F4D - Global Utmaning...clothing material, all derived from the forest. Abbreviations used A/R...

F4DForestry For Development

How bioenergy projects in

Sub-Saharan Africa can reduce climate

impact, fight poverty and make money

IndexPreface: Saving the forests makes economic sense ..........................................................................4

Introduction ....................................................................................................................................................6

Definition of terms used .............................................................................................................................8

Abbreviations used .......................................................................................................................................9

Project and report outline ....................................................................................................................... 11

Economic framework ................................................................................................................................ 11

Risk and opportunity in African forestry .........................................................................................26

Weak domestic markets ...........................................................................................................................27

Economic sustainability ......................................................................................................................... 30

Country studies ...........................................................................................................................................36

Commercial forestry in Africa – case studies ................................................................................ 57

Concluding discussion..............................................................................................................................82

References .................................................................................................................................................... 94

Project partners ..........................................................................................................................................97

”This century will see Africans seize their destiny in their own hands and triumph over their adversities. The world needs what they have to offer in raw materials, commodities and agriculture.”

Tony Blair, A Journey (introduction to the paperback edition, 2011)

© Global Utmaning Maj 2012. Tryck: Åtta 45 Tryckeri AB 500 ex. Grafisk form: FWD Reklambyrå AB.All photos Mattias Goldmann except page 89, courtesy of African Wildlife Foundation.

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Preface: Saving the forests makes economic senseHaving spent countless hours in the deep forests of Sweden, I confess that I am a forest addict. I share this love for the forest with many conservationists whom many are city dwellers, but I find the passion for forests equally strong within the forestry sector. I be-lieve that saving the forests and all their values can best be done through working with both the forest companies and the conservationists. This is based on my understanding of how a market economy works and the fact that all expertise and passion for forests is needed.

Climate change has introduced both a new opportunity and a new threat to sustain-able forestry. Reforestation and afforestation are important tools for mitigating climate change and the potential for this is particularly large in Sub-Saharan Africa.

If carried out in the right way, there is a manifold “win- win” situation: When fossil fuels are replaced with biomass, carbon emissions can be reduced. With increased invest-ments in the forestry and agroforestry sector, poor communities can get better jobs and more income. Industrial development is supported through increased access to raw material, more capital and a better trained workforce. Conservation also benefits from the introduction of good methods in forest and wildlife management.

None of this is assured with the current scramble for biomass. Done wrongly, it may result in land-grabbing and unsustainable methods of extraction, both in an ecological and a social sense. Poverty may be worsened, not reduced. This is why sustainable forest management must mean social and economic benefits for local populations, and why all actors involved need a deep respect for the different interests involved and a strong will to cooperate.

Tropical deforestation is an immense tragedy, not only for the climate, the environment and the people immediately dependent on the forest for their income, but for us all. The answer is not to stop all forestry operations - this will only lead to a higher rate of illegal logging -– but to ensure that there is a market for sustainable forestry, locally, region-ally and globally. The right answer is to raise the bar for what is common practice and ensure that it will make economic sense to protect the tropical forests. The consumers will play an important role in this.

This report, written by Mattias Goldmann for Global Challenge with the support from Sida, Sveaskog and Södra Skogsägarna is an effort to contribute to this process. I am proud that the approach of sustainable forestry, focusing on sub-Saharan Africa, is di-rectly supported by major forest companies and has the explicit interest of several oth-ers. It is with them and with other players in the bioenergy sector that a market for sustainable forestry should develop in the coming years.

Kristina PerssonChairpersonGlobal Challenge – Global Utmaning

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Young trees four years after planting, in Liberia. Project like this can help develop Sub-Saharan Africa, but for this to happen, the investors must be committed, the local community must be involved, legislation has to be improved and the civil society should help establish best practises for forestry and bioenergy investment.

Kenya and Tanzania are nations where Swedish development aid has long focused on the forestry sector. Both countries are in focus for Swedish development assistance, and Kenya hosts the headquarters of UNEP, ICRAF and other related organizations, as well as the regional headquarters of the Swedish Trade Council and many Swedish compa-nies, while the Swedish Embassy in Nairobi is Sweden’s third largest.

Liberia and Sierra Leone are both rising from the ruins of civil war and are striving to attract sustainable foreign investment. In Liberia, Buchanan Renewables, until recently partially owned by Swedish Vattenfall, harvests rubber trees for use as biomass, and in Sierra Leone Addax Bioenergy is developing a greenfield renewable energy and agricul-ture project that will produce ethanol. Both projects aim to combine exports to Europe with domestic use, and to supply the local grid with “green” electricity. Both companies strive for high sustainability.

All four countries have suffered a high rate of deforestation, Liberia and Sierra Leone through a devastating civil war, Kenya and Tanzania through rapid economic growth with little forestry protection and high corruption. Yet, all four countries still have very valuable forests to protect, and have governments that have publicly committed to do so.

This project is the result of Global Challenge’s co-operation with Södra and Sveaskog, who share a unique expertise in this field, and an interest in the potential for sustain-able biomass projects in Africa. In Africa, the main partners are the African Wildlife Foundation (AWF), the leading international conservation organization focused solely on the African continent, with community work in the ecologically important forests of northern Tanzania, and Co-operation for Sustainable Development in Africa (CASDA), an East Africa-based organization focusing on the sustainability projects, including agro-forestry, with links to the Climate Network Africa and Tällberg Forum.

IntroductionFor the first time in many years, forestry is high on the agenda, and the forestry sector is seen as a part of the solution to the two most paramount global problems; climate change and increased population with the interlinked demand for more food.

With the increased interest in forestry comes an increasing interest in investing in land and plantations in Africa, where land availability is good, prices are low and labor cheap. In many parts of Africa, the forests are being cut down without much concern for the long term sustainability, often using illegal methods and/or logging in areas of high biodiversity value. This destruction of valuable natural resources is also a threat to food supply, and does not create the economic wealth that sustainable forest management can. Globally, deforestation accounts for almost a fifth of the increasing CO2-emissions.

Africa has the potential to become a major world supplier of bio-energy with a capacity to produce large quantities of high quality bio-energy at a competitive price, while at the same time functioning as a carbon sink through afforestation and sustainable forest management. This development would have benefits on the climate and the environ-ment as a whole.

With this project, we wish to concretely demonstrate how investments in African forest management can lead to greater social, economic and environmental sustainability, focusing on the experience Swedish forestry and energy companies already have in this field.

The findings lead to recommendations of relevance for the forestry and bioenergy sector of Sweden and internationally, for actual and would-be investors in the sector, and for the foreign aid and trade departments of governments with a presence in Sub-Saharan Africa.

This project focuses on the following countries where we have already seen a strong commitment from the Swedish forestry and energy industry and/or Swedish NGO involvement;

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Definition of terms usedA forest, according to FAO, is as wooded area with a crown density of over 10%, trees that are at least 5 meters tall and cover a surface of at least 0.5 hectares. Thus, planta-tions qualify as forests, as do rubber trees and palm trees. Kenya has defined “forest” as an area with at least 30% canopy cover, 2 m potential tree height and 0.1 hectares area. Other countries and other institutions have yet other definitions; for instance, under Liberian legislation rubber trees are seen as agriculture. This obviously causes problems for any international forestry work. In this report, we use the national definition when-ever appropriate, otherwise the FAO definition.

Forest resources refers to the forest’s ability to provide tangible wood and non-wood for-est products.

Industrial wood serves as the basis for the production of a vast number of products, like industrial round wood, sawn wood, panels, pulp and paper, fiberboard plywood, etc.

Fuel wood is energy generation from direct use of woody material (e.g. twigs, branches and stems); indirect use (e.g. wood processing residues); recovered wood-fuels (used wood) and wood-derived fuels (e.g. methanol)

Non-wood forest products may be food, medicines, spiritual, aesthetic, construction and clothing material, all derived from the forest.

Abbreviations usedA/R Afforestation and reforestation (for instance within CDM)

ASALs Arid and Semi-Arid Lands

BEFS Bioenergy and Food Security (World Bank program)

BSI Better Sugarcane Initiative

CDM Clean Development Mechanism, flexible mechanisms within the Kyoto Protocol

CER Certified Emission Reduction credit (within CDM)

CIFOR Center for International Forestry Research

COMIFAC Central African Forest Commission

COMPETE Competence Platform on Energy Crop and Agroforestry Systems for Arid and Semi-arid Ecosystems- Africa , EU project funded through the 6th Framework

CPF International Collaborative Partnership on Forests

CSO Civil Society Organization (local, as opposed to NGO, national)

CSR Corporate Social Responsibility

EIA Environmental Impact Assessment

EITI Extractive Industries Transparency Initiative

EPA Environmental Protection Agency (in Liberia and other countries)

ESHIA The environmental, social and health impact of the project

ESIA Environmental and Social Impact Assessment

ETS EU’s Emissions Trading Scheme

F4D Forestry for Development

FDA Forest Development Authority (in Liberia)

FAO Food and Agriculture Organization of the United Nations

FCPF Forest Carbon Partnership Facility

FLEGT Forest Law Enforcement, Governance and Trade

FOEP Forest Economic Policy and Products

FPIC Free, Prior and Informed Consent (basic principle for REDD and other mechanisms)

FSC Forestry Stewardship Council

GAP Good Agricultural Practices

GFPM Global Forest Products Model

GHG Greenhouse gases

GFTN Global Forest & Trade Network, WWF:s initiative for sustainable forestry

GPEB Global Partnership on Bioenergy

IFPRI International Food Policy Research Institute

IITA International Institute for Tropical Agriculture

ILO International Labour Organization

IPCC International Panel on Climate Change

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ITTA International Tropical Timber Agreement

ITTO International Tropical Timber Organization

IUFRO International Union of Forest Research Organizations

IUCN International Union for Conservation of Nature

LCA Life Cycle Assessment

LEITI Liberian Extractive Industries Transparency Initiative

LULUCF Land Use, Land-Use Change and Forestry

MDG Millennium Development Goals

NGO Non-Governmental Organization

NREAP National Renewable Energy Action Plans

NTFP Non-timber forest products

NWFP Non-wood forest products

OPIC Overseas Private Investment Corporation

PEFC Programme for Endorsement of Forest Certification

PFCA Participatory Forest Carbon Assessment

PFM Participatory Forest Management

PGD Swedish Policy for Global Development

PWD Person With Disabilities

PRSP Poverty Reduction Strategies Papers

RED Renewable Energy Directive of the European Union

REDD Reduced emissions from deforestation and forest degradation

RSB Roundtable on Sustainable Biofuels

RSPO Roundtable on Sustainable Palm Oil

SADC Southern Africa Development Community

SEMP Social and Environmental Management Programme

SFM Sustainable forest management

SMFE Small to medium forestry enterprise

SSA Sub-Saharan Africa

UNDP United Nations Development Programme

UNEP United Nations Environment Programme

UNFCC UN Framework Convention on Climate Change

VCM Voluntary Carbon Market

VPA Voluntary Partnership Agreement, EU program for ensuring FLEGT-compliance

WB The World Bank

Project and report outline This report is co-funded by Sida, Sveaskog AB, Södra AB and Global Utmaning. While all funders have been involved in the outline of the report, and have given valuable in-put throughout the process, all conclusions, recommendations and possible errors rest with the author. The report is based on desk studies, interviews with over a hundred experts in Sweden, in the four countries covered and at the COP 17 climate conference in Durban.

Economic frameworkTo protect forests, the added value for sustainably sourced timber needs to be higher than the added costs compared to indiscriminate logging. While forests are often equat-ed with wood or biomass, the forest also produces a number of other goods, particularly in the developing world. These include:

» Non-wood forest products (NWFP), such as food and fodder (e.g. game, fruits, honey, roots), medicines, resins, bark, cane, paint. For local communities, these products may be as valuable as the wood or biomass.

» Environmental services, such as carbon sequestration, erosion protection, soil improvement, water retention and improved micro-climates.

» Biodiversity, where tropical forests are a key.

» Recreation and tourism. Some forests can provide more income from recreation and tourism than if the trees are felled.

Profitability will to a large degree depend on supply and demand trends, and the FAO based Global Forest Products Model is widely used to project consumption, produc-tion, trade and prices of forest products. It deals with 180 countries and nine classes of wood, panels, pulp and paper. It takes into account changes in demand due to GDP growth, capacity expansion as a function of profitability and technical change, but does not integrate indirect use values, non-use values and the values of non-timber forest products such as biodiversity and watershed protection. These are not easy to trade on the market place, even though some attempts are now being made, for instance with carbon sequestration and storage.

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Non-timber forest products are often public goods in the sense that it is difficult or impossible for the owner to exclude others from consuming them, and that increased consumption will not decrease the availability for others. This means that they may be of little value for the forest owner, who will have little incentive to develop or protect them. This will often also be true for public authorities, for whom revenues, rents, taxes and job generation are easier to quantify and appreciate.

Unsustainable forestry means that the price of forestry products does not include costs such as the decline of game or other non-timber forest products. In some cases, this can be compensated economically, for instance by paying a fee to hunters and gatherers, though often this cost is difficult or impossible to evaluate.

There are many ways to internalize non-market values in market behavior, including ecological taxes and selling pollution permits. While these all apply for forestry, forest specific approaches have also been developed. It falls outside the scope of this report to relate the models, but any potential investor in African forestry would do well to study the subject in order to make a well-founded appraisal of the non-monetary values of forestry, and how to include them in the balance sheet of the project.

This report focuses on forestry and bioenergy in Sub-Saharan Africa, excluding South Africa, which means that the factor of economic risk plays a more important role in the cost-benefit analysis than for most investments. This is especially true when the risks dealt with are perceived rather than factual, as may often be the case for the countries covered by this report. This report tries to give the potential investor balanced assessments on the risks, threats and opportunities of the regions, countries and sectors covered.

Forestry sector outlook

The world has around three billion hectares of “closed forest;” over five billion hect-ares if shrubs and other areas covered with woody vegetation are included. Over the last several decades, the forested area has been decimated, even though it seems like deforestation is slowing down. FAO finds that some 13 million hectares of forest were cleared between 2000 and 2010, down from around 16 million hectares per year during the 1990s. In the tropics deforestation was 11.4 million hectares the last five years, par-tially offset by growth in the North.1 The highest rate of deforestation has been in South America, followed by Africa, while Asia has shown net gains in forest area since 1990, consistent with extensive planting.

1 FRA 2005

Water availability is one of the critical factors for forestry and bioenergy projects, both for the project itself and for the surrounding communities.

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Forests store a vast amount of carbon, 289 gigatons of carbon in their biomass alone.2 While sustainable management, planting and rehabilitation of forests can conserve or increase forest carbon stocks, deforestation, degradation and poor forest management reduce them. For the world as a whole, carbon stocks in forest biomass decreased by an estimated 0.5 Gt annually during the period 2005–2010, mainly because of a reduction in the global forest area.3

Tropical deforestation and forest degradation releases 2.2 billion tons of CO2 into the atmosphere annually, while the expanding forests in the temperate regions absorb just under 700 million tons of carbon, with a negative balance of 1.5 billion tons of CO2 each year. This equals to 17% of global greenhouse gas emissions, more than the entire global transportation sector and second only to the energy sector. One day’s deforesta-tion around the world is equivalent to the carbon footprint of eight million people flying to New York from London.

Constraining the impacts of climate change is practically impossible without reducing emissions from the forest sector4.

Every newly planted tree in the tropics removes an average of 50 kilograms of CO2 from the atmosphere each year during its growth period of 20–50 years, compared with 13 kilograms of CO2 per year for a tree in the temperate regions. Compared to other mitigation strategies, planting trees is relatively inexpensive.

Deforestation is not only threatening the climate and biodiversity, but is also under-mining efforts to address poverty, reducing the government’s ability to provide jobs and education, creating and sustaining conflicts (eg between loggers and communities), entrenching corruption and weakening law enforcement.5

A major driver of deforestation is the population increase; by 2030, the global popula-tion will grow with about 1% per year. Cereal needs are expected to grow at least at the same pace, which would need a cropland expansion of about 20%, if the last decade’s productivity increase per hectare can be kept up. This rate is already declining, and very unevenly spread (Sub-Saharan Africa has hardly seen any increase at all), and may be particularly hard to keep up when agriculture moves in to more marginal, less produc-tive lands. In tandem with the effects of climate change, productivity may well decrease.

With a productivity decline, and if demand rises more rapidly than projected, for in-stance due to a more marked increase in meat consumption or a faster increase in first-

2 FRA, 2010

3 http://foris.fao.org/static/data/fra2010/KeyFindings-en.pdf

4 IPCC report, 2011

5 Jonathan Yiah, the Sustainable Development Institute, 2011

generation biofuels, agricultural land will make more inroads into forests. To minimize this, CGIAR recommends a stronger focus on higher yielding crop varieties, which should be combined with increased fertilization in areas where this is not systematically done. Better utilization through agroforestry and intercropping are also partial solutions.

Wood industry projection

The annual human outtake of wood from the forests is estimated at around 3,200 mil-lion cubic meters, out of which just less than 60% is for fuel wood and around 40% for industrial end-use purposes. While demand obviously varies with the business cycles, a global long term 1% annual growth for sawnwood is predicted, mainly for softwood.6 For wood panels, pulp and paper, the demand is expected to increase much faster, though for paper, this will to a large degree be met by ”urban forests,” as recycled paper.

Marketwise, Asia is estimated to play a much more prominent role on the demand side, especially China. Russia, Latin America and Africa are highlighted as upcoming sup-pliers of forestry products, though deforestation for non-industrial use will reduce the afforested area by 250 million ha until the year 2050. Should more efficient techniques for cooking become more widespread in the developing countries, the demand for fuel wood may decrease.

African forestry situation

Africa has a forest area of 635 million hectares, just over half being “closed forest” and only 1.2% being planted, mainly in the Mediterranean region and South Africa. Around 600 million cubic meters of wood is harvested each year, almost all of it for fuel wood. Annual deforestation is around 5 million hectares.

The forest situation should be seen in the context of the continent soon reaching one billion inhabitants, with strong economic growth in several African countries and rapid urbanization in most. The dependency on agriculture is still high, and most Africans remain subsistence farmers with limited production for anything beyond the local mar-ket. The agricultural development has been very slow and yields remain low. While American farms typically get over 10 tons of maize per hectare, the average African farm doesn’t reach 2 tons per hectare7.

6 This chapter is partially based on a presentation by Jan Wintzell, at the KSLA seminar 110927

7 http://www.fao.org/docrep/w2698e/w2698e03.htm

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To halt deforestation and the linked desert-ification, the African Union has launched the Green Wall of Sahara Initiative, which calls for a 7,000 km and of trees, 15 km wide, stretching across Africa from Senegal to Djibouti. In June 2010 the Global Envi-ronment Facility gave the project a USD 119-million grant. This notwithstanding, FAO predict continued deforestation until 2020, very small areas of sustainably man-aged forest, no major expansion of planted forest, little increase in industry products from the forest, no replacement of fire-wood as the main source of energy, and increased difficulties in sourcing NWPs8.

Africa is very likely to warm by 3-4°C on average during this century, almost twice the global average. Crop yields and livestock productivity are likely to fall, with reduced food security. Water will become scarcer for drinking, irrigation and hydro power. Large-scale migration and civil conflicts and unrest are possibilities. With 40% of West Africa’s population living in coastal cities, the IPCC’s prediction of a 21-48 cm sea level rise this century is especially unwelcome. Other impacts include loss of mangroves, estuaries and coral reefs, critical for tourism and fishing industries; flooding of coastal infrastruc-ture; and loss of coastal plantations of palm oil, coconuts, mangoes, and cashew nuts9.

Projections on the effects of climate change are unreliable for SSA. For example, one scientific study shows that rainfall in Ghana in 2050 will increase by 49%; another pre-dicts a 65% decrease. This makes government preparation very difficult. This is also one reason why a recent IFPRI study found 26 different adaptation strategies in ten Sub-Sa-haran countries, many of them linked to forestry, such as the regeneration of degraded land and community based management of natural resources.10 Forests protect against the more violent storms, heavier rains and increased droughts that are associated with climate change.

8 FAO: Forestry outlook study for Africa, 2008, including East Africa Subregional Report and West Africa Subregional Report

9 Information compiled by World Resources Report, 2011

10 IFPRI: Strategies for Adapting to Climate Change in Rural Sub-Sahara Africa, 2010

EU demand and criteria

By the year 2020, the EU has decided to reach 20% renewable energy, with individual, legally binding targets for every member state, e.g. Sweden has to reach 49%, and must establish how they aim to do so in a National Renewable Energy Action Plan. To meet the 20% target, the EU will use 50-100% more wood than currently, mainly for electric-ity generation, to a large part wood pellets supplied to large power stations.

