USAID Investment Support Program
At the core of the Investment Support Program (ISP) is a market-systems approach to identify investment opportunities, mobilize private capital, and deepen private and financial sector engagement – all with the aim of catalyzing development impact. Managed by the Bureau for Resilience and Food Security, ISP is a cross-sector contracting vehicle through which any USAID Mission or Operating Unit can access advisory services from Dalberg Advisors related to promoting and facilitating investment. ISP can also be used to develop host government capacity to engage the private sector, build Agency finance and investment expertise, and foster developmental learning and dialogue.
Overview. Launched in September 2014, ISP has a period of performance up to March 2020. Through this flexible contracting mechanism, USAID Missions and Washington offices can access tailored technical assistance and expertise advisory services from Dalberg Advisors related to promoting and facilitating investment and private sector engagement.
Objectives. With ISP, USAID seeks to develop a common approach and Agency-wide platform that can deepen and extend its private sector partnerships and investment support activities to mobilize private capital for development impact.
Scope. ISP is a global and cross-sector initiative that can support Missions and Operating Units wherever they believe private sector engagement and investment can have development impact, across any country or economic sector in which USAID operates. ISP services are organized under six components that complement each other:
Provider. Dalberg Advisors is a mission-driven strategic advisory firm dedicated to development. Dalberg has 23 offices around the world, including eight in Africa where the majority of its staff are based. Dalberg has deep experience across all development sectors, including access to finance, agriculture and food security, education and employment, energy and environment, gender empowerment, health, ICT for development, inclusive growth, investment advisory, and organizational strategy and performance.
Procurement. Missions and Operating Units can order ISP services from a ‘menu’ of 43 firm fixed price deliverables, requiring no separate Scope of Work or procurement action; Dalberg can be engaged within 3-6 weeks from the point of obligating funds. In addition to a streamlined procurement process, ISP provides Missions and Operating Units the flexibility to tailor assignments to their specific needs (by combining ISP deliverables) as well as access to a wide range of expertise and local experience.
Want to learn more? For more information please contact the COR, Janet Lawson ([email protected]) or ISP Team Leader, Afua Sarkodie ([email protected]) for further details. Please note that ISP is in its final year so any new engagements will need to be completed by February 2020.
Driving Results to Develop Market Systems and Engage the Private Sector in Agriculture
Over 100 engagements have been delivered under ISP since its inception in 2014. The following examples demonstrate a selection of advisory support provided in the sphere of agriculture finance and investment and the results achieved.
USAID Africa Private Capital Group (APCG) and USAID/Tanzania – Catalyzing investment into Tanzania’s sunflower oil industry. A USAID-ISP team supported the Government of Tanzania to make its industrialization vision a reality by attracting investment into its nascent sunflower edible oils industry, a sector which has potential to substitute for imports of unhealthy palm oil into the region. The project undertook an in-depth value chain study on sunflower for the planning commission, developed an investment business case along with bankable business model for an anchor investor, and recommended policy interventions to jump-start a nascent industry. This work influenced a private investor to make a $11 million investment into sunflower processing, with the potential to expand to up to $100 million if the first phase proves a success. This would bring other projected benefits including opportunities for improved livelihoods for up to one million farmers, 2,000 SMEs with higher throughput and utilization, demand for $50-100 million in input loans, all with no requirement for government spending in the sector.
USAID/Ethiopia – Improving the investment climate for agriculture. In Ethiopia, an ISP team was engaged to identify and package specific agriculture investment opportunities; engage investors to surface common constraints; and identify policy reforms that would stimulate investment in agro-processing. Alongside the Agriculture Transformation Agency (ATA) the team engaged with over 90 potential operating investors which unlocked more than $130 million of new investment in malt barley and soybean processing, with another ten investors currently in advanced discussions regarding an additional $150 million of investment. Key outcomes of the policy reform recommendations include: (i) the National Bank of Ethiopia has relaxed the required debt to equity ratio from 50-50 to 60-40 and 70-30 in some instances, as well as facilitating investor fast-track profit repatriation in order to attract more investment across the value chain; (ii) The government passed and implemented the policy recommendation for facilitating access to foreign exchange. The new national policy on forex allows exporters of goods and services to retain up to 30% of the proceeds of their export indefinitely in their forex account (instead of the previous 10%).
USAID/Tanzania – Innovative finance for irrigation systems. A USAID-ISP project led to the development of an innovative finance mechanism to help smallholder farmers invest in drip irrigation. The project assessed that drip irrigation has the potential to generate five times yield increases and annual income increases of $4,200 for horticulture farmers in Tanzania. This work has resulted in a potential irrigation financing pilot between a major financial institution and a technical assistance provider that could benefit 40,000 farmers. This pilot also provides a template for other financial institutions to work with farmer groups to scale irrigation across Tanzania and Africa.
USAID Africa Private Capital Group (APCG) – Increasing disbursements under DCA loan guarantees. USAID-ISP was engaged by APCG to conduct a needs assessment with three banks in Uganda and two banks in the DRC to increase disbursements under DCA loan guarantees. Following the initial needs assessment, a bold and innovative attempt is underway in Uganda to get to a step change in lending behavior through the use of off-take agreements as collateral. In DRC, ISP is facilitating a Learning Event on Technology in Agriculture Financing. This is aimed at supporting banks to consider how mobile banking and agency banking can accelerate agricultural lending.
USAID/BFS – “Renovation & Rehabilitation for Resilient Coffee Farms: A Guidebook for Roasters, Traders and Supply Chain Partners”. USAID-ISP was engaged to develop a guidebook for the Farm Renovation + Rehabilitation Collective Action Network that was formed as part of the Sustainable Coffee Challenge to inform future commitments to renovation and rehabilitation across the coffee sector. The project compiled a landscaping of coffee-related R&R investments, identified priority renovation needs and the barriers to be overcome, synthesized lessons from emerging best practices and developed a set of recommendations for the coffee sector as a whole.
Tools and Strategies for Catalyzing Finance in the Agriculture Sector
Please explore the following tools developed under ISP: