The forest sector in the Congo Basin countries: 20 years of AFD intervention by Agence Française de Développement

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The forest sector in the Congo Basin countries: 20 years of AFD intervention

In the 1990s, France, through AFD, began to promote forest management in the Congo Basin. At that time, there was a raised public awareness of the uncontrolled exploitation of forest resources and the majority of donors avoided dealing with private operators. AFD adopted a countercurrent position. The Group’s commitment brought on a storm of criticism in the early years before being recognized as relevant by the majority of stakeholders. AFD’s great merit was to have backed the process over a long time and to have thus demonstrated the interest value of an innovative response in the form of the Forest Management Plan, which seeks a reasonable and sustainable exploitation of the resource. In spite of all the difficulties, AFD managed to stay firmly on the path to a more sustainable management by progressively integrating new models and by opening up to the preservation of biodiversity and to social issues. At the beginning of the 1990s, forest management was experimental, its exploitation being of the ‘mining’ type. Today, out of 31 million hectares of allocated concessions, almost 20 million are committed to management, 4.4 million of which to sustainable management. Much progress has thus been made over 20 years, even if the term ‘areas under management’ covers contrasting situations. But beyond the performance of its projects, AFD’s choice was found to be relevant and forest management today has become unavoidable in the region where practices are evolving. In spite of contextual difficulties, AFD has facilitated decisive dialogue between the different stakeholders. The actual implementation of contract-based links between the State and the private sector on sustainable forest management is most certainly a key achievement of AFD’s intervention. Nevertheless, these results remain fragile; they must be confirmed and adapted to new challenges (the climate, the arrival of new stakeholders…).

Jean-Marie SAMYN, Inter-cooperation (IC), Switzerland James GASANA, IC Emmanuel POUSSE, Institutions et Développement (I&D), France Fabien POUSSE, I&D Contacts: Constance CORBIER-BARTHAUX, Evaluation and Capitalization Division (EVA), AFD Sylvie OKTAR, EVA, AFD

Agence Française de Développement (AFD)

The forest sector in the Congo Basin countries: 20 years of AFD intervention / May 2012 /

Agence Française de Développement (AFD)

post Evaluation

The forest sector in the Congo Basin countries: 20 years of AFD intervention Jean-Marie SAMYN, Inter-cooperation (IC), Switzerland James GASANA, IC Emmanuel POUSSE, Institutions et Développement (I&D), France Fabien POUSSE, I&D

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Disclaimer The analyses and conclusions in this document are formulated under the sole responsibility of the authors. They do not necessarily reflect the viewpoint of AFD or its partner institutions.

Publications Director: Dov ZERAH Editorial Director: Jean-David NAUDET Legal deposit: 1 st quarter 2012 ISSN: 2104-8207 Design: Solange MÜNZER Photos: Jean-Marie SAMYN Execution: Ferrari/Corporate – Tel.: 0033(0)1 42 96 05 50 – J. Rouy/Coquelicot

Ex post Evaluation

The Forest Sector in the Congo Basin countries:

20 years of AFD intervention Jean-Marie SAMYN, Inter-cooperation (IC), Switzerland James GASANA, IC Emmanuel POUSSE, Institutions et Développement (I&D), France Fabien POUSSE, I&D Contacts: Constance CORBIER-BARTHAUX, Evaluation and Capitalization Unit (EVA), AFD Sylvie OKTAR, EVA, AFD

Agence Française de Développement (AFD)

Preamble This document is the final evaluation report presented by Intercooperation (IC) and Institutions et Développement (I&D), as commissioned by AFD, on the evaluation and capitalization of the AFD Group’s interventions in the forest sector of four countries of the Congo Basin: Gabon, Cameroon, Central African Republic and Republic of Congo. For capitalization purposes, the evaluation covered all AFD support projects in the area of forest management planning in the four aforementioned countries between 1990 and 2010. The terms of reference (TOR) basically set out a three-tiered target: • to evaluate the relevance and coherence of the overall intervention by the AFD Group; • to gauge the performance of AFD support projects for designing management plans (MP) in concessions; • to draw lessons from project cross assessment on the benefits of the forest management plan (FMP) and its replication. This final report is in line with the presentation of the provisional report to the Steering Committee on 3 March 2011 and ensuing comments. The mission extends its gratitude to all those who contributed to this report for their availability and the quality of their input in its preparation, particularly, members of the Steering Committee, persons interviewed on the field and resource persons who shared their views with us throughout the process. On the field, the mission is thankful to all stakeholders, including staff of various AFD agencies and other donor entities, forest administration, private companies and non-governmental organizations (NGO). • Intercoopération, Maulbeerstrasse 10, CH-3001 Bern, Switzerland. Phone: +41 31 385 10 10 / Fax: +41 31 385 10 09 http://www.intercooperation.ch jean-marie.samyn @ helvetas.org

• Institutions et Developpement – I&D 27, rue Jean-Noël PELNARD, 92.260 Fontenay aux Roses, France. Phone: 00 33 1 46 600 500 / Fax: 00 33 1 46 603 306 www.ietd.net ietd @ ietd.net

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Table of Contents Executive summary

SECTION 1 Historical background, French policy and AFD strategy in the Congo Basin 1. 1.1. 1.2. 1.3. 1.4.

2.1. 2.2. 2.3. 2.4. 2.5.

Sustainable management, background and state of management in the Congo Basin

Sustainable forest management: definition Milestones in the development of sustainable forest management in Africa The concept of the forest management plan Background and overview of management in the four countries concerned

14 16 16

French strategic policies in the Congo Basin, strategy and history of AFD’s intervention, post-evaluation framework

French assistance strategy in the Congo basin forest sector AFD’s strategy in the forest sector Post-evaluation framework AFD’s portfolio and field implementation of its vision Country portfolio

30 33 36 39 48

Conclusion

SECTION 2 Responding to evaluation questions 3.

General coherence of interventions

3.1. 3.2. 3.3. 3.4.

Coherence and internal synergies with French development assistance Coherence with national policies Coherence with other donors Coherence with the regional process

51 58 59 62

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Stakeholder interactions and relevance: justified choices in the circumstances with hindsight

A key socio-economic sector Intervention in the context of weak states and poor governance Private sector: different stakeholder groups International and national NGOs

65 66 68 74

Conclusion

Average performance, cross-tool assessment

5.1. 5.2.

Individual project performance Performance based on financial tools used

80 86

Conclusion

Relevant impact, though limited in some components

Obvious impact on sustainable forest management Economic aspects and impact on industrial development Social component: the weak link Environmental impact Institutional impact Capital and transfer of knowledge

98 101 103 105 106 110

Sustainability

115

7.1.

A well-anchored tool for large concession holders amid certification doubts What is the actual level of ownership by small and medium-scale permit holders? Resistance to external shocks

118 119

Conclusion

124

Overall appraisal of the role of AFD

125

Conclusion

128

4.1. 4.2. 4.3. 4.4.

6. 6.1. 6.2. 6.3. 6.4. 6.5. 6.6.

7.2. 7.3.

ÂŠ AFD / May 2012

115

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SECTION 3 Lessons and way forward 9.

Replicability in the Amazon

129

9.1. 9.2.

Commitment of France and AFD in Brazil The concept of forest management in the Brazilian Amazon

129 131

10. Lessons 10.1. 10.2. 10.3.

11. 11.1. 11.2. 11.3. 11.4. 11.5. 11.6. 11.7. 11.8.

135

Realigning forest management actions in a comprehensive strategic framework Technical aspects: how to tailor and pursue the FMP process AFDâ&#x20AC;&#x2122;s financial instruments: limitations of loan instruments and benefits of a gamut of instruments

136 148

158

Way forward and recommendations

161

What role for AFD? Strategy elements to be taken into account Expanding the intervention scope and consolidating achievements Consolidating achievements and concurrently improving the FMP tool for new operators Mainstreaming other forest types and deforestation issues Revitalizing research Financial instruments: maintaining the existing kit to ensure responsiveness and incentive Some levers of governance

162 163 166

167 169 170 171 173

Acronyms and abbreviations

177

Appendices

183

ÂŠ AFD / May 2012

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Executive Summary Sustainable forest management, a virtually inexistent approach in the early 1990s The concept of sustainable forest management emerged at the Earth Summit held in Rio in 1992. It entails the conservation and enhancement, for the welfare of present and future generations, of the economic, social and ecological benefits of forests. In Congo Basin countries, This is being implemented by AFD through the development of a tool, the Forest Management Plan (FMP) for concessions. The design and implementation of the above plan incorporates, for an exploited forest, regeneration of the timber product, biodiversity conservation and socio-economic development issues. It is a contractual agreement between the concession holder and the State, for sustainable and long-term logging. In the early nineties, forest management in the Congo Basin was still under experimentation, as exploitation was more akin to mining, without any regard to resource regeneration. Today, out of 31 million hectares of awarded concessions, 20 million hectares are under management, including 4.4 million hectares certified as “sustainably managed” by the Forest Stewardship Council (FSC). A bold step has therefore been taken in 20 years, although the expression “areas under sustainable management” refers to quite different cases.

A pragmatic and responsive AFP strategy, focused on sustainable management AFD’s focus is in line with France’s commitments in major international conventions (Convention on Biological Diversity [CBD], Rio Declaration, Agenda 21) to promote the sustainable management of forests. While the strategy is not set out in a specific document, AFD’s strategy has consistently maintained the same overarching objective: the sustainable management of timber products through forest management (FM) under long-term forest concessions. AFD successfully tailored its intervention to prevailing context and specific stakeholders. In that regard, AFD’s strategy may be characterized as pragmatic. AFD’s action was four-tiered: (i) a first package of financial assistance to forest industries through its affiliate, PROPARCO (Promotion and Participation for Economic Cooperation); (ii) five major financial assistance interventions (loans and credit lines) to large concession © AFD / May 2012

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holders who have embarked on FMP; (iii) three major technical support projects to “small and medium-scale” permit holders; (iv) recently, new projects covering diverse areas (conservation, carbon fund, Reducing Emissions from Deforestation and Degradation [REDD+], etc.).

A coherent and relevant intervention The evaluation highlighted the overall coherence of AFD interventions. First and foremost, coherence with French strategic policies, with the gradual incorporation of their development and coverage of new areas: biodiversity, institutional and regional dimensions. Thereafter, coherence with other donors resulting in some complementarity, as each partner prioritized a specific area of intervention (AFD focused on providing field support to FMPs). Lastly, coherence with the national policies of the countries concerned, although such coherence is partially explained by the fact that France was instrumental in their design through AFD’s pilot projects or MFEA technical assistance. Based on the prevailing context of the nineties and subsequently, 2000s, it is safe to say that AFD’s choice turned out to be relevant. Indeed, the design of the FMP tool, combining forest exploitation and sustainable management concerns, helped in breaking away from the practice of mining-oriented exploitation. It was also a response to the pressure exerted by NGOs, which clamoured for the certification of sustainable forest management, a feeling echoed by public opinion with increased awareness of environmental issues. The trend gradually gained ground and eventually pervaded all circles (academic, political) to the extent of prompting the main companies exporting tropical timber to Europe to introduce into their exploitation system various tools for the sustainable management of state forests. They considered the FMP tool as a central management component to secure the requisite eco-certification for major flourishing markets. Lastly, the socio-economic importance of the forest sector in the countries concerned demonstrates the relevance of the choice. As regards beneficiaries, AFD ventured to deal with forest concession holders, a wise choice at the time and subsequently, all the more so with “small concession" holders, as they have limited areas and financial resources. With hindsight, the rationale for such assistance to smallscale holdings to provide them with FMP, drawn from public funds, can however be questioned, given their structural deficiencies and poor governance record.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Average performance The projects recorded an average performance, as some did not meet their targets. Funding impacted positively on the initial field management activities: recipient companies implemented the FMPs and embarked on certification. In 2010, AFD supported the implementation of management schemes (in terms of designing FMPs) of 5.5 million hectares, quite a significant figure. It goes without saying that large concessions had, singlehandedly, already embarked on management schemes, however, AFD supported and broadened the process in motion. It is worth noting, however, that 50% of those areas are found in one country, namely the Central African Republic (CAR) and that does not guarantee the genuine commitment of private beneficiaries to sustainable management. Grants emerged as the leading instrument from the gamut of financial instruments, with commitments amounting to 29 million euros over the period (excluding debt relief and development contracts) to specifically support small- and medium-scale concession holders. Through this assistance, the latter can efficiently meet one target, with the design of FMP, albeit subsequently raising the issue of ownership. Credit lines rank second with 19.7 million euros, spent in two countries. Their performance is poor (56% of non-disbursed loans in Gabon and 100% in Cameroon1 ). They are not seemingly attractive (complicated procedures, long timeframes, etc.) to national banks which have monetary overhangs and distrust the sector. Private companies received and used direct loans (PN2 to fund the FMP of three large concessions) worth 6.5 million euros, thereby recording a sound performance on account of the fact that the FMPs have actually been implemented. However, private companies are attracted by these loans owing to AFDâ&#x20AC;&#x2122;s international backing and combined grants with FGEF. The prevailing circumstances did not allow medium-scale concessions to benefit from these credit lines.

1 56% of project cancellation: PGA1042 and PCM1039 â&#x20AC;&#x201C; to 100 % : PGA1055 and PCM1039.

ÂŠ AFD / May 2012

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Meaningful impact, though limited in some areas Technically speaking, if the FMP tool developed in the Congo Basin is properly implemented, it can contribute effectively to sustainable management. In 20 years, the large holdings have recorded significant progress by migrating from the mining type of exploitation to the type of forest management that incorporates sustainability. However, these developments are specific to a few large companies and as such, inhibit the FM drive in the Congo Basin. The impact on the other components is poor, especially on the social component, which is still the weakest link. Apart from a few pioneer examples, such as La Congolese Industrielle des Bois (CIB), the socio-economic spin-offs for the local communities are still marginal (in addition to the fact that they did have any return on forest taxes). Similarly, mainstreaming biodiversity has generally focused on large wildlife species and been restricted to a few antipoaching measures. These two components are, undoubtedly, complex, costly and provide little incentive to private entities. It is outside the scope of the forester’s duties, thereby questioning the extent of the concession holder’s responsibility and funding of those components. Regarding institutional aspects, the expected developments did not crystallize. Although legislation has evolved, relations between the State and the private sector have been characterized by business as usual. FM has highlighted the capacity gap between the State and the private sector, while forest administration lacks the resources to perform its statutory duties, to wit: approving, monitoring and controlling FMPs.

Overall appraisal of AFD’s role: a pioneer role and ripple effect Among the donors, France, through AFD, pioneered the management process of the Congo Basin Tropical Forest. In the early 1990s, public opinion was significantly sensitized to the wanton exploitation of forest resources and most donors avoided dealing with private entities. AFD swam against the tide. Its commitment attracted a lot of criticism during the early years before it was recognized as relevant by most stakeholders. AFD’s major achievement is to have supported the process throughout and to have proven the relevance of a new response that is FMP, which paves the way for a reasonable and sustainable exploitation of the resource despite the challenges encountered. AFD stayed the course of more sustainable management by gradually incorporating a new paradigm and appraising biodiversity conservation and social issues.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Beyond the performance of projects, it is worth making a more general appraisal of actions and their impacts. AFDâ&#x20AC;&#x2122;s support option proved relevant in the circumstances at the time. Management is today indispensable in countries of the Congo Basin. Practices have started to change. Despite practices pertaining to the context and to the attitude of key stakeholders, AFP successfully fostered dialogue and partnership between various stakeholders which proved critical in the aforementioned stride. Successful activities conducted or implemented with pilot companies had a ripple effect on part of the other companies thereby establishing the rationale of the exercise. The implementation or the actual implementation of a contracting method between the State and private sector in regard to sustainable management of the forest global common wealth is definitely another major achievement of AFDâ&#x20AC;&#x2122;s intervention. These results however remain frail due to the lack of genuine will on the part of some stakeholders, both loggers and forest agencies, to join this process.

Lessons and way forward The position and resources of AFD did not favour its work on structural issues which eventually inhibited the expansion and sustainability of achievements in that area. Today, the implementation of FMP and the entire process is constrained by four major factors: Firstly, at the macroeconomic level, it is related to the importance of forests in the national economy: interest primarily lies in the exploitation of this resource for its timber potential; Secondly, on the technical level, it relates to the choice tool, which is ultimately complex, cumbersome and costly, hence the need for adjustment to different contexts and targets; Thirdly, the financial aspect involves finding, at a wider scale, new facilities to fund the social and biodiversity components for the purpose of sustainability; Lastly, the fourth factor relates to various aspects of misgovernance in the countries of the Congo Basin. The response should not be restricted to a mere replacement of one tool or instrument by another. Based on its experience and the trust shown by various groups of stakeholders on the diversity of its instruments, AFD is poised to maintain the lead in the establishment of sustainable management of Congo Basin forests. The benefits of FMPs have to be sustained by specifically streamlining the tool in order to widen the scope to include different types of production forests. ÂŠ AFD / May 2012

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Financial instruments must move in lockstep with their targets. Guaranteed loans should be maintained to secure the commitment of small and medium-sized loggers to a sustainable management process. Subsidies should be earmarked for the funding of specific activities falling under the “social” and “biodiversity” components (including research and inventories). Loans to States and C2D assistance may be used to fund the indispensable structural reforms, alongside other partners (institutional capacity building and improved governance). AFD may participate in multilateral initiatives to come up with new funding mechanisms for sustainable forest management. Discussions regarding payments for forest environmental services provide a window of opportunity. Lastly, it is desirable for AFP to broaden its coverage of governance issues in the sector. Such involvement could consist of (i) designing instruments to track the state of the forest and the implementation of FMP as well as accountability instruments for forest management stakeholders; (ii) providing institutional support to various aspects of capacity focused on the critical components of sustainable management; (iii) sustaining sector dialogue in various national, regional and international circles and (iv) providing support for improved donor coordination.

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SECTION 1. Historical background, French policy and AFD strategy in the Congo Basin 1. Sustainable management, background and state of management in the Congo Basin This section highlights the scope of the study by defining the concept of sustainable management, reporting a few milestones, describing forest management and lastly, reviewing the intervention context and current state of forest management in the four relevant countries of the Congo Basin, namely: Cameroon, the Central African Republic (CAR), Congo and Gabon.

Box 1. Key ideas

• The concept of sustainable forest management is not new. However, it actually burgeoned after the Earth Summit held in Rio and led to a batch of international or regional declarations. It seeks to establish a management system aimed at conserving the countries’ biodiversity, as well as economic, ecological and social activities at national and international levels.

• It was formalized by a tool, the forest management plan (FMP), which helps in planning and

implementing a sustainable management system of forest resources that incorporates biodiversity conservation and economic development. It should trigger a shift from the “mining” type of exploitation to sustainable exploitation that gives room for regeneration of the natural capital. The FMP developed for the dense production forests of Central Africa is a French model tailored to the African context (in a rather cumbersome and complex format).

• In 1990, when AFD entered the Congo Basin forest sector, sustainable forest management was inexistent (management legislation and standards, practices of logging companies).

• Nowadays, forest management has gained ground in the four countries concerned: out of 31 million hectares of concessions, about 20 million hectares are under management, including 4.4 million holding “sustainable management” certification (FSC).

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

1.1.

Sustainable forest management: definition

The concept of “sustainable forest management” or “ecological forest management” is an ecological forest management system that sets social and environmental criteria, indicators and objectives, in addition to economic objectives to forest management. In so doing, it ensures the conservation of biodiversity and sustainability of all forest ecosystems and concurrently meets the socio-economic needs arising from forest resources, timber, wildlife, flora or landscapes. The idea of sustainable forest management had been an age-old concern to some foresters. However, it was only at the Earth Summit of Rio de Janeiro in 1992 that sustainable forest management, modelled on the concept of sustainable development, actually gained meaning. Unfortunately, at this conference, no convention on the forest was adopted and only a legally binding and operational declaration was adopted. The Rio declaration on forests is indeed a compendium of wishes and international recommendations for sustainable forest management. Sustainable forest management was first defined at the Ministerial Conference on the Protection of Forests in Europe in Helsinki in 1993 and subsequently adopted by the United Nations Food and Agricultural Organization (FAO). Sustainable management was defined as “stewardship and use of forests and forest lands in such a way, and at a rate that maintains their biodiversity, productivity, regeneration capacity, vitality and their potential to fulfil, now and in the future, relevant ecological, economic and social functions, at local, national, and global levels, and that does not cause damage to other ecosystems”. The International Tropical Timber Organization and the International Union for the Conservation of Nature (ITTO/IUCN), in their guidelines for the conservation and sustainable use of biodiversity in tropical timber production forests (2009), define sustainable management as “the process of managing permanent forest land to achieve one or more clearly specified objectives of management with regard to the production of a continuous flow of desired forest products and services without undue reduction in its inherent values and future productivity and without undue undesirable effects on the physical and social environment”. Sustainable forest management can therefore be understood as “a dynamic and developing concept that seeks to sustain and to enhance the economic, social and ecological benefits of all types of forests for the benefit of present and future generations”.

14 © AFD / May 2012

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In the context of the Central African sub-region, such a concept is underpinned by four principles described in the section “ATO/ITTO principles, criteria and indicators for the sustainable management of African natural tropical forests” 2: • sustainable forest utilization and maintenance of the multiple functions of forests are a high political priority (principle 1); • the forest management unit (FMU), designated for whatever form of land-use, is sustainably managed with a view to supplying the required goods and services (Principle 2); • the main ecological functions of the forest are maintained (Principle 3); • according to the importance and intensity of forest operations, the FMU manager contributes to the improvement of the economic and social well-being of workers in the FMU and of local populations (Principle 4); The principles, criteria and indicators (PCI) are technical instruments adopted by political bodies regionally and internationally, commonly used by States, local governments and NonGovernmental Organizations (NGOs) to assess, and in some instances, to measure and certify in a more or less credible and independent manner, progress toward sustainable management. Despite these efforts and progress, it is worth noting that few forests worldwide, specifically in tropical and sub-tropical areas, are managed in compliance with the forest principles adopted at the United Nations Conference on the Environment and Development (UNCED, 1992) for an array of reasons: lack of financial and human resources, technical and methodological difficulties, inappropriate forest legislation and standards, lack of proper incentives, weak State capacities, lack of stakeholder consultation mechanisms. Furthermore, FMPs, where they exist, still basically focus on timber production, without regard to the other goods and services that derive from forests, and without mainstreaming the social dimension.

2 A collaboration between the African Timber Organization and the International Tropical Timber Organization, ITTO Policy Development Series, No. 14.

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1.2. Milestones in the development of sustainable forest management in Africa The milestones in the development of the concept of sustainable forest management in Africa are highlighted in Appendix 1. The milestones relate to major commitment declarations, although they are still a long way from realization. After the Rio Summit, Central African political leaders played a paramount role in the development of sustainable forest management policies in the sub-region. In 1999, Heads of States, in particular, realized the key and leading role expected of them in the collective effort to achieve sustainable forest management in the sub-region. They set guidelines for the implementation of policies adopted at the international 3, regional 4, sub-regional 5 or national levels. In a rather short time, political leaders of the sub-region defined the operating framework for public, private and civil society stakeholders, especially CEFDHAC and COMIFAC.

1.3. The concept of the Forest Management Plan (FMP) A major shift

The concept of sustainable management therefore gradually engendered the idea of ascribing the concept of sustainable management to the “mining” type of forest exploitation, which had prevailed so far, by using an environmental standard known as “sustainable management plan”, which is three-dimensional: ecological, economic and social. There was a significant shift, not to say a revolution, in management: recourse of States and foresters to new competencies (managers, management agencies), negotiation and consultation among the major stakeholders (forest agencies, local communities, NGOs, private sector, etc.), mainstreaming of local needs and introduction of planning and evaluation methods, strategies and tools.

3 Forest Law Enforcement, Governance and Trade – FLEGT, Rio, ITTO, etc. 4 African Timber Organization – ATO, African Law Enforcement and Governance Process. 5 Conference on Central African Moist Forest Ecosystems – CEFDHAC, Central African Forest Commission – COMIFAC.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Box 2. Extracts of an article by Fargeot, Forni and Nasi 6 (2004) “The concept of exploitation management was developed in Central Africa in the eighties in order to introduce an operational forest management tool in dense forests after successive failures of traditional management methods”. It took into account the then specificities of the forest economies of the Congo Basin: • Vast potential of unexploited forests and lacking infrastructure. • Low population densities with very limited domestic markets. • Sector priority is essentially to export quality timber to European markets. • Political will of governments to develop local timber processing plants. In the Congo Basin, the concept of management which first emerged at the design level is now gaining ground through a number of field activities based on the concept of exploitation management. It entails the participation of an industrial partner identified as the manager of the forest area allocated to him, at the time of designing forest management (Bertrand et al., 1999). The underlying assumption of this approach is the mutual consideration of forestry and industrial needs, the lynchpin for genuine ownership of management by the administration in charge of management and the forest operator, and its actual implementation in the long run. The prevailing central management system, which was dominated by the State and marginalized the local communities from decision-making regarding forest management and implementation, is in the process of decentralization and negotiation. Interventions in the forest sector which were previously based on timber production and income generation henceforth include various products and services, economic opportunities for communities and individuals and seek to help in reducing poverty and enhancing biodiversity conservation. The analytic and reductionist forest management which is specific to past technical aspects is migrating to participatory management and seeks to use a multidisciplinary and integrated approach involving farmers and local communities”.

6 Fargeot, Ch., E.Forni and R.Nasi (2004), “Réflexions sur l’aménagement des forêts de production dans le Bassin du Congo ”, [Thoughts on Management of the Production Forests in the Congo Basin] BFT, No. 281 (3) pp.19-34.

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A long-term planning tool

Sustainable management of a forest requires an initial step which involves designing a forest management plan. The forest management plan as designed and implemented in Central Africa is first and foremost a long-term planning tool which is based on better resource knowledge in general. Through this tool, the geographical and temporal bases of interventions, including their levels, are determined in conjunction with all the stakeholders. The FMP should therefore be considered as a tool, among others, to achieve sustainable management. The implementation of the concept of sustainable management involves a broad spectrum of labels, methods and tools which have been tried and tested while others are still being experimented. However, management methods are still consistent with the development of management plans rather than forest management plans as generally understood. Two management instruments are preferred: â&#x20AC;˘ the length of the cutting cycle which is based on economic and ecological considerations; â&#x20AC;˘ defining the diameter at breast height, which takes into consideration, at least ideally, ecological and technical requirements. Nowadays, forestry interventions, selective cutting projects and regeneration concerns are hardly considered due in part by the lack of research findings in the various fields. That does not mean that nothing has been done in this regard. But natural forest research is a long haul and it is only now that the initial findings of several years of research are beginning to emerge. A tool from a kit

FMP as a tool cannot single-handedly ensure sustainable management of the resource. Its success in this area depends on a number of other factors, which are often extraneous to forestry, that also deserve consideration, such as land, population pressure, agricultural development and poor governance etc. A model suitable for the specific context of the Congo Basin forests

The model adopted in the Congo Basin for natural forests is essentially drawn from the model used in the artificial forests of the Northern Hemisphere which was designed after a detailed resource inventory. It is however much more complicated in the case of a tropical forest given the heterogeneous and diverse nature of species. 18

ÂŠ AFD / May 2012

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Most of the specialists interviewed acknowledged that prior knowledge of the resource, as developed in the African FMP model, favours sustainable resource management. Yet, other models exist, such as the model currently used in the Brazilian Amazon (see Section 9). The applicable principle in this case is a very simplified management planning approach, based on the geographical demarcation of the forest management area into felling sites, according to the equisurface principle, for the purpose of meeting priority timber needs. Thus, knowledge of the resource is not exhaustive initially. Inventories are conducted in the harvestable areas over the course of harvesting, while efforts are made to monitor and implement conservation actions, in addition to social actions 7. This approach has a disadvantage. Two cardinal management principles are not respected: the equal volume of the annual allowable cut and the period of rotation of the cutting cycle. Conversely, the concept of low-impact logging is mainstreamed, as it is with tropical African forests. Another option may be the volume-based approach, with the attendant risk of high grading and selective cutting, which does not favour biodiversity conservation. The FAO, in May 2001, in a bid to report efforts made in forest management over the last 20 years in Central Africa, launched a new initiative entitled “In Search of Excellence” as part of the new FAO/Netherlands partnership programme on the conservation and sustainable management of tropical dense forest ecosystems in Central Africa. This study acknowledges the existence of other approaches and methods, demonstrates their implementation at varying levels and in different circumstances. This study and some of its findings will be revisited.

7 Cassagne, B (2006), “Gestion forestiere durable – adapter, conserver, produire”, ATIBT Newsletter, No.24.

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Box 3. Forest Management (FM) for non-foresters The concept of forest management is an age-old concept that was introduced in developed countries to manage forest resources in a more appropriate and sustainable manner. In the context of the Congo Basin, it was historically relevant to correct a forest exploitation method that was destructive to resources (forest or animal) which caused over-logging and especially, yielded very little socioeconomic benefits for the population. The overarching objective was to stop issuing uncontrolled felling permits without a vision for the sustainability of the resource. The ensuing concession system thus sought to entrust a private concessionaire with the management of a large forest area provided it is managed in a sustainable manner. The forest management system enhances knowledge of the forest resources found in the entire concession (types of tree species, heights, etc.). Accordingly, it is possible to plan exploitation based on resource regeneration. Concessions are divided into logging areas, with only a portion exploited for a cycle of 25-30 years, for instance, in a cutting cycle. Hence, by the time logging resumes in the initial logging area, the forest resources would have regenerated. Harvesting is carried out after checking the tree diameters to ensure the continuous growth of young trees. Furthermore, forest management has been enriched by other fields: (i) social dimension, logging in a concession should yield socio-economic benefits for the riparian population; (ii) biodiversity dimension; forest exploitation should seek to conserve existing wildlife.

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1.4 Background and overview of management in the four countries concerned This section will highlight the context of the four intervention countries, specifically the historical context of the nineties, to better situate and understand AFDâ&#x20AC;&#x2122;s action, before reviewing the current situation. Similar context

The four countries under consideration generally boast of pretty similar forest profiles, with similar forest resources: dense and generally, covered forests, except for CAR, parts of which are primary and others, secondary. The deforestation rate is quite similar and rather low, hovering around 0.1% for dense forests, according to official sources 8. It should be recalled that in the early nineties, no forest had a management scheme, while the first experimental FMPs had barely been launched. In the early nineties, the institutional arrangements were quite similar, as forest concessions or forest management were missing in legislation and regulations. More often than not, exploitation was authorized by logging permits (or similar authorizations) on a volume basis. These countries followed a rather similar course, as they enacted forest laws and codes, followed by standards which introduced concession systems and forest management requirements (Cameroon ranked first in this area in 1994). Additionally, several countries implemented economic and fiscal reforms in the forest sector with the support of the World Bank (WB). Specificities notwithstanding

The four countries do not only bear similarities. Accordingly, forest areas and economic, population and agricultural pressures differ. The Central African Republic is a forest country with only 4.6 million hectares of dense forests while the other three countries have larger areas ranging from 16.8 to 20.1 million hectares. Owing to its small forest area, forest management in the Central African Republic is an easier task, especially because it is a compact block comprising a single stand for the south-west block concerned (a second large forest of 1.6 million hectares is found in the south-east of the country at Bagassou, although it is so far not considered for management).

8 2008 Report of Observatory for Central African Forests (OFAC) on the State of the Congo Basin Forest.

ÂŠ AFD / May 2012

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Among the three major forest countries, Cameroon has the least allocated area (5.7 million hectares) and smallest concessions, while Gabon and Congo boast of vast areas (12 and 10.6 million hectares respectively) with large concessions of hundreds of thousands of hectares in the main forest areas of these countries (there are also areas with "small concession holder" permits in these two countries). Population and agricultural pressures are also different: high in the Central African Republic and in some forest areas of Cameroon and South Congo, but low in Gabon and Northern Congo. The most striking differences are visible in the economic and political frameworks. Two countries, Gabon and Congo, are endowed with oil resources and the timber sub-sector is not the backbone of their economy (although, there is an ongoing tendency to find alternatives to non-renewable energy resources). On the contrary, in the Central African Republic and Cameroon, the forest sector is the leading economic sector, notably in terms of employment and exports. It is also worth noting that Congo and the Central African Republic were gripped by severe political turmoil and instability, thereby making conflict resolution their priority for several years (penalties for outstanding payments imposed on the CAR, Gabon rose to a middle-income country, thus restricting the use of grants subsidies, as it obtains in Congo today). The differences can be summarized as follows: • Gabon and Congo, countries with large forest areas, most of which have been allocated, with low or average pressure and a flourishing oil sector which drives their development and raised them to the status of middle income countries; • Cameroon has large forest areas and fewer allocations compared to its neighbours, and the timber sector is vital for the country; • the CAR, a “small” forest country with a forest area exposed to significant pressure, where the timber sector is vital for the economy, but which has been rocked by a protracted political unrest. AFD’s involvement in the Congo Basin forest sector

It is in this context of opportunities and threats that AFD started and developed its interventions. In terms of opportunities, AFD entered a rather unexplored sector (few interventions from other donors), though essential for the countries’ development, and when forest management was a novel field with attractive opportunities. AFD also came in a sector which was backed by the group alongside PROPARCO, through assistance to forest companies in the nineties which 22 © AFD / May 2012

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

enhanced its knowledge of the sector and countries, established contacts with several forest groups, and provided an opportunity for sustainable action. However, the context was constrained by several factors. Forest management in African tropical forests had not gone beyond the conceptual stage, declarations, and the early pilot projects, leaving no room for planning. The large companies confronted with this concept were reluctant and unwilling to enter into any contract with the State, which they distrusted. Furthermore, they feared that the first companies to join the process would get a raw deal as they would have to bear extra costs and responsibilities. Moreover, in the early nineties, the legal and regulatory framework was not conducive to the establishment of FMPs. Stakeholders operated in a weak institutional framework characterized by deficient State capacities, poor governance, rent-seeking and sharing of profits between the State and private sector, all of which inhibited forest management and led AFD to find motivated and interested partners. Development of forest management in the four countries

To understand how the efforts undertaken by the various stakeholders has paid off today, there is a need to review the past few years and consider developments in areas under forest management in the Congo Basin. The figures are culled from different sources, notably the interactive maps of the World Resources Institute (WRI) of the four countries, OFAC’s State of the forest (2008), FAO’s Evaluation of the world’s forest resources (2010) and country visits. The discrepancies found in certain cases can be explained by the use of imprecise cartographic data in some countries, and in some cases, varying calculation methods. The data presented below will highlight the disparities according to sources. However, these gaps are shrinking as data collection is increasingly accurate. From no managed hectare in the early nineties, the Congo Basin sub-region has recorded significant progress in forest management in 20 years. Today, 31 million hectares have been allocated as forest concessions, representing 51.3% of major forests identified in these countries, including: • 19.9 million hectares of forest concessions under management (representing 32.5% of major forests); • areas with State approval of management plans represent between 11.2 million hectares in 2008 (Chapter 1, State of the Forest in Central Africa, Sub-Regional Report, OFAC) and 13.8 million hectares in 2010 according to data collected by the mission; • 6.3 million hectares certified, representing 10.4% of major forests (all certifications considered), including 4.4 million FSC certified hectares; © AFD / May 2012

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Table 1. Forest management in the Congo Basin in 2010 (in hectares)

Gabon

National territory

Large forest areas*

Allocated areas

26,208,972

21,086,856

12,000,000

Certified areas

6,368,424

1,873,505 10

1,891,630 11

Congo

34,281,549

18,493,992

Cameroon

46,632,582

16,876,143 12

5,660,375

4,650,261

2,600,000 13

CAR

62,065,458

4,616,199

3,037,673

0 14

61,073,190

31,346,443

19,874,813

6,365,135

100

51.3

32.5

10.4

TOTAL In %

10,648,395

Concessions under management

5,818,455

* According to OFAC’s proposed classification in “State of the Forests (2008)”: dense, low-lying forests, sub-mountain forests, mountain forests, marsh and mangrove forests. Not listed are savannah forests, mosaics of forest and culture, dense deciduous forests and other vegetation.

Source: OFAC in “State of the Forests in 2008”

Figure 1. The state of forest management in the Congo Basin in 2010 25,000,000 n Large forest areas

20,000,000

n Allocated forest concessions in ha

15,000,000

n Concessions under management in ha

10,000,000

n Certified Areas in ha

5,000,000

RC A

Ca m er oo n

Co ng o

Ga bo n

Source: OFAC, “State of the Forests in 2008”. 9 North: 5,818,454 ha + South 4,829,851 ha (see Appendix 3 for details). 10 Only northern concessions were considered, as the process has barely started in the South. 11 Including Loundoungou, that may be soon certified, yields 2,444,306 ha. 12 NIS (2006) sets the national territory at 47,565,000 ha. 13 900,000 ha with FSC certification and 1,700,000 certified OLB andTLTV. 14 The IFB Ngotto concession (PEA 169) with a total area of 186,596 was OLB certified, but the certification has been provisionally suspended, due to the economic crisis.

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There are two major types of certification: timber origin and legality certification (OLB) or the Timber Origin and Legality Verification (TLTV), which certifies the legality of timber (issued by a private entity like VERITAS). FSC is a sustainable management certification that ascertains compliance with forest management plans. Table 2 recaps the figures of March 2010 cited by Professor Delvingt, though not directly comparable with table 1. It shows that the certified areas do not refer only to areas which fail to meet FSC sustainable management standards, but also includes legally exploited areas (OLB and TLTV), notably in Cameroon. Table 2. Certification in the Congo Basin in March 2010 Certified areas (FSC)

Certified areas (OLB and TLTV)

Gabon

1,304,962

838,842

Congo

1,907,843

1,350,029

636,056

2,655,703

Cameroon CAR TOTAL

4,417,404

4,844,574

Source: Delvingt, W. in « Les certifications forestières, outils de promotion de la légalité et de la gestion forestière durable ».

While the steady growth of managed areas is commendable, it should not shield country weaknesses and disparities. Data on forest concessions under management should be considered with caution because it does not necessarily imply the adoption, implementation or even design of a management plan. Indeed, some concessionaires operating on provisional contracts have not started designing their FMP. FSC certified concessions alone comply with management plan requirements and undergo periodic inspections. Based on data published in March 2010 and cited by Professor Delvingt, they total 4.4 million hectares. Figure 2 depicts the situation from a different perspective. It is observed that: • the Central African Republic, although the largest national territory, totalling 62 million hectares, has the smallest forest area (7%). In absolute terms, the area of forest concessions in the Central African Republic is also low (3 million hectares) but, in terms of forest cover in the country, it represents 66%. Conversely, certification has been halted (the sole concessionaire in the the process had to suspend its OLB certification for financial reasons);

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

• Cameroon has the second largest area, totalling 46 million hectares, including 36% of large forests. Yet, the country ranks last in allocated forest concessions (34%) and in concessions under management (28%) in relation to large forest areas. Yet, this country is well ahead in the forest management process with more than 80% of concessions already under forest management, compared to allocated concessions. The same pattern is observed in certification, with larger areas than Gabon and Congo. Cameroon spearheaded forest management; • Congo has the third largest area among the countries, with 34 million hectares. Overall, 54% of the country covered by forests, including 58% allocated as forest concessions. In this regard, the country is quite comparable to Gabon, where 57% of major forests have been allocated as concessions. Management data follows the same trend. 31% of large forests in Congo have management schemes compared to 30% in Gabon; • Gabon has the smallest area, totalling 26 million hectares, though in absolute terms (as well as in percentage), the largest forest area (21 million hectares, that is, 80% of the national territory). Figure 2. Distribution of forest areas by category and country

n Gabon

70,000,000

n Congo

60,000,000

n Cameroon

50,000,000

n CAR

40,000,000 30,000,000

80% 54% 36%

20,000,000 10,000,000

57%

58%

30%

34% 66%

31% 28% 66%

9% 10% 15% 0%

ar ea s

pr oc es s th e in

Ce rti fie d

of …

ha in Co nc es sio ns

fo re st co nc es sio ns

fo re st ar ea s

Al loc at ed

La rg e

Na tio na l

te rri to r

Source: OFAC, “State of the Forests in 2008”.

26 © AFD / May 2012

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Picture 1. Ferry crossing for loggers in a certified concession in North Congo.

ÂŠ AFD / May 2012

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

2. French strategic policies in the Congo Basin, strategy and history of AFD’s intervention, post-evaluation framework This section will first examine France’s strategy, then AFD’s, in the forest sector. A framework will be defined and subsequently used in the evaluation sections of this report. Lastly, AFD’s major interventions between 1990 and 2010 will be reviewed.

Box 4. Key ideas

• Following the publication “French Cooperation and Forestry in Africa” by the Ministry of Cooperation (1994), it was in 2004 and 2006 that several documents chronicled the French strategic thrusts in the forest sector such as the White Paper or the Tropical Forest Action Plan. The focus remains the economic development and sustainable management of the resource. It has broadened over the years with the mainstreaming of biodiversity and social issues, institutional issues, climate issues as well as governance issues.

• AFD’s policy hinged on international documents and MFEA commitments. In its interventions, AFD’s objective was to achieve sustainable development and exploitation through the design of forest management plans under the framework of a partnership between the State, owner and responsible for forest management, and forest companies holding long-term concessions. It is on this basis that AFD made strategic shifts in line with emerging issues it deemed relevant and fitting into the context and opportunities that prevailed at the relevant periods. Accordingly, the AFD strategy may be considered as pragmatic and flexible.

• The mission developed a post-evaluation framework. • Four main types of interventions have been identified: (i) a batch of financial assistance to

the forest sector (PROPARCO); (ii) AFD’s financial assistance to major concession holders engaged in forest management planning; (iii) three main technical and financial support projects to “small concession holders” (with the specific case in Central African Republic of the support project to develop forest management plans – PARPAF); (iv) recently, new projects focus on various fields; conservation, carbon fund, REDD and NGO, and governance.

• AFD's intervention was guided by a global vision at the start that was subsequently embodied on the field, in step with the different time frames and the changes in contexts and stakeholders.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

2.1. French assistance strategy in the Congo Basin forest sector Strategically, France’s support to tropical forests of the Congo Basin evolved over the years, depending on the international context (especially with the growing influence of conservation NGOs) and the emergence of new paradigms (local participation and mainstreaming of local community needs, sustainable resource management, governance, climate change, etc.). This defines the intervention context of French cooperation in the Congo Basin. The reference documents cited hereinafter provide a better insight into the French strategy and trends. French cooperation and forestry in Africa (1994)

Historically, the Ministry of Cooperation’s (1994) strategic document entitled, “French Cooperation and Forestry in Africa” was the linchpin of the nineties. Most of its main thrusts still underpin French policy in the forest sector with a view to protecting forests for economic benefits. The rationale of French cooperation actions was that the conservation of African forests can only be achieved if the forests satisfy the needs of the population and States. French assistance strategy was five-tiered: • maintaining global climate balance; • supporting countries in making their environmental choices; • increasing State revenue; • empowering the population in the management of forest products; • improving the living standards of local communities as part of poverty reduction efforts. In the 2000s, several documents subsequently guided, in our view, AFD’s strategic decisions in favour of tropical forests. The Government action plan for tropical forests (April 2004)

This document is pretty concise and proposes four actions: • emphasis on conservation and sustainable management of French tropical forests; • realignment of French cooperation toward forest conservation and activities conducive to the protection of natural landscapes (enhancing actions for the conservation of remarkable natural landscapes, funding projects that foster sustainable and controlled forest management, and promoting law enforcement in the exploitation of tropical forests); • enhanced campaign to curb illegal timber imports and improve forest governance; • sustainable and long-ranging action. 30 © AFD / May 2012

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Environment sector strategy (June 2005)

One of the objectives of this strategy is to enhance the implementation of environmental protection projects and programmes which directly support the implementation of commitments made in major conventions. The above objective has the following components: (i) climate change mitigation; (ii) conservation of biological diversity, including tropical forest management and more specifically, the Congo Basin; (iii) combating desertification and land degradation; (iv) conventions on chemicals. White Paper on tropical rainforests: a turning point in French tropical rainforest strategy (2006)

The White Paper published in 2006 should be considered as a milestone rather than an outcome. It highlights one of the main challenges in the forest debate: reconciling in the same approach the conservation of biological diversity, the economic development of the relevant countries and the mainstreaming of social issues. This document outlines the challenges of tropical rainforest conservation and management (role of our forests in maintaining ecological balances, the social aspect, economic challenges) and gives an overview of the international context (importance of forests in major international policies on sustainable development, international forest governance). It should be considered as a turning point in French tropical forest policy. This Paper tables proposals to Government and underscores the need to comprehensively monitor the proposed actions, including specifically: • “The evaluation of French cooperation projects in the forest – environment sector (including AFD and French Global Environmental Facility [FGEF] projects), focusing on the Congo Basin Forest Partnership (CBFP); • The European FLEGT Action Plan; • The Circular on Public Procurement of Timber”. It is from the prism of these developments that the AFD Group’s new policy should be viewed, as it now focuses on the need to deepen issues relating to governance in the forestenvironment sector, social aspects of forestry, protected areas, training and research and mainstreaming climate change issues.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

The Regional Intervention Framework for Sub-Saharan Africa 2008-2012

The Regional Intervention Framework (RIF) for Sub-Saharan Africa constitutes yet another strategic blueprint for French action. It underscores the paramount importance of natural resources on the subsistence activities of the world’s impoverished people. Various intervention areas are recommended to manage the natural capital in order to sustain growth, which involves concurrently improving the regulatory and institutional framework, enhancing local community and private sector organization and their increased involvement in the management of natural resources. This requires among others: “ (i) mainstreaming governance issues, relating specifically to sharing and using proceeds; (ii) implementing collective actions between the States, the private sector, research institutions and donors, to contribute to stakeholder institutional capacity building; and (iii) involving new stakeholders, notably Asians, whose activities in the forest sector seem unfriendly to the principles of conservation and sustainable management”. Regarding AFD’s strategy, RIF seeks to base its interventions on three components: • “Capacity building, including education, vocational training, health and institutional support; • Sustaining growth, in various economic sectors, specifically, by supporting infrastructure development, the private sector and financial sector; • Supporting the enhancement of urban accommodation capacities”. Cameroon, Congo and Gabon are among the “first concentration” countries. Fourteen countries fall under this group which receives 73% of French assistance. The Central African Republic is among the post-war countries where intervention is devoted to peace-building efforts. Among these four countries, Gabon is rated a middle-income country, which determines the use of some financial tools (grants versus loans). For the implementation of this strategy, support to the “environment and use of natural resources” is mainly provided through grants, except where the sustainable management of the resources exploited by private entities is used as an incentive to them. Non-sovereign loans may be disbursed for that purpose”. And “partnerships will be established with all development stakeholders, particularly NGOs, for innovative and/or field-related actions, and local governments”.

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The “Environment” Sector Intervention Framework (CIF, 2007-2009)

A third strategic blueprint which helps to understand the commitment of France, and AFD’s, by extension, is the Environment Sector Intervention Framework (CIF), 2007-2009. It details the ecological component of AFD’s sustainable development strategy as is defined in its Strategic Guidelines (POS). It sets out AFD’s intervention in the forest sector of Central Africa: • mainstreaming conservation and production concerns in managing forest areas which include both protected areas and managed forest concessions. The sustainable management of concessions, through integrated social management and biodiversity protection efforts, supplements the conservation efforts that cannot be single-handedly implemented by protected areas, which represent at most 15% of the forest area; • according top priority to the Congo Basin and exploring avenues for replicating the models in the Brazilian Amazon and Indonesia; • participating in multi-stakeholder and/or regional initiatives with other donors, and establishing operational partnerships with major environmental NGOs. AFD’s forest management efforts in the Congo Basin are recognized, having contributed to the management of some 12 million hectares out of a concession of 55 million hectares. The target is to hit 20 million hectares in three years. Global warming is listed as another component of AFD’s environmental strategic objectives with a view to mainstreaming climate issues into AFD’s agenda.

2.2. AFD’s strategy in the forest sector Implementation guidelines in the Congo Basin forest sector

The aforementioned documents outline policy or strategic guidelines, while the White Paper and action plans specifically cover tropical rainforests, not only those of the Congo Basin. The RIF is a strategy paper designed for a specific region (Sub-Saharan Africa) while the SIF, Environment Sector Strategy, focuses on the environment. The White Paper is designed as a blueprint to define the Government’s tropical rainforest strategy. The document further guides the design of development assistance projects for the forest sector. The White Paper also outlines the main thrusts of French strategy on tropical forests (at the time of its publication) which is consistent with the national strategy on sustainable © AFD / May 2012

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development, biodiversity, the Government’s tropical forest action plan (2004) and facilitation of the Congo forest partnership. Lastly, it points out that France’s forest cooperation policy is in line with the environment strategy of the Inter-Ministerial Committee for International Cooperation and Development (CICID, 2005). There is an obvious link between these various policy documents. However, as far as the forest sector and specifically, interventions in the Congo Basin are concerned, these documents do not, in strict terms, represent France’s strategy. Components of Partnership Framework Documents (DCP) and Country Intervention Frameworks (CIF)

Components of the French strategy are found in DCP and CIF, as these documents generally span three years. They define sector priorities (notably core sectors) as well as implementation details. These documents also generally and thoroughly review previous and on-going interventions by way of appraisals and lessons, new policies and priority choices, alignment and coherence with national policies and other donors. AFD strategy still officially in the pipeline

Pierre Icard’s memo (2004) 15 outlines the components of the forest sector strategy developed from a logical framework which defines the outcomes, targets and activities. It offers a situational analysis and chronicles the international context, examines AFD’s approach, which remained very similar to traditional French policy: geographical concentration in the region and thematic focus on the management of production forests. The memo identifies the weaknesses of the approach and suggests its realignment on new international requirements. The strategy presented in this memo targets sustainable development in social and environmental issues and a stable and productive economy for the countries. The overarching objective is to foster the sustainable and collective management of forest ecosystems for economic development, while conserving and harnessing biodiversity resources. The envisaged improvements are three-tiered: (i) contribution of the forest sector to national economies (in particular through the establishment of an economic sector observatory at the regional level); (ii) institutions, during the implementation of projects to finance management plans (to ensure, among others, the consideration of small business people); (iii) regional mainstreaming.

15 Icard, P. (2004) “Aménager durablement les forêts tropicales: la démarche ambitieuse suivie dans le Bassin du Congo” [Sustainable management of tropical forests : The Ambitious Approach in the Congo Basin].

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The strategy indeed refers to the design of a White Paper on tropical forests, with the direct involvement of AFD, and the Government’s announcement in April 2004 of an action plan aimed at stepping up efforts for the conservation of remarkable natural landscapes in tropical and primary forests. The action plan attests to the Agency’s commitment to support sustainable and controlled management of forest resources on one hand, and to promote law enforcement in the exploitation of tropical forests, on the other hand. The suggestions made in the memo clearly helped in designing the White Paper. However, the memo neither produced a forest strategy as such, nor a specific logical framework supported by quantitative and qualitative indicators. It is relevant today to refer to the guidelines contained in the document “Sustainable Management of Tropical Rainforests in Africa: AFD Interventions” 16, according to which “in its approach, AFD strives to accommodate the various stakes and sometimes conflicting interests of the stakeholders, starting from the local to the global scale: • locally: for loggers, sustaining a lucrative commercial activity; for the population, improved living conditions through traditional or informal economic activities (fuel wood, bush meat, fruits, medicinal plants); • nationally: development of forest resources and environmental goods and services for diversified economic development; • regionally: harmonizing logging practices, national sector policies; • globally: maintaining climate balance, biodiversity conservation, knowledge of the origin of products (eco-certification, traceability), building negotiation capacities of the countries concerned”. Strategy consistent with a guideline and tailored to context and opportunities

We therefore concur with the findings of Larat and Lemelle (see TORs of the evaluation mission of this study in Appendix 1) regarding AFD’s pragmatic approach, in the sense that its interventions were not based on a final document, formal logical framework or formal guidelines, translated into projects.

16 Available on the AFD website, http://recherche.afd.fr

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AFD complied with one guideline (sustainable development and exploitation, by providing support to forest management under long-term forest concessions) by making strategic shifts in tune with the emerging issues it deemed worthy of support, and adjusting to the prevailing circumstances and opportunities. In this regard, AFD successfully realigned its actions in order to: (i) better mainstream the social and environmental dimensions of sustainable development with FGEF funding; (ii) enhance the forest sector’s contribution to national economies (proposed establishment of an economic sector observatory at the regional level); (iii) mainstream institutional capacity building (to include small-scale players through the State) and, (iv) mainstream the regional dimension. These guidelines, which flow from MFEA commitments, were not formalized in any AFD strategic document. They are consistent with guidelines of the White Paper and have been implemented on the ground. More recently, AFD included climate issues in its coverage. On the strength of strong and shared guiding principles, AFD demonstrated pragmatism in a difficult context (the Congo Basin and forest sector) by “acting when it was possible and striving to introduce a tool when stakeholders were prepared”. This will be examined against the background of interventions.

2.3. Post-evaluation framework AFD does not boast of a forest sector strategic blueprint of its own. For the purpose of this evaluation, it is therefore hard to assess concrete results or outcomes in relation to set targets and objectively verifiable indicators. The Environment SIF proposes the following indicator “areas of forest under sustainable management funded by AFD ” to gauge the target of “fostering improved management of the local environment and renewable resources”. The RIF for Sub-Saharan Africa outlines the requisite resources (agency personnel) but offers no specific information on the set objectives or targets. PFD and CIF guidelines do not specifically state objectives, expected outcomes and monitoring indicators, thus hampering the evaluation and capitalization process. Furthermore, they barely provide an insight into France’s overall tropical forest strategy to easily track the status of indicators and to draw general lessons. In the circumstances, and in an attempt to outline the performance analysis pursuant to the TOR of the study, the mission attempted to generate a retroactive and simplified logical framework from the different aforementioned French cooperation and AFD documents, available at the central level. 36 © AFD / May 2012

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This approach has its limitations. The ensuing logical framework is simplified and almost without indicators because the reference documents lack data (see Appendix 5). Further in the report, field project indicators are examined (where projects had quantified logical frameworks). Main thrusts of the logical framework: Economic and industrial development

Historically, in the early nineties, the objective was to ensure the economic development of the timber sector through the industrial development of forest companies (PROPARCO support, notably). This goal is mentioned because it underlays interventions of the subsequent periods (development of added value, compliance with regulations restricting the exports of logs, more recently, support to cogeneration). Economic development and sustainable management of forest resources

As a result of the international discussions of the late nineties, the objective changed. It reconciled forest exploitation, economic development and sustainable management with the ultimate aim of managing forest resources in a sustainable manner, that is, exploitation should keep pace with forest regeneration. This new generation of projects marked the first direct link with biodiversity. This clear objective is also outlined in the Governmentâ&#x20AC;&#x2122;s tropical forest action plan (2004). This objective, which is still relevant, has expanded its reach, by mainstreaming social and environmental issues, or by realigning on another aspect: climate. Indicators are proposed, mainly area indicators, specifically in the Environment SIF 2007-2009, forests under sustainable management with AFD funding, which targets 20 million hectares in three years for the entire Congo Basin. Pierre Icardâ&#x20AC;&#x2122;s memo (2004) proposed a target of 9 million managed hectares by 2010. The indicators are guidelines. They are an ideal target, but are not meant to be applied to the letter in such a difficult context as the Congo Basin forest sector. An objective incorporating social and environmental issues

In the years that followed, in keeping with the new forest vision, the sustainable management objective incorporated new aspects.

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Forests became a local development factor for communities living in or around concessions, while FMPs must consider: (i) prior consultation; (ii) sustaining and negotiating access rights to forest resources; (iii) sharing the benefits from forest resources for local development. The importance of social issues emerged in the White Paper (2006), which marked a shift in Franceâ&#x20AC;&#x2122;s forest sector policy. The RIF 2008-2012 highlights and details the importance of social issues (by emphasizing the long-term impact of biodiversity degradation on the living conditions of the people). Additionally, sustainable management cut across all the natural resources of forest concessions, animal biodiversity and non-timber forest products. Biodiversity conservation in forest concessions became the objective. The biodiversity conservation is clearly set out in the CICIDâ&#x20AC;&#x2122;s Environment Sector Strategy (2005), and subsequently in the White Paper (2006). The Environment SIF 2007-2009 also highlights this aspect through a broader realignment (biodiversity in concessions and in partnership agreements (PA). An institutional specific objective

Similarly, a new institutional component has come to the fore, though not actually an objective. However, as it gains ground, it spells out expected outcomes in the areas of: (i) capacity building on the critical roles of forest governance; (ii) developing the knowledge base, including research and training, of national expertise; (iii) strengthening dialogue between the state, the private sector, NGOs, local communities and building stakeholder negotiation capacities. Apart from enhancing dialogue, it is expected to bring good governance in the forest sector. The White Paper (2006) was the maiden strategic document to highlight institutional capacity building needs. More recent specific objectives, related to information systems, can also be included as support for forest sector governance. Climate component

More recently, forests have been viewed in the broader context of contributing to climate regulation. This realigns forest management on environmental services (and consequently, their value and cost) in furtherance of an international debate which increasingly considered forests as a global asset (global benefits from sustainable management of national forest areas). 38 ÂŠ AFD / May 2012

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This approach which emerged in Bali in 2007, and was followed up subsequently in Copenhagen in 2009, has been embraced by and incorporated in AFD strategies. Climate change mitigation was mainstreamed as early as 2005 in its Environment Sector Strategy (2005), although the specific role of forests was not highlighted.

2.4. AFD’s portfolio and field implementation of its vision This section will chronicle AFD interventions. First and foremost, it should be recalled that forest management did not begin in 1990, but well before. Accordingly, the technical framework had been in place since 1945, while the Agricultural Research Centre for International Development (CIRAD) had conducted forest inventories in the late seventies. It was only implemented in the early nineties. Bearing in mind this historical background, we will now examine the period 1990-2010, the mainstay of the work. AFD’s involvement in the Congo Basin forest sector

As previously mentioned, AFD started its interventions in a context of opportunities and constraints. On the one hand, the sector was unexplored (few interventions by other donors), was important for the development of the countries, offered great opportunities for the development of FM, and forest companies received on-going assistance through PROPARCO. On the other hand, companies were reluctant and even suspicious, with a weak State and poor sector governance and regulations had no provision for forest management. It was triggered by pressure exerted by NGOs on large European logging companies, including French entities, which required them to demonstrate increased commitment to environmental protection and sustainable management in their forestry activities. AFD then developed and proposed private sector incentives, including requirements, to change their methods as well as to improve their highly arbitrary professional requirements. In so doing, AFD intended to start a “virtuous circle”. This was favoured by the gradual emergence of private agencies which helped in developing, tailoring and operationalizing the “management plan” tool (in keeping with earlier achievements).

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A history of latency

AFD interventions were not initially planned. The context of the Congo Basin forest sector was not conducive to planning. Although AFD’s strategic thrusts had been defined back in the early nineties, they were only implemented when the context became more favourable for action. In some cases, dormancy periods were longer, for example, in the “small concessional holder” projects, where interventions were challenging due to the reluctance of various national stakeholders, practical difficulties and the time for mentalities to change. Hence, AFD started dealing with the more receptive stakeholders, countries which were more inclined to accepting these changes. We will now examine the various types of AFD interventions and review the action of other French Development Assistance bodies for the purpose of consistency. PROPARCO funding for processing and industrial development

During the relevant period of the study (1990-2010), the AFD Group’s intervention initially entailed PROPARCO funding to industrial investment (logging and/or processing) consistent with its mandate to support private investment. The flows were principally delivered in a specific time-frame, between 1992 and 1996, when forests were still generally considered from an essentially economic perspective (a resource to be harnessed). Large disbursements (10.5 million euros disbursed out of the pledged 23 million euros) were made to the private sector, and focused on some large companies like Rougier et Pasquet, principally in Cameroon (5.5 million Euros) and Gabon (4.2 million Euros). AFD has reverted to the industrial development support project, albeit in the area of co-generation or comprehensive support to the timber sector (Congo). MFEA and AFD pilot projects

In addition to PROPARCO’s action, pilot forest management projects were launched in the early nineties. These involved MFEA pilot projects in Cameroon: API Dimako in 1991, Forêts et Terroirs [Forests and Lands] in 1996. AFD also implemented the Salo Forest pilot project (under the SESAM Permit) in the Central African Republic in 1991.

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The first evaluation of the API Dimako project in Cameroon identified the stumbling blocks. Accordingly, it was clearly observed that the company was barely involved in the process while the TA manager, funded by French cooperation, operated on its own. That led to a realignment of the pilot projects, with the option of dealing directly with companies. The group can be credited with inaugurating AFD’s major AFD support project to FMPs through the loan to CEB in Gabon (1.4 million Euros in 1996), as it was the maiden project to design a FMP on a large-scale concession. A batch of AFD funding to large concessionaires

Meanwhile, in the nineties, AFD had considered various incentives to develop the private sector and explored the market to find interested companies. The funding packages included requirements and targeted motivated concessionaires with own resources (to fulfil requirements for a bank guarantee, for instance). At the time, the large European concessionaires were the most receptive stakeholders, in the face of pressure from international NGOs. Protracted and tough negotiations were held with several of them, which entailed, first of all, reassuring and convincing the companies to change their regulations and introduce contractual dealings with the State. Accordingly, the initial CEB funding could only be launched after an amendment of the law: the design of a management plan required the conclusion of a long-term contract with the State whereas, at the time, the company had several small concessions awarded on a short-term. Gradually, depending on countries and prevailing circumstances, AFD expanded its support to FM to include design and implementation of the FMP tool by large European concessionaires. To this end, AFD resorted to direct loans and credit lines in 2000-2003, awarded to Congo (CIB loan), Cameroon (Pallisco loan + credit lines) and Gabon (CEB loan subsequent to 1996, followed by credit lines) for a total commitment of 23.5 million Euros (including 8.5 million of disbursements and cancellations amounting to 15 million). The recent multi-country loan (2007) to Rougier raised commitments to 26 million Euros. Small concession holder projects

The “small concession holder” projects refer to a second group of concessionaires and problematic areas. The concept “small concession holder” (typical AFD in-house terminology) is not based on size: some concessionaires in the Central African Republic, placed under this category, manage larger areas than concessionaires supported in Cameroon under previous actions. The © AFD / May 2012

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concept rather refers to a group of concessionaires who are less enthusiastic about sustainable management, have less own resources and are not part of large international holdings, and hardly ever required to comply with the environmental requirements of European markets. They include Asian or Lebanese companies, independent medium-scale loggers, including European or even national operators, professional or non-professionals, who are interested in brisk gains (“rentiers”). This category was more complex to deal with and it took a longer time to jumpstart assistance compared to the first category of interventions for various reasons: FM raised specific issues (regarding small areas), the reduced motivation of a group compared to the motivation of the large European concessionaires and the requirement to invent or design other tools and projects (through the State). Projects typically provide technical and financial assistance, including technical assistance to national governments, by availing direct technical expertise in designing FMPs for private loggers and through capacity building for the forest administration. PARPAF in the Central African Republic can be classified under this group of projects funded by AFD. It is the oldest (since 1991, with 8.3 million Euros). Two other projects which had been designed and ready for several years were recently put in place: the “small concession holder” project in Gabon (2007, worth 9.2 million Euros, including an AFD loan of 8.2 million and an AFD grant of one million euros) and the PAGEF Project in Congo (2009, five million Euros), have been earmarked as institutional support. The funding is therefore huge, amounting to 22 million Euros worth of commitments (including 11 million Euros disbursed). Case of the Central African Republic

The Central African Republic is a peculiar case. Besides being AFD’s sustained and oldest intervention, it is the only country where AFD delivered technical assistance (TA) prior to 2005 (Salo pilot project, then PARPAF), Forest Research Support (FRS), and implemented a pilot project (Salo) or local development (PDRSO, whose consideration has been reactivated and is in process). It is also the only country where the State oversees the design of FMPs, which explains the format of AFD’s intervention format (TA within PARPAF; since the State designs FMPs, direct support to concessionaires was not possible). AFD interventions in the Central African Republic, including PARPAF (8.3 million Euros), totalled 14 million Euros in commitments.

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MFEA interventions and AFD synergy

AFD’s action was implemented in the broader framework of French development assistance. Pursuant to the various mandates within the French cooperation agency, MFEA’s purview was institutional support (in broad terms), while the AFD Group handled economic development projects. The MFEA oversaw and implemented the institutional objective of French Development Assistance policy in the forest sector through: (i) pilot projects (API 17 Dimako and Projets et Terroirs 18); (ii) institutional support to Ministries responsible for forests in the four countries; (iii) targeted support to forest research (Congo, Central African Republic and Gabon) and teaching (Cameroon, FORAFRI). AFD established productive synergies that will be examined in Section 3. Until the reform of the French cooperation system, the complementarity between AFD and MFEA was operational in the Congo Basin forest sector, with AFD logically steering economic development projects, which did not necessarily imply a strict separation of mandates between the entities. Accordingly, in its proposals and methods, AFD considered the institutional dimension of its actions. For instance, FM requires a major shift of public/private relations to a system of contracting and devolving the management of public assets. To mainstream this aspect, AFD collaborated and cooperated with MFEA. AFD oversaw the implementation of economic development assistance, while MFEA implemented institutional capacity building (through strong synergies). Biodiversity and synergy with FGEF

Gradually, France’s policy to increasingly mainstream biodiversity crystallized on the field. It first materialized in project classification. Accordingly, in 2006, funding of the forest management process in Gabon was classified under the “environment sector” and no longer under “forestry”. More specifically, FGEF interventions increased significantly. PROPARCO interventions had practically ceased (there was only one project in Cameroon and one in Gabon between 1992 and 2002, two other projects which were designed during the same period were cancelled), whereas, FGEF rolled out 15 projects during the same period (including nine for various recipient companies, under the sustainable forest management support project in Gabon) owing to the predominance of environmental issues in French cooperation policy.

17 Pilot Integrated management project in Dimako, (eastern Cameroon). 18 Forest and regional development project.

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In principle, AFD continues to focus its support on management issues in forestry (technical), while FGEF supports the biodiversity and social components of forest management plans or goes solo into partnership agreements (PA). This is demonstrated by a batch of FGEF grants, coupled with AFD loans, earmarked for FMPs from 1999 to 2003: grant “coupled” with CEB Gabon loan (155,000 Euros), grants pegged on credit lines for Gabon (964,000 Euros), grants pegged to the CIB Congo loan (873,000 Euros), and subsequently, grant to supplement the “small concession holder” in Gabon (two million Euros). Recent thrusts

The period 2007-2009 marked a turning point for AFD with the devolution of the forest sector from MFEA to its portfolio, following the recognition of AFD as the lead agency, which gave room for the design of several instruments that were hardly used (TA and grants). Today, it is safe to say that there is only one active agency, that is, the AFD Group (and the FGEF). MFEA has retained its preserve on international and regional issues as well as the technical assistance desk, as Regional Environmental Adviser, attached to the French Embassy and based in Libreville. Following this devolution and in accordance with the main thrusts of French assistance in the forest sector, AFD has expanded its interventions to several areas, using new tools. AFD has now embraced a new component, institutional capacity building and in particular, direct support to national agencies; fiscal support to Cameroon (under the Debt Reduction and Development Contract – C2D) includes a strong institutional component. AFD also recently embarked on conservation with the incorporation of the trans-border forest complex “Sangha Tri-National Foundation” (TNS). This may blur the boundaries between AFD and FGEF projects, as AFD covers the forest conservation sector, while FGEF is responsible for funding new and/or research components. Where AFD is unable to provide grants in certain countries, FGEF steps in alone, thus reducing the visibility of its action. AFD also supported the design of the REDD+ mechanism by the States of the Congo Basin, which included a convention with the World Wildlife Fund, WWF CARPO, under the Forest Carbon Partnership Facility. It is worth recalling that the partnership with WWF had been in the planning stages for some time. These various projects amount to 20.7 million Euros worth of commitments (including institutional support to Cameroon in 2000, cancellation of 1.7 million Euros).

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More recently, AFD incorporated new areas of intervention: • comprehensive support to the industrial development of the timber sector (Congo project); • economic sector observatories; • plantations; • reactivating the PDRSO project, which falls under the social component of FMPs; • sub-regional support (TA SE COMIFAC), specifically for governance (resumption of sub-regional TA/ FLEGT/MAE). AFD’s intervention in these new fields was facilitated by the establishment, in countries like Gabon and Cameroon, of the C2D instrument that pumped massive top-up flows and thus, diversified interventions (consistent with requests from governments). These new thrusts, in keeping with France’s policies, seemingly lack clear-cut guidelines and thereby, undermine consistency and efficiency. Table 3. AFD/PROPARCO interventions for 1990-2010 (in Euros) Pledges

Pledges in % Disbursements Cancellations

PROPARCO projects

23,237,000

24%

10,579,000

12,658,000

AFD loans and credit lines for large FMPs

26,158,000

27%

11,143,000

15,015,000

AFD support projects to small/medium-scale concessionaires

22,545,000

23%

10,687,000

AFD / CAR, a peculiar case (excluding PARPAF)

5,900,000

1,900,000

4,000,000

New thrusts (fiscal support, climate, FLEGT…)

20,750,000

21%

14,000,000

1,750,000

TOTAL

98,590,000

100%

48,309,000

33,423,000

Source: AFD database, SIOP.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Figure 3. AFD/PROPARCO interventions in figures for 1990-2010 (in euros)

n PROPARCO projects

20,750,000 23,237,000

5,900,000

n AFD loans and credit lines to large FMPs

n AFD support projetcs to small/meduim- scales concessionnaires n AFD / CAR, a peculiar case (excluding PARPAF)

22,545,000 26,158,000

n New thrusts (fiscal support, climate, FLEGT, etc.)

Source: AFD, SIOP database.

Overview of the four French funding sources

Table 4 gives an overview of various French funding schemes to support the forest sector of the four relevant countries between 1990 and 2010. These estimates are a mere overview, MFEA and FGEF data should be considered with caution. Aggregate data on MFEA activities were unavailable, especially the oldest. Furthermore, FGEF support was considered basically as management projects, thus, some projects may be missing. Table 4. Overview of the four French funding sources in the Congo Basin forest sector for 1990-2010 (in euros) Committed

Disbursed

AFD

75,353,000

37,730,000

PROPARCO

23,237,000

10,579,000

MFEA

13,660,000

13,240,000

FGEF

9,188,000

5,775,000

121,438,000

67,324,000

TOTAL

Source: AFD database, SIOP.

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Beneficiaries

As far as beneficiaries are concerned, AFD primarily targeted the private sector on account of its mandate within French cooperation assistance and its strategic choices: (i) economic development was essentially driven by the private sector in the forest sector at the time; (ii) targeted support to FM was delivered through long-term forest concessions, thus managed by private entities. There are three categories of projects based on the type of beneficiaries, namely: • private entities: loans and credit lines for the design if FMPs for large concessionaires, with direct fund transfers to the concessionaires or through national banks; • public/private: projects known as the “small concession holder" projects (including PARPAF) whereby the State is the beneficiary, but the project is primarily a support project for private loggers (technical assistance, indirect grants and FMP design) • state: funding to support the Forest and Environment Sector Programme (FESP) in Cameroon, grants to the TNS park and funding to prepare FCPF (although partly funded by international NGOs to support the States in REDD preparation) Table 5. AFD/PROPARCO commitments and disbursements in 1990-2010 by beneficiary (euros) Committed

Committed in %

Disbursed

State (including REDD)

24,750,000

25%

14,000,000

State + private sector

4,445,000

24%

12,587,000

51,395,000

51%

21,966,000

100,590,000

100%

48,553,000

Private sector TOTAL

Source: AFD database, SIOP.

It is observed that the AFD Group/PROPARCO clearly focused on the private sector with a contribution of 75% directly through loans and credit lines (51%), or indirectly, in the form of grants to a beneficiary State (24%, case of “small concession holder" projects including PARPAF).

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

2.5. Country portfolio An in-depth country analysis helps to better understand the trends in AFD’s interventions in the sub-region. In the four countries under review (Cameroon, CAR, Congo and Gabon), AFD strove to tailor its strategy to a number of determining factors. The strategy is outlined in the PIF. There are periodical adjustments (generally, every three years) to take into account new national circumstances as well as new interests and trends at the regional and global levels. The determining factors reviewed include country development objectives and strategies, main strategic thrusts of other development partners, alignment requirements of France’s strategy which are critical to AFD’s strategy (specifically the PFD between France and the relevant country, for a five-year period). AFD charts its intervention scope and plans its activities based on the analysis of these factors. A comprehensive presentation and analysis are attached to each country report sent to AFD and a summary is also found in Appendix 8. This section will merely review country commitments to highlight their share of French intervention flows. Table 6. Summary of country funding commitments (all French donors)

Cameroon Congo

Commitments

41,917,000

35%

8,193,000

Gabon

42,113,000

35%

CAR

17,515,000

14%

Multi-country

11,700,000

10%

121,438,000

100%

TOTAL

Source: AFD database, SIOP.

