financing forest linked small- and medium-sized enterprises (smes): strength in number, greater...
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Money where it matters, London 7-8 December 2016 1
Isilda Nhantumbo8/12/2016Author name
DateIsilda Nhantumbo8/12/2016
Strength in numbers, greater impacts for people and planet
Financing Forest-linked SMEs
Money where it matters, London 7-8 December 2016 2
Isilda Nhantumbo8/12/2016Forests at IIED
Investment in equitable
locally controlled
sustainable forests
Governance
Sustainable, viable and inclusive enterprises
Climate change and financing
Money where it matters, London 7-8 December 2016 3
Isilda Nhantumbo8/12/2016
Aggregation quantity, quality, time
Marketingadvertising / retailing
The Market
Secure legal rights
Business capacity
Technical know-how
Strong enterprise-oriented organisati
on
1. Rights-based advocacy
3. Technical extension
2. E
nter
prise
supp
ort
4. O
rgan
isatio
n
Right-holders manage
Natural resources
and need CapitalCapacity
Producers
Cooperatives
Associations
Federations
Learning and exchange
Risk assessment and mitigation measures
Finance and investment for
sustainable transformation of
forest landscapes, people’s
livelihoods, economies and climate impacts
Money where it matters, London 7-8 December 2016 4
Isilda Nhantumbo8/12/2016
Drivers of DD
Unsustainable logging
Unsustainable agriculture
Unsustainable extraction of
NTFP
Unsustainable biomass
production and consumption
Multiple resources, multiple users and drivers, links between rural and urban, domestic and international markets
SMEs – potential high multiplier effect
Addressing several SDGs – climate action, inclusive growth, employment, gender equality
Forests landscapes and sustainable forest management for REDD+
Money where it matters, London 7-8 December 2016 5
Isilda Nhantumbo8/12/2016
204,000 ha of 61,000 deforested
Example - Forest SMEs in Mozambique 10,000 ha, 500 m3/yr, 5 yearsIntervention = transition to forest concessionairesG24 = front runners – 9 forest concessions
Money where it matters, London 7-8 December 2016 6
Isilda Nhantumbo8/12/2016
Mobilization of SME
Training in partnership with government
ZoningInventoryManagement planReforestation planBusiness plan
Value additionConsolidation of businesses
Forming companies
Statutes
Registration
Public finance – bilateral donor
SMEs buy in and engagement
Additional sources
of finance?
Banks and microfinance institutions
Private investors
Public – domestic sources, bilateral and multilateral
agencies
Investment In sustainableviable and Inclusive businesses
Investment in enabling conditions
For land users and service providers/intermediaries
Money where it matters, London 7-8 December 2016 7
Isilda Nhantumbo8/12/2016
Access to finance by
SMEs – challenges for investments in sustainable and
inclusive forest and agriculture businesses
Interest rates – the
cost of lending or borrowing
Rate of return – for lender only?
Repayment period – short
versus long term investmentScale –
transaction costs vs
cumulative net economic, social and potentially
environmental and climate
gains
Risk – perceived and
real
The grace period – how
soon can the repayment start
Collateral or guarantees – preference for assets such as land, buildings and equipment associated with liquidity
Business management capacity – production potential, technology and markets; financial management systems by beneficiaries
Legal registration
Natural disasters – floods, droughts, wind storms, fire,…
Analysing barriers and opportunities to unlocking finance to SMEs in Guatemala and Mozambique
Money where it matters, London 7-8 December 2016 8
Isilda Nhantumbo8/12/2016Questions for discussion
What are the barriers and challenges to financing forest-linked SMEs?
How can we scale up good practice?
What do we do next?