Private Enterprise Programme Zambia

Zambia Business Growth Fund

Application pack

Contents:

Guidelines: Concept Note Applications [p2]

Concept Note Application Form [p5]

Frequently asked questions [p11]

Funded by

Zambia Business Growth Fund
APPLICATION PACK

Private Enterprise Programme Zambia

ZAMBIA BUSINESS GROWTH FUND

Guidelines: Concept Note Applications

1.Introduction

The Zambia Business Growth Fund (ZBGF or “the Fund”) is an initiative of Private Enterprise Programme-Zambia (PEPZ), which is funded by UKaid from the British Government. The Fund promotes private sector investment, job creation and/or value addition. The Fund, with an emphasis on improved use of technology andimproved workforce skills, is designed to:

1)Incentivise or strengthen value-adding business partnerships between private-sector“anchor firms”[1], SMEs (small or medium enterprises), and/or a large number of micro-enterprises (viaengagement with a business association, for example),and

2)Co-finance profitable investment projects – in the form of matching grants – that deliver increased profits to the anchorfirm itself (or consortium of partners, if relevant), but also result in wider, positive economic impacts for SMEs and microenterprises within relevantsupply/distribution chains.

2.Target sectors

The Fund has three focus sectors:

  1. Food and agriculture;
  2. Mining and mining services; and
  3. Tourism and hospitality.

Cross-cutting investment projects that spanmore than one sector will also be considered (e.g. investment projects in information communication technology or financial services).

3.Fund focus and goal

The Fundseeks to co-finance investment projectsthatinnovatively address the following goal:

Enhanced ability for SMEs to access markets and sell their goods/services through improved use of technology and/or upgraded worker skills, leading to stronger and more sustainable business linkages.

In other words, investment projectsshould have an element of upgraded technology or workforce skills development that leads to improved enterprise performance and business linkages between firms involved inthe relevant value chain. Investment projects that create or sustain jobs orresult in other tangible economic benefits for marginalised[2] Zambiansare particularly attractive.

Aspects of successful investment projectsmay likely include:

  • Improvedcapacity of SMEsthrough activities that deploy upgraded technology or improveworkforce skills, resulting in increased profitability, productivity and job creation.
  • Innovative approaches, ideas, products or services that may not normally be financed through commercial financing routes.
  • A reasonable likelihood of broader market development (i.e. growing the relevant market directly and providing a demonstration effect that others may follow).
  • Ultimate benefits for poor and/or other marginalisedpopulationsin Zambia – particularly women, young people, people with disabilities, and those living in rural areas.
  • No (or minimal) negative impacts on competing businesses; no negative environmental impact (and where possible,environmental improvements); and good business integrity practices.
  • Where possible, formal partnerships between the anchor firm, SMEs, and/or microenterprises (the consortium) where there is a sense of shared endeavour and where all share in the rewards of the partnership.

4.Available funding

Available grants range from a minimum of ZMW1,250,000 up to ZMW4,000,000. The grant amount requested must be at least matched by the applying firm(s). Proposals in which the applicant(s) invests more than the amount of grant requested will be particularly attractive.

NB: All proposed investment projects must be completed by the end of February, 2019.

5.Eligible applicants

The lead applicant(i.e. the anchor firm) must be a private sector or for-profitenterprise that is either registered in Zambia or is externally registered, but with legal investments in Zambia. This includes: private for-profit companies, joint ventures, partnerships, cooperatives, etc. The anchor firm should be an established business. Start-up businesses may be consideredas consortiumpartners, but only in exceptional cases where there is demonstrated evidence of credible and experienced investors and a solid management team; start-up businesses cannot be the lead applicant.

While not a requirement for funding consideration, the Fund encourages anchor firm applicants to formally partner with SMEsor a large group of micro-enterprises (through an association, for example). In all cases, the lead applicant remains responsible for project implementation and must be able to demonstrate that the partnership of SME/micro-enterprise partners has been obtained.

6.Making an application

The Fund has a two-step application process.

  1. Concept Note: The first step is a light-touch process where applicants submit a brief concept note to a) demonstrate their eligibility for funding and b) outline how their proposed investment projectaddresses the Fund’s goal. The concept note application form (Annex A) includes guidance. Applicants are also advised to read the Frequently Asked Questions document(Annex B).

Before submission, applicants are encouraged to contact the PEPZ team to discuss your applicationand general concept (See section 9 below).

Upon submission, the concept note will be reviewed by the PEPZ team.If accepted, the organisation will be invited to the second step of the process.

  1. Full Proposal: The second step requires the completion of a detailed proposalwith information on:
  2. how the project will be implemented;
  3. activities and proposed timelines;
  4. how the project will address the Fund’s goal;
  5. how it will impact SMEs and marginalisedsegments of Zambian society; and
  6. a detailed financing plan to understand how costs will be shared between your company (or the consortium) and the Fund. A template will be provided at this second step.

During the second step, the PEPZ team will a commission due diligence process of the lead firm, and possibly its SME partners. The full proposal along with due diligence findingswill be reviewed by the PEPZ team and an independent sector expert before being considered for final funding approval by DFID.

