AfDB Approves USD 20 Million Private Sector Equity Investment in Africa Forestry Fund
Tunis, 20 October 2010 - The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, 20 October 2010 in Tunis, a USD 20 million equity investment in the Global Environment Fund (GEF) Africa Forestry Fund. The Fund is a second generation facility which focuses on sustainable forestry as a private sector approach to protecting global forest areas while delivering profit to its investors, employees and surrounding communities.
The GEF Africa Forestry Fund is designed to invest in forestry and forestry-related companies in Sub-Saharan Africa, including Greenfield and existing plantations, in activities such as forest products processing and manufacturing, biomass co-generation facilities and natural resource management.
By supporting the Fund, the Bank will pursue its ongoing strategy of collaborating with key development partners to make more resources available for the sustainable development of Africa’s forestry sector and contributing positively to climate change mitigation, an area receiving increased attention from the Bank and other development partners.
Recognizing the private sector as the engine of growth, the GEF fund is deploying capital to the forestry and natural resource sub-sectors in countries where there is strong growth potential and a conducive environment for private sector development. Attracting capital will support local companies in raising adequate equity capital that would enable them to attract further debt financing from other financial institutions.
The Fund is well aligned with several of the Bank’s country strategy papers designed to promote rural development, including the forestry and natural resource sector, as well as with the Bank’s 2010-2014 agriculture and agro-industry strategy, which identifies natural resource management as an important area for Bank support.
From a socio-economic perspective, the investment will contribute positively to poverty reduction efforts, private sector development and skills transfer. GEF Africa will result in new job creation diversified from planting, pruning and harvesting to marketing, management and community work. It is estimated that one-third of such new jobs, will go to women. Moreover, companies receiving investment will provide housing, water, health and education services for employees, their families and their communities.
Going forward, the enhancement of sustainable forestry, agriculture and rural development is fundamental to the attainment of the Millennium Development Goals (MDGs) in Africa, particularly the eradication of hunger and poverty.