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the Netherlands - 22 April, 2021
Since 1989, the Dutch Postcode Lottery has been raising funds to support organisations working for a fairer, greener world. Thanks to the Postcode Lottery’s 3 million participants the lottery has grown to become the Netherlands' biggest charity lottery and supports over 100 nongovernmental organizations. This year the Lottery was able to support Tropenbos International (TBI) with a contribution of one million euros to develop a financial support unit, with a focus on small and medium size-enterprises (SMEs) in the forestry and agroforestry sectors in the global south. We call it ‘Green Finance for SMEs’, or GFS in short. It will enable these enterprises to access capital, with which they can set up sustainable businesses.
Many landscapes in the global south are small-scale mosaics of different vegetation types and land uses, including homesteads, crop fields, agroforests and forests. They are of vital importance for local livelihoods, conservation and climate change mitigation. It is in such diverse landscapes—on farms smaller than five hectares—that nearly half of the world’s food is produced. Moreover, these areas contain a large part of the world’s natural forests, a quarter of which is managed by indigenous people and local communities.
For many years, TBI has been working to support the vitality of such landscapes, by promoting a diverse mix of land-uses and the sustainable management of trees and forests. We found that SMEs in the agroforestry and forestry sectors are crucial for this. Many of them have good ideas for sustainable businesses, but they often do not have access to financial capital to get going. There may be credit providers in the landscape, but they are often reluctant to provide loans to entrepreneurs in the (agro)forestry sector, because it is considered risky, and because the pay-back periods in this sector tend to be longer. These entrepreneurs represent an enormous potential that has largely remained untapped. This is where GFS comes in.
GFS will initially be set up in three to five forested landscapes with significant conservation values and high deforestation threats. It will function as a financial facility that decreases risks for financial organizations in case they provide credit to (agro)forestry SMEs. To be eligible for a loan under this programme, SMEs need to comply with certain social and environmental conditions. TBI—through our local network partners—will help them with meeting these conditions.
By de-risking the provision of finance, while at the same time helping entrepreneurs to make their businesses flourish, we aim to generate a multiplier effect, ultimately resulting in increased private sector investments in green agroforestry and forestry businesses. This will help to build vital landscapes that provide income and food to local people, while maintaining healthy ecosystems that provide important environmental services for the world at large.
Read more about the Dutch Postcode Lottery here (in Dutch)