To Interested Offerors:

The purpose of this Funding Opportunity Notice (FON) is to solicit applications/proposals from interested parties, wishing to receive funding from the CATALYZE Innovative Blended Finance (CATALYZE) program. Palladium is implementing CATALYZE, funded by the United States Agency for International Development (USAID) and is seeking qualified sources to implement activities that will mobilize financing to high growth potential Small and Medium Enterprises (SMEs) in the Western Balkans (Albania, Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia). The Selection Process will employ a two-step phased evaluation that shall progressively reduce the number of offerors considered for the final funding opportunity/opportunities. The process will comprise of two phases:

Phase 1: Initial Review of Concept Papers and Evaluating Against Phase 1 Criteria

Phase 2: Request for Full Proposals and/or Applications and Evaluation Against Phase 2 Criteria and Final Source Selection for award of a subcontract or grant (see definitions below).

Palladium on behalf of USAID anticipates awarding one or more grants and/or subcontracts to fund selected proposals/applications submitted in response to this FON.

Phase 1: Concept Papers in response to this FON must be submitted by the above deadline. After review, successful offerors will be invited to submit full applications/proposals, which if selected, may result in a grant or a subcontract, as defined further below. Successful applications/proposals will be selected for funding by the CATALYZE/Palladium Source Selection Team.

INTRODUCTION

1.PROGRAM SUMMARY

The CATALYZE Blended Finance Mechanism is an 8-year contract (5-year base period, with a single 3- year option period) which uses a facilitated partnership model to craft solutions to crowd in blended finance (i.e. blended concessional and commercial finance) to USAID partner countries and initiatives. CATALYZE allows USAID Bureaus and Missions to efficiently deploy investment facilitation solutions that respond to the needs of specific sectors, issues, and geographies.

The Engines of Growth (EoG) Activity is one project under the CATALYZE activity and is designed to facilitate Western Balkans small and medium enterprise (SME) resilience, growth, and job creation by improving their access to and utilization of appropriate finance. EoG is working to help mobilize capital to SMEs to sustain vulnerable SMEs and jobs in the wake of COVID-19, and now seeks to facilitate appropriate financing to high growth potential SMEs in the long term.

EoG will be focused on two main objectives in the Western Balkans:

• Objective 1: Mobilize capital and/or restructure debt to otherwise viable but distressed SMEs which have been adversely impacted by COVID-19 in order to sustain them, retain/rehire workers, and preserve capacity for future growth.
• Objective 2: Facilitate additional alternative financing to high-growth potential SMEs in the Western Balkans in order to enhance their growth, productivity, and job creation.

This activity is being implemented using different funding windows to engage local partners to address these objectives and support both vulnerable and high growth potential SMEs.

2.FUNDING OPPORTUNITY STATEMENT

Background/Development Challenge

There is a low percentage of women micro, small and medium enterprises in the Western Balkans, ranging from 11% of total MSMEs in Kosovo to 27% in Bosnia and Herzegovina and Serbia. Western Balkan countries are losing on average 18% of their total GDP due to the low participation of women in the economy. The number of MSMEs that have a female majority ownership is even lower, in BiH only 9.3% of MSMEs fall under this category, most of which are micro and small. While there are several reasons for the low number of females owned and operated MSMEs including societal perception, and lack of childcare, many female entrepreneurs also face obstacles that are common to all MSMEs including access to finance, poor market access and product development.

Inability to access new markets: Many SMEs struggle to diversify their markets and depend on one to two buyers. In many cases, the buyers (supermarkets, cooperatives, food processors) are more dominant players in the supply chain and dictate the terms of conditions of the contract. In the case of the Western Balkans, SMEs that are a part of these buyer-dominant supply chains face cashflow problems, as buyers can take up to six months to pay suppliers. During the COVID-19 pandemic, many suppliers noticed an uptake of online sales and recognized that this was an opportunity to reach new customers and reduce their reliance on only a few buyers.

Digital markets can help business reach global and regional markets. For MSMEs, digital markets can transform their businesses to reach larger scale, grow and expand and allow businesses to diversify their buyers. There are several options that MSMEs can chose to expand their digital presence – through E- commerce platforms, marketing through social media, targeted emails, content digital marketing etc. For MSMEs, that lack skills in marketing and have limited resources, it is key to make the right choice for their business product and growth strategy.

