International Labour Organization
- INTRODUCTION AND BACKGROUND a. Current challenges
Over the past decade, Ethiopia has been among the fastest growing economies in the world with double-digit economic growth. Some 85 per cent of its 109 million inhabitants live in rural areas, and inclusive agricultural growth is a driver of poverty reduction. However, agricultural productivity is low due to land degradation major, poor water management, low technology usage and an underdeveloped marketing system, among other factors.
Increase of food prices has been another source of concern. Prices were higher year on year mainly due to macro-economic difficulties and conflict-related trade disruptions in some areas. As a way of illustration, in August 2021 prices of maize have increased by 5 to 15 percent in all monitored markets including, the capital, Addis Ababa. In the Addis Ababa market, prices of teff, an important cereal in the local diet, and prices of wheat, partly imported, also increased in August 2021 by 7 and 20 percent, respectively, when they were 18 and 87 percent, respectively, higher on a yearly basis. The high prices of cereals are mainly due to the continuous depreciation of the country’s currency, which has resulted in high prices of imported fuel and inputs, the poor performance of the secondary season “Belg” harvest, completed in August with about a one-month delay, due to poor rains, the Law Enforcement Operation in the North which has caused severe disruption to agricultural activities – all exacerbated by the absence of institutional systems to absorb such shocks and build resilience in the economy. Inflation has become one of the binding constraints for policy makers both in their short- and long-term efforts to advance economic progress.
b. Untapped cooperative advantage Despite the historical challenges they face in the region, cooperative enterprises are omnipresent in the continent, representing a significant part of the private sector in many African countries , Ethiopia is no exception. Cooperatives in Ethiopia play an active role in the fields of financing, input and output marketing, agro-processing, and many other social and economic activities. In 2020/21 FY, Ethiopia had 99,545 primary coops, 395 unions and 5 federations They had 24 million members of which 30% were female. The largest number of primary cooperatives in Ethiopia are housing cooperatives (32%) followed by agricultural cooperatives (25%), which could be production and marketing while the situation is different in terms of membership.
Historically, during periods of crises, the value of cooperation, solidarity, and mutualism experience an increase in popularity. It is also during such times that there is a surge in membership and turnover of cooperatives and the wider social and solidarity economy. This was the case during and in the aftermath of the 2007-8 global financial crisis. Studies of the International Labour Organization (ILO) shed light on the role of cooperatives in Africa as they were confronted with high volatility in commodity prices and the overall recession in global demand. Findings show that cooperatives manage to cushion the impact of the crisis better than other types of enterprises. For instance, farmers
can use cooperatives to achieve greater economies of scale, in order to mitigate the impact of fluctuations in export prices and input costs. Savings and credit cooperatives also help meet the needs of farmers for credit throughout the agricultural cycle. This creates the need for bridging finance, in order to access agricultural inputs, as well as to finance daily subsistence. Access to finance creates opportunities for farmers to purchase services and infrastructure that increase agricultural productivity.
In the context of the devastating effects of the COVID-19 pandemic, cooperatives and wider SSE organizations around the world are mobilizing to provide relief for their workers, members, and communities. Cooperatives have responded to different aspects of the crises in the immediate to short term. Most of these responses have come from secondary and tertiary level organizations.
Nevertheless, cooperatives and their movements in Africa in general and in Ethiopia in particular remain relatively weak to fully contribute to poverty prevention and reduction through an increased participation in trade flows and value chains. In addition, COVID-19 also demonstrated the vast opportunities that exist for promoting innovations in a growth and recovery agenda. In the face of the pandemic, e-commerce and other digital solutions have kept food value chains alive in some countries by facilitating on-line retail, improving production efficiency and enhancing interaction of food chain actors. But most cooperatives still face literacy and meaningful digital gaps that prevent them from benefitting from global efforts to leverage digitalization in COVID-19 response that may end up in further marginalizing them.
