Grant Contract for a Decentralised Programme s2

ANNEX II: TERMS OF REFERENCE

2014 Page 1 of 9 0658e77d7db73e42fb5561023b544659.docx (1) BACKGROUND INFORMATION

(a) Beneficiary country

St. Lucia

(b) Contracting Authority

National Authorising Officer 5th Floor, Conway Business Centre, Jn. Baptiste Street, Castries, Saint Lucia

(c) Country background

Under the 11th European Development Fund (EDF), the European Commission (EC) has earmarked EUR 5.33m for St. Lucia for a programme of Employment Generation through Private Sector Development. The identification phase of the programming of these resources have been completed, however, the EC has requested a more in-depth formulation including the preparation of a Concept Note and an Action Fiche.

St. Lucia’s economy was traditionally agriculture-based (bananas and other crops), however there has been a shift in focus to the tourism sector in recent times. Despite initial steady growth, the global financial crisis, coupled with drought, the devastating Hurricane Tomas and the Black Sigatoka disease have caused both industries to record slow growth. Fiscal debt is also on the rise showing an increase from 59.0 percent in 2006 to 68.5 percent in 2011.

St. Lucia’s real Gross Domestic Product (GDP) growth averaged 3.4 percent during the period of 2002 to 2006 but slowed to an average growth rate of 1.9 percent from 2007 to 2011. GDP growth during the initial period emanated from developments in the tourism sector, resulting in Foreign Direct Investment (FDI) inflows for tourism construction related projects and increase in stay over arrivals. GDP growth rate reached an all-time high of 9.0 percent in 2006 attributed to a flurry of activities associated with preparations for the 2007 Cricket World cup. The escalating global food and crude oil prices followed by the global economic crisis in 2008 impacted St Lucia’s performance leading to a decline in FDI inflows and tourism related construction projects. The country’s economic performance has since declined with real GDP growth rate of 1.0 percent recorded in 2011. Tourism, construction, financial intermediation, and wholesale and retail trades contribute a significant proportion to GDP with the agricultural sector performance declining over the period.

The contraction in economic performance during the 2007 to 2011 period has resulted in higher levels of unemployment emanating mainly from the tourism and construction sectors. Numerous policy measures were implemented to assist in alleviating the economic situation and to spur growth of the domestic economy. These measures included an increase in the personal income tax threshold, the implementation of the VAT and implementation of short-term job creation programmes such as Holistic Opportunities for Personal Empowerment (HOPE) and Short Term Employment Programme (STEP)

The recent adverse experiences of St Lucia’s economy have imposed major challenges going forward. St. Lucia’s growth potential over the short to medium term has been dampened by the slow recovery in the economies of its main trading partners in North America and Europe. St. Lucia has traditionally relied on these markets as a source of FDI inflows, tourism receipts and remittances. However, the slow recovery of these economies has reduced inflows to Saint Lucia’s economy with the resulting economic downturn and rising unemployment. The successful implementation of reform measures aimed at strengthening and diversifying the economy while achieving fiscal and debt sustainability remain the main policy challenges in Saint Lucia.

(d) Current situation in the sector

2014 Page 2 of 9 0658e77d7db73e42fb5561023b544659.docx The Government of St. Lucia (GoSL) has adopted a three (3) point plan for recovery focussing on job creation in the medium and short term; fiscal consolidation to increase revenues and reduce the deficit; and construction expansion to encourage investing in housing and construction aimed at further creating jobs. The services sector has been identified as a possible low cost but high return sub sector for pursuing economic growth given the relatively low capital investment, low footprint and high penetration capacity for Micro, Small and Medium Enterprises (MSMEs). With an estimated 70.0% of the working population employed by the private sector, it is expected that this sector will drive economic growth of the island by leveraging the characteristics that make it ready for rapid economic growth. Such growth must be fuelled by a skilled labour force, competitive product or service offering within a suitable policy and enabling environment.

The main problem identified in the services sector and which it is expected that the Programme will address directly is the decline in the competitiveness of MSMEs in St. Lucia, which has been linked to low levels of productivity and profitability. It is proposed that this be done through institutional strengthening of Business Support Organizations (BSOs), such as the St. Lucia Coalition of Services Industries (SLCSI), which in turn will render capacity building support to service sector MSMEs. The Programme will also target the improvement of the policy and institutional environment for investment and doing business in the country. The expected results are increased employment, productivity, profitability and competitiveness of service providers as a means of facilitating penetration into overseas markets.

