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Design a Social Impact Bond supporting Alternative Livelihoods for Tobacco Farmers in Zambia
Procurement Process :RFP - Request for proposal
Office :UNDP Country Office - ZAMBIA
Deadline :16-Oct-20
Posted on :02-Oct-20
Reference Number :70943
Link to Atlas Project :
00120771 - Accelerator Lab - Zambia
Documents :
Request for Proposals (RFP)
Overview :

Tobacco use kills more than 8 million people a year around the world and costs the global economy over a trillion dollars annually in medical expenses and lost productivity. In response to the global epidemic of tobacco consumption, in 2003, WHO Member States unanimously adopted the WHO Framework Convention on Tobacco Control (WHO FCTC). In force since 2005, it has currently 182 Parties covering more than 90% of the world's population. UNDP and other agencies work with Governments, civil society and the Secretariat to the WHO FCTC (Convention Secretariat) to implement the WHO FCTC.  Parties to the treaty agree to implement key demand and supply reduction measures, including measures outlined in Articles 17 & 18 of the treaty which oblige Parties to assist tobacco farmers who wish to transition to alternative livelihoods and to put in place measures that protect the environment from tobacco cultivation’s harm. 

Governments consult on the status of the Treaty every year during the Conference of the Parties (COP). Since its first session, the COP has requested the Convention Secretariat to support the development of pilot projects and other initiatives to support the implementation of Articles 17 and 18. During COP6 the “Policy options and recommendations on economically sustainable alternatives to tobacco growing” were adopted. However, there has been limited progress and according to the last global implementation report Articles 17 and 18 are among the least implemented supply reduction measures.

There is good reason to take action now: Tobacco cultivation harms farmers’ health; drives deforestation; pollutes water, soil, and air; and is associated with child labour and poverty. Many tobacco farmers earn poverty wages and are trapped in exploitative contracts. Many tobacco farmers lack viable alternatives, or the capital required to switch. Independent farmers (most operate and sell independently) are often ‘locked’ into long-term contracts with tobacco companies – and the terms of these contracts are not favourable to the farmers.

Alternative livelihoods programmes that are led or assisted by the United Nations have demonstrated success in major tobacco-producing countries, such as Bangladesh, Brazil, Kenya and Zambia. Most tobacco farmers want to leave tobacco cultivation behind and switch to alternative crops and livelihoods if assisted with viable crop selection, easy access to inputs, extension and marketing services, crop protection and stable product prices. Access to education, training and skills development are also needed. Alternative livelihoods projects therefore need to provide tobacco farmers a complete range of services: from inputs, training, farm and market education, to credit and insurance. The comprehensive nature of such interventions requires large upfront investments, and low-income countries often do not have the required resources. Aid investments in alternative livelihoods programmes have also been insufficient relative to need.

Hence, UNDP together with other agencies, is proposing the world’s first tobacco control social impact bond (T-SIB). The objective of this work is to support tobacco farmers to transition to economically viable and environmentally sustainable alternatives to tobacco cultivation using an innovative ‘pay-for-success’ financing model to leverage capital from the private sector. Beyond providing funding for specific alternative livelihoods programmes in Zambia, the T-SIB financial vehicle will be designed to catalyze additional funding for Art 17 & 18 activities through creation of an Art 17/18 Finance Facility.

Proposed interventions will build on previously successful models providing farmers with viable alternative livelihoods and capital to support their transitions. The T-SIB initiative will promote ‘Farming as a Business’ to encourage diversification from tobacco production. This approach encourages farmers to consider all of their resources while planning to maximize these resources through crop production, marketing, and other activities. This approach goes beyond simple crop substitution and helps small-holder farmers develop longer-term plans.

In 2019, UNDP and American Cancer Society completed a feasibility study for a T-SIB in Zambia. Following promising results, UNDP, WHO, FAO, ILO, and WFP submitted a concept note for the United Nations SDG Fund. The SDG Fund is designed to leverage public private partnerships to drive sustainable development and works through joint programmes, where relevant UN agencies work under the leadership of the UN Resident Coordinator’s office, partnering with national and local government counterparts, civil society and the private sector. Programmes must be aligned with national priorities as outlined in the UN Development Assistance Frameworks for the country.

Purpose/Objective of the assignment

a) Identify Outcome Funder or Investor for the implementation of the TSIB in Zambia.

b) Design and propose financial structure for the Social Impact Bond or an alternative innovative ‘pay-for-success’ financing model that would meet its goals.