PA00W6H9

SOUTHERN AFRICA
TRADE
+INVESTMENT
HUB
USAID Southern Africa Trade and Investment Hub

FY 2017 Quarterly Report #2
January to March 2017
FY 2017 Quarterly Progress Report #2

Contract No. AID-674-C-16-00004
Disclaimer
The views expressed in this publication do not necessarily reflect the views of the U.S. Agency for
International Development or the United States Government.
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Contents
Abbreviations .................................................................................................................................. 4
Executive Summary .........................................................................................................................7
Trade and Investment Hub Indicators Table ................................................................................. 9
Agribusiness Trade ........................................................................................................................12
Export Competitiveness .................................................................................................................14
AGOA Capacity Building and Utilization ................................................................................... 14
Apparel and Textiles .................................................................................................................. 17
Accessories .................................................................................................................................21
Specialty and Processed Foods ................................................................................................. 24
Finance and Investment ................................................................................................................ 31
Financial Sector Strengthening ................................................................................................. 32
Policy enabling environment / Financial sector strengthening ................................................ 34
Support of financing platforms/vehicles .................................................................................. 37
Warehouse Receipt Finance (WRF) .......................................................................................... 39
Increasing investment into the region: Investment................................................................... 41
Enabling Environment and Trade Facilitation ............................................................................. 54
Strategic Partnership Capacity Building and Fund ...................................................................... 63
Upcoming Activities and Events 2017 ........................................................................................... 71
LIST OF ANNEXES
ANNEX 1: Trip reports
ANNEX 2: MAGIC Company Directory
ANNEX 3: Export Competitiveness Online Marketing: MAGIC
ANNEX 4: Export Competitiveness Online Marketing: Gulfood
ANNEX 5: Fit Check
ANNEX 6: Information Request for Transaction Support
ANNEX 7: SATIH Pipeline Report
ANNEX 8: SATIH Capital Map
ANNEX 9: Transaction Team Client Survey
ANNEX 10: Analysis of Non-Tariff Barriers
ANNEX 11: Association Building Capacity Assessment Tool
ANNEX 12: Baseline Study Design and Analysis, with Tools (Buyers Survey, Company Survey,
Public Sector Survey)
ANNEX 13: Grants Manual
ANNEX 14: Southern Africa Trade and Investment Hub Strategic Partnership Fund Annual
Program Statement
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Abbreviations
ACE Africa Commodity Exchange (Malawi)

AAFF American Apparel and Footwear Association
ACTESA Alliance for Commodity Trade in Eastern and Southern Africa
ACTIF African Cotton &Textile Industries Federation
AFCA Africa Fine Coffees Association
AFSTA African Seed Trade Association
AGMARK Agricultural Market Development Trust
AGOA African Growth and Opportunity Act
AICAJU Associacao Dos Industriais do Caju/Cashew Industry Association (Mozambique)
AMCHAM American Chamber of Commerce
ASARECA Association for Strengthening Agricultural Research in Eastern and Central Africa
ASIF Agricultural Storage Investment Facility
AWAN African Women in Agribusiness Network-East Africa
AWEP African Women’s Entrepreneurship Program
B2B Business-to-Business
BEDP Botswana Exporter Development Program
BEMA Botswana Exporters & Manufacturers Association
BITC Botswana Investment and Trade Center
BTCA Botswana Textile and Clothing Association
BURS Botswana Unified Revenue Service
CAADP Comprehensive Africa Agriculture Development Program
COMESA Common Market for Eastern and Southern Africa
COPE Center of Phytosanitary Excellence
CPMS corridor performance management system
DCA Development Credit Authority
DFID Department of International Development
EIB European Investment Bank
EMPEA Emerging Market Private Equity Association
FEET Facilitating Enabling Environment and Trade
FSNP Food and Nutrition Security Policy
FTF Feed the Future
GGDA Gauteng Growth & Development Agency
HACCP Hazard Analysis Critical Control Point
HTS Harmonized Tariff Schedule
INCAJU Instituto de Fomento do Caju/National Cashew Institute (Mozambique)
ISPM International Standards for Phytosanitary Measures
JSE Johannesburg Stock Exchange
LEA Local Enterprise Authority (Botswana)
LNDC Lesotho National Development Corporation
LSP logistics service providers
MCTI Ministry of Commerce, Trade and Industry (Botswana)
MIS Market and Information Systems
MITC Malawi Investment and Trade Center
MITI Ministry of Investment, Trade and Industry (Botswana)
MoITT Ministry of Industry, Trade and Tourism (Malawi)
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MOU Memorandum of Understanding
NAPI National Action Plan on Investment
NBM National Bank of Malawi
NEPAD New Partnership for Africa’s Development
NSW National Single Window
NTB non-tariff barrier to trade
OCA Open Capital Advisors
OECD Organization for Economic Cooperation and Development
OPIC Overseas Private Investment Corporation
OSBP One-Stop Border Post
PEPZ Private Enterprise Program (Zambia)
PF Partnership Fund
PMP Performance Monitoring Plan
PPP Public Private Partnership
PRA Pest Risk Assessments
RCN Raw Cashew Nut
REI Regional Economic Integration
RFA Request for Applications
RFP request for proposal
RoO Rules of Origin
SABF Southern Africa Business Forum
SABS South African Bureau of Standards
SADC Southern Africa Development Community
SAMAC South Africa Macadamia Association
SATIH Southern Africa Trade and Investment Hub (“Trade and Investment Hub”)
SCAA Specialty Coffee Association of America
SCAE Specialty Coffee Association of Europe
SFAA Specialty Food Association of America
SIPA Swaziland Investment Promotion Authority
SME Small and Medium-sized Enterprises
SPS sanitary and phytosanitary
SSA Sub-Saharan Africa
STR Simplified Trade Regime
STS Structured Trading Systems
STTA Short Term Technical Assignment
SWIFT Swaziland Free Trade Association
TBT Technical Barriers to Trade
TF Trade Facilitation
TFA WTO Agreement on Trade Facilitation
TFP Trade Facilitation Program
TIPA Trade Investment Promotion Agency
TTTFP Transport and Transit Facilitation Program
UNDP United Nations Development Program
WCFFI Western Cape Fine Food Initiative
WRS warehouse receipt system
WTO World Trade Organization
ZAGIS Zambia Grain Information Service
ZAMACE Zambian Commodity Exchange
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ZCFAA Zambia Customs & Freight Forward Agents Association
ZDA Zambia Development Agency
ZEDF Zambia Export Development Fund
ZEGA Zambia Export Growers Association
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Executive Summary
Across its four component areas, USAID’s Southern Africa Trade and Investment completed
assessments and obtained information and insights from key informants across each of its four
components: Agribusiness Trade, Export Competitiveness, Finance and Investment, and
Enabling Environment and Trade Facilitation. More than 40 associations participated in
organizational capacity assessments, outlining the context their hundreds of members – small
and medium enterprises in various sectors – operate in and pointing to opportunities to
leverage their activities to address key constraints.
The Warehouse Receipt Industry Project in Mozambique, now in its third year, continues to
draw support from private sector stakeholders as improvements to its software platform ease
access to the commodities information that is key to more efficient market functioning. The
Trade and Investment Hub continued support to the project, while developing a broader
regional vision: the region’s major commodity exchanges met with the project to discuss greater
collaboration.
At two major international trade shows, the Trade and Investment Hub facilitated the
participation of 17 export-ready companies from Mozambique, Namibia, South Africa,
Swaziland and Zambia. MAGIC, the largest apparel sourcing trade show in North America
included 11 companies from Lesotho and South Africa. The Trade and Investment Hub co-
sponsored booths and marketing efforts, branded as The Africa Advantage, with its sister USAID
projects in East and West Africa. The companies established more than 50 business linkages and
set in motion deals that will sustain and expand employment; in Lesotho, the industry
contributes almost 10 percent of the country’s GDP. In Dubai, six export-ready specialty foods
companies from Mozambique, Namibia, South Africa, Swaziland and Zambia met nearly 60
potential buyers. Within the region, the Trade and Investment Hub engaged with ministries of
trade, investment promotion agencies and sector specialists to revise and update strategies and
action plans to increase utilization of the African Growth and Opportunity Act (AGOA). The
project’s sector advisors similarly engaged with dozens of companies in each of the project’s
eight target countries – Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa,
Swaziland and Zambia – to identify and develop solutions to competitiveness issues.
Building more warehouses across the region will expand storage space and facilitate warehouse
receipt financing schemes, with benefits to multiple stakeholders. The Trade and Investment
Hub saw the fruition of many months of support as a USD 35 million investment by the
European Investment Bank was realized. The investment facilitates warehouse construction that
will roughly double storage capacity across the country and reduce post-harvest losses from
approximately 23 percent to less than one percent. At the same time, Malawi’s Africa
Commodity Exchange established a win-win with a software vendor that was seeking to enter
the commodity space; Trade and Investment Hub support helped the enterprises link and
achieve a success. The Finance and Investment team also continued to facilitate investment
transactions, identifying 18 deals with an average value of about USD 8 million. A pipeline
report summarizes the status of these potential transactions.
In the second quarter of FY 2017, the Trade and Investment Hub completed assessments of
specific Member States’ needs for technical assistance to implement trade facilitation measures,
namely, Botswana, Lesotho, Malawi, Namibia and Zambia. Development of the Trade
Information Portal in Zambia was initiated, and progress was gained in Namibia for the
concretization of the concept and organizational structure for the National Single Window.
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The Trade and Investment Hub continued to build relationships with key enabling environment
stakeholders, extending the conversations to focus on the private sector and regional
associations’ dialogue with the SADC and national government ministries, and the means to
strengthen the Government-to-Business partnerships for introducing trade facilitation measures
conjointly and for insights into the key issues affecting the movement of goods in the region.
Considerable analyses of the movement of goods across the SADC trade corridors and through
the various border crossing points were undertaken which will lead to the realization of cost and
time baselines within the third quarter of FY 2017.
The Trade and
Investment Hub
assessed
organizational
capacity of 45
industry associations
and cooperatives in
seven sectors and
seven countries:
Botswana, Lesotho,
Malawi, Namibia,
South Africa and
Swaziland, during
the second quarter of
FY 2017. By
strengthening these
organizations, the
Trade and
Investment Hub can
From left to right, Edward Winant, U.S. Embassy Pretoria Trade and Investment Officer,
amplify USAID’s
Laird Treiber, Minister Counselor for Economic Affairs, Acting U.S. Trade
impact; these Representative for Africa Constance Hamilton, Vanessa Adams, COP of the Trade and
entities are key to Investment Hub. Lauren Scott, Trade Officer for Africa, Alan Treat, USTR Director for
reaching Life of Africa, and Suzanne Heinen, Minister Counselor for Agriculture Affairs.
Project targets,
including delivery of new technologies and people trained. Associations provide key services to
their member including advocating a unified voice to government, providing access to
information to assist in growing and improving businesses, and assisting business with
promotion, branding and visibility. The Strategic Partnership Fund, like Association Capacity
Building, is a tool to support the four technical components in reaching the Life of Project
Results.
In March, Constance “Connie” Hamilton, the acting Assistant U.S. Trade Representative for
Africa visited the Trade and Investment Hub’s Pretoria office with a delegation, expressing
appreciation and satisfaction that the project was engaging with stakeholders to accelerate trade
across Southern Africa. “I see your office is tastefully and minimally decorated,” Hamilton said.
“It belies the task before you. But I am confident the Trade and Investment Hub’s activities are
building on and increasing the imperative, essential role trade plays in building a peaceful and
secure world.”
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Trade and Investment Hub Indicators Table
No. Desired Results /Indicators Indicator Indicator disaggregation Baseline FY 2017 FY 2017 Q2 Results
type Targets
USAID/Southern Africa RDCS Sub-IR 1.2.1: Increased value chain competitiveness

Sub-sub IR: 1.2.1.2 Global export competitiveness strengthened
1 Value of exports from hub supported Custom Ag vs. Non-ag vs. Service; 0 $30 mil $0
firms/ associations/ entities Value chain; FtF vs. non-
FtF; Destination market;
AGOA vs non-AGOA; by
women-owned/managed
companies; country
2 Value of sales of assisted firms Custom Ag vs. Non-ag vs. Service; 0 $32 mil $0
Value chain; by women-
owned companies; country
3 Number of buyer/seller linkages Standard F Ag vs. Non-ag vs. Service; 0 450 120
established in export capacity as a Value chain; by women- Ag vs. Non-ag vs. Service
result of SATIH owned companies; country
Ag: 0; Non-ag: 117; Financial Service: 3
Value chain
Specialty foods: 59; Textile and apparel:
58
Warehousing: 3
Country
USA: 34; UAE: 28; South Africa: 11;
Malawi: 2; Zambia: 1; Mozambique: 1;
Lesotho: 3; Pakistan: 3; Canada: 1;
Singapore: 1; India: 6; Taiwan: 1;
Europe: 8; Turkey: 4; China: 2;
Other Africa: 11
USAID/Southern Africa RDCS Sub-IR 1.2.2: Improved regional trade and investment enabling environment
Sub-sub IR: 1.2.2.1 Enabling Environment and Trade Facilitation improved
4 Time required to trade goods across USAID Country; imports; exports; TBD TBD 0
borders and along corridors value chain; corridor;
corridor interval; border
crossing
5 Cost to Trade Goods across borders FTF Country; imports; exports; TBD TBD 0
and/or along corridors value chain; corridor
interval; border crossing;
type of cost
6 Number of policies completing the Custom Process/Step; Policy area; 0 2 0

following processes/steps of gender inclusivity;
development as a result of USG
assistance in each case:
1. Analysis
2. Stakeholder consultation/
public debate
3. Drafting or revision
4. Approval (legislative or
regulatory)
5. Full and effective
implementation
Sub-sub IR: 1.2.2.2 Increasing Finance and Investment to sustainably increase trade
7 Value of new private sector investment Custom Sector; Country; Ag vs non- 4 $5 mil 0
leveraged by SATIH implementation ag vs Service
8 Value of loans Custom Loan recipient sex; loan 0 $5 mil 0

recipient type; Ag vs non-
ag vs Service; sector; Type
of loan; Country
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Cross Cutting
9 Number of individuals who have Custom Sex; training topic; 0 1,200 126 (Female: 49 Male: 77)
received SATIH supported training participant type; Country Country
Lesotho: 8; Malawi: 7; Zambia: 56;
South Africa: 48; Swaziland: 7
Training Topic
Pre-trade show training (marketing):26
Processed food: 56;
Export competitiveness: 44
10 Number of food security private Custom Country; Value Chain; 0 300 103
enterprises (for profit), producers’ Organization type; Country
organizations, women's groups, trade assistance type; new vs
and business associations, and continuing; Ag vs non-ag vs South Africa: 20; Swaziland: 7
community-based organizations Service; sex of owner/MD Value Chain
(CBOs) receiving USG assistance
Specialty Foods: 27
Organization Type
Private companies: 81; Financial
Institutions: 13
Business Association: 2; Government: 4
Parastatal: 2; CBO: 1
11 Number of private enterprises (for USAID Organization type; 0 32 0
profit), producers’ organizations, technology or management
women's groups, trade and business practice type; duration; Ag
associations, and community- based vs non-ag vs Service;
organizations (CBOs) that applied new Sector; Country
technologies or management practices
12 Number of public-private partnerships Custom Partnership focus; Country 0 7 0

(PPP) formed [or regional]; Ag vs non-ag;
Type of Organization
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Agribusiness Trade
Agriculture remains central to poverty reduction, economic growth, and food and nutrition
security in the region. It provides subsistence, livelihood, employment and income and the
opportunity for wealth creation for nearly 61% of the region’s 284 million people (2012).
Furthermore, it contributes 17% of the SADC region’s Gross Domestic Product (GDP), which
rises above 28% when all middle-income countries are excluded. The performance of agriculture
has been positive, at an annual growth rate of 2.6%, against a population growth rate of 2.5%
during the last decade. Regional production of cereals increased by 46% (2003 – 2012) due
mainly to maize production increases of 40%, while production of rice, wheat, sorghum and
millet has remained relatively constant. Similarly, livestock production has increased on average
by 3% per annum. Forestry and fisheries production also showed growth during the same period
with substantial increases in aquaculture.
During the second quarter of FY 2017, the Trade and Investment Hub’s activities achieved
progress in the implementation of the Warehouse Receipt Industry Pilot Project in Mozambique
and toward increased collaboration among commodity exchanges in Malawi, Mozambique and
South Africa.
Key Results
• The roll-out of the Warehouse Receipt Industry Pilot Project continued positively in
Mozambique: Barclays Bank has committed to the WR project for 2017 (subject to
internal approvals), joining Opportunity Bank Mozambique and Carnes de Beira.
Provisional discussions have also taken place with FNB. ECA will again participate in the
pilot this year and Olam has agreed to also provide some warehouses for the project
(details to be finalized). ETG, IKURU and Afgri (at the Nova Horizontes site outside
Nampula) indicated they will participate in 2017 as well. Ongoing work by the software
developer, APPSolve, is aimed at ensuring the efficient processing of all transactions.
APPSolve is updating documentation for the new season, which will reflect adjustments
in interest rates, storage costs, new warehouses, etc. Agreements such as the warehouse
owner guarantees are the most important and revisions are in the pipeline.
• Collaboration among commodity exchanges developing: Three primary commodity
exchanges in the region – JSE in South Africa, ZAMACE in Zambia, and ACE in Malawi
–expressed interest in collaborating to improve the flow of information regarding prices
and availability of product, in meetings with the Trade and Investment Hub.
The Warehouse Receipts Industry Pilot Project has won buy-in from key stakeholders, such as those
indicated by their logos here.
Analysis
After much discussion and preparation, the Trade and Investment Hub and USAID
Mozambique reached agreement on the continued roll-out of the Mozambican Warehouse
Receipt (WR) Industry Pilot Project, now entering year three. The two main challenges were
how to create industry sustainability and incorporating the project into a regional plan with the
objective of promoting regional trade. On the former, the Trade and Investment Hub has
persuaded some of the leading traders and financiers to commit themselves to channel a certain
portion of their business through the WR program. This will not only scale-up the program but
provide the necessary traction, economies of scale and most important convince the rest of the
industry of the merits and incentives to participate. Once a certain threshold has been reached
locally it makes business sense to cross-list commodity contracts and warehouse receipts on
regional exchanges and promote price transmission and regional trade. Already arrangements
are underway to host a regional workshop between Southern African Commodity Exchanges and
regional stakeholders to exploit synergies and trade.
The project is not free of challenges: the biggest remains Mozambique’s volatile economic
environment and, specifically, the sharp increase in interest rates. The Bank of Mozambique
rates have risen to around 24% per annum. Product can only be stored for short periods of time
under these conditions. The latest updates can be followed on the two project websites,
www.mozwarehouse.com and www.agriinfo.org.
The use of Warehouse Receipts would have significant positive impacts on food security across
Southern Africa in multiple ways – mainly by making the market more efficient. Currently,
prices and quantities of maize and other commodities are poorly communicated across the
region – the system, such as it exists, is largely informal. Prices can vary significantly across
relatively short distances: traders may not know that, for example, maize in a locality 100 km
away is fetching a high price; so, they do not mobilize to meet the demand in that area. Farmers,
similarly, may be unaware of their commodity’s price in other areas. Warehouse Receipts
presents a solution by providing a starting point for farmers and traders to act based on clearer
and more accurate information. Warehouse Receipts also provide a means for banks, among
others, to extend credit to farmers, which they can reinvest into their operations, thereby
helping them improve their livelihoods – and alleviate poverty. The industry pilot project aims
to demonstrate to stakeholders the many benefits of Warehouse Receipts. Commitments to
participate in the coming agricultural season from financiers, traders and farmers reflect buy-in
among these stakeholders that is critical to its success.
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Export Competitiveness
The primary objectives of the Export Competitiveness component are to:
• Increase value chain competitiveness