Contributing to low productivity levels is a significant gap between skills of the labour force and those required by the firms which provide services to the domestic and export markets which is further compounded by a culture of non investment in employee training. This is compounded by growing real wage rates and the commensurate increases in the unit cost of production. The low utilization of technology combined with a heavy dependence on imported raw materials have also negatively impacted the unit cost of production. Also, impacting the lack of profitability of these MSMEs is the lack of access to and penetration in the global economy which would create opportunities for strategic alliances with global players, foreign direct investment and increases employment for the labour force.

ICT, Creative Industries and Health are identified in the Medium Term Development Strategic Plan (2012- 2016) as well as the National Export Development Strategy as critical to St. Lucia's sustained economic development and growth prospects. The GoSL intends to focus on providing the legal framework and secure access to support ICT development. While in the Creative Industries the updating of legislation with regard to intellectual property and the provision of copyright protection will be the areas of emphasis. Advocacy by health care and wellness professionals as well as links with the offshore medical school and the New National Hospital (funded largely by the EU) will form the basis of implementation strategies in the Health sector.

(e) Related programmes and other donor activities

A similar study will be undertaken concurrently to gather gender disaggregated data to determine the gender implications surrounding employment generation issues both from an employee and employer standpoint. It is important to understand how gender may adversely or positively affect the issues of productivity and to create programmes that can address this accordingly. Gender will remain a cross cutting issue for the Employment Generation through Private Sector Development Programme and thus it is imperative that baseline statistics will be used to accurately determine benchmarks and effectively monitor the success of this programme.

(2) OBJECTIVE, PURPOSE & EXPECTED RESULTS

(a) Overall objective

2014 Page 3 of 9 0658e77d7db73e42fb5561023b544659.docx The overall objective of the project of which this contract will be a part is as follows:

To contribute to overall economic growth and development of St. Lucia, through the improved competitiveness and productivity of the private sector, particularly the services sector.

(b) Purpose

The purpose of this contract is as follows: The design of an intervention Employment Generation through Private Sector Development.

(c) Results to be achieved by the Contractor

 Comprehensive document outlining the findings of the study with recommendations for incorporation of costed activities, SMART objectives and indicators for the formulation of the Action Fiche for EDF 11  Concept note substantiating the choice of sub-sectors and demonstrating how these sectors and the interventions proposed will result in increased job creation for the country. The Note should explore the efficacy or not of concentrating on one sub-sector only with the highest potential to deliver the expected results. The capacity of national authorities and stakeholders to deliver must be demonstrated, with a thorough discussion on the modes of implementation (grant and/or programme estimates).  Action Fiche for EDF 11 prepared using the EU template and incorporating the following: o EC communication on the role of Private Sector (attached at Annex) o The IMF's labour market report on St. Lucia - o http://www.imf.org/external/pubs/cat/longres.aspx?sk=41692.0 o The 2007 Promoting Employment through EU Development Cooperation http://ec.europa.eu/europeaid/what/social- protection/documents/4sec_2007_495_en_documentdetravail_p_en.pdf o The background paper on Youth Employment in Developing Countries o http://capacity4dev.ec.europa.eu/esip/document/background-paper-youth-employment- developing-countries-0  Visual presentation with focus group discussion of all draft documents highlighting the key findings of the study, and details of the Action Fiche and concept note  Include a gender sensitive intervention from the EDF 11 gender study as part of the work plan for the Non State Actors Panel designed to complement and bolster a more gender favourable outcome for EDF 11.

(3) ASSUMPTIONS & RISKS

(a) Assumptions underlying the project

The key assumptions associated with this activity are as follows:

 Relevant authorities and agencies will be willing and able to provide appropriate data  Sufficient data already exists at various agencies

(b) Risks

Appropriate data does not currently exist.

