Local initiatives create new opportunities for international investors
Millions of acres in Africa have been degraded by desertification, deforestation, intensive farming, and other human activities. Restoring that land to productive use and nature is a huge endeavor.
Groups like AFR100 (the African Forest Landscape Restoration Initiative) have organized efforts toward land restoration. That organization alone has rallied countries across Africa to pledge to restore over 100 million hectares (over 220 million acres) of land in Africa by 2030.
Accomplishing that goal is too much for philanthropists and governments to do alone, and that is why AFR100 isn’t tackling this challenge in the traditional manner, but instead has included impact investing and for-profit solutions alongside grants and funding for NGOs.
AFR100 isn’t tackling this challenge in the traditional manner, but instead has included impact investing and for-profit solutions alongside grants and funding for NGOs.
The basic idea is to support for-profit enterprises that can make value from forests and orchards, using profits to plant more trees and restore more land, creating a virtuous cycle that doesn’t require ongoing supplies of capital, year after year after year.
Implementing that idea is the TerraFund, created and organized by World Resources Institute, One Tree Planted, AFR100, and Realize Impact, with seed funding from Bezos Earth Fund, the DOEN Foundation and others, including a few for-profit companies like Facebook and Caterpillar.
What this investing looks like in practice is a $3 million revolving debt fund providing loans to profitable, for-profit African companies with businesses centered around restorative agriculture, restorative forestry, or other businesses that tackle deforestation.
The capital is used to build nurseries that grow hundreds of thousands of seedings per year, coupled with a business model that either sells those trees to smallholder farmers or that gives them away in order to aggregate the food produced today by the mature trees ready for harvest plus the outputs from the trees’ seedlings as they mature.
For example, one of the first loans went to Tilaa, a company that reforests the drying lands of Northern Ghana, aggregating honey from hundreds of smallholder women farmers, which planted tens of thousands of cashew seedings over the past three years to both feed the bees as well as produce an export crop for those farmers. The TerraFund loan lets Tilaa plant another 100,000 seedlings while also paying for the machinery needed to process the first cashew harvest in 2022.
Another loan went to Acacia EPZ, which works with thousands of nomadic people from Northern Kenya who collect gum arabic from wild acacia trees, processing and exporting that ubiquitous food ingredient into the global market. Creating income from trees creates an incentive for the locals to protect those trees instead of cutting them down for firewood.
Of equal importance, the dry North of Kenya has been overrun by an invasive mesquite tree, and part of the loan pays for a nursery and productions of seedlings so that the gatherers who cut down and deliver the mesquite trees are given an acacia seedling to re-forest Kenya with that useful, native species.
A simpler story is Nguni Nursery in South Africa, which grows and sells tree saplings for sustainable landscapes, greening projects, and ecological restoration. Part of its loan is going toward buying an old rock quarry, setting up a new nursery on that property, as well as re-planting to re-forest the land.
Over in Tanzania is Germark, which grows and sells avocado seedlings to smallholder farmers, aggregating some of those fruits for the export market while pressing the less attractive fruit into avocado oil.
Back to Kenya, Exotic EPZ aggregates, processes, and exports macadamia nuts, again from a large and growing network of smallholder farmers. SA Bamboo Works is the largest processor of bamboo in Ethiopia, having planted millions of bamboo seedlings over the past decade. Greenpot plants bamboo plantations in rural Kenya, with their loan helping set up the factory for manufacturing products from the now mature bamboo stalks.
The only commonality of the above companies is that they were all discovered over the past four years by The Land Accelerator Africa, a business accelerator focused on for-profit companies not coincidentally working in restorative agriculture and forestry.
Not all the companies receiving TerraFund loans are Land Accelerator graduates, however. The fund simply started with those that represented the low-hanging fruit (pun intended).
Together, these recipients have promised to plant over 2 million seedlings in the next five years. That sounds like a lot, but hundreds of billions of trees are needed to meet the goals of AFR100
Mooto Cashews is one loan recipient that was discovered separately. They are similar to Exotic EPZ, but, as the name suggests, focused on cashews, operating in the rural far West of Zambia. Afrex Gold is another avocado exporter, aggregating from multiple counties across Kenya.
These are just the first eight loans that the TerraFund has deployed. Together, these recipients have promised to plant over 2 million seedlings in the next five years. That sounds like a lot, but hundreds of billions of trees are needed to meet the goals of AFR100, and billions more beyond that are needed to restore all the land in Africa.
This is not a small goal, and it will take a lot more funding, and a lot more work, to accomplish.
Regina "Gina" Kline
Founder & Managing Partner, Enable Ventures
October 27 - 12:00 PM EST
Founder & CEO, Acumen
November 3 - 12:00 PM EST
News & Events
Subscribe to our newsletter.
Subscribe to our newsletter to receive updates about new Magazine content and upcoming webinars, deep dives, and events.
Access all of Impact Entrepreneur.
Become a Premium Member to access the full library of webinars and deep dives, exclusive membership portal, member directory, message board, and curated live chats.