“Why invest into forest value chain? How to do it? What are the challenges? What are the outcomes that we are looking for?” asked Christina Ehlert, head of programmes agriculture and forestry value chains at Ada Microfinance, setting the scene for a discussion during European Microfinance Week 2023. She suggested that wood lots not only help on climate change mitigation but also on climate change adaptation and resilience of small-scale producers.
Ehlert explained that Ada establishes partnerships with microfinance institutions and value chain stakeholders such as technical centres or incubators for the benefits of “communities or cooperatives or producers.”
It is a [credit] product which contribute[s] to the environmental protection or the restoration of the biodiversity
As part of the geographical scope of its programme, Ada invited one partner based in Rwanda and one operating in Central America on the panel to join Ehlert.
As the video connection with Rwanda was poor, Delano followed up with Ehlert to better understand the role of Inkunga Finance PLC in Rwanda.
Financing forest in Rwanda
As western Rwanda is heavily impacted by landslides due to deforestation and the impacts of climate change--130 people died in flash floods in spring 2023--Ehlert explained that Inkunga Finance, a microfinance institution, promotes afforestation (the action of planting trees on land to create a new forest), landscape restoration and climate adaptation to their clients.
After having assessed the market needs and opportunities to invest in afforestation, Ehlert commented that Inkunga Finance “developed new financial products (credits) for planting wood lots, forest management and for wood stock acquisition” that are responding to the financing needs of landowners and small businesses.
“It is a [credit] product which contribute[s] to the environmental protection or the restoration of the biodiversity,” said Claudien Nsengimana, managing director at Inkunga Finance, during the conference.
Inkunga Finance expressed the wish to scale up their offerings after having already funded 30 companies. As part of its forestry value chain programme, Ehlert noted that Ada collaborates with Inkunga Finance to enhance its offering in terms of “agroforestry finance but also providing training on forest management so that their clients improve their production systems.”
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .