AFRICA FERTILIZER FINANCING MECHANISM CALL FOR PROPOSALS FOR: PROVISIONING OF CREDIT GUARANTEES TO FINANCING FERTILIZER VALUE CHAIN IN AFRICA

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1 AFRICA FERTILIZER FINANCING MECHANISM CALL FOR PROPOSALS FOR: PROVISIONING OF CREDIT GUARANTEES TO FINANCING FERTILIZER VALUE CHAIN IN AFRICA Posted on October 19 th, Introduction The African Development Bank is the premier Pan-African development financial institution, promoting economic growth and social progress across the continent. The Bank s development agenda is delivering the financial and technical support for transformative projects that will significantly reduce poverty through inclusive and sustainable economic growth. In order to sharply focus on the objectives of the Ten Year Strategy (TYS) and ensure greater developmental impact, five major areas (Hi 5s), have been identified for scaling up, namely; energy, agro-business, industrialization, integration and improving the quality of life for the people of Africa. In 2006, at the Abuja African Green Revolution Summit, the African Union Member States, conceived the African Fertilizer Financing Mechanism (AFFM), an initiative for improving agricultural productivity by providing finance to debottleneck the use of fertilizers in Africa. The Abuja Declaration committed African Union Member States to work together in achieving a very ambitious goal: boosting fertilizer use to achieve 50 kg/ha nutrients. The Summit charged the African Development Bank (AfDB) with the responsibility to establishing and manage the AFFM. The African Fertilizer Financing Mechanism (AFFM) is housed within the Department of Agriculture and Agro-industry (AHAI) of AFDB. The overall objective of the AFFM is to assist African Countries to increase agricultural productivity within the context of the Africa Food Security Vision and the MDGs. One of the AFFM s primary functions is the creation of an enabling environment for mobilizing resources for the investments needed to achieve the 50 kilogram per hectare target for fertilizer use as mandated by the Abuja Summit.

2 2. The Call for Proposals One of the key activities for the AFFM is to support the provision of credit guarantees and other financial solutions along the fertilizer supply chain and as appropriate, at growth leverage points in agricultural output value chains. To further help in de-risking the financing of the fertilizer value chain in Africa, AfDB / AFFM is calling for proposals from qualified financial institutions and implementing partners who are interested in teaming up with the AFFM for the provision of Portfolio Credit Guarantee to importers, wholesalers, distributors and agro-dealers in the fertilizer value chain in Tanzania and Nigeria. Selected financial institutions will be required to provide credit facilities (including loans) to the aforementioned fertilizer value chain actors at the back of which AFFM will provide guarantees to the financial institutions. For the purposes of ensuring that fertilizer gets to the farm gates especially to the smallholder farmers, AFFM will also require the services of implementing partners to assist in the logistics and operational management of the credit guarantee scheme on the ground. 3. Eligibility In addition to general eligibility criteria set in the AFFM Operational Procedures Manual, following criteria are applicable to this specific call for proposals: 3.1.Project Eligibility Proposed activities and projects must fall into the following three area: - Facilitate the provision of financing to fertilizer importers, distributors, wholesalers and agro-dealers; - Provision of credit to be backed by AFFM s credit guarantee to fertilizer importers, distributors and agro-dealers. - Project duration should not be more than 2-year (24 months). - Project Budget should be minimum of 250,000 and a maximum of 2,000, Eligibility Criteria for Selecting Financial Institutions AFFM seeks to team up with credible Financial Institutions (commercial banks, Savings & Loans, Microfinance and Credit Unions), that have a demonstrated ambition to play a vital role in agricultural financing (including fertilizer value chain). The main selection criteria for participating financial institutions include the following; - Willingness to adhere to a portfolio guarantee structure - Demonstrated commitment and willingness to provide financing to beneficiaries that meet predetermined eligibility criteria and/or have a significant current loan book of fertilizer clients; - Willingness to share the credit risk at pari-pasu;

