Leader with Associate Cooperative Agreement EEM-A-00-04-00002-00 Associate Cooperative Agreement No

Leader with Associate Cooperative Agreement EEM-A-00-04-00002-00 Associate Cooperative Agreement No. AID-621-LA-16-00002

3RD QUARTER PROGRESS REPORT FISCAL YEAR 2018

This quarterly progress report was made possible through support provided by Feed the Future through the U.S. Agency for International Development. The opinions expressed herein are the sole responsibility of VEGA/IESC and do not necessarily reflect the views of USAID or the United States Government.

Submitted on 30 July 2018 by: Volunteers for Economic Growth Alliance 734 15th Street, NW, Floor 11 Washington, DC 20005 Prepared under the Cooperative Agreement No. EEM-A-00-04-00002-00 Associate Cooperative Agreement No. AID-621-LA-16-00002

VEGA Contact: Sheila Sullivan Program Manager Volunteers for Economic Growth Alliance (VEGA) 734 15th Street, NW, Floor 11 Washington DC 20005 Tel: (202) 223 7012 Email: [email protected]

IESC Contact: Andrea Patrick Associate Vice President International Executive Service Corps (IESC) 1900 M Street, NW Suite 500 Washington, DC 20036 Email: [email protected]

I. 1 PROGRAM OVERVIEW 1 QUARTERLY PROGRESS REPORT 1 SUMMARY OF RESULTS 1 Deliverables 1 Milestones 1 COMPONENT 1: IMPLEMENTING POLICIES FOR GROWTH 1 COMPONENT 2: BUSINESS DEVELOPMENT SERVICES 1 COMPONENT 3: FINANCING FOR GROWTH 2 CHALLENGES AND CRITICAL ISSUES 2 2 COMPONENT 1: IMPLEMENT POLICIES FOR GROWTH 2 COMPONENT 2: EQUIP BUSINESSES FOR GROWTH 3 COMPONENT 3: ACCESS TO FINANCE FOR GROWTH 4 PLANNED ACTIVITIES FOR NEXT REPORTING PERIOD 5 COMPONENT 1: IMPLEMENT POLICIES FOR GROWTH 5 COMPONENT 2: EQUIP BUSINESSES FOR GROWTH 6 COMPONENT 3: ACCESS TO FINANCE FOR GROWTH 7 III. 7 IV. 8 COMMUNICATIONS AND OUTREACH 8 GRANTS 9 ENVIRONMENTAL COMPLIANCE 10 GENDER & YOUTH 10 ADJUSTMENTS BASED ON THE LEARNING AGENDA 10 ANNEX 1- KEY STAKEHOLDERS AND ZANZIBAR ENGAGEMENT I ANNEX 2 – ENGINE PROGRESS TOWARD INDICATORS III MEL UPDATES XV ANNEX 3 – PROGRAM FINANCIAL REPORT (VEGA) XVII ANNEX 4- STAKEHOLDER OUTREACH AND MEETING SUMMARY XVII ANNEX 5- VOLUNTEER ASSIGNMENTS XXII COMPONENT 1: IMPLEMENT POLICIES FOR GROWTH XXII COMPONENT 2: EQUIP BUSINESSES FOR GROWTH XXIII ii

COMPONENT 3: FINANCING FOR GROWTH XXIII ANNEX 6- COST SHARE XXIV ANNEX 7- SUCCESS STORIES XXVII

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AAOR Alternate Agreement Officer Representative AFRICA LEAD Building Capacity for African Agricultural Transformation Project II II AIMS USDA Agribusiness Investment for Market Stimulation Program AMCOS Agricultural Marketing Co-operative Societies AO Agreement Officer AOR Agreement Officer's Representative ANSAF Agriculture Non-State Actors Forum ASDP-2 Agriculture Sector Development Program-2 Feed the Future Tanzania Agricultural Sector Policy and Institutional Reform ASPIRES Strengthening Project BDS Business Development Services BDSP Business Development Service Provider BFS Business Formalization Survey BOT Bank of Tanzania CA Cooperative Agreement CAADP Comprehensive Africa Agriculture Development Program CBO Community Based Organization COP Chief of Party CPRA Centre for Policy Research and Advocacy (University of Dar es salaam) CRS Catholic Relief Services CSO Civil Society Organization DAC District Advisory Committee DADP District Agricultural Development Plan DBC District Business Council D-by-D Decentralization by Devolution DC District Council DCA Development Credit Authority DCOP Deputy Chief of Party DDP District Development Plan DED District Executive Director DFID Department for International Development (U.K.) DPs Development Partners EIA Environmental Impact Assessment EMMP Environmental Mitigation and Monitoring Plan ENGINE Enabling Growth through Investment and Enterprise Program ESMT Environmental Screening and Management Tool ESRF Economic and Social Research Foundation ETP Environmental Training Program EU European Union FAST Finance Alliance for Sustainable Trade FIs Financial Institutions iv

FSDT Financial Sector Deepening Trust FSVC Financial Services Volunteer Corps FY Fiscal Year GEMS Global Environmental Management Support Project GoT Government of Tanzania HO Home Office IAA Institutional Architecture Assessment ICMA International City/County Management Association ICT Information and Communications Technologies IEE Initial Environmental Examination IESC International Executive Service Corps IIAH Iringa Integrated Activities Hub iN4iN Intelligence for Innovation Africa Network ISP Investment Support Project JSR&PER Joint Agriculture Sector and Public Expenditure Review Forum LGA Local Government Authority LGACI Local Government Authority Competitiveness Index LGRCIS Local Government Revenue Collection Information System MALF Ministry of Agriculture, Livestock and Fisheries Development MANRLF Ministry of Agriculture, Natural Resources, Livestock and Fisheries MDAs Ministries, Departments and Agencies MEDA Mennonite Economic Development Associates MEL Monitoring, Evaluating, and Learning MFI Microfinance Institution MIVARF Marketing Infrastructure, Value Addition and Rural Finance MLEEYWC Ministry of Labour, Empowerment, Elderly, Youth, Women and Youth MoFP Ministry of Finance and Planning MoU Memorandum of Understanding MSME Micro, Small and Medium Enterprise MTI Ministry of Trade and Industries MUCOBA Mufindi Community Bank NEMC National Environment Management Council NMB National Microfinance Bank NPL Non-Performing Loan OCGS Office of the Chief Government Statistician OPIC Overseas Private Investment Corporation PAG Policy Analysis Group PBZ People’s Bank of Zanzibar PO-RALG President’s Office for Regional Administration and Local Government PO-CLAPSGG President Office Constitution, Legal Affairs, Public Service and Good Governance PPD Public/Private Dialogue PRIDE Promotion of Rural Initiative and Development Enterprises PRPT Policy Reform Priority Setting Tool PS3 Public Sector Systems Strengthening Project-phase 3 v

RAS Regional Administrative Secretary RBC Regional Business Council RCC Regional Consultative Committee REPOA Policy Research for Development RFA Request for Application RFCN Request for Concept Note SACCOS Savings and Credit Cooperative Organizations SAGCOT Southern Agricultural Growth Corridor of Tanzania SCCULT Savings and Credit Cooperatives Union League of Tanzania SMIDA Small and Medium Industries Development Authorities SoW Scope of Work TA Technical Assistance TABDS Tanzania Association of Business Development Service Providers TAHA Tanzania Horticultural Association TAHEA Tanzania Home Economics Association TAMWA Tanzania Media Women Association TAMWAZ Tanzania Media Women Association-Zanzibar TANTRADE Tanzania Trade Development Authority TAWLA Tanzania Women Lawyers Association TAWLAE Tanzania Women in Livestock, Agriculture and Environment TAYOA Tanzania Youth Association TCCIA Tanzania Chamber of Commerce, Industry and Agriculture TGNP Tanzania Trade Development Authority TIOB Tanzania Institute of Bankers TNBC Tanzania National Business Council TOAM Tanzania Organic Agriculture Movement TPSF Tanzania Private Sector Foundation TRA Tanzania Revenue Authority TSC Technical Steering Committee TWB Tanzania Women’s Bank TWCC Tanzania Women Chamber of Commerce TZS Tanzanian Shillings UI User Interface UNICEF United Nations International Children’s Emergency Fund USAID United States Agency for International Development USD United States Dollars UX User Experience UWAZI Association of Small-scale Producers VAT Value added tax WARIDI Water Resources Integration Development Initiative WDF Women Development Fund YDF Youth Development Fund ZAFELA Zanzibar Female Lawyers Association ZALGA Zanzibar Association of Local Government Authorities vi

ZATO Zanzibar Association of Tour Operators ZEXA Zanzibar Exporters Association ZANEMA Zanzibar Employers Association ZOI Zone of influence ZNBC Zanzibar National Business Council ZPC Zanzibar Planning Commission ZRB Zanzibar Revenue Board

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PROGRAM OVERVIEW

Pursuant to the Volunteers for Economic Growth Alliance’s Leader-with-Associate Cooperative Agreement No. EEM-A-00-04-00002-00, Associate Cooperative Agreement No. AID-621-LA-16-00002, VEGA/IESC implement the Feed the Future Tanzania Enabling Growth Through Investment and Enterprise Program (ENGINE). The period of performance for the award is September 1, 2016 – August 31, 2020.

IESC is the lead implementer of ENGINE, joined by sub-contractors International City/County Management Association (ICMA), Mennonite Economic Development Associates (MEDA) and Diligent Consulting Limited. Under this Agreement, VEGA/IESC supports USAID’s Development Objective 2: Inclusive broad-based economic growth sustained.

QUARTERLY PROGRESS REPORT

The purpose of this document is to report the program’s progress during the 3rd Quarter of FY’18.

SUMMARY OF RESULTS

Deliverables

The revised MEL Plan was approved by the AOR on 11 April 2018. The 2nd Quarterly Report, FY’18 was approved by USAID on 30 May 2018.

Milestones

COMPONENT 1: IMPLEMENTING POLICIES FOR GROWTH

• Two Institutional Architecture Assessments (IAAs) have been facilitated in the Kilosa District Council (DC) and Kyela DC. • One public/private dialogue (PPD) was facilitated in Mbeya between the LGA and the TCCIA. • A study of 11 Zanzibar LGAs’ operational capacity to implement their devolved responsibilities under D-by-D was completed for PO-RALGSD. • The TCCIA Morogoro regional chapter received financial and facilitation assistance to conduct its Annual General Meeting.

