CONCEPT NOTE - Udenrigsministeriet/media/UM/English-site/Documents... · CONCEPT NOTE Danish...

1

Ministry of Foreign Affairs of Denmark

Department for Green Growth

CONCEPT NOTE

Danish Agribusiness Fund (DAF)

Co-financed and Managed by IFU

10 November 2014 File No. 2014-18978

2

Contents 1 Introduction .................................................................................................................................................... 3

1.1 Strategic questions to guide the discussion. ....................................................................................... 3

1.2 Summary of conclusions regarding the envisaged support. ............................................................. 3

2 Conclusions from preparatory analyses justifying the envisaged support ............................................. 4

2.1 Justification of the envisaged support ................................................................................................. 4

2.2 Key experiences and results of previous support to consider for future support. ....................... 5

2.3 Danish and national strategies for supporting agribusiness ............................................................. 6

3 Preliminary overview of envisaged support................................................................................................ 7

3.1 Objectives of DAF ................................................................................................................................ 7

3.2 Theory of change ................................................................................................................................... 7

3.3 Management and administration of DAF .......................................................................................... 8

3.4 Area and types of investments ............................................................................................................. 9

3.5 Preliminary budget ................................................................................................................................. 9

3.6 Risks ....................................................................................................................................................... 10

3.7 Annex 1: Process Action Plan (PAP) for DAF ............................................................................... 11

3.8 Annex 2: Results Framework ............................................................................................................. 13

3.9 Annex 3: Assessment of Programmatic and Institutional Risks ................................................... 14

3.10 Annex 4: HRBA/Gender Screening Note ....................................................................................... 17

3.11 Annex 5: Climate Change and Green Growth Screening Note .................................................... 21

3.12 Annex 6: Assessment according to the budget support principles (this annex is not applicable

for this programme) ......................................................................................................................................... 25

3

1 Introduction

1.1 Strategic questions to guide the discussion.

The intention of the proposed Danish Agribusiness Fund is to support Danish enterprises and

Danish interests1 in order to ensure sustainable and economically viable projects in developing

countries. At the same time, the DAF aims at enhancing good investment- and market

opportunities for Danish enterprises within agribusiness and food production related industries

and services. Is the proposed DAF framework an effective vehicle for this purpose?

The DAF is proposed to give priority to projects that enhance value chain development, i.e. will

have a direct or indirect impact on other players in the value chain, notably also on small-

holders and SMEs that may be too small for a direct DAF-investment. Is it justified and

realistic to include such a priority?

The proposal suggests that investments in all DAC countries can be supported. Should a

percentage of the investments from the DAF be restricted to fewer (poorer) countries, i.a.

Danida’s contribution to the fund?

1.2 Summary of conclusions regarding the envisaged support.

As part of the Government’s Strategy for Export Promotion and Economic Diplomacy launched in June 2014, an Agribusiness Facility “Danish Agribusiness Fund (DAF)”2 should be established. To establish the DAF, an amount of DKK 89 million is allocated in the 2015 Finance Bill and IFU is expected to contribute with a similar amount from own sources. According to the Finance Bill, the DAF shall be administered by IFU on the basis of the experience from e.g. managing the Fund for Central and Eastern Europe (IØ-fonden) and the Danish Climate Investment Fund (KIF). The DAF will contribute to the creation of profitable and sustainable projects within agricultural production and food processing in developing countries. In parallel, the DAF is envisaged to enhance good investment- and market opportunities for Danish enterprises within agribusiness and food production related industries and services. On this basis, IFU and Danida have initiated the process of establishing the DAF. Main features of the proposed DAF include the following:

The objective of DAF is to contribute to sustainable economic growth in developing countries by enhancing profitable and sustainable investments within agricultural production, food processing and related industries;

The DAF is expected to mobilize additional funds from private and institutional resources, so the total fund is expected to be about DKK 750-800 million;

1 Danish interest is defined as Danish economic interest stemming from either direct equity investment and / or delivery of technology and / or know-how and / or management in a project 2 In Danish ”Landbrugsinvesteringsfonden (LIF)”

4

Projects will be supported in partnerships with Danish enterprises and commercial interests;

Investments in projects with clear developmental effects, such as smallholder inclusion, employment, training and education, environmental sustainability and food safety will be prioritized;

The success of DAF will be measured using indicators such as: expected and actual employment, direct as well as indirect (i.e. smallholders and SMEs upstream and downstream), generation of additional financing from other sources (mobilisation factor), CSR- and financial performance;

The DAF will be managed by IFU according to similar principles applying for the IØ-fonden and the Danish Climate Invest Fund (KIF).

A Process Action Plan showing the tentative planning schedule for formulation and approving the DAF initiative is provided in Annex 1.

2 Conclusions from preparatory analyses justifying the envisaged support

2.1 Justification of the envisaged support

Global food security is on top of the development agenda. The challenge of doubling the food supply to feed more than 9.6 billion people in 2050 is a daunting task in an era of increasing food demand and limitations in supply. Moreover, it is inconceivable to provide food security worldwide without involving small-scale farmers, who in many African and Asian countries account for approx. 80% of the farmland and provide up to 80% of the food products in these countries.

Almost 2 billion people, or approximately 1/3 of the World’s population, are working within agriculture today. According to World Resources Institute (WRI) half the globe’s arable land is used for agriculture. Agriculture is responsible for almost 25% of the emissions of green gasses and for almost 70% of the consumption of drinking water. An increase in food production by 70% over the next 40 years will consequently be a delicate balance. It will be necessary to secure food for 9.6 billion people in a manner, which will create jobs and assist in reducing poverty without putting more pressure on the environment.

Danish agriculture and Danish companies are among the leading in the world with regard to efficient use of resources. According to statistics of Danish Agriculture and Food Council, Danish food production has increased by 18% over the last 20 years. Danish agriculture and food processing companies can contribute on an important scale to secure efficient and environmental friendly growth in the food production and processing in developing countries.

IFU has significant experience with management of similar funds, e.g. the IØ and the KIF funds. Hence, IFU’s administrative structure makes it feasible and cost efficient to establish a

5

new investment fund, which is to invest in projects within agricultural development and food security in developing countries.

Furthermore, it is expected that DAF will perform in close cooperation with Danida’s Business Instruments, including the newly developed Danida Business Explorer and the Danida funded SME-facility managed by IFU. In addition, it is envisaged that cooperation will be extended to Danida supported private sector development programmes in which value chain development constitutes important elements.

2.2 Key experiences and results of previous support to consider for future support.

IFU has vast experience from agribusiness related investments. Combined, IFU’s classic investments and the IØ fund, have invested in approx. 270 projects in more than 70 countries covering projects within the entire value chain of agriculture from “farm to fork”. Supported projects cover the following sectors: primary agriculture, animal production, food processing, distribution, and production of agricultural machinery. IFU’s classic investments and IØ’s food and agriculture related investments account for 21.5% of the funds’ total portfolio. Danish industry has a historic close coupling with Danish farming and the funds’ large concentration of agriculture projects reflects Danish companies’ well-established position in this area.

Through the years, IFU and IØ have invested approx. DKK 4.2 billion3 which has generated total investments in the range of DKK 26 billion, equivalent to a mobilization factor of 6.2. Out of the 270 investments, IFU and IØ are still involved in 61 projects: 13 in Asia, 15 in Africa, 13 in Latin America and 20 in Central and Eastern Europe. The main areas are pig and milk production, food production and breweries, but also supporting industries such as machinery and fertilizer; and the investments have been made in partnership with Axzon, Idavang, Orana, Fan Milk, Carlsberg, Kongskilde, Palsgaard, and others.

From 1990 to 2013, IØ invested in nearly 100 agri-related projects in Central and Eastern Europe. IFU’s and IØ’s investments within agriculture and food related projects have yielded a stable profit, which is approx. 25% above IFU’s total profit for the period. From table 1 it can be seen that IFU and IØ from 1990 – 2013 have obtained an IRR of 8.8% from agriculture and food related share capital investments.

Table 1: Total activity within agribusiness of IFU and IØ from 1990 - 2013

3 Calculated in contracted investments

6

Table 2, including projects in which the total investment from IFU or IØ amounts to DKK 10 million or more, shows that IFU and IØ from 1994 – 2013 by share capital investments obtained and IRR of 12.0% in total.

Table 1: Total activity within agribusiness of IFU and IØ from 1994 - 2013

None of the projects with IFU or IØ investments are established and operating in isolation, but link up to the food value chain in the respective countries. In most cases the food value chain however has proven to be less than perfect and in some cases the project companies have been forced to “compensate” by engaging in downstream activities (slaughterhouse and transport) or upstream activities (feed mill, raw materials).

Some of the projects established with IFU financing have successfully included local smallholders in sourcing of raw materials in the form of out-grower programs on commercial terms, in some cases mixed with training financed under the IFU managed CSR Training Fund. Among these projects are: Barley cultivation for a brewery in Nigeria, vegetables in Peru, bee-honey in Nicaragua and maize and other cereals in South Africa, Zambia, Mozambique, Malawi, Uganda and Tanzania.

