to participate effectively in national, regional and global horticulture markets, reduce transaction costs, acquire productivity-enhancing technologies, and make use of market information
  5. To stimulate on-farm and SME investments aimed at increasing productivity and profitability and reduce food losses
  6. To strengthen the institutional and regulatory framework for improved competitiveness, sustainable growth and service delivery in the horticulture sector

Indicators:

  1. Number of households with improved access to horticulture products
  2. # Number of farmers with increased incomes through increased productivity of high-quality horticultural products that are marketed
  3. # Number of entrepreneurial farmers/SMEs linked to competitive domestic and regional markets (vertical and horizontal linkages) as well as the international export markets
  4. # Number of jobs created (eg commercial seedling producers, aggregators, input suppliers, spraying services, transportation etc) along the horticulture value chain
  5. # Number of SMEs facilitated to add value to horticultural products, reduce food losses, and sustainably supply high end markets
  6. # Number of farmers and SMEs investing xxx amount in the horticulture sector
  7. # Number of Dutch companies with a supported plan to invest in, trade with or provide services to Ugandan companies
  8. Compliance to quality control and Food safety standards
  9. # Number of changes achieved in institutional and regulatory framework servicing the horticulture sector

3.2 Strategic considerations and guidelines

  • Program information

Budget: The indicative funding is Euro 10 million (from EKN) but it is expected that project implementers will raise additional 3 million in leveraging funds of the private sector. 
A matching grant facility for innovation and market incentives will be part of the budget.
Next to the core project budget, an investment component of EUR 3 million is considered. The exact amounts will be established at a later stage.

Time frame: 4 years (2020 – 2023)

  • Approach

Market System Development approach: The MSD approach implies that the project applies a facilitating role where market players and stakeholders are stimulated to take up their role autonomously while the project only provides catalyzing support. Interference in the market system is minimum, aiming at sustainable production and market systems. Access to finance for commercial investments is in principle to be provided by FI. It requires an active, responsive approach that makes use of opportunities that arise in the market.
The extent to which a MSD approach is effective, is determined by the maturity of the market system. For that matter, it is recognized that some flexibility in applying a MSD strategy is required.

Value chain approach: It is anticipated that the project applies a value chain approach, directing its support to production/productivity as well as to marketing/processing of produce. At the same time activities that foresee in strengthening the institutional and regulatory framework can be part of the project (public/private partnerships).

  1. At Farm/Firm level: Specific objective 1: To improve sustainable productivity and supply of horticulture products.  Interventions could aim at:
  • Building the capability of entrepreneurial farmers in supply chains aimed at increasing the quantity, quality and regular supply of selected horticultural products to better markets and agro-business enterprises (lead horticultural firms, horticultural traders, processors and packing operators). 
  • Professionally organizing farmers, service providers and suppliers in order to address the challenges at the customer side of reliability, volume, quality and timely delivery of horticultural products.
  • Supporting professional and commercial vegetable seedling nurseries to ensure dedicated and sustainable supply of high-quality seedlings
  • Support on-farm improvements/investments (e.g. irrigation, green houses, on-farm pack houses etc) to increase quantity and quality of priority horticultural produce, increase climate resilience and reduce post-harvest losses.
  • Support hands-on and practical training opportunities for skills development in horticulture (knowledge transfer).

2. At industry level: Specific objective 2: To improve the competitiveness and access to the domestic, regional and (to a limited extent) export markets for horticultural products.  Interventions could aim at:

  • Strengthening the linkages between value chain actors in sourcing and service delivery.
  • Supporting horticultural SMEs to add value, to reduce losses in fruits and vegetables, improve food safety and enhance efficiencies in supply chains of horticulture products.
  • Improving infrastructure such as testing laboratories, cold chain facilities/controlled storage (at collection points), waste management for chemicals, packaging materials and pack houses to increase product quantity and quality.
  • Organize and strengthen the performance of horticultural producers’ associations, cooperatives.
  • Setting up and operationalizing an (Agro)-Financing modality (Horticulture credit fund) in collaboration with FI, to avail access to finance to farm investments and service providers.

3. At government level: Specific objective 3: To strengthen the institutional and regulatory framework for improved service delivery in the horticulture sector.  Interventions could aim at:

  • In collaboration with MAAIF/MITC/UNBS, supporting the implementation of product standards and quality control mechanisms to meet market demands for food safety, purity, and quality in order to reach higher-value markets.
  • Improving regulation, enforcement and adherence to quality requirements, procedures; safety standards and grades of agro-inputs.
  • Increasing consumer and producer awareness and education on pesticide safety, food safety.
  • Supporting UBOS in ensuring periodic data collection and information sharing on fruits and vegetables sub sector including the local, regional, export and cross-border trade, as well as building a tracking and tracing system up to the farmers level.

In short, the project will improve Access to Technology (A2T), Access to Markets (A2M), Access to Finance (A2F) and Access to organizational/institutional strengthening (A2O).