COMPONENT 2: BUSINESS DEVELOPMENT SERVICES

• One hundred fifty-six e-Coupons were issued, and one hundred forty-three e-Coupons were redeemed, with a total value of $25,835.

COMPONENT 3: FINANCING FOR GROWTH

• Two training courses – NPL management and agricultural lending – were developed with the Tanzania Institute of Bankers (TIOB). TIOB trainers will continue to deliver the courses in the future. • Bizfundi won Insight2Impact’s Datahack Tanzania prize for a women & youth financial inclusion solution. • Due to increased outreach, 450 new MSMEs were registered on the Bizfundi platform.

CHALLENGES AND CRITICAL ISSUES

Policy Reform: A Tanzania Mainland annual budget parliamentary meeting announced that several core D-by-D sectors, including agriculture, land and infrastructure, will in the future be directly accountable to the Central Government, rather than LGAs. This policy change could hinder reform by creating uncertainty among LGAs concerning the implementation of ENGINE initiatives.

Administration: LGAs are reluctant to assume a significant portion of the cost related to sustaining the capacity building assistance provided to them by ENGINE. Turnover in LGA leadership and staff has delayed implementation of ENGINE initiatives. In some cases, ENGINE has repeated activities with new actors.

COMPONENT 1: IMPLEMENT POLICIES FOR GROWTH

Strengthening Regional and District Business Council Meetings: ENGINE facilitated a District Business Council (DBC) meeting in Mbeya. The key issues and recommendations included: the RBC/DBC Presidential Circular should be replaced with an Act; a monitoring and evaluation system should be created to provide feedback on agreed actions; and, private sector membership organizations and LGAs should allocate funds to pay for DBC meetings.

Policy Reform: An ENGINE consultant supported policy reform activities in Iringa and Morogoro with consultative meetings and discussions; service levy collection strategies were reviewed; and Morogoro and Iringa Municipal Council LGRCIS business license and service levy data was analyzed, resulting in reform proposals for enhanced revenue collection. LGAs requested additional ENGINE support for the implementation of service levy policy reforms. Information on the Zanzibar activities is incorporated in

Annex 1.

LGA By-Laws and Administrative Procedures/Guidelines/Road Maps: Component 1 met with Morogoro, Mbeya, Iringa and Zanzibar (Unguja) LGA Management to identify policy reforms that will be prioritized during the remainder of the program. The prioritized policy reforms include environmental conservation, sanitation, service levy, market tolls, fees and levy by-laws, parking fees, women and youth fund administrative procedures, investment promotion strategy review, and LGA strategic plan

review. Most of these policies have already been drafted and presented to LGA departments for comment and a few are at the consultation stage.

SOWs to review Iringa, Mbeya, Kyela, Mufindi and Kilosa LGA strategic plans were prepared and consultant recruitment is ongoing. A SOW to review Women’s Development Fund (WDF) and Youth Development Fund (YDF) operational guidelines and to develop a database and reporting system for women and youth funds has been prepared.

Online PRPT Development: An assessment of comments and issues raised during PRPT training was conducted across all 17 LGAs in Mainland Tanzania and Zanzibar. The PRPT user manual was updated and translated into Kiswahili. A SOW for a specialist to develop a user-friendly online PRPT platform has been prepared and the recruitment process for a developer is ongoing.

Strengthening Private Sector Associations: The TCCIA Morogoro regional chapter assisted in the coordination of the 2018 Annual General Meeting, during which updates on ENGINE support and expert volunteer recommendations to strengthen the chapter were accepted by the members including: approval of new membership categories, a membership drive campaign using marketing interns, and a service levy by-law review.

COMPONENT 2: EQUIP BUSINESSES FOR GROWTH

Development of Lead Firm Value Chain Methodology: The lead firm value chain study conducted by consultant Adam Saffer in 2nd Quarter, FY’18 was analyzed and incorporated into ENGINE’s technical approach, with three agricultural sectors selected for follow-up based on their growth potential and willingness of lead firms to collaborate with ENGINE. These include dairy (Shambani Milk Company in Morogoro), pyrethrum (Pyrethrum Company Tanzania Ltd. in Mufindi), and poultry (Silverlands Ltd. in Iringa). Five meetings were held with the three firms to discuss collaboration. Please see Annex 4.

Identification and Recruitment of New BDSPs: ENGINE signed collaboration agreements with six Cooperative Trainer BDSPs. Needs assessments for the new BDSPs were completed and technical assistance (TA) plans developed. The cumulative total of BDSPs who have signed collaboration agreements with the program reached 111.

Provision of Technical Assistance to BDSPs: Two expert volunteers provided TA to 39 BDSPs from Morogoro, Mbeya, Iringa and Zanzibar. The training, which was delivered in both large groups and smaller focus groups, centered on improving BDSPs’ capacity to manage the consultancy process with SME clients. Twenty-four BDSP staff participated in the focus groups and forty-seven attended trainings.

Provision of e-Coupons to MSMEs: Building on the successful e-Coupon pilot in 2nd Quarter, FY’18, 14 additional BDSPs were enrolled in the initiative, increasing the total number of BDSPs offering e-Coupons to their SME clients to 26. During the reporting period 156 MSMEs were issued e- Coupons to purchase BDS at a discounted price: Mbeya (71); Morogoro (62); Iringa (19); Zanzibar (4). One hundred forty-three

MSMEs redeemed their e-Coupons: Mbeya (75); Morogoro (43); Iringa (17); Zanzibar (4). By the end of Quarter 3 a cumulative total of 199 e-Coupons were issued to MSMEs and 165 were redeemed.

SME Awareness-Raising: Sixteen meetings were held in Iringa, Mbeya and Morogoro to create MSME awareness of access to BDS and financial services. Seven meetings were with cooperative societies (AMCOS and SACCOS), and 3 targeted MSMEs working with NAFAKA in Iringa and Mbeya. In total, 847 SMEs were sensitized to access to BDS and financial services by ENGINE BDSPs.

COMPONENT 3: ACCESS TO FINANCE FOR GROWTH

Technical Assistance to Financial Institutions through Expert-Led Support

Training Courses Offered through Partnership with TIOB: ENGINE’s partnership with TIOB led to the launch of two new training courses - non-performing loan (NPL) management and agricultural finance. Both were introduced in a press conference that featured Bank of Tanzania Deputy Governor Dr. Bernard Kibesse. The NPL management course trained 22 participants from 10 financial institutions in June and will be offered by TIOB on a recurring basis in the future. The agriculture finance course will debut in July 2018. Both courses were developed jointly: an ENGINE international expert was paired with two TIOB local training consultants. Course revenue will sustain TIOB’s future operations.

Business Process Reengineering Assignment with FINCA Microfinance Bank: ENGINE fielded the first volunteer expert deployed to new financial institution partners this quarter to work with FINCA’s accounting department to identify opportunities to reduce risk and improve efficiency.

Outreach and Support to MSMEs

Partnerships: ENGINE signed a Memorandum of Understanding with the WARIDI Program. The programs will work together to promote the use of BDS and credit-readiness among WARIDI’s private sector partners and stakeholders.

Identification of MSME Financing Opportunities through Lead Firms: Meetings with three lead agricultural firms revealed a number of promising MSME financing opportunities. Discussions will continue during 4th Quarter, potentially leading to hundreds of MSMEs accessing credit.

“Mkopo Kocha” MSME Credit-Readiness Service: ENGINE followed last quarter’s “Mkopo Kocha” launch with further training to BDSPs in each of ENGINE’s four locations. BDSPs were trained on the Bizfundi workflow and introduced to loan officers from partner financial institutions in each community. BDSPs have begun providing credit-readiness training to MSMEs, with the expectation that they will be linked to financial institutions in the 4th Quarter.

Bizfundi Field Agents: In an effort to stimulate Bizfundi registrations, ENGINE recruited, trained and deployed eight temporary field agents to promote the platform among MSMEs within the ENGINE zone of influence. Two field agents, each contracted for a period of 3-months, were posted in Mbeya, Iringa,

Morogoro, and Zanzibar to demonstrate the Bizfundi platform and register new users. The number of MSMEs registered on the platform increased by 55% from 290 to 450 during the quarter.

Bizfundi Platform Development

Datahack Event: In April, the Bizfundi team competed in the insight2impact (a South African nonprofit organization) national contest, “Datahack for Financial Inclusion” event and won a $2,500 prize for best women and youth financial inclusion solution. Teams developed innovative data utilization, leading to broader use of financial services. ENGINE’s solution was a loan application outcome predictor that used data from ENGINE’s “Mkopo Kocha” credit-readiness service in a machine learning algorithm. The Bizfundi team operationalized this new service during ENGINE’s presentation. Coverage of the event was featured in The ENGINE developers Canicius Mwitta and Robert Citizen newspaper on May 8, 20181. Kadikilo have built the BizFundi app from scratch.

New Features: A mobile-friendly version of the Bizfundi website and a BDSP message board were developed. A comprehensive website redesign was initiated that will be rolled-out in the 4th Quarter.

PLANNED ACTIVITIES FOR NEXT REPORTING PERIOD

COMPONENT 1: IMPLEMENT POLICIES FOR GROWTH

Strengthen PPDs: ENGINE will facilitate three District Business Council meetings, PPDs and policy reform consultative meetings in Mbeya, Morogoro and Iringa.

Policy Reform Activities: ENGINE will facilitate a review of all by-laws slated for reform in Iringa, Mbeya and Morogoro, including service levy payment procedures, fees and levies, nutrition, environmental mitigation and sanitation.

PRPT: ENGINE will engage an ICT developer to design the front-end of the PRPT software and another expert to facilitate its adoption. Hold refresher training for the PRPT approval process in the 6 LGAs ENGINE works with in Tanzania Mainland and 11 in Zanzibar.

IAAs and Action Plans: ENGINE will field expert volunteers to facilitate the development of IAAs and Action Plans in Kilosa DC, Kyela DC, Mufindi DC, and 5 Zanzibar LGAs.