In implementing DAF, IFU will pursue these principles further.

2.3 Danish and national strategies for supporting agribusiness

Agricultural business development has been part of Danida’s development strategy since the introduction of sector programme support in mid-nineties. In the strategy paper “Partnership 2000” (1994), agri-business constituted, alongside growing recognition of the need for private sector development in the fight against poverty, an important element of Danida’s development strategy. Within the framework of support to agriculture, fisheries and broader business sector development, the value chain approach was introduced from around 2003. With the emergence of Danida Growth and Employment Programmes in 2009/2010 (and recently Danida Green Growth Programmes), agricultural value chain support with emphasis on agri-business are pursued in most private sector development programmes.

7

In the Danish strategic framework for priority area “Growth and Employment 2011 – 2015”, the value chain approach becomes an official strategy. The value chain approach is maintained in the latest Strategy for Denmark’s Development Cooperation: The Right to a Better Life, 2012. The overriding purpose of value chain support is to “promote better linkage between primary agriculture, processing and manufacturing enterprises, service enterprises on both input and output sides, microcredit providers, banks and the public sector”. The common goal is to increase the supply of quality products to both the international and the regional markets and especially to the home market. An important aspect of the value chain approach is that the impact of the value chain interventions should not only have a direct impact on the supported enterprise or group of farmers, but should also have an (indirect) impact on other players in the value chain.

This approach to agricultural and food security development is in line with the policy adapted in most development countries supported by Danida.

It is envisaged that the DAF will give priority to participate in projects where the investments, in addition to enhancing the performance of a single enterprise, will also have an impact on other players in the concerned value chain. Especially projects that support development of small holders and SMEs upwards and downwards the concerned value chain will have priority.

3 Preliminary overview of envisaged support

3.1 Objectives of DAF

The objective of DAF is to contribute to sustainable economic growth in developing countries by enhancing profitable and sustainable investments within agricultural production, food processing and related industries. The results will be a number of sustainable and profitable projects that will create growth and employment, both directly and indirectly. Indirect employment is envisaged in relation to smallholders and SMEs upstream and downstream the value chain in which the investment project is situated. In addition, the number of CSR initiatives is expected to increase significantly. These results are in line with the immediate objective of the Danish Government’s newly launched Government’s Strategy for Export Promotion and Economic Diplomacy. It is foreseen that 10-15 projects will be supported annually which may create 1,200-1,500 direct jobs and 8,000-10,000 indirect jobs. Reference is made to the Results Framework in Annex 2.

3.2 Theory of change

The theory of change can be described as follows: DAF provides investment in an agro-business partner enterprise that has good knowledge of the value chain in which it operates. The partner enterprise is capacitated with knowledge, skills, systems, technologies etc., through the investment. The partner enterprise (often together with service providers4) assists suppliers of inputs (for example smallholders through contract farming) to improve quality (standards) and quantity of inputs and (sometimes) also support the distribution chain to make it more effective. Because of the partner enterprise’s work with input suppliers and (sometimes) distributors, opportunities for farmers, the partner enterprise and distributors to improve their performance, by changing the way they behave, are created. If farmers, partner enterprise and

4 This may be financed through other Danida supported instruments or other government or donor supported programmes.

8

distributors recognize the potential benefits of this opportunity, then they all take advantage of the opportunity and improve their performance, for example increasing quality and range of products to the market. This improvement in the performance of many smallholders, the partner enterprise and distributors, increases their incomes and makes the value chains more competitive, which again contributes to long-term, broad-based, sustainable and inclusive growth. The simplified series of changes can be illustrated as follows:

3.3 Management and administration of DAF

IFU will be the manager of DAF, and the investment appraisal and monitoring will be carried out by IFU staff and expert advisors. The investment process will follow IFU’s standard investment procedure covering analysis of the investment partners, the local partners and the projects. As facility manager, IFU will be responsible for identification, development, assessment, structuring, etc. of the individual investments. The management set up will be further elaborated in the project document.

The structure of DAF is proposed as follows:

The Government funds and IFU's contribution is placed in a DAF facility which will make a current reinvestment of the Government’s return and IFU's return;

The capital of the facility will be invested in the Agriculture and Food Fund (DAF 1), established by private investors. The aggregate funds in DAF 1 – from public and private sources – will then be invested over 3-4 years and the investments are exited – typically during a period of 6 – 8 years, however in all likelihood the exit period will be 8 – 10 years for primary production.

