1. Purpose:

The purpose of Rural Resilience Activity’s Enterprise Innovation Fund is to catalyze new investments in viable market systems, livelihoods, agribusinesses, and employment opportunities through grants that stimulate market development. To achieve this purpose and create lasting systemic changes, Rural Resilience Activity’s Enterprise Innovation Fund stimulates innovations and facilitates commercial linkages through co-creation and partnerships with a wide range of market market actors and across selected high-growth sectors. This RFA focuses specifically on advancing this purpose in Borno, Adamawa, Gombe and Yobe States of North East Nigeria.

2. Background:

Rural Resilience Activity (RRA) is a Feed the Future initiative funded by the United States Agency for International Development (USAID).  Mercy Corps is the prime implementer and is in partnership with Save the Children International (SCI) and International Fertilizer Development Center (IFDC).  The goal of Rural Resilience Activity is to ‘facilitate and protect economic recovery and growth in vulnerable, conflict-affected areas and sustainably move people out of chronic vulnerability and poverty via expanded opportunities’. This goal will be achieved through the following four major components: 

1. Provide up-to-date evidence for the selection of market systems, livelihoods, and employment opportunities that contribute to inclusive and resilient growth and improved nutrition.
2. Stimulate market systems growth and diverse economic opportunities (Pull activities).
3. Build capacity to take advantage of market systems opportunities (Push activities). 
4. Sequencing, layering, integrating (SLI), and collaborative learning to improve activity effectiveness, sustainability, and scale

Rural Resilience Activity will be implemented using a resilience, market systems development, gender transformative, conflict and nutrition-sensitive approach, to stimulate sustainable, systemic change at scale and bring long-term improvements to conflict-affected households, businesses, and institutions. This will involve multiple partnerships with the private sector and government actors. Rural Resilience Activity places a deliberate priority on targeting women and youth.

3. Funding Opportunity

Rural Resilience Activity is pleased to invite Nigeria-registered social enterprises, for-profit businesses, Community-based Organizations (CBOs), Business Membership Organizations (BMOs), government agencies and non-profit organizations to submit an application for an award.  The award will be directly managed by Rural Resilience Activity with USAID support. The intention of this solicitation is to identify for-profit, private sector partnerships and enter into a business metric-based milestone agreement that includes interventions that fit the evaluation criteria set forth in Section 10 below. The number of partnerships available will be determined based on interest, funding available, and quality of proposals. The proposed projects are anticipated to begin by May 2021 and end on or before April 2022.

Subject to the availability of funds, Rural Resilience Activity plans to issue multiple awards under this call. The total value of each award from Rural Resilience Activity for this solicitation is estimated to range from US$5,000 - US$150,000 with 20 to 30 partnerships anticipated. Proposals must make business sense for the partner and must clearly demonstrate a significant impact for smallholder farmers and MSMEs. As the amount of an award is subject to negotiation, a negotiated award amount may or may not fall within this range. Furthermore, Rural Resilience Activity is not obligated to issue awards/an award up to the amount of funds available. Grantees must cover and create a leverage of a minimum of 30% of the total cost (with higher cost share and leverage ratios preferred) as further outlined below.

Application reviews will take place in April 2021. All applicants will be notified of application status at this time. Note that immediate negotiations and site visits will occur with successful applicants between May and June 2021. Site visits and other engagements requiring physical interactions will take into consideration relevant COVID-19 guidelines from the Federal and targeted State Governments in Nigeria. Please make sure the proposed project manager and a decision maker will be available at that time. The negotiations and site visit are required steps in the award process for selected applications.

Partnership agreements will be negotiated with selected applicants based on the criteria described below. Applicants will also be expected to provide co-investment (in-cash or in-kind) to support their proposed activities. Concept Notes must be submitted in accordance with the format described below and received no later than March 19, 2021.

