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New Generation Plantations in Africa, Creating Shared Value at landscape scale


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Presented by Patrick Mugenyi, Uganda Chief Executive Officer and Head of Mission New Forests Company at the Global Landscapes Forum Nairobi 2018, on 29 August in Nairobi, Kenya

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New Generation Plantations in Africa, Creating Shared Value at landscape scale

  1. 1. New Generation Plantations in Africa, Creating Shared Value at landscape scale Uganda Case Study WWF / New Forests Company
  2. 2. How plantation forestry can be an engine for sustainable development at scale • Responsible plantation – borrows from New Generation Plantations principles and is about economic viability, environmentally friendly and socially viable. Like certification except here a certificate is not the target. Based on WWF experience, plantations can be engines for sustainable development at scale if • Established where they have a comparative competitive economic advantage compared to any other crop/ investment • Done at a scale to benefit from economies of scale and attract market • Protecting a high conservation value area such natural forest catchment for hydropower • From the start it integrates market development – • Backed by science, best practices and technology improvements for efficiency • Backed by enabling policy environment – co-funding, market creation, strategy development, district forest business plans
  3. 3. Forests for Prosperity Innovation through Aligning Interests How can plantation companies partner with communities to create shared value, by reducing business risk and improving rural livelihoods?
  4. 4. Sustainability is at the core of the NFC Business model – NGP affiliated and FSC certified a conscious and voluntary choice which ensures that our operations respect and protect people, communities and biodiversity i.e. the triple bottom line as set out below:
  5. 5. How did Forests for Prosperity Start? • Principles of community engagement at NFC: Win- win, Community agency, Innovation, Leadership, Sustainability, Measurable impact • Community feedback survey: • More jobs • Market for outgrowers • Better services at social infrastructure projects • Access to income/loans/capital • Developed a shared vision to more directly align interests: prosperous forests and communities • Parameters: • NFC cannot give grants – not an NGO; have to create value for shareholders and manage expectations • NFC cannot give loans – not an MFI and becoming debt collector would ruin 10 years of goodwill • NFC can buy goods/services – a business that can purchase items of value, so what value can you offer • Community co-design: within the above parameters, the communities proposed to become risk mitigation service providers & designed the structure themselves – critical buy in • NGP Membership NFC is sharing experience with others
  6. 6. Performance Indicators Risk Area Indicator Weight % 1 Fires # of incidents 10 40% # of ha burnt 10 $ Value of Ha lost 10 # of people who have come to fight the fire within 30 minutes of fire reported to NFC (avg) 5 % of fires reported by community 5 2 Theft $ value of trees lost 10 20%% of incidents reported by communities 5 % of perpetrators apprehended 5 3 Grazing # of incidences reported by communities (vs total incidences) 10 20%# of perpetrators apprehended 5 $ value of damages from grazing 5 4 Cultivation All gardens reported before cultivation (Y/N) 10 10% 5 Hunting # of incidences reported by communities (vs total incidences) 3 5%# of perpetrators apprehended 2 6 Charcoal # of incidences reported by communities (vs total incidences) 3 5%# of perpetrators apprehended 2 Agreed with the communities at the start of each new year based on lessons learned from the previous year
  7. 7. Is it Working? Risk Mitigation Amount of Fires Fire ha loss Grazing Cultivation Hunting Snaring Timber theft Other (Charcoal burning on Plantation) Total FY16 2 0 8 3 3 4 10 3 33 FY17 10 0 2 0 0 0 6 1 19 FY18 5 0 4 1 0 0 2 0 12 0 5 10 15 20 25 30 35 Illegal Incidents at Kirinya Plantation FY16-18 (Jul - May) FY16 FY17 FY18 % Incident Reduction FY16-17: 42% FY17-18: 37% Overall: 64%
  8. 8. Is it Working? Community Benefits • Year 1: each CA given Ugx 4m (~1,000) • Makoma: 5.2m 30% return (winners) • Bukatu: 6 m 50% return • Mayuge: 6.2m 55% return • Wakawaka: 7 m 75% return • Payments for year 1 performance: ~5m each • Year 2 returns not yet calculated • Opportunity Bank Partnership • 20 km from the nearest tarmac road, the communities had no access to financial services/loans • They told us they wanted more money and more access to financial services, so in year 2, we introduced them to a few microfinance institutions and negotiated preferential rates at the bank they chose • So far, the groups have received an additional Ugx 20.5m ($5,500) in loans from Opportunity Bank under this agreement • Receiving financial literacy training and other financial services • Agency: biggest immeasurable benefit is the change in the community members’ attitudes from dependency to agency
  9. 9. Lessons Learned – Critical Success Factors • Agreeing a shared vision that aligns interests • Co-designing the solution with the communities • Put them in the role of designers, problem solvers & decision makers – they’re better at it than we are • Cannot copy and paste structure in new location – have to re- design model with new communities for buy in • Co-ownership and continuous close collaboration between forestry & CSR teams • Training and supporting CAs in governance, transparency & marginalized community participation • Financial service provider partner who wants to work with previously unbanked communities • Buy-in from local government
  10. 10. Outstanding Questions • Can it work for other cost centres like grazing & weeding? • Is it replicable at larger plantations with more complex boundaries and administrative structures? • Is it replicable to other countries? Contexts? • How do we continue to prevent fraud among the CAs? • Will they expect the company to pay if this happens? • Will the CAs be able to manage increased challenges as more community members are attracted to join? • How do we deal with fears/tensions/rivalries from labour & contractors? • Could competition between the groups cause sabotage? • How do we calculate performance scores from indicators in an objective way? We are excited to learn from you and improve! What similar models have you seen that could shed light on these questions or other risks involved?
  11. 11. What innovative financing solutions can scale up sustainable plantation forestry in Africa? Coming out of the New Generations Plantations Study Tour in Uganda, 2018 Three approaches are proposed: 1. Blended finance – The idea that we can use development and philanthropic funding to mobilize private capital. Donor funding could focus particularly on extension and outreach work. Combining agricultural and forestry investment and land-use models could provide some return on investment in a shorter timeframe. 2. Public-private partnerships – Forestry companies should be able to access dedicated public funding to help governments meet their objectives (for example their commitments under the Paris climate agreement and the UN Sustainable Development Goals). Combine government, community, private investor and NGO resources 3. Government leadership - can spur market creation (and hence help attract investment) via ring-fenced procurement, timber trade regulation, and enforcement of regulations.
  12. 12. Thank you