• Capacity building for export-ready companies in targeted value chains
• Increase exports globally, regionally and to the US leveraging AGOA
• Facilitate B2B market linkages
• Build sustainable capacity of trade associations and export promotion agencies
• Facilitate investment and technology acquisition for targeted value chains
The component’s four activity areas are: i) AGOA Utilization Strategies & Action Plans, ii)
Textiles & Apparel, iii) Processed Foods (Specialty Foods and Nuts), Pulses & Sesame, and iv)
Accessories, including leather/footwear.
During the second quarter of FY 2017, the team continued to assess assistance needs,
partnership opportunities, and identify and assist companies that have export potential in the
selected value chains. Technical assistance and assessments occurred in Botswana, Lesotho,
Malawi, Namibia, Swaziland, and Zambia. The Trade and Investment Hub assisted companies
from the region to participate at the MAGIC Show in Las Vegas (apparel) and at the Gulfood
Show in Dubai (specialty foods).
The Trade and Investment Hub assisted private and public sector partners in the utilization of
AGOA in Botswana, Malawi and Zambia, specifically to develop and implement their national
AGOA utilization strategies and action plans.
AGOA Capacity Building

and Utilization
AGOA is a non-reciprocal
unilateral trade preference
program that provides duty-
free access into the U.S.
market for qualifying exports
from eligible Sub-Saharan
African (SSA) countries. The
current 10-year extension of
AGOA from 2015 to
September 2025, which is
the longest in the history of
the trade deal, recommends
that each AGOA-beneficiary
country develops an AGOA
utilization/response strategy
to enable the country to take
advantage of, and realize the
full potential of, the AGOA AGOA remains a primary force in increasing trade and investment in
trade initiative. The AGOA eligible African countries. Exports of apparel from Lesotho, for example,
are the source of employment for approximately 75 percent of the country’s
extension underscores the 43,000 apparel industry workers, according to the African Development
importance of the robust Bank.
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trade between the U.S. and SSA and it introduces measures designed to make the agreement
more responsive to unique circumstances in each country. In the SADC region, some countries
have already developed national AGOA utilization strategies while others are at various stages of
developing this important document.
AGOA accords duty-free treatment to virtually all products exported by beneficiary SSA
countries to the US. The program provides the most liberal access to the U.S. market. Duty-free
access to the U.S. market enables AGOA eligible countries to diversify and grow their exports to
the U.S. leading to increased employment and economic growth. Currently, about 39 of 49
potentially eligible countries in SSA are eligible for AGOA benefits. Annually, the U.S. and SSA
hold a Trade and Economic Cooperation Forum, commonly known as the AGOA Forum, to
dialogue trade and investment issues. The 16th AGOA Forum will be held in Lome, Togo
towards the end of this year.
During the second quarter of FY2017, the Trade and Investment Hub supported Botswana,
Malawi and Zambia on the development and implementation of their national AGOA utilization
strategies and action plans with emphasis on identifying AGOA eligible sectors, companies and
products that can be supported to increase utilization of the trade preference program.
Key Results
Botswana: The Trade and Investment Hub worked with the Government of Botswana through
the Ministry of Investment, Trade and Industry (MITI) and the Botswana AGOA Reference
Group, including private and public sector stakeholders as well as civil society, to finalize the
development of the Botswana AGOA Response Strategy and implementation plan. The
endorsement of this document by MITI and the Botswana AGOA Reference Group reflect that it
represents multiple stakeholder agreement and build the necessary foundation for further
progress. As the main coordinator of the Strategy, the Botswana Investment and Trade Centre
(BITC) will play a pivotal role in ensuring the implementation of the strategy. The Trade and
Investment Hub met with BITC and other stakeholders to review suggested export-
ready/exporting companies and to discuss a program for facilitating national stakeholder
consultations on the development of the AGOA Action Plan for Botswana. BITC provided a list
of 18 exporters and potential exporters it has been assisting with export marketing strategies
and development of quality management system for export through the Botswana Exporter
Development Programme (BEDP). BITC also highlighted that Botswana Vaccine Institute (BVI),
a local company that exports livestock vaccines to over 15 countries in Africa and the Middle
East is encountering NTBs and challenges with regulations for product registration, which the
Trade and Investment Hub may assist in the future. The Trade and Investment Hub team also
met with:
• Business Botswana, which provided a directory of its members and agreed to help
identify exporting companies and those with export potential to be included in the
consultations for the AGOA Action Plan for Botswana
• Botswana Exporters & Manufacturers Association (BEMA), which also provided a
directory of its members for the same purposes
• Local Enterprise Authority (LEA), which highlighted the progress on the Leather Park
project that Botswana is developing. LEA indicated that there could still be scope for
assistance from the Trade and Investment Hub’s Finance and Investment team as
Botswana is experiencing challenges in finding the required key partner for the project
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• The Botswana Textile and Clothing Association (BTCA) chairman provided updates on
the textile sector in Botswana, which at this stage only has six major companies. The
BTCA chairman provided ideas on what could be done to help the sector grow.
Zambia: The Trade and Investment Hub interviewed five companies in targeted sectors:
Fallsway Food F&V Processing, Fallsway Timber, Dougman Ventures, Java Foods and Amiran.
Five support institutions were also consulted: Zambia Association of Manufacturers (ZAM),
Zambia Development Agency (ZDA), Ministry of Agriculture, The Ministry of Commerce Trade
and Industry (MCTI), American Chamber of Commerce in Zambia AmCham (AMCHAM), as
well as the quality project for the World Bank, AFDB, UNIDO and the Private Enterprise
Programme Zambia (PEPZ) for coordination and consultations of proposed work plan activities.
Freight costs and delivery times were obtained from the cargo agent Safmarine. On January 20,
the Trade and Investment Hub attended the Zambia Export Development Fund (ZEDF) strategy
workshop organized by ZDA where information was collected and the team networked with over
30 participants from the private and public sector. A Trade and Investment Hub workshop in
early February involved representatives from 41 companies and 12 support institutions to learn
and discuss “Exporting Processed Foods to the USA.” Participants expressed satisfaction with
the quality of the presentations and the interactive approach.
Additionally, the Trade and Investment Hub organized a consultative meeting for the Zambia
AGOA work plan which was attended by 21 representatives of private/public sector who
provided feedback and support for the proposed activities regarding the Trade and Investment
Hub’s work plan for Zambia.
Status of AGOA Strategies and Action Plans, March 2017
Strategy, Action Plan Workshops, Committees
Botswana Complete – launch in April Nov 2016, Jan, March 2017
Malawi Updating Planned
Mozambique In development June 2017
Zambia In development Jan 2017
Lesotho Jan 2017
South Africa Jan 2017
Malawi: Stakeholder consultations to develop the AGOA Response Strategy and Action Plan for
Malawi were undertaken in early February, which included input from USAID/Malawi, and the
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USAID Feed the Future Malawi Agricultural Diversification and the Agribusiness Investment for
Market Stimulation projects. The consultations were followed by a tour of the Malawi Mangoes
farm and processing plant and meetings with:
• The Ministry of Industry, Trade and Tourism (MoITT) to discuss the development of the
AGOA Strategy
• Malawi Investment and Trade Centre (MITC), which will be a partner on developing the
AGOA Action Plan and its implementation
• UNDP to get an overview of its activities and information on the current players and
programs on private sector development in Malawi.
• Land O’Lakes International, to understand its activities and to establish potential
synergies.
Analysis
While a lot of countries have very good export-oriented strategies and plans, most of these
documents have not produced benefits due to lack of effective implementation or, indeed, any
implementation at all. This is partly due to lack of ownership of the strategy and unity of
purpose among stakeholders, as well as a lack of or poor monitoring and evaluation (M&E) to
facilitate implementation. To help increase the likelihood of implementation of the AGOA
Response Strategies and Action Plans the Trade and Investment Hub is helping to develop,
there is need to ensure stakeholder participation in the development process and to include an
effective M&E framework in the strategies. Also, considering the number of available export-
oriented strategies and policies in most of the countries, an M&E plan helps to identify
complementarities and synergies and to clarify stakeholder roles to avoid duplication of effort.
Generally, in all the project focus countries, the agro-food sector has the greater export
potential. Although exporting to the U.S. is difficult for many companies, they are optimistic
that the Trade and Investment Hub will help identify opportunities and enable prospective
exporters to take advantage of the AGOA program. There is however a lack of awareness of the
AGOA program as well as the U.S. market requirements; thus, these should be the priority areas
for the Trade and Investment Hub during the development and implementation of the AGOA
strategies and action plans. In addition to trade linkages, the Trade and Investment Hub would
need to support programs on cost reduction and productivity improvement for the targeted
sectors to improve their competitiveness. Most industrial factories mainly work just one shift,
due to power outages, utilize outdated equipment and suffer an insufficient supply of raw
materials. In providing the much-needed support, the Trade and Investment Hub can
cooperate with other development partners in the region to leverage each other’s resources and
to avoid duplication of effort.
Apparel and Textiles

Textiles and apparel continue to contribute to the growing economies of several SADC states
including Botswana, Lesotho, Mozambique, South Africa and Zambia. Lesotho and South Africa
lead the pack in producing textiles and garments, with most larger factories owned by the
Taiwanese, Chinese, or in a local partnership with a foreign investor. Governments in member
countries such as South Africa have made significant efforts to build their industries, investing
heavily in the textile and apparel production sector through grants to individual firms.
Companies have been able to upgrade plant and equipment. The apparel sector is a significant
employer of vast numbers of people especially women.
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As labor costs continue to soar in the traditional supplier bases such as China, Southern Africa
will continue to be an attractive destination for many manufacturers. While the industry has
grown in some countries, a shift is occurring in other countries with manufacturers preferring to
produce elsewhere due to rising costs of inputs in countries and hampered production. While
new companies are taking advantage of trade benefits in industrial zones and a highly skilled
workforce, they also face challenges such as investment capital and lack of market knowledge or
awareness.
Trade and Investment Hub activities during the second quarter included technical assessments
of export ready textile and apparel companies in Botswana, Lesotho, Mozambique and South
Africa. Collaborating with the trade and investment hubs in East and West Africa, the Trade and
Investment Hub assisted nine companies to participate in MAGIC, the largest apparel sourcing
event in North America, held annually in Las Vegas. Direct post-MAGIC show support was
extended to companies that attended the show. The other key activity involved preparation for
Source Africa, the continent’s largest apparel sourcing trade show, which takes place in Cape
Town, 23-25 May 2017.
Key Results
MAGIC
Nine companies – seven
from Lesotho and two
from South Africa –
participated at MAGIC,
which attracts more than
25,000 buyers to Las
Vegas annually and
includes more than 2,000
exhibitors. The companies
participated under “The
African Advantage,” a
collaboration involving the
East, West and Southern
Africa trade and
investment hubs. The
Africa Advantage
presented the key selling
More than 25,000 buyers attend MAGIC. Trade and Investment Hub-assisted
points to buyers, “On time,
companies established links with 50 potential buyers.
on spec, on price”: the
trade preferences accorded by AGOA, the support and assistance provided to potential buyers by
the Trade and Investment Hub and delivery from African countries. The Africa Advantage
booth, including more than 60 companies all together, attracted hundreds of buyers; an
Ethiopian coffee ceremony raised visibility and interest.
Show participation was the culmination of months of preparation. The Trade and Investment
Hub collaborated with public and private sector partners in Lesotho and South Africa to identify
suitable apparel companies and then trained the companies to participate effectively at the show
and prepared marketing materials announcing their participation. Buyer meetings were
arranged both before and after the show.
18
Lesotho
Seven apparel companies attended the show
from Lesotho:
• Fantastic Clothing
• Long River
• Luqy’s Investment
• Mora Holdings
• Precious Garments
• Tai Yuan (South African-Based sister
company to Fantastic Clothing)
• TZICC Clothing Manufacturers
The Lesotho companies established 50
contacts from the sourcing companies,
industry associations and network
organizations during the event. These were
potential buyers of garments from of a
minimum of 10,000 units of per month.
Luqy`s Manufacturing renegotiated further
business with its US buyer, G & T Apparel
Import Company. The two companies signed a
new contract with increased volumes to 1.15
million pieces from March to December 2017.
Luqy’s is also now negotiating with another
buyer and reported a possible T-shirts order.
Long River also engaged with a potential buyer
and the company is in the process of
negotiating a production agreement. TZICC
will also be sending samples to two buyers for
confirmation of placement of orders. Fantastic
Clothing is also negotiating the order
arrangements with a potential buyer.
South Africa
Two apparel companies attended the show
from South Africa, Durban Overalls and TCI.
Durban Overalls had an enquiry from a Kansas
based buyer for 6,000 units a month.
Company Assessments
In February and March 2017, the Trade and
USAID's three trade and investment hubs - East, Southern Investment Hub carried out technical
and West Africa - collaborated to maximize the impact of capability assessments in 19 factories in
participation at MAGIC, developing The Africa Advantage Lesotho, Mozambique and South Africa. The
brand to increase visibility to and engagement with buyers.
assessments gave an indicator as to the level
19
of capability within the firms and the potential gaps that should be addressed to improve
productivity, standards and quality.
Lesotho
The Trade and Investment Hub collaborated with Re Mmaho, a social compliance company, to
assess companies that attended the MAGIC Show. This is a preparatory step towards WRAP
certification.
Mozambique
Most apparel exporters use South African distributors to export to other markets. There is
currently no association that is strong enough to represent the interests of the sector. The
apparel manufacturers mainly operate as CMTs for the South African suppliers. The apparel
industry is currently struggling with aging equipment, shortage of skilled labor and lack of social
compliance awareness. However, there is a new state of the art spinning plant in Maraquene.
There is a huge potential for yarn exports to the rest of the region as linkages are established and
output from the mill is increased.
Botswana
The apparel sector is reeling from the exit of Carrapparel from the country; the company
relocated to Lesotho in December 2016. Carrapparel had been Botswana’s biggest exporter to
the US. Low productivity appears to be the main challenge affecting companies from pursuing
exports. Investment in new technology is a priority for the apparel sector. The Botswana Trade
and Investment Centre (BTIC) assists local companies to attend trade shows to display their
products. The Trade and Investment Hub is exploring ways to improve technology and skills
through collaboration with the newly established Textile and Clothing Institute of Botswana
(TCIB). As the “Buy Botswana” campaign gathers momentum, new locally owned companies
require technical assistance. A prime example is Glam Collections, a woman-owned company
located in Gaborone. The team is looking to offer technical assistance and establish linkages
with technology suppliers.
South Africa
With government assistance, companies have invested in newer technology. However, skills,
social compliance and lack of market knowledge remain a challenge for the textile and apparel
sector. The inability to manufacture certain products (lightweight woven fabrics etc.) remains a
problem for the downstream garment manufacturers who rely on imported fabrics.
Analysis
The Trade and Investment Hub has identified several gaps within the value chain in companies
that are export ready. Firm-level interventions have been identified that can address these
issues: technology transfer, quality improvement, adherence to standards and social compliance
certifications.
In Mozambique, there is an opportunity to expand yarn production at Moz. Cotton
Manufacturing (MCM) and supply the downstream fabric manufacturers in the SADC region
including South Africa. Apparel manufacturers need to work more directly with the buyers
instead of relying on distributors. Participation in trade shows would assist manufacturers to
reach out to the buyers, thereby diversifying their market.
20
In South Africa, companies using newly acquired technology could produce more competitively
and supply fabric to the region and garments to the US market. Other factors such as social
compliance certification (WRAP), productivity, quality and standards will have to be in place.
Botswana manufacturers’ inability to compete in the export market is partly due to productivity
and quality issues. The associations overlooking the sector, such as the Botswana Exporters and
Manufacturers Association (BEMA) and the Botswana Textile and Clothing Association (BTCA),
do not seem to have the resources and the influence to affect the sector. The Trade and
Investment Hub will explore strengthening these associations.
Accessories
The Trade and Investment Hub continued to assess the accessories and leather sector in the
region, working specifically in Mozambique, Namibia, and Botswana to explore potential
accessory sectors and companies that have export potential. In addition, the Export
Competitiveness team also assessed the possibility of supporting associations and cooperatives
in marketing, business management, compliance, and organization trainings to better support
their members who are looking for business linkages.
In February 2017, the Trade and Investment Hub supported one leather belt company and one
footwear company from South Africa to attend the MAGIC Sourcing Trade Show. Prior to the
show both companies attended the pre-MAGIC workshops. See the Apparel section of this
report for more details on MAGIC.
In the first quarter, the team met with the Swaziland Fair Trade Organization (SWIFT) and was
impressed with the association’s strength, membership, business acumen, and marketing
experience in the global market in the accessories and processed foods sector. Because of its
success in the global market, SWIFT provides training and association support in countries such
as Tanzania, Rwanda, and Kenya. The Trade and Investment Hub is currently conducting a due
diligence on SWIFT’s training support and exploring various types of assistance it could provide
for associations or cooperatives in countries such as Mozambique, Namibia and Zambia.
Key Results
During the first half of the second quarter, the Trade and Investment Hub prioritized preparing
companies to attend the MAGIC trade show and to set up meetings with buyers before and after
the show. Saddler Belts from Durban has two potential leads that it is following up on for orders
and Angels Footwear is in conversations with companies on potential orders. This was the first
participation in an international trade show for both companies.
In March and early April 2017, the team worked in Botswana, Mozambique and Namibia to
explore the viability of the accessories market for exports and to build relationships with
organizations working to support the companies.
Mozambique
The team learned that exports of home décor and accessory items have decreased over the last
several years. The global economic recession is a likely primary cause. However, it seems that
the association that was exporting on behalf of companies has had a slow decline in membership
and there is a lack of business linkage opportunities. One association was identified that is
currently being established by women who want to build a strong marketing group for exporters
in Mozambique. The possibility of providing it training from SWIFT is being explored.
21
The team met with Ikuru, a company that attended the NYNOW trade show earlier this year.
Ikuru received two orders from the show and would like assistance to expand its market to
South Africa, the United States, and to attend the NYNOW show in August 2017.
Namibia
After assessing their potential relative to
other value chains, the Trade and
Investment Hub identified ostrich shell
jewelry, baskets and leather as value chains
that can be supported. In leather, the
Export Competitiveness team is working
with the Agribusiness team to strengthen
the entire beef value chain as that affects
the leather that is being produced in the
country. One company, Nakara, would like
to connect with furniture buyers in the
United States and is interested in making
leather accessories as “white label” for
brands. The constraint is the production of
leather due to various factors including
livestock leaving the country.
The baskets in Namibia are currently being
exported to a few places globally, however,
the supply is low and there is a government
initiative to strengthen the production and
quality of basket weavers. The ostrich shell
jewelry is in high demand in Europe and
Omba Trust is currently working with one
US designer, but would like to explore
additional markets.
The Namibian Government is interested in
growing the wool sector but it’s currently in
a nascent stage.
Women in Namibia produce baskets and other handcrafts for
export with significant potential. The team identified a cosmetics company,
Desert Secrets, which is currently ready to
export to the European market with buyers lined up, but needs support on certification and
stability testing for their products. The Trade and Investment Hub is exploring how to help the
company obtain final certification to meet compliance to export to Europe.
Botswana
The Trade and Investment Hub is exploring Botswanan baskets for home décor. The sector
seems to be fragmented and the Botswana Investment and Trade Centre would like to do a
mapping of the sector to see what areas of interventions can be supported.
The Trade and Investment Hub is preparing an application to the Accessories Council to
improve marketing capacity relevant to its work across Southern Africa. The Accessories Council
22
represents more than 260 companies and aims to stimulate consumer awareness and demand
for accessory products, which is over $50.8B annually in the US alone. In 2016, the Council
partnered with India’s Council for Leather Exports, which offered an opportunity for leather
manufacturers to meet designers, buyers, and to attend trade shows in the US and in India.
Analysis
Several companies in the leather goods, cosmetic, and jewelry sectors are export ready or need
market linkage assistance. The Trade and Investment Hub is exploring firm-level assistance to
help these companies on certifications, quality and design strengthening, social compliance, and
market opportunities.
The leather sector in Namibia and Botswana has potential in exporting wet blue and finished
leather, but there are livestock population constraints due to various factors, and feedlots are
needed to make sure the quality of skins and hides are of export standards. With the
Agribusiness team, the beef value chain will be reviewed as a whole, as leather is a by-product of
slaughtered meat, which can also be exported. Further assessment and analysis of the two
sectors is merited and should involve the Agribusiness and Export Competitiveness teams. In
Namibia, Meatco is looking to build three more feedlots and would like financial assistance to
expand. Meatco is currently exporting wet blue skins to Italy and China and supplying the other
large tannery, Nakara. In Botswana, the government is in the process of establishing a leather
park. More information on the leather park will be collected prior to further consultant
assessments.
In Zambia, Botswana, and Namibia, we have identified baskets for the home décor market.
However, as these baskets are handmade, the consistency varies and capacity to supply is
limited. Assistance to organizations or associations that are working to consolidate artisans and
products could be provided, but as weavers are fragmented, this may take mapping and support
lower down the value chain. There is one group in Botswana, BotswanaCraft, and one group in
Namibia, Ombre Trust, that could export baskets in limited quantities to date.
Similarly, there is an opportunity in Mozambique to connect the woodworking groups with the
home décor market in the U.S. and in Europe. Other handmade items such as horn and
children’s toys, while exportable, cannot be produced at scale at this time and would need
assistance to scale. Companies working with other materials need assistance with production,
design, and quality. The team is looking at strengthening associations or cooperatives, which can
help find smaller niche markets for these groups or consolidate product offerings and artisans to
scale.
23
Specialty and Processed Foods