All questions regarding the solicitation will be answered in writing. Questions can be submitted through March 12, 2021 at 17:00 to nig-innovation-fund@mercycorps.org  

Applicants must target activities in one or more of the following geographic areas and/or value chains. Note that applicants can propose working outside of the Local Government Areas below provided that potential program participants (beneficiaries) are in at least one of the targeted States. Activities conducted by applicants outside these States or which do not directly benefit smallholder farmers and MSMEs resident in the States indicated below would not be funded under the Rural Resilience Activity’s Enterprise Innovation Fund and will not count towards cost share or leverage. Rural Resilience Activity recommends that applicants should target their activities within the suggested Local Government Areas, as these are areas with comparative advantages vis-à-vis value chains, safety and other enabling factors.

Rural Resilience Activity’s Enterprise Innovation Fund is seeking co-investments in the above states and value chains. Investments should focus on the following segments:

• Input Production and Supply
• Farming & food production
• Mechanization
• Extension and Advisory Services
• Aggregation and Value Addition
• High-value market access
• Agro-Processing
• Improved Post-Harvest Handling & Storage
• Digital Solutions & Precision Agriculture
• Food Distribution & Transportation
• Financial Institutions and Financial/Business Advisory (FI & A)*

*FI&As are defined as commercial banks, microfinance institutions, financial/business advisory firms, investment services, accelerator and incubator services, fintech services, and private equity and venture capital funds (including impact funds).

4. Objective of the Call for Applications

Nigeria’s North East region is affected by several challenges ranging from instability associated with the prolonged conflict in some parts of the region; floods, dry-spells and droughts occasioned by climate change; incidences of crops and livestock diseases; and now the COVID-19 pandemic. As of early May 2020, the effects of the pandemic on agriculture and food systems in North East Nigeria had become evident, specifically in relation to food supply chains and interstate movements of agricultural produce, including both food commodities and animal feed. Vulnerable food system workers including petty traders, small- and medium-scale food processors and other value chain actors remain among those most at risk of financial hardship (FAO, North East Nigeria Revised Humanitarian Response, May-June 2020).  According to the FAO, the inability to distribute food in Nigeria is one of the reasons for food insecurity and the high prices of food. With the distortions caused by the pandemic, the distribution of food across the country (which includes North East Nigeria) could deteriorate in the coming months (PWC Report, Responding to the impact of Covid-19 on food security and agriculture in Nigeria, June 2020)

The pandemic threatens to roll back limited gains made around women’s participation in leadership and decision-making structures across the BAY states, and any lost progress will take years to regain (Rapid Gender Analysis, North East Nigeria Region by UN Women Nigeria, CARE Nigeria, Oxfam in Nigeria, 2020). Preliminary findings from Rural Resilience Activity’s market systems assessments suggest that COVID-19 and other challenges are exacerbating existing market constraints for smallholder farmers and SMEs. COVID-19 has disrupted income-generation activities and livelihoods, which results in pushing the affected population, especially women, back into extreme poverty. Some of these market constraints include low levels of access to credit and other financial services, agricultural inputs such as cultivable and secure land, quality seeds, crop protection products, and fertilizers, relevant agricultural information, extension and advisory services, appropriate agricultural and digital technologies, and high value markets. Furthermore, incidences of post-harvest losses and wastages have been reported in high growth agricultural value chains, occasioned by low levels of investments in appropriate infrastructure such as roads and processing facilities. In addition, poor governance and coordination among farmer collectives and groups and prevailing informal social norms and practices in North East Nigeria exacerbate the exclusion of women and youth from economic activities in sectors like agriculture as women and youth face considerable barriers to owning and accessing productive assets such as farm inputs and mechanized services, and land. (Rural Resilience Activity’s Gender Analysis Report of Borno, Adamawa, Yobe and Gombe States, 2020).

