Performance-based financing for promoting resilient ecosystems

Transforming Lives and Landscapes with Trees
Performance-based Financing
For Promoting Resilient Ecosystems
Lalisa Duguma, Peter Minang, Divine Foundjem, Serge Mandiefe
Email: l.duguma@cgiar.org; p.minang@cgiar.org
PRACTICAL INSIGHTS FROM COMMUNITY FORESTS
SBSTA 50, UNFCCC
Side event: Results based financing for REDD+ - experiences and way forward

Community Forests in Cameroon Ecology and Society 23(3): 34
https://www.ecologyandsociety.org/vol23/iss3/art34/
Fig. 1. Distribution of community forest (CF) governance outcomes from case studies in Cameroon.
massive technical support and training from civil society were
crucial in the development of community forestry in Cameroon
in the past (Duguma et al. 2018; Minang, Duguma, Bernard, et
al., unpublished manuscript). This might require concerted effort
across a couple of government departments that have
traditionally not intervened in community forestry. For example,
the Ministry of Finance (MINFI) and Ministry of Small and
especially true for some communities with chiefs as president or
delegates in the CF management committee. They are often
respected, and community members are often devoted to work
with their chief. The influence of positive elites in the east region
has contributed significantly to community development in the
area (Cuny et al. 2007). This can be explained by the fact that
these communities are often small and can easily collaborate. The
• Community forests are legally
recognized entities to manage forests.
• Over 260 CFs (> 1.3 Million ha
secondary forest) with approved
management plan
• Most CFs are not operational and are
not delivering on their objectives.
Hence, deforestation and forest
degradation is high.
Mandiefe et al 2019

§ Poor technical capacity
§ Lack of investment capitals
§ Weak enterprise management skills
§ Poor infrastructure
§ No market linkages
§ No value addition on forest products
§ Limited access to credits and financing
schemes
Why are Community Forests not delivering?
Factors for success or failure of CFs (Duguma et al 2018)

Financing Sustainable Community Forest
Enterprises in Cameroon (Dryad)
Project objective
To enhance viable community forest
enterprises (CFE) with sustainable
livelihoods and environmental
benefits through performance-based
public finance and support
mechanisms.

Why?
• As they are, CFs could not attract
private investment due to the
underlying risks of failures.
• Communities do not have the capital
to run viable enterprises due to the
poor livelihood conditions.
The theory of change:
a new approach is needed!
Time
Breakeven point
Profit making
Process
readiness
Private financing
Public financing
Startup
Investment
Technical support &
business advisory
Technical support &
business advisory
High De-risking needs Low
Minang et al. in preparation.

Performance monitoring
0%#
25%#
50%#
75%#
100%#
75%#
50%#
25%#
0%#
25%#
50%#
75%#
100%#
Year#1# Year#2# Year#3# Year#4#
Repor1ng# Peformance#
c ani i i anc a financ
c i ni ing i ign
to simultaneously collect social, economic or enterprise
and environmental performance data of community forest
n i i inn a i c ni
enterprises to collect, save and send data monthly which
i n an c anag c an
in a n a an a c i c
no access to electrical energy issues in these areas. Sate
ic i c nn c a c ni i
g a acc in n i c ni
n a a i c c c an
n a a c c n i i a ig
challenge. These pose challenges with pro
data transfer.
Figure 3. ni ing in a an i c n n
Enterprise
performance
- Costs
- Revenue
- Assets and others
Social (Community
wellbeing)
- Income
- Ecosystem goods
and services (wood,
feed, edible plants,
etc)
Environmental
benefits
- Forest cover and
health
- Incident reports
(e.g. Illegal logging)
- Other additional
indicators
Data hub
(Computers &
servers)
Mobile devices
(loaded with Field
Monitoring System)
Community
forests
Monthly
data
collection
Data
sent to
back-end
Satellite relay
Memory cards
ac ca anc a
challenges in Dryad
Duguma, Minang, et al 2019.
Community operated
[CFs and Supporting local NGOs]
ICRAF & TMP
[Technical analysis]
Telephone and internet
service providers
Feedback to communities