During the second quarter of FY 2017, the Export Competitiveness team continued to assess
assistance needs and partnership opportunities in different food sectors: specialty foods, dried
fruits, macadamia and cashew nuts, seafood, pulses and sesame The team conducted 41 factory
assessments in Malawi, Mozambique, Namibia, South Africa, Swaziland, and Zambia. The main
objective was to assess companies’ capacities and export potential and to identify opportunities
for promoting export and regional trade growth. The feedback was incorporated into the Trade
and Investment Hub’s FY 2017 Workplan.
Key Results
Gulfood Show 2017
The Trade and Investment Hub launched Africa Fine Foods at Gulfood 2017, which took place
Feb. 26 to March 2, 2017, at the Dubai World Trade Centre in Dubai, UAE. The Gulfood Show
(www.gulfood.com) is considered one of the biggest
annual food trade shows in the world. Six companies
from four countries exhibited under the Africa Fines
Foods pavilion. Africa Fine Foods is a Trade and
Investment Hub brand initiative under which
processed foods from the region are supported and
promoted.
The six companies – Eco-MICAIA Ltd (Mozambique),
Pereira Fishing Co. (Pty) Ltd (Namibia), Forest Fruits
Ltd (Zambia), Minnies Food Enterprises, Great Hearts
of Africa and Nutribrands (South Africa) – generated
more than 40 business-to-business (B2B) linkages,
with an estimated potential of more than US$1m in
export sales over the coming months. Some companies
have received orders since participating. Almost all
exhibitors indicated they will consider exhibiting again
Great Hearts of Africa (South Africa) produces in 2018. Some of the assisted companies will also
highly competitive sauces ad chutneys, which
it exhibited at Gulfood. The company identified exhibit at the upcoming Fancy Food Show (25-27
several potential buyers and is now negotating June, 2017, New York), as well as the Anuga Show (7-
a deal to distribute its products across the 11 Oct, 2017, Cologne, Germany).
Middle East.
At Gulfood, the Trade and Investment Hub met with
buyers from all over the world, including those considering sourcing trips to the region. One
such trip, by Try The World (www.trytheworld.com), has already been confirmed for the third
quarter of FY 2017 and will include meetings with companies in South Africa (Johannesburg
and Cape Town), Lusaka (Zambia) and Swaziland. The South African Trade Attaché in Dubai
expressed willingness to collaborate with the Trade and Investment Hub in identifying serious
and interested buyers/distributors for trade deals and buying missions to the region.
Strategic Partnership Arrangements
During the first quarter of FY 2017, the Trade and Investment Hub established strategic
collaborative arrangements with trade and investment agencies (TIPAs) in export
competitiveness efforts. The Gauteng Growth & Development Agency (GGDA, www.ggda.co.za),
24
the Western Cape Fine Food Initiative (WCFFI, www.wcfinefood.co.za), the Western Cape
Tourism, Trade & Investment Promotion Agency (Wesgro, www.wesgro.co.za), the Swaziland
Investment Promotion Authority (SIPA, www.sipa.org.sz) and the Zambia Development Agency
(ZDA, www.zda.org.zm), have availed their conference/meeting facilities for the buyer-sellers
meetings involving Try the World, and agreed to provide other logistical support. Such
collaborative arrangements allow for leveraging of resources and sharing of experiences.
Export Workshops
60 stakeholders representing private and public sector stakeholders participated in two
processed foods workshops held during the first quarter of FY 2017.
Zambia
53 participants (41 from private sector companies and 12 from support institutions) participated
in a processed foods workshop in Lusaka. The workshop presented information on export/buyer
requirements, trade show preparations and participation, and facilitated discussion of these
subjects.
Malawi
The Trade and Investment Hub presented to the Malawi Organic Growers Association (MOGA).
Seven MOGA members attended the workshop, which focused on the organic market,
export/buyer requirements, trade show preparations and participation.
Research on export potential in the macadamia, cashew, pulse and sesame sectors
The Trade and Investment Hub conducted research,
involving consultations with a broad array of stakeholders in
Mozambique and South Africa in March 2017.
Cashew
Mozambique is the key cashew-producing country in the
region, while Zambia’s Western Province also grows cashew,
which is worth exploring for organic certification.
In Mozambique, the cashew sector employs an estimated
12,000 workers, and includes six large cashew processors
and 25 small-scale processors. The total cashew production,
from an estimated 14 million cashew trees, is estimated at
over 100,000 metric tons (MT) in 2016, and estimated 70-
80,000MT in 2017, with 40,000MT processed in 2016. Over
one million people are estimated to receive income from the
cashew sector in Mozambique. At its peak, Mozambique
used to be one of the world’s largest cashew producers,
reaching more than 200,000MT.
Mozambique's cashew sector shows signs
of regaining its place as one of the world's
Mozambique’s main cashew provinces are Nampula, Cabo
top cashew-producing countries. Delgado and Zambézia. Cabo del Gado produces the best
25
quality cashew in the country, while Gaza Province has an opportunity for organic cashew.
The cost of processing 1MT of RCN in Mozambique is approximately $300-340, whereas the
cost in Vietnam is about $220-240.
The Government of Mozambique levies an 18% export tax on RCN exports and the revenue
collected is used by INCAJU to produce and distribute seedlings, fertilizers and pesticides (via a
private service provider). The Government is working towards an improved regulatory
framework for cashew sector. There are ongoing discussions around the current 18% RCN
export tax and cashew processors are supporting the status quo: Processors want the
Government to maintain the levy to encourage local value addition, industrialization, and job
creation.
Cashew processors in Mozambique are increasing their capacity, installing mechanized
processing technology and setting up new factories. They need assistance with growing their
markets and with putting in place food safety, quality and sustainability management systems.
recommendations on food safety and quality management recommendations
Zambia’s small cashew production might be worth exploring for organic certification. Both Gaza
Province and Zambia are worthy investigating further to ascertain organic feasibility.
Tradinorganic, part of the Sunopta Group, is interested in collaborating with the Trade and
Investment Hub on developing new organic sources of cashew and other products.
Macadamia
The Export Competitiveness team met
macadamia stakeholders in Nelspruit,
South Africa, in March. Nelspruit is the
hub of macadamia in South Africa, and the
country is considered the biggest
macadamia producer in the world, ahead of
Australia. The macadamia sector, which
employs an estimated 12,500 people, under
a total 28,000 in hectarage, produced
45,000 metric tons in 2015 valued at
$150m (R2 billion).
South African and international businesses
are growing their plantations and shelling
investments in macadamia in the region
especially in Malawi, Mozambique,
Swaziland and Zimbabwe. Zimbabwe is
said to have great prospects of becoming a
big macadamia nut player in the value
chain soon. ADM might be interested in
investing in a shelling facility in the region.
Other companies with investments or plans
to invest in the region are Desmond
Farming (South Africa), Linton
Macadamia processing in South Africa.
26
Park/Eastern Produce (UK/East African group), King Nuts (Netherlands) and Crookes Brothers
(South Africa).
The duty-free advantage accorded under AGOA has contributed significantly to the success of
the Southern African macadamia industry. Australia recently concluded a bilateral trade
agreement with China that provides for the phasing out of duties on in-shell macadamia. This
will give the Australian in-shell exporters a competitive edge over Southern Africa. Southern
Africa may, therefore, need to process more of her crop domestically and export the macadamia
kernel, rather than exporting the in-shell macadamia nut to China (the largest market for in-
shell macadamia). There are also opportunities for additional value addition into oils, spreads
and snacks, and opportunity for retailing exports, which some processors are doing already.
South African macadamia processors are aware of the need to provide pasteurizing solutions for
their product. Larger companies are actively researching solutions and would be ready to invest
in them; they are awaiting guidance from the regulatory authorities in the US as to what
technology and process should be used. Smaller processors would need to use other companies
as service providers, since the cost would be too high.
Sesame
Market research, promotion and outreach to potential buyers in USA, Europe and Asia will
evaluate the feasibility of a sesame partnership between the Trade and Investment Hub,
interested buyers and exporters in the region.
Pulses
Further market research will evaluate the opportunity to link exporters to markets other than
India (for example, the USA, Europe and South America). This may require technical work on
regulatory aspects of getting pulses from the region approved as an origin.
Dried Fruit and other products
Dried fruit companies require technical advice on food safety and quality standards and other
aspects of business expansion. The market prospects for most dried fruit products are excellent.
There is increasing demand for organic certification. The Trade and Investment Hub will study
the cost of different products in at the local level and evaluate the possibility of supporting
organic certification, processing or other value addition.
Technical assistance in specific countries
Swaziland
The Export Competitiveness team visited Swaziland from January 21 to 24, 2017 to gather
information and identify end market opportunities for the development of the Trade and
Investment Hub’s processed food export strategy, to assess the country’s potential to export to
the US and other markets, and assess producers’ export-readiness, and to prepare companies for
upcoming trade shows.
Swaziland has five main specialty food processing companies, Black Mamba, Eswatini Kitchens
and Ukwazi Makadamia, as well as two multinational companies; Rhodes Foods Group and
Mondeleza. Both Eswatini Kitchens and Black Mamba are in talks with Wholes Foods (US), and
need agents in the US. Ukwazi already has an agent in the US.
27
The team provided assistance on productivity improvement, increasing export opportunities,
private labelling, and preparation for upcoming trade events, particularly the Gulfood Show.
Namibia
The team worked with three seafood companies (Pereira Fishing, Kuiseb Food Processors, and
Hangana Fishing), two meat companies (Meatco and Closwa), assessing the status of the
sectors, export competitiveness challenges and upcoming trade events. Pereira Fishing later
exhibited at the Gulfood Show 2017, while Meatco was considering the Summer Fancy Food
Show, and Closwa the Anuga Show.
Kuiseb has a lot of underutilized capacity, and new management is working on attaining HACCP
and technology updgrade before attempting international markets.
After 12 years of engaging USG, Namibia finally got approval to export its beef to the US under
AGOA. Namibia is still to ship its first consignment to the US as companies like Meatco are
working on logistics. Namibia can be a case study for countries like Botswana and Zambia on
how the meat industry can meet US requirements.
Namibia can be a case study for countries like Botswana and Zambia on how the meat industry can meet US
requirements. A feedlot in Namibia is pictured here. The animals' hides are critical to the country's leather
products for export and the Accessories sector advisor and the Finance and Investment team are working
together to find innovative approaches to address the value chain’s issues.
Mozambique
In Mozambique, the Trade and Investment Hub gathered information and identified end market
opportunities to inform the development of its processed food export strategy, to assess the
country’s potential to export to the US and other markets, and assess producers’ export-
readiness, and to prepare companies for upcoming trade shows.
28
The team also met with specialty foods firms (Tsokotsa and Gutsamba), cashew companies
(Sunshine Nut Co. and ETG/Korosho) and Kalipesca Seafood. The specialty food firms, which
are SMEs, have to increase their capacity and attain basic food safety standards. The cashew
industry is considering investing in both backward and forward integration, to take advantage of
room for more value addition.
South Africa
The Export Competitiveness team met with seven specialty food producers in three South
African provinces, Gauteng, Kwazulu-Natal and Western Cape, in January to gather information
and identify end market opportunities for the development of the processed food export
strategy, assess the country’s potential to export to the US and other markets, and assess
producers’ export-readiness, and offer assistance to companies for upcoming trade shows.
Mac-Eden Estate, Great Hearts of Africa, Nurish Juice, Fresh Earth, Rio Largo, Montague Dried
Fruits & Nuts, and Wildebraam Swellendam met with the team. Some of the companies are
already exporting to the US, some still need support to acquire food safety standards, while
some require investment in technology and production capacity to increase output. South Africa
has the ability and capacity to provide additional services to the processed foods sector in the
region that includes certifications, processing technology, product development, packaging and
retailing.
Summer Fancy Food Show 2017
Efforts to promote the Africa Fine Foods pavilion at the upcoming Summer Fancy Food Show
(www.specialtyfood.com) began in February. The show takes place in New York City, 23-25
June, 2017. This will be the second USAID-supported participation at the event in six years:
eight companies from the region were supported in 2011 to exhibit under the Taste of Africa
banner, which was a joint
collaboration of the East,
West and Southern
Africa trade hubs.
Twelve (12) companies
from the region have
completed participation
forms: Afriplex (Pty) Ltd,
Fynbos Fine Foods,
Dursots-All Joy Plc, DV
Chocolates, Henties
Juices Cape/Greenway
Farms, Khoisan Tea
Import Export Pty Ltd,
Rio Largo Olive Estate,
Walters Nougat
/Wedgewood (all South Black Mamba (Swaziland) is a women-owned enterprise with significant export
African), UKWAZI potential. www.blackmambachilli.com
Makadamia & ACC and
Black Mamba Foods (Swaziland), Kalipesca (Mozambique) and Sylva Foods Solutions Ltd
(Zambia). The Trade and Investment Hub is collaborating with the South Africa Consulate
29
General of New York at the Fancy Food Show, which includes a 50-50 cost-share arrangement to
pay marketing costs.
Analysis
Further work will identify priorities for supporting the macadamia industry in southern Africa.
If the Trade and Investment Hub prioritizes according to demand by the industry, the potential
impact in terms of investments facilitated will be significant. There are new investments in
Mozambique and Swaziland, and increased planting in Malawi and Zimbabwe. Most factories in
South Africa are established in terms of market requirements. On capacity building, there is
opportunity to support the South Africa Macadamia Association (SAMAC) which is pulling out
of the Sub-tropical association arrangement by March 2018.
The Trade and Investment Hub will support the cashew industry by intervening at different
leverage points: market linkages and assistance with implementation of food safety and quality
will facilitate raw cashew nut (RCN) and kernel exports. Processors and RCN exporters can also
be supported in their upstream investments, i.e. traceability, organic certification, replanting,
maintenance and post-harvest handling improvements.
As alluded to already on sesame and pulses, market research, promotion and outreach to
potential buyers in USA, Europe and Asia will evaluate the feasibility of a sesame partnership
between the Trade and Investment Hub, interested buyers and exporters in the region.
Dried fruit companies in the region will be supported with technical advice on food safety and
quality standards and other aspects of business expansion. The market prospects for most dried
fruit products are excellent. There is increasing demand for organic certification. The Trade and
Investment Hub will study the cost of different products at the local level and evaluate the
possibility of supporting organic certification, processing or other value addition.
While some companies in the region have great export potential, a number will need to have
food safety systems in place, and invest in production capacity. The Trade and Investment Hub
will consider partnership with food safety auditing firms, and established association such as the
African Cashew Alliance (ACA) that has a food safety approach specific to the cashew sector. A
strategic partnership with the ACA on food safety can benefit cashew processors in
Mozambique. Strategic partnership with the South Africa Bureau of Standards (SABS), which
has a program for SMEs, can help SMEs attain basic food safety certifications such as the hazard
analysis critical control point (HACCP) system.
30
More business is MAGIC for apparel
companies
More than 25,000 buyers attend MAGIC, the largest apparel
trade show in North America. The show features more than
2,400 exhibitors – and Southern Africa companies were
among them, thanks to support from USAID’s Southern Africa
Trade and Investment Hub. Their visibility was enhanced by a
unique collaboration involving trade and investment hubs in
East and West Africa, too.
“The success of our apparel industry is dependent upon
international markets,” said Joseph Setipa, Lesotho Minister
of Trade. “Government support leverages the business
opportunities that occur at trade shows.”
Trade shows remain a critical means for companies to find
buyers. But African companies are at a disadvantage: it is
expensive to participate in international trade shows and
connect with buyers whose knowledge of the opportunities to
do business in Africa are often limited.
The trade and investment hubs worked to develop a brand
that addressed the awareness issues directly. “The Africa
Advantage” presented clear and concise messages to appeal
to buyers: Africa is competitive in areas that concern them
most – on product specifications, on location and accessibility
and, perhaps most notably, on price.
Price competitivity is thanks largely to the African Growth and
Opportunity Act, which provides duty-free access to the U.S.
market for eligible countries. Eleven companies from Lesotho
and South Africa participated at MAGIC, establishing business
links with 50 potential buyers. Post-show support indicated
that several significant deals were being negotiated.
For the apparel industry in Lesotho, approximately 43,000
apparel jobs generate almost 10 percent of the country’s
annual GDP.
“Participating at MAGIC helped us set up meetings that are
going to mean more business,” said one company executive.
“The support makes all the difference.”
DRAFT April 2017