The economic impact of the pandemic will be especially harsh on the young population and micro and small businesses. 60% of Nigeria’s population is under the age of 25 (Stears Business, 2020), yet, 16 million Nigerian children were out of school in 2019, up from the last count of 13.2 million in 2018. The growing number of uneducated youths is a significant burden on the economy as this demographic is likely to struggle amidst an economic downturn (The Africa Report, 2020). To worsen the situation, Stears Business highlights that most of the approximately 40 million SMEs in the country, where young people find employment, have also been badly hit by the pandemic and necessary restrictions to business activity. FATE Foundation and BudgIT (2020) studied the impact of COVID-19 on 1,943 Micro, Small, and Medium Enterprises (MSMEs) across the 36 states in Nigeria including the FCT. The result revealed that 94.3% of respondent businesses recorded negative results during the pandemic principally in the areas of cash flow, sales, and revenue. These statistics do not only include youth, but as 15-34 year-olds account for close to half of the nation’s working-age population and a vast majority of small business, young people will feel the greatest brunt of this economic shock. The Africa Report, earlier quoted, highlights that as job losses rise and consumption decreases, the struggle will affect small businesses, who already struggle with limited access to capital, knowhow and markets.

On the supply-side, in market systems like financial services, agents struggle with liquidity while financial institutions struggle with creating significant uptake and awareness of products and services tailored for smallholder farmers and MSMEs. This is occasioned by process-related bottlenecks such as asking for collaterals, high interest and loan default rates, and skill gaps among bank staff around the dynamics of targeted agricultural finance including product development, management, credit monitoring and recovery. Financial institutions, large and medium-sized firms and businesses with innovative solutions and business models that could create entrepreneurship and employment opportunities for smallholder farmers and microenterprises struggle with creating and maintaining sustainable, value-adding commercial relationships with micro and small enterprises.  

While these risks and challenges exist, opportunities exist for service providers such as business development service providers (BDSPs), digitally enabled value-added service (VAS) providers such as fintech and agtech enterprises, and other local (State)-based micro and small enterprises to connect demand from smallholder farmers and micro-enterprises to supply from financial institutions and other large and medium-sized firms. Furthermore, significant opportunities also exist for financial institutions and other large and medium-sized firms to develop more direct customer-focused strategies and build/strengthen their supply chains by working with and integrating micro and small enterprises into their business models.

Based on the foregoing, Rural Resilience Activity will review and disburse direct grants averaging between $5,000 and $150,000 focused on ensuring market-driven mechanisms that will help micro, small and medium enterprises, institutions and smallholder farming households cope, mitigate, adapt and sustain wellbeing outcomes in the face of shocks and stresses such as the COVID-19 pandemic, conflicts, adverse weather effects and other disruptions to agrifood and non-ag. supply chains. Activities of smaller or larger amounts may be considered should the proposed activity meet the objectives of the Call for Applications. Rural Resilience Activity will co-create inclusive growth solutions with awardees and structure grants requiring co-investment by enterprises and organizations, but with contributions timed later in the grant period, and as markets and trade start to recover, thus ensuring companies maintain liquidity beyond COVID-19.

Applicants should propose activities that incorporate and ultimately benefit smallholder farmers and MSMEs in at least one of the following objective areas:

• Objective 1: Increase last-mile access to agricultural inputs, including quality seeds, crop protection, fertilizers, post-harvest storage solutions and mechanization services and cultivable land especially for women and youths
• Objective 2: Increase access to and use of improved technologies including time-saving, productivity enhancing agricultural technologies and digital technologies such as agtech/fintech solutions and small-scale processing equipment
• Objective 3: Increase access to tailored and appropriate formal and informal financing for smallholder farmers and MSMEs
• Objective 4: Strengthen agricultural and business management practices resulting in improved competitiveness, productivity, income, gross margin and yields for smallholder farmers and MSMEs.
• Objective 5: Expansion of market access for smallholder farmer commodities through improved services by offtakers, processors, and other institutional markets resulting in high-value prices for smallholder farmers and MSMEs
• Objective 6: Diversification of products and or marketing channels enabling increased access to information, advisory and extension services at the last mile
• Objective 7: Creation of new private sector, rural and urban employment and entrepreneurship opportunities.