Mainland D-by-D Process: In FY’18, the USAID Economic Growth Office has led a donor consortium comprised of USAID, UNICEF, the EU and DFID in support of PO-RALG’s D-by-D policy review process. PO-RALG has been tasked by the President to undertake 3 studies: 1) a functional review of government

1 http://www.thecitizen.co.tz/magazine/success/Boosting-growth-of-SMEs/1843788-4567974-f7ymblz/index.html

ministries, departments and agencies (MDAs), Regional Administrations and Local Government Authorities; 2) the design of a new decentralization policy; and, 3) the development of a work plan to implement the new policy. Upon USAID’s request, ENGINE edited the SOWs for the three D-by-D studies and hired REPOA to field a team of consultants to undertake the functional review. In the 4th Quarter, following completion of the functional review and the design of the new D-by-D policy, ENGINE will commission a team of consultants to develop the implementation work plan.

Zanzibar D-by-D Process: ENGINE will disseminate the D-by-D LGA capacity assessment report prepared on behalf of PO-RALGSD in the 3rd Quarter. Subject to USAID approval, ENGINE will engage consultants to fast-track the drafting of by-laws in five Zanzibar LGAs, as well as to facilitate and support Zanzibar LGAs to formulate strategic plans and communication strategies.

COMPONENT 2: EQUIP BUSINESSES FOR GROWTH

Formalization of Relationship with Lead Firms and New BDS Providers: Negotiations will continue with three agricultural sector lead firms – Shambani Milk Company, Pyrethrum Company Tanzania Ltd. and Silverlands Ltd. and collaboration agreements will be signed with them to initiate activities leading to increased access to BDS and financial services for their value chain suppliers. Needs assessments of SME value chain actors will be conducted, and BDSPs and financial institutions will be linked to them to provide services and loans. ENGINE will contact at least 13 firms that provide Environmental Impact Assessment services to SMEs in its ZOI and will recruit them to become program-supported BDSPs.

Provision of Technical Assistance to BDSPs: One expert volunteer will provide technical assistance in August to 20 BDSPs in Morogoro and Mbeya to develop marketing materials. Needs assessments and technical assistance plans for newly identified BDSPs will be undertaken, leading to the deployment of expert volunteers to provide the training.

SME BDS and Access to Finance Awareness-Raising: At least one SME awareness meeting on access to BDS and financial Volunteer Expert, Diana Lilla, leads a consultancy services training for ENGINE. services will be organized in each region for AMCOS and SACCOS members. Efforts to partner with other USAID Implementing Partners (Mboga na Matunda, Waridi, NAFAKA, Youth Empowerment) and Lead Firms to organize awareness creation field days for specific value chain actors will be explored. Staff from each region will participate in interviews organized by a local FM radio station to promote the use of e-Coupons to access BDS.

Provision of e-Coupons to MSMEs: BDSP participation agreements will be signed with new BDSPs, and 10 additional providers will be added to the e-Coupon scheme and they will receive training in their use. At least 100 MSMEs from Morogoro, Mbeya, Iringa and Zanzibar will receive e-Coupons to access BDS at a discounted price during the next quarter.

COMPONENT 3: ACCESS TO FINANCE FOR GROWTH

Continued Expert-led Technical Assistance to Partner Financial Institutions: Based on an assessment of ENGINE’s four new financial institution partners, ENGINE has prioritized technical assistance in SME lending and risk management.

Provision of Agricultural Finance Training through TIOB: ENGINE’s second financial institution training course, developed in partnership with TIOB, will be conducted. Once complete, ENGINE will assess the impact of the new training courses to determine the nature of the continued partnership with TIOB.

Continued Progress on Financial Institution Grants: During the next quarter, Yetu Microfinance’s grant will start producing results; a grant to FINCA is expected to be finalized; the grant process for additional financial partners will advance to the full application stage; and, a solicitation for a Zanzibar-specific financial inclusion grant will be issued.

First MSME/Financial institution Linkages: BDSPs are already providing ENGINE’s “Mkopo Kocha” credit-readiness service to MSME clients. ENGINE anticipates that some of these clients will complete the training and will be ready to be linked with financial institutions for credit assessments.

Continued Exploration of MSME Finance Opportunities with Lead Firms: Financing opportunities identified through discussions with three lead firms concerning their value chain suppliers and distributors will be further developed, leading to linkages with financial institutions that are interested in lending to these SMEs.

Completion of Bizfundi Surge Recruitment: The eight part-time marketing field agents will finish their assignment to promote Bizfundi service among MSMEs in ENGINE’s ZOI. Two thousand additional MSMEs are expected to be enrolled on the Bizfundi platform as a result of this effort.

Redesign of Bizfundi Website: A significant redesign to improve the ease of navigation and professional presentation of the Bizfundi website is scheduled for the 4th Quarter. III.

Staff Recruitment: IESC focused on the staffing and professional resource profiles within Component 1 and Operations. In January 2018, the LGA Analyst resigned, and Component 1 coordination was folded into Kevin Kalegeya’s role. During the 3rd Quarter, Mr. William Mjema was selected as the replacement LGA Analyst, which increased administrative and English language capacity as he is a recent U.S. college graduate, with prior GoT experience. In Operations, ENGINE transitioned Agnes Mrutu from a bookkeeping contractor to a full-time position, strengthening program functionality as she also assists the Grants Manager with milestone payment review and monitoring.

Value-Added Tax (VAT): VEGA and IESC have worked with their finance teams to ensure that the program’s approach to VAT billings aligns with the AO’s guidance provided on 25th May 2018. A memorandum documenting these steps will be submitted during the next quarter.

Immigration: IESC met several times with GoT immigration authorities, who had questions about the status of its volunteer experts. The meetings confirmed that the program is fully compliant with GoT visa requirements. ENGINE will continue to seek legal guidance when necessary relating to visas and expatriate work permits.

Theft of ENGINE Vehicle: On 13th April 2018, ENGINE’s Toyota Land Cruiser was stolen from its office compound. Following the theft, ENGINE has fully cooperated with the police and insurance company and has taken further theft mitigation precautions. In the 4th Quarter, ENGINE anticipates it will receive payment from the insurance company for the stolen vehicle and will procure a new Land Cruiser. IV.

COMMUNICATIONS AND OUTREACH

Key Activities

• In June 2018, ENGINE developed one-page flyers to support local TCCIA chapter membership recruitment drives in Morogoro, Iringa and Mbeya. Expansion of TCCIA membership will strengthen chapters’ ability to engage with LGAs through PPDs to effect policy reform and will increase members’ compliance with the payment of the service levy. • One-minute e-Coupon, Bizfundi radio spots, and interviews with ENGINE BDS Coordinators were aired in May and June 2018 on two local radio stations in Zanzibar and Mbeya to promote the use of e-Coupons. In Zanzibar, Zenji FM Radio aired 263 e- Coupon spot advertisements, and in Mbeya, Rock FM Radio aired 240 spots. • At the end of June 2018, access to finance credit-readiness “Mkopo Kocha” flyers were designed to promote BDSP training of MSMEs to prepare them to apply for credit to financial institutions. • ENGINE participated in the 42nd Dar es Salaam International ENGINE staff register MSMEs at Saba Saba Trade Fair, popularly known as Saba Saba, which commenced on 28th June.

Achievements

• ENGINE participated in sixteen outreach events, reaching 892 people, including 556 MSMEs of whom 67 were registered on the Bizfundi digital platform. Outreach groups included rice millers, honey producers and tea growers’ schemes in Mbeya, Iringa youth entrepreneurs, AMCOS and SACCOS. 8

• Between May and June 2018, Rock FM in Mbeya aired 1-minute radio spots and one 30-minute interview aired two hundred forty times, and two hundred sixty 1-minute radio spots aired along with four once-a-week 45-minute interviews on Zenj FM radio in Zanzibar. • ENGINE’s Facebook page (@ENGINEPROGRAM) was launched on 6th June 2018.

Next Quarter’s Activities

• ENGINE will participate in the Nane Nane Agricultural Trade Fair in Mbeya as a part of the program’s continuing effort to promote SME access to BDS and finance. • As part of ENGINE’s ongoing communications campaign, 1-minute e-Coupon and Bizfundi radio spots will be aired in Morogoro and Iringa on Abood Radio and Ebony FM, respectively. • The program will select a local videographer to film Component 1, 2 and 3 activities (PPDs, needs assessments, training sessions, etc.) in Iringa, Morogoro, Mbeya and Zanzibar. In line with the program’s social media plan, video clips will be posted on ENGINE’s Facebook page and the Bizfundi platform.

GRANTS

Component 1: The sub-grant negotiation with the Zanzibar Office of the Chief Government Statistician (OCGS) was completed following the re-design of the business formalization survey. Component 2: The pre-award process continued for the six BDSPs who submitted grant applications. All BDSP sub-grant awards will be disbursed in the 4th Quarter. Component 3:

• Submission to USAID of a request for approval of financial institution sub grants to support expanded product offerings and increase lending to women- and youth-owned MSMEs, which resulted in approval to award sub-grants to YETU ($147,566) and FINCA ($145,640). • A post-award orientation and training on ENGINE’s sub-grant terms and conditions was held for YETU staff who will be involved in sub-grant activity management. • ENGINE issued Request for Concept Notes to Bank of Africa and VisionFund, and they both submitted concepts. Full applications will be submitted to ENGINE for review in 4th Quarter, FY’18.

Next Quarter’s Activities

Component 1: With USAID approval, a sub grant will be issued to the Zanzibar OCGS to conduct a business formalization survey and technical and financial oversight will commence. Component 2: An approval request will be submitted to USAID to issue sub-grants to six BDSPs for innovative services that will enable them to increase their sales. Component 3:

• FINCA’s 2017 audit report and management letter will be analyzed, and potential remediation steps will be discussed with FINCA to address concerns that they identified. Upon determination of satisfactory remediation, the sub grant disbursement process will proceed. 9

• A pre-award assessment of LULU SACCOS (in Mbeya) will be completed and, upon USAID approval, a sub grant will be disbursed to expand its loan products and MSME lending. • A sub-grant solicitation will be finalized for new ENGINE-affiliated financial institutions to expand their loan products and to increase lending to women- and youth-owned MSMEs.

ENVIRONMENTAL COMPLIANCE

During the 2nd Quarter of FY’18, ENGINE developed an Environmental Training Program (ETP) to address the USAID-approved EMMP requirement that BDSPs are provided with and consulted on the USAID Global Environmental Management Support Project (GEMS) Sector Environmental Guidelines. Building on this progress in the 3rd Quarter, ENGINE delivered ETP training to fifty-three BDSPs. The training covered local and national environmental compliance and by-laws pertaining to SMEs.