Southern Africa Trade and Investment Hub
www.satihub.com
Finance and Investment

Firms in Trade and Investment Hub target markets face significant barriers to raising capital:
19% of Trade and Investment Hub target markets identify access to finance as their primary
obstacle to growth (21% not including South Africa) – making it the most commonly cited
obstacle among those examined by the World Bank’s Enterprise Surveys. Contributors to limited
access to finance fall into two categories: firm-level barriers (specifically information asymmetry
and transaction costs) and market constraints (including interest rates, banking constraints, and
external risks including drought and commodity prices). These challenges impact investment
potential across the region – including in South Africa, despite its higher degree of investment
activity.
During the first quarter of FY 2017, the Trade and Investment Hub met with potential partners
across the region, including banks and transaction partners; USAID bilateral missions; USAID
DCA, Private Capital and Microenterprise teams; IFC; and exporting companies. The
component’s activities, organized under five pillars, has involved developed sustainable
partnerships with stakeholders across the region. The Team’s primary areas of focus this quarter
have been to:
• Work closely with other Trade and Investment Hub component leads and stakeholders
to set up the Finance and Investment Facilitation platform which will be part of the
strategic underpinning for the project and the integration of finance and investment into
each of the components and how we work with stakeholders
• Deploy the use of the investment toolkit developed to be a guide to execute investment
facilitation work within each component and with stakeholders
• Build a capital map, including a list of investors in the region, that outlines gaps in the
investment landscape
• Build relationships with a network of banks and investors active in the region to identify
barriers to finance and investment and possible opportunities to deliver support
• Develop a pipeline of transactions, through existing relationships (i.e. DCA banks),
legacy relationships, investor relationships and through ongoing investigation of the
region’s agribusiness, financing services, consumer goods, and enabling sectors
• Roll out support for these stakeholders and investments in the second half of the quarter
• Track key performance indicators to measure the value of new engagements with banks,
agribusinesses and private investments leveraged by Trade and Investment Hub
implementation
• Begin to identify opportunities to work with commodity exchanges and warehouse
management companies in Malawi, Zambia and Mozambique to work towards a regional
trading platform in agricultural commodities
• Align the above with financing opportunities in warehouse receipt financing and
warehouse infrastructure finance
To address these challenges, the Trade and Investment Hub’s Finance and Investment team
focuses on the execution of innovative strategies and activities to facilitate and accelerate access
to finance in the SADC region via five pillars:
1. Banking/Financial sector strengthening – including regulatory or procedural issues and
bank capacity building in partnership with DCA and other USG agencies.
31
2. Policy enabling environment / Financial sector strengthening – working with SADC and
other third party stakeholders on implementation of regional investment policy
framework (SADC-IPF) and its domestication through national action plans on
investment (NAPI).
3. Support of financing platforms/vehicles – working with existing funds on additional
capital raises as well as investigating the potential of establishment of a unique fund with
the goal of better reaching Trae Hub target markets.
4. Warehouse Receipt Finance (WRF) – focusing on three areas within WR strengthening;
WRS Systems Development (together with the Agribusiness team), Financial Institution
Capacity-Building around warehouse receipt financing, Broader Ecosystem Support to
Overcome Barriers to WR Finance Deployment.
5. Increasing investment into the region – collaborating with regional and global investors
to facilitate investment, including through intraregional transactions and investments
from outside of Southern Africa. The team will look to collaborate with USG teams and
agencies such as APCG, PCM, OPIC, USDA and others.
As the Team pursued these activities, relationships were built with stakeholders, partners,
USAID missions and investor offices and capital seekers throughout the region – laying the
groundwork for efficient and effective on-site engagement in Botswana, Lesotho, Madagascar,
Malawi, Mozambique, Namibia, South Africa, Swaziland and Zambia.
Throughout the course of engagement by each pillar of the component, the Trade and
Investment Hub will be tracking financial institutional and investor confidence in Southern
Africa as a viable investment region, and continue on-the-ground analysis to unearth and
understand industry trends and insights.
Financial Sector Strengthening

To promote enterprise development specifically aimed at Small and Medium Enterprises in the
SADC region, the finance and investment team commenced discussions with the Barclays team
to assist the bank with its roll out of their business development strategy in the SADC region.
This work focuses on assisting the bank by means of capacity building for the rollout of banking
products services such as agri-financing, with a potential of long term implementation of DCA
agreements and DCA utilization.
Pilot countries for this scope of work include Botswana and Zambia with a possibility of
expanding other countries within region. The primary objective for 2017 is to complete pilot
projects in Botswana and Kenya (outside the mandate of the Trade and Investment Hub) and
also launch in Zambia, Uganda and Ghana. Also, critical for the pilot is to finance as many SMEs
as possible across various industries to be able to inform our strategy for 2018 and beyond as we
scale the business.
The Finance and Investment team will work closely with Barclays on these tasks:
• Conduct a market analysis to define opportunity, understand which sectors / industries

to focus on for both pilot and scale
• Draft white paper to define opportunity within agriculture and financing of small holder
farmers including credit scoring, insurance and mitigating performance risk
• Work with risk and capital management team to develop risk based pricing model
• Conduct research on financial models
32
• Funding: support in identifying preferential funding partners in the form of donor,

grants and guarantees and drafting funding proposals and
• Product development: look to build on current product offering including distribution
finance model.
This collaboration seeks to extend the current methodology to new sub-sectors/countries of
interest and development of a broader array of investment structures which can be achieved
through the blending in of private equity players, sovereign wealth funds, high net worth
individuals and other alternative financiers from inside and outside the region.
The Trade and Investment Hub’s Finance and Investment team is currently working on
identifying regulatory or procedural barriers to expand lending and investment to identified
partners in the region. This exercise will also involve capacity building to banks in partnership
with DCA and other US government agencies. In doing so, it will closely work with third party
stakeholders, at the same time communicate the challenges and recommended solutions to
relevant industry associations to promote advocacy and Public -Private dialogue into targeted
competitiveness reform.
Such an initiative seeks to address market gaps experienced by banking/financial sector when
expanding lending to risky markets especially SMEs and to assist the banks to unlock the
potential of the banks’ lending efficiencies and outreach to companies operating in the
agricultural sector across the region which are generally perceived to high risk. One of the key
activities under this pillar is to work together with the DCA team and develop a strategy to assist
DCA banks in the region in creating awareness of the partnership with USAID as well as on
training of loan officers to create a successful and effective USAID DCA. The expected results
would be to see an increase in utilization of the USAID DCA guarantees by the banks targeted
and further sustainable lending activities by banks in the market, ultimately creating better
access to finance for smaller businesses.
The Finance and Investment director, met with USAID/Malawi to brief the mission on the work
that the Trade and Investment Hub intends to do in Malawi, and also met with potential
partners, including the Agricultural Commodity Exchange for Africa (ACE) and First Merchant
Bank (FMB), and also build a coalition of USG funded projects to work hand in hand.
Other meetings were with DCA banks in Malawi and Zambia around potential support to help
them further utilize the DCA and increase lending into the agricultural sector – focus was
around development of WHR lending programs. Discussions took place in Mozambique with the
USAID Washington DCA team and also the local mission team about the potential to assist
banks with DCAs in terms of Technical support and participation with the WRS project. In the
third quarter of FY 2017, the Trade and Investment Hub team will reach out to the banks in
country that have DCA’s to discuss options.
Key Results
• The Trade and Investment Hub in collaboration with Barclays to sign a Memorandum of
Understanding. The purpose of the Memorandum is to formalize a collaboration
between the project and Barclays. This work will be done by closely coordinating the
efforts of the Trade and Investment Hub and Barclays as the bank expands its footprint
across the SADC region. The work will focus on SME and Enterprise Development and
33
both organizations will leverage their respective resources to achieve trade, finance and
investment impacts that could not be achieved alone across the region.
• Working with several banks across the region, concept notes have been developed and
are under consideration to help banks such as MFinance in Zambia, First Merchant Bank
(FMB) and National Bank of Malawi (NBM) to assist the banks with capacity building
and facilitation of warehouse receipt finance around the warehouse systems work that
the Trade and Investment Hub is currently conducting in each of these countries.
• Assistance with identifying and building viable warehouse building finance pipeline for
several banks in Malawi. Helping these companies identify the gaps between their
applications for finance and the banks requirements.
Analysis
The level of financial development (banking/financial sector) in the different countries within
the Southern African region is diverse. South Africa continues to be the frontrunner of the
region; other countries, such as Mauritius, Botswana and Namibia, also have fairly developed
financial markets when considered in the African context, while countries such as Madagascar
and Malawi are on the end of the spectrum. Despite the varying level of sophistication across
these financial markets, one trend is clear: access to finance remains limited. In Zambia and
Mozambique, where foreign-owned financial institutions are well capitalized, banks are often
unwilling to take on the risk of lending to small and medium-sized local businesses.
Over the past 10 years, the banking sector has experienced substantial growth, but credit to
private sector as percentage of GDP remains low when compared to international standards. In
general, Southern African banks are well capitalized, (although recently there have been
significant liquidity issues in several countries) and mostly have lower non-performing loan
(NPL) ratios when compared to the other regions on the continent. With recent liquidity issues,
the higher interest rates and general lack of bankable projects, there is still significant work to be
done in assisting the financial sector to expand in the region.
By mitigating some of these perceived risks associated with lending, the Trade and Investment
Hub will support DCA efforts to increase utilization across Malawi, Mozambique, and Zambia.
Specific avenues for support included advising on complex or even large DCA-backed
transactions across the region and supporting the AFD credit line into FMB under the Rural
Warehousing Investment Solution scheme. Furthermore, capacity building for the banking
sector will focus on assisting banks in the region to provide additional capital into the market
with a particular focus on small business lending and agricultural lending.
Policy enabling environment / Financial sector strengthening

The SADC Investment Policy Framework’s (IPF) primary objective is to support investment
climate improvements and investment promotion in the region. IPF is developed around five
thematic areas:
• Promotion of a coherent and transparent investment environment

• Ensure market access and competition
• Protection of investors' rights
• Promotion of responsible and inclusive investment
• Facilitation of regional and international cooperation.
34
As the team continues its engagements across the region, key focal areas of assistance and
intervention were requested by Lesotho National Development Corporation (LNDC) from the
Trade and Investment Hub ranging from development of strategy, capacity building and support
to the LNDC Economic Development Dialogues.
Investment Promotion Strategy
The LNDC requested assistance to develop an Investment Promotion Strategy for US
investment. The strategy should identify and prioritize platforms for activities to be undertaken
as well as identify outputs and resources required. The strategy should further recommend ways
and links to initiate a relationship with a US investment promotion agency for overseas
investments, with special focus on SMEs partnerships and joint-ventures. The LNDC also
requested assistance to elaborate a Development Finance Strategy to support LNDC’s transition
to incorporate the DFI function for acceleration of private sector and business growth.
Industrial Development Zone Strategy to support Lesotho’s diversification drive
The Ministry of Trade and Industry requested the LNDC to develop a special economic zone
(SEZ) to facilitate attraction of investment in other sectors that integrate and diversify current
manufacturing activity. It has been deemed critical to explore the best tools and options to
achieve this growth and to ascertain whether an SEZ will effectively address the gaps. The Trade
and Investment Hub was therefore requested to assist the LNDC to investigate the best
approach to development of infrastructure and policies that will achieve these objectives.
35
Table 1: Botswana, Malawi and Zambia pilot countries for domestication of Investment Policy
Framework
Action period
Country Sector Type Summary Taken Ending Next Steps
31/3/2017
1). Secure formal

commitment from
1). Presented each of the 3 Member
proposed States.
intervention
approach to the
Working with local SADC Sub- 2). Identification of
Localization of consultants finalize
SADC-IPF Committee on country lead
the development of Investment in institution.
Through National Action
Development Manzini Swaziland -
Botswana Plans on 27 February 2017.
Investment of
Malawi & Investment in
Policy 3). Identify & contract
Zambia National consultation with
stakeholders. resident consultants.
Action Plans 2). SADC – TIFI has Preference is to use
on Investment Develop a rollout
dissemination formally contacted the STTAs who were
(NAPI) the 3 Member involved in the initial
mechanism
States for readiness development of the
over the period 1 NAPI Programme
April to 30
September 2017
4). Stakeholder
meetings under NAPI
SATIH to partner
Contacted
with the Lesotho Follow up to confirm if
Investment
National their interest still
Investment Promotion Manager
Development holds.
Investment Climate to follow up on the
Lesotho Corporation
Policy Information original request This will be dropped
(LNDC) to produce
Dissemination which had come form the proposed
a ved in the initial
through a Ministry activities
development of the
Advisor
NAPI Progr
SATIH to partner
Held discussions
with SADC to
with TIFI and the
develop a modern
SADC IT Manager.
Investment interactive Develop SOW for
Investment SADC is eager to
SADC Marketing investment portal STTA to work with
Policy see a regional
strategy linking all Member SADC IT.
approach to
State Investment
investment
Promotion
promotion
Agencies
36
Key Results
• Memorandum of Understanding between SADC/OECD & the Trade and Investment Hub
• Stakeholder Validation Meetings; Facilitation of 6-9 Validation Workshops in 3
countries during the FY 2017:
1. Validated National Action Plan on Investment – Botswana
2. Validated National Action Plan on Investment – Malawi
3. Validated National Action Plan on Investment - Zambia
Analysis
The Trade and Investment Hub is working with the SADC secretariat and other stakeholders in
supporting the implementation of the Policy Framework for Investment across three countries
within the SADC region. The Investment Policy Framework was endorsed in FY 2015/16 by the
Member States and its main objective is to mobilize private investment that supports steady
economic growth and sustainable development, contributing to economic and social well-being
of people in those regions. This can be closely associated with the Trade and Investment Hub’s
transformational goal, which is to improve the lives of people living in the SADC through
sustained economic growth.
The Trade and Investment Hub is currently engaging stakeholders in the targeted countries for
the development and implementation of National Action Plans on Investment (NAPI).
Regarding the domestication of the regional investment policy framework SADF – IPF, the team
is working with local consultants to finalize the development of NAPI in consultation with other
stakeholders and at the same time develop a rollout dissemination mechanism. During this
process, the team participated in the SADC sub-committee meeting on investment in Swaziland
in February, and presented the proposed intervention approach for the rollout of the NAPI.
Accordingly, key activities moving forward will be to facilitate implementation of the NAPI
through securing commitment from these three targeted countries, identification of country lead
and contract resident consultants. Preference should be given to SITTAs who were involved in
the initial development of the NAPI and stakeholder meetings under NAPI.
Support of financing platforms/vehicles