5. Examples of activities that could be supported

Proposed activities should be based on a sustainable business model. The applicant is responsible for organizing and managing activities with technical and/or financial support from Rural Resilience Activity. Examples of activities that could be supported include, but are not limited to, the following:

1. Develop a network of mobile agents, agro-dealers (retailers and distributors) and other input providers to increase uptake or strengthen use of an existing or new digital agricultural finance/trade platform
2. Develop or increase access to an improved range of appropriate financial products and services (for example a financial institution intends to partner with Rural Resilience Activity to receive technical support to access existing credit guarantee mechanisms that incentivize lending to micro and small enterprises
3. Improved promotion and delivery of products and services, for example last mile mobile agents leveraging digital technologies and physical channels to deliver loans, inputs, extension and advisory services, or business, financial literacy, soft skills, and agricultural training to remote rural areas
4. Introduce a new business model for providing end-to-end digital agriculture services including a bouquet that enables smallholder farmers and SMEs access quality inputs, information and advisory/agricultural extension, higher value output markets and financial services.
5. Support aggregators, retailers and other micro and small enterprises to make food items available in urban markets (distribution, promotion and marketing roles) through integration into the supply chains of medium and large processors
6. Support for other types of value addition processes that aim to create alternative markets and better income for micro and small enterprises and smallholder farmers.
7. Develop and promote inclusive business models integrated/embedded with behaviour change practices targeted at mitigating discriminatory cultures and beliefs while promoting youth inclusion and women’s economic empowerment within targeted value chains.
8. Supporting incubators, business development service providers and mentorship programs to improve access to business, soft, technical and digital literacy skills, while integrating/embedding safety, protection and GBV (gender-based violence) information and advisory targeted at micro and small enterprises.
9. Developing and facilitating public-private partnerships that enable and create opportunities for women and youth micro and small enterprises to have access to and control of cultivable and secure agricultural land and supporting the gradual formalization of these enterprises through formal registrations

This list is non-exhaustive. It is simply to provide examples of company initiatives that could be supported by Rural Resilience Activity. Any additional ideas and a combination of multiple reinforcing activities is encouraged.

6. The application process

The application process consists of two phases. The Concept Note is the first phase of the application process. Applicants whose Concept Notes are accepted will then be invited to submit a Full Application, to be developed in close cooperation with Rural Resilience Activity (RRA). The table below shows the process timeframe.

7. Information meeting

The information meeting will provide an opportunity for interested applicants to learn more about the opportunity and the process. Attendance at the information meeting is an optional requirement by applicants. If interested in participating, applicants should send an email requesting interest to participate in an information meeting to nig-innovation-fund@mercycorps.org and a meeting will be organized for applicants individually or as a group and as appropriate.

8. Preparation of Concept Notes

The link to the Concept Note template is provided below and must be completed online by the date listed above. Completed Concept Notes will be accepted in English only and must be no more than six (6) pages in length (not including budget, proof of registration, or other required attachments).

A soft copy of the application form will be emailed to interested applicants on request.

Rural Resilience Activity will evaluate all Concept Notes based on the criteria described below. All applicants that meet the criteria will be considered, however Rural Resilience Activity reserves the right to not accept any applicant if none are qualified.

Those companies/institutions whose Concept Note is deemed acceptable and selected will be asked to submit a Full Application. At that point, discussions between Rural Resilience Activity and the selected applicants will be held to discuss:

• Strategy, budget and timing for different activities.
• Agreement on how technical support from RRA staff and consultants can be provided to support the agreed upon activities.

9. Who Can Apply

For this Call for Applications, RRA is interested in partnering with:

• Private Sector Companies
• Foreign Organizations (referred to as non-U.S. NGOs): either nonprofit or for-profit organizations that meet the definition in 2 CFR 200.47 can apply as part of a consortium. However, the lead applicant must be legally registered in Nigeria.
• Non-profit Organizations: Organizations that meet the definition of 2 CFR 200.70.
• Social enterprises such as community-based organizations with commercial business models
• For-Profit Organizations
• Government agencies (Partnerships with Government entities will be through in-kind partnerships and will not involve direct financial support).

10. Eligibility and Evaluation Criteria

All applicant businesses must be legally recognized entities in Nigeria and able to provide documented proof of legal status. Applicant businesses should have been in operation for more than one year with demonstrated potential for commercial viability and relevant experience in the technical areas proposed in the application. Prior to award, Rural Resilience Activity will conduct due diligence on selected applicants. The due diligence process includes reference checks; a pre-award survey to ensure successful applicants have the organizational, managerial, and financial systems and controls in place to manage a performance-based milestone agreement; and a site visit to evaluate the proposed strategy, meet with local stakeholders, and verify the potential impact proposed.

