1. Investing in Locally
Controlled Forests
Broadening the financial basis for
Sustainable Forest Management
Opening
Peter Dewees, PROFOR
Chris Buss, IUCN
Main presentation
Dominic Elson (author of guide), seventythree
Panellists
Peter de Marsh, IFFA
Sophie Grouwels, FAO

2. The process to develop the
guide
!
• Growing Forest Partnerships
• Initiative with WB, FAO, IIED & IUCN
• Local control at centre of initiative
• The Forest Dialogue
• Pro-poor commercial forestry
• Intensively managed planted forests
• World Bank / Profor investment Forum
• Mobilising investment in tree and forest landscapes
• Forest connect
• Enterprise development

3. The process to develop the
guide
!
• Objectives of the dialogue
• Define the key steps that are required
for successful deals for ILCF
• Identify concrete actions for developing
new partnerships
• Understand how to improve financing
for ILCF

4. The process to develop the
guide
!• Scoping dialogue
• Rights at the centre
• Nepal, Macedonia, Panama
• Bringing in the investors
• London
• Enhancement of ideas from the field
• Kenya, Burkina Faso, Indonesia
• 300+ people

5. Launch of the !
ILCF Guide!
Dominic Elson!
Seventy Three Pte.Ltd.
Rome!
24th September 2012
CoFo / World Forest Week

6. Overview!
• The case for ILCF
• Understanding investment
• Ingredients for success
• The Process
• Next steps

7. Benefits of Investing in Locally Controlled Forestry

8. Not to be confused with CSR…!

9. Changing the system!
Capital
Natural
Resources
Seeks labourand needs
Rights
holders
Natural
Resources
Capital &
partnerships
Manage and seek

10. Theory of Change!
Conditions Investment Outputs Outcome
Local control
process
+
Good enough
governance
+
Fiscal policy
changes
Better land use
management
over time
Improved production:
Food
Fuel
Fibre
Increased tax.
GDP, jobs,
household
saving

11. Understanding investment!
Investment {inˈves(t)məәnt}
a. The action or process of investing money for profit or
material result
b. A thing that is worth buying because it may be
profitable or useful in the future
c. An act of devoting time, effort, or energy to a particular
undertaking with the expectation of a worthwhile result
[Oxford American Dictionary]

12. The donor approach to ILCF!
Lobby local Government
Training
Community Development
R&D
Sending samples
Proof of concept
Capital equipment
Marketing
Working capital
$ 5,000
$ 100,000
Outputs
Non viable business
Return too low for investor
Cannot afford bank loan
Not able to scale up
Dependent on grants & donors
5%
Return on
Investment:
Activities

13. Using investment ‘layers’ for ILCF!
Lobby local Government
Training
Community Development
R&D
Sending samples
Proof of concept
$ 5,000
$ 50,000
Outputs: public goods
Return on
Investment:
Enabling Investment
Capital equipment
Marketing
Working capital
Asset
Investment
$ 50,000 10%
Validation of concept
Capacity to deliver
Market discovery
Decent return for investor
Viable business
Blueprint for others to follow
Able to scale up
Outputs: private goods

14. The SME financing gap!
Firm Size
CapitalRequired
Micro Small Medium
bank loans,
lease financing,
trade finance/factoring
private equity
structured finance
?
microfinance
Formal, bank customersinformal, MFI customers
The Gap

15. Tactical approaches!
Task Constraints Action
Influence the
external conditions
• Governance
• Tenure
• Isolation
Organise through
cooperatives, associations
& federations
Improve the
internal conditions
• Organisational structure
• Sufficient capability to
execute the plan
Seek & manage
partnerships

16. Roadmap to success!
Preparation
Negotiation
Performance
Management
Scale-up
Enterprise Development
Incubation
Mainstream
Investment
Enabling
Investments
Asset
Investments
Proposition Establishment Validation
grants
seed
capital
equity
loans
Impact
Investment

17. Next steps!

18. THANK YOU
Elson, D.(2012), Guide to investing in locally controlled forestry, Growing
Forest Partnerships in association with FAO, IIED, IUCN, The Forest Dialogue
and the World Bank. IIED, London, UK.