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Breakthrough Climate Financing for Dutch Company in Ghana
“Form Ghana reforestation project secures major African Development Bank funding”
For the AfDB the USD24 million loan to the Form Ghana project represents the first Private Sector direct investment in restoration of degraded forests, and the first Forest Investment Program (FIP) private sector project in Africa. Reforestation company Form Ghana is initiator of the project, supported by the Dutch company Form International. It will use the loan in the restoration and extension of the area of sustainably managed forest. In about 10 years’ time, this reforestation project will provide timber, and with the timber revenues the loan will be paid off.
The project is seen as an important step in achieving the Climate Goals, to which the Ghanaian government has committed. Part of the investment is 'concessional loan' from the Climate Investment Funds’ Forest Investment Program (CIF FIP) and this is complemented with AfDB co-financing.
Form Ghana already manages over 20,000 hectares of degraded land in the Ashanti and Brong Ahafo region of the country, of which about 8,000 hectares has already been replanted since 2007. Form has agreed a Public Private Partnership with traditional landowners and the Forestry Commission of Ghana. This is very important to achieve a balanced stakeholder framework between the company, local people and the government.
Form Ghana has held the FSC® certificate for sustainable forest management since 2010 and is supported in reforestation and management by Form International. As a ‘Forest Asset Manager’, Form International takes technical and management responsibility for the Ghana project. The vision of both companies is that restoration of degraded land is only feasible when based on highest standards of sustainable management, where ecological, social and economic components are developed simultaneously. It is a unique concept that provides the opportunity to invest in new forests in a sustainable way.
Besides facilitating continued harvest of the commercial teak species Tectona grandis to make the project financially viable, it will also see native species planted for nature conservation purposes, especially along creeks and waterways, and for soil protection. These species will not be harvested and most of the work will be carried out by 1,000 local employees trained in planting skills.
With the loan the project will be expanded with new plantings, to 11,700 hectares. This will be managed to FSC® criteria and the Verified Carbon Standard (VCS). The FSC® certificate gives investors the guarantee the project will be implemented sustainably, achieving positive long-term effects, for local inhabitants and their natural environment. The VCS measures CO2 captivation and awards carbon credits. It is calculated this project will capture about 2.8 million tons of CO2 within 40 years.
Investing in sustainable forest- and landscape restoration is seen as the key to solving climate problems. All parties involved hope that this project will serve as a convincing and inspiring example, that will attract more investors.