British International Investment

African Forestry Impact Platform

UgandaAfricaEast AfricaFood & Agriculture

We co-developed the African Forestry Impact Platform (AFIP) with New Forests Pty Ltd, as a vehicle to invest in forestry assets in sub-Saharan Africa. It is managed by New Forests.

Our investment

Description of the investment.

We anchored the African Forestry Impact Platform (AFIP) with a $75 million commitment, alongside two other development finance institutions, Finnfund and Norfund, who committed $48 million and $76 million, respectively. AFIP closed in 2023 at c. $200 million. This allowed it to simultaneously complete its first acquisition: Green Resources AS (GRAS), East Africa’s largest forestry development and wood processing company with total landholding of 171,166 hectares.

Our partnership with AFIP will contribute to our productive, sustainable and inclusive objectives through leveraging the forestry sector as a nature-based climate solution, protecting and restoring natural capital while creating economic opportunities for mostly rural and low-income populations. In the long term, the platform could help to build a sustainable forestry asset class by developing a track record and attracting further investment. Our capital and support was crucial to the launch of AFIP, and our involvement in anchoring AFIP will help bring both institutional and impact-seeking co-investors alongside BII into the vehicle and into Africa.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Support climate change mitigation, adaptation and resilience (13.A)
  • Protect and restore forest landscapes, biodiversity & ecosystems (15.1, 15.2)
  • Create economic opportunities (8.5) and contribute to sustainable economic growth (8.2, 8.4)

How?

Primary Secondary
  • Direct: (1) carbon sequestration through tree growth; (2) avoided emissions through protecting natural forests and providing an alternative source of timber.
  • Direct: adoption of high environmental standards and a landscape-based investment approach which will maximise positive environmental externalities in and around plantations and natural forestry concessions.
  • Direct: through (1) job creation on plantations and in wood processing facilities; (2) improving community livelihoods, e.g. throughout grower schemes and agroforestry projects
  • Catalysing markets: We will partner with an experienced global forestry asset manager to launch a permanent capital vehicle which will better align the capital required with the long-term nature and return profile of forestry assets. A positive commercial track record would in the medium term (5-10 years) attract more investors to the sector and in the long-term (10-20+ years) help to build a sustainable forestry asset class in our markets.

Who?

Stakeholder Geography Characteristics
Planet

Globally

Between 2001-19, a total of 187 gigatonnes of carbon dioxide was released into the atmosphere as a result of tree cover loss in Africa (equivalent to 9.86 gigatonnes of carbon dioxide per annum).

Forests and ecosystems

Sub-Saharan Africa

Africa had the highest net loss of forest area between 2010-20, of 3.94 million hectares per annum.

Employees, communities

Sub-Saharan Africa

Majority of jobs will be low/semi-skilled (target of 80 per cent of portfolio companies 2X-qualified via leadership/employment). Communities are mostly rural, low-income and rely on subsistence agriculture.

How much?

Scale Depth/Duration

Expected to be high due to the labour-intensity of forestry. For example, Green Resources AS employs 1,798 people (including 1,264 contractors).

  • Impact will be long-term (>10 years)
  • Impact is expected to be deep. Based on the portfolio included in the business plan (without a natural forestry concession) New Forests estimates 3.41 million tonnes of carbon dioxide equivalent (tCO2e) will be sequestered over 14 years. This could be further increased if a natural forestry concession is included. Carbon is one of the metrics captured in the impact targets.
  • Impact is expected to be deep in terms of increasing and maintaining hectares categorised as under ‘quality habitat’ protection and restoration in or adjacent to AFIP land.
  • Impact is expected to be deep due to the characteristics of populations reached. AFIP will complete stakeholder surveys for investments to better understand the characteristics and action plans to improve stakeholder outcomes.

Contribution/additionality

Contribution/additionality
  • Financial: Commercial capital is not available, particularly for first close (which will be DFI-funded). We have played a key role in the development and seeding of this permanent capital vehicle, which has the ultimate objective of attracting private investment.
  • Value-add: We bring our Africa expertise, as well as experience in E&S management systems, impact incentive engagement, climate support and gender and diversity support.
  • Mobilisation: Our involvement in seeding AFIP will help bring both institutional and impact-seeking co-investors alongside BII into the vehicle and into Africa (potentially for the first time).

Impact score

Impact score (at point of investment)

The Impact Score is a tool to help us manage our performance against our strategic impact objectives. It is designed to incentivise investments that support our productive, sustainable, and inclusive objectives. You can find out more here.

The Impact Score is published for investments made from 2022 onwards. The Impact Scores are calculated at the point of investment. We publish the Impact Scores of new investments annually, once the information has been externally assured by an independent third party.

10

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We agreed an extensive ESAP with the fund manager which included hiring an E&S team, training, developing an ESMS, developing a land acquisition policy, grievance management and setting up an environmental and social oversight committee with external experts.

Environmental and social risk

High

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    First published

    When the investment was first published on the website database.

    :
    July 2023
    Last updated

    When the last quarterly update of the website database occurred.

    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D4595
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    Africa, East Africa
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Food & Agriculture

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Fund
    Start date :
    January 2023
    Amount :
    $75m
    Currency of investment :
    USD
    Fund Manager:
    New Forests Advisory Pty Ltd
    Domicile

    The company or investment fund’s place of incorporation.

    :
    Singapore
    Climate finance

    Indicates whether the investment is climate finance qualified or partially climate finance qualified and the type of climate finance (adaptation, mitigation or both). We define climate finance using the multilateral development bank (MDB) and the International Development Finance Club (IDFC) Common Principles climate finance methodology. See Common Principles for Climate Mitigation Finance Tracking and Common Principles for Climate Change Adaptation Finance Tracking. We provide the climate finance qualification and type for commitments from 2020 onwards, which is when we launched our Climate Change Strategy.

    :
    Fully qualified
    Climate finance type:
    Mitigation
    2X Gender Finance

    Indicates whether the investment is ‘2X qualified’ using the 2X Challenge criteria. You can find out more here. It only applies to investments made from 2018 onwards, when the 2X Challenge was first launched.

    :
    Fully qualified

Investments made by this fund into companies:

For further information about these companies, visit https://newforests.com/

Investment name Country Region Sector Start date Status
Green Resources AS Mozambique, Tanzania, Uganda East Africa Food & Agriculture January 2023 Active

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