Description

A forestry business based in Kenya whose mission is to move small-scale farmers out of poverty. SFV is an instrument that packages tree production partnership contracts with thousands of smallholder farmers and sells them to investors, providing farmers and forestry companies with access to low-cost, long-term finance while enabling institutional investors to access sustainable forestry investments. SFV is the only investment mechanism that enables private investors to invest in smallholder forestry in Africa, while also reducing capital costs for forestry companies that provide technical support and market linkages to smallholders.

SFV reduces transaction costs for investors and reduces some risks of plantation forestry. By segregating the risks of the individual tree assets from those of an operating company, SFV can achieve a lower cost of capital while attracting a broader diversity of investors to participate than the operating company could achieve through traditional balance sheet finance.

Stage of Implementation

The instrument is in fundraising/pre-pilot stage. As of July 2020, Komaza had planted over 6 million trees and partnered with 25,000 farmers across Kenya. It raised a USD 28 million Series B round, with funding from Novastar Ventures, Novastar LPs AXA Investment Managers (through the AXA Impact Fund: Climate & Biodiversity), FMO and Mirova’s Land Degradation Neutrality Fund.

Actors Involved

• Farmers: Farmers provide the land, labor, and security and manage the planting and harvesting of the wood, which is then sold to the company (Komaza).
• Community leaders: Community leaders confirms that farmers have the right to use the land for the purposes planned.
• Impact investors: Komaza has received funding from numerous impact investors including Conservation International to fund (via concessional debt) their initial lending activities and carry out the proof of concept.
• Philanthropies: Komaza has received grant funding from philanthropies including Ashoka and Kiva for technical assistance to develop a software platform and develop a system for tracking impact.

Criteria

SFV is based on funding to and contracts with individual farmers. As such, the policy and enabling requirements at the country level are minimal.

Applicable Countries

Komaza is currently based on the coast of Kenya. The instrument would be applicable in any setting where forest preservation and restoration are needed. Potential target markets for expansion include Ethiopia, Mozambique, Rwanda, Tanzania, and Uganda.