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Conclusion This profile seeks to highlight AFD’s approach, through the four major types of intervention, namely: (i) financial assistance to the industry (PROPARCO), (ii) financial assistance to large holdings involved in FMPs; (iii) technical and financial assistance to “small concession holders”; (iv) new projects to cover diverse areas. Historically, the initial projects are clearly listed as “Forest exploitation, management and exploitation, forestry and processing projects”. Later on, the concept of “forest and environmental management” emerged. Lastly, in the early nineties, the concept of “sustainable forest management” was born. As shown in the section “Strategy”, AFD’s hallmark is pragmatism and flexibility in its interventions, consistent with the guideline of sustainable management, based on a model that ensured the exploitation and conservation of resources, helped to improve the context and maximized opportunities as countries and stakeholders matured in their attitudes. The original vision, outlined in AFD’s strategy, materialized over the years, with remarkable momentum.

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SECTION 2. Responding to evaluation questions 3. General coherence of interventions The first tier of issues addressed in this part of the study relates to the overall coherence of the AFD Group’s intervention with French guidelines, with national policies, with other donors and with regional trends.

Box 5. Key ideas

• Coherence with French strategic guidelines is clear. It is demonstrated by the overarching objective of supporting sustainable forest management, diversifying and gradually aligning interventions on components such as biodiversity, institutional and regional issues.

• There is sound coherence in the actions of French Development Assistance stakeholders with specific synergies of MFEA/AFD and FGEF/AFD.

• Coherence with national policies is sound. It was probably bolstered by the fact that France influenced their design or realignment in conjunction with FMP support pilot projects and AT/ MFEA relays at the central level.

• Regarding coherence with other donors, complementarity is the most appropriate term, as each donor has a specific scope (AFD for field support to FMP), albeit complementary with hindsight. • Coherence with regional issues is also visible, although AFD’s intervention in that field is fairly recent.

3.1. Coherence and internal synergies with French development assistance The coherence of AFD’s intervention with the major guidelines of French development assistance will first be examined. Thereafter, the study will show how it has fitted into French development assistance, in terms of coherence and synergies with MFEA and FGEF.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Overall coherence with strategic guidelines

On the strength of the aforementioned French development assistance strategic guidelines, there is generally sound coherence of AFD interventions with French strategic guidelines, and especially, continuity in its efforts, which is fully consistent with the “time-bound action” strategy discussed in French guidelines. In 20 years, AFD actions have generally conformed to major international debates and new paradigms which emerged over the years (sustainable management, biodiversity, climate change, FLEGT as well as social issues, etc.). AFD successfully fostered an integrated approach for conservation and sustainable management, by migrating, over the years, from a basically economic approach to gradually mainstreaming biodiversity and more recently, climate change. There have been two important milestones, consistent with these strategic guidelines, namely: sustainable management and biodiversity. On the one hand, AFD supported the forest management approach that involved shifting from a “mining” type of exploitation to sustainable logging that takes into account resource regeneration. On the other hand, AFD implicitly incorporated biodiversity in its approach given that FMPs generally developed a biodiversity component (keeping pace with developments in the approach and FMP regulatory framework). This goal was achieved through funding from FGEF, in the exercise of its mandate, with complementary actions to back AFD’s support to FMP. The other milestones are fairly recent and are gradually crystallizing into concrete support, to wit: institutional support, mainstreaming climate issues (support to the Congo Basin Partnership Fund (CBPF) for this mechanism) and governance support (regional level).

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Table 7. French assistance strategic guidelines in the forest sector and major types of interventions of AFD Priority guidelines set out in:

Types of AFD interventions

(i) The Tropical Forest Action Plan (2004), (ii) The Environment Sector Plan (2005), (iii) the White Paper (2006), (iv) The Sub-Saharan Africa RIF 2008-2012, (v) Environment SIF 2007-2009.

Sustainable management • Focus on conservation and sustainable management of French tropical forests • Integrated approach to biodiversity conservation and sustainable management of exploited forests • Mainstreaming conservation and production issues

FMP support projects for the sustainable management of forest resources through assistance to large concessions (loans and credit lines) and smalland medium-scale holders

Conservation and biodiversity • Realignment of French cooperation on forest conservation and natural lansdcape-friendly activities • Conservation of biological diversity, including tropical forest management, specifically in the Congo Basin

FMP support (as above) incorporating a biodiversity component in studies and planning. Targeted FGEF grants to support the biodiversity component

Institutional support • Enhancing knowledge, research and information dissemination • Implementing collective actions • Capacity building

Component support by MFEA and recently devolved to AFD. AFD PARPAF and smallholder projects now fall under institutional support Funding research in CAR en RCA

Governance and legality • Enhanced efforts to stem the import of illicit timber and mainstreaming sustainable management in the timber market • Improved and greater recognition to forestry governance

Support to FMP of large concessions for the purpose of certification of managed areas Regional institutional support project with TA to support FLEGT (in furtherance of TA/MFEA)

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Priority guidelines set out in:

Types of AFD interventions

(i) The Tropical Forest Action Plan (2004), (ii) The Environment Sector Plan (2005), (iii) the White Paper (2006), (iv) The Sub-Saharan Africa RIF 2008-2012, (v) Environment SIF 2007-2009.

Climate • Combating climate change • Combatting global warming aligned on sustainable forest management actions

Ongoing consideration of including FM in mechanisms such as REDD Targeted support to prepare the CBFP Fund and WWF Convention

Other important points • Action should be sustainable • Maintaining priority on the Congo Basin and exploring other opportunities in the Brazilian Amazon and Indonesia • Aligned on other multi-stakeholder and/or regional initiatives Source: AFD database, SIOP.

The implementation of French strategic guidelines sometimes required a certain pace, until the context and stakeholders were favourable enough, to undertake certain actions (such as support to “small concession holders”). The analysis of the coherence of AFD’s intervention with French strategic guidelines will be illustrated by two country case studies. Gabon, the country with the highest flows, properly demonstrates coherence with French guidelines. In this specific regard, Gabon served as AFD’s pilot country when it realigned support from exploitation – mainly driven by PROPARCO in the early nineties – to management. This includes support to CEB which furthered the design of the FMP model, the introduction to credit lines between 1999 and 2003 to help popularize the approach, through FGEF grants to better mainstream the social and biodiversity components and today, exploring avenues to involve other stakeholders, “small concession holder” project drivers, in the management process. Through the Biodivalor pilot project (PB), FGEF has intensified French efforts in the area of biodiversity. In the Republic of Congo (RC), the 2000-2009 portfolio highlights a deficient intervention in numerous areas, in relation to the forest sector strategic guidelines. However, that can be attributed to inadequate intervention (principally, loan to Congolaise Industrielle du Bois (CIB) and FGEF 54 © AFD / May 2012

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component) owing to the unrest that rocked the country and suspension of assistance following RC’s default in payment. However, in 2010, new priorities were defined in line with the core strategic thrusts, relating to the sustainable management of forest ecosystems 19. The 2007-2011 PFD for the Republic of Congo follows the same trend. The forest sector is portrayed as one of France’s three intervention sectors. This choice was guided by the fact that it is also one of the world’s richest and largest forest ecosystems in terms of biodiversity. French intervention in this sector was dictated not only by economic reasons, but also by the need to preserve this ecological and cultural asset. Apart from the European Union (EU), which had launched its FLEGT programme, other donors can barely be found in the forest sector. Coherence among stakeholders and French cooperation instruments was also assessed. It was found to be significant. Since the project outline describes the various stakeholders and their mandates, this section will focus on the coherence of their interventions. Overall coherence of French assistance with main thrust: sustainable management

Overall, the interventions of MFEA, AFD and FGEF are guided by the common objective of sustainable forest management. It is logical because the strategic documents, such as the White Paper, outlined France’s position, which translated into MFEA commitments implemented by AFD in its own sphere. Beyond this common objective, the three stakeholders are bound by common strategic principles: (i) the key role of FM in meshing exploitation with sustainable management; (ii) the need to expand sustainable management to biodiversity issues; (iii) the importance of redistributing forest benefits to local communities; (iv) the need for institutional capacity building actions Accordingly, overall coherence of French assistance in the Congo Basin forest sector is adequate at two levels: (i) The French cooperation strategic guidelines adopted in 1994 have maintained their relevance in AFD strategic documents (albeit, incorporating new components like climate issues); (ii) the targets for various MFEA/AFD/FGEF interventions are pretty similar. Specific MFEA/AFD/FGEF synergies were developed. Prior to reforms in the French cooperation system, MFEA oversaw institutional support (in broad terms), whereas the AFD Group ran economic development projects. In 1995-2007, both entities undertook significant interventions. The background section highlighted the complementary nature of their interventions. The most prominent synergies are reported hereunder: 19 Source: Ernst, G. (2010), Note sur l’approche régionale foret dans le Bassin du Congo [Memo on the regional forest approach in the Congo Basin], AFD, Paris.

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• reliance on or collaboration with MFEA pilot projects (API Dimako, and to some extent, Forets et Terroirs, in Cameroon) to launch the first large-scale FMPs (or the Salo forest pilot project); • productive collaboration between AFD’s FMP field support projects and use of deliverables by TA/MFEA in Ministries in charge of forests to improve forest legislation and standards; • continuity in the specific area of forest research, with the Mbaiki station in CAR, where AFD is gradually taking over from MFEA. An indirect synergy, through consultancies, has been developed by the fact that the same group of agencies (CIRAD, Forest Resource Management – FRM) have worked for MFEA and AFD, thereby gradually developing France’s FM knowledge base. There are also solid synergies between AFD and FGEF, which was involved in the social and biodiversity components of FMPs, especially with the backing of AFD (see Part I). It provided additional and sometimes, crucial support for mainstreaming social and biodiversity issues, thereby easing the task of AFD, which funded FMPs, in designing FMPs that encompassed the three components (forest, social and biodiversity issues). This synergy also rendered AFD loans more attractive to concessionaires, as will be shown subsequently. A set of diverse and effective tools

Beyond the coherence and complementarity of French assistance stakeholders, it should be underscored that AFD relied on a myriad of tools. Virtually all the available tools were used and tailored to different situations to support a common endeavour: • MFEA pilot projects to pave the way; • AFD concessional loans to the private sector, to interested groups which meet the loan requirements, to support the FMPs of large concessions; • AFD lines of credit in national banks to grant smaller operators access to loans, and support the involvement of the national banking sector in the forest sector; • AFD grants and TA (PARPAF and “small concession holder” projects in Congo) to help some concessionaires to join the process at some point, as they cannot do so on own their own; • AFD sovereign loans (“small concession holder” project in Gabon for the same purpose as stated above, although Gabon’s status as a middle income country did not allow grants);

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• MFEA technical assistance desks in (i) Ministries in charge of forests to support national policies and specifically, to ease the incorporation of FM in policies and laws, to develop standards and reform the general institutional framework; (ii) regional bodies supporting governance (for instance AT/FLEGT); • MFEA research support or training projects as part of general capacity building efforts in the forest project; • FGEF grants to support AFD actions to help mainstream social and biodiversity components in FMP • FGEF grants and projects in the area of conservation or sustainable wildlife management (rural hunting), recent AFD grants to TNS Park. While these tools have not always delivered the goods (lines of credit, sovereign loans), their use and the complementarity of their actions are worth mentioning. AFD used and tailored its different tools to every target group with flexibility. Recently expanded AFD scope and toolkit

Following reforms in French cooperation, AFD has emerged as the leading agency and it has now taken over institutional support projects, a completely new area. It is clear that institutional issues cut across AFD’s strategy. Furthermore, projects like PARPAF or “small concession holder” in Congo and Gabon already included institutional capacity building actions, without being the focus of those projects. Today, AFD has taken over interventions from MFEA. That opens new and significant intervention avenues for a core component of France’s strategy in the Congo Basin forest sector. Furthermore, new tools have been introduced, such as C2D, to supplement the available tool kit. With an expanded scope and a new range of tools, AFD is poised to tackle various sustainable forest management projects, transcending the technical aspect of FMPs (governance, FLEGT, mainstreaming social issues and poverty, climate change, REDD, etc.). With a diversified portfolio, it has a strategic position on emerging regional and national issues. It is a laboratory of new ideas and, through its myriad of tools, continues to create an enabling environment to improve stakeholder practices and operating methods.

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3.2. Coherence with national policies Sound coherence with national policies

The coherence of AFD interventions is also visible in relation to the national policies and strategies of the four Congo Basin countries. The components supported by AFD are indeed consistent with the defined priorities of these policies and strategies:

(i) sustainable management in general; (ii) FM as the preferred driver of sustainable management; (iii) support to the development of FMPs in both large concessions and “smallholders”; (iv) mainstreaming social and biodiversity components; and more recently,

(v) mainstreaming climate issues in forestry methods; (vi) supporting enhanced processing. For example, in Gabon, the projects implemented with CEB to design the first FMP influenced the subsequent forestry law. In the following years, AFD and FGEF management interventions were logically pursued in coherence with national policies. Ongoing efforts undertaken in the “small concession holder” projects, with the strong involvement of Gabon’s government, should shape regulations and standards in the near future. For instance, in the Republic of Congo, AFD interventions (ongoing or planned) are generally coherent with the country’s national policy, in addition to providing support to: • continued assistance to management (North and South) through the Congo sustainable forest support project (PAJEF); • processing with the planned timber sector support project; • conservation through the TNS Park; • mapping out with the support of the National Center for Forest and Wildlife Resource Inventory and Management (CNIAF) for the demarcation of the permanent area (still with PAGEF).

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There is sound coherence with the forest codes designed over the last few years. It is also worth reporting that AFD has started addressing the issue of “smallholders” (Congo and Gabon, and the CAR to a lesser extent). For instance, in Congo, AFD interventions are consistent with the forest policy, as it tackles the problematic southern region head-on; a daunting challenge highlighted in the forest policy, but never addressed squarely. Partially related to interactions between French assistance and national policies

This coherence does not only stem from an intervention consistent with national goals. It also results from interactions between French assistance and policy guidelines. France, notably through its TA in Ministries responsible for forests, somehow influenced national policies, laws, and more generally, the various framework documents. The institutional support provided by MFEA through its technical assistance system contributed significantly to this effort as well as to designing forest codes. The pilot projects (MFEA or AFD) and AFD field assistance projects supported the forest management drive and mainstreaming in policies and legal frameworks. This can be credited to the synergy between AT/MFEA and AFD field actions. However, one may be inclined to think that this synergy somehow influenced coherence consistency by aligning some forest policies, strategies and regulations on French guidelines, specifically in the area of management. The FMP model developed in the Congo Basin countries is a French model (with the assistance of French agencies).

3.3. Coherence with other donors Initially visions and approaches were different, but influenced the legal framework

Behind a seemingly common sustainable management objective, the various donors designed different guidelines and strategies which did not often favour a collective intervention. In this regard, the Canadian International Development Agency (CIDA) focused on substantial institutional support to the public sector (in Cameroon, for instance) on the assumption that deficient governance had caused some major problems in the sector. Meanwhile, the European Union and the British Department for International Development (DFID) rather focused on governance (for instance, the Independent Observer (IO) projects, followed by FLEGT) driven by the fact that progress in sustainable forest management primarily depended on improved governance, with the technical support and oversight of DFID Cameroon. While this approach caused serious tensions, it helped in dealing with the sector’s core problems. The © AFD / May 2012

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World Bank introduced sector development guidelines, often consistent with the Highly Indebted Poor Country Initiative (HIPC) tools. It withheld its intervention until the fulfilment of these requirements, although pursuing targeted interventions in the areas of resourceallocation system, fiscal reforms, indigenous peoples, partnership agreements, etc. It is worth recalling that, in the nineties and 2000s, most donors supported the “conservationist” approach and challenged the private sector and miners, who were considered to be lawless, which spurred them to prioritize support to protected areas (especially the European Union) or refrain from intervening in the forest sector (case of the World Bank, which suspended its support to the forest sector as long as conservation remained the order of the day). Only smaller donors, like CIDA or the German International Cooperation Agency for Sustainable Development, or the German Technical Development Assistance Agency (GTZ) supported the forest sector, sometimes aligned on French thrusts, on the shared belief that it was possible to achieve sustainable logging and/or deliver targeted support to community forestry. This divergence did not prevent donors from wielding significant influence on forest laws and reforms. Greater approach convergence from 2000, but poor coordination

The introduction of FMPs was initially stalled by the reluctance of major donors, especially any approach which favoured the involvement of the private sector. Things have changed since. AFD’s approach can be credited with demonstrating that forest management is a sustainable logging method and that the private sector’s adherence to the approach is indispensable. Today, almost all donors share this approach which has become one of the pillars of forest policies and strategies (see the Environment Forest Sector Program – PSFE Cameroon or COMIFAC Convergence Plan). There is improved complementarity of support: reform of the allocation and management system, FLEGT and management. The shift in the position of international NGOs influenced the position of donors. Accordingly, the World Bank’s position changed when NGOs presented new views to Washington.

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De facto complementarity of interventions

Regarding the focus of major donors, it can be characterized as the distribution of intervention areas between traditional stakeholders. The World Bank covers forest sector reform issues (taxation, allocation systems, economic matters, social issues), the European Union focuses on governance and support to protected areas while AFD supports FM components through the private sector and forestry administrations. This explains its qualification as de facto complementarity of various donor interventions and therefore, coherence of AFD’s intervention with other donors, although the interventions were not originally designed in a concerted manner. Besides Cameroon, there was neither a formal donor coordination nor strategic consensus in the forest sector. This very general observation should, however, be qualified for each country. In this regard, the Central African Republic and Congo had virtually no other donor interventions until recently, and as such, coherence was “automatic”. There are a few recent examples of collaboration or concrete complementarity between AFD and other stakeholders: governance in Congo with the European Union; forest management in Congo with ITTO, the Wildlife Conservation Society (WCS), and GTZ; REDD in the Central African Republic; TNS Foundation grants with other donors 20. The complementarity between French support in the forest sector and the activities of major donors like Germany (natural resource management project – PGRN), Canada, the United Kingdom, the Netherlands, the United States Agency for International Development (USAID), the World Bank, the EU (FLEGT) and ITTO, is firmly established in Cameroon. In Gabon, France and ITTO conducted complementary interventions to entrench the management process (zoning, mapping and forest inventory in Zone 1, pilot FM project – Bokoue forest). With further regard to Gabon, France offered to act as the lead aid agency after the Government of Gabon showed interest in the PAFT (Tropical Forest Action Program) 21 in 1990.

20 The establishment of the fund was prepared with the support of the World Bank – WWF alliance. Members of the foundation include donors, GTZ and AFD, and international NGOs – WWF, WCS. 21 PAFT was established in 1985 (process initiated by FAO and WRI) and renamed, “Tropical Forest Action Program”.

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Box 6. AFD and EU complementarity: example of Congo Complementarity, by extension partial coherence, is observed in FMP and good governance component. The relevance of an intervention implemented by two donors is noteworthy, with one delivering support to the private sector and forest management (AFD) and the other supporting good governance (EU) and in the process, splitting two components which though complementary, are difficult to be supported by a single donor, as is the case today in the Republic of Congo.

• AFD provides technical support to management and soon, to processing, taking into account the concerns of the southern zone. Its support is extended to mapping the permanent area in the South and capacity building with focus on CNIAF.

• The EU concentrates its support on governance issues through the IO project, supporting the tracking system and the FLEGT negotiation process (also supported by AFD with the regional technical assistance of COMIFAC).

These two major interventions are complementary: AFD tackling field and technical aspects upstream and downstream, while the EU focuses on governance issues and enhanced control. It can be said that the interventions are coherent and separately contribute to achieving sustainable management, a process which requires tools (FMP) and a monitoring system (OI and FLEGT). Both are strongly interrelated.

3.4. Coherence with the regional process The consulted policy documents are generally silent on the existence of regional mechanisms. COMIFAC and CBFP are summarily presented in the White Paper and the Environment Sector Strategy. The Environment CIF 2007-2009 underscores the need for AFD to align its intervention on multi-partner and/or regional approaches.

Box 7. Extracts of PFD (Congo) The PFD between France and Congo for 2007-2011 provides that, “ AFD’s Congo Forests Sustainable Management Support Project (PAGEF) will be aligned on ongoing regional projects: “forest and sustainable development – CBFP” to support COMIFAC’s efforts for good governance in the forest sector and “training and research to support sustainable development in the forest-environment sector in Central Africa”. Funds will be raised for Congo for the purpose of funding some studies and one-off research and conservation actions ”.

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Similarly, the guidelines of the AFD Group’s interventions in the Republic of Congo for 2007-2009 state: “ supporting the protection and sustainable exploitation of forest resources is the focus of national and regional natural resource management policies, pursuant to the Yaounde Declaration (March 1999) on “the conservation and sustainable management of tropical forests” and the Treaty establishing COMIFAC signed in Brazzaville in February 2005 by Heads of State of Central Africa. Our actions shall therefore be fully consistent with interventions of the French cooperation and USAID under the Congo Basin Forest Partnership and the implementation of the COMIFAC Convergence Plan ”. Lastly, the country intervention guidelines with the Republic of Gabon for 2007-2009 states: “ the Congo Basin is the second largest forest basin in the world. France plays a pivotal role in promoting the sustainable management of natural resources and initiated the field implementation of the concept of sustainable management plans. The objective is to pursue the enabling policy for sustainable exploitation and forest management, training and research as well as in the area of environmental protection and biodiversity conservation. This approach is implemented under the national framework of the Forest-Environment Sector Programme (PSFE) of Gabon and regionally, under the implementation of the COMIFAC Convergence Plan and Congo Basin Forest Partnership (CBFP) which was facilitated by France from January 2005 to December 2006 ”.

French support is consistent with the regional framework, and more specifically, with COMIFAC (the regional body responsible for steering and harmonizing forest and environmental policies) and CBFP. In 2002, the launching of CBFP afforded a new intervention framework to various partners. France took a leading role and enhanced its influence. It was at the forefront of sustainable forest management. The intervention context became more favourable, as reflected by the expansion of AFD’s portfolio in the late 1990s and early 2000. Various actions implemented by France since 2003 have contributed to the regional integration process of the forest-environment sector in CBFP namely: the organization of the CBFP’s first Plenary Meeting in 2003, facilitation of CBFP between 2005 and 2007, acknowledged leadership by the majority of members in Central Africa on several priority components of CBFP, notably sustainable forest management. France’s long-term commitment in the four countries in the area of forest management increased its influence in COMIFAC and CBFP, as they made the tool the cornerstone of sustainable forest management in the Congo Basin.

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AFD plans to maintain this support to COMIFAC and CBFP and concurrently, establish synergies with the initiatives of other technical and financial partners (Congo Basin Forest Fund – CBFF/African Development Bank – ADB/WB/EU). This regional position has projected AFD as a new lever of influence, in the face of weak national administrations. However, its impact will depend on the performance of COMIFAC, on its leverage and its ability to genuinely influence the implementation of national policies. Picture 2. Transporting firewood.

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4. Stakeholder interactions and relevance: justified choices in the circumstances with hindsight This section examines the relevance of choices in respect of targets, tools and actions, in the operative context in furthering sustainable management. Concurrently, the TORs included a review of stakeholder interactions (private entities, donors, NGOs, governments). This component, intertwined with the relevance of the intervention choices, is also discussed for the purpose of clarity. • There were concerns about interventions delivered in the context of weak states and poor governance. With hindsight, the decision to intervene in such a context was justified and furthered the management process. • The private sector is a heterogeneous group comprising four main players; (i) large European holdings; (ii) medium-scale operators; (iii) Asian groups; (iv) “small” operators. • ADF banked heavily on providing field support to FMP by initially targeting the large European holdings and subsequently, small and medium-sized permits, an understandable and relevant decision at the time. Today, there are concerns about pursuing projects with the State.