Prior experience with USAID or other US government entities is not required. However, if the applicant has received US government or other donor funding in the past or has a proposal pending, details and purpose of such funding should be noted in the application. For applicants who have received donor funding in the past, details of fund use should be included and any other reference information. Failure to disclose this information will result in disqualification.  Applicants are required to propose leverage/cost share in their cost proposals. Rural Resilience Activity reserves the right to negotiate the final proportion with successful applicants during negotiations. Funds from United States government-supported programs cannot count towards leverage/cost share. For private sector businesses, it is expected that proposed leverage/cost share contributions must come from the enterprise’s personal funds and assets and not from the United States Government or other donor supported-funds. Proposed contributions must be appropriate, relevant to the proposed activity, and will be carefully considered during the evaluation of applications

The following activities are not eligible for funding:

• Pure academic research.
• Technologies that have not been market tested and require further research and development.
• Agricultural commodity procurement.
• Restricted commodities and services from ineligible suppliers in accordance with 22CFR228.123.

Eligible applicants for this opportunity must:

• Be registered as a legal entity with the Government of Nigeria; implementing partners and other organizations may be included in a consortium such as other commercial businesses, farmer cooperatives, consulting firms, and/or business/member associations
• Provide an investment in the proposed initiative of at least a 30% contribution from their own (private sector) funds. Preference will be given to proposed partnerships with higher leverage. See Section 10 for further explanation of leverage requirements.
• Propose partnership of up to 12 months in duration with an end date on or before August 31, 2022.

Upon submission, the RRA Team will evaluate all Concept Note applications using the following criteria:

• Eligibility of the applicants per the above criteria, including completeness of the application, attaching all required additional forms and proposing cost-share/leverage ratio
• Alignment with Rural Resilience Activity (RRA) Objectives
• Viability and sustainability of the concept/business model and impact on activity’s target groups
• Expected scale of positive impact of the proposed activities
• Track record and experience of applicant
• Value of impact compared to the cost of the activities

Furthermore, proposed activities will be evaluated on other factors with the most important being their ability to achieve significant commercial-scale results through market-based approaches that include co-investment from private funding sources to advance the project. Another general eligibility requirement is that the proposed projects and activities must be funded through private financing, which can include equity capital (internal or external), and/or debt capital from banking and other financial institutions. For Universities, CBOs or other NGOs, private financing could include but not be limited to man-hours of staff and volunteers, etc. Further, the Rural Resilience Activity will prioritize the projects and activities that exceed the one-to-one matching fund requirement governing the grant partnership. Activities with a potential to engage women and youth are also priorities.

11. Budget and Leverage Ratio

The budget will be evaluated based on best value. Ongoing business expenses such as the procurement of commodities from farmers or normal processing and operations expenses are not allowable and should not be included in the budget. Costs will be evaluated in equal weight for cost effectiveness and cost realism of the application, explained below.

It is important to note that these activity funds are not allowed to be used to pay for any profit. As such, no profit may be included in applicants’ budgets.

The budget and leverage ratio will not be included in an applicant’s technical evaluation and will be reviewed separately after the technical review of applications is complete. Preference will be given to proposals with more than one-to-one matching. Descending order of preference for leveraged funds includes: cash, in-kind, other sources such as non-US Government donors.

As mentioned throughout this call, all grant awards must include budget share/leverage of public/private sector resources, assets, capabilities, and expertise. This means that the value of public/private sector resources, assets, capabilities, and expertise (cash and in-kind) contributed to the implementation of the grant activity must at least equal 30% of the monetary cost of the project with the other 70% of this cost provided by Rural Resilience Activity’s Enterprise Innovation Fund. Co-investments of more than 30% and significantly higher are preferred. It is strongly encouraged that companies/organizations propose private sector resources, assets, capabilities, and expertise that exceed the 1:3 match minimum, and as such will be viewed more favorably. The budget share and leverage will be structured into grants after three to six months when markets revive and trade resumes.

