Conservation Financing in Africa Approaches and Challenges

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Conservation Financing in AfricaApproaches and
Challenges

• Wildlife Conservation Society
• Conservation Finance Program
• ABCG meeting November 2002

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Fund Types
Endowment Fund Funds that invest their capital
and use only income generated from those
investments to finance activities. Sinking Fund
Sinking funds disburse their entire principal and
investment income over a fixed period of time
(usually 6-15 years). Sinking funds will also
invest their funds to generate revenue, but the
earned income is programmed along with the
original allocation for expenditure during the
fixed time period. Revolving Fund Revolving
funds are used to transfer funds to communities,
organizations, businesses and individuals on
condition of repayment. Land Trust Land trusts
purchase land to conserve biodiversity on private
land and increase the size of protected areas.
They acquire land through donation and/or
purchase, by working with landowners who wish to
donate or sell conservation easements (permanent
deed restrictions that prevent harmful land uses).
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• Issues and Challenges
• for Africa-Based
• Conservation
• Funding
• Organizations

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Legal
Eastern and Southern Africa law facilitates the
formation of trusts and endowments.
Straightforward legal process. Gaining in-country
tax-free status is a challenge in most
countries West African law does not easily
support the formation of environmental funds (law
of associations) In Cote DIvoire PCGAP project
with GEF and other donor funding leading the way
to modify legislation to address issue may be a
model for other countries.
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Investment Issues
Most endowments are small leading to greater
risk and high management cost. Many of the funds
have little to no access to effective local
financial advice and receive little direction
from their asset managers. The stock market
downturn has created loss of value and anxiety in
established funds losses exacerbated because of
the two above points. General popular lack of
investment understanding can create
tension. Endowments (and increasing market
valuation in the 90s) militated against active
fundraising.
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Investment Issues
Resource Extraction/Mitigation payments - The
Foundation for Environment and Development in
Cameroon received U.S. 3.5 million from COTCO
(Cameroon Oil Transportation Company S.A.) The
capital sum and the interest earned will be
expended gradually over a 28-year period.
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OIL
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Technical Issues
Difficult to find board members with requisite
skills and commitment to manage
organizations. The breadth of technical skills
required to run the organization often beyond the
scope of staff. Balance between staffing
requirements and overhead costs how to deliver
quality within means of the organization.
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Programmatic Issues
Historically donors avoid contributions to
endowments GEF the major exception and leader
in this area. New entrants Frankfurt Zoo,
German Government. Funds have been slow to
develop effective fundraising strategies a
glaring oversight with recent stock market
declines. Funds identify need for greater
technical assistance and strategic planning
advice. Diversification of funding sources
essential ecotourism is not a panacea.
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Policy Issues

• Donors moving to support Poverty Reduction
  Strategies linkage to biodiversity conservation
  has been weak what are the possibilities to
  link biodiversity to livelihood improvements?
• How to get Ministries of Finance and Planning to
  give adequate consideration to biodiversity
  conservation as a source of long-term revenue and
  value generation.

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Opportunities/Approaches
Land Trusts offer opportunities for biodiversity
protection on private land - need to identify
these trusts can leverage the value of the land
to generate revenue. IFC and IUCN launching
Kijani Fund A green venture capital fund
providing individually structured investment
packages for biodiversity businesses backed by
in-kind technical assistance not yet
capitalized. Development of loan financing
(village banking), revolving funds, business
enterprises that can generate revenue. Tanzania
considering feasibility of water use fees for
forest protection
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Green banking products
Green Trust South Africa in partnership with
Nedbank has raised over 4 million since 1990 and
funded 125 projects in South Africa, Namibia,
Mozambique and Malawi
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Planned Future Directions
Funds in West Africa have requested a technical
workshop for early 2003 to further enhance their
skills and understanding of financial
instruments. Organizations in the Albertine Rift
are interested in strategic planning around
conservation financing. WPC will include a
session on conservation financing. New funds will
be coming into operation in 2003 and 2004 and
will face challenges similar to their
predecessors.