AfDB Approves USD 14 Million for Its First Private Sector Direct Investment in Restoration of Degraded Forests Through Sustainable Forest Plantations in Ghana

18 July 2016
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African Development Bank (Abidjan)

The Board of Directors of the African Development Bank Group (AfDB) on July 13, 2016 approved a USD 14 million senior loan through its private sector window to Form Ghana Ltd for restoration of degraded forest reserves through sustainably managed forest plantations. The Board decision supports the Bank's contribution to inclusive and green growth, and its commitment to providing and leveraging well-placed finance for climate resilience. This will enhance the Banks' existing channels of support to the sector which include indirect interventions through the private sector window such as capital participation in specialized Funds focusing on Forestry. It will also contribute to responding to the country needs and implementation of the High-5s.

African countries have experienced the world's most extreme land degradation through deforestation and this is seriously impacting Africa's economic development, and compromising the continent's resilience to climate change. Forestry is historically and currently a critical sector for Ghana, supporting the livelihood of a significant part of its population but Ghana's forest resources have over the last decades been depleted at an alarming rate. Sustainable forest management is therefore important to curb this trend and keep Ghana on the path to green growth. The sector requires long term funding but currently attracts very limited private sector financing due mainly to perceived high risk and the nature of the financial market.

AfDB Director for Private Sector Department, Kodeidja Diallo, stated that this project is the Bank's first direct intervention in forestry through the private sector window and will serve as a pilot in setting the pace for engaging the Private Sector in Sustainable forest plantation management. The concept is replicable and demonstrates how a close collaboration between the public and private sectors can contribute in transforming the future outlook for private sector participation in this vital sector of the economy". The Bank is also mobilising blended funding to support the financing of this project.

Reacting to the Board Approval and on behalf of the project sponsors, Paul Hol, Executive Director of Form International, stated that "this is a breakthrough for private investments in forestry on the continent. I believe that this project and collaboration between AfDB and Form Ghana Ltd can be a very important step to enable the expansion of large scale reforestation and landscape restoration projects in Africa. In this way it can be an important front running project for the African Forest Landscape Restoration Initiative (AFR100) from the World Resources Institute (WRI) and NEPAD which aims at restoring 100 million ha of land in Africa by the year 2030".

The Form Ghana reforestation project will establish a forest plantation in areas that used to be productive semi-deciduous forest reserves but that were, over the last decades severely degraded. The plantation holds the Forest Stewardship Council (FSC) certification which is a globally recognised stamp of approval for compliance with the highest standards of practice in sustainable forest management and its reforestation activities have been independently validated under the Verified Carbon Standard (VCS) which confirms the company's contributions to climate change mitigation. The project will contribute to enhancing Ghana's climate resilience by addressing degradation while protecting livelihoods, creating jobs, and contributing to socioeconomic development.

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