Local Competitiveness Facility (Rwanda)

Sofie Geerts, International Technical Advisor on LEDRwanda Decentralisation Support Programme

Stimulate partnerships between large, medium, small, micro enterprises

and cooperatives.

Promote value chain development: mitigate cost and risk barriers by partnering

Have positive LED resultsMeet pro-poor developmental objectives

4 objectives

What is LCF?

1.2.

4.3.

LCF = a grant fund with own-funding requirement for grantees: 4 objectives

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Why LCF?

1.2.

4.3.

• Idea from South Africa – similar fund exists 16 years – positive LED results

• Rwanda policy environment: private sector as engine of job creation; government to create enabling environment

• Feasibility study for LCF conducted: no other similar fund, local potentialities there but no access to finance; lack of finance main barrier to keep small enterprises from growing

LCF: a complementary tool for business environment and LED

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Different LED approaches:• Value chain

development• Skills development• Cluster development• Public-private

partnerships• Branding of local

economy• Etc.

LED=

Job creation, economic growth, higher

incomes

LCF grant funding + CB

= means to stimulate

private sector development

LCF as complimentary economic model to achieve LED

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LCF and LED

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Different LED APPROACHES

to be implemented

COORDINATION and PLANNING:• Planning• Coordination• Harmonisation

BASIC FACTORS in PLACE like infrastructure, business development services, skills, etc.

ACTIVE ECONOMY on the LOCAL

LEVEL

Contribution of RDSP and LCF to LED in Rwanda

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TFF RDSP: initial concept; GoR/BTC, LCF

South Africa

LCF assessment: feasibility, stakeholders

LCF Programme Document: Rationale, design and why,

governance, TC

LCF Operational manual (including tools):

Consultant, LODA, Districts, TC

LCF pilot implementation

LCF develop

ment process 1.

5.

2.

3.

4.

• Process started in 2015• Many stakeholders consulted• Strong ownership from MINALOC, LODA, local

government• Feasibility assessment• Quality assurance: LCF South Africa, TAs LODA,

BTC, WB, UNCDF, DFID

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LCF development process

Funding windows available

WINDOW PROJECT VALUE GRANT OWN CONTRIBUTION (cash or in-kind)

Window 1: 5 000 000 - 10 000 000 Rwf (6000 – 12 000 euro)

90% 10%

Window 2: 10 000 000 - 40 000 000 RwF(12 000 and 50 000 euro)

70% 30%

LCF piloted in 4 Districts – 600 000 euro per District available

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Who can apply?WINDOW 1Two possibilities:• A medium or large company partners with

micro, small companies or cooperativesThe applicant company should be a formal company, others are informal;

• An NGO partners with micro, small companies or cooperativesThe NGO is the applicant organisation; other companies are informal

Note:• At least two companies per partnership• TVET centres (public or private) can be part

of the partnership

WINDOW 2Two possibilities:• Micro, small companies or cooperatives

clustering together• Large/medium companies partner with small

micro enterprises/cooperatives with focus on value chain integration and linking small companies to markets

Note:• All companies should be formal• At least two companies per partnership• TVET centres (public or private) can be part of

the partnership

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• Agribusiness: both agriculture and livestock

• Handcrafts: basketry and mats, embroidery and woven products, hand textiles, ceramics and pottery, leather (products), wood products (carpentry), jewelry (products), metal products (welding)

• Tourism: accommodation, development and operationalization of touristic sites, cultural villages, cultural sites, guides, travel agents, water sports

• ICT: radio, television, cellular phones, computer and network hardware and software, satellite systems, as well as services associated with them (videoconferencing, e-learning, MEIS, mobile money, internet registration services, internet services…)

• Distribution and services sector: in partnership with any of the above sectors; companies in the distribution or services sector alone cannot apply, it should be distribution and services companies as part of a value-chain (e.g. a transport company partnering with an agribusiness company)

Target economic sectors for LCF

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Launch of LCF

Awareness campaign

Notification to applicants

Evaluation full project proposals

Evaluation of expressions of

interest

Call for expression of interest

Notification of provisional results

Due diligence

Investment Committee Award notice to

winning projectsContracting

First payment

Second payment

Third payment

Fourth payment

Site visits and monitoring reports

Financial AUDIT

Steps for call for proposals 1

Selected projects to submit full

proposal

Purpose:• Build awareness of existence of LCF, how to apply, eligibility, criteria• Mobilise private sector to apply for funding from LCF

WEBSITEwww.lcf.rw

RADIO spot

TV spotBROCHURES

POSTERSBANNERS

AWARENESS meetings

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Awareness campaign

Technical Committee

Investment Committee

LODA/LED LCF Secretariat

DISTRICT/BDEU LCF Secretariat

BENEFICIARIESPartnerships

LODA BoD

RDSP

Evaluation

Appl

icati

on Feed back

Cont

ract

Grant Agreement

MoU

MEISAdvisory

Advi

sory

EvaluationDistrict

evaluation committee

External evaluation consultants

Evaluation

Governance and management

Important lessons in setting up a new grant fund to enhance LED

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• Assess feasibility prior to confirming and designing the fund• Start in a limited number of localities (pilot)• Compare with other existing and closed funds – avoid overlap• Involve all relevant stakeholders from the start • Long decision-making process: ensure buy-in of crucial decision-makers at

all stages• Envisage starting under co-management modality, with later shift to grant

agreement modality to ease design and share early risks; ensure ownership• Ensure adequate role of central vs. local government in governance and

decision-making structure

Thank you

Questions?

Evaluation criteria….Expression of interestLCF OBJECTIVE Criteria1. LED IMPACT Potential for extra jobs to be created

Potential for increased salaries Market access Alignment with LED Strategy/DDP

2. PARTNERSHIP Partners to prove their institutional capacity to implement; Demonstrate a win-win objective for all partners involved; Participation and ownership of all partners involved Own-funding requirement available Involvement of TVET Centre

3. INNOVATIVE IDEAS IN VALUE CHAIN DEVELOMENT

Contribution to innovation Focus on value chain development

4. PRO-POOR Pro-poor impact to be shown: potential for job creation for poor people (Ubudehe 1 and 2)

Evaluation criteria….Full proposalCRITERIA KEY ELEMENTS

1. RELEVANCE Appropriate activity schedule Contribute to the profitability of the partnership members Market analysis: competition, target clients, demand, sales

and distribution (only for window 2)

2. FEASIBILITY Technical and organizational capacity of the members to implement the project, including staff

Own-funding requirement proven Financial viability of the project including cost benefit ratio Risk management (only for window 2)

3. SUSTAINABILITY Sustainability of the businesses part of the partnership group

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