Solutions Sought

CATALYZE will review and disburse direct grants and/or subcontracts to companies and organizations to

develop proposals to help women MSMEs to sell online and on marketplaces.

CATALYZE seeks to:

• Identify partners that are familiar with access to market challenges women MSMEs face in the Western Balkans, across different sectors

• Support activities that will innovate and/or expand the ability of W-MSMEs to access virtual marketplaces and implement digital marketing strategies; and

• Champion activities that have the potential to address more than just one country in the Western Balkans.

Interventions under this activity should be scalable and sustainable and should promote improvements in the competitiveness of W-MSMEs. A regional approach offers private sector partner(s) greater potential to scale up, as well as a larger base of potential W- MSMEs. Applicants should seek to leverage economies of scale where possible and seize any opportunities to organically promote intra-regional economic integration.

CATALYZE encourages offerors to consider the following desired outcomes, however it welcomes all innovative ideas that will help W-SMEs access new markets and diversify their buyers, increase sales and create new jobs throughout:

• Support to W-MSMEs to open new sales channels, developing e-shops and establishing electronic payment account (Pint of Sale- POS) and integrate into existing e-commerce platforms;
• Improve W-MSMEs overall legal virtual business performance and exposure on e-commerce platforms and enlarge their sales;
• Develop of virtual marketplace or e-commerce platforms for W-MSMEs;
• Improve W-MSMEs digital marketing through social media and content media, development of digital design tools.
• Facilitate W-MSMEs access digital tools, platforms and/or instruments that enhance their finance, working capital and credit.
• Encourage regional trade and cooperation

3.AWARD INFORMATION

Estimated Funding Level

Palladium expects to award one or more grants and/or subcontracts and may choose to fully fund or incrementally fund the selected application/proposal(s). Individual awards can be up to $100,000; however,

this amount can potentially increase during the co-creation process and/or if additional funds are made available for this initiative. The final amount will depend upon the proposed activities, the expected impact and final negotiations that will take place in Phase 2. EoG will measure the impact over the course of the EoG activity as follows: the amount invested by USAID against the expected number of SMEs that will benefit from the proposed activity. EoG will also consider the anticipated sustainability and long-term impacts of potential awards under this Notice.

Anticipated Performance Period

Palladium anticipates a performance period of 12-24 months.

Award Type

Palladium anticipates awarding Fixed Amount Award (FAA) or Cost Reimbursable Grants and/or Firm Fixed Price Subcontract as defined above. The award mechanism will be determined by the CATALYZE team through a pre-award determination process based on the nature of the proposed activity and the financial and management capacity of the selected organization. The award size, the number of awards and amount of available funding is subject to change.

4.ELIGIBILITY REQUIREMENTS

This FON is issued as a public notice to ensure that all interested and qualified organizations have a fair opportunity to submit applications/proposals for funding. The following criteria will be applied to all offerors in Phase 1 to determine the eligibility of offerors:

• Offeror is legally registered as a non-for profit or for-profit organization in accordance with the laws of the country where entity is registered and is in good standing, legally licensed and up to date on all applicable taxes

• Offeror has certified that it is not affiliated with any political party nor engaged in any partisan activities.

• Offeror submits all mandatory documents prior to the deadline stipulated in the FON.
• Offeror has certified that it is receptive to participate in learning opportunities and commitment to participate in capacity building.

Certification of these requirements must be noted by completing Attachment A. Failure to submit this form will result in disqualification.

Types of Entities that May NOT Apply

The following types of entities may not apply for CATALYZE awards:

• Political parties, political party organizations, Government parastatal institutions or Government owned institutions are not eligible for grants or subcontracts;
• Organizations that have controlling interest held by a government, government agency, or agent thereof;
• Offerors with active exclusions from the working with the US government (www.sam.gov), the UN (Sanctions List), or the US Department of the Treasury Office of Foreign Asset Control;
• Any entity affiliated with Palladium or any of its directors, officers, or employees; and Individuals.

Potential New Partners

Palladium strongly encourages applications/proposals from potential new partners, including organizations which have never received funding from USAID directly or indirectly.

