Post on 21-Oct-2014
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Chatham House British Academy19 May 2014
Author nameDateChatham HouseBritish Academy19 May 2014
Lessons from Ghana, Indonesia, Malaysia and Papua New Guinea
Simon Milledge, IIED
Legality-related challenges faced by small-scale and community forest producers and enterprises
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Chatham House British Academy19 May 2014Characteristics of SMFEs
Flexible, highly diverse
Rapid job creation
Supply domestic markets and exports
Less capital‐intensive, high IRR
Address broader dimensions of poverty: resource rights, local wealth, entrepreneurship, social capital
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Chatham House British Academy19 May 2014
Learning from the pastWhy the focus on exports/formal sector?
Drivers of major initiatives
Emphasis on foreign exchange earnings
Visibility, number and ease of working
Emphasis on resources not people
Underestimated value
Political economy
Low ‘domestic demand’ signals
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Chatham House British Academy19 May 2014Assessing feasibility
Sociological
Economic
Environmental
Political
Administrative
Financial
Technical
Institutional
Remote
Industry
Operating
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Chatham House British Academy19 May 2014Sociological challenges
Perceptions: SMFEs, informal sector
Mistrust: bad advice, exploitation
Societal concerns: market signals
Poverty: illiteracy, labour availability
Social capital: underdeveloped
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Chatham House British Academy19 May 2014Economic challenges
Industry trends: domestic markets increasing relative to export markets, outpacing enabling environment
Resource availability: supply-demand mismatch
Competition: from imports
Subsidies: in an inadequate policy environment
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Chatham House British Academy19 May 2014Environmental challenges
Land degradation and declining quality of forest resources
Unsustainable harvest levels driven by:- high demand- excessive competition- major land allocations to large-scale enterprises- ineffective regulation- corruption- weak incentives for sound management
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Chatham House British Academy19 May 2014Political challenges
Unsupportive legal framework: insufficient focus on the laws that affect small-scale and community forestry – resource access & control
Insecure tenure: creates uncertainty
Illegality: chainsaw milling illegal but unenforceable, inequitable use of enforcement
Dispute resolution: lack of support
Regulatory inconsistencies: ineffective regulation, discretionary and discriminatory concession allocations, corruption
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Chatham House British Academy19 May 2014Administrative challenges
Regulatory processes: Unclear, complex, excessive - land allocation, business registration, trade permits, taxation, finance
Poor quality of data: land, informal sector, SMFEs
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Chatham House British Academy19 May 2014Financial challenges
Investment incentives: price incentives uncompetitive with other permitted land uses, high transaction costs, low security
Partnerships: low bargaining power
Sources of finance: financial management, collateral, start-up capital, risk profiles, terms, financing avenues
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Chatham House British Academy19 May 2014Technical challenges
Certification: low awareness, high cost, inflexibility of standards, lack of market-place differentiation
Information: markets, contracts, land allocation and financing
Forest management: plantation inputs, natural forest management
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Chatham House British Academy19 May 2014Institutional challenges
Capacity: finance, business skills, quality control, marketing, negotiation
Support: training, mediation
Organisation: cooperatives and associations
Collaboration: participation and partnership, less on recognition and decision-making authority
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Chatham House British Academy19 May 2014
•Market signals•Business skills•Organisation•Finance, cost
• Industry structure• Harvesting
practices
• Legal reform• Tenure• Formalisation• Enforcement
• Public perception• Livelihoods• Resource access• Benefits regime
Social acceptance Legality
Economic viability
Environmental sustainability
• Legality needs to be addressed together with wider priorities
• Includes structural reform/enabling environment aspects (c.f. coloured text) and more operational areas
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Chatham House British Academy19 May 2014Where focus is needed
Legality definition
Tree tenure and benefits regime
Inclusive management and benefit sharing
Financial instruments and incentives
Adequate training and improved product
Improved enterprise organisation
Trade chain partnerships