7.Rolling application process

Applications will be accepted and assessed on a rolling basis with a final deadline of 30 April, 2018. However, the Fund will close when the available budget has been fully committed. Applicants are encouraged to submitan application as soon as possible.

8.Submitting applications

Completed concept notes can be submitted to . The PEPZteam will acknowledge receipt of your concept note, advise when the assessment of your concept note will likely be completedand when you will be notified of the outcome. Assessment of concept notes will normally be completed within a two-to three-week period.

9.Inquiries

All enquiries related to the Fund should be directed to either orthe office at+260 211 259 974.

Funded by

BR 210318Page | 1

Zambia Business Growth Fund
APPLICATION PACK

ANNEX A:

Zambia Business Growth Fund:

Concept Note Application Form

  1. Investment Project details

Project Title / Start Date
Sector / End Date
Project
Location(s) / Duration (months)
Lead Company (anchor firm) / Grant requested (ZMW)
Partner(s) / Total Project Budget (ZMW)
  1. Investment Project Summary

Investment Project objectives / What is the investment project trying to achieve?
Investment
Project approach / How will the investment project achieve its objectives? (e.g. activities to be undertaken, etc)
Fund Alignment / How does the project address ZBGF’s focus on improving SMEs’ capacity and market access through technology and/or skills development?
Business alignment / Why do you want to implement the project? How does the investment project fit within your existing business? How do the business incentives for the lead firm align with those for its consortium partners (if relevant)?
  1. Innovation

What is the innovation of the proposed investment project?
NOTE: The Fund defines innovation in a broad sense to include: i) a new approach, idea, product or service ii) an approach, idea, product or service that has not been applied for the sector in question in Zambia; or iii) service or business model being introduced to the SME/microenterprise target group(s), through an approach which has not been tried before.
  1. Outcomes and Impact

SMEs and/or microenterprises / a)Number of SMEs/microenterprises to directly benefit from the investment project:
b)Type of benefit (for each type of SME/microenterprise):
Consider
Increased revenues
Increased sales
Penetration of new markets
Improved efficiency of participating SMEs
Other
Explain the benefit (where possible, please estimate monetary increases)
Lead Applicant / a)Type of benefit:
Consider
Increased revenues
Increased sales
Penetration of new markets
Improved efficiency of participating SMEs
Other
Explain the benefit in more detail (where possible, please estimate monetary increases)
Poor and marginalised people /
  • Number of SMEs jobs created/sustained (% female)
  • Estimated monetary value of SME jobs

  • Number of Lead firm jobs created/sustained (% female)
  • Estimated monetary value of SME jobs

  • Number of households with Increased livelihoods from supplying to SMEs
  • Estimated monetary value of increased livelihoods

Description of any other benefits to marginalisedgroups
(Note: PEPZ definition of marginalised people includes: women; young people; people with disabilities and those living in remote areas)
  1. Rationale for co-financing

Why are you seeking co-financing for your project?
Please address the following the questions:
  • Would the project / SME linkage take place at all without ZBGF financing?
  • Why have you not been able to raise the required financing from other sources?
  • Would the project take place on a different scale or address a different target group without ZBGF financing?

  1. Estimated Project Budget

  • Only preliminary estimates required. This section should break down the cost-sharing arrangements between partners and show the funds requested from the ZBGF. The applicants should, wherever possible, only provide broad categories (such as cost for management, monitoring and evaluation, equipment and inputs, product development, etc.) and use the basic format provided.
  • Please note that while the minimum contribution from applicants is 50% of the project’s eligible costs, preference will be given to those contributing a higher percentage.

Project Items Requiring Funding, by Broad Category / Source / Investment Amount for the Project (in ZMW)
1. Category / Anchor firm investment
Consortium member(s) investment
ZBGF Contribution
2. Category / Anchor firm investment
Consortium member(s) investment
ZBGF Contribution
3. Category / Anchor firm investment
Consortium member(s) investment
ZBGF Contribution
Total Contribution / Anchor firm investment
Consortium member(s) investment
ZBGF Contribution
  1. Lead Firm Certification

Lead Firm Details (Anchor firm)
Name
Address
Date company established
Country incorporated
Type of organisation / E.g. for profit company, partnership, joint venture, etc
Registration number / Registration certificate attached
Company Representative
Name
Position
Address
Email
Telephone
Acceptance of terms and conditions
By signing this form, the applicants accept the following terms and conditions:
  • The applicant accepts that we are bound by the process and rules of the competition that have been highlighted in the ZBGF Guidelines and FAQs and shall accept the outcome of the process without any deviation or reservation.
  • The applicant shall bear all costs related to the preparation and submission of the proposal, regardless of whether its proposal is selected or not. We accept that neither ZBGF, the PEPZ Programme nor its implementing donor, DFID, shall in anyinstance be responsible or liable for those costs, regardless of the outcome of the process.
  • The applicant accepts that ZBGF, through the PEPZ programme, determines the level of responsiveness to an application exclusively on the contents of the written application forms.
  • The applicant accepts that information relating to the examination, evaluation, and comparison of applications to this Fund, and recommendation of contract award shall not be disclosed to you or any other person not officially concerned with such processes.
Signature:......
Name: ......
Date: ......
  1. Partner organisation details (if relevant)