2014 Page 4 of 9 0658e77d7db73e42fb5561023b544659.docx (4) SCOPE OF THE WORK

(a) General

4.a.1. Description of the assignment

The assignment seeks to determine the barriers to private sector development and employment generation and to devise a way forward for creating a favourable environment for businesses to thrive and to create employment. This will be done by gathering relevant statistics and baseline information from businesses, business focussed agencies including business promotion and supporting agencies. The information should be focussed on the services sector in general as well as the 3 key sectors outlined in the EDF 11 Identification Fiche. The consultant will then be responsible for using the findings from this study in order to formulate the Concept Note and Action Fiche for EDF 11. The Action Fiche must include specific and costed activities to be conducted under EDF 11, measurable indicators based on findings of the baseline surveys as well as gender sensitive considerations and other relevant documents.

4.a.2. Geographical area to be covered

St. Lucia

4.a.3. Target groups

Private sector in St. Lucia, youth and unemployed persons

(b) Specific work

a) A comprehensive baseline study incorporating the following:

 Characteristics of the labour force/labour market in St. Lucia (by age and gender) – unemployment, underemployment, working poor, educational attainment, skills endowment, immediate past and present initiatives by Government/Non-Government/Development Partners etc. to address the gaps;  Characteristics of the private sector in St. Lucia, particularly the services sector and especially the Audio-Visual, ICT and Health and Wellness sub-sectors - contribution to GDP, number of enterprises, gender distribution of ownership/management/workers, level of education and skills across ownership/management/workers, level of productivity and competitiveness etc.;  The mapping of private sector development related initiatives (ongoing) by Government/Non- Government/Development Partners - existing level of support for the business enabling environment and investment climate, good governance programmes, regulatory reform, customs and business reforms, anti-corruption policies etc.;  Access to finance for MSMEs – capacity of commercial banks and other financial institutions local, regional and international, size of bad loan portfolio;  Related global trends in trade in services including the opportunities and challenges presented by international and regional trade agreements e.g. EPA.

b) A detailed analysis of problems to be addressed incorporating the following:

 Justification for the three sub-sectors chosen, in terms of potentialities (quality and quantity) and added value in creating employment and decent jobs;  Indications of the type of jobs demanded and the types of which will be created;  A market analysis of the demand for and the provision of business services in the three sub-sectors;  Lessons learned from previous programmes with the St. Lucia Coalition of Service Industries, and other Business Support Organizations with which the EC has worked in the past  Identification of the potential Development impact

c) Design of the outline of the Programme including a logical framework – overall objective, specific objective, identified needs and problems, targeted results, objectively verifiable indicators, sources of verification etc. 2014 Page 5 of 9 0658e77d7db73e42fb5561023b544659.docx d) Design of the outline of a Performance Based Management System including the establishment of baselines and indicators for impact assessment throughout the life of the Programme, as well as the identification of data collection mechanisms needed to ensure ongoing monitoring.

(c) Project management

4.c.1. Responsible body

The Office of the National Authoring Officer will be responsible for managing this Consultancy.

4.c.2. Management structure

The Consultant will report to the National Authorising Officer regarding overall performance of the contract. The Consultant shall provide relevant briefings to the Contracting Authority as requested.

4.c.3. Facilities to be provided by the Contracting Authority and/or other parties

The Contracting Authority is not responsible for providing administrative support, transport and logistics under this contract.

(5) LOGISTICS AND TIMING

(a) Location

St. Lucia

(b) Start date & Period of implementation of tasks

The intended start date is December 1st, 2014 and the period of implementation of the contract will be 3 months from this date. Please see Articles 19.1 and 19.2 of the Special Conditions for the actual start date and period of implementation.

(6) REQUIREMENTS

(a) Staff

Note that civil servants and other staff of the public administration of the partner country, or of international/regional organisations based in the country, shall only be approved to work as experts if well justified. The justification should be submitted with the tender and shall include information on the added value the expert will bring as well as proof that the expert is seconded or on personal leave.

6.a.1. Key experts

All experts who have a crucial role in implementing the contract are referred to as key experts. The profiles of the key experts for this contract are as follows:

Key expert 1: Team Leader

Qualifications and skills

A minimum of a Master’s degree in International Development, Economics business administration or any other related discipline and/or other equivalent/relevant well justified professional qualification(s)

General professional experience

At least 10 years experience working on development issues

2014 Page 6 of 9 0658e77d7db73e42fb5561023b544659.docx At least 10 years experience in research and project formulation

Excellent writing, communication and presentation skills

Excellent research and data collection skills

Ability to work independently

Specific professional experience

Minimum 10 years experience working on employment generation and private sector issues in the Caribbean

Previous experience working on EU funded projects and in programming, of EC development cooperation in the area of private sector development; Knowledge/experience of private sector, investment and competitiveness issues in the Caribbean Ability to communicate in Kweyol will be considered an advantage

All experts must be independent and free from conflicts of interest in the responsibilities they take on.

