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

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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+

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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

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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?