Next Quarter’s Activities

In 4th Quarter, FY’18, ENGINE will follow-up with NEMC on the Environment Impact Assessment (EIA) and Audit Regulation that are currently being revised. Once approved, ENGINE will disseminate EIA process updates to its BDSP partners.

GENDER & YOUTH

Women and Youth Development Funds at the LGA Level: ENGINE met with WDF and YDF Officers at Morogoro Municipal Council, Mbeya City Council, and Iringa Municipal Council to discuss fund utilization rates, status, challenges, and how ENGINE can provide support. During the 4th Quarter of FY’18, ENGINE Regional Representatives will work with LGA Community Development staff to develop WDF and YDF Scopes of Work to deploy an expert volunteer and local consultant to recommend improved loan procedures, systems and repayment mechanisms.

ADJUSTMENTS BASED ON THE LEARNING AGENDA

• Policy reforms in each LGA will be focused on reforms that the LGA has already initiated, ensuring buy-in and commitment to the process. • Due diligence of all financial institutions will now routinely include an analysis of FIs’ most recent Audit Reports and Management Letters

ANNEX 1- KEY STAKEHOLDERS AND ZANZIBAR ENGAGEMENT

LGA PRPT trainings were held with relevant LGA staff from Urban, West A and West B Municipal Councils (Unguja) and Chake Chake and Wete Town Councils (Pemba). They were joined by key stakeholders engaged in PPDs, including the Zanzibar National Business Council (ZNBC), Zanzibar National Chamber of Commerce Industries and Agriculture, (ZNCCIA), Civil Society Organizations (CSOs) and Ministries, Departments and Agencies (MDAs). PRPT core teams (working groups) were formed, work plans were developed, and they were shared with LGA Management for approval.

The Business Formalization Survey (BFS) initiative progressed with a Technical Steering Committee (TSC) meeting discussion facilitated by expert volunteer Dr. Steven Dick concerning the improvement of the Office of the Chief Government Statistician (OCGS) grant proposal. TSC attendees included the Ministry of Trade and Industries (MTI), PO-RALGSD, LGAs, Zanzibar Planning Commission (ZPC), OCGS, Ministry of Labour, Empowerment, Elderly, Youth, Women and Youth (MLEEYWC), TRA and ZRB. During the period, ENGINE consultant Revocatus Sangu conducted an institutional and capability analysis of the 11 Zanzibar LGAs (both in Unguja and Pemba) for PO-RALGSD in relation to the responsibilities devolved to them under D-by-D. Relevant stakeholders engaged during the period include: PO-RALGSD, 11 LGAs, MDAs, Development Partners (DPs), the private sector and CSOs.

Local Government Training Institute - Hombolo (LGTI) conducted a situational analysis to inform the questionnaire it will design for LGAs to introduce the Local Government Authority Competitiveness Index (LGACI) under an ENGINE sub grant to introduce its use. The following stakeholders participated in the analysis: PO-RALGSD, Urban, West A and West B Municipal Councils (Unguja) and Chake Chake and Wete Town Councils (Pemba), MDAs, private sector/business community and CSOs. In the next stage of the sub grant activities, and once the results of the analysis are finalized, LGTI will commence the design of the questionnaire.

ENGINE expert volunteer Candy Mirrer facilitated discussions with a range of stakeholders, including the private sector /business community, LGAs, CSOs and Ministries, Departments and Agencies, during an assignment to improve the draft ZNBC strategic plan. ENGINE will recruit a consultant in 4th Quarter, FY’18 to finalize this assignment and to develop a work plan for ZNBC.

D-by-D: On behalf of PO-RALGSD, local consultant Revocatus Sangu undertook an institutional capacity assessment of all 11 Zanzibar LGAs to implement D-by-D. Actionable recommendations and next steps to operationalize the D-by-D reforms included:

• PO-RALGSD should support LGAs to review and implement various employee career development tools, undertake a staff audit, and develop a Client Service Charter, Scheme of Service, job descriptions, and personnel promotion and a succession plan; • PO-RALGSD, MOFP and the Planning Commission should develop participatory planning guidelines for LGAs under D-by-D through the Fiscal Decentralization Task Force;

• Zanzibar LGAs should prepare a three-year Strategic Plan to guide their planning and budgeting process, as required by LGA No.7/2014 and PFA 2016; • PO-RALGSD and PO-CLAPSGG should work with LGAs to fill the gaps in their planning staff; • LGA training in modern revenue management techniques, including revenue enhancement; • The design of a monitoring and evaluation framework aligned with the D-by-D implementation roadmap; and, • The alignment of existing legal instruments with D-by-D implementation to avoid ethics violations and other unacceptable work practices.

Additionally, ENGINE advised Zanzibar LGA lawyers on the proper approach to reform their misaligned by- laws following the LGA lawyers’ consultative meeting that identified contradictions and gaps between national-level D-by-D strategy, LGA Act No. 7 of 2014 and respective LGA by-laws. ENGINE also developed a consultant SOW to support Zanzibar LGAs review and reform their by-laws and develop new ones.

ANNEX 2 – ENGINE PROGRESS TOWARD INDICATORS

Performance Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Indicator Indicator (source of Year One Y2 Target Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Target Cumulative % Type information) (FY17) Actuals Actuals Actuals Actuals Actuals to Actuals to date Date Activity Purpose: Increase private sector investment leading to inclusive, broad-based economic growth in the SAGCOT, plus Zanzibar

P1 Custom/ Value of new private Aggregate N/A USD USD 73,031 USD USD USD 41% USD USD 628,832 8% Outcome sector investment 1,544,156 307,380 248,421 628,832 8,097,766 facilitated by ENGINE Morogoro N/A N/A Data USD USD USD N/A USD 85,930 unavailable 28,570 57,360 85,930 Iringa N/A N/A Data USD USD USD N/A USD 201,614 unavailable 187,317 14,296 201,614 Mbeya N/A N/A Data USD USD USD N/A USD 167,173 unavailable 67,260 99,913 167,173 Zanzibar N/A N/A Data USD USD USD N/A USD 92,080 unavailable 24,232 67,848 92,080 Component 1: Implementing policies for growth 1A Custom/ Percent of target LGAs Aggregate N/A 0% N/A N/A N/A N/A N/A N/A 0% Outcome with improved or maintained Local At least 50% Government Authority of All 11 Competitiveness Index target LGAs (LGACI) scores maintain or Morogoro N/A N/A N/A N/A N/A N/A N/A improve Iringa N/A N/A N/A N/A N/A N/A their LGACI N/A

Mbeya N/A N/A N/A N/A N/A N/A scores N/A

Zanzibar N/A N/A N/A N/A N/A N/A N/A 1B EG 3.1- Number of agricultural Aggregate 71 120 35 47 30 112 93% 480 183 38% 12/ and nutritional enabling Output environment policies Stage 1 29 80 17 22 10 49 61% 240 78 33% and analyzed, consulted Stage 2 37 40 18 25 19 62 155% 120 99 83% Outcome on, drafted or revised, Stage 3 3 0 0 0 1 1 100% 70 4 6% approved, and Stage 4 2 0 0 0 0 0 0% 30 2 7% implemented with USG Stage 5 0 0 0 0 0 0 0% 20 0 0% assistance Total Policies 12 N/A 5 7 5 17 N/A N/A 29 Passing 1 or More Steps

III

MEL Plan Performance Indicator Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator Indicato (source of ENGINE Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % r Type information) Year One Target Actuals Actuals Actuals Actuals Target Actuals to (FY17) to date Date Actuals 1C Custom/ Number of policies with Aggregate 80 63 43 77 4 124 197% 200 204 102% Outcome reform Morogoro Municipal Council 21 N/A 8 0 0 8 N/A 29 recommendations made Kilosa District Council 0 N/A 13 0 0 13 N/A 13 to the relevant authority in forums with key Iringa Municipal Council 21 N/A 12 2 4 18 N/A 39

stakeholders present Mufindi District Council 0 N/A 6 0 0 6 N/A 6

Mbeya City Council 13 N/A 2 3 0 5 N/A 18

Kyela District Council 0 N/A 0 18 0 18 N/A 18

Zanzibar Urban Municipal 0 N/A 0 6 0 6 N/A 6 Council Chake Chake Town Council 0 N/A 0 7 0 7 N/A 7

Wete Town Council 0 N/A 0 7 0 7 N/A 7

West A Municipal Council 0 N/A 0 7 0 7 N/A 7

West B Municipal Council 0 N/A 0 7 0 7 N/A 7

Morogoro 21 N/A 21 0 0 21 N/A 42

Iringa 21 N/A 18 2 4 24 N/A 45

Mbeya 13 N/A 2 21 0 23 N/A 36

Zanzibar 0 N/A 0 34 0 34 N/A 34

1D Custom/ Number of roadmaps for Aggregate 0 9 4 0 0 4 44% 26 4 15% Output regulations and Morogoro Municipal Council 0 N/A 2 0 0 2 N/A 2 administrative Kilosa District Council 0 N/A 0 0 0 0 N/A 0 procedures made publicly available Iringa Municipal Council 0 N/A 2 0 0 2 N/A 2 Mufindi District Council 0 N/A 0 0 0 0 N/A 0 Mbeya City Council 0 N/A 0 0 0 0 N/A 0 Kyela District Council 0 N/A 0 0 0 0 N/A 0 Zanzibar Urban Municipal 0 N/A 0 0 0 0 N/A 0 Council Chake Chake Town Council 0 N/A 0 0 0 0 N/A 0 Wete Town Council 0 N/A 0 0 0 0 N/A 0 West A Municipal Council 0 N/A 0 0 0 0 N/A 0 West B Municipal Council 0 N/A 0 0 0 0 N/A 0