The investment strategy is envisaged as follows: It is anticipated that the investments are made in partnership with companies with strengths in the areas within agriculture, aquaculture and food production and –supply, i.e. at any level of the food value chain. DAF will pursue the objective of having the investment partner’s financial exposure matched or exceed DAF’s exposure. In most cases, DAF and the investment partner will expectedly have joint majority in the projects. Normally, the investment partner will have operational experience and expertise within the field of investment. The partner has traditionally been one of the key determining factors of a project’s success, as the partner is normally closest to the daily operation of the project.

DAF provides finance (and TA)

Agri-business enterprises are capacitated with new

technology market information etc

Improved performance of agri-business enterprises

and of upstream and downstream value chain

actors

Increased quality and/or quantify/efficiency of value

chain produce

Increased income for all value chain actors leading

to jobs, growth and poverty reduction.

9

3.4 Area and types of investments

DAF should be able to invest in the entire agricultural value chain from “farm to fork” and across sectors and regions. Investing in projects within deep-sea fishing should only be in exceptional cases as sea fish is considered a scarce resource under pressure. Furthermore, DAF should not invest in crops for energy production, as this type of projects must be considered to be within the objectives of the KIF, if at all supported.

It is proposed that DAF invests in the following type of projects:

● Investments in primary production (crops, gardening, agroforestry and husbandry) projects which contribute to the increase in the quantity and quality of crops (grain, fruit and vegetables) as well as meat and milk;

● Aquaculture; ● Treatment, drying and storage of crops; ● Production of food; ● Logistics; ● Processing of byproducts and waste; ● Production of machinery and equipment (agriculture and food industry); ● Production of feed, vitamins and other ingredients for feed production; ● Production of veterinary products; ● Consultancy and other production advisory services

Investments will be in the form of equity, quasi-equity (convertible) instruments and debt. Investments in projects with clear developmental effects, such as e.g. smallholder inclusion, employment, training and education, animal welfare and food safety will be prioritized. Elaboration on how the HRBA and gender principles will be addressed in the DAF is provided in Annex 4 and issues related to environmental and climate change is elaborated in Annex 5. In the formulation process, it will be considered whether it is possible to include CGAP in an advisory capacity related to inclusion of smallholders in the DAF investment projects. Where possible, IFU will collaborate closely with other Danida business instruments. In addition there seems to be obvious opportunities for substantial synergy effects in a number of countries where Danida supports value chain development as part of private sector development support programmes.

3.5 Preliminary budget

The total paid-in capital is expected to be DKK 750-800 million; initially DKK 89 million is expected from the Danish Government and a similar amount from IFU. In addition, private and institutional investors are expected to inject an additional DKK 500-600 million in the fund.

Expecting a fund capital of about DKK 750 million and an investment period of about 4 years, the indicative budgets for paid-in capital and disbursements are as follows5 Indicative budget for the paid- in capital of the Danish Agribusiness Fund 2015 – 2017 – DKK

million

5 It is, of course, difficult to foresee the exact interest of institutional and private investors in the DAF and also to foresee the exact annual investments.

10

2015 2016 Total

- Danida 89 89

- IFU 89 89

- Institutional

investors

300 300 600

Grand total 478 300 778

Indicative disbursements from the Danish Agribusiness Fund 2015-2018

2015 2016 2017 2018 Total

Annual

investments

194,5 194,5 194,5 194,5 778

The exit period is expected to be about 8-10 years.

3.6 Risks

IFU invests in projects located in developing countries. Political and economic conditions may be turbulent in such countries, and the projects are often subject to high commercial risks. To minimise the overall risk in IFU’s investment portfolio, a set of risk policies has been implemented in the investment policy. These policies include guidelines for appraisal of commercial risk, for project, partner and country risk exposure as well as guidelines for managing direct financial risk. It is anticipated that the strategy of investing through the entire agricultural value chain, across sectors and regions, will mitigate risks related to agribusiness investments. See also the Risk Management Matrix in Annex 3.

11

Annexes

3.7 Annex 1: Process Action Plan (PAP) for DAF

Time line

Programme Documentation Responsible

December 9,

2014

Programme Committee

Meeting

Minutes from Meeting MFA/GRV

December

2014/January

2015

Preparation of Draft and

Final Draft Project

Document

Draft Documents External

Consultant/IFU with

comments from GRV

and possible including

CGAP

Beginning of

January 2015

ToR for appraisal

forwarded to TAS

ToR GRV (with assistance

from External

Consultant)

January Workshop with relevant

NGOs, organizations and

others interested in DAF

Minutes from the

workshop

GRV (with assistance

from External

Consultant)

