Indufor is Assessing Impacts of Finnfund Investments in Sustainable Forestry in Eastern Africa

June 14, 2019

To understand the development impacts of its forestry portfolio better, Finnfund, the Finnish Fund for Industrial Cooperation Ltd., has commissioned Indufor to study some of its forestry investments in Eastern Africa. Finnfund provides long term risk capital for private investors in developing countries. Being a development finance institution and an impact investor, Finnfund’s investment criteria include not only profitability, but also sustainability and positive development impacts.

Sustainable forestry including commercial plantations and related industries is a strategic priority sector for Finnfund. Its forestry investments have more than doubled since 2001, now standing at close to EUR 100 million. A significant part of Finnfund’s forestry portfolio is located in Eastern Africa.

Developing the forest sector and the local economy

The study is looking into the importance of the portfolio from an industry production and trade perspective. It is focusing on the role of the investment in developing both the forest sector and the local economy. Given the importance of forestry in combatting climate change and the re-emerging discussions on reforestation of Africa, the study is also looking at the contribution of the investments in increasing the forest cover in the countries included in the study, i.e. Tanzania, Uganda and Rwanda.

In eastern Africa, the forest industry is an important driver in the development of the overall forest sector. While focusing on the forest industry companies included in Finnfund’s portfolio, we are also looking at other forest industries, to compare the company performance and the quality and prices of sawn timber and utility poles. A working hypothesis is that Finnfund, supporting responsible investment, will be in the forefront when it comes to forest sector development.

forest industries
A sawmill supported by Finnfund investments (left) and a portable sawmill representing one of the more advanced SMEs in Uganda (right).

The forest industries are an integrated part of the society in which they operate. For example, they provide employment, pay taxes, implement outgrower schemes, carry out social responsibility programs and procure various goods and services. In our study we will assess the role of the companies in Finnfund’s portfolio and estimate their role and contribution to the local economies.

treegrowers outgrowers social risk management tree seedlings
Tree growers benefit from outgrower schemes in form of quality seedlings, advice on woodlot management as well as access to markets. Outgrower schemes are one of the interventions whereby forest industries in Finnfund portfolio have an impact on the local economy.

Indufor is a global leader in Natural Resources Management, Investment Advisory, and Strategic Industrial Development consulting. We support our customers to compete and sustainably grow in international markets. Indufor has offices in Finland, New Zealand, Australia and the United States, and representation in China. We have close to 40 years of experience in more than 100 countries. Our services support our clients to make the world more sustainable and greener.

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Thomas Selänniemi

Head of Sustainability Consulting

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