Despite their large number and membership base, cooperatives in Ethiopia have not gained significant market share in production, marketing or financing. From consultative meetings between the ILO and ECC in 2021, several challenges have been identified including unprofessional and non-competititve nature of the cooperative management, due to pay and government influence which stifle incentives to take initiative and grow the coop business. Cooperatives lack internal capacity (human and technical resources for instance) and external accountability (audit, inspection) to have healthy financial controls that minimize waste and corruption. Their accounting and information management systems are generally not upto local or international good practices. Cooperatives struggle to access financing from financial institutions hence they can’t grow their business or invest. Additionally, due to poor communication and historical legacy, cooperative suffer from poor reputation problem (they are seen as government/ political institutions).
c. Releasing the cooperative potential
Conscious of the high potential to cooperative development to address critical challenges, the government of Ethiopia through its Ethiopian Cooperative Commission (ECC) has developed a manual for the modernization of cooperatives. The aim of this training and operational manual is to support cooperatives at all levels to modernize their management and operating systems, as well as and service delivery. The document identifies three priority types of cooperatives for modernization, namely:
agricultural cooperatives, which are widely considered as a vital foundation that can help smallholder farmers overcome the constraints that hinder them from taking advantages of their business as they empower economically weak farmers by enhancing their collective bargaining power and thereby reduces the risks that they face in the market;
consumer cooperatives, as a business owned by its customers for their mutual benefits which take the form of take the form of retail outlets owned by their customers; To this end, consumer cooperatives are expected to supply agricultural and industrial products with good quality, sufficient quantity, fair prices and on time according to the basic needs of their members;
financial cooperatives, whose role in deepening access to credit for agriculture in the rural areas and improving access to near banking services for both rural and urban households has been seen as critical.
As outlined in the Manual, modernizing cooperatives require strengthening internal structures, which are leadership, operational processes, and service delivery.
Objective and scope of the assignment
With its globally and historically recognized accomplishments in promoting cooperatives and the wider social and solidarity economy, the ECC considers the International Labour Organization (ILO) as an important capacity builder who can play a valuable role in realizing the modernization ambition. In an effort to support the government in realizing the full potential of cooperative enterprises, the ILO in close collaboration with ECC will carry out a diagnostic analysis to understand the nature of deficiency of cooperative development, to identify context-specific constraints, opportunities ways of addressing the constraints in selected sectors and regions.
The desired ECC-ILO partnership would look to modernize cooperatives so that they can respond to the country’s current economic and social needs while ascertaining the sustainable benefit of their members. The proposed partnership will start with a diagnostic assessment of sample cooperatives to identify the specific challenges faced by cooperatives. While the ECC’s modernization manual has identified high level constraints faced by cooperatives, the diagnostic assessment will build on the analysis as a starting point and may confirm, detail or re-prioritize challenges to specific local realities.
** Scope**
The assessment will focus on specific sectors namely teff and wheat and sample set of cooperatives operating in these value chains that have been identified by the ECC. To make sure that the partnership maximizes the cooperative advantage in the target sectors, the assessment will also aim at identifying potential synergies between the three priority types of cooperatives in the given sector and region e.g. agricultural cooperatives delivering produce to consumer cooperatives while financial cooperatives providing financing to production and marketing activities of consumer and/or agricultural cooperatives. The focus on limited sectors (mainly teff and wheat to some extent) will allow deeper learnings and the design of specific interventions to build or strengthen a holistic value-chain that benefits all actors.
Methodology
The Contractor will be recruited to conduct the diagnostic assessment according to the objectives and scope discussed above. Findings from the assessment will inform the design of specific pilot interventions for modernizing cooperatives to address short- and medium-term challenges and hence operationalize ECC’s manual.