MEL Plan Performance Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Indicator Indicator (source of Year One Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type information) (FY17) Target Actuals Actuals Actuals Actuals Target Actuals to Actuals to date Date 1E Custom/ Number of Aggregate 14 19 12 7 1 20 105 67 34 51 Output broad public and % % private Morogoro 3 N/A 6 1 0 7 N/A 10 stakeholders’ Iringa 5 N/A 3 0 0 3 N/A 8 business enabling Mbeya 3 N/A 3 3 1 7 N/A 10 environment Zanzibar 1 N/A 0 2 0 2 N/A 3 (BEE) policy forums established or supported 1F Custom/ Average percent Aggregate 0% 5% N/A N/A N/A N/A N/A At least N/A 0% Outcome change from 20% previous year in Morogoro Municipal Council N/A N/A N/A N/A N/A N/A increase N/A business Kilosa District Council N/A N/A N/A N/A N/A N/A from N/A licenses issued baseline as Iringa Municipal Council N/A N/A N/A N/A N/A N/A N/A across all target an average LGAs Mufindi District Council N/A N/A N/A N/A N/A N/A across all N/A Mbeya City Council N/A N/A N/A N/A N/A N/A mainland N/A Kyela District Council N/A N/A N/A N/A N/A N/A target N/A LGAs, and Zanzibar Urban Municipal N/A N/A N/A N/A N/A N/A N/A at least Council 10% across Chake Chake Town Council N/A N/A N/A N/A N/A N/A all targeted N/A Wete Town Council N/A N/A N/A N/A N/A N/A LGAs in N/A West A Municipal Council N/A N/A N/A N/A N/A N/A Zanzibar N/A West B Municipal Council N/A N/A N/A N/A N/A N/A N/A

MEL Plan Performance Indicator Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator Indicator (source of information) ENGINE Year Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type One (FY17) Target Actuals Actuals Actuals Actuals Target Actuals to Date Actuals to date 1G Custom/ Number of individuals Aggregate 253 447 143 63 13 219 49% 1500 472 31% Output trained on the job in Women 182 N/A 35 28 4 67 N/A 249 women/youth integration, policy analysis, policy Youth 71 N/A 42 37 7 86 N/A 157 design, advocacy, and Public Sector Data N/A 107 52 1 160 N/A 160 implementation Affiliated unavailable Private Sector Data N/A 36 11 12 59 N/A 59 Affiliated unavailable 1H Custom/ Number of operating units Aggregate 51 116 35 29 1 65 56% 377 116 31% Outcome across target LGAs receiving policy analysis capacity building 1I Custom/ Number of institutions Aggregate 9 54 10 12 4 26 48% 150 35 23% Output engaged in policy reform Public Sector Data N/A 7 9 1 17 N/A 17 work strengthened and/or Affiliated unavailable established Private Sector Data N/A 3 3 3 9 N/A 9 Affiliated unavailable

MEL Plan Performance Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Indicator Indicator (source of Year One Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type information) (FY17) Target Actuals Actuals Actuals Actuals Target Actuals to Actuals to date Date 2A Custom/ Value of sales by Aggregate N/A USD N/A USD USD USD 66% USD USD 12% Outcome ENGINE supported 240,000 59,484 98,711 158,195 1,360,000 158,195 BDS providers Women N/A N/A N/A USD USD USD N/A USD 86,235 Owned/Managed 38,436 47,800 86,235 Youth N/A N/A N/A USD USD USD N/A USD 35,631 Owned/Managed 16,623 19,008 35,631 2B Custom/ Percent change in Aggregate N/A 7% N/A 8% 8% 8% 116% 15% 8% 54% Outcome revenue of MSMEs Women N/A N/A N/A 8% 11% 10% increase on 10% within the ZOI Owned/Managed average purchasing Jointly N/A N/A N/A 13% Data 13% from 13% services from Owned/Managed Unavailable Baseline ENGINE-supported Youth N/A N/A N/A 8% 10% 9% 9% BDS providers Owned/Managed Morogoro N/A N/A N/A Data 10% 10% 10% Unavailable Iringa N/A N/A N/A Data 7% 7% 7% Unavailable Mbeya N/A N/A N/A Data 6% 6% 6% Unavailable Zanzibar N/A N/A N/A 8% 13% 10% 10% Micro N/A N/A N/A 8% 9% 9% 9% Small N/A N/A N/A Data 6% 6% 6% Unavailable Medium N/A N/A N/A Data 8% 8% 8% Unavailable

VII

MEL Plan Performance Indicator Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals ENGINE Indicator Indicator (source of information) Year One Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type (FY17) Target Actuals Actuals Actuals Actuals Target Actuals to Actuals to date Date

2C Custom/ Number of jobs created by Aggregate N/A 406 N/A 37.5 112 149.5 37% 2186 149.5 7% Outcome private enterprises, business associations, and Women N/A N/A N/A 19 60.5 79.5 N/A 79.5 CSOs within the ZOI who Youth N/A N/A N/A 35.5 107 142.5 N/A 142.5 received ENGINE assistance Morogoro N/A N/A N/A 2.5 22 24.5 N/A 24.5 Iringa N/A N/A N/A 13.5 7 20.5 N/A 20.5 Mbeya N/A N/A N/A 16.5 71 87.5 N/A 87.5 Zanzibar N/A N/A N/A 5 12 17 N/A 17 2D EG 3.2- Number of firms (excluding Aggregate N/A 20 N/A 31 18 49 245% 40 49 123% 21/ farms) or CSOs engaged in Women N/A N/A N/A 24 15 39 N/A 39 Outcome agricultural and food Owned/Managed security-related manufacturing and services Youth N/A N/A N/A 7 3 10 N/A 10 that have increased profits Owned/Managed or become self-sufficient Firm N/A N/A N/A 14 9 23 N/A 23 with USG assistance CSO N/A N/A N/A 9 6 15 N/A 15

VIII

MEL Plan Performance Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Year One Indicator Indicator (source of (FY17) Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type information) Actuals Target Actuals Actuals Actuals Actuals Target Actuals to to date Date 2G Custom/ Number of MSMEs Aggregate N/A 200 N/A 50 141 191 96% 600 191 32% Output issued with e- Micro N/A N/A N/A 47 137 184 N/A 184 Coupons Small N/A N/A N/A 3 4 7 N/A 7 Medium N/A N/A N/A 0 0 0 N/A 0 2H Custom/ Number of BDS Aggregate 95 100 70 16 15 101 101% 405 196 48% Outcome providers receiving Women 49 N/A 23 8 8 39 N/A 88 ENGINE assistance Owned/Managed Youth 27 N/A 18 2 6 26 N/A 53 Owned/Managed Morogoro 15 N/A 11 2 1 14 N/A 29 Iringa 20 N/A 14 4 1 19 N/A 39 Mbeya 32 N/A 29 5 4 38 N/A 70 Zanzibar 28 N/A 16 5 9 30 N/A 58 2I Custom/ Number of new Aggregate 0 22 0 72 78 150 682% 48 150 313% Outcome products or services offered by ENGINE- supported BDSPs

MEL Plan Performance Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Indicator Indicator (source of Year One Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type information) (FY17) Target Actuals Actuals Actuals Actuals to Target Actuals to Date Actuals date 3A Custom/ Percent of DCA Aggregate N/A 18.0% 4.9% 4.9% N/A 4.9% 27% 33.3% 4.9% 14.7% Outcome utilization among Akiba N/A 3.2% 0.0% 0% N/A 0.0% 0% 7.9% 0.0% 0.0% partner financial CRDB N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A institutions Covenant Bank N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A for Women Pride Tanzania N/A 32.7% 19.8% 19.8% N/A 19.8% 61% 58.6% 19.8% 33.8% 3B EG 3.2-3/ Number of MSMEs, Aggregate N/A 210 244 Data Data 244 116% 1000 244 24% Outcome including farmers, unavailable unavailable receiving agricultural- related credit as a result of USG Women N/A N/A Data Data Data Data N/A N/A Data unavailable N/A assistance Owned/Managed unavailable unavailable unavailable unavailable Male N/A N/A Data Data Data Data N/A N/A Data unavailable N/A Owned/Managed unavailable unavailable unavailable unavailable Jointly N/A N/A Data Data Data Data N/A N/A Data unavailable N/A Owned/Managed unavailable unavailable unavailable unavailable Youth N/A N/A Data Data Data Data N/A N/A Data unavailable N/A Owned/Managed unavailable unavailable unavailable unavailable Morogoro N/A N/A Data Data Data Data N/A N/A Data unavailable N/A unavailable unavailable unavailable unavailable Iringa N/A N/A Data Data Data Data N/A N/A Data unavailable N/A unavailable unavailable unavailable unavailable Mbeya N/A N/A Data Data Data Data N/A N/A Data unavailable N/A unavailable unavailable unavailable unavailable Zanzibar N/A N/A Data Data Data Data N/A N/A Data unavailable N/A unavailable unavailable unavailable unavailable

MEL Plan Performance Disaggregation Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Indicator Indicator (source of Year Y2 Q1FY18 Q2FY18 Q3FY18 Total Y2 % LOP Cumulative % Type information) One Target Actuals Actuals Actuals Actuals to Target Actuals to (FY17) date Date Actuals 3C Custom/ Percent increase Aggregate N/A 5% To be Data Data Data Data 15% Data Data Outcome in number of developed unavailable unavailable unavailable unavailable unavailable unavailable business loans Women N/A N/A To be Data Data Data Data N/A Data N/A issued to MSMEs Owned/Managed developed unavailable unavailable unavailable unavailable unavailable operating within Youth N/A N/A To be Data Data Data Data N/A Data N/A the ZOI from Owned/Managed developed unavailable unavailable unavailable unavailable unavailable financial Akiba N/A N/A To be Data Data Data Data N/A Data N/A institutions developed unavailable unavailable unavailable unavailable unavailable receiving CRDB N/A N/A To be Data Data Data Data N/A Data N/A ENGINE developed unavailable unavailable unavailable unavailable unavailable assistance Covenant Bank N/A N/A To be Data Data Data Data N/A Data N/A for Women developed unavailable unavailable unavailable unavailable unavailable Pride Tanzania N/A N/A To be Data Data Data Data N/A Data N/A developed unavailable unavailable unavailable unavailable unavailable 3D Custom/ Percent increase Aggregate N/A 5% To be Data Data Data Data 15% Data Data Outcome in value of loans developed unavailable unavailable unavailable unavailable unavailable unavailable issued to MSMEs Women N/A N/A To be Data Data Data Data N/A Data N/A operating within Owned/Managed developed unavailable unavailable unavailable unavailable unavailable the ZOI from Youth N/A N/A To be Data Data Data Data N/A Data N/A financial Owned/Managed developed unavailable unavailable unavailable unavailable unavailable institutions Akiba N/A N/A To be Data Data Data Data N/A Data N/A receiving developed unavailable unavailable unavailable unavailable unavailable ENGINE CRDB N/A N/A To be Data Data Data Data N/A Data N/A assistance developed unavailable unavailable unavailable unavailable unavailable Covenant Bank N/A N/A To be Data Data Data Data N/A Data N/A for Women developed unavailable unavailable unavailable unavailable unavailable Pride Tanzania N/A N/A To be Data Data Data Data N/A Data N/A developed unavailable unavailable unavailable unavailable unavailable

