Small and Medium Forest Enterprise (SMFE) Development

A mechanism for sustainable forest management and fostering wealth

at the local level

Sophie Grouwels, Yaoundé, May 2009

Outline presentation• context & definition SFE/CBFE• the CBED program of FAO: overview

activities• Facilitation of an enabling environment for

SMFE – Forest Connect Alliance

The development context• Millennium Development Goals: reduce

global poverty and ensure environmental sustainability by 2015

• High stakes in forest communities: poverty more pervasive and deeper and importance of protecting natural resources

• Development of small and medium forest enterprises (SMFEs): opportunity for strengthening forest-based livelihoods and conserving the natural resource base

Definition SFE?

DefinitionAn enterprise can be defined as an entity - without

thinking of its legal form - that executes an economic activity. The activities done by an individual, family or an association with an economic concern can therefore be considered as an enterprise. The key factor is the economic activity and not the legal form. We understand under “economic activity” all activities that are aiming to produce income. (EC)

Une entreprise peut être définie comme une entité, indépendamment de sa forme juridique, exerçant une activité économique. Les activités exercées àtitre individuel, familial ou associatif avec une préoccupation économique peuvent donc être considérés comme des entreprises. Le facteur déterminant est l’activité économique et non la forme juridique. Par activitééconomique il faut entendre toute activité destinée à produire des revenus (Communautés Européennes, 2006)

FAO’s Community-Based Forest Enterprise Development (CBED) program

Part of FAO’s support to Participatory Forestry:

The focus is on people centered, sustainable NRM

Community-Based Forest Enterprise Development (CBED) program

CBED Program aims to facilitate support to local people in developing income generating enterprises while conserving tree and forest resources in:

– Areas where Poverty Alleviation & Natural Resource management are priorities and supported by adequate frameworks

– Areas where natural resource-dependent populations are in need of alternative sources of income

HOW are we doing this?• Support capacity building to all stakeholders

to enhance better understanding of SMFE -on request (using MA&D training approach)

• Stimulate the ongoing discussion on the need for an enabling environment for SMFE (Conferences, publications, studies,...);

• Support inter-institutional information sharing and in- and cross-country networking on SMFE (such as FC);

CBED program

Linking small forest enterprises to each other, to markets, service providers and policy processes

Facilitating an Enabling Environment for Small Forest Enterprises

New diagnostics

60%3%82%50%43%75%REVENUE as % of total

60%25%97%75%50%49-70%EMPLOYEES as % of total

-33-95%87-98%93%87%>98%.NUMBER as % of total

UgandaS. Af.IndiaGuyanaChinaBrazil

New / useful approachesFAO MA&D approachExamples in Mali, Burkina Faso,

Ghana, RD Congo, Uganda, The Gambia, Colombia, Laos, ,...

Central problem for small forest enterprisesIsolation from:• each other• markets and market information• providers of business

development services (BDS) and financial services (FS)

• policy and decision-makers that shape the business environment

Issues of geography, transport and communication infrastructure, informality, scale, staff capacity, language etc.

Lessons about success 1• Enabling environment – improve

institutional and legal framework: Regional Directives to improve management and commercialization of NWFP in COMIFAC countries with national adaptations for Cameroon and DR Congo; - securing resource rights through Community Forestry in the Gambia;

• Service providers –linking community enterprises to business development service providers to improve their management skills and their marketing strategies; ex. Ugandan Honey Association training bee farmers in order to improve the quality and packaging of the honey;

Lessons about success 2• Intelligence: Improve

bargaining power through accurate market Information e.g. NTFPs MIS in Southern Cameroon, through rural radios (Bush Mango + other products are adding on)

• Marketing – identifying niche markets like ‘Community Based and/or certified Fair Trade’. e.g. Ten Thousand Villages, a North American fair trade dealer welcomes this month its partners from Burkina Faso to celebrate Certified Fair Trade shea butter.

Lessons about failure 1

• Disabling environment –e.g. Cameroon: cumbersome access rights (need for permits) for economic use of NTFPs leading to illegality for micro entrepreneurs

• Isolated producers – e.g. DR Congo where community producers are disorganised, un-reached by financial services, and poorly linked to business service providers

Lessons about failure 2• Unsustainable sourcing – Guyanese

Amerindian small loggers associations responding to buyers rather than ecological capacity to supply.

• Low qualities and volumes – NTFPsavailable on markets tend to be of low quality (lack of standards)

• Poor marketing knowledge – Fumbwawholesalers market in Kinshasa: bundles are lying on the ground in mud which implies deterioration

• Inferior design – Cameroon's honey produced by rural entrepreneurs packaged in plastic bottles which are not closing properly and with labels falling of after purchase

Shifts in the search for solutions • From direct supply or intervention

relating to: – Provision of Financial Services (bank or group

loans, equity finance, insurance, leasing)– Provision of Business Development Services (ICT,

business training, bureaucratic advice, design and packaging, technology support, courier and delivery, networking, market info, advertising and trade fairs).

– Advocacy for policy change (business registration, forest resource allocation, management stipulations, transport rules, taxation, labour laws)

• To facilitation of a sustained increase in the above

– Provision of information about SMFEs and service providers, catalysing collective action, underwriting business linkage events, developing public-privatefora, training trainers etc.

A new support framework • Forest Connect is an alliance (nat. &

internat.) dedicated to action learning in support of SMFEs

• Institutional hubs/national SMFE support institutions and communication platforms now being established in Burkina Faso, China, Ethiopia, Ghana, Guatemala, Guyana, Laos, Mali, Mozambique, Nepal and RDC

• Diagnostics of SMFEs and their associations undertaken (or underway)

• Service providers being mapped within and outside forest sector

• Value chain analysis to identify bottlenecks

• Communication strategies set up

• Toolkit under development for the facilitation of support for small and medium forest enterprises

• International communication platform maintained

• Facilitating support to Forest Producers’ associations

• WFC October 09 : session on SMFE enabling environment + side event FC + SMFE business info exchange faire

some of the ongoing activities

For more information:

Website Forest Connect: http://forestconnect.ning.com/

Website community-based forest enterprises

http://www.fao.org/forestry/enterprises/en/

Contact person in FAO: sophie.grouwels@fao.org