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Anna BolinDecember 8th, 2016
Guatemala - progressive forest governance in support of SMEs
• National system for forestry incentives: PINFOR & PINPEP
• US$ >$ 300 million 20 years,
• 430,000 ha of natural forest and plantations established/managed, >1 million beneficiaries
• PROBOSQUE: US$ 625.7 million, 20,000 Jobs / year, 7.5 million farmers
• National alliance of forest communities – 10 2nd level and 400 1st level organisation 17.5% of Guatemala’s forest cover, 30% certified
Anna BolinDecember 8th, 2016
Forestry Incentives Programs
BANRURAL BAM (Banco
Agrícola Mercantil)
FEDECOVERA AND ASSOCIATED
COOPERATIVES
FIDOHSA Financiera de Occidente, Funding in key industries for sustainable development (specialising in forestry)
FORESCOM
Financial Fund to Promote Community
Forestry Development
Private Sector
National mechanisms (Funds from: BANRURAL, FIDOHSA, BID, CATIE FINNFOR II, Forestry Concessions, MICOOPE)
PINFOR (Forest producers with legal ownership of the
land) Forestry plantations Management of natural
forest for protection Management of natural
forest for production Started: 1996 End date: 2016
PROBOSQUE (Forest producers with legal
ownership of the land)
Forestry plantations Management of natural
forest for protection Management of natural
forest for production Agroforestry Systems
(includes silvopastoral systems)
Started: 2015 End date: 2045
PINPEP (Smallholders without
legally ownership of the land)
Forestry Plantations Agroforestry Systems Management of natural
forest for protection Management of Natural
forest production
Started: 2010 End date: 2030
Public Sector
Funds obtained from: 1% of the Annual Incomes Budget of the State of Guatemala, per incentive program
Main objective: to promote forestry and agroforestry activities related to sustainable management, protection and production
Options for forestry concessions MBR/options for working capital and investment
Options for plantations (implementation and harvesting)/options for working capital
MICOOPE (Forestry loan, Coban
Cooperative)
BANRURAL a) PINFOR loan
b) SME loan
Other mechanisms GuateCarbon
Financial mechanisms and options for forest SMEs
Sustainable SMEs
Capacities
Interests rate
Scale of investment
Rate of return
Repayment period
Grace period
Risk Management
Marketing, financial management, processing,
Diversification, development of working capital reserves, affiliation to apex organisations
5% up to 14%
Working capital for harvesting and processing, investment in machinery,
Depends. Forest Concessions returns high, plantations only at scale. High repayment rates at 93-100%
>5 years
>=1 years
Commercial banks
Financial management
Guarantees (person/assets), purchase orders, INAB certificate
Varies from region to region 10-18%
Varies. 60-100% of value of incentive/purchase order
2 months-7 years depending (e.g. working capital/machinery)
Public sector
Grants for 6-10 years
Guarantee funds, INAB technical assistance, registration of business (SEINEF)
PINFOR: approx. 33% covered by incentives grant (pine 2-5 ha, 20 yrs)
INAB & Municipalities: Intecap, business dvt services, roundtables,
n/a but likely to be >10%Mix of initial capital from MINECO, regional development banks, donors
1 year for PINFOR plant. 6 years for
Rubber (OCCIDENTE)
Letter from INAB verifying participation in incentives programme
Research and engagement on behalf of forestry SME’s
Anna BolinDecember 8th, 2016
Fedecovera: social business and financial service provider
Anna BolinDecember 8th, 2016
Findings: needs and priorities• Varies greatly from region to region
depending on main product and market
• Lower interest rates
• Financial management capacity key
• Diversification and value addition- e.g. processing, agroforestry, restauration and bioenergy (Probosque)
• Scaling up technical assistance and business support
• Collaboration between NGOs, banks and government effective in improving access
Anna BolinDecember 8th, 2016Findings: gaps
• Lack of financial options to investment in processing and value addition - what to do with all the plantation wood?
• Understanding of risk and risk aversion- what are the main needs and risks of SMEs and vice versa for FIs- establish more realistic expectations on commercial banks
• What are the most suitable forms of institutions and delivery mechanisms? Role of cooperatives in improving inclusive financial access and sustainability of SMEs? What about potential for scale?
Anna BolinDecember 8th, 2016
Author nameDateAnna BolinDecember 8th, 2016
Thank you!