Making CFs ready for investment:
investing in processes
§ A new partnership model was
needed – Research institution,
Local NGOs, Financial institution,
Community forests.
§ Process investment and
operational cost ~ 20,000-60,000
£ per CFE over 10 years
§ Investments in diligent process
of selecting enterprises viable for
investment de-risks the
investment by 66%.
CFE Teaser
development
Teaser assessment
and approval
1-2 reviews and
interactions with IOs
CFE
selection
Baseline
Contract negotiations-
Disbursement plan and indicators
Periodic
disbursement
Training/ technical
support
CFE data
collection
FMS deployment
Contract negotiations- Disbursement plan and
indicators
Due
diligence
Agreement
executed
Investment memorandum
development
Feasibility
review
Training plan
Financial
modeling
Annual verification – performance,
Audit, etc.
Performance based
review
Figure 1 The processes behind the financing decisions for a community forest enterprise within the Dryad project
Processes as precursors for performance
In Dryad, community forests with valid management agreements sign an investment contract with the World
Agroforestry (ICRAF). The onboarding process for community forest enterprises in Dryad involves rigorous processes to
enable effectiveness, efficiency and sustainability. It mainly includes four key steps (see figure 1 for details):
i. Development of business plans (with technical support);
ii. Financial modeling and appraisal of business plan;
iii. Due diligence, negotiations and contracting; and
iv. Training and implementation (including field monitoring systems for monitoring)

Contracting Activity planning
Reporting
formality and
schedule
CFE onboarding process
Performance
reporting
Performance analysis and
continuity decision
Enterprise
operationalization
Training and technical support
Implementation
Making CFs ready for investment:
Simplified version

TEASER, 663.00 ,
3%
INVESTMENT
MEMORANDUM ,
3,596.00 , 18%
DUE DILIGENCE,
642.00 , 3%
EIN, 2,018.12 , 10%
MONITORING SYSTEM
(FMS), 543.99 , 3%
EVIDENCE BASE CREATION,
4,191.00 , 21%
FOLLOWUP AND
SUPPORT,
4,956.75 , 24%
TRAINING,
3,676.47 , 18%
Big process investments
§ Follow up and support (24%)
§ Evidence base creation (21%)
§ Training (18%)
§ Investment memorandum
(18%)
Note: Values in £ per CFE from a preliminary analysis of selected CFE.

The progress so far
Sector Typology of
enterprises
Typology of
finished products
Target markets
NTFPs Collection and sale Business as usual Wholesalers
Pre-processing and
packaging
Honey in 1l and 50l
containers.
Packaged njansang
Super markets and
other niches
Timber Timber exploitation
Wood processing
and joinery
Openers,
Pens, key holders
Brewery Companies,
NGOs, embassies
Agriculture/
agroforestry
Plantain production Plantain, egussi or
melon seeds
Manioc Supermarkets
Service sector Eco-tourism Eco and cultural
tourism
§ 34 enterprises managed by 29 CFs
under the project now.
§ Close to 100,000 ha of secondary
forest with clear commitment of
adopting sustainable practices e.g.
reducing deforestation and forest
degradation.
§ Numerous community development
projects are planned to be built
from the proceeds of the
enterprises.

Wages and Operating Profit Estimation
2.34
3.20
4.09
4.15
2.51
1.53
3.36
3.36
4.04
0.88
- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50
ADNG (Njansang)
BOPO (Plantain-pistache)
COBABA (Manioc)
CODEL (Manioc)
CODEM (Rattan)
CRVC (Njansang)
Libock (Plantain-pistache)
Nguimbock (Plantain-pistache)
Tinto (Bush mango)
Tinto (Njansang)
Income from wage (£) in 10 years time
2.13
1.53
6.58
6.49
3.86
0.89
1.69
1.69
2.38
5.60
- 1.00 2.00 3.00 4.00 5.00 6.00 7.00
ADNG (Njansang)
BOPO (Plantain-pistache)
COBABA (Manioc)
CODEL (Manioc)
CODEM (Rattan)
CRVC (Njansang)
Libock (Plantain-pistache)
Nguimbock (Plantain-pistache)
Tinto (Bush mango)
Tinto (Njansang)
Operating profit (£) in 10 years time
For every £ invested in CFEs the projected return in 10 years time is …
Note: These preliminary estimates are without including the process investments.

SUSTAINED POSITIVE CASHFLOW is crucial, otherwise
the enterprises will be ‘bankrupt’ !!
The significance of cashflow
(2,000,000.00)
-
2,000,000.00
4,000,000.00
6,000,000.00
8,000,000.00
10,000,000.00
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Cashflows for Pistache enterprises
Bopo Pistache Libock Pistache plantain Nguimbock Pistache Plantain
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Cashflow for selected Njansang enterprises
ADNG Njansang CRVC Njansang MEKOM Njansang Tinto Ngansang
Note: Values are fCFA.
Ricinodendron heudelotiiCitrullus lanatus

Take home messages
§ Attracting investments to community managed
settings requires a blended approach.
§ Public financing for making the entities ready for
investments and private investment to finance and run
the enterprises.
§ If our efforts to conserve ecosystems do not generate
values that directly translate to solving the problems
of communities, the motivation for sustainable
management in such a setting remains a challenge.
§ Then deforestation and forest degradation become
persistent problems rather than being solvable issues.
§ Sustained POSITIVE cashflow is even more important
than high profit margins since communities do not
have the capacity to run enterprises if cash flow falls
below zero.

Some documents: For practitioners
Minang PA, L A Duguma, S P Mandiefe, D Foundjem, et al. 2017. Community forestry as a
green economy pathway: two decades of learning in Cameroon.
https://www.worldagroforestry.org/publication/community-forestry-green-economy-
pathway-two-decades-learning-cameroon
Duguma L., P Minang, D Foundjem, P Mandiefe, et al. 2019. Prospects for Performance Based
Financing of Community Forestry in Cameroon. Technical Brief No. 1. World Agroforestry.
Nairobi, Kenya.
http://www.asb.cgiar.org/Publications%202018/Prospects%20for%20Performance.pdf