Despite the numerous active investment funds (equity and debt) operating within the region,
there is still significant scope for additional viable fund platforms, particularly those with
developmental impact agendas in the region. As a result, many investors have cited their
willingness to support fund managers in the region; however, there are not enough sustainable
platforms across the region for the amount of financing that is looking to be placed and that is
needed for further development impact.
Access to finance continues to be a huge constraint for businesses, especially SMEs when they
are trying to get funding to grow their business operations. Given these challenges, the Finance
and Investment team is investigating alternative sources of funding for SMEs, which are new
and innovative, and will provide capital and terms that are unique from the typical commercial
banking offering, not previously available in the market.
The Trade Hub met with several financial institutions, commercial banks, investment
companies and Development Finance Institutions. Discussions were held with Barclays’ Jan de
Kock, Head of Enterprise Development (South Africa) and David Mparutsa, Head: Enterprise &
37
Supply Chain Development (Africa exc. SA). Barclays is currently expanding its Enterprise
Development and Supply Chain program to Botswana and Zambia and discussed potential to
collaborate and assist with the roll out and increasing lending in the region. Other discussions
occurred with Nedbank on its work across the region. The Finance and Investment team also
spoke with Khulansande Capital, Lionhead Capital Partners, the IFC, and other organizations
about key investment challenges and opportunities to support access to finance in the region.
Several engagements occurred with SADC on the support of its Regional Agricultural
Investment Plan (RAIP), which outlined the establishment of the Agriculture Development
Fund (ADF) as one of its key priorities. The RAIP and ADF will provide a platform for
investment into the agriculture sector for both public and private sector investors. ADF will
focus on seven different areas including: value chains; agricultural infrastructure development;
markets and trade; environment and natural resources; agricultural information management
system; food and nutrition security; and, governance and institutional development. The SADC
Council met in Swaziland (March 2017) and approved the RAIP (2017 – 2022) including the
establishment of ADF. This approval now allows the SADC Secretariat to commence drafting the
legal instrument to establish the fund. The RAIP coordinator will be working with the SADC
Legal Counsel in this process.
Support towards the implementation of the SADC ADF has already begun with the 11th
European Development Fund allocating €9 million for the implementation of the RAIP in three
focus areas of Agricultural Information Management Systems (which involves commodity
exchanges as sources and users of the information), surveillance and control of crop and animal
diseases which are hindering intra-regional and international trade, and the implementation of
the SADC Food and Nutrition Security Strategy.
Key Results
SADC Council:
• Approved: SADC Regional Agricultural Investment Plan in March 2017.

• Approved: Establishment of Agricultural Development Fund a facility that will be
providing financial support to Member States.
• Agricultural Development Fund Operational Guidelines Considered: The draft ADF
Operational Guidelines will be submitted to Ministers of Agriculture and Food Security
at their meeting of 15 – 19 May 2017 for consideration.
Analysis
The development of inclusive financial markets that work for everyone, especially the poor and
SMEs, will make an important contribution to reduce poverty and unemployment in the region
and boost inclusive economic growth. Various studies have shown that an economy is likely to
increase its growth potential if its financial system is inclusive and reaches all sectors of the
economy. Evidence is also emerging on the positive link between appropriate financial inclusion
and improved livelihoods of the poor. Therefore, the role of access to finance in establishing and
growing small business (including in agriculture) can never be underestimated and is well
documented and supports the development of a sector that is key to both livelihoods
development and growth.
Thus, the Trade and Investment Hub will prioritize increasing access to finance and investment
in the region, through traditional forms of financial platforms (commercial banks, finance
38
companies, etc.), and will also support existing fund managers that are seeking to raise
additional resources to invest in the form of equity, mezzanine and/or debt financing. However,
there is a need for a different approach which could be in the form of blended capital structure
i.e. combination of grant money from public sources, debt or equity capital from private
investors and the use of first loss capital and technical assistance programs that serve as a
structural risk reduction tool. In the development of these financing instruments, key
stakeholders such as private sector investors as well as DFI’s and other patient capital providers
in the fund structure will be engaged.
Warehouse Receipt Finance (WRF)

The warehouse receipt system (WRS) work comprises of three components:
1. WRS systems development – in conjunction and partnership with Agribusiness Trade
and other USAID programs on the ground
2. Financial institution capacity-building, specifically around warehouse receipt (WR)
financing and incorporation into the broader work around warehouse buildout
3. Broader ecosystem support to overcome barriers to WR finance deployment
Broadly speaking, the work is designed to unlock financing of commodity inventories as a
mainstream form of inclusive asset finance available through bank and non-bank financial
institutions (FIs) across the Southern Africa region.
In part, this objective depends on having functional WRS institutions and infrastructure
(“systems development”); in part on having capacitated bank and non-bank FIs ready to roll out
the product (“capacity-building”); in part on potential beneficiaries – farmers, traders,
agribusiness – being aware, understanding and interested in the product; and, in part on having
the broader legal-regulatory and technology frameworks in place to support the actions of all
players (“broader ecosystem support”).
Now, there are three functional WRS in the region. The most mature is the “Electronic Silo
Certs” WRS affiliated with the commodity exchange of the Johannesburg Securities Exchange
(JSE) in South Africa; the others are the WRS operated alongside commodity exchanges
operated by the two Malawian institutions, Agricultural Commodity Exchange for Africa (ACE)
and Auction Holdings Commodity Exchange (AHCX). Elsewhere, Zambia has recently
operationalized its WRS under the Zambian Agricultural Commodity Exchange (ZAMACE);
while in Mozambique, the public-owned WRS, the Bolsa de Mercadorias de Moçambique
(BMM), and a USAID-backed private sector initiative are operating WR financing pilots at small
scale. There remains significant work to be done.
Key Results
Systems development
Warehousing: two pipelines in Malawi developed for warehousing construction involving 10
agribusiness involving two wholesale financiers through two local banks, with combined over
350,000MT of new capacity, and total of USD 45m-plus investments
Technology systems: new upgraded technology systems put in place through Trade and
Investment Hub-facilitated relationship between ACE and specialist international software
vendor
39
Indemnity fund: concept developed for an indemnity fund to reduce risk for financiers of
financing on WRs, based on an institutionalized first loss mechanism at the level of the WRS.
Capacity-building
Bank training: Verbal expressions of interest on capacity-building received from four Malawian
banks on capacity-building requirement (FMB, NBM, Opportunity International, CDH)
Broader Ecosystem Support
Warehouse management company: concept developed, and aligned with various financial
institutions, for an entity to provide independent on-site certification and control of
commodities for financing under WR finance of agribusiness and third party depositors, based
on detailed case study and proof of concept from India.
Analysis
The Malawian exchange, just like its South African peer, has seen the weight of WR financing
activities under structures in which market and price risk is mitigated. In South Africa, this is
achieved typically through positions being hedged on the commodity exchange. In Malawi, an
innovative structure – the forward contract – has been developed in which a reputable off-taker
commits to buy the financed commodity at a fixed price on a future date. This enables 100%
financing of the seller’s commodity prior to the sales date – effectively equivalent to a spot
purchase, albeit at a fair market price – while allowing the buyer to secure supply in advance,
efficiently using financing to stagger purchases, and lock in a price to provide greater certainty.
The majority of Malawi’s WR financing is performed in such a manner, and more than five
institutions now service the forward contract.
However, the alternative WR financing structure – so-called “WR haircut financing”, also
known as “pledge financing” or “70% WR finance” – is finance against the WR without an off-
taker in place. The latter name for the product references the loan to value (LTV) ratio, i.e. 70%,
on which financing occurs. The 70%, the LTV, equals a 30% collateral “haircut” (hence the
former name). This haircut is in place to reflect the unmitigated market and price risk: more
specifically it reflects that the financier can accept a 30% decline in the market value of the
financed commodity before the value of the collateral becomes less than the value of the loan,
imperiling the bank’s capability to recover its money in the event of a default.
WR haircut financing is an important instrument to be in place as a complement to the forward
contract financing. It is the form of WR financing that enables farmers to avert distress sales and
sell later in the season to receive better prices. It is also the form of WR financing that traders
and small-scale processors use to finance aggregation. In other words, it is potentially a highly
impactful and inclusive form of finance. And yet it is only offered by one bank in Malawi,
supported by a USAID DCA, and in relatively small sums.
Accordingly, a key focal point of The Trade and Investment Hub’s work will be to promote
capacitation and risk-mitigation for WR haircut finance, in particular generating a much greater
nuanced understanding for banks on mitigation mechanisms for price and market risk,
reflecting the dynamics of different value chains, different moments in the marketing cycle, and
the impact of extraneous domestic and global factors, to promote the scaling of haircut finance
alongside forward contract finance in Malawi.
40
At the same time, it is also recognized that the forward contract financing structure has
considerable merit. It is currently limited to support large corporate agribusiness and is not a
tool that can be used by smaller corporations and small-and-medium-sized enterprises (SMEs).
A second objective for the Trade and Investment Hub will be, then, to help descale the forward
contract to work for these additional sectors as a form of inclusive growth.
Finally, it is noted that Malawi remains significantly ahead of Zambia, Mozambique and other
regional jurisdictions with its WRS. Over a 10-year development effort comprising significant
test and learn cycles, Malawi has evolved the forward contract based on the requirements of its
market stakeholders. It will be important to support the other jurisdictions to learn from the
Malawian experience without having to repeat the same duration and experimentation. The
Trade and Investment Hub will therefore aim to disseminate best practices and support
capacitation efforts in other countries, as well as creating synergy between different jurisdictions
in the region.
Increasing investment into the region: Investment

The Trade and Investment Hub’s primary areas of focus this quarter were:
1. To set up the Investment Facilitation platform under the Finance and Investment
component
2. Deploy the use of the toolkit developed last quarter to develop a guide to execute
investment facilitation work
3. Build a capital map complete with a list of investors in the region, that outlines gaps in
the investment landscape
4. Build relationships with a network of investors active in the region, in order to identify
barriers to investment and possible opportunities to deliver support
5. Develop a pipeline of transactions, both through investor relationships and through
ongoing investigation of the region’s agribusiness, financing services, consumer goods,
and enabling sectors
6. Roll out transaction support for these investments in the second half of the quarter.
As the Finance and Investment team pursued these six activities, relationships were built with
investor offices and capital seekers throughout the region – laying the groundwork for efficient
and effective on-site engagement in Botswana, Lesotho, Madagascar, Malawi, Mozambique,
Namibia, South Africa, Swaziland and Zambia.
Throughout the course of the engagement, the team will be tracking investor confidence in
Southern Africa as a viable investment region, and continue on-the-ground analysis to unearth
and understand industry trends and insights.
Key Results
• Transaction team set up the Investment Facilitation platform

• Toolkit: Deployed the use of the toolkit developed last quarter, which gave us a better
understanding of how a transaction aligned with the Trade and Investment Hub’s
priorities and how we may provide support
• Capital map analysis: Developed a capital map as an aid to support the project’s
understanding of available capital options in the Southern African region and indicated
capital gaps in the market where support could be targeted
41
• Pipeline: Throughout the quarter the team sourced a pipeline of 18 transactions with a
cumulative deal value of US$152.3 million and an average transaction size of US$8.46
million
• Launched transaction support: Building on core documents, the team launched
transaction support in February 2017 two transactions, (i) a microfinance investment in
Malawi and Zambia; and (ii) a Southern African regional restaurants transaction
• Investor Confidence: the team began tracking investor confidence in the Southern
African region using Deloitte’s Annual Africa Private Equity Confidence Survey report.
Analysis
The Finance and Investment team set up the Investment Facilitation platform, which included
participating in a series of Trade and Investment Hub-wide workshops in Pretoria to coordinate
activities with other components, discussing strategy and best practices for Investment
Facilitation. During these sessions, the team supported development of the Finance and
Investment Component Work Plan, and participated in discussions with Trade and Investment
Hub leadership and the USAID Africa Private Capital Group in Pretoria to review the process for
sourcing, selecting, and supporting transactions.
Toolkit
Last quarter the team developed a toolkit, which is a guide to the implementation of transaction
activities, (i) outlining the context and need for investment facilitation; (ii) establishing the
process for sourcing, selecting, and delivering transaction support; and, (iii) providing a
collection of key documents – including, Information Requests, Fit Checks, Advisory
Agreements, and Trade and Investment Hub marketing materials. This toolkit was deployed this
year at various points of the engagement process to gain a better understanding of transaction
alignment with Trade and Investment Hub priorities, and identify areas where Trade and
Investment Hub support would be an essential value add.
Capital Map Analysis

The team developed a capital map as an aid to support the Trade and Investment Hub’s
understanding of available capital options in the Southern African region. The Capital Map
consists of an analysis of the investment landscape in the project’s priority sectors. Figure 1
shows a visualization of some of the identified capital providers, targeted investment size and
42
type of financing offered. This visualization depicts some of the capital gaps that we shared with
partners to inform policy- and enabling-environment interventions. Furthermore, the Capital
Map includes an Excel database of investors – specifying regional markets in which they are
active, the type and size of financing offered, sectors targeted, and a summary of the investor’s
overall strategy (Figure 2). In sum, we have aggregated a non-exhaustive list of over 140 capital
sources and their strategies for the region.
Figure 1: Capital Map
Figure 2: Capital Map list
43
The Capital Map focuses on identifying trends across grouped markets in the region;
summarizing sector-level challenges and opportunities within these groups; and, examining
gaps in the regional capital landscape. Initial work was completed through intensive desktop
research; drawing from investor databases, direct investor insights, economic and investment
literature; and, past on-site work.
In examining investment track records within the Trade and Investment Hub’s target markets,
the team considers available information on completed investment transactions within each
market. As recorded by EMPEA (the principal source of transaction data used in this capital
map), completed transactions can consist of private equity, private infrastructure and real
assets, or private credit, invested via a range of deal types: buyout, growth, venture capital,
Private Investment in Public Equity (PIPE), mezzanine or debt.
The extensive desktop research was built on substantially during January and February 2017 as
the transaction team’s on-site work focused on delivering Direct Investor Insights through
interviews with 20+ active investors in the region. Interviews seek to collate capital sources’
investment strategies (including target ticket size, sectors, and geographies) and further develop
the capital map analysis.
These interviews allowed the team to gain a deep understanding of the challenges faced by
investors in the region and their target investment markets. Three key trends emerged through
investor interviews. Capital providers (1) show a high level of interest in more “frontier”
economies including Malawi, Mozambique, and Zambia; (2) face capacity challenges and
require bandwidth support to fully capture opportunities across these markets; and (3) require
support in post-investment planning on complex transactions involving regional integration.
Figure 3: key investor trends and insights
Interest in frontier markets Bandwidth constraints Post-investment planning
Malawi, Zambia, and Firms investing in the US$2m Post-investment planning is

Mozambique are relatively to US$20m range rely on key to ensuring value
overrepresented in the small teams and would addition and capitalizing on
current pipeline benefit from additional existing investments
support on sourcing, due
diligence
44
Overall, the trends identified among investors will serve as helpful guides to the team going
forward, as it works to engage investors, address common challenges and match capital seekers
with the capital suppliers in target markets.
Pipeline
Throughout the quarter the team sourced a pipeline of 18 transactions, both through investor
relationships and through ongoing investigation of the region’s agribusiness, financing services,
consumer goods, and enabling sectors. Information about potential transactions is actively
gathered and presented to the Trade and Investment Hub for selection and approval. The team
will continue to develop this pipeline throughout the course of the engagement. Inactive projects
will be removed and new projects will be added and maintained.
The current pipeline has a cumulative deal value of US$152.3 million. Not every transaction in
the pipeline will receive Trade and Investment Hub support, and not every transaction that
receives such support will reach financial close. The average transaction size is US$8.46 million,
across 18 transactions.
The pipeline incorporates transactions across the project’s three priority sectors and eight of the
nine countries. The following diagrams summarize the composition of the pipeline by sector and
by country. The Team will continue to source transactions to grow and diversify the pipeline.
45
Figure 4: Pipeline by country
Total Number of Transactions by Country

Zambia
Multiple 5%
Swaziland 17%
0%
Malawi
Lesotho 17%
6%
Botswa…
Namibia
11%
South Africa
11%
Madagascar Mozambique
5% 22%
The Team has achieved a diverse spread in geographical location of pipeline transactions. The
only targeted country that is not represented is Swaziland. Swaziland has a very small consumer
population and low growth and therefore very limited investment. However, the Team is
monitoring early stage investment opportunities in this region and transactions will be included
in the transaction pipeline as they develop. The Team is constantly seeking to achieve a wide
geographical spread and this will continue to be an area of focus as we expand our pipeline of
transactions.
Figure 5: Pipeline by Sector
Transaction Value by Sector Transaction Number by Sector
Enabling Sectors,… Enabling