Cost Share

Offerors are expected to contribute resources from their own private or public sector sources for the implementation of the proposed concepts.

5.APPLICATION/PROPOSAL & SUBMISSION INFORMATION

All applications/proposals for consideration must include the following:

1. Concept Paper

Palladium will review proposals/applications using a two-stage process. For Phase 1 Offerors must first submit a concept paper of no more than five pages directly to Palladium before submitting a full proposal/application. Concept papers must meet the identified needs of this solicitation.

Do not submit a full proposal/application unless requested by Palladium. Only upon receipt of positive Palladium feedback on the concept paper is the offeror requested to put together a full proposal/application for Palladium consideration, using the criteria below.

Concept paper submission deadlines:

• March 1, 2022 17:00 Skopje Time

Phase 1: Concept Papers

Concept papers will be accepted and reviewed per the schedule outlined above. Awards will be subject to availability of funds. There is no guarantee a grant application or subcontract proposal submitted will be awarded.

The concept paper must be submitted in accordance with the instructions below and will be reviewed in terms of responsiveness to the FON, appropriateness of subject matter, and creativity. Offerors are encouraged to demonstrate how their proposed work will contribute to increased SME growth and job creation.

Instructions for Concept Paper Preparation & Submission

In the first stage, all offerors are required to submit a short technical concept paper that is specific, complete and concise. The concept paper should demonstrate the offeror’s capabilities and expertise with respect to achieving the goals of this program.

The concept paper must be submitted in Times New Roman, font size 11, and must include page numbers. Each page must be marked with the FON title and number.

Concept papers should be prepared according to the structural format set forth below:

1. Cover Page (no more than 1 page). The cover page must include:

1. FON number and name
2. Address of organization
3. Contact point (lead contact name; relevant telephone, fax, e-mail information);
4. Signature of authorized representative of the offeror.

2. Technical approach (no more than 4 pages): This section should address the program summary and selected objectives in Section I of this document and should include:
   1. Describe relevant experience of your organization for the proposed activity, this should include experience of your management and/or staff
   2. Provide brief overview of consortium partners (if any) and their role in the proposed activity
   3. Describe the intervention you are proposing in concise and clear terms.
   4. Explain how you determined that there is a need and/or demand for your proposed product/ service, include market analysis you have undertaken.
   5. Describe how the intervention will be implemented
   6. How will you achieve scale in terms of number of W-MSMEs reached.
   7. Briefly describe the business model upon which you will build the intervention to ensure that it is sustainable once EoG support ends
   8. Describe the amount of effort to be employed, the anticipated results.
   9. The geographic focus (country, regional, etc.) of the proposed activity; and
   10. Type of support the offeror requests from USAID.
3. Supporting information (no more than 1 page):
   1. Proposed total estimated cost;
   2. Brief cost breakdown (with cost share);
   3. Proposed duration of the activity.
   4. Certifications and Evidence of Responsibility (not included in page count):
      1. Completed Eligibility Certification (Attachment A) All materials must be in English.

The concept paper must be submitted by email to: wbalkans.eog@thepalladiumgroup.com no later than the deadlines on the cover page of this FON. All correspondence must include the relevant FON number and title.

Palladium may contact offerors for clarifying questions.

Offerors that are not selected will be notified and may request a debrief, after which they may resubmit concept notes for consideration with feedback from Palladium, pending available resources.

Phase 2: Full Proposals

Selected offerors will be notified to participate in Phase 2. Phase 2 will be a co-creation process, whereby EOG and USAID will work with the applicant to provide feedback on the concept note, with the goal of achieving EOG goals. This phase is expected to last up to two months. During this period, applicants will be asked to participate in one co-creation workshop with EOG where applicants will present their activity and EOG will provide feedback on what is expected to be included in the proposal. The applicant will then be invited to develop a full proposal taking into consideration the feedback. Full proposals will be further evaluated by the EOG Evaluation Committee. Palladium reserves the right to fund any or none of the applications/proposals submitted during Phase 2.

During Phase 2 applicants will be expected to provide a comprehensive analysis of the expected impact or return of investment. This will be measured by the amount of USAID expected investment compared to