Copyright © 2019 by the author(s). Published here under license by the Resilience Alliance.
Minang, P. A., L. A. Duguma, F. Bernard, D. Foundjem-Tita, and Z. Tchoundjeu. 2019. Evolution of community forestry in
Cameroon: an innovation ecosystems perspective. Ecology and Society 24(1):1. https://doi.org/10.5751/ES-10573-240101
Research, part of a Special Feature on Twenty Years of Community Forestry in Cameroon: Opportunities and Challenges for
Sustainable Development
Evolution of community forestry in Cameroon: an innovation ecosystems
perspective
Peter A. Minang 1,2
, Lalisa A. Duguma 1
, Florence Bernard 1
, Divine Foundjem-Tita 3
and Zacharie Tchoundjeu 3
ABSTRACT. Cameroon introduced community forestry (CF) in 1994 as a means of improving community engagement in forest
management, enhancing forest conservation, and reducing poverty for forest-dependent people. More than 20 years on, reflection on
uptake, conceptual evolution, and innovation is necessary to understand how best community forests can contribute to Cameroon’s
post-2015 sustainable development goals. We investigate, review, and reflect on how community forestry has evolved from an innovation
ecosystem perspective, with a view to enhancing innovations and performance. Interest and momentum in community forestry remains
strong in Cameroon, with the number of community forests growing, reaching 430 and covering 1.7 million ha (7% of total forest area).
Major innovations identified are the introduction of pre-emption rights and steps toward sustainable forest management (ban on
industrial logging, development of certification standards, and the introduction of the environmental notice in lieu of a full
environmental impact assessment for CF activities). Little or no innovation is registered in areas related to forest enterprise (i.e., products
and services value chains) and in terms of practicing sustainable forest management. Evidence suggests that knowledge generated
directly feeds innovation. Coincidentally, areas for which little progress was made (enterprise and sustainable practices) also recorded
few publications, suggesting that partnerships aimed at improving knowledge generation and sharing could help catalyze innovation.
Other options for unlocking innovations within community forestry discussed include: enhancing intercommunity forest and private
sector community forests partnerships and collaboration, increased capacity development and capital investments, and deploying
incentives (financial and nonfinancial). Together these options can potentially transform community forestry in Cameroon.
Key Words: Cameroon; community forestry; evolution; innovation ecosystems
INTRODUCTION
Community forestry (CF) can be defined as forest management
in which communities manage and use forests, often with some
form of legal authority to do so, and it is primarily driven by local
community benefits and ecological sustainability goals (Arnold
2001, Ribot 2002). Community forestry is one of the fastest
growing forms of forest management. Since its emergence in the
1970s, it has grown tremendously with communally managed
forests being the main source of livelihood for more than 1.2
billion people (Agrawal et al. 2008). Community forestry has been
practiced in several countries around the world including Mexico,
Nepal, Philippines, Tanzania, Kenya, and others. It was founded
largely as an alternative to state-managed conservation. It was
Ojha and Kanel (2005) also reviewed 25 years of community
forestry in Nepal based on inputs from more than 200 stakeholder
contributions through 82 papers based on proceedings from a
national workshop. They found that community forest conditions
had improved overall compared to other forests; the participation
and contributions of women had increased significantly; and the
legal and institutional framework had been well developed. On
the downside, they highlighted the general lack of evidence of
any livelihood improvement as a result of CF; a deficit in the
distribution of community forests around the country with the
middle hills hosting most CFs whereas the Terai and high hill
regions had very few; inequities in control, with representation in
decision making dominated by wealthier families and therefore
Duguma, L. A., P. A. Minang, D. Foundjem-Tita, P. Makui, and S. Mandiefe Piabuo. 2018. Prioritizing enablers for effective
community forestry in Cameroon. Ecology and Society 23(3):1. https://doi.org/10.5751/ES-10242-230301
Prioritizing enablers for effective community forestry in Cameroon
Lalisa A. Duguma 1
, Peter A. Minang 1
, Divine Foundjem-Tita 2
, Parmutia Makui 1
and Serge Mandiefe Piabuo 2
ABSTRACT. Cameroon, in its Forestry, Wildlife and Fisheries Law 94/01 of 1994, supported local communities to engage in managing
forests and benefit from them economically and environmentally. Three main objectives underlie this law: (1) enabling local communities
to have access rights to forests in their surroundings, (2) Improving rural livelihoods, and (3) promoting sustainable forest management.
Despite a gradual increase in the number of community forests, their effectiveness in delivering on the above objectives has been low.
Our aim is to examine the typologies of the enabling factors (enablers) that could improve the performance of community forests in
achieving the objectives underlying their creation. Content analysis was applied to 41 documents focusing on community forest issues
in Cameroon. Benefit generation, partnership, monitoring, and policy support were the most frequently mentioned enablers with 47%
of the total frequency of enablers assessed. The second enablers set, with close to 33% of the total frequency, are technical support,
governance, financial support, practices choices, and institutions. We found a strong degree of association between the enablers in
general.Ownership,performance,andpartnershipdominatethiswithpositiveassociationwith12,11,and10otherenablers,respectively.
These results point to two policy and technical implications in the area of community forestry in Cameroon. First, the emergence of
key sets of enablers and clusters of associations can help identify and emphasize critical leveraging points for improving effectiveness
and efficiency. Second, it points to the need for holistic or integrated approaches in addressing enablers to improve community forests’
performance. Further research might be needed in identifying and prioritizing corresponding policy instruments required for
intervention.
Key Words: Cameroon; community forest; effectiveness; enablers
Foundjem-Tita, D., L. A. Duguma, S. Speelman, and S. M. Piabuo. 2018. Viability of community forests as social enterprises: A
Cameroon case study. Ecology and Society 23(4):50. https://doi.org/10.5751/ES-10651-230450
Viability of community forests as social enterprises: A Cameroon case study
Divine Foundjem-Tita 1
, Lalisa A. Duguma 2
, Stijn Speelman 3
and Serge M. Piabuo 4
ABSTRACT. Since the concept of community forests was instituted in Cameroon in 1994, there has been an upsurge of such forest
Some documents: Scientific backing

World Agroforestry (ICRAF),
United Nations Avenue, Gigiri,
P.O Box 30677-00100, Nairobi, Kenya
Phone: +254 20 722 4000
Fax: +254 20 722 4001
Email: icraf@cgiar.org
Website: www.worldagroforestry.org
Thank you!
Email: L.a.Duguma@cgiar.org; p.minang@cgiar.org
The project is supported by UK Aid.
Implemented by

Performance-based financing for promoting resilient ecosystems

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