The principal sponsor for the Fund is GEF, a US based company that has been a dedicated investor in forestry, energy and environment and related sectors since 1990.

The Project is a proposed equity commitment of up to $20 million in GEF Africa, not to exceed 20% of the Fund’s total commitments.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	20.0

* These investment figures are indicative

The Fund will invest in companies mainly in Eastern and Southern Africa together with a few countries in West Africa. The Fund will make equity investments ranging from $15-30 million per company and seeks diversification in the following sub-sectors across the forest sector i) greenfield plantations, ii) existing plantations, iii) natural forest concessions, iv) forest products processing and manufacturing facilities, and v) biomass cogeneration facilities.

A majority of the target countries of the Fund are among the 20% least developed countries in the world. These countries are predominantly rural, with low income levels, low education rates, high infant mortality rates, high HIV prevalence (especially in Southern Africa), poor availability of clean water and nutritious food, and low life expectancy rates. In the face of great need, forestry enterprises in rural areas of Africa will have a significant positive impact. Employment: The investments in the Fund pipeline would create approximately 10,000 new jobs. Community Benefits: Existing GEF funds have provided at least some portion of their employees not only housing, but also health and nutrition services, on-the-job training and support for local schools and communities. The Fund is expected to make a similar commitment to investing in the basic needs of employees and their communities. Sustainable Forestry: The Fund will ensure that all forestry investments will meet the Forest Stewardship Council’s Principles and Criteria. With the exception of South Africa, where FSC Certification is already standard practice, additional certification will provide benefits and an important model for the forest sector in all countries targeted by this Project. Climate Change Mitigation: The Fund anticipates investing in 750,000 hectares of forest during its life and estimates the CO2 sequestration of the project to be approximately 4.5 million tons CO2 equivalent per annum, or 44.6 million tons CO2 equivalent for 10 years.

i) IFC’s involvement would give GEF access to IFC's industry knowledge in plantation and wood processing operations around the globe and help benchmark and improve its operations in a sustainable manner. ii) GEF is looking for IFC's help in implementing best practice environmental and social guidelines for its operations. iii) IFC's commitment would act as a stamp of approval and play a catalytic role in mobilizing other sources of capital to GEF Africa. iv) GEF Africa would benefit from IFC's political risk mitigation in the countries in which it will invest.

This Project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure and Sustainability Policy. During appraisal IFC reviewed GEF’s policies, procedures and capacity to identify and manage social and environmental risks through a Social & Environmental Management System (SEMS) which is consistent with the anticipated portfolio and associated risks. IFC also assessed GEF’s capacity to comply with applicable environment and social regulations and the IFC Exclusion List and Performance Standards. IFC also reviewed the Fund’s ability and prior history to meet internationally-recognized standards and independent verification systems for sustainable forestry. IFC may suggest Supplemental Actions to address any material or personnel gaps in the SEMS prior to disbursement. To ensure compliance of Fund investments with the IFC PS and Applicable Performance Requirements the Fund Manager will:

- Upgrade the SEMS at appropriate intervals and in such ways as to ensure its effectiveness,
- Identify and maintain responsible, qualified persons to manage and implement the SEMS,
- Ensure that all investments achieve and maintain independent certification to the FSC standard,- Submit a periodic report to IFC as per a format to be provided by IFC.

In order to ensure the Fund’s SEMS robustness, the Fund Manager will provide to IFC the environment and social due diligence prepared for the first three proposed subprojects and all subprojects which may result in significant adverse social or environmental impacts that are irreversible or unprecedented. GEF will satisfy that any such subprojects are in compliance with the Performance Standards or have a satisfactory action plan prior to investing to bring the subprojects into compliance within a reasonable time frame.