Sectors
22%
Consumer
Goods, Agribusines
$15.0 Agribusines s
s, $93.1 44%
Consumer
Goods
Financial
17%
Services, $20.5
Financial
Services…
46
The team has achieved a balanced spread of transactions across all sector focus areas.
Agribusiness has been a priority focus area and therefore constitutes the largest contributor in
terms of both transaction value and number.
Figure 6: List of Transaction summaries
Transaction Size (US$m) Sector Month added 1 Country

1. $1 - $5 Financial Services January 2017 Zambia
2. $5 - $15 Consumer Goods February 2017 Multiple
3. $1 - $5 Agribusiness January 2017 Namibia
4. $5 - $15 Consumer Goods January 2017 Multiple
5. $5 - $15 Consumer Goods January 2017 Madagascar
6. $5 - $15 Agribusiness January 2017 Malawi
7. $5 - $15 Agribusiness February 2017 Malawi
8. $5 - $15 Enabling Industries February 2017 South Africa
9. $5 - $15 Agribusiness January 2017 Mozambique
10. $5 - $15 Financial Services February 2017 South Africa
11. $15 - $50 Agribusiness February 2017 Multiple
12. $5 - $15 Financial Services February 2017 Malawi
13. $5 - $15 Agribusiness February 2017 Mozambique
14. $1 - $5 Consumer Goods February 2017 Lesotho
15. $5 - $15 Agribusiness January 2017 Mozambique
16. $5 - $15 Enabling Industries February 2017 Namibia
17. $1 - $5 Enabling Industries February 2017 Namibia
18. $5 - $15 Enabling Industries February 2017 Botswana
Total $152.3
Transaction Support
Building on core documents and work with the Trade and Investment Hub leadership, the team
launched transaction support in February 2017. The team held a series of online and call
interviews investors with over 30 investors. These investor interviews have already yielded
highly impactful investment opportunities seeking support as indicated in the pipeline of
transactions. To be prepared to immediately deliver support to these transactions, the team
spent significant time – in South Africa and abroad – identifying and shortlisting candidates
resulting in the formation of a growing team of four investment professionals.
1 This reflects the month at which the Team added the transaction to its pipeline.
47
This quarter we launched advisory s services supporting two transactions, (i) a microfinance
investment in Malawi and Zambia; and (ii) a Southern African regional restaurants transaction.
i. Zambia & Malawi Microfinance Funding Support.
The team provided Loan Book Analyses and Market and Regulatory research support to a
microfinance institution in Zambia and Malawi to expand lending capacity in the region. The
client is a private equity and debt fund focused on consumer facing businesses in Sub-Saharan
Africa. They were looking to disburse debt to a Microfinance institution in Zambia and Malawi
in order to expand the investee’s lending capacity in the region. The investor was not equipped
to conduct a thorough market and regulatory analysis of the microfinance institution in Malawi
& Zambia and required assistance with the analysis of the loan book and associated controls, to
understand the risk profiles of the loan books and enable them to correctly price the credit risk
associated with the transaction.
The microfinance industry in Malawi and Zambia forms a key source of credit and financial
services for the low-income and largely financial excluded populations in these countries.
Demand for credit is largely driven by educational costs and farm expenses and is therefore
highly cyclical.
However, the industry has been limited in its ability to provide credit due to its inability to raise
sufficient funding. Funding is the biggest challenge facing the Zambian and Malawi
Microfinance industry. The industry’s ability to raise funding has been greatly affected by the
severe currency devaluation over the past few years. This brought on a general market liquidity
crunch, with high-risk sectors such as the microfinance industry being particularly badly
affected.
The proposed funding for this investment represents more than 50% of the institution's current
loan book and would, therefore, potentially double the entity’s ability to extend credit to this
demographic and hugely promote financial inclusion. Furthermore, the size of the transaction is
such that it would see significant growth in the institution itself and create employment through
expansion of its processes, policies and operations. This expansion will result not only in
employment at a low level, such as agents, loan officers etc. but also create a need to promote
and develop higher levels of staffing requirements. Some of the key recommendations from our
analysis regarding how to manage this growth were for the organization to hire or train a Chief
Risk Officer, Chief Credit Officer, and Audit Manager and develop greater organization
structures such as a Nomination, Credit and Audit committees. From our recommendations, it
is likely that filling these staffing requirements will become a condition precedent to the
investment itself.
During an on-site visit the team participated in a two-day skills development training program
that the investee provided to its sales agents as indicated in Figure 7. The training focused on
how to complete loan applications, how to perform affordability examinations, fraud prevention
techniques, and marketing skills. This provided valuable insight into how the investee operates
its nationally distributed microfinance lending business and maintains quality control.
Currently, the investee employs 500 employees globally, and 70 in Malawi and Zambia
collectively. Additional capital will create direct jobs at the Investee, as well as indirect jobs
through increased access to finance. As more people and businesses borrow, they will employ
48
more people and support the local markets. Furthermore, the investee creates cross-border
trade by providing loans to businesses that trade throughout Southern Africa.
Figure 7: Transaction Team
attending a sales agent
training session being run by
the microfinance operation
in Zambia. The training
program is a key control
used by the company to
identify and reduce the risk
of fraud in the loan
origination process. It also
improves efficiency,
provides skills training for
agents and reduces errors in
the capturing process.
Figure 8: Zambia Microfinance transaction currently receiving Hub Support

Investor The Investor is a private equity and debt fund, focused on consumer facing
businesses in Sub-Saharan Africa.
Investee The Investee is a Microfinance institution, primarily focused on government
payroll lending.
Transaction The Investor is looking to disburse debt to the Microfinance institution in
Zambia and Malawi in order to expand lending capacity in the region.
Country Zambia and Malawi Employment Globally, the Investee has
over 500 employees. Its
Zambia and Malawi
branches collectively have
over 70 employees. This
transaction will help sustain
jobs and create further
employment as the company
expands its lending
practices.
Fit Check
Sector Financial Services Regional Trade Creates cross-border trade

by providing loans to
businesses that trade
throughout Southern Africa.
Investment Size US$1 – 5 million Gender Operations in Zambia and
Feasibility Term sheet is signed and Malawi employ many
targeted investment close women, and women are a
is April 2017. significant portion of the
Investee's client base.
Additionality The Investor is not equipped to conduct thorough market and regulatory
research on the target. Furthermore, the Investor requires assistance with
analysis of the target loan books, in order to understand their risk profiles.
The Team would be deployed for three to five weeks to provide industry and
competitive analysis research as well as in-depth loan book analysis.
Investment Use Use of proceeds is to on-lend. The Investee will use this financing to lend to
SMEs and individuals in the region. Access to credit is an essential
component to enhancing economic growth, through access to education,
medical treatment etc.
49
ii. South Africa & Regional Restaurants
The team also provided market analysis to enhance sectoral understanding, conduct due
diligence on the various business integration plans, support a procurement strategy analysis that
looks at local and regional supply chain inputs, and overall sourcing strategy; and assist with
merger facilitation between the investee and the investor’s current business. The client is a
private equity fund focused on emerging markets looking to take a majority equity stake in a
South African restaurant chain, which it will integrate with an existing investment and provide
capital to expand the enlarged business across the region.
The investee
currently employs
approximately
1,000 employees. It
plans to open four
new restaurants
over the next year,
which will employ
an additional 200
employees. The
increase of the
minimum wage in
line with the Basic
Conditions of
Employment Act,
will also result in
increased wages in
the hospitality
sector and A storage room of a local supplier who hopes to increase sales to the investee and therefore
restaurants increase sales by source more regionally.
subsectors.
Through the market assessment conducted, the investment team identified finding adequate
and skilled management teams to run a restaurant to be one of the biggest challenges facing the
restaurant industry in the region. Skilled management is critical to the growth and success of a
restaurant, and investing in skills development will enhance skill levels in the region, as well as
in the investee’s operations. Furthermore, in the restaurants and hospitality industries there is
often a clear developmental path towards management for low skilled employees, which will
also increase the skill level for previously unskilled labor.
The Trade and Investment Hub's support is guiding the investor on how to increase purchases of
inputs from other SADC countries. After receiving expansion capital, the platform will
potentially seek to expand to Botswana and other Hub-covered countries. Moreover, while exact
proportions are not yet defined, agricultural products grown in the SADC region are potentially
inputs in the business. The investee already sources inputs such as coffee from East Africa,
prawns from Mozambique and other produce varieties from Namibia. Importing from outside of
Africa is becoming increasingly expensive for many restaurants in the industry due to the
volatility of the South African Rand. Competitors who were previously net importers from Italy
and the United Kingdom are beginning to change their sourcing strategies to include a 8:2 local
to import ratio. However, the volatility of the prices of key inputs in South Africa, are driving
50
restaurants to explore Botswana, Namibia and Mozambique as potential sourcing locations. If
the investee follows procurement trends, they may expand the mix of goods imported from these
Southern African countries.
The team has already started meeting with key suppliers in the region. One of the suppliers who
sources coffee from East Africa works closely with co-operations and farmers on the ground to
enhance sustainable agricultural practices- particularly in countries where many farmers still
see coffee as a “cash crop” rather then a sustainable business. This particular supplier will be
working with a range of other stakeholders to implement a program focused on disease
resistance for crops- improving quality and quantity going forward. Similar programs can be
implemented in the Southern African region increasing regional trade of high quality goods.
A warehouse in Malawi, where limited warehouse storage capacity is a factor in a 23 percent level of post-
harvest lost.
51
Figure 9: South Africa, Botswana Regional Restaurants transaction currently receiving Hub
Support
Investor The Investor is a private equity fund focused on emerging markets.
Investee The Investee is a South African restaurant chain.
Transaction The Investor is looking to take a majority equity stake in a South African
restaurant chain, which it will integrate with an existing investment and provide
capital to expand the enlarged business across the region.
Country South Africa, Employment The Investee currently employs
Botswana & Others approximately 1,000 people. This
investment will help create over 200
new jobs through supporting the
target’s expansion plans of four new
restaurants over the coming year.
Sector Consumer Goods Regional The investment is being made with
(incl. Agribusiness) Trade the intention of driving future growth
through expanding the integrated
business across the region (e.g.
Botswana). Trade is also expected to
be supported through the business
sourcing a range of key agricultural
inputs from across Southern Africa.
The investee already sources inputs
such as coffee from East Africa,
prawns from Mozambique and other
produce varieties from Namibia.
Based on the results of the
procurement strategy and supply
Fit Check
chain analysis, the investee could

look at sourcing other inputs from
additional countries in the region.
Investment US$5 – 15 million Gender The Investee will be an equal
Size opportunity employer. The company’s
Feasibility A Sale and Purchase recruitment program encourages
agreement has been women to apply for roles, and has a
entered into with track record of promoting based on
selling shareholders. capability.
Several conditions
remain outstanding
including final
investment committee
approval.
Additionality The Investor has an existing investment in the restaurant space and expects to
integrate the two businesses, and drive expansion of the enlarged business
across the region. However, the Investor lacks market knowledge and requires
support to merge the two businesses. The Team’s support will be required to
perform a detailed market analysis to enhance sectorial understanding, conduct
due diligence on the various business integration plans, support a procurement
strategy analysis that looks at local and regional supply chain inputs, and
overall sourcing strategy; and assist with merger facilitation between the target
and the Investor’s current business.
Investment The investment will be used to fund a majority stake acquisition and support
Use business expansion across the region.
52
Anticipating the completion of these active transactions, the team refined current transaction
lists and shortlisted five possible transactions to engage in the next quarter. Among those five is
an investment into a horticulture producer in Namibia, which will substitute the country’s
imports and eventually export produce to Botswana and other regional partners. Namibia
currently imports close to 80% of its fresh produce from South Africa. This investee plans to
substitute South African imports and fill the gap for locally produced fresh produce in Namibia.
The investee also foresees itself quickly outgrowing this market and expending into other
regional markets as the region endures an upcoming drought.
Investor Confidence
Tracking investor confidence in Southern Africa provides the Hub with an indication of
potential investment activity and its ability to support the Hub’s mandate in the region.
Throughout this engagement, the Team will use the Deloitte Annual Africa Private Equity
Confidence Survey (“PECS”) report as the reference point for changing levels of investor
confidence. The PECS report targets General Partners (“GPs”) and Limited Partners (“LPs”) and
focuses on five key assessment areas to assess changes in investor confidence: 1. PE Deal
Activity, 2. Exit Environment, 3. PE Market Outlook, 4. Economic Climate and 5. Funding
Environment. The survey draws upon levels of investment activity over the past year to gauge
investment expectations.
Overall, investor confidence in Southern Africa remained unchanged in the twelve months to
mid-2016. Going forward, investors expect PE deal activity to increase, with capital ready to be
deployed following a number of new funds recently raising capital. Furthermore, most investors
expect exit volumes to increase or remain constant based on the anticipated volume of deals
maturing in the next twelve months. Investor expectations for PE market activity in the region
remain relatively stable; however, some negative sentiment is apparent, particularly towards the
low-growth South African economy.
Southern Africa had the weakest growth outlook across Sub-Saharan Africa in 2016, with its
comparatively subdued forecasts attributed to drought, and low commodity and metal prices. In
South Africa specifically, political uncertainty, exchange rate risks, and interest rate hikes have
negatively affected investor confidence.
The funding environment is expected to remain steady year on year, with Development Finance
Institutions and private individuals remaining as the dominant sources of funding in the region.
Ultimately, Southern African investors are confident in their ability to continue doing business
in the region; however, they remain wary of the key challenges that may affect returns in the
next 12 months. The PECS reports will be annually reviewed in conjunction with the Team’s
ongoing work in the region.
Next quarter, the team will leverage all developed toolkits, capital map analysis, investor
networks and lessons learned in active transactions engaged this quarter. The team’s target
number of transactions to support in the upcoming quarter, given current bandwidth capacity
will be approximately six including both investor and capital seeker transactions.
53
A ‘win-win-win’ for food security
By facilitating Commodity exchanges play a critical role in agriculture. They
improvements in a link farmers to information on prices and quality, integrate the
commodity exchange in value chain, and facilitate storage to reduce post-harvest
Malawi, the Trade and losses, among other things. With support from USAID’s
Investment Hub achieved Southern Africa Trade and Investment Hub, the region’s
a win-win-win for food largest commodity exchange outside South Africa has
security. implemented new software that has significantly improved its
performance.
“Thanks to the support from USAID and the Trade and
Investment Hub, our partner organizations can now upload
information about their farmers and take advantage of ACEs
ICT solutions in their operations,” said Kristian Schach Moller,
CEO of the Agricultural Commodity Exchange for Africa
(ACE). “In return for this technology ACE is granted
permission to push market prices and market information to
the partners’ registered farmers. We are creating a win-win-
Assisting organizations like ACE helps improve win situation."
food security in Malawi.
ACE was established in Malawi in 2006, initially as a
commodity exchange, and from 2010-11, also as a
“Thanks to the support, warehouse receipt system (WRS). Technology – software,
specifically – is critical to a commodity exchange’s success,
our partner organizations
as it seeks to manage inventory from thousands of farmers
can now upload and cooperatives. ACE had been using custom-fit software
information about their that had outlived its usefulness. The Trade and Investment
farmers and take Hub saw a perfect match: the team linked ACE to a specialist
software vendor for exchanges that was interested in the
advantage of ACEs ICT commodity space but with little experience in it.
solutions in their “The vendor had the technology architecture but lacked
operations.” guidance on functionalities – exactly the reverse of ACE’s
situation,” said Terry Wyer, the Trade and Investment Hub’s
Kristian Schach Moller,
director of finance and investment. “A partnership between
CEO, Agricultural them added value to both parties.”
Commodity Exchange for
Now, ACE’s services have improved, making the exchange
Africa
more attractive to multiple stakeholders.
DRAFT April 2017

www.satihub.com
Warehouses to increase food security
A major investment in Every year, Malawi loses almost a quarter of its harvest,
warehouse construction primarily because of the lack of quality grain storage facilities.
will reduce post-harvest With Trade and Investment Hub support, a USD 35 million
losses, increase finance investment into warehouse construction has been facilitated
opportunities for farmers that will improve the situation significantly.
– increasing food
In a country where millions of people experience chronic and
security.
acute food insecurity annually, post-harvest losses are life
threatening. According to the African Post Harvest Losses
Information System of the Monitoring Agriculture Resources,
Malawi loses over 23% of its maize crop due to post harvest loss,
in significant part due to the absence of storage facilities.
Lack of quality warehousing facilities also exacerbates price
volatility and impedes the ability of farmers to improve their
livelihoods – and escape poverty. Warehouse facilities would
link farmers further to a Warehouse Receipt System, which
can help farmers receive higher prices for their grain.
Building more warehouses in Malawi, like
this one, is a critical step toward improving A 2016 USAID study indicated even a maize farmer paying to
food security. transport grain 100 km – the longest distance scenario
envisaged – would see a 15 to 20 percent net return by using
the WRS as opposed to selling at farmgate.
A stakeholder needs assessment identified lack of
Lack of quality warehousing as a significant constraint to the overall
warehousing development of Malawian agriculture. The Trade and
exacerbates price Investment Hub worked with the Agricultural Commodity
volatility and impedes Exchange for Africa (ACE), local and international financiers
farmers’ ability to and a group of progressive agribusinesses to bring in funds
improve their on terms that are aligned with the economics of investing in
livelihoods – and warehouses.
escape poverty. “The challenge was not a lack of appetite for investing into
warehouses but rather a lack of financing on suitable terms,”
said Terry Wyer, the Trade and Investment Hub’s director of
finance and investment. “Once we identified the bottlenecks,
we could help stakeholders blend the right financing package
to unlock high impact investments.”
DRAFT April 2017

www.satihub.com
Enabling Environment and Trade Facilitation

In the second quarter of FY 2017, the Trade and Investment Hub completed assessments of
specific Member States’ needs for technical assistance to implement trade facilitation measures,
namely, Botswana, Lesotho, Malawi, Namibia and Zambia. Development of the Trade
Information Portal in Zambia was initiated, and progress was gained in Namibia for the
concretization of the concept and organizational structure for the National Single Window.
The Trade and Investment Hub continued to build relationships with key enabling environment
stakeholders, extending the conversations to focus on the private sector and regional
associations’ dialogue with the SADC and national government ministries, and the means to
strengthen the Government-to-Business partnerships for introducing trade facilitation measures
conjointly and for insights into the key issues affecting the movement of goods in the region.
The Sanitary and Phyto-Sanitary (SPS) specialist was introduced within the EE&TF team
complementing the SADC SQAM directorate for both SPS and TBT synergies.
Considerable analyses of the movement of goods across the SADC trade corridors and through
the various border crossing points were undertaken which will lead to the realization of cost and
time baselines within the third quarter of FY 2017.
Establishing a structure for identification and support to mitigation of non-tariff barriers was a
prime focus and coupled with the (third quarter) baselines, the Trade and Investment Hub shall
gain a better understanding of the non-tariff barriers prevalent in the SADC region with the aim
of designing relevant and targeted interventions to address some of the gaps found.
Key Results
Tracking time, cost and NTBs across Southern Africa
The NTBs Manager at SADC provided access to the Tripartite NTBs data to enable the Trade and
Investment Hub to understand
the trade constraints prevalent
in the SADC region. The data
analyses indicated the main
barriers reported related to
Trade Policy and Customs-
related procedures, fees and
charges, transit and transport
related procedures, quality and
standards and sanitary and
phytosanitary issues among
others. Further analysis of
other literature on NTBs in the
SADC region was undertaken
and the Trade and Investment
Hub is currently refining a
Hundreds of trucks are crowded in a parking area as they wait to be
strategy to support SADC and
processed at the Zambia One Stop Border Post. More than 200 freight Member States to address
trucks enter Zambia's OSBP daily from Zimbabwe. Photo taken from a reported NTBs at a regional
distance due to the sensitivity of the border crossing.
54
level, as well as at the national level.
NTBs Reported (%)