End January

2015

All draft documentation for

the project forwarded to

TAS

Draft Project Document,

and associated

documentation as per

AMG

MFA/GRV

Beginning

February 2015

Discuss main issues to be

considered by Appraisal

Mission

Agenda for meeting TAS

February/March

2015

Appraisal Visits to IFU GRV/TAS

Primo March

2015

Appraisal process finalized Appraisal Report,

Recommendations

summary

TAS

12

Time line

Programme Documentation Responsible

End March

2015

Formulation process

finalised

Final Project Document Formulation

Consultant/MFA/GRV

Medio April

2015

Project Document with

appropriation cover sheet

forwarded to KVA

Final Project Document,

annexes and additional

documents

MFA/GRV (with

assistance from

External Consultant)

End April 2015 Presentation to the Danida

External Grant Committee

Minutes from Grant

Committee Meeting

KVA and GRV

May 2015 The minister approves the

project

Resume from Danida

External Grant Committee

and Signature of Minister

KVA

June/July 2015 Parliamentary Finance

Committee approves the

project

Appropriation papers and

Signature of Minister

KVA

August 2015 Signing of legally binding

agreements (commitments)

with IFU

Legally binding agreements MFA/GRV

September 2015 Book commitment in

MFA’s financial systems

within budgeted quarter.

First disbursement MFA/GRV

13

3.8 Annex 2: Results Framework

To be further elaborated during formulation

Preliminary Results Framework

Thematic

Programme

Danish Agribusiness Fund (DAF)

Thematic

Programme

Objective

The objective of DAF is to contribute to sustainable economic growth in

developing countries by enhancing profitable and sustainable investments

within agricultural production, food processing and related industries.

Impact Indicators Expected and actual employment, direct as well as indirect i.e.

smallholders and SMEs upstream and downstream, CSR- and financial

performance.

Engagement Title Danish Agribusiness Fund (DAF)

Outcome indicator Number of investments made by DAF and associated number of direct and

indirect jobs, CSR initiatives and financial performance

Baseline Year 2013 14 investments – 5 in new projects and 9 additional investments -

with a total contracted investment of DKK 179.8 million in

agribusiness made by IFU’s classic

632 direct jobs is expected in the 5 new projects.

Target Year 2017 12-15 investments made by DAF per year, which may support

1,200-1,500 direct jobs and 8,000-10,000 indirect jobs.

14

3.9 Annex 3: Assessment of Programmatic and Institutional Risks

Programmatic Risks

Risk Factor Likelihood Background to assessment of likelihood

Impact Background to assessment to potential impact

Risk response Combined residual risk

A possible new global financial crises will limit Danish companies’ ability and willingness to invest in ventures in developing countries.

Un-likely Being almost through a global financial crises it is considered unlikely that a new crises will start within the next 3 years.

Major A new financial crises will limit Danish companies’ interests in investing in ventures in developing countries. This was also the case during the recent crises.

A thorough involvement of IFU in preparation and implementation of new DAF investments will limit the damage of a new crises.

Minor

Political and/or financial developments in individual countries limiting Foreign Direct Investments.

Possible During recent years financial or political turbulence have taken place in many developing countries.

Major Political or financial turbulence in a country with IFU investment will often have a major negative impact on the investments.

IFU will try to mitigate consequences concerning ongoing projects, whereas new investments will be halted until the situation is acceptable for investments. Furthermore, investment demand and appetite from Danish enterprises in such countries will be expected to be limited.

Minor

Lack of interest and/or capability by Danish enterprises to invest in developing countries.

Un-likely Danish enterprises may be vulnerable towards investing in developing countries – especially In the agricultural sector.

Major If Danish enterprises loose interest or capability to invest in developing countries it will be difficult or impossible for IFU to achieve the targets of the DAF.

More support and assistance to agribusinesses through the DAF will make investments less vulnerable and provide better changes for success and sustainability.

Minor

Commercial failure of

Likely Unless investments are

Major Commercial failure of investments will mean that both the concerned

IFU has elaborate risk management procedures, comprehensive

Minor

15

individual investments.

carefully appraised they can easily lead to commercial failure.

partner enterprise and IFU will have high probability for losses.

appraisal procedures and experience for mitigating the risks detected prior to investments.

Institutional Risks

Risk Factor Likelihood Background to assessment of likelihood

Impact Background to assessment to potential impact

Risk response Combined residual risk

Misuse, corruption and fraud by participating Danish and/or local partners

Likely According to International Transparency Index, corruption is widespread in most developing countries

Major Implementation of project interventions may be seriously damaged if funds are mismanaged

Denmark’s and IFU’s zero tolerance principle will apply and any mismanagement will be addressed

Minor

Disagreement on IFU’s investment committee concerning the priority of projects and compliance with agreed terms and conditions for Danish financial support

Un-likely Experience shows that investments in smaller investments are less profitable for IFU than investments in larger enterprises.

