Forestation and Landscape Financing

Max 2C climate scenario requires 3-5m ha/year forestation, but the forest cover is still shrinking.  Forestation is believed to have better environmental, social and economic impacts, and the larger effects on poverty alleviation and food security than any other development activity. All successful reforestation depends on private smallholder, large planters and good markets.  Entrepreneurial companies, not equity funds, have driven planting and carbon sequestration. Larger scale ag and forestry are key components of effective, climate mitigating FLR.

Triple bottom line with informed and realistic return requirements 

Forestry provides climate mitigation effect at lower cost than other mitigating activities. Unique social, environmental and economic impacts for the world’s poorest rural areas. This study concludes that DFI and impact investors should expect 6-8% (nominal) return on equity and 4-5% interest on debt, excluding benefits from climate mitigation and ESG impacts.

Based on 1,000 conversations and 20 years’ of field experience 

This presentation is based on my experience leading Africa’s largest forest planter since 2000, built on landscape models, including the largest FSC certified forest plantations in Africa (ex RSA) and the world’s first voluntary forest carbon project.  Benefiting from 1000+ conversations with operators and stakeholders and my current life in academia, it is clear that time has come to push for new, dramatically larger actions.

Strong and Stable Growth in East Africa 

The World Bank forecasts continued strong growth in East Africa in a forecast released 4 June, despite of the recent Africa-wide slow down. East Africa is the world’s fastest growing region outside of Asia. It has seen 5-6% economic growth since 2000, recently led by Tanzania and Rwanda at 7% pa.  EAC growth is forecast at 6.2% pa from 2016 to 2019, with Tanzania growing fastest at 7.3% pa. East Africa’s GDP growth is forecast to remain at 6.0% in 2017, negatively affected by draught in Kenya and Uganda, but positively influenced by accelerated growth in Tanzania.  The WB forecast EA GDP growth to accelerate to 6.5% by 2019. Thus, East Africa’s decade long record of 6% pa growth is set to continue.

African GDP growth averaged 5% pa during 2000-2014, after only 2% pa growth in the 1980s and 1990s.  McKinsey (McK Global Institute (MGI) in 2016) forecasts 4.6% pa growth in Africa for 2010 to 2040, similar to the growth since 2000, but up from 3.7% pa from 1990 to 2010.  East Africa is the fastest growing region on the Continent, with 5.2% pa forecast growth.  East Africa is identified by MGI as Africa’s ‘Stable Grower’, joined by a small number of countries in West Africa.   The East African Community and Nigeria are the growth center of Africa, with 174m and 182m people, respectively.  Including neighbouring Ethiopia, and the Eastern parts of DRC, East Africa has 300m people.

Green Resources 20 years in 2015

On November 23rd 2015, Green Resources celebrated 20 years of operations.  The company has become the largest forest company in Africa, outside of South Africa and Swaziland, with 44,000 ha net standing forest (over 80,000 ha gross area), all greenfield establishments.  It is an African leader in FSC certified plantation forests.  Green Resources, and the companies acquired by GR, has been responsible for 1/3 of the new commercial scale (incl. Government owned) forest plantations established in Africa since 2000.

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