The rapid increase in demand cannot be met by increased production within the EU, since improved forestry practices or increased plantations will not yield results within the relatively short time frame. Canada, the USA and Russia all face challenges that may lead to them not being able to deliver the additional quantities of biomass to the EU market.

Production in North America fell during the economic downturn at the end of the last decade, a shortfall comparable to the additional volume of roundwood required to meet the EU target. Also, North American wood faces increasing problems to reach sustain-ability criteria, particularly in the “catchment” area of large wood pellet plants. Serious question marks have been raised over whether Russia can adhere to the EU FLEGT rules. This all leads to a strengthened interest in non-traditional suppliers, while the stronger emphasis on sustainably sourced timber will lead to new opportunities for producers offering this.

Meeting the increased demand

While part of the increase in demand is from the developed world, much of it is locally driven. Consumption of sawn timber increases with income at both the household and national levels, while rapid urban growth generates increasing demand for wood for construction and furniture. The demand for firewood and charcoal remains high but is now supplied by fragmented networks, rendering current forestry regulation unwork-able, especially when combined with high levels of corruption.

In South Africa, demand for sawn timber increased on average by 8.6% per annum over ten years, 17% per annum in the past three years. This increased demand cannot be sustained locally and the country will become a net importer within a few years, contributing to higher prices and possibly local shortages. The situation is exacerbated by annual losses of 2.2% to plantation fires the last three years. While most other Sub-Saharan African countries do not have sufficient resources to conduct similar studies, it is believed that they too will experience severe shortfalls in fuel wood by 2025.11

11 http://www2.dwaf.gov.za/dwaf/cmsdocs/4177___Study%20%20of%20supply%20and%20demand%20 Industrial%20Roundwood%20in%20S.A..pdf

A model farm trial plantation, Liberia.

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Up to 70% of trees logged in Africa are left unused, so simply reducing waste and mov-ing to whole-tree usage will reduce the pressure on African forests significantly. This will demand investments in the education of foresters, as well as in improved machin-ery, and an acceptance for furniture and other products to be made from wood waste.

Other measures to reduce demand for forestry products include the massive introduc-tion of energy efficient stoves to replace the three-stone variety that is prevalent in African households. Swedish products Solvatten and SolarWave are both examples on how demand for timber can be reduced through innovative ways of purifying water without boiling it.

CIFOR stresses the need for enhanced access to new technologies and finance streams, along with more transparent markets and improved forest governance conditions, more inclusive business models and a better distribution of economic benefits.

Plantations

A partial answer to the demand challenge is fast-growing plantations, which currently amount to around 30 million ha, with an annual production of 20 m³/ha for softwood, 30 m³/ha for hardwood, compared to the annual increment in Sweden of less than 5 m³/ha. FAO expert asserts that, “without investment in fast-growing plantations above all in developing countries, future wood supply may well be in jeopardy. About 25% of in-dustrial wood production is currently thought to come from plantations and this figure could well rise to 50% within the next few decades.”12

According to estimates presented at KSLA, 68 million ha of industrial fast growing plantations is required to meet the future demand for industrial roundwood; three times Sweden’s total production. Large-scale possibilities exist primarily in Latin America and Africa, where forestry products could also be used for bioenergy and fuels production. Brazil, China, Chile and South Africa are expected to become important suppliers of pulpwood and industrial softwood from fast-growing plantations.

FAO projects that with an expansion of plantation areas and rising yields, harvest from plantations could more than triple between 2005 and 2030, and that plantations could one day satisfy most of the world’s demand for industrial wood, thus helping protect the world’s remaining natural forests. If the trees are planted on degraded land, it may reduce soil erosion and help combat climate change.

While plantations offer a potential for faster growth, it may come at a price, namely a fast reduction of NWFPs, biodiversity and soil nutrition. Further, its increased water consumption is problematic in many areas, and the risk of diseases and insect attacks may rise.13

The World Agroforestry Center suggests using fast growing trees and shrubs to natu-rally fertilize farm fields, making good use of how trees draw nitrogen from the air and transfer it to the soil through roots and leaf litter, replenishing exhausted soils. This boosts yields and increase income and food security, reduces run-off and soil erosion, and helps overcome the competition for land between agriculture and forestry. In Ma-lawi alone, 145,000 farmers use fertilizer trees, with a doubling of maize yields.14

12 Persson, Reidar: Increased forest production in the South – threat or opportunity?, Swedish FAO Committee, Publication series 3, 2009

13 See for instance Cossalter & Pye-Smith: Fast-Wood Forestry, Myths and Realities”, CIFOR, 2003

14 East African, nov 14, 2011

Sustainable forestry projects must take into account the local communities’ needs for forestry products. These are not limited to the wood itself, but also include many non-timber forest products. Such products have not always been correctly valued by external actors (Tanzania).

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City forests

With the rapid urbanization, CPF emphasizes the need for protecting and managing forest and trees in and around cities, to strengthen urban livelihoods and improve city environments. Forests in and around cities can also mitigate severe weather impacts by shielding buildings from strong winds and flooding, and can help cities save energy by acting as a buffer from hot weather. Urban forests also improve the well-being and health conditions of citizens by cooling the environment, particularly in arid zones. Ur-ban agroforestry and the harvesting of NWFPs can supplement household food supplies.

FAO is soon to publish the first ever guidelines on urban and peri-urban forestry, in-cluding good practices15. For investors, peri-urban forestry projects may be easier to monitor and thus offer reduced risk for large scale theft and illegal logging. It may also be easier to attract qualified workforce, more feasible to add value to the forest product, and easier to access local and international markets. This must be weighed against the often higher land prices, possible water scarcity and a higher incidence of small-scale theft or logging.

Investments

For the developing part of the world, forestry averages around 2% of GDP, with around 3% of total export values.16 For some of the poorest countries, forestry provides more than 10% of GDP.17

Over the last decade, the world’s largest pulp and paper companies have all made larger investments in Southern Hemisphere forestry than before, with something approach-ing a ”green race” to make use of biomass possibilities. At the same time, institutional investors have increasingly turned to forestry, e.g. the pension investments going into forestry has increased approximately five times since the late 1990s, to about USD 35bn in 2007. The early focus on South America and Australia has recently shifted towards Africa. The World Bank has also re-entered the forestry sector, after more than ten years’ absence.

According to senior forest researcher Reidar Persson, “The reason for forestry migrat-ing south is not just because plantations grow faster than the forests in the North, but mostly because wood production is currently much cheaper there.”18

15 http://www.fao.org/news/story/en/item/92329/icode/

16 FAO, 2005

17 Steele and Kragt, 2006.

18 Persson, Reidar, 2009

Taken together, there is now ample financing available for expanding forestation activi-ties in Africa, perhaps more than what can be matched by suitable, sustainable projects. To what extent this investment trend will continue depend on a large part on political stability and beneficial investment terms. Whether the investments will lead to sustain-able growth in the third world forestry sector or damaged ecosystems and reduced ac-cess to food in the global South, is to be decided by policies and regulations, enactment and company behavior. 19

Changed ownership

Reforming forest tenure systems and securing forest ownership rights can significantly improve peoples’ livelihoods and enable them to gain income from forest products, ac-cording to FAO.20

Around 80% of the world’s forests are publicly owned. Community or private own-ership may result in improving forest management and local livelihoods, particularly where state capacities to manage forests are weak.”21 Attempts to reduce pressure on the forests by changing the ownership are evident in all countries studied in this report, though whether it is successful remains to be seen – local communities may be unpre-pared for negotiations with forestry companies, or may seek short term gains incompat-ible with sustainability.

Legislation

All African countries studied have well-intentioned forest regulations and sustainable forest management policies. However, implementation is generally poor due to a lack of resources and institutional weaknesses. In addition, for some of these countries, politi-cal and social unrest during the last decade has had negative effects on forest resources.

Many African states outshine Europe when it comes to forest areas set aside for protec-tion, again with relevant legislation in place but lack of resources and mechanisms to ensure its implementation.

19 http://www.fern.org/sites/fern.org/files/Biomass%20imports%20to%20the%20EU%20final.pdf

20 FAO: Reforming Forest Tenure, 2011

21 FAO, October 2011

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The WWF has identified a number of key reasons why sound forest management has been difficult to implement in Africa:

» Discrepancies between local traditions and modern legislation, administrations often destroy local management structures and disempower traditional resource users;

» Lack of knowledge among local communities about conservation goals, protected area boundaries, protected species, wildlife and hunting legislation;

» Neglect of socio-economic, ethnic and/or traditional aspects by the authorities in-volved;

» Under-staffing, under-payment and under-equipment of those in charge of forest management, leading to corruption at various levels;

» Lack of public awareness concerning the importance of biodiversity conservation among decision makers.22

This situation is in marked contrast with developed countries demanding sustainable forestry, public participation, better forest legislation, a stop to corruption and illegal logging, a focus on poverty reduction and an ever-increasing number of plans and re-ports that have to be developed. “This causes problems in the short term for forestry in developing countries and often leads to conflict between developing and developed nations.”23

Sustainability schemes

To help ensure sustainable practices, national and international legislation may be sup-ported by the forestry companies voluntarily adhering to standards and certification schemes, both more general and forestry specific.

The Forest Stewardship Council, FSC, is increasingly sought after from buyers of wood-based products, especially furniture and paper. A case in point is one of the larger for-estry companies losing an order for 300,000 tons of wood mass since they were unable to provide FSC-labeled mass. FSC can also help attract investors from developed coun-tries, and is a prerequisite for many banks, including branches of the World Bank.

22 WWF: Protecting forests and alleviating poverty in Central Africa, 2012


Full FSC verification demands control over the land (own or lease), others can apply for FSC-controlled chain-of-custody. Since October 2011, the FSC includes human rights verifications, with the central ILO conventions.24 FSC awareness is low on the African market, so it is mainly relevant for products marketed to other parts of the world. FSC can be combined with Fair Trade labeling, focusing on wages and working conditions, with an estimated price increase of 1-2 percent.

The WWF initiative GFTN aims to eliminate illegal logging and drive improvements in forest management, assisting hundreds of companies in evaluating their procure-ment and implementing appropriate action plans to ensure responsible sourcing and sustainable supply. With combined annual sales of USD 72 billion, trading by GFTN participants represents 19% of all forest products bought or sold internationally every year.25 Further, national or regional voluntary schemes are applied for buyers of forestry products, such as the Nordic Swan for buyers of paper and related products.

Other sustainability schemes have been designed for biofuels but are still relevant, the most important being the RSB, which was developed with extensive African consulta-tion, and more specific criteria such as the RSPO for palm oil. Others are focused on agriculture, but still have relevance for the forestry sector, such as the GAP.

The ITTO aims to conserve tropical forests and assist countries to develop economi-cally, operating under the recently renegotiated International Tropical Timber Agree-ment (ITTA). It helps improve the competitiveness of wood products relative to other materials; boost the marketing of tropical timber from sustainably managed and legally harvested sources; shares information on certification and other aspects of the inter-national timber market; helps countries to improve forest law enforcement and gov-ernance; addresses illegal logging and related trade in tropical timber; and undertakes sustainable forest management and forest restoration. The ITTO has 61 signatories, in-cluding Liberia (from 2008), but not Kenya, Sierra Leone or Tanzania.

Certifications and labels are not in themselves guarantees of sustainability, with labels PEFC and SFI recently being accused of permitting clearances in biodiversity hotspot areas.26

It must also be remembered that complex and expensive certification schemes may ei-ther exclude smallholder farmers in developing countries, or force them to partner with larger companies. As noted in this study, not certifying biomass or biofuels may mean farmers cannot access key export markets, including the European Union.

24 http://www.fsc-sverige.org/images/dokument/standarder/fsc-std-40-004%20v2-1_trackchanges.pdf

25 www.worldwildlife.org/naftn

26 Greenpeace: On The Ground, 2011

22 23

CIFOR argues that existing standards and schemes are heavily biased towards industri-al-scale producers, and calls for linking sustainability initiatives to developmental ben-efits such as microfinance, health and education services for smallholders in rural areas. In addition, governments should step in and provide financial incentives and improve access to markets by strengthening local infrastructure.27

Many NGOs, mostly based in the developed world or financed from the developed world, see the different schemes, legislations and initiatives for sustainable forestry as being too lenient on the producers. Many NGOs claim to represent the local com-munities, though for this study, we have found that the local communities sometimes disagree with the positions of the NGOs. For instance, in Kenya where the Tana River county counselors have petitioned the National Environmental Management Authority to not revoke a local jatropha project license, stating that, “it is happy for the Bedford Biofuel project to be developed” and accuses the Nature Kenya NGO of having “been operating in the area for many years and has done little to help the local population.”28

A similar divide is found for the Addax project.

It is beyond the scope of this report to give any detailed information on these regula-tions and voluntary schemes, especially since they are easily accessible on the Internet.

Biofuels vs. forestry

In recent years, biofuels have been discussed more intensively than solid bioenergy or forestry, and often the critics of expanded biofuels production are the same who advocate for afforestation/reforestation. In reality, there is no sharp boundary between biofuels and bioenergy, with a number of reasons why they should be discussed in con-junction, particularly in the tropics:

» Increasingly, liquid biofuels will be made from forestry products, such as cellulosic ethanol or biodiesel from oil palms, castor or croton trees.

» The legislation and sustainability criteria are more and more convergent, eg the EU RED directive is for the time being only applicable for biofuels but will most likely be adapted for solid fuels.

» Biofuel projects in the tropics often either have afforestation/reforestation as a criteria for government approval, or have voluntarily included this;

» The clearing of land for biofuel projects often means that the biofuel producer for the first several years also supplies woody biomass;

27 CIFOR: No farmer left behind in sustainable biofuel production, 2011

28 http://biofuelsdigest.com/bdigest/2011/09/29/kenya-group-pleads-to-keep-jatropha-license/

» Liquid biofuels can be used locally and reduce the pressure on the forests, e.g. ethanol gel can replace firewood for stoves;

» Both sectors face the same land-related issues and institutional hurdles and the bio-fuel experience can thus be useful for the developers of sustainable forestry projects

Biofuel exports are projected to increase globally by nearly 90% over the coming de-cade, partially through forest related products and to an increasing degree coming from emerging markets including Africa. This could reduce dependency on oil and generate hard currency income for cash-strapped economies, while at the same time increasing yields in agriculture. If poorly designed, the biofuels expansion will not improve the livelihood of the most needy and will happen at the expense of food production, hence the “food vs. fuel” debate.29

A simulation showed that the food-security aspect is subordinate to fiscal implications, so that a greater scale of production of bioenergy will lead to exchange rate apprecia-tions, which may potentially hurt small holders from an export perspective. The expan-sion will reduce national poverty rates, with distributional effects depending on the crop.30

Unaccounted national forest values

In most African countries, non-timber forest values far exceed the recorded national in-come generated by formal forest industries. For example, more than 95% of Tanzania’s population relies on wood-based energy. Other non-timber forest values are also high, such as forest-based traditional medicines, with an estimated value of USD 77 to 155 million in South Africa alone, or Kenya’s forests potential recreational value, estimated at up to USD 30 million, or Namibia’s total non-timber values at USD 180 million – nearly 450 times higher than the income from commercial logging.

Forest services such as watershed catchment protection, erosion control, nutrient cy-cling, maintenance of soil fertility and local and global climate control also have a high, and largely unrecorded, economic value. For example, the value of soil erosion avoided by natural vegetation is estimated at up to USD 80 million per year in Zimbabwe, and USD 1.5 million in Eritrea. Kenya’s indigenous forests provide water catchment services worth more than USD 25 million a year.

29 This not being the subject of this report, numerous other articles and reports on the subject by the same author, and many others, are suggested reading.

30 Dr. Gunnar köhlin and Dr. Jörgen Levin

24 25

Risk and opportunity in African forestry

Corruption

Transparency International highlights illegal logging as an area of intense corruption, with up to USD 23 billion in illegal logging operations yearly and many large forestry companies working with corrupt governments to log rare and valuable timber. TI warns that most developing countries are poorly prepared to measure and verify changes in forest carbon emissions and carbon stocks, and that the carbon market may further in-crease corruption and fraud by government officials and project sponsors.31

The OECD puts corruption in the forestry sector to around 10% of the total income, a figure that Global Witness expects to increase with the new opportunities for malprac-tise associated with REDD, especially the separation of rights to forest carbon from land rights. To reduce corruption, independent monitoring is needed, involving formal civil so-ciety oversight, as well as financial transparency with registries of finance and activities. 32

The World Wide Fund for Nature (WWF) views corruption as one of the main reasons for deforestation, especially in the tropics where forests are often difficult to reach and located in countries with a high corruption index.

Political risk

Sub-Saharan Africa does not rank high in terms on political stability, and out of the four countries studied for this report, three have had serious political instability; Kenya’s post-election violence in 2008, Sierra Leone’s and Liberia’s long civil wars and again with Liberia’s upheavals during the political campaign of 2011. The situation has im-proved, with both Liberia and Sierra Leone returning to democracy almost a decade ago and holding elections that were generally considered free and fair. In Liberia’s case, topped with the Nobel Peace prize awarded to President Johnson. Sierra Leone and Kenya both have elections in 2012, with the opportunity to prove themselves worthy of investors’ attention.

The political risk may also be coupled with normal democratic processes; in countries

31 REDD-monitor, December 2008

32 Global Witness: Forest carbon, cash &crime, 2011

with weak institutions, links will often be directly with the people in power. This, as several investors will testify, means there is a significant risk of falling from favor with a change of regime.

Infrastructure

In all of Sub-Saharan Africa infrastructure is weak, with deficient roads, decrepit or broken down railways and airlines which may not fulfill IATA and EU regulations. In all of Congo DR, there are less tarred roads than what it would take to make a single-lane road from the east to western boundaries.

While this adds to the cost of any investment, with prolonged traveling times and in-creased costs for repairs and insurance, it is particularly costly for the forestry industry. Their equipment is often heavier and/or wider than the existing road network can handle, leaving the company with little choice other than to invest in the infrastructure them-selves, and sometimes to completely forgo otherwise ideal areas for forestry, since the costs of infrastructure would be too high. This is currently done by two of the four projects studied, and may well be needed for the others when the timber is to be taken out.

Electricity is rare in rural Africa, with diesel-powered generators, kerosene lamps and three-stone stoves being the norm. While this means about double the costs per kWh compared to the EU average, it is also an opportunity for additional revenue for those that through their projects are able to generate surplus electricity and sell it to the na-tional provider.

Weak domestic marketsHaving a strong local market has been the key for many successful companies, in for-estry as well as in other sectors. In addition, it has been claimed by NGOs that bioen-ergy (particularly biofuels) should first and foremost be produced for the local market.

While, as we have seen, there is certainly a market for forestry products in Sub-Saharan Africa, it may not readily be available to outside investors, and the willingness or even ability to pay a premium for sustainably sourced wood products is small. This would

Addressing infrastructural needs must be high on the agenda for sustainable forestry, even though the subjects are often not seen as linked.

26 27

indicate that if sustainable forestry is to thrive in Sub-Saharan Africa, it should include exports to countries and customers that will be able to pay for higher environmental and social standards.

Strategies for achieving local markets for forestry products may include a focus on sec-tors where sustainably sourced wood is already in demand, or where demand may be easier to encourage. This may include the expat community and the hotel and tourism sector. Over time, the market may grow to other sectors, but the often repeated formula of “local demand first” may not be applicable. Other local opportunities include the pro-duction of electricity for the grid, though this may often mean also investing in the grid itself.

Forestry and poverty reduction

Poverty is lack of money and jobs, but also of assets, services, civil and political rights, voice and the rule of law. Poverty is not only the consequence of limited resources, but also of bad governance, poor forest practice, wood not being efficiently used and un-equal distribution of the income and benefits derived from forests.

If well managed, forestry can contribute to poverty reduction in all these areas, but this should be supported by legislation, included in schemes and standards and part of cus-tomer demands. If not, forestry and bioenergy can increase poverty, by reducing the access to land and to the forestry products. The mere fact that forestry companies pay taxes and reinvest part of their profits is not enough to ensure improved conditions for the poor; evidence of this trickling down to the poorest is not strong.33 To empower the poor, companies should engage in the (re)design of policy, institutional and market conditions.34

Jobs and investment

The timber industry provides an estimated 10 million jobs in developing countries, with 30-50 million more informal jobs in the wood industry.35 Forest plantations often gen-erate high employment during tree establishment and harvest, 1 to 3 jobs per 100 ha of plantation. Employment benefits increase if plantations are on degraded or unused land, where alternative agricultural employment is low, or where rotation cycles require continuous replanting, maintenance and harvesting.

33 Angelsen and Wunder, 2003

34 The Forest Dialogue: Poverty reduction through commercial forestry, Yale 2006

35 Poschen, 2001

Around 80% of the African forestry sector is controlled by SMFEs, focusing on the local market, and most NWFPs, such as charcoal production or apiculture, are dominated by smallholders, taking advantage of the low startup costs. This challenges the typical per-ception that commercial forestry is controlled by a small number of wealthy individuals and foreign-owned companies. SMFEs face increasing challenges, both from govern-ments that typically favor large-scale operators, and from increased costs for mecha-nized and expensive harvesting, transportation and processing.

Even though SMFEs increase the administrative burden on the state, simply by there being many more subjects for taxation and control, many SMEs may in total be a better option for the poor than fewer large companies. Wealth is more spread out local creativ-ity is better empowered and cultural identity and practices may be better understood. There is however no guarantee that SMFEs will fight poverty, create jobs or preserve the environment any better than larger enterprises.

Many forestry companies have been accused of paying low wages, having poor work-ing conditions and offering little career opportunities. This would also be true for other extractive industries, pointing at the need for stronger government regulations and the organization of labor for collective bargaining.36 Ensuring that the forestry revenue can easily be reinvested in other promising domestic sectors, or spent on domestic goods and labor intensive services, will also help the country to retain more of the profits.

Part of the poverty reduction is carried out in CSR or “outreach” projects, undoubtedly providing some benefits to local communities. Yet decision transparency is generally low and cost effectiveness unknown.

Outgrower schemes are often seen as a way to empower small scale farmers, since they will control their own produce. On the other hand, they will not be cushioned from market changes in market demand, and the model may require skills that subsistence farmers will not have. The model is becoming more common, particularly in planta-tions and agroforestry, complemented by partnership arrangements between forestry companies and smallholders or communities. In African forestry, outgrower schemes are well-known for rubber wood, coconut and oil palm, while the new carbon market is to a large degree set up as local partnerships.37

While forests can generate income revenue for the communities, not least through the NWFPs, they can also incur substantial costs. Forests interfere with other economic activities, especially the non-production of agricultural crops, and the crop damage caused by forest-dwelling birds and animals. It is important to take these into account,

36 Aidt and Tzannatos, 2002

37 Murdiyarso and Herawati, 2005

28 29

when setting up commercial forests or protecting existing forests, so that new revenue streams outweigh the ones being lost. This includes benefit-sharing, the development of forest-based markets and enterprises, the promotion of local alternatives to forest-based sources of income and subsistence, and direct payments to community members.

Economic sustainabilityIn order for sustainable forestry projects to reach any magnitude in Africa, there has to be economic gains to be made. In this report, we divide this into

» CSR – that projects themselves are not economically viable, but that the associated benefits make them worthwhile for the company.

» Co-funding – projects are not themselves economically viable, but thanks to addi-tional income from carbon schemes, forestry protection schemes, etc, they become economically sound. Here, we focus on the carbon funding that can be had for sus-tainable forestry.

» Commercial on their own – projects that will give an economic profit even without any additional third-party funding.

The logics of these are described below.

CSR

Several Swedish companies have forestry or agroforestry-related CSR-projects in SSA. These include the fast food chain Max and the Swedish importer of Korean cars Kia, both offsetting carbon emissions from their products through planting jatropha trees in Mali.

These projects are not profitable in the traditional, narrow sense of the word; in both cases the environmental work done in Africa is included in the price, and will make business sense only if customers are more likely to choose the particular brand over others due to the project. In Kia’s case, selling future offsets once the first credits have expired, was recently abandoned. Both Max and Kia give testimony to the projects hav-ing raised brand awareness and contributed to an improved position of the company and its activities.

While all projects studied for this report have a CSR component, none of them are CSR projects. There is ample scope for having successful CSR forestry projects in Sub-Saharan Africa, though it is believed that projects will become more important for all parties involved and last longer if they are economically sound in themselves rather than relying on the CSR logic.

Carbon funding

Africa is home to one of the world’s largest forest basins and should thus be a hotbed of forest carbon activity. Yet, only a sliver of the total carbon funding comes to Africa, even less if focusing on Sub-Saharan Africa excluding South Africa.38

A limiting factor for forest carbon funding is that in many cases it is still not clear who has the rights to the forest carbon, with no laws specifically applying to carbon captured in trees. This is especially true in an African context, where even basic land rights are often far from straightforward. Carbon might be seen as a natural resource, like min-erals, ownership of which is often vested in the government. With this interpretation, the people involved in daily forestry work would get little or no incentives, and it is up to the state to create incentives for local land users. Forest carbon may also be seen as being part of the tree, again belonging to the state if the trees are naturally occurring or planted in forest reserves, while other planted trees would belong to the planter or owner of the land. Since REDD is to a large part about avoiding degradation of forests, it may be unsatisfactory that people only benefit from trees that have been planted. If the carbon is seen as tied to the land itself, land users and managers will more easily get direct economic incentives for preserving forests, though government might not accept to have the minor role that this would mean. Instead of any of these models, a unique regulatory framework may be created, with consequences that are difficult to anticipate.39

A risk of all forest carbon projects is that benefits will not be fairly distributed among the community as a whole, and/or among those who put most effort into the initial tree planting phase. The more literate, powerful and wealthy members of a community often capture the benefits of new income generating activities. To ensure that carbon money continues to be an incentive for forest protection rather than a source of conflict within the community, a fair distribution must be ensured. There is also a risk that project de-velopers raise expectations that planting trees will solve all the communities’ problems, be they economical or environmental, including increased rainfall, better yields of crops that grows under trees, and increasing low-season flows of streams.

38 Ecosystem Marketplace: 2011 State of the Forest Carbon Markets

39 This follows Anne Thiel and Slayde Hawkins: Ghana Builds REDD Regulatory Regime, 2011

30 31

CDM

The best known carbon funding opportunity is the CDM, which allows projects in de-veloping countries that reduce emissions to earn CERs, each equivalent to one ton of CO2. CERs are sold to industrialized countries to meet a part of their Kyoto Protocol tar-gets, and to voluntary buyers who wish to reduce their carbon footprint. Projects must not have happened otherwise (additionality), a baseline for future emissions in absence of the project must be established and the leakage of emissions moving to other areas or sectors due to the project determined. For smaller projects the process is simplified, and several small projects can be grouped together. CERs trade as a commodity, with prices currently at their lowest ever, at under €5, compared to €23 just two years earlier. For projects that do not comply with CDM, or where the volume is too small to warrant the expensive procedure, the less stringent VCM can be used, delivering VERs that are accepted by many buyers at the voluntary market.

Recognizing that to date very few CDM-projects have been in Sub-Saharan Africa (ex-cept for South Africa) and LDCs, the UN has made a special effort to increase the

amount of projects here. For LDC and countries with fewer than ten projects, the reg-istration fee for project is deferred until the first issuance of CERs, and project develop-ment loans are available without interest and with no repayment if the project fails.40

Land use and forestry-based CDM projects have so far been limited to afforestation and reforestation activities but this may be widened to revegetation, forest management, cropland management, grazing land management, wetland management and soil car-bon management. However, the EU, by far the largest market for CERs, currently dis-qualifies reforestation/afforestation projects, meaning that forestry CERs are not easily traded. Post 2012, EU may only accept LDC-CERs, which is beneficial to Liberia, Sierra Leone and Tanzania but rules out Kenya.

As an additional safeguard about 60 NGOs, including WWF and Greenpeace have de-veloped the Gold Standard, with guidelines for sustainable development, only accept-ing projects within renewable energy and energy efficiency.41

REDD/REDD+

Reducing Emissions from Deforestation and Forest Degradation is a UN effort to offer developing countries incentives to reduce emissions from forested lands and invest in low-carbon paths to sustainable development.

The UNDP/UNEP, the WB and the ITTO all have specific support programs for REDD with a strong emphasis on Africa, complemented by bilateral support and private fi-nancing. These include Norway’s International Climate and Forest Initiative, the In-ternational Forest Carbon Initiative of Australia, the Congo Basin Forest Fund (CBFF) and the Clinton Foundation. Some countries, including Kenya, are also developing GEF proposals to support REDD readiness activities. In total, more than USD 5 billion for preparatory activities and pilot projects has been pledged, including €300 million in Norway’s 2012 budget. When fully operational, around 2015, USD 17-33 billion per year may be transferred under REDD to forest-rich developing countries, in a combina-tion of public donor funds and private carbon finance. A number of REDD pilots are now under way in all four countries of this study, even though both UNDP/UNEP and the WB have been slow in disbursing its funds.42

Investors are warming up to REDD. “People are not sure if REDD’s going to be in or out. But if it is in, it is going to be massive. What they don’t want is that to happen and

40 http://cdm.unfccc.int/Nairobi_Framework/index.html

41 http://www.cdmgoldstandard.org/

42 http://blog.cifor.org/4786/forestry-needs-to-spend-international-funding-more-quickly-efficiently/

Workers at Buchanan Renewable’s storage site for rubber tree chips ready for export, Liberia.

32 33

not have any competence or expertise”, says Kevin Whitfield, had of carbon finance at Nedbank Capital.

The Bank of America Merrill Lynch has invested USD 9 million in a REDD project cov-ering 750,000 hectares in Indonesia, to absorb up to 100 million tons of CO2 over 30 years, while Industry RE works on 11 REDD projects in Brazil, covering almost 15 mil-lion ha. In February, Wildlife Works’ REDD project in Kenya became the first to issue VCS carbon credits.

REDD has been welcomed by much of the developing world and NGOs alike, with Wildlife Works saying that REDD brings “tremendous positive potential to introduce sustainable conservation, while uplifting the economies of indigenous people”. The Munden Project is more critical, highlighting three “significant flaws” in REDD;

» Over-the-counter bilateral deals for forest carbon is likely to create major problems related to default risk, pricing power, operational complexity and oversight, with a likely drain on resources, both in money and time.

» Producers of forest carbon will derive only marginal benefits from the market, as it is likely to behave as any commodities market would.

» The forest carbon asset is created using a vague, malleable and insufficiently repeat-able set of processes, making market clearing of forest carbon impossible under any reasonably safe standards.43

In Sub-Saharan Africa the process is still hampered by lack of sufficiently detailed map-ping of biomass, high levels of corruption in the forestry sector, and a generally weak understanding of such financial mechanisms.

In order to get ready for REDD, tenure reform is often an important step, mainly to increase control over forests and forest management, which is essential for combating deforestation and forest degradation, and to better distribute compensation for REDD+ forest management.44 It is also vital to accurately measure carbon stock changes through forest inventories, which according to field trials in Tanzania can be carried out by vil-lagers who participated in PFCA, though this in itself requires funds for training.

The main concern of the participants in all REDD projects surveyed was when the car-bon fund will be available for them, and whether the price of carbon per tree is com-

43 Munden Project: REDD and Forest carbon: Market-based critique and recommendations, 2011

44 Biddulph, Robin; Ekbom, Anders; Hellmark, Ida and Westholm, Lisa: REDD+ and tenure: A Review of the Latest Developments in Research, Implementation and Debate, Focali report 2011:02

petitive to that of timber.45 For forest dependent people, it is vital that they do not lose their rights to forests, that they benefit fairly, and that they can participate in decision-making.46

Profitable sustainable forestry in AfricaSeveral large-scale examples show that sustainable management of forests can not only be done within the realities of sound business, but can also improve the bottom line. Plum Creek, the largest US private landowner, has about a third of the company’s seven million acres of timber lands under revenue-generating conser-vation and wildlife protection agreements. Mondi, a leading international paper and packaging group, recently identified op-portunities to tap into growing markets for biomass and ecotourism through a review of ecosystem services at three of its South African plantations. Mozambique-based Dalmann, transforms its own FSC-forestry into hand-crafted hardwood furnishings, in Tanzania, Green Resources does much the same. Swedish floor manufacturer Kährs is one of several companies specifically de-manding sustainably sourced wood.

In June 2011, WWF and Kimberly-Clark, the largest tissue manufacturer in the world, announced the New Global Commitment to Responsible Forestry. It will help Kimberly-Clark to reach its recently announced commitment to have 100% of its virgin wood fiber sourced from certified suppliers by 2015, with a preference for FSC. WWF and Kimberly-Clark will train and educate staff and suppliers on responsible fiber sourcing, encourage certification of small, non-industrial private landowners, pursue FSC Chain-of-Custody certification for all Kimberly-Clark facilities, and promote FSC-labeled products in key markets.

45 Mukama, Kusaga; Mustalahti, Irmeli and Zahabu, Eliakimu: Participatory Forest Carbon Assessment and REDD+: Learning from Tanzania, 2011

46 http://www.iied.org/climate-change/key-issues/climate-negotiations-capacity-building/cop17-workshop- making-redd-deliver-

Felling of rubber trees, Liberia.

34 35

Country studiesIn this report, four Sub-Saharan African countries are in focus. These are presented be-low, in general, and with a focus on the forestry situation in each country. The projects studied are presented in the following chapter.

KenyaLand area 569,140 km2

Forest area 35,220 km2 (6,19%)

Population 41,070,934

GDP/capita (PPP) USD 1,600

Population below the poverty line 50.00%

TI Corruption ranking index 154

HDI 0.509

Ecological footprint (hectare/capita) 1.1

Environmental performance index 51.4

Greenhouse gas emissions/capita (ton CO2e) 0.9

Natural resource depletion (% of GNI) 1.2

Change in forest area (in %) -5.9

General information

Kenya is the commercial and financial hub of East Africa, with a market-based economy and a liberalized foreign trade policy. From 2002, the annual growth has been over 4% almost every year, with the exception of the contraction following the 2008 post-election violence. The situation has since returned to near normality, though with reduced con-fidence from investors and a worry that violence may return in the late 2012 elections.

29% of the population have access to electricity, well above the East African average. Its electricity generation is dominated by hydro power and they currently consume 13 kWh per capita. Imported petroleum is used for transportation, domestic lighting, cooking and power generation. Coal is used in small quantities and only by heavy industries and over 70% of Kenya’s energy need is met by biomass (firewood and charcoal).

The government has fiscally stimulated infrastructure and agriculture, though repeated droughts and consequent food, energy and water crisis hamper all such initiatives. 80 % of Kenya is ASAL, with limited or no capacity for growing feedstock, putting tremen-dous pressure on the Rift Valley, the coastal zone and other pockets of fertile land.

Heavy reliance on agricultural production and tourism makes the economy vulnerable to international market highs and lows, and the country has recently been hard hit by changes in rainfall patterns and intensity, with severe drought in the north. The major exportable commodities of the country are tea, coffee and horticultural products, the main exports partners being Uganda, UK, Tanzania and Germany. The main imports are machinery and transportation equipment, petroleum products, motor vehicles, iron and steel, resins and plastics.

The economic and social action plan Vision 2030 aims for Kenya to become a middle-income country by 2030, which also means a rapid increase in energy usage.

Kenya continues to face great long term challenges, reflected in the weakening of the exchange rate, the pressure on the current account due to weak exports, remittances and tourism, and lower investor confidence due to prolonged differences within the political grand coalition.

In contrast to neighboring Tanzania, Kenya is not considered an LDC (Least Developed Country), which has implications for trade benefits etc.

Forest situation

As of 2008, forests make up 6.1% of the Kenyan land area, an area that during the period 1990-2008 decreased by 5.9%. Kenya is a major importer of timber products, spending roughly USD 37.5 million per year on these. This has impacts such as over-cutting pri-vate forests that are meant for soil and water conservation on farm lands. Furthermore, timber demand is expected to increase to 38 million cubic meters annually.

Over 70% of national energy demand in Kenya is met by solid biomass sources includ-ing fuel wood and charcoal, while around 20% comes from petroleum fuels and just under 10% from electricity, which is mainly geothermal.47 For biomass, the demand has been steadily growing, while the supply base is diminishing, with a national biomass energy supply deficit was estimated at around 65%, meaning that the wood was taken out at a much higher rate than the regrowth.

Kenya consumes an estimated 1.2 million tons of charcoal annually with the sub-sec-tor providing a source of livelihood to at least 200,000 persons. Technology is a major barrier to sustainable and efficient charcoal production. Traditional earth-mound kilns dominate charcoal production throughout the country with low wood-to-charcoal con-version rates ranging between 10-15%.

47 IEA, 2010

36 37

Kenya’s Vision 2030, establishes that by 2030, 10% of Kenya’s surface should be tree-covered – though there is no specific required percentage for forest. In the Forest Act of 2011, every landowner is required to set aside 10% of the land for trees, which is primarily how Kenya aims to reach its goal.

A detailed Forest Bill has recently been launched, while a national framework for REDD is being prepared by the government. The government has set up a National Steering Committee for Biofuels, and a draft biofuels policy has been developed, including a blending mandate for biofuels in petrol and diesel, but it is unclear when (or if) it will be made legally binding. Kenya also has a Community Forest Management Agreement under the Forest Act 2005.

In June 2011, the Aberdare Range/ Mt. Kenya Small Scale Reforestation Initiative was registered as a CDM project.48 1,649 hectares of degraded forest lands are to be reforest-ed with indigenous trees by the Green Belt Movement (GBM) on behalf of Community Forest Associations (CFAs) in association with the Ministry of Environment and Natural Resources and Kenya Forest Service (KFS). The CFAs are granted exclusive rights to all non-wood forest products including medicinal plant, honey and grass collection and environmental services like carbon rights. CFA groups plant and tend the seedlings during the first two years, with income of approximately USD130/ha. This is very wel-come, as there hardly are any income generation opportunities in the area, with limited market access.

The project activity faces barriers in generating the investment to support the costs of nurseries, planting, tending and protection (fire, human intervention, etc.) after planta-tion establishment. The revenue from the sale of CERs as a result of registration of the project as the CDM project is expected to support the plantation maintenance. No proj-ect activity of this type is currently operational in the country, so the learning curve is steep and transaction costs to get the project on the ground high. This pilot project activ-ity will leverage the playing field for other investors to establish CDM forestry projects.

48 http://cdm.unfccc.int/Projects/DB/JACO1260322827.04/view

Protection and replanting of forest in the Kenyan Aberdares region, registered as a UN Clean Development Mechanism (CDM) project.

38 39

SWOT

At a workshop set up with Kenyan forestry stakeholders, a priority list for forestry was set up, with the following subjects on top:

» Simplify registration process for CDM and REDD;

» Clarify local benefits of carbon credits;

» Establish a government policy on tree-planting, biofuels etc.;

» Advance technology on fast-growing species and energy efficient appliances.

A SWOT-analysis on Kenyan forestry was carried out, with the following results

StrengthsTrained/skilled forestry personnelPolitical will to reach 10% forest coverCultural supportInstitutional supportForest act and forest policyForests protected in constitution

OpportunitiesCarbon capture potentialCheap laborLand not tree-coveredGood rainfall - no need for irrigationErosion-reduction neededConducive climate conditionsHigh wood demand

WeaknessesNo clear sustainability policiesNo standardization for appliancesSeed bank may be exploited

ThreatsPopulation growthCompetition for landFood insecurityExcessive seeds consumptionIncreased access to forest threatens biodiversityInefficient appliances (stoves etc.)

LiberiaLand area 96,320 km2

Forest area 31,540 km2 (32.75%)


GDP/capita (PPP) USD 500



HDI 0.329


Environmental performance index –

Greenhouse gas emissions/capita –



General information

After 14 years of civil war, Liberia finally achieved peace in 2003. Over 250 000 people were killed and millions displaced, with the destruction of billions of dollars worth of properties and sources of livelihood. The close to four million inhabitants are amongst the poorest of the world, with a vast majority living on less than one US Dollar per day, the country’s economy operating at about one-third of pre-war levels. 65% of the population is illiterate; 70-80% of the population depends on agriculture as a source of livelihood.

The 2011 Nobel peace prize was awarded to Liberian President Sirleif Johnson, who short-ly thereafter was elected for a second and final term. She has lead an often praised road to establishing the rule of law, modernizing the country and attracting foreign investment while at the same time protecting natural values. Liberia’s economy is among the fastest growing in the world, with a 7% growth rate in 2011 and an estimated 9% for 2012.

Liberia has abundant natural resources including timber, rubber, gold, diamond and iron ore, all extracted by international companies with controversies about to what ex-tent this benefits the local population. The largest single export product is rubber, even though the sector suffered badly during the war and is only now starting a renewed development. Water is plentiful throughout the country, with heavy rains between May and November.

The few Liberians connected to the grid pay USD 0.50 per kWh, twice that of Sweden. The 20 MW of grid-connected electricity all come from diesel-powered plants, the rest of the country depending on generators, charcoal and firewood. One of Johnson’s elec-tion promises is to give more people electricity at lower prices, by restoring the Mt.

40 41

Coffee hydro plant and exploiting rivers for hydroelectricity, while the plans to supply electricity from surplus rubber biomass have been downplayed recently.49

The Constitution calls for “maximum feasible participation” in all public decision mak-ing, so that the public sees this as a right rather than a privilege. In practice, the authori-ties have not always been so accommodating. In 2011, President Johnson told villagers protesting against a forest company’s supposed human rights transgressions, “You are trying to undermine your own government. You can’t do that. If you do so all the for-eign investors coming to Liberia will close their businesses and leave, then Liberia will go back to the old days”, probably rightfully implying that foreign investors are easily scared away from a country with such a tarred history.

“Rural Liberians welcome international investment and they continue to hope, despite decades of evidence to the contrary, that it will bring local development and prosper-ity. However, they also want to be consulted, compensated for any resulting losses and given the right to determine and manage how their lands and resources are used by investors during the lifetime of the concession,” writes Silas Siakor from the Sustainable Development Institute in the New York Times.50

Land-use planning and zoning regulations are still virtually non-existent. Land is not classified based on productivity or capability, meaning that it is not being used to its best advantage and that sustainability is threatened.

Forest situation

Until the early 19th century, West Africa was completely covered by the Upper Guinean rain forest. Today, around 14% of their original extent in Liberia remains, equaling to 42% of the total remnants. The forest is a declared biological hotspot, high in endemic and threatened species. In addition to the tropical timber, Liberia’s sources of iron ore, gold and diamonds attract international investors, putting additional pressure on the forests. Though the forests are exceptionally biologically diverse, only 4% are protected, with expansion planned but limited enforcement capability for the areas already under protection.

Prior to 2003, the forestry sector accounted for approximately 50% of Liberia’s export earnings and about 20% of GDP. During the civil war, the Oriental Timber Company controlled 1.6 million hectares of the Liberian forest, paying warlord Charles Taylor mil-lions of dollars for it and destroying much of it. The rubber tree plantations, in a west-

49 http://allafrica.com/stories/201112021052.html

50 http://www.nytimes.com/2012/01/21/opinion/in-liberia-a-nobel-laureates-problem.html?_r=1&ref=opinion

eastern-belt across the country, were tapped beyond capacity to finance the war, with little investment in new trees.51 This caused the UN general council to ban Liberian tim-ber products. One of the first priorities of the civil government of President Johnson was to get this ban lifted, starting by annulling all previous contracts in the forestry sector.

By 2005, land forest cover had decreased to 32.7%, from 42.1 % in 1990, and the coun-try’s target of returning to 42.1% by 2015 seems unlikely to be met, according to the government itself.52

After the war, the pressure on the forests changed character, from companies such as OTC to people returning to the countryside, practicing slash-and-burn agriculture, hunting for bushmeat and felling trees for the local market. A partial solution to this can be the development of agroforestry, which Liberia is well suited for, with fertile land, heavy rainfall and readily available (if largely uneducated) workforce. Other rel-evant non-timber incomes from the forests include apiculture, ecotourism, local hand-crafts, captive breeding and product processing.53 Currently, hardly any such products are developed, hampered by lack of financing, management shortages and lack of basic infrastructure.54

In 2004, Liberia established its National Forest Policy, followed by a National Forest Re-form Law in 2006, with particular emphasis on benefit sharing mechanisms and cross subsidy to forest conservation, with some commercial revenue earmarked for conserva-tion. However, the benefit distribution mechanism has not been fully put in place, and the IMF is critical to the strong influence of private contract holders in the fiscal system, suggesting an extensive revision of the law.

LEITI

In 2009, Liberia was the first African country and the second in the world to enter the Extractive Industries Transparency Initiative, which “sets a global standard for transpar-ency in oil, gas and mining. ”The LEITI Act unilaterally includes forestry and agriculture. Already in the first year, Liberia won the EITI Chairman’s Award for the country’s rapid implementation progress,55 and the UN lifted its ban on Liberian forestry products. Even today, Liberia is the only country to include payments from the forestry sector in the EITI process.

51 SAMFU: Plunder: The silent Destruction of Liberia’s Rainforest, 2002

52 Liberia, government: Establishment of Protected Area Network (Expan), 2011

53 Ibid.

54 http://www.farmbuilders.com/about-liberia.php

55 EITI: Incentivizing EITI Compliant Countries: The Case of Liberia, 2011

42 43

The “publish what you pay” means that all extractive industries must publish all their income, costs, contracts and concessions, in order to combat corruption.56 The first two LEITI reports directly implied that the state could recover revenues owed while the third, published in December 2011, established a near-balance between what companies claim to pay and government institutions receive. 71 mining, oil, agriculture and forestry com-panies reported their payment between July 1, 2009 and June 30, 2010, with just under 70 million USD reported as payment of taxes, royalties, land/surface rental and other ad-ministrative fees, within 3% of matching the income of the relevant government agencies. The income from forestry was 17% of the total, while mining was just over 50%.

Through LEITI, several shortfalls within Liberian forestry have been identified, includ-ing FDA’s lack of capacity; the need for a restructured forest fiscal regime and the risk of investors negotiating directly with communities whom are not well prepared for that. As for revenue management, there is a need to “mitigate problems associated with availability of land for domestic food production.” The environmental and social moni-

56 LEITI Act, §5.3, July 2009. http://www.leiti.org.lr/doc/act.pdf

toring needs to be improved, with a stronger role for the civil society.57 Further, there is a “risk that companies may default on tax payments once politically established in region and can threaten government with large payroll.”

The LEITI CEO Samuel Tokpah wants to expand the mandate to also check what the authorities are doing with the money paid and to review processes and develop guide-lines for awarding contracts and concessions.

Concessions

Between 2006 and 2011, the government granted more than a third of Liberia’s land to private investors to use for logging, mining and agro-industrial enterprises, including 1.04 million hectares of forest to seven concessionaires, under 25-year contracts and 10 smaller timber sales contracts for short-term harvest. However, many operations have not yet started and may not do so, hindered by the lack of detailed mapping, the high costs for infrastructure investment and the requirement to pay land fees in advance.

Every concession is a law of its own, which promotes transparency and ensures parlia-mentary involvement, though concession awards have still been blighted by criticisms of irregularities, unsuitable bidding companies and excessive delays. Although the law requires full disclosure of forest contract and social agreements, only a few of these are posted on the FDA website. The FDA has also been failing to fully publish its Commu-nity Forest Management Agreements with local communities.

Any commercial forestry activity must be pre approved by a local Community Assembly, with detailed instructions about how this is to be set up. Before commercialization, an EIA, a management plan and a social contract must be implemented for every conces-sion, though for smaller concessions a general EIA may be sufficient. Not all concession EIAs have been fully validated yet, social benefits are mostly absent and many obliga-tions are not quantified and lack timelines. The EIAs are the basis for EPA’s monitoring, following a chain-of-custody model, but its limited capacity means the FDA uses its own local inspectors, with a risk of conflict of interest. The government itself writes that different government agencies, ministries and bureaus “often overlap and in some cases appear to conflict with one another.”58

Concession legislation can be circumvented by companies using the Community Right Law from 2009 which lets them set up Community Forest Land of up to 5,000-50,000 hectares, subject to validation by the FDA and approval by the Community Forest Man-

57 EITI: Incentivizing EITI Compliant Countries: The Case of Liberia, 2011

58 Liberia, government: Establishment of Protected Area Network (Expan), 2011

A model farm in Liberia, where different varieties of rubber trees and other species are tested before they are planted commercially.

44 45

agement body. They can then negotiate deals directly with forestry companies, through the Private Use Permits. As of January 2012, 23 such permits had been signed, several of them replacing previous land deals with the state, indicating that some companies prefer negotiating with often ill-prepared and ill-advised communities. “I think they have been used as a backdoor to bypass legislation,” says Robert Nyahn from Samfu, the Save My Future Foundation.

The community’s interest in Community Forest Land may stem from them not always receiving the 40% of the revenues generated from the concessions, which are generally USD 2.50/ha/year. It has to pass local authorities, and part of the money may stay there. CSOs have not been able to function as a safeguard, since they have not been consulted as the National Forest Reform Law stipulates. The FDA is setting up a National Forest Forum and Decentralized County Forest Forums to address this. Community forests can also mean that locals get income from ecotourism, which is supposedly the target for the three community deeds around the Sapo national park.

To avoid cheating, every tree has an electronic chip linked to a stampage fee. This does not apply to rubber trees, which in Liberian legislation are counted as agriculture, though exporters of rubber tree biomass still need to pay a special export tariff. Cur-rently, the authorities discuss a reclassification of rubber trees as forestry, to get the stampage fee. According to FLEGT, the rubber tree is clearly a forestry product, so that those exporting rubber tree biomass have to comply with the EU sustainability criteria.

The FDA wants to change the area-based fee to a volume-based system, which would theoretically be more fair, though skeptics worry that the leeway for cheats and cor-ruption is larger with a measurement more difficult to control than how big the land is.

The Liberia Chainsaw and Timber Dealers Union claim that illegal logging largely stems from 85% of pitsawers being illiterate, and simply unable to read and understand the law. This has led to efforts to popularize the law through radio jingles, TV shows and cartoons. This is all commendable, though only a partial response – as long as the mon-ey for illegally logged timber is good and enforcement is lax, deforestation will continue.

A specific problem is that renowned verifier SGS, in charge of ensuring that wood only leaves the country if it has the appropriate permits, only has a contract until October 2012. After that the control will be nationalized again, with a half year of limited control, until the Voluntary Partnership Agreement (VPA) between Liberia and the EU hopefully enters into force in March 2013. This seeks to ensure that the Liberian timber industry complies with the EU FLEGT regulations, with €20 million in EU funding for five years. With the VPA comes a new control mechanism, with SGS as a serious contender for once again verifying the process. Liberia’s neighbors Sierra Leone, Guinea and the Ivory

Coast are not signatories to the VPA, meaning that timber that would be illegal accord-ing to FLEGT can be exported from there – and the borders are porous.

Liberia does not currently have a single CDM or REDD project, partially due to a scam involving a British firm that tricked investors that it was setting up a REDD-project, making REDD be seen as top-down and non-transparent by the NGO/CSO sector. The forestry sector has seen it as a threat to forestry, and this has only recently begun to change. At a CSO and media workshop in Liberia, the REDD was likened to a slow drying dog: “If you want to eat now and you are told they will dry a dog for you, you get disappointed because it takes so long to dry.”59 The government clearly sees it otherwise, as a REDD section is included in the climate change office directly under the President.

The World Bank furnishes up to USD 4 million for REDD-readiness in Liberia, including Fauna&Flora International’s 80,000 hectares REDD-project. When funding runs out after 2013, other actors – including commercial forestry – may want to take this on and receive REDD income. FFI’s identified main risks include unclear local land tenure rights, lacking stakeholder engagement, the need for potentially costly community livelihood improve-ment and the problematic revenue sharing. Liberia is expected to earn approximately 3.6 million USD from the Forest Carbon Partnership Facility, beginning late 2012.

Sierra LeoneLand area 71,740 km2

Forest area 27,540 km2 (38,45%)


GDP/capita (PPP) USD 900

Population below the poverty line 70,20%


HDI 0.336



Greenhouse gas emissions/capita –



General information

Sierra Leone’s civil war finally ended in 2002, after eleven years, tens of thousands of deaths and the displacement of more than two million people – one-third of the population. Since then, strong outside assistance has helped the country recover, with

59 Comment at workshop, Monrovia, 27th of January 2012

46 47

a high growth rate, successful re-habitation and resettlement and the restoration of democracy.

Mining, including gold and diamonds, remains the main foreign currency earner, though the country and its people have as yet not benefited much. The capital Freetown has one of the largest natural ports in Africa, facilitating bulky exports. The government tries to increase cash crop production, but two-thirds of the population are subsistence farmers with limited market access. Unemployment is high, particularly among the youth.

In 2004, the country ranked last (177 of 177) in the UNDP Human Development Index. By 2010, it had risen to place 158, and World Bank data suggest the country’s improve-ment in political stability over the last decade is the fastest in the world. For 2012, Sierra Leone is expected to record its twelfth straight year of uninterrupted economic growth, often with double Africa’s average rates.60 However, Sierra Leone still has a long way to go, being recently classified by FAO as one of five African countries with critical food insecurity problems.

Forest situation

About 38% of Sierra Leone is forested, though the country lost 10% of its forest cover since 1990 and deforestation rates have increased significantly since the end of the civil war. Logging, clearing for cattle grazing, fuel wood collection, and mining are all factors in this. The country has 5.4 million hectares of land, less than 20% of which is under cultivation. FAO estimates that even after ensuring enough land for food security, Sierra Leone will have more than two million hectares of arable land for commercial agricul-ture and agroforestry in 2050, a view echoed by the largest environmental NGO, the Conservation Society of Sierra Leone.

President Koroma states that “tens of millions of dollars worth of logs were smuggled out of the country to Middle Eastern and Southeast Asian countries to be made into furni-ture and household decorations.”61 Wood products are often unlabeled or mislabeled to conceal their origin.62 To halt illegal logging, transport and export of logs was completely banned in 2010, though even minimal processing is enough to allow for export.

Sierra Leone got its first forest management system in 2002. 55 protected areas cover 4.5% of the country, though real protection is minimal. In 2011, the Gola Forest, the most important surviving fragment of rainforest in the county Leone, was designated

60 www.huffingtonpost.com/ernest-bai-koroma/time-for-africa-to-get-se_b_508463.html?view=print

61 http://www.care2.com/news/member/374694206/1347540

62 Ecological Applications journal, 2007

a national park. REDD-funding is expected, developed by the Royal Society for Protec-tion of Birds. President Koroma calls carbon financing “a win-win for the environment and for economic development.”63

63 http://sdupdate.org/component/content/article/3-in-brief/153-sierra-leones-new-national-park-redd-and- ecosystem-services; http://news.mongabay.com/2011/1203-sierra_leone_gola.html#ixzz1jfC22jhe

Companies investing in the Sub-Saharan African forestry and bioenergy sector will often face the need to invest in basic infrastructure, including buildings and roads. These should themselves be done in such a way that they minimize deforestation

West Africa’s once verdant and extensive rainforests are now a historical footnote. Gone to build ships and furniture, feed hungry mouths, and supply minerals and gems to the West, the band of tropical forests that once extended from Guinea to Cameroon are virtually gone. The loss of West Africa’s rainforests have triggered a number of environ-mental problems that have contributed to social unrest and exacerbated poverty across the region. Earth Watch: The state of West Africa’s rainforests

48 49

The Constitution does not specify ownership of land, and the land laws are from 1960, with a proposal for new legislation to be voted on in 2013. Currently, freehold is recog-nized in the western province around the capital Freetown while in the other provinces lands are under customary law with Paramount Chiefs as custodians. This land can-not be bought or sold, though it can be leased by anyone for 50 years, extendable for another 21 years. In most provinces, women cannot own land, though customary laws vary over time and by chiefdom. According to the Oakland Institute, current legislation means investors may bypass government requirements and negotiate directly with local leaders.64

In 2009, the country’s first Energy Policy was adopted, which investors are anxious to have developed into a law, since policies can be changed overnight. An energy working group is lead by FAO and includes all relevant ministries, working on how to reduce the country’s dependency on charcoal and wood, the primary source of energy for 96% of the population, how to move away from slash-and-burn agriculture and how to ensure the capacity and willingness to replant after logging.65

The guidelines from the Ministry of Agriculture, Forestry and Food Security (MAFFS) state that “between 5 and 20% of company shares should be offered to Sierra Leoneans, especially to those from the investment area.” While not binding, those adhering to it will get economic benefits. Land leasers are to follow policy guidelines for investors, and must develop an ESHIA, to be enforced by the Environmental Protection Agency.

Investors are to pay USD 12 per ha and year, 50% for landowners, 20% for Chiefdom Councils, 20% for District Council and 10 % for the national government. This can be negotiated, with some companies paying less than half that amount in direct deals with chiefs and landowners. This is criticized by Patrick Johnbull of Green Scenery, saying that the setup of land deals is “going to lead to the same war we just came from.”

The development strategy for agriculture and forestry, within the National Sustainable Agriculture Development Plan, focuses on attracting foreign investment, while a special Smallholder Commercialization Program focuses on developing and entering subsis-tence farmers into the formal economy.

Sierra Leone climbed 20 places in the World Bank’s annual Doing Business rankings in the last three years, and is now one of the top 5 countries in Sub-Saharan Africa for investor protection and the ease of starting a business. The World Bank calls the country “among the 30 most improved economies in the world over the past five years” and ranks it highly in “ease of starting a business” as second in Africa and 27th worldwide

64 Oakland Institute: Understanding Land Investment Deals in Africa. Country Report Sierra Leone, 2011

65 Interview with FAO’s Lidia Martínez Francés, 2012

for investor protection. President Koroma is seen as investor-friendly and says that he wants to run his country ‘like a business’ and that his background in the private sector as an insurance broker gives him the know-how to do that.

The Sierra Leone Investment and Export Promotion Agency (SLIEPA) has highlighted key points to attract potential investors:

» Agricultural labor costs from USD 2-3 per day, considerably less than alternate loca-tions in Asia or Latin America;

» Labor regulation is relatively flexible, with productivity-based payments widely ap-plied;

» Leases on good agricultural land range from USD 5 to USD 20 per ha per year (USD 100+ in Brazil, USD 450+ in Indonesia and USD 3,000+ in Malaysia);

» Currently, there is no charge for utilization of water resources;

» Electricity rates are high, but this is beneficial for those who can generate own power and sell to the grid;

» Tax rates are attractive, with no corporate income tax and no duty on imported inputs for qualified investors.

To attract foreign investment, 100% foreign company ownership is permitted in all sec-tors, without restrictions on expatriate employees or repatriation of profits. “First mov-ers” get a ten year tax holiday and full duty exemption for five years that do not have to be consecutive. The Minister of Finance and Economic Development recently stated that these tax exemptions “severely erode our tax base and undermine the effective pro-gressivity, fairness, and efficiency of the tax system,” while the IMF asks for the incen-tives to be minimized and replaced by focusing on improving infrastructure, though the SLIEPA are confident this will not happen.66

Corruption remains a serious problem, and Sierra Leone has not enacted the publi-cally declared will to join the EITI. Should this happen, the forestry sector will not be included, as it is in Liberia. Sierra Leone has also not as yet joined the EU VPA process, to help ensure timber products meet the EU sustainability criteria.

Sierra Leone has started tapping into carbon funding, with four projects under develop-ment:

66 Interview with SLIEPA’s Victor Bangura and Raymond K. Gbekie, 2012

50 51

» Ecotech Timber: Avoided Deforestation, potential carbon revenue USD 8.5 million/year

» Enviro Carbon Access: 243 000 ha forestry, 51 % of proceeds to the government

» SL Green Oil: CDM project for energy, biodiesel, reforestation and agroforestation

» Addax Bioenergy: Co-generation of electricity for the grid

The Sierra Leone Network on the Right to Land argues that “There is need for invest-ment in agriculture to ensure food security and sustainable development”, adding that “a lack of transparency around contracts, and the frequent exclusion of women and other key stakeholders from negotiations, has produced a string of deals that threaten the livelihoods and the long-term futures of local farming communities.”67

TanzaniaLand area 885,800 km2

Forest area 352,570 km2 (39,9%)


GDP/capita (PPP) USD 1,400



HDI 0.466



Greenhouse gas emissions/capita 1.4



General information

Tanzania has an agriculturally based economy, with cash crops including coffee, sisal, tea, cotton, tobacco and sugarcane. Most of the population is subsistence farmers, grow-ing corn, wheat, cassava, bananas, fruits, and vegetables. In addition, large numbers of cattle, sheep, and goats are raised. Agriculture accounts for more than 40% of GDP, provides 85% of exports, and employs 80% of the work force. Topography and climatic conditions, however, limit cultivated crops to only 4% of the land area.

67 Guardian, 2012-04-11All things great start small – seedlings used by the Greenbelt Movement to replant the Aberdares forest range. Projects like this are often co-fundedby companies, who may see return on investment through the different financial mechanisms for forestry conservation.

52 53

for future use. In addition, village land is legally established if a village has commonly agreed boundaries with its neighboring villages. Currently, 70% of all land is under the jurisdiction of 21,000 villages, 28% is reserved land of some kind and 2% is general land.71 Villages are currently developing Village Land Use Plans, including mapping for forestry, registered with the Land Planning Commission. This is seen as an important tool to reduce deforestation.

CategoryArea in 106 hectares

1995 2000 2005 2010

Forest (including plantations) 41.5 37.5 35.4

Other wooded land (OWL) 18.2 14.9 13.3

Other land 28.9 36.2 39.9

By late 2011, PFM had been implemented in 2,323 villages, covering 4.12 million hect-ares, or about 12% of all forestland in the country. This includes Village Land Forest Reserves (VLFR), with a total area of 2.35 million hectares in 1,460 villages. However, many villagers complain that they receive little compensation for their costs, includ-ing loss of crops to forest animals, difficulties in patrolling vast forest boundaries, and risks of being attacked by poachers. PFM has been observed to have high potential for achieving the REDD objectives which could provide the financial incentives required for sustainable PFM implementation.

External investors cannot buy land, but may lease it for 33-99 years with the consent of the villagers (if it is village land) or the government. A well-known case is Swed-ish EcoEnergy (previously Sekab), which leases land in Bagamoyo, mainland Tanzania, from the government of Zanzibar.

The government will not allow companies to approach farmers straight to buy forests without informing the government, so that communities with limited knowledge do not sign up 33 or 99 years lease agreements “and then return to the government to complain when their land is taken,” Dr Ningu said. The government is equally critical about international NGOs acquiring land without the knowledge of the government, while CSOs advocate for the involvement of the private sector, so that there can be a sizable market for the carbon.72

Plantations occupy more than one million hectares, but are often poorly managed and hence their contribution to wood production is far below the potential. Private wood-lots are becoming an increasingly important source of wood supply, while tree growth in communal land is being depleted due to uncontrolled felling. The forest industry is poorly developed, with most sawmills using outdated technology and giving a low re-

71 Matondi, Prosper B; Havnevik, Kjell and Beyene, Atakilte: Biofuels, Land Grabbing and Food Security in Africa, 2011

72 http://www.ippmedia.com/frontend/index.php?l=36042

Industry has traditionally been focused on the processing of agricultural products and light consumer goods. Timber is important and includes mahogany, teak, ebony and mangrove. The principal exports are gold, coffee, cashews, diamonds and other gem-stones, manufactures, and cotton. The principal imports are consumer goods, machin-ery, transportation equipment, industrial raw materials, crude oil, and foodstuffs. The leading trade partners are China, India, South Africa, and Canada.

After the election of the current President Kikwete, Tanzania has implemented a series of economic reforms, with relatively high economic growth and low inflation, and at-tracting foreign donors and investors. Since 2000, Tanzania’s real GDP has grown at an annual rate of 6.3%, though the recent global financial crisis and recession affected Tanzania through reduced tourism, exports and Foreign Direct Investments.68 The de-pendency on the agricultural sector renders the economy vulnerable to adverse weather conditions and unfavorable prices in international primary commodity markets.

Less than 10% of Tanzania’s population has access to electricity compared to the Afri-can average of 30%. Most of this need is being met by wood-based biomass but some of the energy need is met by imported fuel oil. 90% of the total energy supply is provided for by biomass. The government intends to introduce large scale hydropower plants and thermal units to increase electrification from 10% to 15% by 2015.

Forest situation

Tanzania has 33.5 million hectares covered by forests and woodlands, out of which 13 million have been gazetted as forest reserves. Deforestation has been intense; by 2010, 19.4% of forest cover existing in 1990 had been lost.69 The importance of forestry protec-tion is proven by the fact that in forests in South-Eastern Tanzania, previously unknown species are found almost yearly, including birds and a monkey.

The World Bank estimates that over 90% of Tanzanians depend on charcoal and wood as their main source of cooking energy, with 9 million tons of CO2 emitted into the atmosphere yearly and deforesting more than a 300 hectares of each day, together with the need for livestock grazing.70

The Village Land Act establishes that village land can include lands that are commu-nally used such as forest areas used for fuel woods, fallow woods, and lands reserved

68 Swedfund has issued a report on the current economical situation of several African countries; www.swedfund.se/wp-content/uploads/2010/07/updatedreportoneastafrica2010.pdf

69 FAO: Global Forest Resources Assessment Report for Tanzania for 2010, 2010. All figures refer to mainland Tanzania, Zanzibar has its own legislation but is not of great relevance for forestry projects

70 Figures from Tanzanian Traditional Energy and Development Organisation (Tatedo)

54 55

covery, and pulp and paper production is declining as a result of economic and en-vironmental problems.

The government, having previously em-braced investments in biofuels and bioen-ergy now seems to be less interested, with the minister of agriculture, Prof. Maghem-be, giving priority to the local and inter-national market for food, which has better incentives; “food prices are skyrocketing and will continue doing so for the foresee-able future, our goal is to boost production and supply such markets.” Within bioen-ergy, the priority need is “safe, renewable cooking fuel.”73

Tanzania got off to a quick start within REDD, thanks to a bilateral agreement with Nor-wegian aid agency Norad, and now has 9 pilot projects implemented by the civil society.

The government has launched a National REDD Task Force, in charge of developing a comprehensive national REDD strategy, to provide increased benefits from forests, and to diversify local incomes from natural resource management.74 Within this, 10 five-year pilot projects are taking place across the country, but for them to reach maturity, USD 85 million in funding is needed, and the Director of Forestry in the Ministry of Natural Resources and Tourism, Dr Felician Kilahama, has been publicly skeptical about the possibility to raise the money.

At a Global Forest Coalition workshop in Tanzania in late 2011, underlying causes of forest loss were identified, including lack of food and energy security, land tenure is-sues, urbanization, industrial agriculture, export-driven logging, mining impacts, poor community education, limited political commitment and the need for better control of foreign investments. Recommendations include a Community-based forest manage-ment system (CBMF) and Participatory Forest Management (PFM), safeguards which would halt buyers of land in villages from converting natural forests into plantations and ensure that communities and private sectors were involved.

Within CDM, an afforestation project is planned, with partial Norwegian funding.75

73 http://www.commercialpressuresonland.org/press/expert-faults-commercial-jatropha-investments

74 http://www.ippmedia.com/frontend/index.php?l=32946

75 http://cdm.unfccc.int/filestorage/P/B/N/PBNE9CKZX6FG501AVQMYU3OJ8H2DWI/PDD.pdf?t=ZkR8bHZ3N 3hvfDAokyjPDExd1xstK_s84Z_F

In 2009, the first FSC certificate for community-managed natural forests in Africa was granted to the Tanzanian NGO Mpingo Conservation and Development Initiative. Nine months later, the first FSC certified African hardwood was harvested to be sold legally, thanks in part to the certification. Half of the profits from the first harvest were spent on a new borehole and a facility for the local midwife, the other half spent on patrolling and boundary clearance, to safeguard the forest for future harvests. The villager Mwa-naisha Likoko says, “changes have come to our village through the forest we own and manage under our control.”

In 2010, the areas was increased nine-fold to 17,000 hectares, and the second harvest, in February 2011, yielded 69 cubic meters of logs, with an income of USD 7,300 from SandaliWood, Tanzania’s first FSC certified sawmill. In January 2011, the world’s first FSC certified wood-wind instrument was put on sale. In a similar project in Nyombo WWF Denmark has linked the FSC-certified producers with Coop to provide a market. In addition, Svensk Skogscertifiering has established sawmills in Tanzania, to increase the possibilities for local value addition before export.

Commercial forestry in Africa – case studiesIn this part of the report, four bioenergy projects in Sub-Saharan Africa are presented for each of the nations. The projects all have a Nordic link, three of them with Nordic ownership, two of them are or were until recently partially Swedish owned, all of this in line with the Nordic expertise on biofuels and forestry.76

Kenya: Biofuel from the forest

Until now, Naro Moru’s only claim to fame is its location at the foot of Mount Kenya, making it a base for hikers. That may be about to change. The Help Self Help Center (HSHC), cooperating with Swedish/Irish Renetech, aims to be a major producer of bio-diesel from forestry products. “Can we really still expect that tea and coffee will move us out of poverty? We don’t think so, the world is now much more focused on biofuels and so should we be,” says project manager Benjamin Wanjohi.

Renetech sees a great future for biodiesel from oil-rich crops from sub-Saharan Africa, and offers local producers its knowledge base with implementations in Sweden, but also

76 The forthcoming Global Utmaning report ”The Nordic Climate Way” exploits this in detail

A ranger employed to protect the newly planted seedlings from illegal grazing – an example of how the local community may not always value improved forestry protection.

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biofuel production in Uganda. In Kenya, Renetech is advising HSHC on how to scale up its already substantial biodiesel production. To date 3,500 persons are involved in collecting seeds from croton and castor from farmland and forests, the idea being that if the trees are turned into a source of revenue, people are less inclined to cut them down.

HSHC now has eight collection centers, each with around 25 farmers collecting seeds from the croton and castor trees, sunflower and cape chestnut. Every time more than three tons of seeds have been amassed, a truck will pick them up and pay the collec-tors by the local M-Pesa system, putting the money in an account linked to the mo-bile phone rather than handing it out as cash. This reduces the risk of the truck being robbed, as well as the risk of the cash being unwisely spent. Collectors are paid around €0.06 per kilo of seeds, or around €700 a year if they have one acre of croton and castor. Most of the farmers have now started growing these crops specifically for the seeds, often intercropping with feedstock.

The castor will yield after only four months but rapidly reduces seed production after three to five years, while croton takes several years to give any seeds, after which it will be productive for decades. Both are suitable for ASALs, resistant to droughts, can with-stand the sometimes freezing temperatures around Mt Kenya, don’t need irrigation, fertilizer or pesticides and are rarely attacked by pests. The seeds are mildly poisonous, which according to many the European NGOs is a good thing, since it means that making biofuel from them does not compete with food.

The croton seeds are tough to break, and crushing is difficult and time-consuming to do manually, which is why the HSHC has invented a special crushing machine with the capacity of seven tons per day. Seeds should not be stored too long before crushing; ev-ery month about 5 % of the oil content is lost. After dehusking, the seeds are washed to get rid of any remaining husks and then dried prior to the cold pressing. After settling, the oil is filtered, then heated and then reacting with methanol in a transesterification process to create biodiesel and glycerine. The biodiesel is then again heated to further remove water, after which is it once again filtered. Currently HSHCs capacity is around 600 liters a day, which is sold at the gate to local matatu minibuses, trucks and tractors. “We focus on the bottom of the pyramid”, explains Benjamin Wanjohi. “It is easier to convince the owner of a matatu than the owner of a new SUV to switch fuels.” Sold at €0.80 per liter, it is around 20% cheaper than normal diesel and the drivers claim that they get a slightly better mileage. When visiting, some matatus are turned away, since the biodiesel is sold out.

In addition to the biodiesel, a seedcake is produced which is sold as chickenfeed, while the husks are used as organic manure, with the intention to make them into briquettes to replace charcoal cooking, in combination with efficient stoves.

HSHC, a non-profit organization, is currently in discussion with several companies about how to best scale up the production. The main reasons for this interest are the high and increasing price of the fossile diesel and the proposed Kenyan mandate to blend several % of biodiesel in all diesel, combined with HSHCs expertise in crushing croton and reliable supplies of seeds.

Analyzing HSHCs business model for biofuels, we see a great opportunity to take ad-vantage of the price hikes for fossil fuels and the surge in demand for biofuels, but several shortcomings must be overcome:

» Focus. In addition to the biofuels from croton and castor, HSHC develops SVO from the same crops, as well as cape chestnut and sunflower. It is also involved in farmer education, bamboo, a fish pond, chicken rearing and runs a study program for Bel-gian and Dutch students. Given HSHCs modest size, several of these enterprises should be discontinued, or the biofuel business kept as a separate entity.

Seeds from the croton tree are collected from local farmers, who already use the tree as demarcation and for shade. The seeds are then crushed and processed into biodiesel, which is sold at the local market.

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» Management. As the current workforce readily admits, the project needs able com-mercial management as well as biodiesel experts, either through being bought by a company with that expertise, or by acquiring it from the open market.

» Esterification. While the crusher has a capacity of 7 tons a day, the esterification machines can only produce 540 liters/day, and the quality needs to be improved, lowering the levels of gum and water in the fuel.

» Supply. In the future, there will be competitors for croton and castor seeds, especial-ly with a blending mandate for biofuels. These may offer slightly more for the seeds since they don’t have the sunken costs of farmer training, seedlings, etc. It may not be practical to have contracts with all farmers, so other methods need to be designed.

» Price stability. While we don’t expect fossil diesel to get significantly cheaper than today, production costs may go up, especially for methanol and electricity. A way to ensure long term price stability is needed.

Liberia: Buchanan Renewables

In Liberia, rubber plantations have long been the backbone of the economy, but dur-ing the civil war, many rubber farms were abandoned, neglected or tapped excessively. Through satellite imagery studies and GIS mapping, Buchanan Renewable Fuels deter-mined that up to 80% of the estimated 249,000 ha of rubber trees in Liberia was beyond the ideal replacement age of 25-30 years. A large-scale renewal had started at larger plantations such as American-owned Firestone and Belgian Lac, while on the small-scale or independent farms little replacement has been done. This is partially due to that many have died, left the country or changed occupation, but may also be because many farmers prefer the little income the old trees still give to the at least five years of no income until new trees become productive.77

Swedish state owned energy company Vattenfall and Dutch-registered Buchanan Re-newables wanted to change this situation, while at the same time import large quan-tities of sustainable biomass to the EU market. Old rubber trees are to be felled and converted into chips, to be used in Vattenfall’s power generators in Germany and the Netherlands, replacing coal in already existing power plants. This has already earned the companies involved several prestigious awards, including the Corporate Council on Africa’s Business Excellence in Natural Resources Development Award and the African Business Green Award.

77 World Agroforestry Center: Rich Rewards for Rubber? 2011

In 2011, 221,000 tons of wood chips were exported, more than double that of 2010. The target for 2012 would mean even faster growth, to around 540,000 tons, with operations breaking even in 2013 and 1 million tons produced by 2015. Already this year, 30% of wood chips are to come from independent farmers. Currently, a number of farms are un-dergoing the due diligence process for clearing their trees, where the location of the farm plays a major role; if too far from roads, it is not financially viable to go there. However, as infrastructure in Liberia improves and farms can be sourced in clusters, BR Fuel’s ef-ficiencies will improve and the company will be able to reach more smallholders.

Due to the scale of the business, the long-term commitment and the intention to be in-volved in the up-stream process, Vattenfall decided to acquire 20% of BR, with Swedfund acquiring a further 10%.78 Vattenfall Biomass Liberia was created, with Vattenfall owning 2/3 and Swedfund the remaining third. The separate company BR Power, over which Vat-tenfall has had no control, is to supply LEC with electricity, mainly for Monrovia.

In order to control operations better, it was decided to ship the rubber wood chips from the local port of Buchanan, rather than from Monrovia. Together with the National Port Authority, ship wrecks were removed and the harbor was dredged, so that it can now be used for shipping by BR Fuel and others. Roads between the suppliers of rubber trees and the harbor, and between Buchanan and Monrovia, have been restored and are be-ing maintained with funds from the project.

Vattenfall believes that the BR Fuel model may be relevant for other similar products, such as oil palm trees and coconut trees, though the structure of these trees is different and they cannot be easily chipped.

In May, 2012, Swedfund and Vattenfall decided to sell their shares in the project. How this will affect the future of the project is not currently known.

Environment

From a global climate perspective, the project has significant merits. Replacing coal in European power plants with leftover biomass reduces GHG emissions by up to 85%, while the plant in Liberia is expected to reduce CO2 emissions by around 120 000 tons per year by replacing or precluding the development of diesel oil and HFO fueled elec-tricity generators.79 These values, while independently verified, are currently theoretical since the necessary investments for the coal fired power plants to accept biomass have not been made, and the local power plant has not been built. According to BR Fuel, the

78 http://newsroom.vattenfall.se/2010/06/16/vattenfall-forvarvar-andelar-i-buchanan-renewables-fuel-ltd-i- liberia/

79 http://www.buchananrenewables.com/assets/pdf/BR-FactSheet-Sept2011.pdf

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investment is dependent on finding a sustainable and diversified supply of biomass. In the meantime, the chips are used in biomass power plants in Europe, where it replaces other renewable energy. This is probably still beneficial to the climate, as the GHG re-duction from the rubber trees is so high, but no figure has been given.

The 36 MW power plant delivering 223 million KWh/year of rubber tree leftovers-based electricity to the national grid, was agreed upon in January 2009. The agreement is valid for 25 years, and the capital cost of the project is estimated at 149 million USD.80 More than three years later, the production of the plant has not started, due to prolonged negotiations between the parties involved. Buchanan’s billboards in Monrovia claim-ing that they are “lighting up Liberia” and “providing enough power to light up 500,000 homes” may make people believe that the electricity is just around the corner, which for a number of reasons is not the case. We, however, do not believe that there is any merit to claims from local NGO Green Advocates that the plant will never be constructed since it is more lucrative to sell all biomass to Europe. Should demand exceed supply, BR Fuel has a contractual agreement to prioritize biomass to the Liberian power plant.

BR Fuel’s machinery allows them to use not only the trunk of the tree, but also large branches, and roots are often taken away. They are not suitable for chips production but can be used in future local biomass generators. If left, they provide the soil with nutrients, but may also harbor pests. 15 meter buffer zones are created around all water bodies and special management zones on harvesting sites. These buffer zones may act as corridors for wildlife, although in the plantations biodiversity is limited, compared by the World Agroforestry Center to a field of maize or rice.81 WAC recommends agrofor-estry systems for rubber, which increases biodiversity and is claimed to achieve higher returns to labor than jungle rubber, at investment costs substantially below those of monoclonal smallholder systems, while also providing farmers with fruits, timber, res-ins and medicinal plants. It is thus commendable that the project has intercropping ambitions, although it falls short of agroforestry in the WAC sense.

The machinery used is heavy and may compact the soil when used in the rainy season, which may render growing vegetables difficult. Lac, one of the biggest rubber com-panies, prohibits logging during the rainy season, though it is allowed by the largest rubber company Firestone and has been done by BR Fuel at several small-scale farms. While BR Fuel cannot stop it completely, it has identified a number of ways to minimize both the occurrence and the effects. This may include reaping the soil, but it would run counter to the minimal tillage practice and mean that nutrients in the soil are lost car-bon released.

80 Official information on the concession agreements. 2009.

81 The ESIA is to be found at https://www2.opic.gov/environasp/eia/buchanan/eia_buchanan.asp

Harvesting unproductive rubber trees is considered normal agricultural practice, and BR Fuel does not require permits or licenses from the FDA to do so. Neither do smallholder farmers require permits to es-tablish and manage rubber farms. Conces-sionaires require a concession agreement with the government and, in most cases, an annual operating permit from the Min-istry of Agriculture and an environmen-tal permit. BR Fuel has developed an ap-proved ESIA, with is complemented by site-specific environmental management plans and quarterly harvesting manage-ment plans. The FDA inspects the rubber wood chips for export, while SGS verifies and issues Certificates of Origin for them.

Locally, the operations obviously cause an increase in traffic; up to 150 trucks may be used, which would mean Scania’s largest order ever in this part of the world. While still diesel-powered, they have significantly lower emissions than most other trucks in Liberia. To reduce dust, which is an important problem on Liberia’s gravel roads, trucks are speed limited and fitted with GPS units. The ESIA recommends wetting the roads in the dry season, though this has had limited success and is only occasionally done.

Rubber wood is seen as subject to the Voluntary Partnership Agreement between the Liberia and the EU, meaning that it must comply with FLEGT and the VPU. BR Fuels cannot FSC-certify the rubber tree plantations, since they don’t own, lease or manage the plantations, but aims for FSC Chain of Custody Certification and FSC Controlled Wood. Farmbuilders “ensure all farms we contract with are managed in accordance with FSC standards and policies,” including not harvesting any rubber trees in forests which are being converted to plantations or non-forest use and never harvesting from forests in which genetically modified trees are planted. BR Fuels is currently evaluating wheth-er or not to also follow other criteria, such as the upcoming ISO bioenergy standard and/or the RSB, which is increasingly becoming the label for biofuels and is in line with the EU RED, should it be extended to bioenergy other than fuels.82

Vattenfall has studied how GPEB indicators can be applied to BR Fuel, though this is to test the indicators, and not to evaluate the project. Farmbuilders follow the WB IFC Environmental, Health and Safety Guidelines,83 with a first audit during 2012, in ad-

82 The criteria are for woody biomass also, see http://rsb.epfl.ch/

83 IFC: Environmental, Health, and Safety Guidelines for Plantation Crop Production

Rubber tree chips waiting in Buchanan harbour. Whether they will in fact be used in coal-fired powerplants is now unclear.

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dition to the first BR CSR report. In the nursery, trials are done with oil palm, a crop whose sustainability is often questioned by environmentalists. At this early stage, the Sustainable Palm Oil criteria have not been implemented, but it may be part of any fu-ture plantation. Already now, the practice of minimal tillage and low-dosage pesticides is being implemented.

