January 24, 2020

Unlocking finance to bolster investments for landscape resilience in Africa: Insights and innovations from the African Landscapes Dialogue

Mao Amis, African Centre for a Green Economy Sara Scherr

This blog is the second in the post-African Landscapes Dialogue blog series, highlighting the Thematic Discussions that took place. For the other blogs, please see here.

Challenges and opportunities for sustainable landscapes in Africa

Mt Kilimanjaro is undoubtedly one of the most iconic and biodiverse features in East Africa. Towering at a height of 5895m above sea level, its three peaks of Kibo, Mawenzi and Shira attract thousands of tourists annually, creating a thriving local and regional economy, infrastructure and employment, benefiting local communities. The ecosystem is also very suitable for agriculture. The rich volcanic soils have created suitable conditions for farming, where coffee, maize, and other crops are grown by community members, thus diversifying the local economy.

The challenge now for the Mt Kilimanjaro ecosystem–and indeed many ecoregions in Africa–is that a changing climate is transforming the landscape and putting the livelihood of people at stake. Coffee farmers on the foothills of Mt Kilimanjaro have been battling with low productivity and fluctuating market prices for coffee. As a result, many farmers are abandoning coffee farming to pursue other ventures, reducing livelihood stability and income. The increased vulnerability of smallholders has led to calls for landscape investments to build resilience for livelihoods as well as to protect threatened biodiversity and ecosystems.

A group of stakeholders from across Africa have been gathering over the last couple of years under the auspices of the African Landscape Dialogue (ALD), to unpack these challenges and identify workable solutions to build resilience.

Photo: Georgina Smith/CIAT

Landscape finance innovations

The last ALD in Arusha, Tanzania between 12-15 November had a major focus on landscape finance, as a key driver of building resilience. Landscape finance in its simplest form can be defined as investments in integrated landscape management (ILM) that support multiple outcomes, which may include biodiversity conservation, agricultural production or livelihoods. ILM is important because of the multifaceted challenges of managing complex socio-ecological systems with competing interests and trade-offs. Landscape investments can take the form of either ‘asset’ investments, which are geared towards delivering returns to their investors or ‘enabling’ investments, which are designed to create suitable policy conditions for asset investments.

The ALD as a dialogue and networking platform for landscape leaders is used to share best practices, tools and to build landscape partnerships. In the Arusha meeting, landscape investment case studies were shared from Ethiopia, Kenya, Uganda, and Tanzania. From the discussions it was clear that a lot of experimentation is taking place at the landscape level on improving financial flows, testing best practices in funding models and forming innovative partnerships.

For example in the Naivasha basin in Kenya, Imarisha Naivasha, is championing innovative partnerships to unlock landscape-level investments to build a resilient economy and protect nationally-important water resources and wildlife. The program focuses on four financing strategies: private-public partnerships, market linkages, nature tourism and payment for ecosystem services. If successful, it will result in securing more than 3500km2 of an important landscape in Kenya.

Vi Agroforestry, an international NGO working both in Mt Elgon region of Uganda and western Kenya, is using carbon offsets to finance agricultural and environmental investments with almost 30,000 farmers and help to secure 21,000 hectares. Through this initiative 340,000 tonnes of CO2 were sequestered, raising $1,397,000 in the carbon market. In addition, maize productivity increased by 62%. This is a good example of the multiple outcomes approach championed by ILM.

Nestle Water shared a landscape case from Ethiopia, where large corporates dependent on water resources, facing severe climate risks, have taken the initiative to mobilize other stakeholders to pool resources to improve watershed management. The initiative has set up a 15-year vision and defined a large set of landscape investments, to improve urban-rural linkages, create employment, manage pollution and improve land use. They are taking actions to mobilize $70 million from a diverse range of potential public, private and civic investors to kick-start the program.

Recommendations from African Landscape Leaders

From the ALD session on landscape finance, it was evident that mobilizing capital to transform critical landscapes remains a major challenge. One of the main issues is the prevalent gap between risk and reward. Landscapes remain risky with limited short-term direct rewards to potential investors. There are also few investments that use the multiple outcomes ILM approach, most are still focused on single outcomes, whether its biodiversity conservation or livelihood issues. This makes it very difficult to identify bankable ILM portfolios.

There is also a misconception that investments for landscape-scale impact need to be on a large scale. Yet often times more impact can be achieved while working on a small scale. For example, in Laikipia County, Kenya a group of local stakeholders started a small but successful water bank. Testing new models at a small scale is critical to help understand their effectiveness, so there is a need to balance how investments are different scales can be better coordinated.

Participants at the ALD felt strongly that to build a successful portfolio of landscape investments, landscape leaders need to be involved. More specifically there is a need to empower ILM-oriented investment fund managers, as the ILM approach differs from traditional approaches that channel investments that target single outcomes. These discussions also relate to how global climate finance flows to the landscape could be better channeled.

The sentiment from participants was that global climate finance mechanisms such as the Green Climate Fund (GCF), were quite complex and not well designed to meet investment needs at a landscape level. The manner in which the fund is structured makes it difficult to access, without investing substantial resources upfront. As a result, only very large organizations have the capacity to tap into those resources.

In general, there is a need to build a better fund management ecosystem that can help to channel investments to landscape initiatives. This may include working with intermediary institutions that can link specific landscapes to the global funding ecosystem, provide tools and systems to landscape leaders to build a strong business case. This would enable landscape investments to be significantly de-risked make it very attractive for private sector players to set up shop and form innovative partnerships with other stakeholders. The partners in the African Landscapes Dialogue are working together to advance such innovations.

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