Transforming Market Systems Activity Private Sector Engagement Plan

The activity's primary objective is to increase economic opportunities for poor and marginalized Hondurans, thereby reducing incentives to migrate. The development hypothesis underlying the TMS is that by improving the business enabling environment, promoting resilience, and strengthening interrelated value chains, market systems will yield a sustainable increase in income for Hondurans, including marginalized populations. To achieve this objective, TMS employs a "light touch" facilitative approach that stimulates change without taking a direct role in the system. The activity encourages broad participation of local partners who self-select to engage in the process, working through market actors to drive the change process and foster the desire to invest from within the system. TMS actively seeks integration of vulnerable groups, ensuring that local capacity building for inclusion is a key component of the activity. The TMS Private Sector Engagement Plan outlines the approach to engaging with private sector actors, including subject matter expert workshops, local contracted service providers, steering and value chain committees, facilitative inclusion, the Partnership & Innovation Fund (P&IF), and network building. The plan emphasizes the importance of due diligence in evaluating the risks and benefits of working with potential private sector partners. Due diligence involves a two-pronged process, including a Market Actor Assessment (MAA) for each prospective private sector partner and a Pre-Award Assessment and Environmental Mitigation and Monitoring Plan for potential co-investments. The MAA memorandum includes a review of four essential areas: corporate image, social responsibility, environmental accountability, and TMS compatibility. The due diligence process is ongoing, with partnerships monitored on an annual basis and due diligence memorandums updated to identify any new issues that may affect the activity and USAID or the USG's reputation. The Market Actor Assessment (MAA) is a crucial component of the due diligence process, conducted to assess the willingness, capacity, and readiness of a Market Actor to become a high-quality TMS partner. The MAA is completed by the TMS Market Actor Liaison and the TMS Grants Manager, based on engagements with the Market Actor and modest secondary research. Additional personnel, such as the TMS Director of ME&L and CLA, may be consulted, and supporting documentation is attached to the final package and maintained in the partner file. The TMS Private Sector Engagement Plan highlights the importance of planning and tailoring the due diligence process to the scope and circumstances of the partnership. While the due diligence review must be comprehensive, it may be appropriate to limit the review in certain cases, such as prospective partnerships with smaller entities. The plan emphasizes the need for serious attention to due diligence before embarking on a partnership, as it may take some time to gather appropriate information, consult subject matter specialists, analyze the information, and provide answers to questions and concerns from TMS management and/or USAID/Honduras.