4.1. A key socio-economic sector The relevance of FM support should be primarily considered in relation to the socioeconomic importance of the timber sector in the Congo Basin countries. For the record, the forest sector is among the drivers of the economy of these countries. In some cases, it is actually the leading sector in terms of actual contribution to GDP or employment. In Cameroon, the forest sector accounts for up to 6% of GDP, representing about CFA 41 billion in fiscal revenue: 13,000 jobs in the formal sector and 150,000 jobs in the informal sector. In the Central African Republic, despite the small size of the logging area, the forest sector fetched about 6.3% of GDP in 2007 and 40% to 80% of export earnings, year on year. It is the second largest employer after the State. The socio-economic importance of the forest sector is the main factor to assess the overall relevance of AFD interventions. © AFD / May 2012

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4.2. Intervention in the context of weak States and poor governance Stakeholder interactions: weak States not playing the game

Forest administrations did not fully play their part in the forest management process. First of all, they are deemed to be very weak in the countries concerned. They kept pace, after the Rio Conference in 1992, as reflected in forest law reforms to introduce forest management plans for concessions. However, they failed in defining and implementing coherent forest policies, despite the formulation of the National Forest Action Programme (NFAP) or PSFE, which received massive donor support. They were unable to put in place an efficient law enforcement tracking system. The situation can be explained by various factors, namely: (i) Governments probably made the economic choice of making the most out of the timber sector, at the expense of sustainable management; (ii) forest revenue is used for political patronage; (iii) it is a source of revenue for the forest administration, which thrives on corruption. The absence of a sustainable forest management policy breeds arbitrage in favour of the agricultural and mining sectors, structural weaknesses of States and State institutions sustain corruption and negligence in the forest sector. The few reformers in these administrations have very little resources to change the “system” in place. Reasons for the reluctance to improve resource allocation systems and disinclination to compel loggers to submit or approve their FMPs (see duration of provisional contracts) are obvious. Indeed, as long as an FMP is not adopted, loggers are left to their own devices: they harvest as many resources as possible, without regard to losing their concession after a couple of years. Various reports reveal that after approving FMPs, the administration does not conduct site inspections, which are, in most cases, an opportunity to collect their usual cuts. Even large companies, playing by the rules, are not immune from such extortions. The IO Report, in Cameroon for instance, is damning, as it highlights the disconnect between administrative rhetoric and reality. The administration is a stumbling block to the development of FMPs, in its drive to sustain the sharing of forest revenue. FMPs designed on paper and the areas said to be “under management” shield the reality of sustainable management, save for a few companies that are well on track, and have earned FSC certification (see Table 1).

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Governments still expect a lot from partners, although the countries lack an integrated forest policy yoked to a sector-based development. The official stance increasingly calls on countries of the North to increase their contributions to pay for the environmental services deriving from forests. The administrations interviewed unanimously expect continued support, through management support projects for “small concession holders”, increased institutional support, aligning support on industrial development strategies, notably for local processing, and to a lesser extent, plantations (case of Congo). A pragmatic approach: pro-private sector and bucking the trend, but relevant with hindsight

French policies, implemented by AFD, opted for an intervention in this context of weak States marred by poor governance. Other donors made different choices (the World Bank opted for deep-seated reforms based on conditionalities, CIDA focused on institutional support, DFID tackled governance by acting as a watchdog, while the European Union supported independent observers). Was a pragmatic approach relevant at the time? It is hard to answer this question. However with hindsight, it was relevant because waiting for State capacities to be strengthened would have stalled action for several years at the expense of sustainable management. France’s decision turned out to be partially justified. Several large private concessionaires placed large areas under management (specifically for commercial certification purposes). There is general agreement and acknowledgement that if this choice had not been made then, there would probably be neither management nor certification today. Sustainable resource management would have been a far cry away. In this regard, among the various donors, AFD pioneered the management of tropical forests in the Congo Basin. Its position as a development bank, strongly involved in the private sector, dictated a different view of the novel intervention area it embraced. While most donors were distancing themselves from the private sector, amid paradigm shifts and increased global environmental awareness on the wanton exploitation of the earth’s forest resources, AFD swam against the tide. Indeed, AFD believed that chastising the private sector, which is the core of the production process and indispensable de facto stakeholder in the sustainable forest management drive, would have been misguided, especially as governments were remiss in their duties. AFD, tapping into its banking experience and range of tools, offered an alternative: funding FMPs, the cornerstone of forging new stakeholder relations to achieve sustainable forest management. Its commitment attracted a wave of criticism in the © AFD / May 2012

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early years that is, between 1990 and 2000, before most stakeholders gradually acknowledged its relevance. Despite all the hurdles, AFD stayed the course by gradually mainstreaming new paradigms and core issues such as biodiversity and social issues, in forest management. The problems and constraints encountered by AFD do not, in any way, downplay its significant contribution to the sustainable management process in the Congo Basin. Furthermore, if the choice had been to wait for the establishment of good governance, as advocated by FLEGT, Congo Basin countries would not have easily embarked on the FLEGT process.

4.3. Private sector: different stakeholder groups The private sector plays a critical role in forest management, both as stakeholder in the exploitation and management of forest resources upon concession and/or allocation of one of the several categories of permits. It also directly impacts other resources in the allocated areas (biodiversity, non-forest timber products [NTFP]). The private sector is very heterogeneous and their divergent interests are often driven by competition for resources and markets. There are four types of players: (i) large European groups; (ii) medium-scale operators; (iii) Asian groups; (iv) smallholders. Apart from the above categories, so-called “rogue loggers”, without official permits, carry out considerable logging and supply the local and regional markets. Large European groups

Large European groups drove forest management. They spearhead the management process. They swiftly migrated from the mining type of exploitation to forest management (for instance, CIB and the Industrielle Forestier du Ouesso (IFO) company in the Republic of Congo, Pallisco in Cameroon, CEB and Rougier in Gabon). This shift did not occur without reluctance. This shift resulted primarily from pressure exerted by environmental NGOs. Indeed, these large companies embraced management in an effort to secure their markets in the face of pressure from international NGOs (threats of boycott) and to penetrate potential markets which require certification (of which management is a key tool). Their decision was also guided by economic reasons. The FMP tool provides knowledge and mastery of the resources which help to rationalize exploitation. It further ensures sound assessment of specie productivity for commercial purposes. 68 © AFD / May 2012

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Several large groups pre-empted and clearly positioned themselves as drivers of this process in conjunction with international NGOs and forest administrations. Indeed, the design and implementation of FMP were prerequisites for certification. The lack of relevant experience in the Congo Basin led some leading companies (such as CEB in Gabon) to design FMPs which were building blocks for formulating forest law standards in the countries concerned. The other large companies, which were initially reluctant, gradually joined the bandwagon, coupled with the fact that FMPs became statutory requirements. All these large groups have management units. It is hard to assess the actual outcome of the implementation of FMPs due to the absence of monitoring tools in this area, poor governance, difficult access to logger data, lack of in-depth research, etc. Only a few IO reports give a serious insight into field activities. FSC certification is the only credible tool in the implementation of FMPs. It should be recalled that OLB or TLTV certifications, which attest the legality of timber are not yardsticks of sustainable management. A study (GTZ/PGDRN 22) on the implementation of the best 20 forest management plans in Cameroon shed some interesting light while at the same time revealing the worrying reality of the sustainable management of these FMP concessions (it is worth recalling that Cameroon ranks last in AFD’s interventions). According to findings of this study, three out of every four management plans fail to comply with 50% of the required standard for sustainable management certification. FSC certification is currently the only standard to measure genuine implementation of FMP. The involvement of the large groups in future sustainable management efforts is in question. Some views hold that compliance with international standards (FLEGT) and market pressure will spur the large groups to increase their market shares on the European timber market. In this way, they will foster sound forest management in their concessions and possibly in other areas held by other concessionaires with whom they have an agreement. Meanwhile, others believe that the large groups are unlikely to pursue their efforts, as they feel they have so far been short-changed as a result of differential pricing. Furthermore, the FLEGT process risks opening up the same European markets to companies in compliance with minimum FLEGT standards. Compliance with these standards entails much higher costs for the companies that earning FSC certification.

22 Vandenhaute, M. and J.-L. Doucet (2006), Etude comparative de vingt plans d’aménagement approuvés au Cameroon [Comparative Study of Twenty Approved Management Plans n Cameroon],Yaounde. The study was commissioned by GTZ / Natural Resource Sustainable Management Programme (PGDRN).

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Box 8. Extracts of Professor Delvingt’s comment “In this area, companies have significantly improved their relations with other stakeholders of the timber sector: • they source part of their supply from medium- or small-scale operators who comply with FSC controlled wood standards;

• they implement joint pilot projects in the area of community forests (case of Palissco in Cameroon) or smallholders in Gabon;

• they closely collaborate with managers of protected areas in the vicinity of their concessions (Palissco, Rougier, IFO, CIB, CBG);

• they collaborate with some major international NGOs, including WCS and WWF; • they have established excellent relations, through ATIBT/IFIA, with FSC International which cites the Congo Basin as an example;

• they engage, to a certain extent, in forest research by collaborating with other research centres such as CIRAD, Nature+/ University of Gembloux and African Universities”.

What is more, some of these large groups have expressed clear concerns about the Congo Basin forests. The FMP standard came too late, after most forests had come under intensive logging and it will be difficult to remedy the excessive logging of the first cut. This may explain the abandonment of some concessions and the fact that in Cameroon, for instance, no new company has embarked on the FSC certification process. Medium-scale operators

Save for a few exceptions, medium-scale operators were forced to join the management process to comply with the law, rather than a genuine interest in sustainable management. These operators target markets, other than certified European markets, or supply the processing plants of large groups. The fact is unequivocal: on the one hand, these companies, with the collusion of the forest administration, take advantage of the provisional agreements to delay the design of FMP, beyond the statutory timeframe, in order to maximize logging activities in the interval, and on the other hand, the ensuing FMPs are substandard, often carbon copies of other FMPs, thereby highlighting the disinterest of these companies in this process and the forest administration’s inability to fully play its role. This group of companies is unlikely to embrace sustainable management without coercion and proper oversight. Some companies inclined to sustainable management complain about the prohibitive cost of designing forest management plans, which is out of their 70 © AFD / May 2012

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reach, a cogent argument according to experts. Agreements concluded between the large groups and these operators are a window of opportunity: large groups provide the muchneeded know-how and resources to these operators in return for part of their production. The large groups, especially those in compliance with certification standards, will thus foster compliance in the various concessions. Asian groups

It is often observed that they are unwilling to embrace sustainable management and are preparing more for a strategic shift in case European markets close. Most Asian operators are indicted for the “abysmal management” of their concessions. They have little regard for sustainable management; they have mainly commercial interests. While this pattern fits most Asian groups operating in the sector, others which depend on European markets to re-export processed products are planning a strategic shift, in case these markets close (case of VICWOOD, see box 17). It is very likely that some concessions supplying European markets comply with minimum management standards, whereas the remainder of the concessions trading on Asian markets will retain their current management system. Smallholders, or “small concession holders”

This category of operators is predominantly made up of national players who received various types of felling permits or harvesting rights as political compensation or in broader terms, through patronage, in which case, forest officials use proxies. This stakeholder group is rent-seeking and is unlikely to engage in professional logging. However, considering the size of this group and its impact on the resource, it is desirable to find appropriate solutions, bearing in mind that the current FMP process does not accommodate such smallholders. As in the case of medium-scale operators, partnerships with more organized companies could be a way out. However, this solution would apply to a few small-scale operators who are inclined to meet partner requirements. Most of them will continue selling to the highest bidder and log wantonly to supply local or regional markets. The lack of effective control and pervasive corruption inhibit the development of this stakeholder group. Lastly, there are also rogue loggers who have no permits, yet enter into agreements with communities for the exploitation of their forests or directly harvest directly from protected areas, and even in concessions. It is hard to estimate the number of such loggers but they

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dominate the local market. A recent CIFOR 23 study revealed that the share of the illegal or illicit sector to the local market accounts for some 50% of timber production in Cameroon. There is no legal framework governing the domestic and informal market, which clearly explains the presence of administrative officials and political leaders in this market. The informal sector is anything put poorly organized. Consultancies

Consultancies involved in the design of forest management plans form a specific category in the private sector. There are few consultancies specialized in forest management. However, they directly influenced the FMP model adopted in the Congo Basin. The sector is predominantly driven by one or two consultancies which from the very beginning strongly influenced AFD’s technical choices, in addition to two or three other consultancies which have also developed recognized expertise in the field. Relevance of AFD support policies

Historically, AFD initially supported a first group of operators, namely, large European groups. Was it relevant? To answer this question, it is worth revisiting the aforementioned historical context, marked by a challenging sector (poor governance, unsustainable exploitation practices, reluctance by private companies to embark on forest management), and protracted negotiations based on several feasibility studies which were not entirely conclusive. It should be specifically reported that discussions on the “small concession holder” approach in Gabon started in 1990 and ended only in 2006. The same applied to partnership agreements with large companies (CEB for instance). Forest management was new, and a review of the background and context sheds light today on AFD’s policy which initially supported the more receptive groups, the most serious groups (international entities) and the largest (to have an impact and a ripple effect), that is, large European concessions. Should support to the private sector be delivered through government loans to large private timber groups? In other words, are development assistance priorities in the forest sector aimed at helping these private, often European entities, or using these public funds for other purposes? For instance, funding management schemes in large forest companies in Gabon between 1996 and 2005 amounted to 13 million Euros including 900,000 worth of FGEF grants which was primarily destined to four companies. First of all, it must be underscored that these are primarily loans with stringent reimbursement guarantees. 23 CIFOR, Bogor, Indonesia (2011), Cameroun : une richesse forestière ignorée [Cameroon: a forgotten forest treasure]. A paper prepared with the support of the European Union and technical support of FEDA.

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Regarding the use of public funds to cover the requisite costs to design management plans and to support operators beyond the prescribed threshold, it may be said to be relevant to the extent that these funds are not meant stricto sensu for the private sector, but for the management of a global public asset: forests. This explains why the costs are shared between the various stakeholders involved: (i) the State, owner of the resource and responsible for its management; (ii) the private company involved in putting in place the management tool; and (iii) the development partner from the North (AFD). This contribution is warranted, among other factors, by the external benefits engendered by the sustainable management of tropical forests. It therefore seeks to ensure that the various stakeholders who receive this funding, the State (forest administrations) and private operators (both of whom benefit from production and own management plans) perform their management duties properly and comply with the rules of the game. The support is intended to achieve sustainable management as well as national and international impact consistent with the guidelines set out in the SIF 2007. These choices which were relevant at some point should be reviewed today in light of lessons learnt, as will be shown in this study. The SIF 2007 providers that, “non-sovereign (loans to the private sector) guaranteed (at a concessional rate) lending should only be considered where (i) the project is actually environmentally friendly; (ii) the funding supports the implementation of a priority public policy (i.e. the loan beneficiary can be considered to be the implementation tool of the said public policy); and (iii) the funding triggers a new unprecedented process for the beneficiary or competitors. Upon fulfilling the above requirements, the lowest possible interest rate is negotiated with the beneficiary, based on the local financial context ” Thereafter, AFD focused on the group of “small concession holders” (PAGEF Congo, “small concession holders” in Gabon). It was delayed because resistance was stronger, the stakeholders were unprepared for the process and environmental NGOs exerted less pressure. The idea existed already in early 2000, and possibly before, but only materialized as projects in 2007/2009. The PARPAF project in CAR also falls under this group, bearing in mind that it targets medium-scale operators and started in 2000. Once again, the issue is relevant and warrants support. The development of sustainable management involves a response to this group of small-scale, yet important operators for the sector, or in certain areas. In this regard, this category of operators must be considered in order to achieve sustainable management of forest resources in southern Congo. AFD support was therefore relevant and should be commended for addressing an important, yet delicate issue. Indeed, concerns were raised, and still stand, about the choice of beneficiaries. It is © AFD / May 2012

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acknowledged that it often involves non-professionals, often “rent-seekers” for whom concessions are just another means of making brisk money. Therefore supporting this category of operators may have very little impact because they are very unlikely to really change their forest exploitation methods, especially in the context of weak States. This is the challenge facing the “small concession holder” project in Gabon or PAGEF in Congo and their success will highly depend on their operation methods. However, there are questions on the relevance of using public funds for private stakeholders, a majority of whom do not play by the rules (payment of taxes, compliance with forest regulations)

4.4. International and national NGOs International NGOs

Initially, major NGOs generally advocated conservation: is tropical timber exploitable? They brought pressure to bear on large international holdings to push them to change their views on the exploitation of forest resources. While this debate has not been laid to rest, most of these NGOs have changed their positions and have agreed to engage the various stakeholders involved. Historically, they initially played an undisputed proactive role in the establishment of the certification process. There is no doubt that without the proactive action of major environmental NGOs (Green Peace, Friends of the Earth, WWF and Anglo-Saxon NGOs) echoed locally by National NGOs, large companies would likely not have embarked on the certification process. The boycott threat made by these NGOs paved the way for the adoption of various certification standards. Forest management plans came into the picture later, as necessary certification tools. This action continues, although the vision varies with NGOs. While some NGOs have stayed the conservation course, others have embarked on a more constructive process of partnership with the private sector. Generally speaking, there is a marked shift in NGO positions, migrating from hard-core conservation to sustainable management. There is also a significant improvement in relations between major concession holders and NGOs. It is worth recalling that while the forest products and economic issues component (processing) is properly mainstreamed in FMPs, the social and biodiversity components are insufficiently mainstreamed. Companies deem that these components are outside their scope and skill and that they cannot remedy the deficiencies of public authorities in this regard. In an effort to meet their legal obligations and/or certification requirements, these companies partnered with NGOs to implement these two components, depending on the availability of grants (e.g. FGEF, as 74 © AFD / May 2012

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well as funds raised by these international NGOs). The social and environmental components of FMPs was out of the reach of forest companies and led them to seek the services of NGOs specialized in these areas. Partnerships thus saw the light of day, moving from one-off activities to long-term actions. In this regard, WWF and WCF have gradually established partnerships with companies and have been part of the forest management process from the onset. The conflict with the sector in the 1980s and 1990s was gradually overcome through forest management plans. From simple agreements and one-off contracts, stronger and long-lasting partnerships have been established. Accordingly, WWF created the Global Forest and Trade Network (GTFN), comprising the major groups as members, which acts as a forum for sharing experience and planning between NGOs and the private sector. NGOs have been involved in one-off actions primarily to combat poaching. However, they are also conducting a myriad of studies on the management of biodiversity or local development in concessions, with fairly different findings. These NGOs acknowledge the importance of forest management planning in changing the attitude of private sector stakeholders. According to NGOs, two key factors explain these changes in the private sector: business culture (with new management teams in some groups) and markets (with certification or simply the importance of a positive environmental image). But, these achievements are shaky, as only a small fraction of operators have followed this trend (albeit the largest in terms of area), while there is insufficient ownership of biodiversity and social issues. Admittedly, they are mainstreamed because it is a legal requirement but, companies tend to outsource these components to NGOs and get rid of them. These NGOs are therefore concerned about the sustainability of their action after they have left (such as WWF in Gabon). There are divergent views on sustainability factors which translate into sustainable management, and more specifically, the FLEGT process. NGOs consider certification as the only available tool which ensures minimum compliance with sustainable management requirements. NGOs underscore the thorny issue of misgovernance of the sector as the core deficiency. There is no point introducing appropriate tools or vaunting management if there is no reliable system to control and monitor its implementation. These NGOs believe AFD has a part to play in this area, whereas under market pressure, companies embark on the certification process alone while AFD support in this area is not productive.

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National NGOs

National NGOs are highly diversified, ranging from staunch environmentalists to NGOs of “circumstances” (also generally called opportunistic NGOs or development brokers), which have embarked on a new aspect of the environmental market. National NGOs are generally more critical of management benefits. They believe that the high levels of corruption in the sector warrant an overhaul of all levels of the governance system in the countries concerned to achieve concrete progress in sustainable management. Over and above all, they also have a dual ambition. On the one hand, they emerge as potential operators on the field for the biodiversity and/or social components. They intend to support local communities in the delivery of social services. Like in the other sectors, there is a growing natural and logical trend whereby national NGOs are gradually replacing international NGOs as development players, and sometimes with the support of the latter. On the other hand, NGOs want to take a more active part in forest management issues by acting as representatives of civil society in general, and local communities in particular. Such participation has begun although the NGOs acknowledge that they have to demonstrate greater professionalism to enhance their legitimacy. Linkage between AFD and NGOs

AFD successfully established productive relations with some associations (international tropical timber technical association – ATIBT) and international NGOs (WWF and WCS). It initiated dialogue at the very early stages with several NGOs such as WWF. It also led to the signature of a memorandum of understanding between WWF and AFD to support governments in the design of REDD+ mechanisms. However, it has not successfully established sustained dialogue with other green NGOs (Green Peace, Friends of the Earth) and Anglo-Saxon NGOs. Other donors (GTZ, DFID) have successfully, albeit with difficulty, opened dialogue. This lack of contact has led to aggressiveness by these environmental NGOs toward those who have received or still receive AFD support (that was specifically the case with CIB in the Republic of Congo).

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Conclusion All in all, it can be said that French intervention implemented by AFD in the prevailing context was relevant in respect of the decision to provide field support to forest management. The decision to initially support private concession holders seems to have been wise with hindsight to the extent that if such a decision had not been made at the time, the current benefits of management would not have been achieved. However, several points should also be considered for future purposes. AFD supported large holdings, rather professional and driven by the commercial benefits of certification, which propelled the process and justifies the intervention a posteriori. However, the context is different today because the other groups of concession holders cannot be supported in the same way (medium-scale or “small-scale” operators), without building attendant capacities for the administration. In the absence of significant outcomes from donor support to the forestry administration, there is a widening capacity gap between the public and private sector. Today, the partnership is unequal and the forestry administration is unable to monitor and control private forest management schemes. After the first batch of large management schemes, the current context (across-the-board and sustainability of the management process) does not warrant dealing with the private sector only. It is desirable to realign public/private interventions, which is also part of AFD’s new mandate, following the recent devolution of MFEA’s institutional mandate. The new trend has been set in motion with the gradual realignment of that portfolio to the State (institutional support to Cameroon, “small concession holder” projects attached to the administration component, including a capacity building component) and to a lesser extent, international NGOs (Regional Agreements to support REDD+). Lastly, extending the management process to new target groups of the private sector raises, more than ever before, the issue of governance. Indeed, it is a significant drawback to the actual implementation of management plans for groups of concession holders that are not motivated or driven by market factors.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Picture 3. Transport of logs from the IFB concession, CAR.

78 Â© AFD / May 2012

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5. Average performance, cross-tool assessment This section will discuss the terms of reference of the study regarding performance in the area of: (i) projects in relation to outcomes, in a fairly factual manner to give an overview of targets/partially met or not met, (ii) each type of financial tool, an important aspect for AFD.

Box 10. Key ideas Performance/projects

• AFD’s performance in terms of individual project targets can be considered as average and contrasting. Funding helped in designing projects, which was one of the first full-scale management projects. Today, 5.5 million hectares are managed, including 50% certified. The relevant areas are concentrated in two countries: the Central African Republic and Gabon, and a few companies.

• The PARPAF project in CAR, considering the specific context of this country, yielded satisfactory results in terms of managed forest areas, although all targets were not met, while the performance of the social and institutional components was mixed. Today, the question is the actual outcome of the implementation of forest management plans. The performance of the smallholder projects in Gabon is yet to be seen.

Performance/Tools (AFD only, excluding PROPARCO) • Grants constitute the predominant tool (amounting to 29 million Euros, excluding C2D) and relate specifically to technical smallholder support projects. They take small-scale operators one step further, although the issue of ownership of designed forest management plans is still unresolved.

• Credit lines are the second financial instrument (19.7 million Euros disbursed in Gabon and Cameroon). Their performance is weak in terms of utilization of financial flows (56% of cancellations in one case and 100% in the other). They are seemingly not very attractive (due to red tape and long timeframes) in a context where national banks are over liquid and distrust the forest sector, unless they have signed up to the ARIZ mechanism.

• Direct loans to private companies (PN2 for financial assistance to forest management plans of three large concessions) amounted to 6.5 million Euros. This performance is commendable because the supported forest management plans were designed (and today implemented). However, these loans were especially attractive to small companies which enjoyed both the international backing of AFD and FGEF grants.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

5.1. Individual project performance First of all, an overview of targets met by various projects will be presented. Thereafter, targets will be assessed by groups of projects, based on the classification outlined in section 1. Financial assistance to large concessions

The AFD Group’s initial assistance to the forest sector primarily involved loans for industrial development and capital loans delivered through PROPARCO between 1990 and 2000. In the course of those years, AFD concurrently and gradually demonstrated its determination to enter the forest management “market”, which was increasingly becoming a topical issue. Five projects

Support to large concessions was delivered through five main projects: (i) loan to CEB Gabon in 1996; (ii) credit lines to Gabon in 2000/2003; (iii) credit lines to Cameroon in 2000/2002; (iv) Palissco loan to Cameroon in 2003; (v) CIB loan to Congo in 2003. A multi country loan to Rougier is in process since 2007. The Central African Republic was not involved owing to special circumstances (medium-sized concessions and role of the State in partnership agreements). Total disbursements amounting to 26 million Euros were committed. Mixed outcomes

Going by the project targets, performance is mixed (see Appendix 9). The three projects CEB, CIB and Palissco can be considered as successful because the set objectives were achieved. These projects initially aimed at designing forest management plans for large areas, a target met by all the three concessionaires. These forest management plans are now designed and under implementation. Furthermore, the relevant areas are now certified. Furthermore, this assistance had a positive impact on the general regional context at a defining moment of forest management (FMP full-scale experiment): (i) it had a trigger effect on large concession holders, (ii) it fostered widespread learning of the FMP tool, which helped to improve the tool and standards, (iii) it improved private sector/international NGO relations towards a more constructive dialogue generated by a sustainable exploitation tool.

