Lessons from last 30 years of commercial forestry investments #2

In Sub-Saharan Africa, sustainable planted forests can play a critical role in economic development and environmental recovery. But the last 30 years of commercial forestry investment in the region has been challenging.

In our new study with Gatsby Africa, we analysed investment transactions using Criterion Africa Partners proprietary data from the last 30 years to better understand the drivers of this underperformance and highlight key opportunities for the next generation of investors, development actors and governments. Some of these include:

👉 A deeper focus on industrialisation, with more processing investments linked to clear offtake markets. From recognising significant patient and concessional finance, to recruiting experienced operators, to deepening access to higher value international markets (using ESG compliance as a differentiator), greenfield investors can play a key role in accelerating the industrialisation of the sector.

👉 Create opportunities for smallholders to play a meaningful role in the value chain. Accessing diversified whole tree markets, for example, will play a crucial role in the development of smallholder production systems, enabling smallholders to sell the majority, if not all, of the tree.

👉 Realise the potential presented by carbon finance and to drive the competitiveness of forestry investments. Supporting access to carbon finance can subsidise 20% or more of the total greenfield investment costs and fund most smallholder establishment costs. Developing new carbon methodologies could also play a crucial role in unlocking downstream market opportunities.

To unlock the next phase of growth, industrial processing is critical, as well as securing regional and international offtake markets. But with the right investments and focus, this has the potential to drive economic transformation across the entire sector.