Minor Support to agribusiness is an important part of the strategy, and it is unlikely that committee members will deviate from the strategy.

The DAF provides IFU with an instruments that makes it attractive to invest in agribusinesses.

Minor

Cooperation with Danida and other donor projects may not be on the top agenda of IFU

Un-likely Board members may find that it is too bureaucratic to work with donor support and require too many resources to

Major

Without DAF, IFU may be reluctant to finance significant involvement in agribusiness – and thereby agri-based value chain development. Important synergy opportunities may be lost.

The DAF is designed so IFU’s normal procedures in implementation will be used. Collaboration with Danida business instruments and private sector programmes may extend chances for successful DAF investments.

Minor

16

coordinate with other programmes

It may be difficult to attract investments from private sector investors

Un-Likely Investors may be reluctant to invest in agrobusiness

Major Private investors may find that investments in agriculture contain more risks than other investments.

The DAF is designed to minimize the risks for private investors. IFU’s experience show that institutional and private investors are interested in agri-business (and not in smaller primary agricultural projects)

Minor

17

3.10 Annex 4: HRBA/Gender Screening Note

Basic info

Title Danish Agribusiness Fund (DAF)

Country/ region Countries eligible for IFU climate investments – DAC countries

Budget in DKK

mio.

DKK 750 - 800 million of which 89 million from Danida

Starting date and

duration

September 2015 – Investment period 3-4 years and exit of 8-10 years.

Human Rights Based Approach

Assess whether a Human Rights (HR) Based Approach has been applied in the programme:

Human Rights Assessment and Standards

Issues: yes no Explain:

Have major HR analysis relevant for the country

been consulted (UPR, OHCHR, EU HR Strategy,

other relevant donor documents)

X Not applicable given the regional nature of the

fund.

Have key international HR standards and/or

mechanisms influenced choice and formulation of

outcome areas?

X IFU has signed up to the 10 UN Global Compact

principles, and is committed to implementing and

advancing these together with the project

companies. IFU’s policy is based upon international

UN, ILO and OECD conventions, declarations

and agreements, including the UN Guiding

Principles on Business and Human Rights.

Where relevant, is application at national level,

including major gaps between human rights in

principle vs. human rights in practice, evaluated and

identified?


fund.

Are key recommendations from UPR for the

thematic programmes and from any treaty bodies,

special procedures, INGOs, HNRIs etc. that

require follow up at national level considered?


fund.

Are rights-holders identified? X People employed in the joint ventures and people

and communities affected by the joint ventures.

18

Are duty-bearers identified? X Authorities responsible for private sector

regulations and framework.

Assess whether Human Rights Principles have been applied in the preparation and in the design of the programme?

Non-discrimination: Are any groups among rights-

holders excluded from access and influence in the

thematic programme areas identified?

X IFU advocates non-discrimination and encourages the project companies to promote gender equality. Companies must ensure that their policies and practices promote equal opportunity and prevent discrimination.

Are disaggregated data available on most vulnerable

groups? X Not applicable at programme level given the

regional nature of the Fund. Such issues will be

assessed at project level if applicable

List any key support elements included to promote

non-discrimination X IFU uses the UN Global Compact self-assessment

tool which includes an assessment of all human rights including discrimination

Participation and inclusion: Are barriers for

participation, inclusion and empowerment of rights

holders identified?

X Not applicable at programme level given the

regional nature of Fund. Such issues will be



participation and inclusion X IFU uses the UN Global Compact self-assessment

tool which includes an assessment of all human

rights including participation/inclusion

Transparency: Is the extent to which information is

accessible to rights holders including marginalised

groups assessed?

Where relevant, whether information is available in

other than official languages of the country in

question should be indicated.

X Not applicable at programme level given the




transparency X IFU uses the UN Global Compact self-assessment


rights including communication /participation

/transparency – e.g. free prior and informed

consent (FPIC)

Are key accountability mechanisms in the relevant

area – both horizontal and vertical listed? X Not applicable at programme level given the

regional nature of the Fund.

Are obstacles, e.g. capacity and political-economy

incentives that duty-bearers and rights holders face

to exercise their obligations and rights listed?