Key Expert 2: Development Expert

Qualifications and skills

Bachelor’s Degree in International Development, Economics, business administration or any other related discipline and/or other equivalent/relevant well justified professional qualification(s) General professional experience

At least 5 years experience working on development issues

Excellent writing, communication and presentation skills

Excellent research and data collection skills

Ability to work independently

Specific professional experience

At least five (5) years experience working in areas related to employment, trade and private sector development or other relevant field

6.a.2. Other experts, support staff & backstopping

CVs for experts other than the key experts should not be submitted in the tender but the tenderer will have to demonstrate in their offer that they have access to experts with the required profiles. The Contractor shall select and hire other experts as required according to the needs. The selection procedures used by the Contractor to select these other experts shall be transparent, and shall be based on pre-defined criteria, including professional qualifications, language skills and work experience.

The costs for backstopping and support staff, as needed, are considered to be included in the tenderer's financial offer.

(b) Office accommodation

Office accommodation will not be provided by the Contracting Authority.

(c) Facilities to be provided by the Contractor

2014 Page 7 of 9 0658e77d7db73e42fb5561023b544659.docx The Contractor shall ensure that experts are adequately supported and equipped. In particular it must ensure that there is sufficient administrative, secretarial and interpreting provision to enable experts to concentrate on their primary responsibilities. It must also transfer funds as necessary to support their work under the contract and to ensure that its employees are paid regularly and in a timely fashion. The contractor will be responsible for all supplies, administrative requirements and transportation required for the fulfilment of the deliverables.

(d) Equipment

No equipment is to be purchased on behalf of the Contracting Authority / partner country as part of this service contract or transferred to the Contracting Authority / partner country at the end of this contract. Any equipment related to this contract which is to be acquired by the partner country must be purchased by means of a separate supply tender procedure.

(7) REPORTS

(a) Reporting requirements

The Contractor will submit the following reports in English in one original and three copies:

 Inception Report of maximum 12 pages to be produced after one week from the start of implementation. In the report the Contractor shall describe e.g. initial findings, progress in collecting data, any difficulties encountered or expected in addition to the work programme and staff travel. The Contractor should proceed with his/her work unless the Contracting Authority sends comments on the inception report.

Draft final report of maximum 40 pages (main text, excluding annexes). This report shall be submitted no later than 2 weeks before the end of the period of implementation of tasks.

Draft Action Fiche for EDF 11 based on the findings of the Final Report, with costings, prepared using the most current EU Action Fiche Template. The draft Action Fiche should be submitted at the same time as the Draft Final Report

Draft Concept Note detailing and justifying activities chosen for the Action Fiche

Final report with the same specifications as the draft final report, incorporating any comments from the focus group presentation and as well as all other stakeholders. The deadline for sending the final report is 1 week after receipt of comments on the draft final report. The report shall contain sufficient details to support the activities proposed in the Action Fiche. The detailed analyses underpinning the recommendations will be presented in annexes to the main report. The final report must be provided along with the corresponding invoice.

Final Action Fiche with the same specifications as the draft Action Fiche incorporating any comments received from the parties on the draft Action Fiche. The deadline for sending the final Action Fiche is 1 week after receipt of comments on the draft Action Fiche.

Final Concept Note with the same specifications as the draft concept note incorporating any comments received.

The consultant is expected to make a visual presentation on the findings of all draft reports.

(b) Submission and approval of reports

The report referred to above must be submitted to the Project Manager identified in the contract. The Project Manager is responsible for approving the reports.

(8) MONITORING AND EVALUATION

(a) Definition of indicators

2014 Page 8 of 9 0658e77d7db73e42fb5561023b544659.docx The main indicator for the successful implementation of this contract would be the completion of a report that covers the main areas identified in section 4.2 of the Terms of Reference.

(b) Special requirements

2014 Page 9 of 9 0658e77d7db73e42fb5561023b544659.docx