Vattenfall and BR Fuel have been approached by actors suggesting to apply for addi-tional funding through the UN financial mechanisms CDM and REDD+. CDM may be relevant for BR Power’s biomass power plant, which to a large extent replaces diesel-powered generators, and for the reforestation associated with parts of the project, even though the EU does not accept such carbon credits. REDD funding could potentially be relevant for buffer zones, as well as for “jungle rubber” or schemes where rubber trees are mixed with other trees.

Social

On a national level, BR sees that “Liberia has the opportunity to be the world’s first sus-tainable natural, non-edible biomass driven economy.”84 How the project will hopefully more than double the electricity currently available on the grid is also of great social importance. This will reduce costs, particularly for those currently using diesel-fuelled generators at USD 0.60 per kWh, compared to the 18.5 cents BR has negotiated with the Liberian government.

At the local and regional level, the main social effect is employment. BR Fuel is currently employing about 700 people, excluding around 250 security personnel from a contrac-tor. Local employment would benefit further if more value adding is done in Liberia, such as pelletizing and roasting or liquifying the chips before sending them to Europe, where power plants cannot accept unprocessed chips.

BR’s lowest wages are USD 130/month, which compares favorably to the current mini-mum wage of USD 52/month for unskilled industrial workers and USD 39/month for agricultural workers. In the 2011 elections, raising minimum wage to USD 6.80/day was promised, whether and when this will happen is unknown. Employees are also given 25 kilos of rice a month, as per the Collective Bargaining Agreement, which – together with the fact that the salaries are put into an account rather than distributed as cash – reduces the risk of a large part of the salary being spent immediately on payday. Some nighttime schooling for the employees has been set up, and scholarships for literacy classes are offered.

84 http://www.buchananrenewables.com/assets/pdf/Buchanan_corp_fact.pdf

Smallholder farmers are paid USD 1.50 per ton of tree, once branches and roots have been sawn off. A tree is typically around 0.5-1.5 tons, weighing up to 10% more in the rainy season than in the dry, which means BR Fuel will pay more even though on the world market moist chips fetch a lower price.

Early in the process of acquiring rubber trees, pre-harvest meetings are held in all vil-lages affected, to inform the local community of the plans. This is complemented with signs and other information, including a local radio program. Even the most verbal crit-ics agree that the communication with stakeholder is done well.

BR Fuel has financed bus stops after the request from the previous mayor, market places after demands from locals, and scholarships for children. A brief visit was enough to refute Green Advocates claim that the market was not wanted and is not used, but how projects are chosen is not transparent and no local outsider is allowed to participate in the decisions. A more comprehensive outreach strategy for the company is under development.

Contracts are established with each plantation owner, preceded by an often difficult screening to ensure that the right person has been approached; post-conflict land rights issues have still not been fully settled. Until February 2012, 34 contracts with farmer have been signed. Currently, farmers can choose from three different economic models under the Farmbuilders program:

» Trees are bought, felled and taken away

» As above, plus technical support and materials for replanting

» As above, plus the running of the plantation

On smaller farms and upon the farmer’s request, BR Fuel harvests all trees, including those that are still productive, since it would not make economic sense to take a few trees at a time. On larger farms, harvesting is done in stages, but still taking all trees. We are ensured that planting of cover crops is done immediately after harvesting, in order to not leave the land bare. BR Fuel through the Farmbuilders program strives to ensure the proper replanting of trees, on average 1.5 seedlings per tree felled, less in areas where trees were spaced to close, or on steep slopes. Space is set aside to intercrop the rubber trees with vegetables such as pepper, peanuts or maize – but not the staple crop cassava, as it and the rubber tree will spread diseases to one another. This is in line with the Ministry of Agriculture’s Rubber Master Plan.

Depending on the crop, the intercropping may give nitrogen to the tree, protect against pests, give moisture and provide food and additional income for the farmers. Since the

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rubber trees don’t produce any rubber the first and up to seven years – though new varieties may cut this down to four – this revenue stream may be vital to the small-scale farmer. It is thus disappointing that this part of the project has as yet not been success-fully implemented. BME says seeds and crops were stolen in the previous trials, and while 34 farmers have had their trees taken away, there has not been any decision about which crops to finally offer, much less any actual planting, although non-food cover crops have been planted on all farms. At the model farm, no intercropping involves rubber trees, though plans are underway for the “Five P´s”: pineapple, peanuts, peppers, peas and plantane (banana).

In a meeting held in Buchanan town, all CSOs present claim that BR Fuel previously promised to pay USD 10 per tree if farmers arranged for replanting themselves, USD 5 if BR Fuel was to do that. This is vehemently denied by BR Fuel, though in line with the Somo report’s finding that “Smallholder farmers have expressed concern that the company has not lived up to verbal price agreements, does not conduct proper main-tenance on the young rubber trees, and in several instances cut down old trees but never produced wood chips from them.”85 While CSOs claim paying a fixed sum per tree would be more transparent and easy to understand, Farmbuilders are questioning if this practice would be fair to farmers, as the tree diameters and thus the biomass sourced from the trees varies significantly.

Farmbuilders offers farmers to plant and maintain their own farms for a fee. Weeding and cleaning, for example, is pays USD 3.50 per day for an average of 100 trees a day, with the opportunity to make up to USD 5 per day if exceeding the minimum quotas. The CSOs interviewed concurred that many workers, including PWDs, may not be able to do more than 50 trees a day, thus not meeting the quota. The pay is probably not regulated by minimum wage, since BR Fuel does not require the farmer to put in any specified number of hours.

Farmbuilders (FB) is to become a separate for-profit company, allowing BR to focus on its core business. The exact relation between the companies is still to be worked out, though direct relations with the farmers will be FB’s responsibility. FB will provide seeds, seedlings and stumps for a variety of crops, pesticides and fertilizer, and outreach ser-vices. Based on the rubber tree production cycle, farmers will be offered loans with no repayment the first seven years, though if interest rates approach the commercial rates in Liberia, currently around 14%, the repayment would be steep. If the farmers are suf-ficiently informed, they can themselves make up their mind about how attractive this is.

Farmers are encouraged to form cooperatives so that the fields can be rotated and the burden of the loss of income for the first four to seven years can be shared. The diversity

85 http://somo.nl/news-en/controversy-at-biomass-producing-company-in-liberia/

of the plantation owners makes this a difficult task; as half of all rubber trees are owned by small-scale farmers, while others may live far from the farm and have little interest in increased involvement in the operations.

The College of Agriculture and Forestry in Monrovia praises the BR Fuel model, saying that from a value-added perspective there’s no better use for the trees and there are few negative environmental externalities.86 This is challenged by Green Advocates, claiming that rubber trees are otherwise used for charcoal, so that the project makes firewood and charcoal scarcer and more expensive, increasing poverty, deteriorating livelihoods and forcing charcoalers into pristine forests.

GA claims charcoal prices have gone up fourfold since the project started, while other studies show a more moderate increase and puts this in line with rising prices for other commodities, including rice and fuel.87Since rubber trees are commonly simply aban-

86 http://www.eed.de/fix/files/doc/2011_Liberia_Report_rubber_trees.2.pdf; http://www.timbercommunity. com/content/power-giant-vattenfall-buys-biomass-africa

87 Eg van der Plas, Robert J.: Biomass Issues in Liberia, 2011

A rubber tree being tapped for latex. The tree doesn’t produce any latex for the first 5-7 years, then has a production peak for about 25 years, after which the production slowly declines.

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doned once they are not productive, since BR Fuel uses less than 1% only 0.4% of the available rubber wood in Liberia, and since BR Fuel leaves branches and roots for charcoalers and others, GA’s argument seems to have limited merit. The argument may, however, become relevant once the power plant is operational, since it will use a large part of the rubber wood currently left behind. On the other hand, with more people connected to the grid dependency on firewood and charcoal will be reduced.

Another concern is that the exports will make rubber wood an additional lucrative busi-ness, supplementing latex tapping and thus extending the importance of the rubber economy for Liberia. Over-dependency on any one product is problematic, especially when linked to monoculture, dominance of foreign investors, limited value addition and poor working conditions. On the other hand it doesn’t seem well-advised for Li-beria not to make the best use of its few comparative advantages. The income from biomass is also limited compared to the income from the rubber, implying that biomass demand won’t be the driving force. Also, the investments associated with the project improve the possibilities of a more diversified economy.

While visiting Buchanan Port, a ship was waiting offshore to load timber. Investors pre-viously in the mining sector claim that the reopening made them switch to forestry with China as the main final market. “They take what they can get, no questions asked.” That Liberia is part of LEITI and that the FDA, port authorities and SGS are to check every tree for export permits was shrugged off as having little practical importance. To what extent this is BR Fuel’s responsibility is open for debate, though helping to reopen a port is clearly positive for the economic development, and total corruption may decrease with the possibility of shipping from a port with less demands for informal payments than in Monrovia. BR Fuel may consider reinforcing this by supporting control practices in the port.

The business model has been approved by co-funding development banks such as OPIC in the United States and Swedish Swedfund, as well as MIGA, the insurance branch of the World Bank. The set-up of BR has been questioned, with headquarters located at a trust office in Amsterdam although the company has no economic activities or employees there. “The company’s complex corporate structure is designed in a way that can be optimally used to avoid paying taxes in Liberia. If the company expands its activities and becomes profitable in the coming years, there is a risk that the corporate tax payments to the Liberian government will remain minimal,” according to Somo. He however clarifies that “there is no hard evidence that BR has used its corporate structure to reduce the taxes it pays to the government of Liberia.”88

88 Somo: Burning Rubber, 2011. http://somo.nl/publications-en/Publication_3715

BR Fuel has set up a Farmer Grievance Committee that meets once a month to address farmers concerns. The Chair is a farmer, two representatives from BR Fuel, a civil society representative, and farmers with whom BR Fuel has contracts. The structure and stan-dard operating procedures are still being developed.89

Sierra Leone: Addax Bioenerg y

The Swiss-based energy group Addax and Oryx Group (AOG), is investing € 267 mil-lion in the African agriculture and renewable energy industry. Through its subsidiary Addax Bioenergy, it is developing greenfield ethanol production in Makeni, Sierra Le-one, consisting of a sugarcane estates , an ethanol refinery and a biomass power plant. About 85,000m3 ethanol is to be produced per year with around 15 MW of electricity for the national grid, produced by the sugarcane leftovers, and organic fertilizer (vinasse) to be used on the farm.

Addax Bioenergy has leased just over 40 000 hectares of land from 96 villages, and will use about 14,000 ha for estates , roads and other installments. This equals to just over 0.5% of Sierra Leone’s arable land. At present, around 1,200 persons work at Addax Bioenergy. When fully operational in late 2013 about 2,000 jobs will be created, making it the largest private investment in Sierra Leone’s agricultural sector.

According to Addax, ”The project aims to become a model for sustainable develop-ment in Africa, through the respect of strict sustainability standards and the introduc-tion of innovative social solutions. These include extensive and transparent stakeholder dialogue, helping landowners establish deeds of land ownership, enhancing local food security and agricultural productivity, and extensive infrastructure development.” The project is designed to comply with the African Development Bank’s safeguards policies, the World Bank’s International Finance Corporation (IFC) performance standards, the EU renewable energy environmental and social sustainability criteria, and those of the Roundtable for Sustainable Biofuels.

FAO BEFS define the Addax project as an integrated Food-Energy Systems for people and climate and has been involved in the design of its large scale Farmer Development Programme supporting local small holders.90

It is developed in partnership with eight European and African development finance institutions, including Swedish Swedfund which has invested €10 million in Addax, a deal criticized by the political opposition who put Swedfunds transparency in ques-

89 Mail from

90 See Addax Bioenergy website

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tion91. In Sierra Leone, the project is supported by the government and praised by the President, whose special adviser on the private sector describes the project as the coun-try’s “flagship investment.” Some of the praise is wishful thinking; “The project would also certainly lessen the price of sugar as it would produce lots of sugar for the local market”92 (no sugar will be produced). The parliament ratified the project in November 2010 with support from both government and opposition parties, recognizing its con-tribution to meeting the country’s development goals, and has included FAO and IITA in its development.

The MOU states that Addax shall be exempt from any law that comes into effect, or is amended, modified, repealed, withdrawn or replaced, that has a material adverse effect on Addax, its contractors or shareholders. Whether this actually means that new land tenure legislation or tax regime will not affect the project remains to be seen.

The Oakland report claims that “the work is dangerous (cutting sugarcane with cut-lasses); laborers have no protective gear and injuries are common.” On unannounced visits for this report, workers were wearing protective gear and the ESHIA stipulates all harvesting will be done mechanically. However, local authorities and the villagers themselves are pressuring Addax to have more manual cutting, and this will at least partially happen, since some of the areas will not be fit for harvesting machines.

The report further claims that “Addax promised, for example, development in the form of schools, health facilities, a community center, and water wells. To date, none of these promises have been fulfilled.” In a report with over 200 footnotes, this claim has no source, and no NGO or media reporting or Addax own records or videos can substanti-ate them. We have thus been unable to identify any source for these claims, which are denied by the company.

Addax believes Sierra Leone offers several advantages over traditional ethanol produc-ing countries such as Brazil, mainly the lower labor costs, the free-trade agreements with the EU and the US and the shorter transport distances to the EU market. Climate and soils are suitable, even though the rain only falls 4-5 months of the year. On the downside, finding suitable labor is hard, for some work impossible, necessitating ex-pensive expats and/or extensive local training programs, almost all material have to be imported and even when it is locally available, lack of competition means high prices.

91 In particular, the Swedish Green Party criticized the government for lack of transparency regarding Swedfund’s projects.

92 www.statehouse.gov.sl/index.php?option=com_content&view=article&id=142:president-koroma-hails- addax-groups-multi-million-dollar-biofuel-investment-in-sierra-leone-&catid=34:news-articles

Environment

While the greenhouse gas merits of etha-nol have often been debated, the biofuel from this project is to reduce emissions by 71.5% compared to fossil fuel, based on LCA values, following the methods of ISO14044 and the EU RED. This is in line with the EU default values for sugar cane based ethanol, with room for improve-ment should machinery become ethanol powered.

The project has gone through an extensive environmental, social and health impact assessment (ESHIA), conducted by inde-pendent consultants, which took two years to complete. It included GIS (geographic information system) analysis and fourteen specialist studies, and it has been applauded as ‘the gold standard’ of impact assessments by industry professionals and the Euro-pean Commission93. Stakeholder engagement and public consultation were prioritised during the execution of the ESHIA. Another focus in the ESHIA process was on land selection and avoiding impact on communities, forest and water and using land for the project that has been previously degraded by human activity.

Sugar cane is a water intensive crop, thus theoretically well suited for a country like Sierra Leone. In the ESHIA, it is declared that the estates will only require irrigation during the dry season (November to May), but this may most likely have to take place year-round, since the irrigation pivots are also distributing the fertilizing vinasse. The Addax project source its water from the Rokel river which since 2009 has increased it water flow significantly due to the Bumbuna hydro power project coming on stream.

However, the Addax ESHIA warns that during the eight dry months per year, water could potentially be a problem. While the company’s water permit requires it to stop operations if the Rokel River flow is below 640 000 l/second, operations at full swing re-quires up to 800 000 l/second. Addax’s statement that “a hydroelectric dam built by the Italian government and put in operation in 2009 maintains the flow of water through-out the year and avoids any downstream impacts of the project” may thus not be en-tirely correct. Future needs in combination with potentially other large scale agricul-tural operations downstream, risk seeing diminished water availability, and Addax has

93 Addax Bioenergy’s Environmental Social Health Impact Assessment (ESHIA) was analysed and considered “outstanding” in comparison to 19 other ESHIA/EIA in study by the European Commission. The study was carried out by Chalmers University, Sweden and Ecofys, Holland.

While the local community will not be able to furnish all the needed expertise for large-scale bioenergy projects, investors like Addax develop skills training programs to limit the number of expatriates needed in the project, and increase the local benefits over time.

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encouraged the government to set up a Rokel river watershed management authority to protect the river from becoming overused.

Addax Bioenergy is the first company in Sierra Leone to pay for water use, 3 Leones (0.0007 USD) per m3 drawn from the Rokel River. This is partially sound environmental behavior – free commodities are overused – and partially prudent business; by paying for the water, the company is setting a standard for other projects and is less likely to find its water permits revoked.

The ESHIA identifies several “issue/impacts” on human health, on the natural eco system, involving contamination of aquatic resources and soils by pesticides and fertilizers, that are described as “moderately severe” with recommended “mitigation measures” which should be closely and independently monitored throughout the life of the project.

Several claims that Addax has contaminated the river are most likely untrue, since op-erations have hardly started. While not directly linked to the river situation, the fuel-ing of machines – and the many thefts of fuel – causes many spills that have until now

not been adequately taken care of. If water sources are affected by the project, it may breach the Water Control and Supply Act, and Addax vows to replace them with new, deep wells; though on inspection, a natural spring previously used by villagers had been damaged with no replacement as of yet.

If water community water sources are affected by the project, it may breach the Water Control and Supply Act, and the company vows to replace them with new wells or boreholes. Addax has already drilled several new boreholes and replaced wells which is only possible during the dry period.

As part of its community and skills development programme during 2012 Addax will also start implementing a water and sanitation project in its project area (see below).

The sugarcane is planted in circular fields, which leaves the outside of the circle and is claimed to “minimize its impact on local livelihoods and preserves much of the existing farmland and natural reserves”. However, neither nature nor villagers will readily ac-cept to be confined to these areas, and Addax is creating specific eco-corridors and 75 meter buffer zones which protecting the riparian forest closest to rivers and will only directly use about one third of the 40 000 ha they lease. At the visit, a special tree pro-tection nursery was being planned, though the survival rate of transported trees may be low, the cost high and the benefits compared to planting new trees limited. As part of their community development programme Addax will also plant an estimated 150 000 trees, a mix of indigenous and fruit bearing, to provide income for the villagers.

Since the main market for the ethanol is the EU, complying with the EU RED is a must, while the intention to fulfill RSB criteria raises the bar a bit further. That IFC and AfDB standards, the Equator Principles, and the Bonsucro/BSI will also be complied may sound impressive, but is almost a given since RED and RSB are more stringent.

In the short term, Addax doesn’t have access to any electricity which means a lot of diesel-powered generators are used, with high CO2-emissions. When in operation, the factory will provide up to 20% of the national grid electricity has tremendous posi-tive environmental impact, since it will replace diesel-powered generators, kerosene or firewood. The co-generation of electricity for the grid will become Sierra Leone’s first successful CDM project. However, even then, all tractors, trucks and ferries will be diesel-powered.

The ESHIA states that “forests will not be cleared and only small portions of palms may be cleared”, though this has not been entirely possible to live up to. Around 600 hect-ares of forests and 4,000 hectares of bush will be cleared, with compensation to com-munities for the loss of trees according to a detailed price list developed together with them. New trees are planted (3500 to date), a tree nursery has been established and

Even with efficient irrigation, the water needs for the biofuel crops remains one of the most contentious issues of the Addax project. Addax is currently the only company in Sierra Leone that is paying for its water rights.

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valuable trees are moved to new sites – 1 777 ha of ecological corridors across the site is the primary mitigation measure to enhance protection and recovery of biodiversity.

Addax pays the stipulated land lease of 12 USD/ha, in total about USD 550’000 per year, and USD 70’000 for annual SLEPA monitoring. Addax is exempt from the 30% corporate tax until 2022, from import duties for five years. The water fee amount to USD 54 000 per year according to external sources, slightly more according to Addax.

The main expected income obviously comes from the ethanol, followed by the genera-tion of electricity, with a negotiated 0,20 USD/kWh for 20 years for 15 MW and the possibility of additional income from the diesel-powered 6 MW back-up generator, which is otherwise available for production for the grid. An additional income may be the CDM for the co-generation, though this has not yet been finally approved. All in all, Addax aims for a return on investment of 15%.

FAO recently estimated that by 2050, after land needed for food security has been set aside, more than 2 million hectares of arable land will be available for commercial agri-culture in Sierra Leone. Addax is planting 10,000 hectares or 0.5% of this figure.

Social issues

Jörgen Sandström claims that it is of utmost importance to “anchor the project by devel-oping long-term win-win community processes”, and that commercial success is key but the project must be sustainable (economic, social, environmental).

The land for the project is leased by Addax from local landowners through the local chiefdoms, in compliance with the laws of Sierra Leone. The agreements were signed after two years of public consultations. There were no precedents of leasing large areas of land prior to the Addax project, which reinforced the need for a thorough under-standing of local dynamics before negotiating a land lease.