Not applicable at programme level given the



accountability X IFU uses the UN Global Compact self-assessment


rights including communication and reporting

towards stakeholder and vulnerable groups – e.g.

free prior and informed consent (FPIC)

19

Results/Indicators

List any indicators designed to monitor the

realisation of specific human rights X IFU uses the UN Global Compact self-assessment


rights issues, core labour standards, environmental

issues and anti-corruption. 45 questions and +200

indicators. Not all indicators are relevant for every

project, but whose which are and which the

company doesn’t have a clear approach towards

will be identified at project level and used to set up

a CSR action plan

List any indicators designed to monitor the

integration of the four principles X See above

List any key indicators chosen to track capacity of

key partners (both rights holders and duty bearers) X See above

Dialogue Partners

Define key dialogue partners (duty bearers) to be

addressed by the country programme Not applicable given the regional nature of the

Fund. Such issues will be assessed at project level if

applicable

Define key alliance partners, including other

likeminded donors, multilateral partners and CSO’s IFU uses the UN Global Compact self-assessment


rights issues and prepared by the Danish Institute

of Human Rights

State major dilemmas/risks associated with the

policy dialogue and proposed mitigation measures

(incl. reference to Framework for Risk Assessment)

Not applicable given the regional nature of the

Fund.

Gender Screening Tool

Are key challenges and opportunities for gender

equality identified? Not applicable at programme level given the



Are reference made to CEDAW-reporting, UPR,

and other relevant gender assessments? Not applicable at programme level given the


Identify opportunities/constraints for addressing

gender equality issues The employment opportunities for women varies

depending on the project. Traditionally, most jobs for women within agribusiness are low skills jobs, and very few women are in managerial or

20

supervision positions. In DAF investments, gender equality will be pursued at all levels. It is also expected that many indirect jobs - that may be created upstream or downstream of the agribusiness enterprises supported - will provide opportunities for women, for example through female cooperatives or female farmer groups.

Such issues will be assessed at project level if applicable

Describe key strategic interventions to promote

gender equality within each thematic programme? IFU promotes gender equality as applicable

Empowering women is an indispensable way of advancing development and reducing poverty. Discrimination against women - including gender-based violence and reproductive health inequities – contributes to maintaining inequality. The policies and activities of the project company must respect women’s rights and promote financial, social and political equality between men and women.

Explain how gender specific purposes will be

reached, which strategic approach, what activities

are planned

See above

Define expected outputs. Not applicable at programme level given the



Identify gender equality indicators aligned with

national targets on gender if possible. Not applicable at programme level given the



21

3.11 Annex 5: Climate Change and Green Growth Screening Note

Basic Information

Programme title: Danish Agribusiness Fund (DAF)

Country/region: Global (all DAC countries)

Estimated allocation: 750-800 Million DKK of which 89 million from Danida

Brief description of the Programme support:

Investment in Agri-businesses at all levels of agro-based value chains to improve food availability

Dates (expected): Programme committee: End November. Appraisal: March 2015

Climate change screening

Assess the status of policies and strategies to respond to climate change in the country and sector. If the issue is inadequately dealt with (indicated by a tick in the “no” box), please add comments and assess the potential impact on the program (see also “next steps” section, below).

Issue: Yes No Comments and further work to be done:

1. Are the processes and impacts of climate change documented (e.g. in national communications to the UNFCCC)?

x Not applicable at programme level given the regional nature of the Fund. Such issues will be assessed at project level if

applicable

2. Is there a national climate change policy or strategy, including estimates of the economic costs of adaptation?

x IFU has a sustainability policy which includes a preventive and precautionary approach to environmental challenges including climate change

3. Have nationally appropriate mitigation actions (NAMAs) and or Low Carbon Development Plans been identified (e.g. targets for renewable energy production)?

x See above

4. Has a national adaptation programme of action (NAPA) been approved identifying key sectors where

x See above

22

adaptation is required?

5. Are there effective and operational meteorological and disaster preparedness organizations?

x

Summarize the overall assessment of climate change impacts and responses:

IFU do access whether the project has a positive impact and if relevant estimate net carbon savings in t CO2e (project emissions are less than the baseline emissions) or whether the project has a negative impact. If the project is most likely a significant net emitter of carbon (>25,000 t CO2e per year) there will be a requirement for actions to reduce emission.

Screening of Country Green Growth Framework

Assess the status of policies and strategies for green growth and the procedures for environmental impact assessment in the country and sector. If an issue is inadequately dealt with (indicated by a tick in the “no” box), please add comments and indicate further work to be undertaken (see also “next steps” section, below).