XII

XIII

Performance MEL Plan Total ENGINE Year Two (FY18) Life of Project (LOP) Totals Indicator ENGINE Indicator Disaggregation Year One Total Y2 Cumulative Type (source of Y2 Q1FY18 Q2FY18 Q3FY18 LOP Indicator (FY17) Actuals % Actuals to % information) Target Actuals Actuals Actuals Target Actuals to date Date

Cross-Cutting (Volunteerism) Aggregate 28 34 10 5 1 16 47% 117 44 38% Number of Women 10 N/A 3 1 1 5 N/A 15 Custom/ volunteer expert CC1 Component 1 11 N/A 4 3 1 8 N/A 19 Output assignments mobilized Component 2 3 N/A 3 1 0 4 N/A 7 Component 3 11 N/A 3 1 0 4 N/A 15 Aggregate 587 785 274 104 23 401 51% 2700 988 37% Number of days of Custom/ Component 1 349 N/A 102 53 23 178 N/A 527 CC2 volunteer expert Output service delivered Component 2 84 N/A 85 35 0 120 N/A 204 Component 3 91 N/A 87 17 0 103 N/A 194 USD USD USD USD USD USD Aggregate USD 388,788 66% USD 679,199 44% 438,164 185,302 82,789 22,320 290,411 1,548,062 USD USD USD USD Component 1 USD 192,564 N/A N/A USD 310,885 Custom/ Value of volunteer 57,601 38,400 22,320 118,321 CC3 Output expert service USD USD USD Component 2 USD 66,393 N/A USD 0 N/A USD 156,033 63,516 26,124 89,640 USD USD USD Component 3 USD 80,749 N/A USD 0 N/A USD 163,200 64,186 18,265 82,451

XIV

MEL Footnotes:

1. For Custom Indicator P1, this includes private sector "human capital" investment leveraged from Financial Institutions (ENGINE partners and non-partners) paying for their staff to undertake Tanzania Institute of Bankers (TIOB) short courses that have been developed in partnership with ENGINE. The cost-share investment by TIOB in developing these courses is also included in this Indicator count. Some of the TIOB investment occurred in the 2nd Quarter reporting period, but as it was not previously reported in the 2nd Quarterly Report, we adjusted for this by reporting these investments in the FY’18 Q3 Report. 2. For Custom Indicator 2A, the value of sales of BDS providers includes both sales of stand-alone BDS by traditional types of BDSPs, as well as sales by providers who bundle BDS with other goods/products that they sell to MSME clients. An example of such a bundled BDS product would be agri-input sellers providing BDS extension advice to farmers who purchase fertilizers and chemicals from them, where the cost of that extension advice is bundled with the agri-input sales price. It would be cost-prohibitive to attempt to extrapolate the value of the BDS itself from the sale price and thus the total value is taken. 3. For Custom Indicator 3A, which tracks DCA utilization by ENGINE partner financial institutions, data is not available. Pride’s DCA guarantee was suspended by USAID in April 2018. Akiba Commercial Bank is in the process of replacing its managing director and has informed USAID and ENGINE that it will refrain from participating with DCA and ENGINE until a permanent replacement MD has assumed his/her position. 4. "N/A" refers to data points where either no data collection was conducted by ENGINE as the activity implementation was not at a stage to reasonably yield results for the indicator, or data points where no Y2 or LOP targets were set in the MEL Plan. "Data unavailable" refers to data points where the activity implementation has proceeded to a stage to yield results, but no data can be reported due to either reporting issues faced with the partner or other issues related to the compilation and aggregation of the data collected. 5. For Custom Indicators C1-C3, during FY’17, ENGINE field three volunteer experts for gender and youth and communications. These assignments do not fall under the current Components 1-3 disaggregations as defined in the MEL Plan PIRs but are included in the total aggregate values. In addition, the value of the cost share contribution under C3 for Q1 was also amended as two volunteer assignments, which were spread between two quarters, were counted twice. IESC has amended its reporting methodology to ensure that this error is not repeated.

MEL UPDATES

3rd Quarter, FY’18 Progress: In 3rd Quarter, the MEL team continued its work to support Senior Management and the AOR in finalizing the revised MEL Plan. Work also continued on the new “Aggregation Systems” that will be used to consolidate and report on the updated 26 custom and 3 standard indicators in the revised MEL Plan. Similarly, most data collection forms had to be revised to better capture the market system changes defined by these indicators at the partner, market output/outcome and end MSME beneficiary levels.

Field verification visits were conducted by the MEL team during the quarter to validate specific indicator results reported on in previous reporting periods. A major focus was on key indicators with significant upward adjustments in the Quarter 2 Report, such as Standard Indicator 1B (EG 3.1-12). Accompanied by the Component 1 Team Lead, the

MEL Assistant visited and carried-out in-depth interviews of representatives from the Morogoro Municipal Council, Mbeya City Council, Iringa Municipal Council, LGAs in Zanzibar (West A, West B and Zanzibar Urban Municipality), in addition to ZALGA. The discussions and observations from the field verification visits were recorded and shared with Component teams and Management. Representing ENGINE, the MEL Assistant also attended the USAID M&E Tri Annual Meeting in Mtwara from 27th – 29th June.

Key Indicator Results for 3rd Quarter: The increased range and quality of products and services offered by BDSPs (78 new products or services introduced during the quarter – Indicator No. 2I, Number of new products or services offered by ENGINE-supported BDSPs), supported by ENGINE’s marketing and awareness activities (589 unique MSMEs reached during financial inclusion and BDS outreach events – Indicator No. 2F, Number of MSMEs informed about BDS and financial services), contributed to the growth in BDSP sales, with a total of 1,170 MSMEs purchasing BDS (Indicator No. 2E, Number of MSMEs purchasing services from ENGINE-supported BDS providers) during the quarter, generating U.S. $98,700 of additional revenue. E-Coupon activity also grew during the quarter, with 141 e-Coupons issued (Indicator No. 2G, Number of MSMEs issued with e-Coupons) to new MSME BDS purchasers. Additionally, 450 new registered Bizfundi users (Indicator No. 3G, Number of users registered on the Bizfundi Platform) were recorded during the quarter, following increased efforts by the Component 3 team to register more BDSP and MSMEs onto the online market linkages platform.

Planned Activities for the Next Reporting Period: In 4th Quarter, FY’18, the MEL team will support a Data Quality Assessment (DQA) by the Data 4 Development (D4D) Project of ENGINE previously reported indicator results (Standard Indicators EG.3.2-3 and EG 3.2-21) in ENGINE’s Dar Es Salaam office on 20th July and in the Mbeya regional office on 26th July.

Following the DQA, the focus of MEL efforts during 4th Quarter will be to work with Component teams to improve the capture and reporting of indicators that ENGINE have yet to report on or data that has not yet been fully captured by the current data collection systems. Examples of such indicators include:

• Indicator 1F, which tracks the growth of business licences issued by ENGINE partner LGAs; • Indicators 3B, 3C and 3D to capture the MSME loans issued by the new financial institutions that have been added to the Component 3 portfolio; and, • Investment indicator P1, with respect to MSME non-lending investment leveraged.

To improve the response rate of BDSPs and MSMEs to follow-up data collection activities, the MEL team will support Component 2 in setting up a competition and other incentives to encourage quality and timely reporting. Field verification activities will also be carried out in August - September 2018 by the MEL Assistant, with coordination provided remotely by the MEL Specialist Consultant. The indicator results that will be verified will be decided following discussion with senior management and Component teams.

XVI

ANNEX 3 – PROGRAM FINANCIAL REPORT (VEGA)

ANNEX 4- STAKEHOLDER OUTREACH AND MEETING SUMMARY

Please find below a list of stakeholder and outreach meetings conducted by IESC during the reporting period.

Date Institution Meeting Outcome Component 1 Date Partner Subject TCCIA marketing strategies and communication materials 2-Apr-18 TCCIA Iringa reviewed.

6-Apr-18 Iringa Municipal Council Service levy enforcement procedures were reviewed.

7-Apr-18 Iringa Municipal Council Service levy collection methodology reviewed. Service levy enforcement procedure recommendations 8-Apr-18 Iringa Municipal Council provided.

Service levy reform proposal, an improvement plan 13-Apr-18 Iringa Municipal Council enforcement and recommendations provided.

13-Apr-18 TCCIA Morogoro MRR interns selected.

16-Apr-18 Morogoro Municipal Council Service levy enforcement procedures were reviewed.

Service levy enforcement procedure recommendations 16-Apr-18 Morogoro Municipal Council provided.

17-Apr-18 Morogoro Municipal Council Service levy collection methodology reviewed.

XVII

Service levy reform proposal, an improvement plan 18-Apr-18 Morogoro Municipal Council enforcement and recommendations provided.

10-May-18 ENGINE Office A ZNCCIA Action Plan was developed. Five key strategic objectives were discussed and agreed 15-May-18 Department of Trade upon. Five key strategic objectives were discussed and agreed 25-May-18 Department of Trade upon. Five key strategic objectives were discussed and agreed 4-Jun-18 Morogoro Municipal Council upon. Next steps relating to the service levy were discussed and 5-Jun-18 TCCIA Morogoro chapter agreed upon.

7-Jun-18 Mbeya Municipal Council Policy reforms to focus on were identified and agreed upon.

Next steps relating to the service levy were discussed and 8-Jun-18 TCCIA Mbeya chapter agreed upon.

18-Jun-18 Iringa Municipal Council Policy reforms to focus on were identified and agreed upon.

Next steps relating to the service levy were discussed and 19-Jun-18 TCCIA Iringa chapter agreed upon.

25-Jun-18 3 LGAs of Unguja Four key issues of policy reforms were discussed and agreed.

D-by-D status discussed and way forward for 26-Jun-18 PO-RALGSD implementation was agreed. Status discussed and came up with next step for ZALGA 27-Jun-18 ZALGA operations. Feedback from each partner was discussed and way forward 27-Jun-18 OCGS agreed. Three key issues of policy reforms were discussed and 28-Jun-18 Wete Town Council agreed. Three key issues of policy reforms were discussed and 29-Jun-18 Chake Chake Town Council agreed. Component 2 Date Partner Subject

The Morogoro BDS Coordinator met with 12 veterinarians to Private Vet Service Providers - raise their awareness about the ENGINE Program and to 2-May-18 Morogoro explore the potential for private veterinarians to partner with ENGINE as BDSPs to the dairy and poultry value chains.