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However, this section will highlight the social and environmental component impacts that were not achieved. The AFD monitoring reports question the financial viability of forest management as it seeks to know whether sustainable felling will not raise financial profitability issues to the groups involved. Regarding the two credit lines (Gabon and Cameroon) their targets were not met. In Gabon, only five companies received loans. The target of achieving forest management plans up to 2 million hectares was achieved. However, more than 50% of credit lines were cancelled due to the lack of beneficiaries or efficient relay local banks. In Cameroon, all the credit lines were cancelled (despite applications filed by several companies in national partner banks). Ultimately, the performance is therefore contrasted. Forest management plans were designed for an area of 2.4 million hectares (representing large concession areas supported by AFD in terms of loans and credit lines outside PARPAF in the Central African Republic). Nonetheless, there is a significant rate of credit line cancellations. Beyond the figures and areas, it is specifically important to note the ripple effect which will be addressed in the overall performance of AFD. FGEF support

The appraisal of FGEF support is not directly considered under the terms of reference of the study. They will be glossed over to give a general idea. A study is currently conducted by the BRL on FGM projects. Targets

FGEF support was mobilized for several types of interventions: • grants coupled with AFD loans or projects (CEB Gabon loan, Gabon credit lines, Cameroon credit lines, CIB Congo loan, AFD Smallholders Project Gabon; See Table 8); • support to research themes: Gabon BIODIVALOR (450,000 Euros), Central African Republic village hunting area management (1 million Euros), Cameroon community forest support (1.3 million Euros); • support to conservation and management efforts in protected areas: Cameroon in two national parks (1.5 million Euros) as well as two small initiative programs (PPI in Gabon). Overall, FGEF mobilized subsidies amounting to 9.2 million Euros including 4.9 million in support to forest concession management plans and 4.3 million in support of conservation projects protected area management or research. Out of the 4.9 million Euros in support to FMP, more than 4 million of FGEF grants were mobilized coupled with AFD assistance to forest concessions amounting to more than 40% of total FGEF disbursements. © AFD / May 2012

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

It is further observed that four of the five main AFD loans or credit lines earmarked for the design of FMPs were coupled with an FGEF grant (see Table 8). These coupled grants were primarily aimed at supporting: (i) mainstreaming of the biodiversity component in large concession forest management plans and to a lesser extent; (ii) research or monitoring of forest trends or (iii) mainstreaming of social issues in FMP. An interesting performance

On the one hand, FGEF grants enabled concession holders to go further in the development of the biodiversity components (conducting biological inventories and biodiversity plans), which they would not have been able to do without the grants. This component, being a requirement for the concession holders, did not rouse much enthusiasm. On the other hand, these grants led to the setting up partnerships between private entities and NGOs (more often international NGOs) and constructive stakeholder dialogue. However, the outcomes of the biodiversity components were restricted to the inventories of flagship species and to achievements often limited to anti-poaching (see Section 6.4). Lastly, the FGEF/AFD coupled grants had a significant impact on the attractiveness of AFD loans and as such on their success which will be examined in Section 5.2. Table 8 highlights the key FGEF and AFD interventions in the area of management or biodiversity. It shows the importance of coupled projects both for FGEF (almost half) and for AFD (more than half).

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Table 8. Key FGEF and AFD interventions in the area of biodiversity management Country/year

AFD Interventions

Interventions FGEF

Interventions in forest concessions Gabon /1996

AFD loan CEB

FGEF grant (200,000 euros), mobilized subsequently under other support flows to Gabon

Gabon/2000-2002

AFD credit lines

FGEF grant (1 million euros)

Cameroon/2000

AFD credit lines

FGEF grant

Congo/2003

AFD loan CIB

FGEF grant (873,000 euros)

Cameroon/2003

AFD loan Pallisco

Gabon/2006

AFD smallholders Project

CAR/2000-2010

AFD Project PARPAF

Congo/2009

AFD Project PAGEF

FGEF grant (2 million euros)

Interventions outside forest concessions Gabon/1996

FGEF – Biodivalor / forestry research support (450,000 euros)

CAR/2003

Management of rural hunting areas (FGEF 1 million euros)

Cameroon/2004

Biodiversity conservation in 2 national parks (1,500,000 euros)

Cameroon/2007

FGEF/GTZ – community forest support (1,300,000 euros)

Gabon/2009

FGEF PPI Mangroves Park Ankanda

Congo/2006

FGEF PPI Community involvement Parc Gamba Source: AFD database, SIOP.

Small- and medium-scale projects Three projects targeting smallholders and middle-scale operators

The expression “small concession holders” is an official terminology of AFD. It refers to medium or small scale companies often independent and not attached to international holdings with limited technical and financial resources.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

The â&#x20AC;&#x153;small concession holder" project in Gabon (started in 2007 with an ordinary sovereign concessional loan [PS2] and a grant) and the PAGEF in Congo (2009 with a grant) fall under this category. These projects had long dormancy periods because the forest administration and often reluctant operators had to be convinced. They saw the light of day following assistance, primarily financial assistance, delivered to large forest management plans while the â&#x20AC;&#x153;small concession holder" projects deliver combined technical and financial assistance. For the purposes of this analysis, the PAGEF Project in the Central African Republic is included (started in 2000 with a grant). It is the oldest project and targets medium scale operators but has several commonalities: (i) independent small and medium scale operators with limited technical and financial resources; (ii) similar technical support to the private sector (funding of FMP design); (iii) an institutional support component and a project in the administration. These three projects made progress in their respective areas with a satisfactory disbursement rate. PARPAF is near completion while the "small concession holder" project in Gabon is midway and the PAGEF Project started last year. Recent Projects

The Congo and Gabon projects are still too recent to assess the achievement of set objectives. Regarding the "small concession holder" project in Gabon, it should be noted that the areas are below the targets and it is expected that there will be a significant cost over-run. However, the performance of each of the two projects is expected and at the same time raises a question: having attained the target for large concessions, how can other categories of exploiters who do not have the resources to implement FMPs such as those co-funded so far by AFD and who do not have a direct interest in joining this process be made to adhere to the sustainable development process? PARPAF has made progress on several core objectives: (i) all allocated forest areas (3 million hectares) have quality management plans; (ii) stakeholder capacities, specifically private entities, and to a lesser extent forest administration capacities have been enhanced; (iii) management standards have been designed and technical manuals published; (iv) an enhanced dialogue between the State, private entities and NGOs has been established. However, the target of implementing sustainable forest management plans for all production forests will not be met at the end of the project which can be attributed to the uncompleted allocation process by the Government of the last three exploitation permits (representing 25% of the said forests). Furthermore, the use of two permits for the purpose of management plans has been suspended. Additionally, the social and environmental components 84 ÂŠ AFD / May 2012

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are weak. Lastly, the forest administration is not yet able to fully and independently perform its mandate without further support. Based on the set objectives, this group of projects can be given an average mark (without overlooking internal and external factors of their performance). That said, there will be a need to assess: (i) the actual adherence of concession holders to the sustainable management process; (ii) the relevance and feasibility of supporting small and medium scale permits (which dovetails previous concerns on the relevance of supporting this category of concession holders like in Gabon); (iii) challenges of institutional support. The benefits and weaknesses of these projects in terms of performance are summarized in Appendix 9. New support thrusts

AFD recently embarked on new thrusts of support: • conservation through the Sangha Tri-national Park (TNS, 2007, 3 million Euro grant); • a 4-year funding starting in April 2009 amounting to 3.6 million Euros in the FPCF was initially supplemented by a disbursement of 1.4 million Euros for capacity building in Congo Basin countries in the area of REDD at the national and regional level. WCS, WWF and Conservation International (CI) are part of the co-funding of this project. Finally, the decision was made in September 2009 for the first phase spanning April 2009 to December 2010 with the assistance of AFD amounting to 1 million Euros and contribution of three NGOs amounting to 1.2 million Euros; • sector support through the program approach and budget support to the EFSP in Cameroon (20 million Euros of grants drawn from C2D Funds including 10 million disbursed in 2007 and shared between the common fund and budget support); • technical assistance to the Executive Secretariat of COMIFAC which had just begun (in the aftermath of the MFEA technical assistance). The first two projects are recent and ongoing and there is neither data on their status nor on their achievement of objectives. Regarding support to Cameroon, the available outcomes are disappointing and further developed in Section 5.2.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

5.2. Performance based on financial tools used Overview of tools

Several tools have been used. Section 3 underscored the relevance of an array of tools used depending on needs, based on the demand of various target groups. Table 9 highlights the main tools used. Out of a total commitment of 75 million used (AFD outside PROPARCO) the following observations are made: • predominance of grants (29 million representing more than 50% if C2D is included) pertaining to technical assistance projects to "small concession holders" (Central African Republic and Congo), C2D EFSP support to Cameroon (10 million disbursed) as well as FPCF design funding; • significant amount of credit lines (19.7 million representing more than 20%) earmarked in two countries (Gabon and Cameroon) with high cancellation rates (76%); • less frequently used tools; (i) PS2 sovereign loan (8.2 million for the Small Permit Project in Gabon); and (ii) direct loans to private companies (PN2 to fund large concessions amounting to 6.5 million); (iii) ordinary condition loans (PCO) (loan to the State of Cameroon amounting to 1.7 million Euros). Figure 4. AFD financial tools (outside PROPARCO used in the Congo Basin from 1990 to 2010) n Commitments

30,000,000

n Cancellations

25,000,000 20,000,000 15,000,000 10,000,000 5,000,000

te rm s

Lo an s

m ar ke t

loa ns

PS 2

PN 2 So ve re ig n

C2 D

Cr ed it lin es

Di re ct loa ns

Gr an ts

(e xc lu di ng

C2 D)

Source: AFD database, SIOP.

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Table 9. Types of AFD financial tools (excluding PROPARCO) in the Congo Basin in 1990-2010 Country

Project type

Commitments Commitments Disbursements Cancellations in %

Grants Cameroon, (excluding C2D) Congo, Gabon, RCA

Smallholder projects, PFBC and TNS foundation Budget support

29,245,000

39%

14,061,000

C2D

Cameroon

Budget support and basket funding

10,000,000

13%

10,000,000

Non-sovereign loans Credit lines

Cameroon, Gabon

Financial support 19,700,000 PAF large concessions

26%

Direct non-sovereign concessional loans PN2

Cameroon, Congo, Gabon

Financial support PAF large concessions

6,458,000

Sovereign loans PS2

Gabon

Smallholder project

8,200,000

11%

2,526,000

Loans on market terms

Cameroon

State Institutional support

1,750,000

75,353,000

100%

TOTAL

4,000,000

4,685,000 15,015,000

37,730,000 20,765,000 Source: AFD database, SIOP.

Grants Main, though recent intervention tool

AFD delivered its intervention in the forest sector primarily through grants (29 million Euros) owing to the importance of "small concession holder" projects (PAGEF Congo and PARPAF in Central African Republic). This tool was also used in the FPCF or the TNS Park Foundation. Regarding debt relief, 10 million Euros was committed through the C2D tool for the C2D support project to the EFSP in Cameroon. The grant tool is however recent. Prior to 2006, it had only been used in the Central African Republic and amounted to 5.2 million Euros (PARPAF 1 – BIS and SALO Pilot Project). The development of this tool should run parallel to of recent assistance to "small concession holders" and the shift in AFD’s role which has emerged as the fulcrum of French assistance. It should © AFD / May 2012

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further be noted that FGEF disbursed 9.2 million Euros worth of grants including 4 million Euros as FMP assistance delivered by AFD. The grant (and debt relief) is the predominant tool in the forest sector. "Small concession holder" grants: an efficient tool pending medium-term outcomes

The State is logically the beneficiary of grants in the "small concession holder" projects, but in reality these grants are awarded indirectly to small and medium scale companies for management purposes in so much as they contribute from these grants towards a large part of the FMP preparation costs (for example, in the PARPAF project the contribution is 70%, in the "small concession holder" project in Gabon, the beneficiaries defray only the cost of management inventory which stood at about 1,000 CFAF per hectare out of direct costs estimated at 3,500 FCFA, the remainder being borne by the project). The grant tool turned out to be efficient in the case of PARPAF in the Central African Republic (the sole small/medium scale permits project which has covered some ground). It helped in outsourcing and initiating basket funding for the design of FMPs as well as sourcing highly qualified expertise. Without this support, it is likely that management in the Central African Republic will be seriously lagging. In the case of Gabon, it is the same pattern with the same positive impact yet it is obvious that no "small concession holder" would have embarked on the designs of FMPs without this assistance. However, conversely to the Central African Republic, this Smallholder Project was primarily a loan to the State of Gabon which is a middle income country (PS2 amounting to 8.2 million Euros including a 1 million grant). Accordingly, the end beneficiaries are indirectly subsidized. However, it raises the issue of the genuine commitment of small and medium scale permit holders to sustainable management. Funding the design of FMPs which will not be seriously implemented will be inefficient yet that is the current risk in the three countries concerned. Admittedly, serious companies are participating in the forest management process yet there are still numerous small and medium-sized companies whose adherence is purely cosmetic, often to keep a clean image and continue logging without any commitment nor implementation of sustainable management efforts (not to mention the social or biodiversity components). That leads to the issue of the model put in place drawn on large concessions but which is not tailored to small and even medium scale permits. As such, a costly tool is funded which poses efficiency problems in the medium term. Ironically, the State receiving the grant is eventually the stakeholder who benefits the least. That was the case of PARPAF in the Central African Republic where the administration was not 88 ÂŠ AFD / May 2012

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adequately developed to play its expected role of designing or monitoring and controlling forest management plans. As mentioned in the country reports, it is attributable to: (i) inherent difficulties of institutional support in the forest sector; (ii) peculiar circumstances of the Central African Republic (political crisis); and to a lesser extent (iii) modus operandi of the projects. These projects are highly dependent on technical assistance. C2D grant/EFSP Cameroon: poor results

In Cameroon, AFD supported the implementation of the EFSP, a sector program intended to implement the forest policy specifically the sustainable development and institutional capacity building. It used the C2D mechanism in 2006: 20 million Euros were available; 10 million Euros were disbursed for the first tranche and 4.5 million Euros have been used so far. The funding was equally shared between sector budget support and a common fund. The results are disappointing for AFD as well as for other donors (so far GTZ has withdrawn from the common fund). Only 4.5 million Euros were disbursed which raised questions on the real impact of the use of these funds. The main weakness results partially from: (i) poor capacity of the national partner to steer the program to use the sector budget support tool and to fulfill requirements for the use of the common fund; (ii) dysfunctional donor common fund, the lack of coherence in the donor interventions, divergent visions and inappropriate processes (a locking system which requires the approval of all the partners before disbursing a single dime) did not enable the common fund to play its part. Public finance procedures also constrain the efficiency of such a fund. Following this failure, AFD plans to revert to project support. C2D flows however, offer new opportunities to enhance AFDâ&#x20AC;&#x2122;s action as it is an unexpected opportunity to fund the forest environment sector whereas AFDâ&#x20AC;&#x2122;s own resources are declining as it virtually operates so far with loans. Projects are being planned in Gabon and Congo. Credit lines Important but inefficient instruments

Credit lines are the second financial instrument totaling 19.7 million Euros used in Gabon and Cameroon. A new credit line project is under consideration in Congo (support to the timber sector). Project performance has shown poor results in respect of using the available financial resources: (i) In Gabon, only five companies received loans and 56% of loans were cancelled; (ii) in Cameroon, the entire credit line was cancelled. For AFD it resulted in poor financial returns and significant running costs. ÂŠ AFD / May 2012 89

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Box 11. Credit lines Gabon/BGD (2000) A credit line of 6.5 million Euros to fund the design of management plans: refinancing 70% exclusive of tax of the project cost, 7% interest rate (5% interest rate for AFD and 2% for the Gabonese Development Bank [GDB]) with a 5-year rescheduling and 11-year payment schedule.

Cameroon (2000) Four credit lines amounting to 2.25 million Euros each (BICEC, SGBC, SCB Credit Lyonnais and Commercial Bank Cameroon (CBC)) for refinancing of forest companies by these four banks to design their management plans under the following conditions: rate of 2% over 15 years including 6 years of rescheduling and 0.5% of commitment commission, maximum closing interest rate for final beneficiaries of 5% (PCI long-term loan with a concessional rate of 35%). In addition to these four credit lines, an ordinary loan (PCO) of 1.75 million Euros with the State as beneficiary to fund institutional support for the implementation of FMPs (PCO rate of 2.5% over 19 years). This loan was cancelled following the cancellation of the credit lines.

Unattractive conditions and unreliable banks

Two main factors justify the failure of these credit lines. On the one hand, according to the banks and companies, the lending conditions were not attractive. For national banks, the reasons related to high operating costs in terms of application and monitoring procedures. For companies, AFD loans were often heavy-laden (procedures, guarantees, timelines). However, that is not a full explanation because several companies applied for loans in Gabon and in Cameroon unsuccessfully (VICWOOD/THANRY, Societe Industrielle des Bois Africaines – SIBAF/BOLORE, ALPI Petrol et Fils Cameroon/ALPICAL, WIJMA). On the other hand, national banks were less inclined to take risks in the forest sector which they did not understand and deemed risky. The lending objective was partially to attract them to this sector which was an objective that was not achieved. Finally, there is a certain contradiction in Gabon; banks are funded by large companies (Rougier, Le Roi Gabon, Societe des Bois de L’Astourville – SBL, Societe de la Haute Mondoc – SHM) which had access to other non-concessional funding. The target of easing general access of forest companies to bank loans in order to invest in forest management was not achieved on a large scale. 90 © AFD / May 2012

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AFD’s initial target in introducing credit lines was two-tiered. On the one hand, to reach out to a larger number of forest companies and on the other hand to support banks in funding and promoting investments in forest sustainable management as banks are major drivers of investments which are potentially environmentally unfriendly. However, there is still great doubt on their efficiency: (i) Banks in the Congo Basin are over-liquid. The issue is therefore not of primary capital but of the risk and/or poor knowledge of the forest sector; (ii) These banks will always be reluctant to fund non-professionals therefore there is a risk (like in Gabon) to fund only reputable and professional companies; (iii) By targeting small and medium-sized groups, non-professionals are often targeted (traders) who will not adhere genuinely to management hence, the loan will yield very little in the medium term; (iv) Lastly, it is not AFD’s place to bring pressure to bear or to make demands on the quality of projects implemented by private beneficiaries (no quality requirement is considered in the lending process “the progress of the project and justification of expenditure in relation to the initial project alone are requirements for disbursement of the loan”). Direct loans to private companies

Direct loans to companies (concessional PN2) amounted to 6.5 million Euros awarded to three companies CEB in Gabon, CIB in Congo and PALISSCO in Cameroon. An efficient objective-based tool

It has been demonstrated that this tool had been efficient to the extent that loans were granted (and repaid or in the process of being reimbursed as planned) and that FMPs were designed and subsequently implemented (including certification of the areas concerned). Furthermore, these types of concessional loans did not disrupt the national banking markets specifically because there were no medium and long-term banking products for forest players. Additionally, the credit line section shows that banks were reluctant to enter the forest sector market. Also, these international holdings had their own international banks. For AFD, this concessional loan type is warranted because the State owns the forest, and as a public asset, is entitled to preferential lending conditions. A non-financial incentive

In reality, it is observed that companies took AFD loans for two non-financial reasons. Firstly, at the time, they needed an international backing as a result of pressure from green NGOs which could be delivered by AFD’s image. © AFD / May 2012

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Secondly, two or three loans were coupled with an FGEF grant which was attractive to them in developing some components of their forest management plans such as biodiversity. Several companies stated that one of the reasons AFD loans were taken was because FGEF grants were interesting and were tied to this loan. This is the case of CIB in Congo (AFD loan of 1.3 million Euros coupled with an FGEF grant of 870,000 Euros). FGEF grants significantly drove the success of AFD loans. The use of FGEF grants given to AFD lenders can be questioned. Finally, the strictly financial aspect turned out to be secondary although it also helped companies to access cheap funding at some point in time. The subsidized loan was a relevant tool for companies (otherwise they would not have taken the loans and had to fulfill requirements) although they were seemingly interested in the international backing offered by AFD’s image and the FGEF coupled grant to implement the social and biodiversity components of forest management plans. The loan itself was stricto sensu unattractive depending on the cases in regard to the rate, the length or the duration of the procedures, required guarantees or repayment currency. This was corroborated by other companies who embarked on forest management with their own resources or used traditional bank loans.

Box 12. Example of CEB and CIB Loans CEB Gabon Loan The total project amount was 2.6 million Euros including self-funding of 1 million, AFD loan worth 1.4 million Euros and 200,000 Euros of FGEF grants. The loan ran for 11 years with a 5-year rescheduling period at a 5% annual rate and an opening commission of 0.5%. A total loan guarantee was provided by the Union Gabonaise Bank. The loan was disbursed entirely in one tranche. The total management project cost amounted to 2.4 million Euros including 1.4 million from AFD and 1 million by the company. It should be noted that the FGEF contribution was not disbursed on commencement. It was disbursed subsequently under a project implemented by FGEF and open to several companies.

CIB Congo Loan AFD loan requirements for the CCG1070 project (non-sovereign concessional loan of 1.3 million Euros at a 3.5 rate) were adopted after lengthy and difficult negotiations. The loan had been granted in late 2002 but disbursed in one tranche only in early 2004 although CIB appropriately implemented its activities and happens to be one of the leading companies in the area of management and certification. However, the loan was not in itself helpful. After a long and heavy process, CIB had already implemented a large part of the management project (with the support of GTZ and ITTO) when the loan was disbursed and if CIB took this loan belatedly, it was because it needed: (i) international recognition (with the benefit drawn from AFD’s image); and (ii) to be able to qualify for the FGEF grant which was pegged to the loan.

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Ultimately, AFD efforts to support companies to embark on forest management coupled with its range of financial products paid off. The benefits are a booster to operators who decide to take this risk and the lending conditions also helped in selecting the most motivated companies to take the lead in the forest management process. AFD’s role must be underscored because these loans often caused a ripple effect in the process and helped other assistance packages to swiftly join the partnership agreement process in the Congo Basin (on the ground, in national regulations or regional policies). While the loan itself was not decisive in the partnership agreement process, it helped in moving the process forward and swiftly. Sovereign loans: a limited instrument

Sovereign loans were hardly used. Only one was actually put in place namely the "small concession holder" project in Gabon which was a PS2 loan amounting to 8.2 million Euros (with a grant of 1 million Euros out of a total 15.7 million project). The use of this sovereign loan tool was in line with the general policy of “no grants for middle income countries” since Gabon was one of such. Another sovereign loan was designed for Cameroon as part of the credit line scheme. It totaled 1.75 million Euros with the State as beneficiary to fund institutional support for the implementation of forest management plans (PCO 2.5% interest rate over 19 years cancelled).

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Conclusion AFDâ&#x20AC;&#x2122;s performance in terms of the objectives of each intervention and tools used can be considered as average or contrasted (some targets were met and others were not) Indeed, several factors reduced the impact of FMPs supported by AFD. On the one hand, 50% of supported areas are located in the Central African Republic where concession holders are not certified, with doubts on the actual implementation of forest management plans in several concessions. It is further noted that AFD supported a limited number of companies : 14 (and only 6 outside the Central African Republic). On the other hand, the major project in the Central African Republic implemented with PARPAF, in the peculiar context of this country, yielded satisfactory results for managed forest areas. However, the targets were not met. The social and institutional components recorded mixed results and today the actual implementation of forest management plans is being questioned. The performance of the smallholder project in Gabon is still to be ascertained. However, major achievements have to be reported. From a quantitative point of view, FMPs supported by AFD represent 5.5 million hectares which is a significant area accounting for 17% of attributed areas. Apart from the two problematic credit lines, the target of the actions is almost met. Today, those companies are among the few which actually implement forest management plans and embark on certification. Overall, 50% are certified which ensures the sound implementation of forest management with potential impacts on sustainable management. Furthermore, these fundings were among the first that helped in designing life-size management projects and served as models for the development of standards and legal reforms.