Issue: Yes No Comments and further work to be done:

1. Do national procedures and legislation for Strategic Environmental Assessment (SEA) and Environmental Impact Assessment (EIA) exist?

x Not applicable at programme level given the regional nature of the Fund. Such issues will be assessed at project level if

applicable

2. Are there operational Green Growth Strategies/actions plans and/or National Environmental Action plans?

x See above

3. Are there regularly updated state of the environment reports and green growth monitoring systems with indicators?

x See above

4. Is there sufficient institutional and human capacity for green growth and environmental management in the sector concerned?

See above

Summarize the overall impression of the Country Green Growth Framework:

Not applicable at programme level given the regional nature of the Fund.

Climate change and Green Growth opportunities and risks of programme

Assess how climate change and environmental opportunities and risks will arise through the programme:

Will the programme ... Oppor-tunity:

Risk: None:

1. ... support green growth initiatives including livelihood improvements and resource efficiency

x

2. ... support the creation of decent and green job? x

3. ... contribute to effective management and efficient use of x

23

natural resources

4. ... have direct or indirect impact on climate change (e.g. through increasing or reducing emissions of greenhouse gases)?

x

x

5. ... have direct or indirect impact on occupational health and safety?

x

6. ... lead to changes in land and resource tenure and access rights, including the rights of indigenous peoples?

x x x

7. ... include activities within or adjacent to protected or environmentally sensitive areas?

x x

8. ... have direct or indirect impact on the resilience of communities in the face of natural disasters?

x

Summarize and explain climate change and green growth opportunities:

Projects related to food production in the whole value chain could by using best available technology and increasing competences and productivity improve livelihood, resource efficiency and reduce the impact of climate change. IFU financed project shall comply with IFU’s sustainability policy including land rights , health and safety and other human right issues such as ILO core standards.

Furthermore IFU’s sustainability policy require projects to consider the environmental performance through a preventive and precautionary approach that addresses environmental challenges, including climate change, loss of biodiversity and land use changes

Summarize and explain climate change and green growth risks:

Some individual projects may include issues related to environmental sensitive areas and issues in relation to indigenous people. Such issues will be assessed in accordance with international guidelines set up by the World Bank and IFC

Identify requirements for undertaking an Environmental Impact Assessment (EIA). Categories are: [ A ] Full EIA required; [ B ] Partial EIA required; [ C ] No EIA required6. Intervention Name Category A, B or C:

1: Select category:

2: Select category:

3: Select category:

The internationally accepted category levels A, B or C (high, medium and low impact respectively) as well as the category “B+” (determining projects of generally medium impact with some specific higher impact features) are applied by IFU to all project investments. A projects: ESIA by a qualified expert, in compliance with IFC guidelines (PS1 B+ projects: ESIA by a qualified expert, in compliance with IFC guidelines (PS1) at least for areas with significant specific risks (partial ESIA) B projects: No ESIA C projects: No ESIA

6 Category A = Intervention is likely to have adverse environmental impacts that may be sensitive, irreversible, and significant in scale/scope; B = Intervention is likely to have negative impacts, but which are less significant, not as sensitive, numerous, major or diverse; C = The environmental risk of the intervention are of little or no concern.

http://www.ifc.org/ifcext/enviro.nsf/Content/PerformanceStandards

http://www.ifc.org/ifcext/enviro.nsf/Content/PerformanceStandards

24

The CSR self-assessments – covering all 10 Global Compact principles (45 indicators)- are carried out for all projects no matter category. Will national regulations and procedures for EIA be applicable to activities of the programme that have potential environmental impacts? – Yes - No In some countries EIA procedures are implemented to an extent useful. When will the EIA be undertaken?: See above

Next Steps – process action plan

Need for further work during the preparation, appraisal and implementation of the programme arising from the climate change and green growth screening: Suggested activity: Action needed Comments and elaboration:

1. Assessment of green growth and climate change opportunities in sector development plan.

Not applicable

2. Assessment of capacity for green growth and climate change management in the sector/country.

Not applicable

3. Prepare ToR for and conduct Country Analytical Work.

Not applicable

4. Prepare ToR for and conduct SEA(s) of sector policies or plans.

Not applicable

5. Prepare ToR for and conduct EIA(s) for programme interventions.

Not applicable

6. Initiate donor harmonisation in the sector on green growth and climate change.

Not applicable

7. Other...?

Signature of Screening Note

Place and date ………………………………………………………. (name) Danish Mission in

25

3.12 Annex 6: Assessment according to the budget support principles (this annex is not

applicable for this programme)

CONCEPT NOTE - Udenrigsministeriet/media/UM/English-site/Documents... · CONCEPT NOTE Danish...

Documents

Transcript of CONCEPT NOTE - Udenrigsministeriet/media/UM/English-site/Documents... · CONCEPT NOTE Danish...