Partner 1
Name
Address
Date company established
Type of organisation / SME
Other for-profit organisation
Other (please specify)
Partner 2
Name
Address
Date company established
Type of organisation / SME
Other for profit organisation
Other (please specify)
Partner 3, if relevant
Name
Address
Date company established
Type of organisation / SME
Other for profit organisation
Other (please specify)

Funded by

BR 210318Page | 1

Zambia Business Growth Fund
APPLICATION PACK

ANNEX B: FREQUENTLY ASKED QUESTIONS

ELIBIGILITY REQUIREMENTS OF APPLICANTS:

Who can apply?

Applications must be led by a private sector firm. Implementation of the proposed project – through a consortium – could be supported by other private sector organisations or non-governmental organisations (NGOs).

Can a new or start-up firm apply?

The main applicant (i.e. the anchor firm) cannot be a start-up firm. Start-up firms may consider start-up firms as members of a consortium only in exceptional cases where there is strong evidence that the new company has credible and experienced investors and management team.

Can a foreign firm, or foreign joint venture, or multinational company apply?

Yes, as long as they have a legally registered entity in Zambia.

Can a government agency apply for the Fund?

No. Applications should be made by private sector firms.

Can an NGO apply for the Fund?

An NGO cannot be the lead applicant. NGOs can be part of consortia.

Can an individual person apply?

No. All applications must come from a registered company.

What financial capacity do applicants need?

Private sector firms that apply to the ZBGF must be able to demonstrate their capacity and financial strength, and must also be able to contribute a minimum of 50% of eligible project costs (in cash or eligible assets at fair value). In-kind contributions will be acceptedonly on a very limited basis where major assets are put into productive use; the significant majority of applicant contributions must be in cash, and in-kind contributions will be stringently reviewed.

Does my project need to be innovative?

Yes, there needs to be some innovative aspect to the investment project.

How do we define innovation?

The ZBGF views innovation in a broad sense including: i) a new approach, idea, product or service that will be deliver benefit to the proposed consortium and its SMEs; ii) an approach, idea, product or service that has not been applied for the sector in question in Zambia; or iii) service or business models being introduced to the target group of SMEs through a linkage which has not been tried before. If you have questions about this, please contact PEPZ for clarification.

What other eligibility criteria must applicants meet?

Eligibility criteria are defined within the Guidelines. All applicants must also prove their legal status and tax compliance, including office address, telephone number, company registration number and tax code.

I am still not sure if I am eligible to apply.

If you are unsure of your eligibility to apply, please contact PEPZ by telephone (+260 211 259 974) or or clarification and guidance.

ELIGIBILITY REQUIREMENTS OF PROPOSED PROJECTS:

What type of project is the Zambia Business Growth Fund looking for?

We are looking for projects that: i) are innovative; ii) demonstrate commercial sustainability, (iii) have high potential for growth and scale/replication, (iv) are realistic and feasible, and v) most importantly, should demonstrate how the benefits of the project will result in a much wider economic impact on other SMEs or microenterprises. If you think your project idea meets these requirements, we want to hear from you.

What is the challenge that companies need to address to increase the likelihood of funding?

The Zambia Business Growth Fund of the PEPZ programme will award grants to investment projects that we judge to successfully address (and competitively address, given other applications) the following goal:

Enhanced ability for SMEs to access markets and sell their goods/services through improved use of technology and/or upgraded worker skills, leading to stronger and more sustainable business linkages.

In other words, investment projects should have an element of upgraded technology or workforce skills development that leads to improved enterprise performance and business linkages between firms involved in the relevant value chain. Investment projects that create or sustain jobs or provide other tangible economic benefits for marginalised Zambians are particularly attractive.

What impacts is the ZBGF looking for?

ZBGF is looking for business-led investment projects that convincingly show high likelihood of significant impact with regard to:

  • Improved efficiency of participating SMEs leading to increased profitability and employment.
  • Minimised negative impact on competing businesses, and where possible, improved impact on the environment and poor ethical codes of practice.
  • Benefits to SMEs including:
  • Increased sales;
  • Penetration of new markets;
  • Increase revenues;
  • Greater employment creation for poorer income households and individuals
  • A significant number of SMEsand poorer Zambia households that will benefit from your investment
  • Demonstrated commercial sustainability

Are there any criteria for the number of SMEs impacted?

There are no fixed criteria, but we encourage firms to think of the most innovative way to impact a large number of SMEs/microenterprises. All other things being equal, firms requesting smaller amounts of grant money with higher impact will likely be more competitive for funding.

Must the proposed project be located in a particular location with a high proportion of poor residents?

ZBGF will consider proposed projects located in any part of Zambia. However, we will favour project proposals that are expected to have the greatest positive impact on SMEs and poorer segments of Zambian society.