Market focus: The market study that was commissioned concluded that the current potential for Uganda to export to the EU market, is limited. Though some niche (ethnic) markets do exist, the professionalism of the Uganda horti production in terms of quality, food safety, reliability, right volumes, is still low. For the mainstream market, Uganda is not (yet) considered as a serious producer. Based on this, the main focus of the project will be on domestic and regional markets. In addition, it could be considered to develop one business case with the explicit focus on export to Europe or the middle East. This pilot could serve as a vehicle to develop systems that can comply with high-end market conditions. 

Product focus: The focus is on vegetables, while fruits are secondary.

  • Investment component

Access to finance is a key constraint for farmers and companies to invest in developing the value chain, particularly for those that have not yet build up a credit history. Financial institutions (FI) are hesitant to offer credit. It is foreseen that a credit line will be established to support on-farm investments and market facilities. It is anticipated that this financial modality will be executed by a FI under a separate arrangement with the embassy but is considered as an integral part of the project, though alternative financial engineering can be considered.

  • Geographical area

The proposed geographical areas in which to implement the interventions are: districts around the Lake Victoria Crescent (for Kampala and EU markets), Kigezi region (for local, DRCongo and Rwandan markets), Mt Elgon/Mbale region (for local, Kenyan and S. Sudan market) and West Nile region (local, DRCongo and S. Sudan market). The specific districts will be determined during the proposal development phase together with key stakeholders.

The selection of these areas is based on existing levels of horticultural production, growing market demand, their potential for expanded production to meet the growing demand, their access to markets, opportunities for youths and female participation, opportunities for value addition, and their access to infrastructure to supply these markets.

The policy and regulatory work will be at national level with NARO, MAAIF, Ministry of Trade, Industry and Cooperatives (MTIC), and UBOS, based on multi-stakeholder processes and clearly defined outputs.

  • Beneficiaries

The focus of the program will be on entrepreneurial farmers and small and medium sized enterprises (SMEs).  The interventions will focus on 3 sector levels:

1)        Small and medium sized, entrepreneurial farmers and organized farmer groups/cooperatives as producers

2)        SMEs as aggregators or service providers with potential to pull the value chain development and provide enough leverage and volume.  Where possible, the SMEs can be linked to potential Dutch investors/Dutch businesses.

3)        Government/Public sector, in order to address policy and market systemic issues aimed at improving horticulture supply chains at a wider scale.


Explicit attention should be given to women producers and entrepreneurs.

  • Climate Smart

Interventions must pay due attention to climate change aspects and measures for adaptation and mitigation of adverse climate impact are to be incorporated.

  • Dutch Economic Cooperation

In general, the horticulture program should seek to strengthen bilateral economic cooperation between Uganda and the Netherlands through increased investment and trade promotion activities.  The horticulture value chain in Uganda holds a strong potential for creating business based on Dutch technology and expertise. Companies already present in Uganda are the first stepping-stone.

The ability to successfully combine all the above considerations and manage all of them systematically, at a level that can drive horticulture transformation in Uganda requires a mix of skills, knowledge and experience. This ability is likely to be beyond the capacity of any one single organization/entity. Accordingly, there is a possibility for a lead applicant to associate with other firms/organizations (in a consortium) to enhance their qualifications and to cover these aspects completely.

4. Process

4.1 Contents of the Concept Notes (max 6 pages)

The Concept Notes must be concise, to the point and strictly limited to the proposed project and avoid generalities that are considered as well-known to all. Concept Notes should not exceed 6 pages and must include the following sections:

  • Cover page (which is not counted) with full contact details
  • A brief description of the proposed horticulture development project including an outline of the project strategy, definition of the beneficiaries, and how the intended project will contribute to the Embassy’s objectives as outlined in the ToR (max three pages).
  • A summarized Theory of Chance and result chain (max one page)
  • A simplified budget, in euros. Please note that the proposed budget in the application may not exceed the budget amount indicated in the ToR.
  • A description of the implementing partners and their roles
  • Any appendixes will not be reviewed by the Embassy.

Concept Notes must be written in English language. The letter type used in the Concept Note must be 10pt or higher. Any proposal using a small letter type will be disregarded.

4.4      Evaluation of Concept Notes

The Embassy will evaluate Concept Notes using the following criteria:

Critera
Criteria Points
A Relevance
1 Relevance of the proposal in view of the specific objectives for this program Max 10
2 Definition of the target group and constraints assessment Max 10
3 Attention for women and youth entrepreneurs Max 10
4 Opportunities for Dutch trade and investments Max 10
B Intervention logic
5 Coherence of the project design. Does it address the problems identified? Max 25
6 Feasibility of the project, will it reach the expected outcomes and impacts? Max 05
7 Are outcomes and impacts observable and measurable? Max 05
8 Cost-effectiveness (cost per unit of expected result, outcome or impact) Max 10
9 Strength of the implementing partners Max 15
Total Max 100

After having studied the Concept Notes, and before selection, the Embassy may request applicants to provide additional information in writing. This is intended to better understand the proposal, but not to make major revisions to it. Under no circumstances will applicants be asked to rectify Concept Notes after submission as this would harm the principle of equal opportunity for all applicants.

ANNEX 2:

Market Study Report on Fruits and Vegetables 2019 by ISSD