Leverage shares can be either cash (e.g. from operating cash flow, donor funds or other), rate discounts, services, material or third-party contributions, such as equity investors loans from financial institutions, or a combination thereof. Other USG funding sources are not accepted for cost-share or leverage requirements. Examples of in-kind contributions that may be counted include:

• Commodities
• Use of training or other purpose-specific facilities necessary to a program’s implementation;
• Value of time donated by technical consultants or company employees whose work and expertise are necessary to a project;
• Value of salaries for staff dedicated to a project;
• Technology, communications and capital assets;
• Intellectual property rights; or
• Licenses.

Determining whether or not the private sector resources and contributions can count toward meeting the 1:3 matching requirement, Rural Resilience Activity will consider the following criteria:

• Attribution and Additionally

• The contribution must support and advance the objectives and activities of the project;
• The contribution must be based upon the active engagement of the private sector partner in the design and development of the partnership;
• The application of the resources and contributions to activities under the proposed alliance must be attributable to the private sector entity’s anticipated or actual engagement with the Rural Resilience Activity
• The provision or application of the resources must be qualitatively and/or quantitatively more than what the entity would have done in the absence of anticipated or actual engagement with the Rural Resilience Activity

• Nature and Origin – the contributions and resources must be private in nature and origin; they must come from the applicant directly, and/or a critical and core partner to the partnership; and they must come from one or more of the following sources:

• Private for-profit entities such as a business, corporation, or private firm;
• Private equity or private financial institutions, including private investment firms, mutual funds, or insurance companies;
• Private investors (individuals or groups);
• Private business or industry associations, including but not limited to chambers of commerce and related types of entities;
• Not-for-profit and social enterprises including Foundations, NGOs, CBOs, Universities and could be in the form of technical expertise provided by staff and volunteers

• Value Proposition and Development Impact – the resources and contributions mobilized from the private sector should, in combination with the support provided by Rural Resilience Activity provide the partnership with a comparative advantage in achieving significant and sustainable impact on the targeted development challenge.
• Measurable – the resources and contributions must be something of value that can be measured in some form that permits evaluation of the contribution’s impact on achieving desired results.
• Composition – most of the private sector resources should come in the form of cash, equity capital, with a letter of intent from the equity investor, and or debt capital with a letter of commitment from the financial institution.
• Timing of Private Sector Resource Commitments and Contributions – The mobilization, contribution, provision and/or application of the resources can take place at any time during the development or implementation of the partnership.

As cost-share and leverage are those resources, assets, capabilities and expertise which are not part of the amount provided by the Rural Resilience Activity, they are treated differently.

• Leverage strictly comes from the private sector, while cost-share does not;
• Cost-share is binding and auditable under an award agreement, while leverage is not;
• The determination of what constitutes leverage is based on the objectives, considerations and criteria set forth at https://www.usaid.gov/sites/default/files/documents/15396/GDA%20APS_APS-OAA-16-000001_2016-2018.pdf; the determination of what constitutes cost-share is set for at 2 CFR 200.306 and ADS 303.3.10.

12. Submission process

A Concept Note must be submitted using the templates provided in Annex 1 which provide instructions on the required content and format. An applicant not adhering to these instructions, risks being considered non responsive to the requirements of the Call for Applications and eliminated from further consideration.

Interested applicants should submit their completely filled concept notes via email to nig-innovation-fund@mercycorps.org

13. Conditions

Issuance of this solicitation in no way constitutes a commitment by the Rural Resilience Activity to execute any agreement or to pay any costs incurred by any applicant in submitting a Concept Note or a Full Application.

Please note that Rural Resilience Activity will fully respect the confidentiality of all companies involved in the program. If selected, Rural Resilience Activity will establish an agreement with the company/institution that describes the objective of collaboration and that clearly defines each party’s respective responsibilities, roles, and obligations. Successful applicants must be willing to share information with Rural Resilience Activity regarding their performance, and Rural Resilience Activity will conduct interviews with clients / customers to gather information on impact and to monitor progress.