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Table 10. Areas supported by AFD (In hectares) Gabon

Congo

Cameroon

CAR

Total 4 countries

Excluding CAR

Large dense forest areas 21,087,000 18,494,000 16,876,000 4,616,000 61,073,000 56,457,000 Including allocated areas 12,000,000 10,648,000

5,660,000 3,038,000 31,346,000 28,308,000

Including areas under FM

6,368,000

5,818,000

4,650,000 3,038,000 19,874,000 16,836,000

Including areas supported by AFD

2,000,000

296,000

118,000 3,038,000

5,452,000

2,414,000

Areas supported by AFD

2,000,000

296,000

118,000 3,038,000

5,452,000

2,414,000

17%

100%

17%

% of total forest areas

66%

Companies supported by AFD

1,870,000

296,000

118,000

2,284,000

% of allocated areas

Certified areas

Source: AFD project memo.

From a strictly quantitative perspective, considering solely the AFD coverage with hindsight (see graph 5) the supported areas represent 17% of attributed areas. While achieving the targets of the Environment SIF 2007-2009 is still a long way off, these serve as guidelines in setting the targets in a difficult context where progress is achieved based on existing opportunities. What matters is the pilot nature of the early interventions and the ripple effect which will be examined in Section 6 dealing with the impacts and the appraisal of AFDâ&#x20AC;&#x2122;s role.

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Figure 5. The state of forest management in the Congo Basin

Total 4 countries 70,000,000

61,073,000

60,000,000 50,000,000 40,000,000

31,346,000

30,000,000

19,874,000

20,000,000 5,452,000

10,000,000 0 Forest areas

Allocated

Under forest management

Areas supportes by AFD

Source : graphical prestenation of data in Table 10. Picture 4. Kosipo, Mbaiki station, CAR.

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6. Relevant impact, though limited in some components The previous sections have reviewed the performance of projects and financial tools used. This section, beyond the specific project objectives, will assess their impact based on the following main thrusts: 1.

Sustainable forest management

Economic development of the sector

Socio-economic benefits for the population

Biodiversity conservation

Institutional reforms

Building and sharing of the knowledge base

Before getting into the crux of the matter, it must be stated that very little data is currently available on the implementation of FMPs and specifically on their concrete impact. It is obvious that the implementation of FMPs is recent and outcomes are expected in the long term. However, the method is also constrained by a general lack of monitoring. The data available to us today are mainly: (i) certification schemes (which attest to the actual implementation of forest management); (ii) IO reports (Cameroon and Congo); (iii) some data from private consultancies or monitoring reports of projects like PARPAF; (iv) the GTZ study conducted in Cameroon on the quality of forest management plans (which is, however, not restricted to forest management plans supported by AFD, as Cameroon ranks last in its country operations compared to the other countries).

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Box 13. Impact

• On a purely technical scale, the FMP tool developed in the Congo Basin is an efficient tool for sustainable management if it is properly implemented. Looking back twenty years, major forest groups have achieved significant progress in their forest management systems.

• Regarding the other components, the impact is much lower. The social dimension was the

weak link. Besides a few pioneer examples, such as CIB, local communities reaped very few socio-economic benefits (partially explained by the absence of expected forest tax rebates). The same applies to the biodiversity component which generally focuses on large wildlife species and is restricted to a few anti-poaching efforts. It goes without saying that these two components are complex, costly and hardly enticing to private companies.

• Regarding institutional aspects, the expected developments did not materialize. The law was

reformed, but for the State/private sector relations it was generally business as usual, and forest management significantly widened the capacity gap between the State and the private sector, as forestry administration lacks the requisite capacity to perform its statutory duties of monitoring and controlling forest management plans.

6.1. Obvious impact on sustainable forest management The foremost expected impact of forest management is to achieve sustainable forest management, which entails the long-term preservation of forest capital in managed concessions. An appropriate and quality tool for large concessions

The gradual development of a knowledge base and expertise by private operators, consultancies (although they have been few and essentially French) or national or international experts has led, after a long time, to testing this method, to vetting and replicating its outcomes, as well as generating substantive discussions on outstanding issues which fuelled opposition. Today, forest management planning is a recognized and obviously relevant tool. As clearly shown in OFAC’s overall performance report in 2008 “in terms of management standards, the forest management models adopted by companies are based on the same principles; group selection harvesting, possibly through marking, and short rotations (between 25-30 years) on plots whose areas are calculated based on their maximum sustained yield. The inevitable development of certification in the sub-region will lead to a convergence of management standards in the areas of forestry and social issues. In this regard and because it 98 © AFD / May 2012

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is driven by forest companies and private management or certification entities, while convergence is well on track, moving the process forward requires a clear recognition of ecological factors based on forestry research findings”. The FMP tool developed in the Congo Basin is technically relevant on several scores. The tool has now been fine-tuned in terms of knowledge of the resource and harvest planning to ensure a general regeneration of the forest capital. Where it is properly implemented, the tool can efficiently contribute to sustainable management. Indeed, it explains the adherence of several groups of large concessionaires. Though initially reluctant or sceptical, large concession holders have today embraced forest management after testing the technical abilities of the tool. It is safe, at this point, to say that FMPs designed with AFD support are of a high standard. As stated by P. Larat and J. P. Lemelle 24 “quality wise, FMPs are largely consistent with existing norms and standards (ATO, CIFOR)” and “compliance with ATO standards stands at 75-80% (with gaps in five standards: NTFP, IE, IESR, SC, and Bio)”. This FMP standard also prompted the concerned companies to successfully join the certification process. Looking back twenty years, forest management has come a long way with respect to these large forestry groups. The “mining” type of exploitation of the 1970s and 1980s has ceased in large concessions. Several million hectares are today under management, specifically on medium-/long-term bases. The stride is significant in the said areas. Above all, there is a remarkable shift in the methods of large companies under management schemes in the area of forest management, and to a certain extent, industrial and commercial management. These large concessions have migrated from forest exploitation to sustainable forest management. FMPs and AFD support can be credited with bringing on board companies that were initially reluctant, owing to poor knowledge of the tool. They came on board as soon as they became familiar with the tool. Management units are now in place, sustainable management has been mainstreamed in the functioning of companies while inventory and monitoring tools have been developed. However, these developments are concentrated on a few large groups, an impediment to the forest management process in the Congo Basin, and the challenge today is to expand this process to other target groups (see section 11 on the way forward).

24 AFD (2010)/Concept note – Aperçu de la coopération française dans le secteur forestier du Bassin du Congo sur la période 1990 – 2010, Jean-Pierre Lemelle, Pauline Larat, Constance Corbier Barthaux, July.

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A complicated, cumbersome, costly tool with some scientific reservations

While the approach has been consistent with the sought objectives and expected responsiveness (sustainable management of forest resources) in a specific physical and policy environment, with hindsight, more caution will be exercised on the selected tool: the FMP is a model from the North tailored to tropical forests. However, views on this issue differ. The first shortcoming of the tool is its complexity and cumbersomeness. It is technically appropriate but requires specialized technical capacities for design and implementation. Its complexity and cost inhibit access to small- and medium-scale forest companies, which is a significant drawback to its expansion (see section 10). The second major impediment of FMPs relates to the fact that current scientific knowledge does not offer conclusive evidence that the technical choices in respect of rotation, exploitable diameter, and regeneration rates, just to name these few factors, ensure sustainable management of the resource. The impact of anthropogenic activities in the complex natural environment is unknown and it will take several more years before the required analytic data will emerge from research findings. It is obvious that the resource regeneration will not be the same for natural forests in their first harvest and for those in their second or third harvest cycle. The intention is to regenerate, as much as possible, the same timber volume. Be that as it may, partial knowledge of forest exploitation dynamics cannot be relied upon to conclude that FMP is a sustainable management tool. There are increasingly new scientific findings, such as the Mbaiki research project 25 on post-logging forestry dynamics. According to Professor W. Delvignt, “one of the pillars of the current FMP is the regeneration index for exploited or exploitable species. There are six of such factors, three of which are insufficiently known 26: diameter growth, natural mortality and to a lesser extent, exploitation damage. The permanent systems developed by some forest operators do not fully comply with scientific standards for reliable data collection. There are indeed efforts in this regard (CIRAD and Nature+), but they are not enough.”

25 The Mbaiki forestry research station was established in 1982 by the CAR Ministry of Water Management and Forestry, in collaboration with CIRAD. 26 See Vol.I of Etude sur le plan pratique de l’amenagement des forets naturelles de production tropicales africaines [Study on the Practical Management of African Tropical Natural Production Forests], published by ATIBT with funding from MFEA and FGEF, AITB (2007), Paris.

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6.2. Economic aspects and impact on industrial development The FMP tool did not have clear cut economic, industrial or financial objectives. The objectives were rather underlying and there are several relevant impacts to be reported. Safeguarding access to the resource and impact on the sector

The first impact of forest management is the provision of long-term access to the resource to companies. This is specifically and logically related to State/private sector contracting embodied in a long-term convention. Sustained access provides critical visibility to the company, which is relevant in planning and investments. It sustained supplies and stabilized the entire timber sector in the Congo Basin. The second impact spurred companies to further diversify exploited species and by extension, processed species. The requirement to add more value to felling areas also led companies to focus on new species. In this regard, FMP helped to increase resource knowledge and planning. Several telling examples are found in companies or in statistics of exploited species in Congo, with greater diversification of lumber species, bearing in mind that the economic crisis also led countries to seek new markets with less known and cheaper species. However, the diversification of exploited species is primarily related to market needs, economic policies of countries and compliance by operators. Today, the local timber market is stagnating due to inappropriate national policies and unfair competition from informal operators. The FMP approach has eased, but not resolved core problems. Lastly, there is increased professionalism in the timber sector, though resulting primarily from the bidding system to award concessions, which favoured the generally professional large companies. Sustaining and opening markets

A second and greater type of impact helped to sustain and even open European markets. Large companies adopted FMP for primarily commercial reasons to: (i) sustain markets following pressure from international NGOs (boycott threats in the 1990s and 2000s), FMP having been designed to respond to criticism and prevent the boycott looming on the impugned large groups; (ii) penetrate potential certification markets. In fact, it is not by chance that the most advanced concession holders received the greatest criticism or threats at the time (CIB, for instance). ÂŠ AFD / May 2012 101

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Today, knowledge of the resource, thanks to the FMP tool, also contributes to better planning and market development, and during the economic crisis, this knowledge opened a few markets for secondary species, as they offered more competitive prices. Impact on industrial development

The FMP tool used in the Congo Basin, based on an in-depth resource inventory, impacted positively on the industrial fabric of companies. In Congo, large companies of the North acknowledged that knowledge of the local resource gives better visibility to the company, a feeling echoed in Gabon and Cameroon. The companies know where to find the species they intend to exploit, they know the distribution of these species by diameter category and the merchantable height as well as the diameter breast height (DBH) and the resource to be harvested. Knowledge of the resource ensures more rational, and therefore less costly, exploitation (spatial/specie planning, knowledge of the resource potential, size of the industrial tool). This is extremely important for medium- and long-term planning, both for exploitation and processing. Armoured with this knowledge, the company can plan its industrial plant, whereas in the past, a processing plant was built without knowledge of the available resource. Companies typically remain at the first stage of processing (sawing) and some species are not exploited because the company lacks a dryer. This newly acquired knowledge of the resource enables companies to now determine whether it would be economically viable to purchase dryers for instance, in order to resort to new species and install more advanced processing plants for the valuation of new species. The company can also explore and promote abundant and new species found in its concession on the market (linkage with research). However, there is seemingly greater impact on adaptation and improved industrial planning than on the development of the tool itself. Indeed, resource conservation eases investment, which in turn depends ultimately on several extraneous factors to forest management: national laws, fiscal reform initiated specifically with the support of the World Bank, strategic corporate choices for international groups (which consider relative costs for processing in Africa/France, business avenues and economic crisis). National legislation specifically had a significant impact with the requirement of processing a certain percentage of logs (if not all, as is the case in Gabon, or the compulsory establishment of a plant on site). This vertical integration model also had several negative impacts, but this is not within the scope of this study.

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Cost, efficiency and profitability

What is the cost of forest management and is it profitable? While the cost of designing an FMP can be calculated, it is rather difficult to answer the question on profitability. Reference is made to the detailed cost assessment and analysis in Appendix 12. It is worth noting that the cost of designing management plans may double, and average cost per hectare can be estimated at 2 to 3 Euros. This is a genuine constraint to small- and medium-sized companies planning to embrace forest management. The rate of return remains a mystery; the great variable may be known after the second cycle in 25 or 30 years.

6.3. Social component: the weak link The social dimension was one of the turning points of the forest management approach in 2000s. FMP as designed in the Congo Basin was expected to incorporate this new threepronged dimension, namely: (i) decent working and living conditions for forest company employees; (ii) socio-economic benefits for the people living in or around the concessions; (iii) respect or introduction of forest rights, specifically relating to access to non-forest resources. It also entailed involving the riparian population in the design of FMP to ensure that the ensuing tool is the outcome of a consultation and negotiation process between the lessor and local communities. Poor impact

In concrete terms, the social dimension emerged as one of the weak links of the FMP approach, including those supported by the AFD, which were probably the most disappointing. Some achievements are indeed worth reporting, specifically: (i) increased attention of large concessionaires to the living conditions of their employees with attendant positive impact; (ii) genuine efforts of some concessionaires, like CIB, in the area of socio-economic benefits. These achievements are often linked to partnerships between the concessionaires and developmental NGOs. However, the overall impact is very low. On the one hand, management projects hardly delved into the social dimension, generally restricted to a situational analysis without investigating the requisite socio-economic factors for formulating local development actions. On the other ÂŠ AFD / May 2012 103

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hand, companies did not go very far in terms of concrete achievements, as they are more interested in buying industrial peace from a few local authorities rather than designing genuine development projects. This applies to large concessions which receive loans or credit lines, as well as companies supported by PARPAF, which has made little progress in the social component, in terms of concrete achievements by operators. Various monitoring/evaluation reports virtually make the same findings. Besides the large FMPs supported by AFD, the other concession holders are in the same situation or worse off. Complex social dimension

The observed low impact can be specifically justified by the challenging nature of the social component of forest management plans and by the lack of “social” skills within forest companies. This component is perhaps the most challenging part in designing FMPs. This issue will be further developed in Section 10. The impact can also be partially explained by the fact that forest taxes are not ploughed back nor enforced, as required by law. Ground to be covered

As far as the social component is concerned, it can be said that AFD has not yet reached the milestone set in international strategies and in the White Paper. This can be explained by two factors. Firstly, AFD funded the design of forest management plans (direct loans and credit lines) in one tranche. It therefore depended on the scale of the concessionaire’s intention to develop the social component, without a direct bearing on this component (very complex). On the other hand, more direct, though limited, assistance was provided, notably FGEF or PARPAF (although with poorly developed field activities). This aspect of forest governance which is a core sustainability criterion, especially at the social and economic levels, has not been tackled in a specific project supported by AFD. It is one of the core objectives of the South-West regional development project (PDRSO) to be implemented in the Central African Republic, although funding afrrangements are still to be determined.

104 © AFD / May 2012

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6.4. Environmental impact Like the social dimension, the environmental component was one of the main turning points of the FMP approach in the 2000s. Much like the social aspect, impact has so far been poor. The objective of the environmental component of FMPs in the Congo Basin was basically to conserve biodiversity, apart from timber forest products, to wit: wildlife as well as non-timber forest products. Limited impact

As with FMPs in general, there is no objective data on outcomes in biodiversity. However, based on a few reports and interviews with seasoned experts in that field, the few outcomes have little impact. Generally, at the outset, biodiversity was insufficiently and improperly considered during the FMP design process, and was generally limited to an inventory of large wildlife species and identification of conservation areas. The other aspects (wildlife outside flagship species, NTFP and flora) were neglected. Furthermore, few targets were met. Worthwhile outcomes were recorded by certified companies where large wildlife species have been stabilized following a decline in poaching. The companies focused their efforts on preventive anti-poaching measures such as controlled access to concessions, closing of old tracks or inspection of tippers to prevent the transportation of bush meat. Conversely, biodiversity aspects, apart from large wildlife species, are often neglected, and results in non-protection owing to the absence of proper measures. Yet, in the absence of wildlife monitoring, the actual trends remain unknown. Challenging and costly component

As in social issues, companies consider that this component is out of their scope, which was a major impediment initially but understandable on account of its complexity and cost. These reasons will be further developed in Section 10.

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FGEF grants, partnerships with NGOs

FGEF grants provided critical support to the biodiversity component of FMP. Without these grants, the few benefits and current momentum would not have been significant. Hence the interest of private concession holders in FGEF grants, being reluctant to embark on such a costly and challenging component. This is also reflected in partnerships with international organizations as already discussed in Section 4. On the strength of current knowledge, one of the most advanced projects in the area of ecological and socio-economic research is the Peripheral Park Ecosystem Management Project (PROGEPP) implemented by WCS in the CIB forest concessions in Congo, funded by ITTO, WCS, CIB and a small share by FGEF. Extensive data is currently available on the impact of forest exploitation on the management of wildlife and the whole food chain in general. This approach hinges on international standards (WCS and other biodiversity conservation bodies in Central Africa). The section on ecology makes a comparative analysis of data drawn from other neighbouring areas such as the Nouabale Ndoki National Park (PNNN), the Lake Tele Project and the Mokabi Forest Management Unit as criteria to assess the state of wildlife, its habitat and development of human activities in those areas. Socio-economic monitoring seeks to consistently assess the impact of the wildlife management system and support measures (alternative activities) on the local community. The implemented activities specifically relate to: (i) monitoring hunting activities in CIB sites; (ii) monitoring household nutritional status; (iii) FGEF and ITTO semi-nomadic study

6.5. Institutional impact The development of FMPs sought several institutional objectives. Basically, it entailed overhauling State/private sector relations through a contractual agreement where the State, as owner, awards the management of public assets on a long-term basis to an operator in return for a commitment to achieve sustainable management. It also aimed to build new stakeholder relations (negotiation capacity building, development of NGO/forester partnerships). The impact was different depending on the following aspects: (i) rules of the game; (ii) stakeholder roles and relations; (iii) capacity building

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Rules of the game have changed significantly and FM is now an indispensable framework

FMPs were developed in line with new rules of the game in terms of laws, statutes, and standards. It is a noteworthy outcome, reflected by the significant improvements made to the legal framework in a few years, especially in the early 2000s, following the enactment of forest laws, forest codes and ongoing management standards. Appendix 4 offers a detailed and comparative analysis of forestry laws and regulations, and underscores the importance of previous efforts to standardize the FMP tool in the four countries. Today, the FMP tool adopted in the four countries is standardized, as reflected by the harmonization of legal and statutory frameworks. Several donor support packages, especially consistent AFD support, significantly contributed to this development. The sound synergy between AFD field actions and MFEA technical assistance delivered to Ministries has already been mentioned, as those actions contributed, for instance, to the development of forestry codes modelled on field experience (MFEA projects as well as AFD large scale projects). It is a major outcome that is worth reporting. Today, forest management has become indispensable in forest activities in the Congo Basin and the legal framework is a springboard for further action. The challenge lies in the fact that there is little compliance with the rules of the game, a point that will be addressed subsequently. Inter-institutional relations have evolved but need to be sustained

FMPs also set out to operate a shift in the attitudes of various stakeholders as well as to establish new forms of stakeholder interaction. From this perspective, the FMP approach has certainly led to a shift in attitudes, though not as expected. The main outcome is the establishment of new relationships between private operators and international NGOs, whose positions evolved from antagonism to better understanding, and indeed, concrete partnerships have been developed on the field, specifically in designing and implementing the biodiversity and social components. The main achievement of FMPs is to have offered a sustainable management solution which links the two initially divergent views. It must be recalled that this targets, first and foremost, the large groups which drive management and that certification standards spurred companies to seek collaboration with NGOs, in addition to possessing expertise in the social and biodiversity sectors. ÂŠ AFD / May 2012 107

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Box 14. Examples of private sector/NGO partnership In Gabon, there are partnerships between the Rougier Group and WWF and between WCS and the National Resource Support Centre (CNARES) for wildlife management. In Cameroon, there are partnerships between Palissco and a Belgian research institute, between WWF and the Société Forestiere et Industrielle de la Doumé – SFID (Rougier) for certification, between ALPICAM and the Swiss based NGO, Tropical Trust Forest, to support certification; or the recent partnership between WCS, the Ministry of Forestry and four wildlife management companies. In Congo, the partnership between WCS, CIB and the Government paved the way for dialogue (under an ITTO funded project). Today, the Danzer Group has followed suit, still in partnership with WCS, and fresh discussions have been initiated by Danzer and CIB with other conservation NGOs to enhance the social component.

Furthermore, projects like PARPAF, have introduced consultation frameworks, which did not exist before, between the State, the private sector and other stakeholders. Meanwhile, FMPs have helped to establish the importance of communities and NGOs, and today forest issues are no longer about the State awarding concessions to the private sector. However, it is obvious that there is still some ground to cover, notably: (i) local communities are yet to be actually recognized in the field as a fully fledged partner; (ii) despite recent developments, NGOs are still to be advocates and drivers of the public interest. However, with hindsight, a major stride has been made. Forests have been recognized as a public asset which must and should be discussed by all and sundry. While this achievement may not be exclusive to FMPs, there is a growing trend to involve the civil society in all policy and reform issues and in this regard, FMPs have made their own contribution. Above all, FMPs were designed as tools to introduce a new form of State/private sector relations (long-term vision, access to the resource placed under concession based on a commitment to achieve sustainable management). However, the impact has been limited. In practice, the agreements actually included timelines. However, relations have developed slowly, which has significantly inhibited the impact of FMP on stakeholder relations. The State, as owner, conceded public resources without, however, setting a long-term vision, standards or performance monitoring. State/private sector relations are generally characterized by profit-sharing without a shared vision of sustainable management. Government is remiss in its duty to monitor FMPs to ensure private sector compliance with its commitments. Basically, a logging convention leading to a contract should be the end result of a negotiated and consultation process between both parties. In practice, contracts have often been considered as a requirement for logging, following the 108 © AFD / May 2012

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concession bidding process. The frequent delays in signing these contracts are eloquent testimony of this fact. Ultimately, State/private sector relations have remained business as usual. To conclude, the collective and contractual management of the resource needs to be established, as shown for instance, by the number of concessions which have been awarded for several years and remain provisional even after the statutory time-limit has elapsed. Limitations of State-building

The FMP approach entailed new roles for the State: negotiation and contracting capacities, but also and especially, approval capacities (management plans followed by annual management plans) and monitoring and control of compliance with specifications, especially in the area of logging standards. AFD’s support was obviously limited, as this fell under the purview of the MFEA until the recent devolution of this function. PAGEF is still too recent to see its impact. AFD considers the “small concession holder” project involving the administration in Gabon as a positive outcome. However, the expected outcomes will be assessed with greater caution. PARPAF in the Central African Republic is the oldest institutional support project, yet recording poor results because the forest administration is unable to perform its core duties of designing, monitoring and controlling FMPs. Today, the challenge lies in resolving this problem by establishing a semi-public agency, partly funded through external resources. The Cameroon example, with the support of the PSFE, is edifying. The PSFE’s core mandate is to build the capacities of the sector stakeholders, including the administration. It is worth noting that budget support, including AFD’s share, has so far had little impact, although it stems more from governance problems than from deficient financial instruments developed in the sector. Other donors (AT, MFEA and the Priority Solidarity Fund – PSF 27, CIDA in Cameroon, and GTZ in the Central African Republic) have provided significant assistance to forest administrations. However, the persistent weakness of the administration has created a double standard. The gulf has widened between concession holders, who master the tool, and the administration, which is unable to monitor and control forest management on the ground. This point will be developed in Section 10 relating to lessons.

27 PSF is a MFEA project support instrument.

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Specific case of the State’s role in CAR

The Central African Republic is a specific case, as the State has taken over the design of management plans (it was not compelled to do so under the forest law; see Appendix 4 on comparative instruments). What lessons are to be drawn? The outcome is not very positive. In fact, it is the PARPAF Project that has been designing management plans for concessions for ten years. While it has recruited and trained forestry engineers from the administration, it currently has a gap in its capacity building. Leaving the design of management plans to the State is today difficult without the attendant institutional support. Furthermore, that has led to insufficient ownership of the management plans by foresters. On the other hand, they did not deal with the problem and learn the ropes of management immediately. Also, others still consider it as an external tool and are still not convinced about its implementation. The relevance of PARPAF, which has been previously discussed, is to have successfully pooled funds and provided access to technical expertise which would otherwise not have been available for this scheme, at least in a model as complex as the French-modelled FMP used in the Congo Basin.

