- Over 260 community forests (CFs) have been established in Cameroon, covering over 1.3 million hectares of secondary forest. However, most CFs are not operational and are failing to meet their objectives of reducing deforestation and forest degradation.
- Key challenges facing CFs include lack of technical capacity, investment capital, enterprise management skills, infrastructure, market linkages, and access to financing. A new performance-based financing approach is being tested to help CFs establish viable forest enterprises.
- The new approach involves rigorous selection and establishment processes for community forest enterprises, as well as long-term training, technical support, and monitoring to boost enterprise success rates and ensure environmental and social benefits.
Performance-based Financing for Promoting Resilient Ecosystems
1. 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
2. Transforming Lives and Landscapes with Trees
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al., unpublished manuscript).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
3. Transforming Lives and Landscapes with Trees
§ 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)
4. Transforming Lives and Landscapes with Trees
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.
5. Transforming Lives and Landscapes with Trees
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.
6. Transforming Lives and Landscapes with Trees
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
7. Transforming Lives and Landscapes with Trees
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)
8. Transforming Lives and Landscapes with Trees
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
9. Transforming Lives and Landscapes with Trees
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.
10. Transforming Lives and Landscapes with Trees
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.
11. Transforming Lives and Landscapes with Trees
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.
12. Transforming Lives and Landscapes with Trees
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
13. Transforming Lives and Landscapes with Trees
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.
14. Transforming Lives and Landscapes with Trees
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
16. Transforming Lives and Landscapes with Trees
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