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The Mbeya BDS Coordinator met with 369 MSMEs in 14-18 May MSMEs in Rungwe and Mbeya Rungwe and Mbeya City, focusing on the tea and rice value 2018 City chains to raise their awareness on access to BDS through ENGINE-supported BDSPs.

The Zanzibar BDS Coordinator met with the leadership of ZASAPCU to introduce the ENGINE Program and to explore Zanzibar Salt Processing collaboration to increase access to BDS for salt value chain 26-May-18 Cooperative Union (ZASAPCU) actors. The leadership appreciated the idea of collaborating with ENGINE and requested an awareness meeting for ZASAPCU and its members.

The Morogoro BDS Coordinator conducted a live radio 7-Jun-18 ABOOD MEDIA-Morogoro interview on Abood Media to create awareness to the public (MSMEs) on the ENGINE Program, e-Coupons and BizFundi.

The Morogoro BDS Coordinator met with TCCIA members to raise their awareness about the ENGINE Program during the 26-Jun-18 TCCIA-Morogoro TCCIA Annual General Meeting where more than 45 MSMEs were reached.

The Morogoro BDS Coordinator met with 45 MSMEs to raise 29-Jun-18 SUGECO their awareness about the ENGINE Program, e-Coupons, BizFundi and credit readiness training.

Component 3 Date Partner Subject

12-Apr-18 Dar es Salaam Stock Exchange Introductions, identification of areas of alignment.

2-May-18 Yetu Microfinance Onboarding new partner.

3-May-18 FINCA Microfinance Bank Onboarding new partner.

9-May-18 Umi Microfinance Introductions, identification of areas of alignment.

10-May-18 VisionFund Onboarding new partner.

17-May-18 TIB Rasilimali Introductions, identification of areas of alignment.

22-May-18 Innovare Introductions, identification of areas of alignment.

Financial Sector Deepening 27-Jun-18 Exploring partnership opportunities. Trust

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27-Jun-18 Bank of Africa Onboarding new partner. 27-Jun-18 T-LED Exploring partnership opportunities.

27-Jun-18 World Poultry Association Exploring partnership opportunities.

Grants Date Partner Subject

Office of Chief Government Verified information provided by OCGS on self-assessment 23-24 April 2018 Statistician (OCGS) form and conducted a physical assessment of OCGS.

Conducted post award meeting and oriented YETU 7-May-18 YETU Microfinance Bank Plc Microfinance Bank on ENGINE Sub Grant terms and conditions.

Briefing on the status of the Environmental Policy Act of 1997, the Environmental Impact Assessment (EIA) and the National Environmental Audit Regulation of 2005 revisions. NEMC believes that the 10-May-18 Management Council (NEMC) EIA and Audit Regulation will be incorporated into the Government Gazette, following its signature by the Attorney General as early as July 2018.

USAID Date Partner Subject

Randy Chester, Director, Discussion of a memo to the AO concerning D-by-D 9-Apr-2018 Economic Growth Office, and initiatives with PO-RALG. Hal Carey, AOR, USAID

USAID Implementing Partners meeting on sexual harassment 11-Apr-2018 USAID staff and sexual abuse and exploitation.

24-Apr-2018 Hal Carey, AOR, USAID Discussion concerning Indicator P1 LOP target results.

Hal Carey, AOR; Michelle Discussion of a contract modification and extension to the Corazine, AD, EGO; Joyce ENGINE Program, as well as the D-by-D work for PO-RALG 9-May-2018 Mndambi, AAOR; Semaly the Economic Growth Office requested that ENGINE Kisamo, Policy Advisor, USAID; undertake. Andrea Patrick, AVP, IESC

Ayana Ayala, AO; Ani Strakosha, Deputy Supervisory Discussion concerning a contract modification to the ENGINE 9-May-2018 A&A Specialist; Andrea Patrick, Cooperative Agreement. AVP, IESC

Randy Chester, Director, USAID Implementing Partners meeting to discuss Business 11-Jun-18 Economic Growth Office, and Development Service subsidization and grants. Hal Carey, AOR, USAID

Joyce Mndambi, AOR, and ENGINE Program briefing, with presentations from all 12-Jun-18 Semaly Kisamo, AAOR, USAID Components and Cross-cutting Departments.

Discussion on the USAID Collaboration, Learning and USAID, DO2 Implementing Adaptability (CLA) tool, and its application in everyday 28-29 June 2018 Partners, MEL Tri- Annual program activities, and agreement to enhance CLA for General Meeting. sustainability of USAID Interventions.

USAID Partner Meetings Date Partner Subject

20-Apr-18 NAFAKA, MNM, WARIDI, AY Monthly touch-base meeting.

29-May-18 Peace Corps Tanzania Recruitment of PC volunteers to support ENGINE.

Nafaka, ENGINE, USAID, PS3, AY, Ingender health, Mboga na USAID’s Implementation Partners areas of collaboration 7-Jun-18 Matunda, Boresha Afya, Land streamlined. Tenure Assistance

12-Jun-18 USAID Implementing Partners Exploring partnership opportunities.

26-Jun-18 Dalberg Exploring partnership opportunities.

Discussion on how USAID, ENGINE and Trade Hub can work with AGA. It was agreed that USAID will link AGA with the USAID, Trade Hub and Africa 28-Jun-18 Development Credit Authority (DCA), ENGINE will share Grant Advisors (AGA) BDSP and BizFundi criteria and Trade Hub will link AGA with its SME network.

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ANNEX 5- VOLUNTEER ASSIGNMENTS

COMPONENT 1: IMPLEMENT POLICIES FOR GROWTH

3rd Quarter Initiatives:

• At the end of the 3rd Quarter of FY’18, two expert volunteer IAA assignments were progressing in Kyela (Mbeya) and Kilosa (Morogoro) with the expectation that these assignments will be completed in the 4th quarter. • During the 3rd Quarter of FY’18 a volunteer expert, Candy Mirrer, completed an assignment with the Zanzibar National Business Council. The objective of the assignment was to improve ZNBC’s strategic plan.

3rd Quarter Results:

• Fifteen TCCIA member recruitment and relations interns were hired (5 each in the Morogoro, Mbeya and Iringa regional chapters) for a 3-month TCCIA membership drive that: a) publicizes TCCIA services and achievements; b) attempts to interest old and inactive members to renew their membership; and, c) recruits new members. The initiative will continue into the 4th Quarter of FY’18, building TCCIA’s membership base to better advocate for the private sector and to increase local business service levy compliance, which will increase LGA revenue collection. • ZNBC’s draft Strategic Plan was strengthened by volunteer Candy Mirrer and four key strategic objectives were identified.

Component 1 Volunteer Assignments in the 4th Quarter

Mainland Tanzania Three volunteers will facilitate Institutional Architecture Mufindi, Kyela and Kilosa Assessments (IAAs) and LGA Action Plans. Three volunteers will facilitate a review of LGA strategic Morogoro, Iringa and Mbeya plans. Three volunteers, linked with local STTA consultants will Morogoro, Iringa and Mbeya build the capacity of Community Based Organizations (CBOs). Three volunteers will provide TA in solid waste Morogoro, Iringa and Mbeya management to LGAs. Zanzibar

Urban, West A & West B Municipalities (Unguja), Two volunteers will conduct Institutional Architecture and Chake Chake & Wete Town Councils (Pemba) Assessments and develop LGA Action Plans.

One volunteer will assist the Zanzibar National Business Unguja and Pemba Council to develop PPD guidelines for RBCs & DBCs.

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Urban, West A & West B Municipalities (Unguja), One volunteer will fast-track drafting LGA by-laws. and Chake Chake & Wete Town Councils (Pemba)

One volunteer will develop a D-by-D communication Unguja and Pemba strategy for PO-RALGSD. Unguja and Pemba One volunteer will review MKUZA Plan III for PO-RALGSD.

Urban, West A & West B Municipalities (Unguja), Two volunteers & two STTA consultants will facilitate the and Chake Chake & Wete Town Councils (Pemba) development of LGA strategic plans.

COMPONENT 2: EQUIP BUSINESSES FOR GROWTH

3rd Quarter Initiatives:

• Providing Technical Assistance to BDSPs in Mbeya, Iringa, Morogoro and Zanzibar on how to improve the consultancy process. • Training BDSPs in Mbeya, Iringa, Morogoro and Zanzibar on Environmental Management Policy.

3RD Quarter Results:

• Thirty-nine BDSPs (Iringa - 10; Mbeya - 19; Zanzibar - 10) received Technical Assistance on how to improve the consultancy process. In total, 47 BDSP staff participated in group trainings. • Fifty-three BDSPs (Iringa – 9; Mbeya – 14; Morogoro – 7; Zanzibar - 23) received training in environmental management policies. In total, 61 BDSP staff participated in group trainings.

Component 2 Volunteer Assignments in the 4th Quarter

Location Assignment One volunteer will train Morogoro BDSPS on how to improve the consultancy Morogoro process. Iringa, Morogoro and One volunteer will train Morogoro and Mbeya BDSPs on how to design BDS Mbeya marketing and promotional materials. One volunteer will train Zanzibar BDSPs on how to design BDS marketing and Zanzibar promotion materials.

COMPONENT 3: FINANCING FOR GROWTH

3RD Quarter Initiatives:

• Identify business process improvement opportunities within FINCA’s accounting department and develop recommendations to streamline procedures and improve performance against key metrics such as cost, quality, service, and speed to achieve efficiency gains.

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3RD Quarter Results:

• Business process gaps and process improvement opportunities were identified, and longer-term recommendations to transition the institution were made. Provided FINCA with tools (best practices and guides) to help the team expedite the process.

Component 3 Volunteer Assignments in the 4th Quarter

Location Mainland Tanzania Mentoring and training on SME lending to build the capacity of financial institution staff on the practical skills required to address the unique challenges Dar es Salaam and Arusha of lending to SMEs and employ international best practices for managing SME loans. Mentoring and training on SME risk management to build the capacity of Dar es Salaam and Arusha Tanzania financial institution staff to be able to identify, assess and manage risks associated with lending to SMEs.

