guatemala - progressive forest governance in support of small- and medium-sized enterprises (smes)

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[email protected] 1 Anna Bolin December 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 2 nd level and 400 1 st level organisation 17.5% of Guatemala’s forest cover, 30% certified

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Page 1: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (SMEs)

[email protected] 1

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

Page 2: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (SMEs)

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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

Page 3: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (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

Page 4: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (SMEs)

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Anna BolinDecember 8th, 2016

Fedecovera: social business and financial service provider

Page 5: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (SMEs)

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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

Page 6: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (SMEs)

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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?

Page 7: Guatemala - progressive forest governance in support of small- and medium-sized enterprises (SMEs)

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Anna BolinDecember 8th, 2016

Author nameDateAnna BolinDecember 8th, 2016

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Thank you!