In parallel with the above mentioned ESHIA process, Addax commenced a public land lease process and established a formal grievance mechanism to receive and facilitate resolution of the communities’ concerns and grievances about the project. In addition, Addax established Community Liaison Offices to ensure that people have the possibil-ity of making suggestions or lodging complaints.

The Sierra Leone Network on the Right to Food (SiLNoRF), through its coordinator Mr Mohamed Conte, recognizes that Addax held consultations with land owners but claim that the consultative process was marred by promises of “better housing, schools, hos-pitals, general economic development and improved standards of living”. This position

is echoed by the Landowners Committee of Makeni and many locals, but has been im-possible to substantiate. Addax also argues that they from the beginning were warned by local NGOs, local authorities, the Government, its local business partners and by the communities themselves of the need to manage high expectations. In addition Addax argues that there is no logic to make promises you cannot deliver on as this would only add burden to themselves. Jörgen Sandström claims “to have started 150 meetings with the words ‘ I am not promising anything”; a position repeated by HSSE manager Derek Higgo at a village meeting covered for this report.

Mohamed Conte also criticizes Addax for not being sufficiently transparent, insisting that the area Addax will lease is significantly larger than what they claim and official documents show, also saying that 77 people run the risk to be resettled due to the proj-ect, while Addax says not a single family run the risk of being moved with the current development design. Mr Conte further claims that “the villagers are forced to abandon their traditional shifting cultivation”, and dismisses that other local NGOs such as CSOPAD (Civil Society Organization for Peace and Development) are more positive about the project, saying that ”Addax supported [them] to sing their praise”.

More than 180 landowners and farmers in the affected villages signed a CSOPAD peti-tion in 2011 saying that “the communities are well informed about the project and wel-come the development”, and Pa Amidu Fornah, representing Bombali Shebora Chief-dom, described as “absolute falsehood” claims that they had been forced to surrender lands to Addax94.

Addax has looked at developing an outgrowing scheme, where certified small-scale farmers grow sugarcane on parts of their own land and sell to the company, with in-creased secure cash incomes and control over their own farming. Given that sugarcane is not a widely planted crop in Sierra Leone, and that most farmers are at subsistence level, Addax realizes it may take some years before such a proposal is realistic on a wider scale, and the company will not introduce it in the short term. Instead Addax has em-barked on an extensive agricultural support and training programme for the communi-ties leasing land to the project (see Farmer Development Programme below).

A study by Swiss based activist NGO Bread For All says that “many farmers in project-affected communities have already lost their access to fertile lands.”95 Visiting the site, this does not seem to be the case, including a meeting where Addax specifically tried to ensure that village back roads are kept intact.

94 Concord Times, 2012-04-05; see also National News 2012-04-04

95 http://www.brotfueralle.ch/fileadmin/deutsch/01_Service/Publikationen/BFA_Concerns.pdf

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The minimum salary paid to workers is 332’000 Leones per months which is more than double the legal minimum salary in Sierra Leone. All social security (NASSIT) is paid on behalf of the workers. In addition, workers receive a transport allowance. Workers are paid on monthly bases; no wages are being ‘held back’.

The Oakland Institute study’s comment that “People hired from the communities only worked as casual laborers and hardly worked longer than three months” highlights two problems; NGOs and villagers wants Addax to hire locally, which it has agreed to do Dur-ing the development phase of the project, work takes places in different locations, mean-ing that contracts need to be short (though often six months), so that the next village can soon be benefiting from employment. For villagers to get work beyond casual labor, they would need training, which can only make sense if they are to stay with the company for some time, though the pressure to always employ locally to some extent hinders this.

Several organizations focused on the right for food accuse Addax of threatening food security. Given that most of the around 20 000 inhabitants in the area are subsistence farmers, with an income of just over a dollar a day, it is a reasonable focus.

Communities have more income than before and still more land available than they actually used before. However, that’s on average – for some villages, the situation is at the same low levels as before, and Addax has the contractual right to choose which land they want to use. It is not likely that they would use this right to the point of bringing in the police against the very people whose support the company need to minimize theft and sabotage, and who will provide several hundred workers and influence the inter-national community’s view on the project – and thus the lenders.

As part of the solution, Addax has set up the Farmer Development Programme to help smallholder farmers become self-sufficient through improved food production; claimed to be Sierra Leone’s largest independent food production programme ever.

Until March 2012 Addax has contributed to food security in the region by developing more than 1’500 hectares of community fields for crop cultivation and by training 1,441 farmers to increase their productivity with improved agricultural practices at no cost to the communities. This Addax Farmer Development Program (FDP) is eliminating “hun-ger months” for the first time in many years. It is organised together with the UN Food and Agriculture Organization (FAO) and the Ministry of Agriculture, Forestry and Food Security to sustainably improve food security through better adapted farming methods. In 2012, the FDP will develop more than 2,000 hectares, adding more cultivated lands and rice than the communities ever had in the past.

The FDP includes a 30 week Farmer Field & Life School (FFLS) training programme to educate smallholder farmers in better agricultural practices. 1,441 farmers have gradu-ated from 50 FFLS schools as of March, 2012.

The Farmer Development Programme (FDP) is used to support households and com-munities who are directly affected by the project, including the landowners leasing land to Addax and others using these lands. All project affected communities residing within the boundaries of the development area are eligible to participate in the FDP. Every person affected by the project, children included, is allotted 0.143 ha of ploughed and sown agricultural land, based on an average yield of 0.7 tons of rice per hectare and a FAO in-country food security baseline of 100 kilos per person per year.

Objectives of the FDP include:

» Introducing improved planting and crop management methods;

» Using local materials for soil improvement and crop protection;

» Sensitisation on basic health and sanitation issues;

» Mobilising local funding and generating income; and

» Providing improved planting materials.

The Farmer Field and Life Schools (FFLS) training programme aims to ensure that households affected by the project have sufficient land and agricultural knowledge to mitigate potential economic displacement, and secondly, to enhance food and liveli-hood security. The FFLS farmer training programme will enable about 2,000 local farm-ers (i.e. one out of six persons affected by the project) to improve productivity of their food crops. The FFLS groups consist of 25 to 30 persons per farmer school. One partici-pant per hectare of each affected community is invited to participate. Addax expects to organise between 70 and 80 FFLS groups. Each FFLS will have a chairperson, treasurer, secretary and women’s representative elected by the group.

“Farmers do not have ownership of the programme”, complains Mohamed Conte, and this may be the case. Addax may find difficulties when asking farmers to contribute 1/3 of the cost for crops and machinery, to be increased to 2/3 the next year and the full cost in the third year. According to a nine-week study by (SiLNoRF), Addax was late in 2010 in the pilot area supplying necessary material for farmers to cultivate the replacement fields they were given. In 2011 SiLNoRF they claimed that water is already becoming

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an issue, with several streams running dry96. Swiss based activist organization Bread For All and German Brot für die Welt claimed in March 2011 that farmers were not given copies of their Memorandum of Agreement – this was however not the case where we went for this study. That not everyone fully understands the MOA is obvious and to make sure the communities fulfill their responsibilities is a real challenge for the company who has support on daily basis by the extension services from the Ministry of Agriculture, Forestry and Food Security.

Addax has developed several project plans and programmes which are to be imple-mented starting 2012, based on continuous community engagement and public disclo-sure. These include:

» Forestry: A nursery with woodlots, eco-corridors, and assisting in meeting the im-mediate needs of local communities in the project area, as well as mitigating the threat to certain protected forest areas. 50,000 trees are to be planted by the end of 2012, and 500,000 trees in 2013.

» Water and sanitation: The WASH program, to be developed with an external part-ner, is to focus on water supply, sanitation and health and hygiene educationWell rehabilitation or construction in villages. Latrines will be constructed in villages and schools, with health and hygiene messaging, based on the participation and agree-ment of the communities, following the Community Led Total Sanitation approach.

» Community fire safety programme: Fire is a major issue and several villages are burnt down every year by man-made fires. Addax will implement a community fire safety programme, with the Local Unit Commander of Makeni Police.

» Community traffic safety programme: Communities are to be sensitized regarding the dangers with vehicles, together with Sierra Leone Roads Authority.

» Graduate advancement programme: For the long term sustainability of the project, the company needs to promote more Sierra Leonean staff into senior positions, and for this a Graduate Advancement Programme is to be established. A young graduate is to be attached to each of the major disciplines that underlie the successful running of the estate and factory.

» Rokel Training Institute: Addax has plans to invest in an educational institute in the project area, for capacity building, community Development and knowledge transfer.

96 http://www.bioenergie-promotion.fr/15057/sierra-leone-le-projet-dagrocarburant-addax-conteste/

Tanzania: Green Resources

Green Resources is a Norwegian company, started in 1995 to become a leading devel-oper of plantations for forestry and other uses, and a leading producer of greenhouse gas emission credits. The company focuses on East Africa because of good land avail-ability, high rainfall, qualified foresters, low-cost labor, stable governments and a long-standing Nordic development aid presence in the region.

Business model

Green Resources is developing an interesting example of a commercial-regulatory hy-brid where operations are partially funded and value maximized via harvesting timber and carbon credits.97

Green Resources started pilot planting of forests for carbon offsets in Uganda and Tan-zania in 1996-1997. Prior to this, there had been no large-scale planting of new forest in East Africa for more than a decade, neither private nor public, with the exception of a teak project in Tanzania.

In 1998, Green Resources established contact with the certification and inspection com-pany SGS. With SGS’ special competence in greenhouse gas offset project certification, the Green Resources’ Tanzanian afforestation project, in November 2000, was one of the first three projects worldwide to be certified and the company sold the first options on carbon credits.

The greenhouse gas credit regulations and market developed slower than expected, which led Green Resources to reduce their planting activities. Since 2003, however, the regulators have been more proactive; the carbon credit market has come alive and Green Resources has once more increased its afforestation operations. Currently, GR has 20,000 ha of planted forest in East Africa.

Recently, a new REDD project was added to the portfolio, executed by the Jane Goodall Institute, and partially funded by the Norwegian Embassy in Dar es Salaam, in line with the general Norwegian focus on helping countries prepare for REDD implementation and benefit from carbon trading by 2013. Annual income for this project is expected to be around USD 400,000.

97 http://www.greenresources.no/Company/BusinessStrategies.aspx

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Environment and social

GR has a strong focus on sustainability, with two thirds of all forests FSC-certified as yet, including Uchindile, Mapanda and Idete plantations in Tanzania.98

According to Timberwatch, the lease of community land to Green Resources is a case of land grabbing.99 Since the villagers have clearly agreed to the setup, this would mean that they have not done so voluntarily, or have not been sufficiently well informed to make a conscious decision. We have not found any evidence of this being the case. On the contrary, the process to ensure community involvement is innovative – and without the engagement of the locals, the project will not deliver income to the project owner.

In 2012, communities in seven villages of Kigoma Rural district start earning money for protecting the Masito-Ugalla forest reserve, set up as a REDD pilot project. The project covers 70 000 hectares of pristine area within Masito- Ugalla Ecosystem where the lo-cal communities and local government staff have been empowered through awareness creation, capacity building and training to manage and monitor forests and to sell car-bon credits in the global market through REDD.100

The JGI recently conducted a survey in the villages on how to best share the benefits, with almost a thousand people out of the 60,595 population interviewed. All villages have formed community based organizations, coming together under an apex body, which will handle the carbon credit payments.

Each village develops its own development project plan through which the money will be used, focusing on participatory forest management. Some of the villages want to construct classrooms, dispensaries and teachers’ houses. In each village, CBO members have been trained on how to control deforestation, monitor destructive human activi-ties, and have been taught entrepreneurial skills such as beekeeping so that they can abandon charcoal making. “Communities will decide on how to use the money they get in developing their areas but each of the villages will get between 50 and 100 modern beehives,” said Mr Nssoko.

98 http://www.greenresources.no/News/tabid/127/articleType/ArticleView/articleId/57/Green-Resources- achieve-FSC-certification-in-Uganda-120511.aspx

99 Timberwatch: CDM Carbon Sink Tree Plantations, 2011

100 http://allafrica.com/stories/201109051499.htmlEven in large scale forestry projects, work is labour-intensive, which may be particularly welcome in countries where formal employment opportunities are scarce.

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Concluding discussionThe study of four Sub-Saharan countries, each with a project that has been studied more in detail, combined with the discussion with forestry experts from all over the world, and an extensive literature study, has lead this report to a number of topics for a concluding discussion. We focus on economic, environmental sustainability and social sustainability, dividing it into a section for investors, for host governments, for institu-tional donors and NGOs.

For investors Environment

The environmental sustainability may be jeopardized by many different factors, includ-ing the lack of detailed knowledge about the area, the need for ROI that may mandate the use of trees that are not well adapted to the area, and may for instance use water to the extent of hampering the growth of other trees or other crops, or reducing the availability of drinking water to the local communities. As discussed extensively here and elsewhere, a focus on plantations may be environmentally sound in itself, but risk leading to overall negative environmental impacts.

Land rights and land grabbing

The issue of land rights will be a major topic for investors, since this is very different to the situation in the investor’s home country, and is often not straightforward, with overlapping and sometimes conflicting legislation. Suggestions on how to handle this includes:

» Understand local tenure system, including its weaknesses;

» Conduct inclusive and extensive social and environmental assessments and follow its recommendations;

» Sign up to recognized certification schemes to make sure there is a meaningful con-tribution to the development of local community;

According to Oxfam, 227 million hectares of agricultural land in developing countries, mainly in Africa, have been taken over by foreign investors since 2001, while the World Bank puts the estimate at 56 million hectares over the same period, slightly bigger than the total size of Sweden. The increase has been fast; prior to 2008, the annual average was less than 4 million hectares sourced, while in 2009, it was 45 million hectares, out

of which at least 70% has been in Africa.101 Thus, the main advise from several persons interviewed for this report has been “hurry up.”

While the main reason for this advice was that suitable land is being bought or leased (though only rarely “grabbed”), another reason is that the very beneficial economic terms offered for investors in many Sub-Saharan African countries might not last.

The accusation of “land grabbing” was often raised when the projects studied were be-ing discussed with organizations, both local and international.102 At times, this seems to be a catch-all phrase, since Addax only leases the land and only does so after agree-ments with each village, while Buchanan Renewables does not even do that – they only buy trees on the land. This does not mean that land grabbing does not occur, though the prevalence in the debate may partially be due to other reasons, as discussed under the NGO section, below.

It may also be relevant to discuss whether the issue is altogether negative: “Land grab-bing is part of a globalization process, in which Africa has two main functions; 1) it has become part of the internationalization of capital, investment and trade, and 2) it has come to constitute an integral part of enhancing food and energy security in developed and transition countries.”103

This discussion is interesting for think tanks and other institutions, but not necessar-ily for the investors, who should avoid being labeled a ‘land grabber’ by embracing the commitment to the local community it is influencing by working to:

» Understand the local tenure system, including its weaknesses: there is no excuse for not understanding or ignoring local laws to increase its own benefit. This opens the project to local backlash, it turns international public opinion against it and it can compromise the success of the project.

» Conduct inclusive and extensive social and environmental assessments and follow the recommendations of these assessments. Additionally, investors must understand that often the most vulnerable groups may not have a voice, therefore it is important to identify and account for all groups that benefit from the land and resources in question.

101 IISD figures, 2011

102 We refrain from exactly defining the term land grabbing here, there is abundant literature on the subject for those interested.

103 Matondi et all, 2011

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» Sign up to recognized certification schemes to make sure the product was produced sustainably and has contributed to the development of the host community. These include FSC, RSB, the Principles of Responsible Agricultural Investment, the Equator Principle, and the sustainability criteria in the FLEGT directive (mandatory for export to the EU, but can be used voluntarily elsewhere).

» Guaranteeing a sustainable product is not only beneficial to the environment, locals and the future, but may also allow for premium branding. If the costs of sustainable and fair production are not economically viable, then perhaps the project should not be carried out.104

Outreach/CSR

While NGOs and the local inhabitants in the project area often portray it as a responsi-bility to invest in basic infrastructure such as schools, hospitals, roads and clothing, this report takes a different approach. Far from being impressed by villagers showing up in in clothes with the investor’s logo on, even though they do not work for the company, or by market places with the company’s name sporting from large signs over the entrance, we urge the companies to reflect on how the self-determination of the community can be strengthened. We concur with one employee at Buchanan Renewables, saying that, “you have got to put your trust in the people, otherwise it won’t work”. Putting this to practice means refraining from partially paying salaries in kind, and replacing self-con-trolled “outreach” investment with funds being made available for the local community to do with as they see fit.

When working with local groups this will become a natural part of the process, and the company should ensure that local communities are represented at the decision-making tables, even though the host country may not always have this as a priority. A positive example here is Addax decision to pay the fees for the local community legal represen-tative, while the community itself appoints the representative. The investor should also strive to create incentives for skill transfer, so that local communities can over time be able to take more qualified positions with the investing company, and so that they can work successfully as outgrowers – if the community has previously been subsistence farmers, this is not done overnight.

The common advice to “start small” may not be applicable; investments in forestry and agroforestry are often big. It is thus more relevant to consider “start slow,” as we have seen that almost all mistakes made by project developers have been due to not analyz-ing the local situation well enough before starting the investment. The generous timing

104 Pangea: Land Grab Refocus. Roots and Possible Demise of Land Grabbing, 2011

in land leases, often 50 years or even 99 years, with a 5 year “use it or lose it” clause means that there is scope for finding and securing the land at an early stage, and then slow the process down, with a continuous dialogue with the civil society.

Circumventing political risk is an important aspect for investors, which may be done by a diversified portfolio where one single project is not the make-or-break of the com-pany. Again, this advice is not always practical for the forestry sector. As we have seen, over-relying on generous offerings from the host government may mean high political risk, and should thus be avoided – we believe there is merit to the Addax approach of insisting to pay water fees even though the bureau for foreign investments in the coun-try says there is currently no obligation to do so. Involving the political opposition in the project may also be relevant; so that all support is not gone should the government change in the next election. While this may be easier said than done, given the realities of politics, ensuring local job opportunities is a good start for this to happen.

The entrance to the Helf Self Help Center, where local matatu minibuses arrive to fill up with locally produced biodiesel made from seeds from the croton and castor tree. The seedcake is used by local farmers.

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International companies investing in developing countries need to plan for social equal-ity and community participation in their commercial operations, right from the start - in addition to the usual profitability and environmental impact considerations. This is the main conclusion from The Forests Dialogue’s Forests & Poverty Reduction Initiative, which notes that the complex connection between forests and human livelihoods has led some to view forests as poverty traps, providing sufficient resources to maintain forest-dependent populations but not generating enough wealth to enable these popu-lations to escape poverty.105

The local community

Tree crops, including cocoa, coffee, oil palm and rubber, are important sources of in-come, foreign exchange and employment throughout Sub-Saharan Africa. If grown correctly, they will also contribute to natural resource management, though the op-posite is unfortunately often the case, with monocultures, little respect for biodiversity hotspots and over dependency on pesticides. A partial solution to this is the smallhold-er system, though the challenges of making this work should not be underestimated. The initial costs are high and the time before trees start producing is long, which may lead to underinvestment, low yields and disenchantment with the project. This runs counter to many investors, donors and the public in general, wishing to support com-munity based-projects. Several organizations included in this study, including Liberian Farmbuilders, strive to ensure other income is available during the time the tree crop does not yield, through intercropping and other practices. The economic stress may also be reduced through microfinancing, even though the relatively high interest rates they often have (14-30% in the countries studied) mean that they are not ideally suited for loans spanning over several years.

NGOs and CSOs

This report builds extensively on the work of local, national and international NGOs and CSOs, whose work for sustainability we value very highly. Their work as watchdogs for foreign investments is particularly useful, as agreed by all companies interviewed for this report. In some instances, it is even the NGO that develops a project of sustainable forestry, which may in the next step become a commercial venture.

Nevertheless, we have also been able to identify several instances where NGOs have clearly overreacted to minor wrongdoings from the investors, in some cases including factual mistakes that the organization in question is not willing to correct. In this situ-

105 http://environment.yale.edu/tfd/uploads/TFD_PovertyReduction_Review_StreetandPrice.pdf

ation, the investment may be difficult to carry out, a less caring company may enter the market and the whole forestry sector may end up less sustainable as a result. For this reason, we concur with the findings in Land Grabbing and Food Security:

“There is the perception that NGOs investigate the problems of, and prospects for, in-vestment projects at the grass-roots level by identifying themselves with the poor. As a consequence, reports published by NGOs are widely circulated and are well received, with high confidence in the reliability of their information – especially when they cre-ate crisis scenarios on undeveloped Africa. When such reports predict doom, the NGO solicits funds from donors to arrest the situation. A thought-provoking question is: Will there be any basis on which to solicit funding when there is no crisis?”106

Host Governments

Host governments in Sub-Saharan Africa are under pressure to create jobs and eco-nomic growth while at the same time trying to protect natural resources. Trade agree-ments and comparative advantages may mean that it is difficult for them to have mean-ingful value addition to raw material, and would-be investors may be reluctant to invest in expensive machinery so that such value addition can be made, the result being that in order to increase revenue, more natural resources have to be exported.