ANNEX 6- COST SHARE

3rd Award Program to Quarter Balance Total Date FY’18 Total volunteer $505,947 $22,320 $679,199*** -$173,252* cost-share

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Total non- volunteer cost N/A $7,3067 $7,306.85 $7,307 share** Total volunteer $1,370,329 - - $1,370,329**** leverage Total non- volunteer N/A - - - leverage

Other volunteer N/A - - - contributions** * Balance may be negative to show value exceeding the amount originally planned.

** Includes any volunteer contributions which are not reported under cost share or leverage, i.e. in-kind contributions and cash.

*** Volunteer cost share reporting will be reflected on the next month’s financial invoice.

****IESC has requested that the leverage contribution be eliminated and folded into the cost share contribution in a modification request dated 22 May 2018.

Number of Volunteer Total Number of Assignments Completed Number of Volunteers Volunteers Proposed from to Date Remaining to be Fielded Award

Male Female 117 30 14 73

Summary of Volunteer Assignments Assignment Length Assignment Name Assignment Description (in days) Status* Finalize the draft strategic plan for Candy Mirrer 23 Days Completed ZNBC. LGA Institutional Architecture Mike Jaillet 15 days** Ongoing Assessment LGA Institutional Architecture Lane Bailey 15 days Ongoing Assessment

Work with FINCA Microfinance Bank Angy Chin 15 days to identify business process Ongoing improvement opportunities

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Capacity building to BDSPs on Jillann W. Richardson 10 Days Ongoing consultancy process. Capacity building to BDSPs on Diana Lilla 25 days Ongoing consultancy process.

Mobile app and web developer for Jesus Perez 18 days Ongoing the BizFundi application

Mobile app and web developer for Peter Oforo 20 days Ongoing the BizFundi application

*Only assignments that are completed are included in IESC’s cost share submission for the quarter.

**Ongoing assignments may include updated assignment lengths, which will be reported during the next quarter once the assignments are completed.

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ANNEX 7- SUCCESS STORIES

USAID-SUPPORTED SUBSIDIZED VOUCHER SYSTEM FOR BUSINESS DEVELOPMENT SERVICES BENEFITS SMALL AND MEDIUM-SIZED ENTERPRISES

June 2018 – In the Stendi Kuu neighborhood of Iringa, Ayoub Myefu is not a new name among poultry farmers. Ayoub buys eggs from various farms in his area and then sells them at his retail shop, located next to a regional bus station. Even without a clear business plan, Ayoub knew that he wanted to sell poultry products when he formally opened his business in 2009.

In 2009, a tray of eggs cost Ayoub around 5,000 Tanzanian Shillings (TZS), but by 2018, the cost of eggs had risen to 8,000 TZS per tray. As the cost of eggs increased, the day-to-day management of the shop became a challenge for Ayoub because he did not have the training to calculate his profit margin.

In early February 2018, through the USAID-funded Feed the Future Tanzania Enabling Growth Through Investment and Enterprise Program (ENGINE), Ayoub received a discount voucher, which enabled him to purchase business development services at a discounted rate. Ayoub Myefu stands outside of his shop. By offering discounts of up to 40% on business development services, ENGINE offers an incentive for micro, small and medium enterprises (MSMEs) to purchase services. Interested MSMEs fill in application forms provided by business development service providers, who then submit the completed applications to ENGINE. Once approved, the MSME receives a message with a voucher number on their mobile phone, which they can then use to pay for part of the cost of the service from the provider. The remaining expenses are paid directly by the MSME to the business development service providers. Services covered under the program’s discount include: accounting and record keeping, financial management, business planning, access to finance, business formalization, marketing and promotion.

Through Ashtec Limited, an ENGINE-certified business development service provider, Ayoub was able to purchase accounting and record keeping services at a rate of 150,000 TZS, a 40% savings off the original fee of 250,000 TZS.

When discussing the benefit of this training, Ayoub noted, “My business was struggling and it was difficult to tell how much profit or loss the business was making. Keeping a record of all my business transactions has ensured that I am now tracking my business as I should. While I initially used to make a net profit of 15,000 TZS per 100 trays of eggs sold, I now make 35,000 TZS profit per 100 trays of eggs after deducting expenses, such as transportation costs.”

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Since February, Ashtec Limited has been providing MSMEs in Iringa, Mufindi and Mbeya with subsidized business development services under the scheme. Ayoub’s business operations specialist and trainer, Fabian Mwiga, at Ashtec Limited noted, “To enable me to better assess the financial performance of Ayoub’s business and help him to determine how he can strengthen his business, I advised him to opt for book-keeping service. Once he is comfortable with this process and has all the records in place, this will help me to Business Operation Specialist and Trainer at Ashtec Limited, Fabian Mwiga has offered his services to 37 better understand his business, to examine sales, revenue, MSMEs in Iringa, Mufindi and Mbeya through ENGINE’s expenses and then I can advise him further.” discounted scheme.

To date, via ENGINE’s voucher system, Ashtec has issued 37 discounted vouchers to MSMEs in Iringa, Mufindi and Mbeya regions, in the areas of accounting and record keeping, business formalization and marketing.

Another ENGINE voucher beneficiary, Martha Jacob Sakafu is a bee farmer in Swaya Village, which is 14 kilometers from Mbeya’s regional capital. In 2017, she heard about Africa Honey Solutions, a local company that contracts bee farmers around her area and offers beekeeping education, provides modern harvesting equipment and access to markets.

She joined the organization as a contract farmer late last year. Today, Martha is one of the 21 bee farmers that have purchased services from Africa Honey Solutions at a discounted rate. Acknowledging the impact of the business development services training on her business, Martha noted, “Previously, I owned five bee hives which produced about 80kg of honey per harvest. Following my interaction with Africa Honey Solution, I have been able to add two extra hives and now I produce roughly about 140kg of honey per harvest. Joining Africa Honey solutions has enabled me to market my honey effectively.”

Formed in 2000, Africa Honey Solutions is a registered business development service provider with the ENGINE Program. The Managing Director of Africa Solutions, Protence Crispin noted, “By providing discounted business development services, we have boosted honey production for our bee farmers, who are based in Swaya, Uzunguni, Ilomba and Inoro villages. We are in the process of installing commercial hives in place of the traditional hives for local farmers, which will quadruple their harvest.” Managing Director of Africa Honey Solutions Protence Crispin sold discounted services to 21 MSMEs in Mbeya through ENGINE’s voucher scheme.

By empowering entrepreneurs such as Ayoub and Martha, ENGINE is helping to improve the capacity of MSMEs in Tanzania. To date, 37 business development service providers have been enrolled to participate in the scheme, 124 vouchers have been issued and 118 have been used by MSMEs who seek business development services in Iringa, Morogoro, Mbeya and Zanzibar.

Feed the Future is the U.S. Government’s global hunger and food security initiative. With a focus on smallholder farmers, particularly women, Feed the Future supports partner countries in developing their agriculture sectors to spur economic growth and trade that increase incomes and reduce hunger, poverty and undernutrition.

USAID is the lead U.S. Government agency working to end extreme global poverty and enable resilient, democratic societies to realize their potential.

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ENVIRONMENTAL THREATS CAN BE OPPORTUNITIES TO DRIVE SUSTAINABLE PRIVATE SECTOR GROWTH

June 2018 –Hans Njombelo runs a rice milling business in a local milling stalls, which he shares with 19 other rice millers in Mbeya Region. As a part of his business, he contracts farmers from Songwe, Kyela and Usangu to provide unpolished rice which he mills and sells to the public. In late 2016, he faced an environmental management issue that almost forced the closure of his business.

“Initially, I did not conduct an environmental impact assessment of Hans Njombelo and other business development service providers in Mbeya shared their learning experiences with ENGINE’s Environmental my business. I, as well as the other Management Consultant, Ethan Myers. traders, were unaware of the impact that improper disposal of rice husks could pose to our business”, Njombelo noted. A visit by the National Environmental Management Council (NEMC) to the milling stalls resulted in a three-day notice period to dispose of rice husks within their premises or shut down their businesses for good. Hans’ business is one of many that works with the USAID-funded Feed the Future Tanzania Enabling Growth Through Investment and Enterprise Program (ENGINE), which trains Business Development Services Providers (BDSPs), to become incubators for innovative economic solutions. “BDSPs should view environmental threats as opportunities to create new products and new value chains that drive sustainable private sector growth”, noted ENGINE Environmental Management Trainer, Ethan Myer.

Fortunately for Hans, prior to meeting ENGINE, he and other traders lobbied and received a 14-day extension from the local government to dispose of their rice husks at a local dump site. Today however, Njombelo and other millers hold a renewable annual contract with Mbeya Cement, a company that buys the husks and uses them to generate fuel. Hans explains, “Every two weeks, trucks pack up 5 tons of husks at a cost of 78,000 Tanzania Shillings (TZS). We not only conserve our working environment, but we also make a living out of it, which was a big lesson for us.”

In Zanzibar, Foum Ali Gari, an agriculturalist and founder of Zanzibar Organic Spices (ZOSG), an association of Zanzibari farmers, participated in ENGINE’s environmental management training. Prior to this training, Foum and his fellow association members have been using innovative methods to produce

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traditionally organic, quality yields for spices such as turmeric, cloves, cinnamon, black pepper, nutmeg and ginger. However, the training’s subject matter and methodologies helped Foum and the other training participants refine their harvest and growing methods and ensure that they are environmentally sustainable.

Each farmer in the ZOSG association farms an average of three hectares of land in Kijichi and Kizimbani, which is in the western district of Zanzibar. Foum remarked, “We discourage the use of modern chemicals and chlorinated water. We have dug boreholes and shallow wells to water our spices which ensures that we produce quality yields.”

Once their harvest is complete, Foum and the other farmers sell their spices for premium prices compared to non-organic spices. For example, an ordinary kilogram of nutmeg sells for 23,000 TZS at the market, while ZOSG’s organic nutmeg will sell for double the price at 40,000 TZS per kilogram. Vanilla, which sells for 50,000 TZS up to 200,000 per kilogram for non-organic products, is sold by ZOSG for 750,000 TZS per kilogram.

Business development service providers like Hans and Foum are among the 25 BDSPs in Morogoro, Iringa, Mbeya and Zanzibar that were trained by ENGINE and will continue collaborating with their local governments to encourage the utilization of practical, environmentally friendly by-laws and policies.

USAID is the lead U.S. Government agency working to end extreme global poverty and enable resilient, democratic societies to realize their potential.

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