The Contractor will apply a set of qualitative and quantitative methods to conduct the study. Qualitative methods will include bilateral interviews and focus-group discussions with relevant stakeholders such as cooperative enterprises and organizations (incl. financial and producers’ cooperatives), government representatives, cooperative support organizations, social partners, and NGOs, value chain actors (e.g. processors, traders, buyers) among others. The main objective of the interviews will be to gather in-depth information, including perceptions, views and factual information on the current situation and potential for cooperative development and the integration of youth in existing cooperatives (as members of employees). The service provider should take specific measures to ensure the inclusion of women and youth as interviewees, and an interview/FGD plan as well as the draft interview guide should be included in the inception report. Quantitative methods will include analyzing the individual cooperatives and the
overall sector (value-chain’s) performance data to uncover areas and drivers of poor performance. Both approaches will be important in constructing a holistic explanation and prioritization of poor performance improvement or low modernization.
More specific tasks of the Contractor will include:
Qualitative:
· Building on recent ILO cooperative assessments, conduct a literature review of legal environment and context of cooperatives, especially in relation to the selected value chain and cooperative development in teff and wheat in particular and in Ethiopia in general;
· Provide a brief overview of the legislation concerning cooperatives in the country and in particular the above-mentioned three types of cooperatives In Amhara and Oromia region, highlighting specific challenges and opportunities;
· Review of documents (internal policies and external assessments) of the selected cooperatives, identify constraints and deviations from good practices;
· Further map the selected sample cooperatives;
· Review the main competitors of the selected cooperatives (such as informal traders, private companies, state owned companies), evaluate their competitiveness against the sample cooperatives and drivers of their competitiveness;
· Review relevant documentation on the selected value chain sectors, teff in particular (value chain analysis reports, research papers, etc.) to understand the role of cooperatives operating in these chains and their level of interactions with related private sectors (e.g. processors, buyers, middlemen, exporters);
· Engage members (as individuals and also through focus group discussions) to assess their perception and evaluation of the given cooperative’s performance, its underlying drivers and their views on how to improve;
· Identify relevant cooperative support organizations (i.e. cooperative business development service providers, training institutes, NGOs etc.) and assess their capacity and needs (organizational, managerial, technical and financial);
· Prepare standard interview questionnaires for relevant organizations and other necessary tools (e.g. for remote consultations with producers, traders, exporters)
· Identify the strengths and weaknesses of cooperatives in terms of leadership, membership, infrastructure, participation in the markets, and their economic viability. The analysis will be done by types of cooperatives (e.g. agricultural cooperatives, consumer cooperatives, financial cooperatives such as savings and credit cooperatives);
· Provide an assessment of the interaction of the three type of cooperatives among the sample cooperatives. The assessment will include the analysis of interactions between the different types of cooperatives (e.g. between agricultural cooperatives & consumer cooperatives or agricultural cooperatives & financial cooperatives) and potential for (further) horizontal integration of cooperatives in the select value chain sectors;
· Assess the potential impact of the Covid-19 on the sample cooperatives and competitors organizations operating in the target value chains and regions, as well as potential opportunities resulting from the pandemic (incl. in terms of agri e-commerce for producers cooperatives in the select value chains);
· Identify and discuss concrete opportunities for cooperative development in particular for the creation of market links through vertical and horizontal integration of the different types of cooperatives;
· Identify and analyse skills gaps and specific training needs for cooperatives, other producers’ organizations, and cooperative support organizations – to the extent that skills and knowledge of cooperative employees and members have been prioritized as a major constraint against the sample cooperatives’ performance. This will include a review of ILO tools such as Think.Coop, Start.Coop, and MyCoop to assess their relevance;
· Review and analyse the major technology tools that are being used by the cooperative (especially finance, data management, communication) and identify challenges and opportunities for optimizing the use of technology;
· Produce a diagnostic analysis report based on the above objectives which includes but is not limited to a desk review, stakeholders mappings, analysis of challenges and opportunities for cooperative development with a focus on potential for vertical integration as well as linkages to private-sector operators or value chains, and recommendations for improving the performance of cooperatives including with regard to selection of value chains to be considered for pilot interventions for cooperative development; upgrading the position of cooperatives in the proposed value chains; vertical and horizontal integration of cooperatives; linkages to private-sector operators in the proposed value chain; potential niches for cooperative entrepreneurship promotion, as well as to guide future ILO’s interventions in related value chains.
