Investors raise $280 million to fight deforestation in Africa
A consortium of investment firms closed its first fund-raising round for the forestry sector in sub-Saharan Africa, in a bid to combat deforestation.
Norfund led the funding round with US$76 million (S$108 million) into the African Forestry Impact Platform (AFIP), followed by US$75 million and US$48 million from British International Investment and Finnfund respectively, a statement from the investors released on Thursday said.
Increasing timber demand in Africa’s expanding economies is putting pressure on some of the world’s most biodiverse forests, said David Brand, chief executive officer of New Forests, which will manage the fund.
AFIP has been registered in Singapore as a variable capital company, which is an open ended, permanent capital vehicle.
The fund will help increase the supply of sustainable wood products, said Clarisa De Franco, managing director and head of private equity funds at the UK government’s development-finance arm. “Charcoal is an important source of domestic fuel in many sub-Saharan African nations with the demand rising,” De Franco said.
The increasing consumption of charcoal is putting pressure on forests on the continent. Usage of the wood-based fuel jumped 90 percent in Africa to 34.9 million tonnes in 2020 with Nigeria, Ethiopia and Ghana being the top producers, according to the United Nations’ Food and Agricultural Organization report.
The AFIP fund aims to raise as much as US$500 million of long-term institutional capital for investment in the continent that loses four million hectares of forests yearly, according to a statement.
The fund has acquired 100 percent of Green Resources, East Africa’s forestry and wood processing company that manages approximately 38,000 hectares of pine and eucalyptus plantations in Tanzania, Uganda and Mozambique, according to the statement.
In a presentation about the fund, New Forests said target metrics included 2.26 million tonnes of carbon dioxide in net removals, inclusive of carbon offsets; a 14 percent increase per hectare of quality habitat protected or restored; and a 14 percent increase in people earning an income or additional or improved livelihood.
“The Africa platform will expand the plantation forest sector while seeking to also support forest conservation, restoration of degraded land and expansion of community-based forestry programs,” Brand said.
New Forests, which has A$8.7 billion (S$7.8 billion) in assets under management across 1.1 million hectares, manages sustainable timber plantations and conservation areas, carbon and conservation finance projects, agriculture, timber processing and infrastructure assets.