WorldBankFinancingforForestsinAfrica:LessonsfromIEG’sForestEvaluation

(2002‐2012

WorldBankFinancingforForestsinCentralAfrica:

LessonsfromIEG’sForestEvaluation(2002‐2012)

IssuesforDiscussion

CentralAfricahasborrowedmuchlessfromtheWBthanwasexpectedwithrelationtoforestsandgrowth.

IthasnotreceivedanyIFCorMIGAassistance.

Ithasalsomadeverylittleuseofconcessionalfinanceforsustainableforestmanagement.OnlyoneCentralAfricancountryhasmadeuseoftheBio‐CarbonFund(DRC).DRChasaccessedmultipleformsoffinance–developmentpolicyandinvestmentlending,GEF,theCarbonFund,theForestCarbonPartnershipFacilityandCIF/FIP.

CentralAfricaishighlyactiveintheFCPF‐butquestionsaboutFinancingandthefutureofthepilotCarbonFundareImpending.

AfricaDominatesWorldBankForestPortfolioinProjectNumbers…

…….ButForestLendinginAfricaisonly13%ofGlobalLending(Total=US$2.6b;AFR=US$240.5m)

…….AndForestLendingtoCentralAfricawasonly3%oftotallendinggloballybetween2002‐2012.

UseofConcessionalFinancehasbeenLimitedinCentralAfrica

VeryFewAfricanCountriesaremakinguseofthemultipleformsofforestfinance

offeredbytheWorldBank

• TheDRChasaccessedIDAfinance(developmentpolicylendingandinvestmentlending);GEFconcessionalfinance;theBiocarbonFund;REDDfinancethroughtheForestCarbonPartnershipFacilityandCIF/FIPfinance.

CongoBasinCountriesareparticipatingintheFCPF.TheFCPF’stargetcapitalizationisUS$650million:US$300millionfortheReadinessFundandUS$350millionfortheCarbonFund.

LargestdonorsareGermany(24%),Norway(20%),Canada(10%),andAustralia(9%).TheWorldBankGroupunderwrotethecostofestablishingtheFacility,istrustee,hoststhemanagementteam,etc.

WhereasFCPF’sapproachtoREDD+presupposedprivatesectorparticipation,theFacilityhasonlybeenabletoattracttwoprivatesectorparticipantstotheCarbonFund.

IEG’sReviewoftheForestCarbonPartnershipFacilityfoundthatREDD+ismoreexpensive,complex,andprotractedthanwasanticipated.

REDDPreparationisExpensive:Preparationcosts–includingcomprehensiveconsultationsareinsomecasesrequiringupto4xthisamountanticipated.

AdministrationisExpensive:DisbursementsincreasedfromUS$1min2011toUS$2.8min2012.TheWorldBankadministeredprogramhasspentroughlyUS$22todeliveratotalofUS$4.9millioningrantssinceitsinception,70percentofwhichhavebeenutilizedbyfivecountries(includingDRCandtheRepublicofCongo).

SupervisionisExpensive:FundmanagementunitprovidesUS$1mtoAfricaregionannuallyforimplementationsupervisionsupport.

IEG’sRecommendationfromtheReviewoftheForestCarbon

PartnershipFacility

TheFCPFneedstoupdateandclarifyitsmissiontotheWorldBank’sBoardandtoitsparticipatingmemberswithrelationtothechangesthataretakingplaceinthecarbonmarketandwithrespecttotheevolvingnatureoftheCarbonFund

…thereisaisneedforgreaterclarityonhowandunderwhatconditionstheFacilitywillsupportnon‐market,versusmarket‐basedapproachestoREDD+andhowbenefitswillbealigned.

TheFCPFshouldalsoclarifytheroleofitsparticipantsvis‐à‐visthetwofunds:HowwillcountriesthatarenoteligiblefortheCarbonFundviewtheirroleintheReadinessFundaftertheCarbonFundcomesfullyon‐stream?

IEG’sRecommendationfromtheReviewoftheForestCarbon

PartnershipFacility

TheWorldBankneedsahigh‐level,strategicdiscussiononitsoverallapproachtoREDDandneedstoarticulatehowitplanstosupportimplementationofcountries’REDDstrategiesgoingforward.

AstrategicreflectionontheBank’soverallapproachtoREDD+isnecessary,includingadiscussionbetweenallrelevantnetworksandsectorsabouthowcountry‐generatedREDD+strategieswillbealignedwith,andincludedin,CountryAssistanceStrategies(CASs),PovertyReductionStrategyPapers

(PRSPs)andthecorrespondingoperationalportfoliosandhowREDD+willbesupportedaftertheplannedclosingdateoftheFacility.

TheCIF/FIPareProvidingadditionalfinancefortheREDD+AgendatoDRC

TheDRCisreceivingUS$58.4millioningrantsfromtheForestInvestmentProgram–atargetedprogramundertheStrategicClimateFund(SCF),oneoftwomulti‐donorClimateInvestmentFundshousedattheWorldBank.TheprojectsareimplementedbytheAfricanDevelopmentBank,AsianDevelopmentBank,EuropeanBankforReconstructionandDevelopment,Inter‐AmericanDevelopmentBank,andWorldBankGroup.

Estimatedco‐financing$37.7million