2%
2% 2%
3% 2%
3%
Trade procedures
3%
Customs related
35%
5%
Fees and other
charges
9% Transport and transit
issues
Other
15% Infrastructure and

equipment
20%
Establishing the baselines for time and cost across SADC corridors, the Trade and Investment
Hub developed and advertised a Statement of Work for a Transport Economist to establish the
methodology and data sources for the ‘baseline for costs’ and the rationale for a web-based
corridor performance monitoring system (CPMS) that will provide reports and indicators
measuring border crossing time and route trucking time for several corridors in Southern Africa.
And to establish a baseline of ‘time of transport movements across corridors and through border
crossings in the Southern African region” the Trade and Investment Hub identified a service
provider with primary GPS-tracking data in sufficient volumes and GPS tracking range across
the region. Both baselines will be produced within the third quarter.
Also on the theme of time and cost baselines, the Trade and Investment Hub, SADC and
development partners discussed the need for assessing the impact of trading costs for individual
products/value chains and identifying resulting needs along the corridors most commonly used
by those value chains during a Corridor Approach workshop in Gaborone, Botswana. The
participating stakeholders confirmed their commitment to the action plan theme that ‘corridor
development is at the heart of industrial upgrading, with the value chain focus ensuring that
corridors are not developed randomly but in accordance with their actual economic function’.
The stakeholders agreed on the importance of private sector involvement in development
processes and expressed commitment to greater coordination.
55
Southern Africa primary trade and transport corridors
SADC Infrastructure and Services Directorate

The Trade and Investment Hub had discussed the potential for support to SADC Member States
in domesticating legislation in the four key areas: harmonized vehicle load management;
harmonized vehicle regulations and standards; overload management, and vehicle standards.
SADC Trade, Industry, Finance and Investment (TIFI) Directorate
The Trade and Investment Hub was requested to consider technical assistance to the SADC
priority activity matrix in respect of facilitating the development of the SADC Trade Information
Portal, conducting one or more prioritized activities within the field of Coordinated Border
Management including introduction of the SADC Simplified Trade Regime concept (STR),
coordinated border management activities, conformity of its Protocol on Trade with the WTO
Trade Facilitation Agreement, and the regional transit bond management system. The Trade
and Investment Hub is currently waiting for SADC to clearly define its requirements.
SADC Standards, Quality Assurance and Metrology (SQAM) program
Enhancing awareness among the private sector of the role of Standards in trade expansion is a
key priority, according to Dr. Lomkhosi Gama of the SADC Standards, Quality Assurance and
Metrology (SQAM) program. The Trade and Investment Hub discussed the formal framework in
which the cooperation amongst the national agencies responsible for both Standards and
Sanitary and Phyto-Sanitary measures could be improved further by information sharing of best
practices and success stories within the sub region.
56
Southern Africa Customs Union (SACU)
In December 2016, the Trade and Investment Hub submitted a revised action plan for the
conduct of time release studies at two border crossing points in conjunction with three Customs
administrations - Botswana, Namibia and South Africa. In February 2017, the Trade and
Investment Hub met with the SACU Deputy Director of Trade Facilitation and learnt the time
release study program was delayed until 2018 to allow for other prioritized activity to be
pursued.
Botswana
In Botswana, the Trade and Investment Hub met with the Botswana Unified Revenue Service
and the Customs Commissioner to discuss the “teething” problems being experienced with the
implementation of the new web-based Customs Management System, which had led to delays at
border crossings. Although the new paperless system provides valuable trade facilitation
measures such as the submission of declaration data at any time, payments can be made online,
and “pre-clearance” status can be determined prior to the arrival of the goods, the Customs
required three months to build up adequate goods inspection and Customs valuation data to
enable their risk assessment and price referencing utilities. The Customs Commissioner also
confirmed the request for technical assistance to continue with the legal confirmation to the
Customs and Excise Acts, and development of regulations for the Customs Act which was
scheduled to commence in April 2017.
The Trade and Investment Hub also met with the Botswana Bureau of Standards (BOBS) and
agreed in principle to host SPS/TBT strategic public-private sector roundtables on its premises
availing its conferencing facilities, and close working relationship with the SADC SQAM unit.
Lesotho
A diagnostic mission to Lesotho assessed the level of implementation of the articles within the
WTO Trade Facilitation Agreement (TFA), identified the enabling or economic reform activities
currently supported by other Development Partners, and identified constraints to trade. For
example, during the visit to the Maseru Bridge Border Post with the Lesotho Customs Service,
more than 60 trucks were queued up on each side, and the Customs Service said delays could be
reduced substantially if Customs staff could avail the use of mobile scanners to transfer data
directly into the ASYCUDA World database, and if the agricultural inspectors had
interconnectivity with the Customs Service when recording risks and inspection results.
Several recommendations were made for the Trade and Investment Hub to support the formal
linkage of the Trade Facilitation Needs Assessment through the Lesotho National Coordinating
Committee on Trade and the Lesotho National Trade Facilitation Committee, and to support
public and private sector dialogue of the WTO TFA and its requirements.
Malawi
The Trade and Investment Hub initiated a diagnostic study in Malawi to determine the
requirements for support to implement trade facilitation measures in the country. Consultations
with the border management public administrations and private sector associations and the
donor community in Lilongwe and Blantyre resulted in a formal concept notes for support to
establish an authorized economic operator program, commencing the first phase of concept
57
design and sensitization in May 2017, and for support to develop and maintain a Non-Tariff
Barriers database and to strengthen the monitoring mechanism.
Namibia
In February, more than 50 public and private sector stakeholders participated in a Trade and
Investment Hub-supported inter-ministerial workshop to confirm the structure of an operating
authority for Namibia’s National Single Window. Participants deliberated over fully
Government-funded options and the many possibilities offered through a Public Private
Partnership. U.S. Embassy Charge d’Affaires John Kowalski and Namibia’s Minister of Trade,
Industry and SME Development Hon. Immanuel Ngatjizeko opened the workshop, which
elicited contributions from several ministers and deputy ministers, and executive officers from
Namibia’s major trade and industry associations. The single window technology facilitates the
exchange of trade-relevant information between traders and government agencies, as well as
among government agencies, for obtaining permits and licenses, certificates and necessary
approvals. This reduces the time it takes to clear goods and reduces the costs of doing business.
The Trade and Investment Hub also met with the Trans Kalahari Corridor Secretariat (TKCS)
and the Walvis Bay Corridor Group (WBCG) in Namibia to discuss the potential development of
“backhaul facility” to ensure transporters spend less time on their respective corridors with
empty loads and marketing specific value chains to optimize usage of the corridors to Walvis
Bay port.
U.S. Embassy Charge d’Affaires John Kowalski speaks at the inter-ministerial workshop on Namibia's
National Single Window in February.
58
Namibia’s Minister of Trade, Industry and SME Development Hon. Immanuel Ngatjizeko opening the inter-
ministerial workshop on a National Single Window.
South Africa
Customs delegates representing the South African Revenue Service (SARS) advised of their
current plans to introduce Customs-to-Customs (C2C) data exchange protocols with the Serviço
Alfandegário de Moçambique. The Trade and Investment Hub learned the pilot was successful
and the two agencies intended to “go-live” in May 2017, and thereafter to extend the protocol to
the Lesotho Revenue Administration. The Customs delegates expressed their opinion that
extending the C2C protocols in the Southern Africa region are the most important trade
facilitation measures as they provide the linkages for strengthened risk management models, for
pre-arrival clearances, and reciprocity of regional authorized economic operator information.
Zambia
The diagnostics study to clarify the Zambian government's requirements for support to trade
facilitation and enabling environment initiatives was conducted, during which mission the
Trade and Investment Hub supported the “Back to Work 2017 Networking Breakfast." The event
facilitated discussion of the high costs of doing business in Zambia, the lack of locally produced
products in the market, and the need to create a conducive environment for trade in Zambia and
take full advantage of Zambia’s position as a transit hub in the region.
The Permanent Secretary for Commerce, Trade and Industry, Madame Kayula Siame, expressed
her ministry’s commitment to implement Zambia’s Trade Information Portal in collaboration
with the Trade and Investment Hub. The portal will help ensure traders can access to
information and will promote transparency in the way trade is regulated in Zambia. In separate
meetings with officers from the departments of Foreign Trade, Planning, the Smart Zambia
Institute, and the Ministry of Justice, the Trade and Investment Hub’s EE&TF team sought to
59
kick-start the project following a diagnostic mission that was undertaken in late 2016. The Trade
and Investment Hub outlined an action plan including the eight critical stages of development
namely: inception, content collection and analysis of the cross-border trade compliance
regulatory information in Zambia, website specification and development, content formatting,
content uploading, website testing, and operational implementation, and as a consequence of
support to content analysis identified that almost all imports and exports of agricultural
commodities face restrictions with the requirement for Zambian government permits. The
technical assistance continues with the first and second phases, and will shortly support public
and private sector dialogue sessions to enhance awareness of the concept for the Trade
Information Portal and to learn of the private sector’s expectations.
Four Zambian customs brokers and freight forwarding associations may merge to serve as a
unified body and voice for the industry after discussing the idea with the Trade and Investment
Hub. Leaders from the associations have agreed, in principle, that they must combine their
organizations and believe that the new streamlined organization will be able to create a vibrant
customs broker/freight forwarding industry. The benefits include improved compliance by
customs brokers, importers, and exporters, and the potential for greater revenue collection by
the Revenue Authority. The associations and the Trade and Investment Hub are collaborating to
develop the approach, build consensus, and establish an implementation plan.
At the request of the Zambian Ministry of Finance and Ministry of Commerce, Trade and
Industry, the Trade and Investment Hub commenced research activities prior to undertaking a
compliance audit of the Chirundu One Stop Border Post to provide actionable recommendations
to improve the flow of traffic and goods through this border crossing.
The Trade and Investment Hub’s Sanitary and Phytosanitary (SPS) specialist consulted with the
National Plant Protection Organisation (NPPOZM) in respect of the pest risk analysis that will
be required to be undertaken and formally notified to their counterpart agency of South Africa
(NPPOZA) to enable Zambian exports of sweet melons, chilies, peppers and avocados to comply
60
with South Africa’s phytosanitary import requirements. The Trade and Investment Hub will
continue to support the NPPOZM with the timely conduct of the risk analysis.
Analysis
On 22 February 2017, the WTO Trade Facilitation Agreement (TFA) entered into force. “The
Agreement on Trade Facilitation is a defining multilateral achievement of our time,” General
Council Chair Ambassador Harald Neple (Norway) said. “It is practical, modern and global and
it symbolizes the essence of the WTO: members from all corners of the globe coming together,
overcoming differences and responding to pressing trade issues for the benefit of all,” he said.
The chair called on members who have not yet ratified the TFA to do so soon and to deposit
their instruments of acceptance. All members, the chair added, must work together to fully
implement the Agreement.
The following table reflects the status of Trade and Investment Hub-focus Member States’
commitment to the WTO TFA:
Botswana Notified category A only Ratified May 2015
Lesotho Had not notified Ratified January 2016
Malawi Notified categories A, B, C Had not ratified
Mozambique Notified categories A, B, C Ratified January 2017
Namibia Notified category A only Had not ratified
South Africa* Had not notified Had not ratified
Swaziland Had not notified Ratified November 2016
Zambia Notified categories A, B, C Had not ratified
The Trade and Investment Hub learned the South Africa government had in fact completed both
the ratification and the categorization of their commitments, but has not yet submitted the
formal protocols to the WTO TFA facility.
During this second quarter, it became more apparent that several Member States continue to
rely on mineralization and customs revenues to sustain their economies, and lack robustness
and flexibility in their trading schemes.
Another negative aspect noted was the imminent closure and non-activation of some
development partners’ programs for support to regional trade facilitation measures, which
indicates there will be a gap in development partner funds to support the “soft” measures.
The discussion among SADC and development partners on the realization that corridor-based
interventions, both “hard” and “soft,” should be relative to the prioritized regional value chains
may not resonate with the Member States who view the investment in border crossings and the
like as a contributor to future government revenues.
Outside of South Africa, the private sector is still “hungry” for the opportunity to learn of the
trade facilitation measures that may benefit their SME organizations, and the associations are
requesting support for capacity building efforts for advocacy and pro-business opportunities.
61
The transport and logistics sectors in the Member States outside of South Africa are struggling
to compete with their South African and regional East African counterparts, although several
Corridor Management Secretariats are striving to achieve economic gains for the users of their
corridors by proposing to partner with the Trade and Investment Hub to identify “back-haul”
opportunities and the like.
The Trade and Investment Hub’s EE&TF team believes the key to achieving progress in the
trade facilitation arena is for “communication, communication and more communication.”
Having an “ear to the ground” and participating in focus groups of relevance to both public and
private sector stakeholders are critical.
62
Strategic Partnership Capacity Building and Fund

Associations throughout Southern Africa have hundreds of business members and each
cooperative represent thousands of farmers. By strengthening these associations, alliances,
federations, the Trade and Investment Hub can amplify USAID’s impact; these entities are key
to reaching Life of Project targets, including delivery of new technologies and people trained.
Associations provide key services to their member including advocating a unified voice to
government, providing access to information to assist in growing and improving businesses, and
assisting business with promotion, branding and visibility.
The Trade and Investment Hub will:
• Strengthen internal systems and operations of partner associations to support their

memberships and assist the Trade and Investment Hub in meeting targets
• Ensure associations and cooperatives have adequate strategies, systems, procedures and
sustainability plans
The Strategic Partnership Fund, like Association Capacity Building, is a tool to support the four
technical components in reaching the Life of Project Results. In addition to technical assistance
and the direct support of trade-related activities specified in the workplan and Activity Fund, the
Southern Africa Trade and Investment Hub may provide Grants Under Contract (GUC) through
the project’s Strategic Partnership Fund. The overall objective of the Strategic Partnership Fund
is to further goals and impact of Southern African Trade and Investment Hub by supporting
interventions with matching funds that can catalyze rapid and inclusive growth in the Southern
Africa Trade and Investment Hub project, across all program components. Beneficiaries will
include industry associations, Medium, Small, and Micro Enterprises (MSMEs), cooperatives,
civil society and other entities. By building sustainability through technical assistance and
matching grants to these beneficiaries, the reach of the Trade and Investment Hub’s assistance
can continue beyond the life of the project. The Strategic Partnership Fund will focus primarily
on opportunities which:
• Accelerate intraregional agricultural and consumer goods trade and exports to the
United States and global markets
• Facilitate provision of processing and grading equipment
• Mitigate risk and facilitate private sector technology transfer regionally as well as
international transfer and adoption of new technologies
• Support cluster development and regional industry association capacity building towards
• Facilitate increased level of international certifications, new technologies and capital
equipment upgrading resulting in increased international competitiveness
• Leverage private sector investment to facilitate greater regional and international trade
Key Results
The Trade and Investment Hub conducted capacity assessment of 45 Associations in seven
sectors in seven countries: Botswana, Lesotho, Malawi, Namibia, South Africa and Swaziland.
These were combined with the five surveys conducted in Zambia and South Africa in the
previous quarter. Summaries of the questionnaire were created and distributed to the Trade and
Investment Hub’s technical component teams to allow them to understand the capacity of the
various associations. After the surveys and summaries were completed, the team analyzed the
quantitative survey data and evaluated the different associations’ reach (to members and
63
industry) and sustainability (financial and management) and plotted this data on the graph
below. The team further analyzed the data to assess key findings, present themes across
technical sectors and countries and researched best practices for industry associations. This
information was presented remotely at the workplan review session in Pretoria.
Organizational capacity assessments allowed the Trade and Investment Hub to identify associations most able and
likely to achieve program impacts.
The surveys identified strengths and weaknesses or the associations as they related to
Membership, Marketing, Finances and Management to determine “Reach” (Membership and
Marketing) and “Sustainability” (Finances and Management).
The Grants Manual was submitted to USAID on January 12, 2017 and was approved February
23, 2017. Annex 13.
The Trade and Investment Hub Annual Program Statement (APS) was drafted as well as specific
criteria for Strategic Interventions for USAID review. Annex 14.
The Strategic Partnership Fund team is preparing for a series of information sessions in the
following locations to introduce the Trade and Investment Hub, outline the strategies and
guiding principles of the Strategic Partnership Fund, and detail application procedures for
companies, entrepreneurs, associations, and other potential partners who may or may not be
familiar with application process for USAID funding.
Analysis
• Based on the Association Capacity Building surveys, key findings include:

• Opportunities exist to strengthen national level associations by forming regional
partnerships
64
• Some established associations with large membership numbers have questionable

impact and services to those members
• Smaller associations can have dependency on single dynamic leader with little/no
succession planning
• Need to diversify revenue streams beyond donor financing
• Need to strengthen program monitoring and evaluation within associations
• Even well-staffed, well-equipped local branches do not reach sufficient numbers of
remote and rural farmers thereby increasing the reliance on the informal market
• Fragmentation in transportation and logistics leads to problems with industry groups
speaking in a single voice
• Opportunities exist to increase scalability of associations for regional exports. The table
below presents the findings of the survey by sector.
65
Sector Associations Opportunity for Regional Partnerships Overarching Trends

Accessories Cape Town Fashion Council SWIFT training modules could be used Lack of funding is a significant problem for
and Apparel throughout the region associations dependent on national
SA Fashion Council
government funding and/or membership dues
Possible collaboration of associations across
Apparel and Textile Association of
borders to address transportation barriers Lack of significant industry interest
SA (ATASA)
Swaziland Fair Trade (SWIFT)
Lesotho Industrial Employers’
Association (LIEA)
Agriculture Malawi: ACE, FUM, NASFAM, Improvements to M&E systems utilizing best Lack of Access to Finance.
and OSTWG, HIMACUL practices/regional trainings/regional standards
“Side-selling”/informal market remains a
Agribusiness
Namibia: NAU, NNFU Leverage SACAU for access to regional data significant barrier to structured financing and
attracting buyers
SA: AFAB, SACAU, SAMAC, SAGIS/ZAGIS potential partnership
Subtrop Inflated membership #s
Swaziland: SWIFT, WFF Difficulty accessing active members/showing
value add
Zambia: GTA, ZNFU
Storage and transport logistics are barriers to
market access
66
Specialty Malawi: OSTWG, HIMACUL Develop a regional selling platform to increase Export barriers with scalability; industry is
Foods and opportunity for international exports small
Mozambique: AICAJU
Dried Foods
Training to achieve compliance with bureau Leadership has technical capacity, but needs
SA: Subtrop, SAMAC
standards/licensing requirements assistance with outreach to members,
especially with post-harvest production,
packaging and sales
Finance Malawi: ACE, FUM, NASFAM, Assist structured financing. Technical assistance needed for structured
OSTWG, HIMACUL financing schemes
Expand warehouse receipt systems
Namibia: NAU, NNFU Storage space constraints for commodity
Assist in supporting creation of NASIA with
exchanges
SA: AFAB, SACAU, SAMAC, ASISA
Subtrop Cold chain / transportation constraints for
Commodity Exchanges
Swaziland: SWIFT, WFF
Zambia: GTA, ZAMACE, ZNFU
Transportation Lesotho Freight Forwarders Possibility to link associations across borders Duplication of efforts and association overlap
and Logistics Association for a common goal, although fragmentation of limits ability to address government as “a
associations presents a challenge single voice for industry”
Malawi: CILT
Lacking industry desire to create stronger and
Namibia: NATA, NLA, WBCG
in some cases more formalized associations
SA: CILT, Confederation of
Supply Chain Associations,
SASTA
67
Women AWEP Chapters (Pan Africa, Regional AWEP networking platform AWEP membership is extremely small; most
Entrepreneurs Zambia, Botswana, Namibia, chapters need to be re-constituted
SATIH can function as cornerstone for AWEP
and Exporters Malawi)
in the region Some non-AWEP groups have strong
SA: BWASA mentoring programs
Successful mentoring programs could
Swaziland: SWIFT, Women’s potentially be duplicated
Farmers Foundation
Multi-sectoral Botswana: Business Botswana, Potential for improving effective services for Diversity of industry with competing interests
American Business Council of members based on regional and international limits ability to advocate on behalf of
Botswana (ABC) best practices industries in many instances
Association of Lesotho Employers Large reach with limited depth in services for
and Businesses (ALEB) members
Namibia: Namibia Trade Forum Monitoring and evaluation of training impact is
(NTF), Namibia Chamber of limited or nonexistent
Commerce and Industry (NCCI),
Overly reliant on donor funding
Economic Association of Namibia
(EAN) Strong ties to regional and national
government but not necessarily at provincial
NEPAD Business Foundation
level
Zambia Association of
Local level chambers appear to be weak with
Manufactures (ZAM), Zambia
limited support from national level
Chamber of Commerce and
Industry (ZACCI)
68
From a regional sectoral perspective, the Accessories and Apparel associations, by in large, were
too reliant on regional/national government funding or membership dues and had little
financial support from industry. Although there were exceptions (e.g. Swazi Fair Trade), most
had no mechanism to generate revenue from program activities which lowered their overall
sustainability scores.
The agriculture and agribusiness associations, and specifically the Farmers’ unions tended to
report inflated numbers that were difficult to verify and called into question their real “on-the-
ground” impact. Their members lacked access to financing and transportation and logistics were
significant barriers to market access.
The Specialty and Dried Foods associations suffered from export barriers due to scalability
issues. Several of the associations had excellent in-house technical resources but scored
relatively poorly on communicating their value to members. In Malawi, the associations could
use technical assistance to reach out to members on post-harvest, processing, packaging and
sales.
We found that several of the financial associations could use technical assistance to developed
structured financing schemes. Storage space was an issue for commodity exchanges as well as
cold chain/transportation.
In South Africa, the transportation and logistics associations were highly fragmented with little
industry interest in creating a federation for a stronger force. The associations appeared to be
highly competitive with one another, with most of them claiming to be the leader in the
transportation space. Logistics organizations in Namibia were fragmented as well with one
group servicing the large and established companies and the other servicing small holder and
medium enterprises. There was little coordination between the groups. In Lesotho, the primary
organization was very loosely organized and minimally effective with a low sustainability score
despite the need for a strong voice due to border crossing constraints.
The women entrepreneurs and exporter associations were mixed. In most cases AWEP chapters
were dormant or extremely small, although the opportunity exists to reconstitute them with
solid regional support through the newly established Pan Africa AWEP. Other associations,
including the Businesswomen’s association in South Africa had excellent mentorship program
that could be replicated and substantial databases that were largely underutilized.
Finally, the multi-sectoral associations across all countries tended to be relatively weak with
respects to outreach and impact with members. Although they tended to have good relationships
with government at the national and provincial level, they lacked influence at the local level. In
addition, although their membership reach was extensive they lack depth due to competing
priorities among members. By in large, most of the associations were heavily reliant on donor
funding for operational as well as programmatic activities, calling into question their long term
true sustainability.
When analyzing the survey data, certain survey constraints became apparent. Specifically, the
survey did not assign a score for diversity of funding or for leadership succession planning. Both
elements are important to try and gauge the relative sustainability of an organization. An
association that is overly reliant on donor funding should be assessed as less stable than one that
has a multitude of revenue streams from membership, services, sponsorships, etc. Likewise, an
69
association that is run by a single dynamic leader without clear succession planning is at risk of
deteriorating or suffering setbacks if a leadership “bench” hasn’t been established. This later
issue was observed at a relatively strong association, Swazi Fair Trade: last year the organization
went through four managers. As a result, revenues suffered and prior leadership had to be
brought back in to get the organization back on track. When analyzing the data, the surveyors
adjusted the association’s overall sustainability score based on information gained through the
interviews.
Two survey additional constraints were identified, but scores were not adjusted. Specifically,
although the survey did ask questions to gauge the effectiveness of services provided by the
association, the answers to the questions were insufficient to gauge effectiveness. This is a
weakness that should be addressed in future versions of the survey. Finally, the survey did not
allow for the opportunity to note if the surveyor felt the membership numbers were inflated. In
our overall analysis by association, notes were made if the membership figures provided were in
doubt.
We found significant research on best practices for associations. Although most of the best
practices listed below were common sense, significant research exists on how to implement best
practices that could be utilized when working with target associations. The best practices
identified are:
• Joint membership at local and national level or national and regional level can
strengthen membership numbers, expand reach of programs and “voice” of community
• Board and existing CEO should include succession planning in strategic plan – nearly
70% of nonprofits do not have a formal succession plan
• Education and certification, the third-largest source of revenue for associations and a
revenue diversification possibility for the Trade and Investment Hub – while
membership dues are decreasing as a % of revenue worldwide
• Membership renewal can be motivated through phone calls, social media and surveys of
members who dropped membership
• Tiered membership can help convert “free rider” members into paying members
• Long-standing associations can have tendency to strategize based on organizational
structure instead of more dynamic and changing member needs - broad based
associations can become more effective by segmenting members and targeting each
group’s unique challenges
• Maximizing membership data analysis can assist in goal setting, increasing membership,
increasing revenue and improving outreach
The next steps for capacity building will be for the teams to identify the first and second tier
associations preferences. At that point, the questionnaires and issues summaries will be
consulted and a capacity development plan will be created to address known deficits that could
impact outcomes. Finally, assistance will be given to address those known deficits to ensure that
overall strength of the selected associations.
The analysis of the Association Capacity Building Survey has also gone into planning for the
launch of the Strategic Partnership Fund. The key findings have provided a landscape of
opportunities and challenges for grants to associations. Survey results are also being fed into
the Trade and Investment Hub baseline survey.
70
Upcoming Activities and Events 2017
Special Events
Date (s) Event title Location
May 16-18 Trade and Investment USAID and 3-Hub Pretoria, South Africa
Workshop
June 14-16 Corporate Council for Africa Summit Washington, DC
Date (s) Event title Location

Agribusiness and Trade
April 26-29 Agritech Expo Lusaka, Zambia
May 15 SAGNET Steering Committee meeting Pretoria, South Africa
May 15-19 SADC Ministers of Agriculture and Food Security Gaborone, Botswana
Meeting
Export Competitiveness
April 16-28 Specialty Foods Sourcing Mission (by Try The Johannesburg, Cape Town
World) (Specialty Foods) (RSA), Lusaka (Zambia),
Mbabane (Swaziland)
May/June Pre-Fancy Food Preparatory workshop (Specialty Cape Town

Foods)
June 25 Summer Fancy Food Show New York City

June SAITEX/AB7 (Specialty Foods) Midrand, South Africa
May 7-9 Hostex Food & Hospitality Africa 2017 (Specialty Gallagher Convention Centre,
Foods) Midrand, South Africa
May 21-23 Buyers Mission – Apparel/Accessories Lesotho, South Africa

August AGOA Forum Lome, Togo
September 18-21 ACA Annual Cashew Conference & Expo 2017 Cotonou, Benin
(Specialty Foods/Cashew)
September 25-29 Origin Africa (Apparel) Mauritius
October 7-11 Anuga Food Fair (Specialty Foods) Koelnmesse, Cologne, Germany
November SAMAC Annual Conference Nelspruit, South Africa
TBD Macadamia Assessments - Malawi, Mozambique, Malawi, Mozambique, Swaziland,

Swaziland and Zimbabwe (Specialty Foods) and Zimbabwe
TBD Post Events Follow up Meetings Johannesburg, Cape Town,

Lusaka, Swaziland
(Gulfood/Sourcing Mission + Fancy Food)
(Specialty Foods)
71
Finance and Investment
April 24 Bank capacity-building for WR finance scoping Lilongwe, Malawi

exercise
May 1 Bilateral meetings between financier and Lilongwe / Blantyre, Malawi

agribusiness for rural warehouse investments
May 2-3 National Association of Securities Professionals Durban, South Africa

conference
May 4-5 World Economic Forum on Africa Durban, South Africa
May 3 -5 Africa Financial Services Investment Conference UK, London
May 8 NBM board approves first warehousing Blantyre, Malawi
investments under EIB-NBM credit line
May 8 Zambia WRS development support package Lusaka, Zambia

development
August 2017 Stakeholder Validation Meetings Lilongwe/Blantyre
April-June Horticulture operation onsite operation Namibia, Malawi
April-June Logistics investee review Mozambique
Strategic Partnership Fund
April 19, 2017 Strategic Partnership Fund Information Sessions Lusaka, Zambia
April 25, 2017 Strategic Partnership Fund Information Sessions Maputo, Mozambique
April 27, 2017 Strategic Partnership Fund Information Sessions Blantyre, Malawi
May 10 Strategic Partnership Fund Information Sessions Gaborone, Botswana
May 23 Strategic Partnership Fund Information Sessions Windhoek, Namibia
May 25 Strategic Partnership Fund Information Sessions Maseru, Lesotho
May 30 Strategic Partnership Fund Information Sessions Johannesburg, South Africa
Enabling Environment and Trade Facilitation
April 9- May 7 Review excise legal provisions and consolidate Botswana and Namibia
and form an Excise Act
April-May 2017 Continue technical assistance to development of Zambia

the Trade Information Portal
April 1-22 Complete the compliance audit of the Chirundu Zambia

OSBP
April 21-May 22 Initiate the ‘time’ baseline study Pretoria
April 22- May 7 Trade Facilitation: Excise Tax Review
April 23-May 1 Technical assistance to the Development of the Namibia

National Single Window
72
April 24-25 Support to USAID ANSI TBT training Zambia
April 24-28 Create awareness for private sector of AGOA and Lesotho
compliance thereof; and trade facilitation
measures
April 28-May 11 Trade Facilitation technical assistance Zambia
May 1-19 Technical assistance for the confirmation of SADC Pretoria & Botswana
TIFI priorities for SATIH support
May 3-6 Build advocacy capacity and building regional Botswana

links among women’s business organizations
May 3-19 Technical assistance for the compliance Botswana

assurance of the functionality specification the
National Single Window
May-June Create awareness for private and public sectors of Zambia

the Trade Information Portal and trader’s
expectations for access to information
May 16-20 Facilitate reduction of reported SPS and TBT- Botswana

related non-tariff barriers
May 23-June 30 Improve SPS border inspection procedures Zambia – 12 inspections sites
May/June 2017 Review Customs legal provisions and develop the Botswana and Namibia
Customs Regulations framework
mid-May to mid- Initiate the ‘cost baseline study Pretoria, and regional
August
May/June 2017 Technical assistance to the introduction of an Malawi

authorized economic operator program
73

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SOUTHERN AFRICA

USAID Southern Africa Trade and Investment Hub

USAID Southern Africa Trade and Investment Hub

Contract No. AID-674-C-16-00004

ACE Africa Commodity Exchange (Malawi)

USAID/Southern Africa RDCS Sub-IR 1.2.1: Increased value chain competitiveness

6 Number of policies completing the Custom Process/Step; Policy area; 0 2 0

8 Value of loans Custom Loan recipient sex; loan 0 $5 mil 0

12 Number of public-private partnerships Custom Partnership focus; Country 0 7 0

• Increase value chain competitiveness

AGOA Capacity Building

Strategy, Action Plan Workshops, Committees

Botswana Complete – launch in April Nov 2016, Jan, March 2017

Malawi Updating Planned

Mozambique In development June 2017

Zambia In development Jan 2017

Lesotho Jan 2017

South Africa Jan 2017

Apparel and Textiles

Specialty and Processed Foods

DRAFT April 2017

Finance and Investment

Financial Sector Strengthening

• Conduct a market analysis to define opportunity, understand which sectors / industries

• Funding: support in identifying preferential funding partners in the form of donor,

Policy enabling environment / Financial sector strengthening

• Promotion of a coherent and transparent investment environment

1). Secure formal

Support of financing platforms/vehicles

• Approved: SADC Regional Agricultural Investment Plan in March 2017.

Warehouse Receipt Finance (WRF)

Increasing investment into the region: Investment

• Transaction team set up the Investment Facilitation platform

Capital Map Analysis

Figure 2: Capital Map list

Interest in frontier markets Bandwidth constraints Post-investment planning

Malawi, Zambia, and Firms investing in the US$2m Post-investment planning is

Total Number of Transactions by Country

Transaction Value by Sector Transaction Number by Sector

Enabling Sectors,… Enabling

Transaction Size (US$m) Sector Month added 1 Country

Figure 8: Zambia Microfinance transaction currently receiving Hub Support

Sector Financial Services Regional Trade Creates cross-border trade

chain analysis, the investee could

DRAFT April 2017

DRAFT April 2017

Enabling Environment and Trade Facilitation

NTBs Reported (%)

15% Infrastructure and

Southern Africa primary trade and transport corridors

SADC Infrastructure and Services Directorate

Strategic Partnership Capacity Building and Fund

• Strengthen internal systems and operations of partner associations to support their

• Based on the Association Capacity Building surveys, key findings include:

• Some established associations with large membership numbers have questionable

Sector Associations Opportunity for Regional Partnerships Overarching Trends

Upcoming Activities and Events 2017

June 14-16 Corporate Council for Africa Summit Washington, DC

Date (s) Event title Location

April 26-29 Agritech Expo Lusaka, Zambia

May 15 SAGNET Steering Committee meeting Pretoria, South Africa

May/June Pre-Fancy Food Preparatory workshop (Specialty Cape Town

June 25 Summer Fancy Food Show New York City