As seen in this report, many Sub-Saharan countries try to attract investors by offering very favourable terms, with long tax holidays, allowing for full repatriation of profits and not demanding local ownership. The IMF has specifically warned against this, suggest-ing instead that the country invests in infrastructure and education needed for more sustainable, long term investments, though countries may find themselves trapped in a “race to the bottom” when it comes to offering incentives.

Host countries particularly need to address the land rights issues brought up by inves-tors – the rights are opaque and the implementation, protection and enforcement of those rights is often far from perfect. There is a lack of a functional and consistent insti-tutional framework, with unclear guidelines for carrying out, monitoring and enforcing land deals. Accountability is not guaranteed, nor safeguards to vulnerable populations and proper level of compensation to displaced people. Land deals are not sufficiently transparent, with lack of access to documentation and terms of deals. Community con-sultation, although required, was not always carried out. Even though EIAs and EISAs are statutorily required, the requirement is not consistently enforced. Host countries are urged to:

106 Boamah, Festus, in Matondi et all, 2011

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» Strengthen the country’s tenure system by: carrying out comprehensive land use planning; strengthening land rights via land certification and registration; improving monitoring and enforcement of laws and investment requirements; ensuring trans-parency and public scrutiny of deals.

» Ensure accountability – governments should be accountable to the people they rep-resent. The LEITI “publish what you pay” is a good example on how this can be done.

Overall Sustainability assessment

SADC has established 17 desirable outcomes that African nations should be seeking from biofuel expansion, clustered into four groups: livelihoods and development, en-ergy poverty and security, attracting appropriate investment, and sustainable land use. The UN Special Rapporteur on the Right to Food, by Olivier De Schutter, has issued a set of core principles and measures to address the human rights challenge posed by large-scale land acquisitions around the world. In brief, these state that:

» 1. Negotiations leading to investment agreements be conducted in full transparency with the participation of local communities, and the host government should always balance the advantages of such an agreement against the costs involved for the long-term needs of the local population, including land availability.

» 2. Any shifts in land use can take place only with the free, prior and informed consent of local communities.

» 3. States should adopt legislation protecting the rights of local communities, speci-fying in detail the conditions under which shifts in land use, or evictions, may take place, and procedures for these.

» 4. Investment agreement revenues should be used for the benefit of the local popula-tion, and investment contracts should prioritize the development needs of the local population.

» 5. Host states and investors should establish and promote farming systems that are sufficiently labor-intensive to contribute to employment creation. Investment agree-ments should contribute to reinforcing local livelihood options and provide a living wage for the local population.

» 6. Host states and investors should co-operate to ensure that the modes of agricultural production respect the en-vironment, shall not accelerate climate change, soil depletion and the exhaus-tion of freshwater reserves.

» 7. It is essential that the obligations of the investor be defined in clear terms, and that these obligations are enforce-able, for instance by including pre-de-fined sanctions in cases of non-compli-ance.

» 8. Investment agreements must include a clause providing that a certain mini-mum percentage of crops produced shall be sold on local markets, to ensure that they will not increase food insecu-rity for local populations.

» 9. Participatory impact assessments should be conducted prior to the com-pletion of negotiations to highlight the consequences of the investment on the right to food, and to ensure an equal distribution of benefits between local communities, the host state and the in-vestor.

» 10. Indigenous peoples are granted specific forms of protection of their rights on land under international law.

» 11. Agricultural waged workers should be provided with adequate protection and their fundamental human rights and labor rights should be stipulated in legislation and enforced.

Reforestation/Afforestation projects should always have a strong component of community involvement, not least in the planting phase.

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World Bank Principles for Responsible Agro-investment

1: Respecting land and resource rights. Existing rights to land and associated natural resources are recognized and respected.

2: Ensuring food security. Investments do not jeopardize food security, but strengthen it.

3: Ensuring transparency, good governance, and a proper enabling environment. Pro-cesses for acquiring land and other resources and then making associated investments are transparent and monitored, ensuring the accountability of all stakeholders within a proper legal, regulatory, and business environment.

4: Consultation and participation. All those materially affected are consulted, and the agreements from consultations are recorded and enforced.

5: Responsible agro-investing. Investors assure that projects respect the rule of law, reflect industry best practice, are economically viable and results in durable shared value.

6: Social sustainability. Investments generate desirable social and distributional impacts and do not increase vulnerability.

7: Environmental sustainability. Environmental impacts of a project are quantified and measures are taken to encourage sustainable resource use while minimizing and mitigating the risk and magnitude of negative impacts.

Sweden’s position

Forestry has traditionally been central to Swedish overseas assistance, with Sweden’s significant skills resulting in many projects starting in the 1960s and 1970s. Until around 1980, the Swedish national development agency, Sida, put considerable effort into cre-ating a resource base for the forest sector, but in recent years, the proportion of Swedish development assistance devoted to forestry has dwindled. According to one author, this is due to that “Sida increasingly began to canvas support among politicians and the general public by focusing on popular subjects. Forestry and agriculture were not among these and also lacked strong lobby groups, resulting in them often being out-competed by more popular subjects.”107

In 2002, Sweden decided that future development assistance and other related activi-ties should follow the PDG rules; “Swedish efforts shall to begin with concentrate on a selection of these global utilities: the fight against infectious diseases, the fight against corruption and money-laundering, conflict-prevention measures, guaranteeing safe


water supply and sustainable manage-ment of the world’s climate and forests.”108 It is difficult to see that this had any im-mediate effect on Sweden’s international forestry positioning.

In 2006, the multiparty, multi-stakeholder Swedish Commission on Oil Indepen-dence, chaired by then-prime minister Göran Persson, advocated that the forestry sector should be given a central role in the replacement of fossil fuels, and that Swe-den should invest in supporting greater and sustainable biomass production in developing countries.109

From what we understand, Sida and other Swedish development assistance is again focusing more on forest, partially due to the focus on fewer countries, and that many of the remaining countries have deforestation as one of their major issues to be dealt with. Another reason may be the possibility to increase the leverage of Swedish assistance through UN-based mechanisms such as REDD and REDD+.

Sweden’s signature to the REDD+ agreements developed in Cancún means that in-creased investments are expected from Sweden in activities that prevent deforestation or degradation of vegetation, or support afforestation, in developing countries in the period up to 2020. In mid-2011, participants from the Swedish Forest Agency, Sida, The Royal Swedish Agricultural Academy, the academic research community and various NGOs, developed “the Norrköping Protocol for REDD+,” a set of recommendations and proposals:

» Swedish REDD+ efforts should mainly be oriented towards measures, which con-tribute to reduced poverty and improved management of natural resources.

» Sweden should focus on bilateral initiatives with a high degree of transparency in countries where Swedish support has the potential to make a difference.

» Sweden should conduct activities in countries where there does exist cooperation and a good understanding of the situation in the recipient country, thereby ensuring good conditions for effective interventions.

108 Government of Sweden: Policy for Global Development – A fairer world without poverty, SOU 201:96, 2006. Emphasis added

109 Oljekommissionen, final report

The author at COP17 with a position often taken by Swedish development organizations.

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» Sweden should not favor financing existing REDD+ pilot programmes (for example UN-REDD, FCPF or FIP) nor contribute to special purpose REDD+ funds.

» Sweden should focus on the so-called phase one within REDD+ (capacity and com-petence building, improved systems for land rights, forest monitoring and sustain-able land use).

It is suggested that Sweden has comparative advantages in relation to capacity/com-petence building; goal-oriented public sector reform; enabling conditions for industry and well-functioning markets; development of systems for clear land rights (for ex-ample within community forestry and forest people’s rights); forest and environmental monitoring as well as all that is implied in the + in REDD+, such as rehabilitation of degraded lands, natural resource management, sustainable production of ecosystem services, sustainable forest management and landscape perspectives.110

In recent years, Sweden has emphasized how good behaviour from Swedish companies can give good business. “Swedish companies employ CSR practices in Eastern Africa, which gives us a considerable advantage over others,” said development minister Gu-nilla Carlsson. “We would like to make Sweden a good example of how we can invest in sustainable forestry. We can assist you [Sub-Saharan Africa/Tanzania] in gaining ac-cess in possible ventures in rural areas, where the best way is to involve the local, rural population in the project design.”111

Not all agree that Sweden’s forest management is sustainably managed. The Swedish Society for Nature Conservation has repeatedly criticized several of the major forestry companies for failing to live up to high environmental standards, sometimes claiming that the management violates Swedish legislation. In December 2011, National Geo-graphic published a large article with the headline “Sweden’s good reputation hides unsustainable forestry,” claiming that the voluntary environment management schemes are not working, and that the FSC (Forest Stewardship Council) does not live up to its reputation.112

110 Biddulph, Robin; Ekbom, Anders; Hellmark, Ida and Westholm, Lisa: REDD+ AND TENURE: A Review of the Latest Developments in Research, Implementation and Debate. Focali report 2011:02

111 Speech given on the ocasion of Tanzania’s vice-president visiting Sweden, 27th of September 2011, personal notes

112 http://miljoaktuellt.idg.se/2.1845/1.426120/sveriges-goda-rykte-doljer-ett-ohallbart-skogsbrukTaking away Africa’s resources – or increasing Africa’s wealth? The answer may lie in how the investment is done.

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References Many people have contributed with their invaluable insight. We thank them all and would especially like to mention the following, with our sincere apologies for anyone forgotten.

PeopleAddax (Sierra Leone): Derek Higgo, Jörgen Sandström, Andrew Turay

Agenda for Environment and Responsible Development: Silvani Mng’anya

Agricane: Nick Ireland-Jones

AWF (Kenya): Kathleen Fitzgerald

Bassa NGO Network (Liberia): Peter Johnson

Buchanan Renewables (Liberia): Alexandra Baillie, Dave Darlow, Liisa Kiviloog, Morris Neasain, Gerald Ray, Benson Whea

CASDA (Kenya): Yvonne Anyango

Conservation Society of Sierra Leone: Edward Aruma, Sama Monde

EcoEnergy: Arvind Puri

EU Delegation (Liberia): Carlos Battaglini Manrique de Lara

EU VPA (Liberia): Anna Halton

FAO (Sierra Leone): Lidia Martínez Francés

Farmbuilders(Liberia): Bill Massaquoi, Isaac Smith

Fauna and Flora International(Liberia and international): Josh Kempinski, Richard Sambolah, Harold Smith

Forest Development Authority: Theo Freeman, Myer K. Jargbah, Edward Kamara, Moses Wogbeh

Global Utmaning, Elin Ewers, Kristina Persson

Green Advocates (Lib): Alfred Brownell, Francis C Kolee

Green Africa Foundation: Isaac Kalua

HSHC (Kenya): Nastuon Karaya, Peter Njenga, Benjamin Wanjohi

Institution for Democratic Governance and Development (Liberia): Violia Beaie, Samuel Yurkpawolo

KSLA: Åke Barklund m.fl.

Liberia Chainsaw and Timber Dealers Union: Arthur Karngbeae

LEITI (Liberia): Sam Tokpah

LRF: Lennart Axel

Madam (Sierra Leone): Mohamed Conte

Metria: Tobias Edman

Orgut: Håkan Sjöholm

Renetech: David Bauner, Tom Walsh

Samfu (Liberia): Abraham Collie, Maria Bomgard

SEI/Siani: David Bauner, Francis Johnson, Melinda Sundell

Sida: Gun Eriksson Skoog, Tove Goldmann, Bo Göransson, Kerstin Jonsson Cisse, Nicholas Ngece, Gisela Strand, Maria Stridsman, Mats Åberg, Johan Åkerblom

Secretariat for International Forestry Issues (SIFI): Fredrik Ingemarson

Skills and Agricultural Development Services (Liberia): Peter Mulbah

SLIEPA (Liberia): Victor Bangura and Raymond K. Gbekie

SLU: Susanna von Walter

Sustainable Development Institute (Liberia): Jonathan Yiah

Sveaskog: Roger B Johansson

Svensk skogscertifiering: Klas Bengtsson

Swedish Embassy, Monrovia: Jallah Kennedy

Södra: Göran Orlander

UN (Lib): Paolo Nastasi

University of Toronto: :Mark Purdon, export on CDM and afforestation in Sub-Saharan Africa

Vattenfall: Annika Andersson, Erik Brandsma, Michelle von Gyllenpalm, Catharina Ringborn

WWF: Olle Forshed, Peter Roberntz

Chris Rhodes, Sam Ricks, Conny Rudin, Tove Strauss

Seminars etcCommunicating REDD+, 27th, Jan, 2012

EU FLEGT VPA coordination meeting, 26th Jan, 2012

UN COP 17: A large number of seminars on forestry, REDD etc (supplied on demand)

Forestry Day, 4th of December, 2011, Durban, South Africa

Self-organized seminars, workshops and meetings in all countries covered by this report

Litterature Accra Caucus on Forests and Climate Change: Is REDD-readiness taking us in the right direction?; 2011

Beall, Elizabeth & Rossi, Andrea: Good Socio-Economic Practices in Modern Bioenergy Production, FAO 2012

Biddulph, Robin; Ekbom, Anders; Hellmark, Ida and Westholm, Lisa: REDD+ and tenure: A Review of the Latest Developments in Research, Implementation and Debate

Bread for all: Land Grabbing: the Dark Side of ‘sustainable’ Investments, 2011

Butcher, Tim: Chasing the Devil, 2010?

CIFOR: No farmer left behind in sustainable biofuel production, 2011

Cossalter & Pye-Smith: Fast-Wood Forestry, Myths and Realities”, CIFOR, 2003

DeSchryve, Alison Paul and John Johnson: EITI Guide for Legislators, Revenue Watch International, 2009

Goldwyn, David L. (ed): Drilling Down: The Civil Society Guide to Extractive Industry Revenues and the EITI, Revenue Watch International, 2009

FAO: African forestry and wildlife commission: The importance of governance and benefit sharing, 2012

FAO: Reforming Forest Tenure, 2011

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FERN: Forest governance in Liberia – an NGO perspective, 2008

Focali report 2011:02

Global Witness: Forest carbon, cash &crime, 2011

Government of Sweden: Policy for Global Development – A fairer world without poverty, SOU 201:96, 2002

Green Advocates: The Good, the Bad and the Ugly: Lessons learned from the implementation of the extractive industries transparency initiative in Liberia, 2006-2011 (web)

van Hensbergen H.J; Bengtsson, Klas; Miranda, Maria-Ines; Dumas, Isabel: Poverty and Forest Certification, 2012

Hindawi: Participatory Forest Carbon Assessment And REDD+: Learning From Tanzania, 2011

IFPRI: Strategies for Adapting to Climate Change in Rural Sub-Sahara Africa, 2010

IUCN: Aspects of community involvement in sustainable forest management in Eastern and South Africa, 2011

LEITI: Incentivizing EITI Compliant Countries: the Case of Liberia, 2011

von Maltitz, G.; Staffor, W: Assessing Opportunities and Constraints for Biofuel Development in sub-Saharan Africa, CIFOR, 2011

Matondi, Prosper B; Havnevik, Kjell and Beyene, Atakilte: Biofuels, Land Grabbing and Food Security in Africa, 2011

Mukama, Kusaga; Mustalahti, Irmeli and Zahabu, Eliakimu: Participatory Forest Carbon Assessment and REDD+: Learning from Tanzania, 2011

Munden Project: REDD and Forest carbon: Market-based critique and recommendations, 2011

Oakland Institute: Understanding Land Investment Deals in Africa. Country Report Sierra Leone, 2011

Pangea: Land Grab Refocus. Roots and Possible Demise of Land Grabbing, 2011

Persson, Reidar: Increased forest production in the South – threat or opportunity?, Swedish FAO Committee, Publication series 3, 2009

van der Plas, Robert J.: Biomass Issues in Liberia, 2011

Publish What You Pay and Revenue Watch Institute, Eye on EITI: Civil Society Perspectives and Recommendations on the Extractive Industries Transparency Initiative, 2006

Skogforsk: Efficient forest fuel supply systems, 2011Skogforsk: Efficient forest fuel supply systems, 2011

Tesfaye, Yemiru: Participatory forest management for sustainable livelihoods in the Bale Mountains, Southern Ethiopia, 2011

Thiel, Anne and Hawkins, Slayde: Ghana Builds REDD Regulatory Regime, 2011

UN Panel of Experts report on Liberia, 2011

World Agroforestry Center: Rich Rewards for Rubber? 2011

World Resources Institute: Decision Marking in a Changing Climate,Adaptation Challenges and choices, 2011

Worldrescources Report: Case Study Forest Management South Africa, 2011

WWF: Living Planet, 2011

WWF: Protecting forests and alleviating poverty in Central Africa, 2012

Project partners

Sveaskog

Sveaskog is Sweden’s largest forest company, owned by the state. Approximately 15% of its annual net sales are from biomass for energy and non-timber services such as windfarm leases and hunting and fishing licenses. In 20 years, this is expected to have doubled.

One fifth of its land is managed for conservation and promotion of biodiversity. The company is experimenting with ways to maximize carbon uptake through different for-est management measures and plans to sell the additional uptake to carbon markets.

The company chairman, former prime minister Göran Persson, together with Janet Ranganathan of World Resources Institute, recently launched a vision of sustainable forestry, which “is being propelled by new markets that are emerging for forest services such as carbon storage, wildlife preservation, recreational facilities and watershed pro-tection.” This trend is creating huge business opportunities for forest companies with the foresight to reinvent themselves and look beyond the traditional equation of forests equal timber. Forest companies of the future will expand their business model beyond delivering products to providing an array of crucial services to communities. Timber revenue will still be important, but successful companies will have supplemented their income from the fast-growing new markets that emerge from the increasing scarcity of ecosystem services. Why should forest management companies diverge from a seem-ingly successful business strategy to follow the services route? For the reason CEOs like best – it makes good business sense.” 113

Södra

More than 51,000 forest owners in southern Sweden are members of the economic as-sociation that is Södra. They own just over half of all privately owned forest in the area, as well as a group of companies that are successful in both Swedish and international markets.

Södra is also a large employer. 4,000 people work for the Group, in areas that range from forestry management and environmental conservation to accounting, sales and product development. The Group’s four business areas produce sawn and planed timber goods,

113 http://www.guardian.co.uk/sustainable-business/blog/forest-companies-sustainable-future

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interior products, paper pulp and biofuel. In recent years Södra has also become such a large producer of electricity that the Group now produces more electricity than it uses.

Long-term growth is the objective of Södra’s members. This far-sightedness not only applies to growth in our own forests but also in our own industries. The fact that Södra is an economic association also means that it is the members who, together, decide on the direction Södra takes. It is a democratic organization in which each member has a voice. The basis of the economic association is the 31 forestry areas. Each year, annual meetings are held where elected representatives are chosen to be the link between members and the central level, the assembly and the board.

There is no such thing as a typical member of Södra. Södra includes young and old people and men and women on large and small estates. On the other hand, the mem-bership corps is changing character. More and more members are resident in another area, which means that they do not live on their estates all year round. Södra will pro-mote the profitability of its members’ forest operations by:

» trading, developing and processing raw materials from forests » developing and marketing processed forest products » conducting an active industrial policy » providing felling services and other forest services

Södra’s strategy has an international sales focus, with productivity improvement and bioenergy as increasingly important elements of Södra’s business. Recent years have seen a heavy investment in product development, particularly on the environmental side, including making Södra’s Värö mill the world’s first fossil-fuel-free pulp mill.

Södra Skogsenergi has sold fuel products from the forest for 25 years. Deliveries have steadily increased, but more use can be made of the forest. Södra Skogsenergi sup-plies mainly to large customers, thermal power stations, combined power and heating plants, as well as industry and pellet factories. Private individuals can now use pellets to heat their homes.Södra is now Sweden’s leading producer of green electricity from biofuel with an annual production of 1.5 Twh.

Södra currently does not have any operations in Africa, but the way Södra organizes several thousand forest owners, including many small-scale owners, is of great interest to the SSA community, and Södra may in the future find it relevant to invest in SSA bioenergy production.

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Global Utmaning Birger Jarlsgatan 27 111 45 Stockholm Sweden. Telefon 08–787 21 50 www.globalutmaning.se

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