Building Productive Alliances

AGCOM is implementing the Productive Alliance (PA) Model in the project. The PA model is an approach that is based on commercial agreement between the project supported producer organizations, commercial off-takers and other value chain players. The component supports the integration of small-scale and emerging farmers into value chains by improving their capacity to finance and execute productivity-enhancing investments and respond to the requirements of end-markets (buyers /off-takers)

  1. Horizontal Alliance
    A Horizontal Alliance entails the teaming up of smallholder farmers to mutually pursue economies of size in form of a Producer Organisation. AGCOM is promoting these horizontal alliances by supporting the formation of commercially oriented POs and facilitate their formalization in preparation of entering into meaningful Productive Alliances (PAs). The project is also strengthening existing POs through demand-driven capacity building in areas of governance, finance, business management. Special attention is given to the promotion of women and youth participation in these Producer Organisations
     
    This activity is done while carrying out an effective communication and dissemination campaign that informs all potential stakeholders, market‐ready POs as well as other POs or individuals interested to form organizations—of the PA opportunities supported by the project.
     
    Brokers
    The Brokers facilitate capacity building of POs to enable them effectively respond to call for concept notes and proposals. POs are supported with the capacity in the preparation of viable concept notes and proposals; financial management; business management; extension advisory services, social safeguards, governance and leadership. The full cost of building capacity will be covered by AGCOM. Each broker is allocated a geographical region where it operates
     
  2. Vertical Alliance
    AGCOM offers consulting and technical assistance (TA) to POs in the form of extension advisory services, business management and proposal development to strengthen and upgrade the capacity of POs to meet off-taker and market specifications. These services complement key interventions in the form of matching grants, partial credit guarantee fund and the last mile infrastructure

     

    1. Matching Grants
      Purpose
      AGCOM Matching Grants refers to the financial support that the Producer Organizations access in Productive Alliances. The financial support meets the costs of capital investment in the agribusiness that directly contribute to the requirements or market specification of the off-takers/ buyers. AGCOM meets a maximum of 70% of the total cost while the PO covers 30% of the remainder. The PO contributes a minimum of 10% in cash and or 20% in-kind contribution

      Target
      AGCOM Matching grants targets smallholder farmers in cooperatives, associations, informal farmer groups, milk bulking groups (MBG). AGCOM promotes the integration of women and youth producer organizations in the PAs. AGCOM is expected to work with 300 POs in the project reaching to 100,000 farming households and 650,000 beneficiaries

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      Eligibility criteria for AGCOM Matching Grants
      Grants are provided to producer organizations in Productive Alliances. POs are selected based on the following criteria:

      • Small scale and emerging farmers in an association and cooperative. The minimum membership is 20 farmers, with preference for POs with large membership.
      • Producers engaged in crop production must have land that is greater than zero but not exceeding 8 (eight) hectares.
      • Medium scale farmers are encouraged to team up with smallholder farmers in forming these cooperatives. The medium scale farmers must form 20% of PO membership. The members should not be related.
      • From the on-set, the association must be committed to be trained and to be registered as a cooperative.
      • The land for AGCOM subprojects must have secure tenure. In cases where the land is not registered, applicants must be willing to register their land. This process shall be facilitated by the project. The purchase of land is not covered by the matching grant.
      • Producer organization (PO) must be in a Productive Alliance- that is POs must be linked with a commercial off- takers (buyers). The productive alliances shall be either formal or informal agreement. The PA must be designed to increase crop yield, increase production, yield, quality and sale of agricultural products, improve post-harvest storage and processing facilities.
      • All value chain players (producer organisation, off-takers, Financial Institutions) must be willing to be in a productive alliance (PA) for minimum of (two) years.
      • Must not have previously benefitted from this matching grant, or if it has benefited from a matching grant, it has completed the corresponding subproject in a satisfactory manner.
      • POs with high proportion of women and youth membership are given special attention and support from the project to participate in the PAs.
      • The PO is responsible for developing concept notes and proposals. The concept note / proposal must clearly demonstrate that the investment idea is viable and good value for money (VfM).
      • The PO must be ready to contribute a minimum of 30% of the capital costs. 10% will be cash contribution and 20% in-kind contribution. Medium scale will match a maximum of 50% of the total cost.
      • The matching grants for POs are capped at US$2,500 per producer household based on the standard project costs.
      • Every PO is required to open a separate current bank account. The account will be solely used for transactions related to the matching grants operations.
      • Each matching grant requiring safeguard instruments is subjected to prior written approval from the World Bank. The safeguard instrument shall be disclosed prior to commencement of the subproject.
      • All proposals for the matching grants applications are reviewed by the Independent Evaluation Committee. The IEC applies a standard criterion in the review process. IEC will recommend viable proposals for the matching grant awards.

       
    2. Partial Credit Guarantee Fund (PCGF)
      Purpose of the PCGF
      The Partial Credit Guarantee Fund for the agricultural value chain players will place partial guarantees in selected Commercial Banks. This will enable the eligible applicants to access loans to address their input and other working capital needs. PCG is still under development as of now
       
      Target
      The PCGF will target POs in productive alliances, off-takers, input suppliers, aggregators and processors
       
      Operations of the PCGF
      The PCGF will have a qualified Fund Manager that will administer the funds. AGCOM will set up an Investment Committee (IC) comprising of professionals to assess all application and recommend the application for further bank due diligence.
       
      Applicants will be eligible for the PCGF upon submission of applications that will successfully undergo the bank due diligence procedures.
       
      Participants in PAs that qualify for the PCG loans, will access 70% of the requested loan amount under the PCGF while 30% will be self-sourced. PCG loans will be used to meet input and working capital needs
       
    3. Last Mile Infrastructure
      The project will provide a public infrastructure to facilitate operations by the selected producer organization and off takers in a productive alliance. These may include; rural feeder roads, access to electricity, access to clean water, and large-scale irrigation under AGCOM's last mile infrastructure component as a public good.
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