Quantitative:
· Review financial data of each cooperative (income statement, balance sheet, cash flow), evaluate its level and trend of profitability and health, compare to the value-chain’s overall performance, identify constraints and opportunities for addressing them;
· Review and analyse non-financial performance data of each cooperative (e.g. volume of trade)
· Use the insights from the quantitative analysis to guide the qualitative methods above so that the qualitative methods help uncover the underlying drivers of cooperative’s financial performance.
Duration of the assignment and deliverables
The assignment will take place from 1 July to 30 September 2022 for 30 working days . The final output expected from the Contractor is a diagnostic analysis report of a maximum of 40 pages in English. Specific deliverables expected from the consultant include the following:
Deliverable
1. Inception Report / Work Plan:
This document should include detailed work plan with information on the stakeholders to be interviewed; Specific assessment questions; interview and FGD guide / questionnaire; Initial bibliography for the literature review. (5 days)
2. Draft diagnostic analysis report:
The draft report should include: Literature review; Analysis of the legal environment Assessment of cooperatives and their strengths, weaknesses and needs (incl. in terms of vertical and horizontal integration, linkages with private sector actors); Mapping of relevant cooperative support organizations (incl. the ones operating in the targeted regions and/or value chains); Recommendations on the way forward; quantitative analysis of financial and non-financial data
Complete list of interviews; Bibliography; Annexes on the organizations and people interviewed; interview questionnaires; list of stakeholders identified during the mapping exercise 20 days (inclusive of field days)
3. Workshop presentation:
Presentation of findings to key stakeholders for feedback ( 2 days)
4. Final report:
Revised report based on the comments to the draft report (3 days)
MANAGEMENT ARRANGEMENTS
The Contractor will work under the overall responsibility of the Director of the ILO Addis Ababa Office, under the direct supervision of the ILO-PROSPECTS Programme Manager in Ethiopia. The consultancy firm will get technical guidance from the ILO Cooperatives Unit in based in Geneva, Switzerland and the ECC based in Addis Ababa, Ethiopia.
CONTRACTOR PROFILE
The Contractor is expected to be a legal entity i.e. legally incorporated in Ethiopia (firm, an association of consulting firms, research institute, etc.) with the appropriate capabilities and experience to execute the services. The Contractor needs to have a record of accomplishment in carrying out technical assistance and consultancy services on cooperatives. The Contractor must have the number of necessary staff and professional ability to meet the requirements of the assignment, to form a well-balanced team of key experts with the following aggregate abilities:
· Advance University degree in social sciences or other relevant subjects such as economics, business, finance
· Knowledge and experience in working in Ethiopia or another developing country
· Specific knowledge on participatory research methods
· Experience in cooperative development and agricultural development
· Good facilitation, presentation and analytical skills, as well as ability to elaborate high quality assessment documents
· Language skills: fluency in English and in Amharic is required
· Familiarity with ICT tools that can be used for regular data collection
How to apply
SUBMISSION METHOD For this request, offers may be submitted by [email protected]. You must submit your offer strictly in compliance with the procedures described below.
- REQUIRED DOCUMENTATION In order to be eligible for consideration, submissions must include: ● Annex II, Certification to be submitted; ● Annex III, Offer Submission Form, including Appendix A (detailed breakdown).
- VALIDATION AND SUBMISSION The above documents are to be signed by the legal representative, stamped with the official seal of your company, and submitted on or before 03 June,2022,17:00, Addis Ababa, Ethiopia TIME to the following address: [email protected] OR Fax number Click or tap here to enter text. ILO CO-ADDIS Ababa Menelik II Avenue 251, Addis Ababa Ethiopia
You can find the application documents on the following link:https://www.ungm.org/Public/Notice/174235