3 - Up-to-date fulfilment of all regulatory requirements (registration, licensing, audited financial statements); - Demonstrated financial stability and performance using the CAMELS model and regulator rating (management, risk rating, profitability, liquidity, leverage, portfolio quality, growth); - Demonstrated adequate procedures, internal controls and systems for target beneficiary appraisal, credit approval, default recovery, reporting, monitoring and risk management; - Preferably have a network in rural areas (branch offices); - Preferably have experience working with other credit guarantee schemes; - Capability to report on the performance of the guaranteed portfolio to AFFM on quarterly basis. 3.3.Eligibility Criteria for Selecting Implementing Partners Likewise, AFFM wishes only to work with credible Implementing Partners who have the capability and willingness to reach out to target beneficiaries. The criteria for the selection of Implementing Partners will include the following elements, amongst others: - Sound knowledge of the fertilizer market and value chain; - Familiarity with target beneficiaries in the local market setting; - Familiarity with local financial institutions and a demonstrated ability to initiate contact, conduct negotiations and conduct monitoring & evaluation (M&E) activities; - Ability to develop local market intelligence; - Ability to develop a pipeline of eligible beneficiaries; - Ability to support further fertilizer value chain development; - Capacity to perform credit assessments and high-quality reporting to AFFM; - Competitive management overhead. 4. Fee and Transaction Cost Disclosure All responders should note that this is a competitive selection process and therefore all forms of fees, transaction cost, and (interest rate charged, if possible) should be clearly stated in your submission. 5. How to apply? 1. Download the AFFM operations and procedures manual at 2. Submit a project concept note as per the attached Concept Note Application Form, and clearly stating application as Implementing partner or Financial institution. 3. Only applicants whose Concept Notes pass the selection criteria will be invited to submit a Full Technical and Financial proposals. 4. Submit Concept Note in PDF form via to: AFFM@AFDB.ORG to the attention of:

4 The Coordinator of the AFFM African Development Bank, CCIA building, Avenue Joseph Anoma, Abidjan 01, Côte d Ivoire; Department of Agriculture and Agro-Industry DEADLINE: November 22 nd, 2018 _ 5pm Abidjan time. Any submissions received after this time will not be considered. 6. Additional queries on completion of concept note Any additional queries relating to the completion of the concept note should be addressed to the AFFM secretariat via (AFFM@AFDB.ORG). The AFFM link will be updated periodically with a list of enquiries and the responses provided. The deadline for submission of queries is 16 th November 2018.

5 AFRICA FERTILIZER FINANCING MECHANISM Concept Note Application Form This form constitutes the project concept note which will be reviewed against the AFFM criteria. Applicants who are successful at this stage will be invited to submit full technical and financial proposals. When completing this form, please do not exceed the 4 pages provided. Applicants submitting concept notes over 4 pages in length will not be considered. Project Ref. No: For official use only 1. APPLICANT CONTACT DETAILS State the name, postal address, telephone, fax and of your institution (NB: Communication will be via unless otherwise stipulated by the applicant) Name of Institution Contact Person Address Telephone Fax (if applicable) 2. PROJECT TITLE (Not exceeding 15 words) 3. PROJECT DATES, DURATION AND TOTAL FUNDS REQUESTED Project Duration (months/years) Total cost of the project Other contributions/sources of finance Total AFFM Funds requested Currency used 4. GEOGRAPHICAL LOCATION OF THE PROJECT State the country (ies) that the project will be implemented in. Country (ies) where project is to be implemented

6 5. PROBLEM DEFINITION Provide a clear statement of the problem that this project aims to address 6. PROJECT OBJECTIVE Please clearly state the objective of the project. In particular, please identify how this project will address the problem identified in section 5 above.

7 7. PROJECT SUMMARY (please do not exceed the space provided on this page) Please describe how the project will achieve its stated objective. What are the results that you expect to achieve and what range of activities will be undertaken to achieve these?

8 8. BENEFICIARIES AND STAKEHOLDERS Please explain who the intended beneficiaries are and how they will benefit from this project. 9. PROJECT INNOVATION Please indicate the way(s) in which you consider this project to be innovative 10. HOW TRANSFORMATIVE IS THE PROJECT? Please indicate why you consider this project to be transformative. Name Job Title Signed* Date CERTIFICATION On behalf of [insert name of organisation], I apply for a project of [insert currency and total value] from the AFFM. I certify that, to the best of my knowledge and belief, the statements made in this application are true and the information provided is correct. * This form should be signed by an authorized manager of the institution submitting the concept note.