6.6. Capital and transfer of knowledge The last expected impact of FMPs related to “the development of a knowledge base and expertise, preferably for operators and private operators and to a lesser extent, for public bodies.” The rationale of this idea is the fact that the State devolves the management of its resources but must retain control and monitoring powers for the purpose of getting access to and processing data from FMPs to track the development and management of public resources. Development of knowledge especially for companies and consultancies

Knowledge of the resource, through management inventories, has significantly developed in the managed areas. It is a laudable achievement worth reporting and it will generate extensive data on forest resources in these areas. However, this knowledge has basically remained in companies, which have their own inventory data and in consultancies, which supported them. The administration does not use this data and there lacks a national system to track forest resource, as a public asset. Furthermore, it focuses on knowledge of available resources and pays very little attention to their development. 110 © AFD / May 2012

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There has also been a development of know-how. Today, the various methods and tools for the design and implementation of forest management plans are mastered. However, once again, this know-how is generally locked in private companies and their international assistance providers. The problem lies in the fact that, consultancies (French predominantly) have not significantly transferred knowledge to national consultancies, as well as to forest administrations. It seriously inhibits the toolâ&#x20AC;&#x2122;s sustainability. However, projects like PAGEF and PARPAF have trained national officers or plan to support national consultancies, which demonstrates that AFD has recognized this component and intends to remedy the deficiency. Similarly, the "small concession holder" project in Gabon directly recruits staff seconded from the forest administration. However, the transfer of skills does not seem to have been a priority before and today it significantly inhibits the sustainability of the tool. Only a few large and medium-sized companies boast of requisite human resources with mastery of the tool. Such staff was hired for the management units established by companies, but remain very inadequate. However, it is important to highlight the need, in terms of quality and quantity, for surveyors, who are responsible for identifying forest species for management inventories. It is a profession which is fast growing and which requires very advanced botanical skills. Above all, in the administration, it seems there is no documented research on the FMP model, as though this model was imported, supported by donors and approved by countries. Admittedly, the developed model was used in the pilot phase to prompt reforms in national legislation, notably forestry codes, often spearheaded by technical assistance and external consultants. Similarly, at the regional level, the mission did not find specific studies on the capitalization of FMP approaches. However, the FMP approach takes pride of place in the Convergence Plan and has become the regional standard for forest exploitation. Yet, so far, there is no study/capitalization on the models used, standards and results. It is true that the approach is still quite recent, with regard to measuring the performance of large-scale pilot projects. Capitalization was achieved more through international consultancies (predominantly French), in projects or in ITTO. From the onset, French intervention has led to a virtual monopoly of CIRAD which provided technical assistance. AFD gradually turned to other consultancies (Forest Resource Management and the National Agency for International Forests â&#x20AC;&#x201C; ONFI, and subsequently, TEREA Consultancies) which provided invaluable support in the area of human resources and technical expertise. However, given the limited number of consultancies, all of which were French, and highly focused on technical issues, it probably inhibited the consideration of alternative ÂŠ AFD / May 2012 111

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FMP models. The approach has also been typically a “Franco-French” affair and focused on forestry methods (forestry, choice of species, rotation, exploitation diameter and management, calculation of regeneration rate, etc) with little regard to the social and institutional components. Today, the profile of staff hired for management projects reflects this trend. They are excellent foresters, but they are unable to incorporate other dimensions in their approach. Capitalization and dissemination efforts

In terms of capitalization and dissemination of scientific data, France has also made considerable efforts. The FORAFR 28 project, funded by MFEA, on the “Sustainable management of African tropical rainforests in 1996-1999” sought to capitalize CIRAD’s findings in the equatorial forests and to disseminate the findings to stakeholders. The International Centre on Forest Research (CIFOR) was CIRAD’s main partner in this project. A CD-ROM, comprising the full text of the 21 documents of the FORAFRI series (more than 2000 pages) and summarizing all the technical reports published then (1999), has been produced. In 2001, ATIBT published the first issue of the manual titled “Handbook on Managing Natural Tropical Production Forests in Africa” with the financial assistance of MFEA and FGEF. At the time, only Component 1 (forest production) was covered. Component 2 (social issues) and Component 3 (wildlife aspects) were published in late 2005. Subsequently, in 2007, an updated version of Component 1 supplemented Components 2 and 3 to form a series of handbooks which encompass all forest management aspects. This update was funded by MFEA and led by members of the Component 1 Task Force, comprising ATIBT, FRM and TEREA, with the support of ONFI and CIRAD. In October 2004, CIRAD organized a workshop in Montpellier on the theme: “Challenges of Sustainable Development and Management of Production Forests in the Congo Basin”. It sought to prepare a new agenda for sustainable development research in the area of tropical rainforest policy and management, as forest management moved from the conceptual realm – adopted by consensus pending implementation – to implementation at different levels. There was a recommendation for France to give guarantees for the funding of research stations, like in Mbaiki, CAR.

28 Programme to capitalize and transfer findings of research conducted in African tropical rainforests.

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Poor forestry research

Developing the knowledge base also requires forest research. It exists (Mbaiki research station), albeit very limited in relation to the scale and complexity of tropical forest ecosystems. The Mbaiki station serves the entire sub-region regarding knowledge of forest trends. It was established in the early eighties by the Tropical Forest Technical Centre (CTFT), later known as CIRAD-Forêt, and funded by the Fund for Cooperation and Assistance initially, and later by AFD over the last 10 years. The surveyed plots were exploited in 1984 and 1985 and until 2009, 25 serial measures (inventories) were implemented. The project timeline, which is unique in the world, has enabled the station to generate reliable and extensive data, considered to be unparalleled worldwide (Progress Report 2009, ARF, H.Moinecourt). Unfortunately, this is a peculiar case, as the inspection of sampling plots provided for in most management projects has not been conducted, thereby depriving the knowledge base of patterns of post-harvest stand development and forest regeneration. A report, published in 2004, to evaluate actions funded by FGEF in Gabon speaks volumes. As mentioned in the section on Gabon, the report underscored the lead role of FGEF funding which led to the establishment or expansion of a network of sampling plots in concessions.The weakness of this system lies in the lack of standard protocols as well as the lack of a central data processing system. Very little has changed in that regard.

Box 15. Excerpts from Mr. Delvingt’s answers to the mission’s questionnaire “One of the pillars of the current FMP is the regeneration index for exploited or exploitable species. There are six such factors, three of which are insufficiently known 29 (diameter growth, natural mortality and to a lesser extent, exploitation damage).

The permanent systems developed by some forest operators do not fully comply with scientific standards for reliable data collection. There are indeed efforts in this regard (CIRAD and Nature+), but they are not enough.The study, and specifically, monitoring the social, ecological and economic aspects of forest management in Central Africa, from all angles, has barely started. By way of example, how can we claim to achieve sustainable management of the tropical forest ecosystems with such poor knowledge of ecology of the forest species? ”

29 See Vol.1 of “Etude sur le plan pratique d’aménagement des forêts naturelles de production tropicales africaines”, published by ATIBT with the financial support of MFEA and FGEF.

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Picture 5. Mbaiki Research Station.

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Sustainability

Regarding sustainability in the FMP approach, it is a question of determining whether the model developed through AFD support is properly anchored in the current context to warrant its continuation. This section will also examine the impact of the economic crisis and the emergence of Asian investors, to determine whether the model accommodated these two external factors.

Box 16. Key ideas

• The institutional framework is well developed with forest legislation that recognizes forest management as a requirement and standard to achieve sustainable management. This framework has been strengthened by various reforms to the concession award system. It also hinges on national or regional policies and strategies which have established forest management as sine qua non to forest management. In this regard, forest management has a strong potential to be sustainable. • However, the sustainability of the current FMP approach is significantly related to the

various types of operators and their corporate policies. For large concession holders, while the FMP tool is well anchored today in management practices, the future of certification is still uncertain. For small- and medium-scale concessionaires, misgovernance is a major impediment to mainstreaming the approach, in addition to lingering and serious doubts on the actual implementation of ongoing or planned forest management plans.

• The economic crisis greatly set back forest management, but it did not compromise the core process for large concession holders.

• Regarding the emergence of Asian investors, most of them seem reluctant to embrace sustainable management, although some concessions are joining the process to comply with European market standards.

7.1. A well-anchored tool for large concession holders amid certification doubts An analysis of the progress and obstacles to the establishment of forest management plans in the Congo Basin shows that forest management has generally made progress in large concessions for commercial reasons, as it involved sustaining markets, following pressure from international NGOs, and then entering potential markets which require certification. © AFD / May 2012 115

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A well-anchored tool for large concession holders

Large concessions have gone beyond designing FMPs, the most costly phase. The tool has been established and mastered, in addition to its recognition as a relevant forest exploitation tool. Large concession holders have come to terms with its economic value with regard to: (i) knowledge and mastery of the resource for more rational and cost-effective exploitation (spatial and specie planning, knowledge of the potential, development of the industrial tool); (ii) increased knowledge of commercially viable species. There are concerns about the use of the tool to achieve sustainable management. That seems to be the case today because certification drives forest management. It takes into account sustainable management, while management is one of its pillars, recognized as a prerequisite in national legislation and as such, certification promotes the FMP tool as well as compliance thereof. Certification, the sole assurance of actual FMP implementation

It is hard to assess the actual outcome of the implementation of FMPs due to the absence of monitoring tools in this area, poor governance, difficult access to logger data, lack of in-depth research, etc. Only a few IO reports give a serious insight into field activities. FSC certification is the only tool attesting to the implementation of FMPs. It should be recalled that OLB or TLTV certifications, which attest the legality of timber are not yardsticks of sustainable management. A study (GTZ/PGDRN) on the implementation of the best 20 forest management plans in Cameroon 30 shed some interesting and disturbing light on the reality of the sustainable management of these FMP concessions. According to findings of this study, three out of every four management plans fail to comply with 50% of the required standard for sustainable management certification. Regarding large concessionaires supported by AFD, there is greater impact reflected by the fact that today, 50% of areas are certified, and according to Larat and Lemelle (already cited), “compliance with ATO standards hovers at 75 to 80%”.

30 Cameroon ranks last in AFD’s interventions in this component.

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The future of certification

However, certification also has its limitations. Companies have realized that they are not yet reaping significant certification gains, in terms of markets, although certification has enabled them to maintain or increase some market shares in Northern Europe. However, the added value is not guaranteed. Furthermore, certification is only a lever to companies which directly target European markets, which is not the case for those eyeing domestic markets or some Asian markets (subject to new requirements on the origin of re-exported timber). Today, there are doubts on the involvement of large groups in future management efforts. There are two scenarios on the horizon. According to some opinions, compliance with international standards (FLEGT) and market pressure will spur the large groups to increase their market shares on the European market. In this way, they will foster sound forest management in their concessions and possibly in areas held by other concessionaires with whom they would come to an agreement. Others, however, believe that the large groups are unlikely to pursue their efforts, as they feel they have so far been short-changed as a result of differential pricing. Furthermore, the FLEGT process opens the same European markets to companies in compliance with minimum FLEGT standards. This might render certification less relevant for forest companies as, (i) European markets which require certified timber today, may be satisfied with FLEGT certified timber in the future and, (ii) for the consumer, the proliferation of labels and certificates could divert their interest because of an absence of benchmarking, expecially since (iii) compliance with FLEGT standards entails less costs compared to FSC certification. While certification is a key lever of forest management, its future remains uncertain. A decline in the coming years will certainly impact negatively on FMPs. What is more, some of these large groups have expressed clear concerns about the Congo Basin forests. The FMP standard came too late, after most forests had come under intensive logging and it will be difficult to remedy the excessive logging of the first cuts. This may explain the abandonment of some concessions and the fact that in Cameroon, for instance, no new company has embarked on the FSC certification process.

ÂŠ AFD / May 2012 117

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7.2. What is the actual level of ownership by small and medium-scale permit holders ? Very recent results

It has been underscored that AFD made a relevant and bold decision in squarely addressing the issue of small- and medium-scale concession holders. These are indeed major, yet sensitive, target groups in the achievement of sustainable management in some areas (for instance, Southern Congo). This category of operators is predominantly made up of national players who received various types of felling permits or harvesting rights as political compensation or in broader terms, through patronage, in which case, forest officials use proxies. This group of stakeholders is rent-seeking and seemingly adamant to change. Today, the outcomes of the smallholder support projects are too premature to determine with certainty the sustainability of actions undertaken as discussed in the section on performance. However, there are two concerns: one regarding the tool and the other on the ownership of the process. Complex and costly tool

The FMP tool, in its current format designed for the Congo Basin, is suitable for large concessionaires. However, it is much more difficult to implement in smallholdings because it is very cumbersome and costly to these smallholders. It is the first impediment to sustainability. This issue will be thoroughly revisited in Section 10 and it will be seen that from a technical standpoint, sustainability (and the expansion of FMPs) will require the adaptation of the current model to provide simpler solutions to technical, organizational, and financial constraints of smallholders. It should be underscored that projects, like PAGEF in Congo, are indeed striving to find answers to this question. Ownership

The main factor behind the success of the tool is the interest of the companies themselves. Large concessionaires have a dual motive: first of all, commercial motives, then, economic considerations. Conversely, that also highlights the shortcomings of the FMP approach, as several groups of concessionaires are dragging their feet, in the absence of pressure from the administration (governance deficit), to join the management bandwagon without economic 118 ÂŠ AFD / May 2012

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or commercial incentives. This applies specifically to small- and medium-scale groups (i) who are interested in EU markets; (ii) who engage in over-logging for rent-seeking motives (“rentiers”). Furthermore, it is worth recalling that there is a gulf between designing and actual implementation of FMPs. Today, FMPs are generally designed for compliance purposes, without any intention (i) to ensure coherence with sustainable management or (ii) to implement them. The term “managed forests” clearly shields reality, as numerous concession holders are racing against time and delay the implementation process in collusion with most local administrations. Admittedly, some concession holders are seriously committed to forest management (like the Central African Republic with the support of PARPAF). However, it is now believed that most small and medium-sized concession holders engage in rent-seeking and wanton exploitation as well as targeting local or regional markets. The lack of effective control and pervasive corruption seriously undermine the action’s sustainability. Partnerships with more organized companies offer a way forward. However, it will only apply to the few smallholders who are ready to accommodate some partner demands.

7.3. Resistance to external shocks Economic crisis

The economic crisis generally slowed down the forest management process. Undoubtedly, management costs do not represent the highest operating costs for large companies. However, these companies already had to cope with rising operating costs (increased fiscal pressure, transport costs, incidental taxation as well as certification costs) and the crisis dented profitability, thus rendering investments more difficult, especially flat-rate expenditure, such as designing FMPs. It is therefore safe to say that the crisis, coming in the wake of increased fiscal pressure, curtailed overall expenditure of forest companies, for FMP or other activities, resulting in arbitrage at the expense of forest management or a decline in investments for processing facilities. Furthermore, the crisis caused massive staff lay-offs and poaching among the retrenched workers, thereby eroding gains made in the sustainable management of biodiversity. However, it is worth reporting that forest management had some positive impact: knowledge of the resource led some companies involved in the management process to develop new species (example of Tali, following a slump in the demand for Sapelli). Similarly, certification has enabled the companies concerned to retain some market shares. © AFD / May 2012 119

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It is therefore safe to say that the economic crisis did not undermine the forest management process for large concession holders already involved in FMP. The initial investment had been made, the tool has been introduced and is known and its economic benefits are fully understood. On the other hand, the economic crisis slowed down the activity of the most vulnerable concession holders (in the Central African Republic for instance, given operating costs such as transport) and further delayed the FMP design process of other concessionaires. Asian investors

Regarding the emergence of Asian investors, there is little data on their activities and commitment to management (or simply, sustainable forest management). The feedback varies with sources. They are generally unwilling to embrace sustainable management, but are actively preparing their back-up plan in case of the closure of European markets. Most Asian operators are indicted for the “abysmal management” of their concession, primarily driven by commercial motives and generally they have little regard for sustainable management (see reports of FLEG Independent Observer in Congo – noting that this practice is not specific to Asian companies), and obviously for management itself to which which they are committed half-heartedly (delays in management plans for instance). While this pattern fits most Asian groups operating in the sector, others which depend on European markets to re-export processed products are planning a strategic shift, in case these markets close (case of VICWOOD). It is very likely that some concessions supplying European markets will be managed in compliance with minimum management standards, whereas the remainder of the concessions trading on Asian markets will retain their current management system. It is further observed that a few concessions are making progress, as some companies are inclined to compliance (such as PAGEF Congo). Knowledge of the context and of this group of companies has led Professor W. Delvingt to make the following comments: “The future of large Asian companies in the Congo Basin is problematic. On the one hand, they will face pressure from European markets (part of the timber harvested by Asians is re-exported to Europe in various forms) to comply with the standards of European companies operating in Africa. On the other hand, it is obvious that their loot of the forest thrives because of widespread corruption of African officials. Any progress in good governance in the Congo Basin should therefore lead to the gradual compliance of Asian loggers with minimum legal exploitation requirements and at best, compliance with the core principles of sustainable forest management”. 120 © AFD / May 2012

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An eloquent example of this mixed observation is the VICKWOOD Group in the Central African Republic. It holds three concessions, including: (i) two that have virtually ground to a halt and are no longer filing any documents with the administration (not to talk of their management plans), probably because their concessions have been abundantly exploited; and (ii) the other concession seems to be moving in the right direction (with an expatriate officer acting as manager for several countries). This is also the case in Gabon: (i) the takeover of the Leroy Gabon company by Asian investors eroded all the achievements made in the area of management (which had actually been funded by AFD); and (ii) conversely, another Asian company Sun RY, is poised to join the sustainable management process. Positive trends are generally induced by the commercial motive of safeguarding access to European markets, thereby increasing compliance with sustainable management principles, starting with sustainable management. Finally, it is hard to say whether the emergence of Asian investors had an obvious impact on the forest management process in one way or the other. It is worth stating, however, that these operators lack as much incentive or are as reluctant as the entire group of medium-scale concession holders. Like the latter, they are often driven by the aforementioned market constraints rather than pressure mounted by the administration to ensure compliance with the rules of the game.

Box 17. VICWOOD, a Chinese group, taken over by Thanry Central Africa in the late 1990s Is this an exception to the rule? the following data was gleaned from an interview with the group’s representative (the statements published here reflect the group’s position and not necessarily the position of the mission). It holds eight concessions in three different countries: Cameroon, (4); Central African Republic, (3); and North of Republic of Congo, (1). Total area: 1,800,000 hectares and relevant area: 1,200,000 hectares (TA 1,719,170; RA 1,324,879). TLTV certification (Société Générale de Surveillance – SGS) in Cameroon, approximately 500,000 hectares (TA 485,380). The group’s policy is to achieve strict compliance with the laws of the three countries where it has operations. Award of TLTV certification in all the forest management units (FMU) since 2005 in Cameroon.

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

So far, there is no official commitment to FSC certification, but preparations are already underway in Shangai (FSC, COC-Chain of Custody- and ISO 14000) and in the field in Africa in order to pre-empt future market constraints and to fast-track compliance. In case of market pressure, this strategy will speed up the group’s readiness (2 years) to secure a certification at least in Cameroon. The group’s strategy is to comply with the existing laws. The group considers Cameroon as a pilot country in the certification process. The market will determine the group’s future commitment to this process, especially in the Central African Republic and Congo. TLTV is envisaged in Congo, whereas in the Central African Republic, the group has so far focused on the strict implementation of forest plans. Shanghai is the group’s industrial centre with a work force of 30,000 31 and 50 slicers. It also serves as the group’s processing plant for part of the timber imported from Central Africa, before it is re-exported to the United States, Europe and the rest of the world (highly diversified market). The domestic and regional market is growing exponentially, whereas market shares in the European Union and the United States are on the decline (specifically the EU market), which is rather considerable (according to the shareholder). The group is not ready to take any chances which might undermine its access to either the European markets or American markets. The group is stocking up to sustain its processing centre in China, but is keeping track of processing trends in Africa in order to pre-empt any measures that might be taken at the international level. The group is keenly monitoring negotiations between Central African countries and the European Union under the FLEGT process and apparently, China has made contact with the European Union under the same framework (the status of this process needs to be checked). The group has five industrial sites in Central African countries: two in Cameroon, two in the Central African Republic, and one in Congo, including one in the pipeline (contacts had been made with the predecessor of H. Marion, for AFD funding), and one in North Congo. These plants are primarily used for primary processing and drying in Cameroon. All approved management plans have been implemented. In Congo, the FM approval process is stalled owing to the lack of pressure from the administration in this regard. The group complies with the technical standards (forestry) set out in the management plans. In the Central African Republic, an industrial site is currently served by two permits. The group has barely resumed operations after the financial crisis and two of the group’s permits were over-exploited in the past (during Thanry’s tenure), which poses problems to the group currently. Timber harvested in these concessions is substandard (low grade sawn timber).

31 Figure that we could not check but that could also correspond to the population of Vicwoo City. (see also company's web site - http://wwwvicwood.com.cn/english/wdjt/qygk/qygkasp).

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The group has expressed concerns about the post-PARPAF in the Republic of Congo where it has three concessions, whose management plans were approved in 2008. The quality of management plans designed with the support of PARPAF is rated as outstanding. PARPAF has played a critical role in stabilizing the forest sector and wields a positive influence in the Ministry to avoid some excesses (of civil servants) and to remedy the lack of qualified officers in the Ministry of Forest. The group is concerned about the FLEGT process in the Central African Republic, which has been made more cumbersome by the introduction of more stringent laws, although capacities for the implementation of Voluntary Partnership Agreements (VPA) remain very low. In Congo, Vickwood is not involved in PAGEF. On the contrary, the group is seriously lagging in the design of its management plan for the northern concession which demonstrates the absence of pressure by the administration. However, as and when necessary, the group can demonstrate great response and mobilization capacities. According to the Chinese management of the group, mentalities have not yet evolved, which explains why loans coming from other countries (specifically European countries) are treated with caution. It is understandable that the Chinese still have doubts about the process initiated by the Europeans or by the international community. The Chinese are very close-minded and strive to maintain their financial independence. Moreover, the group, indeed, has the requisite internal resources for financial autonomy.

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Conclusion The institutional framework is well developed with forest legislation that recognizes forest management as a requirement and standard to achieve sustainable management. This framework has been strengthened by various reforms to the concession award system. It also hinges on national or regional policies and strategies which have established forest management as sine qua non to forest management. In this regard, forest management has a strong potential to be sustainable. However, the sustainability of the current FMP approach is significantly related to the various types of operators and their corporate policies. For large concession holders, while the FMP tool is well anchored today in management practices, the future of certification is still uncertain. For small- and medium-scale concessionaires, a deficit in governance is a major impediment to mainstreaming the approach, in addition to lingering and serious doubts on the actual implementation of ongoing or planned forest management plans The sustainability of the FMP approach therefore seems to be challenging for two reasons: (i) the future of certification and scope of forest management in large concessions; (ii) the sustainability and mainstreaming of forest management in small- and medium-sized concessions. Picture 6. Deforestation following demographic pressure.

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Overall appraisal of the role of AFD

The previous section reviewed the performance of actions on a case-by-case basis by type of projects, tools and their impact. But to fully understand the outcome of AFD’s assistance, it is important to step back and to review the performance and overall impact of these actions in the Congo Basin over a 20-year period.

Box 18. Key ideas

• Beyond the performance of projects, the more general performance of all actions and their impact needs to be reviewed. Finally, France, specifically through AFD, pioneered the management process of tropical forests in the Congo Basin by consistently supporting the forest management process and thereby, demonstrating the relevance of an innovative response, namely: FMP, which reconciles logging and management in order to achieve sustainable development. This method helps to develop public/private collaboration on the sustainable management of a public asset namely, forests. • AFD spearheaded the endorsement of the process by all the stakeholders and its dissem-

ination in different countries. It helped in building stakeholder partnerships between the private sector and NGOs, and contributed to the introduction of reforms in forest legislation and standards;

• The successful implementation of projects with the first large concession holders had a ripple effect on the other companies and demonstrated the relevance of the process.

Support to forest management: a relevant choice in the circumstances, consistent with sustainable management needs

French intervention, implemented by AFD, conformed to a main thrust: supporting forest management (through its choice tool, FMP). Initially, this strategic choice was questioned, given the prevailing international context that was marked by the dichotomy between the “mining” type of exploitation practiced by forest companies, and the “conservationist approach” advocated by environmental NGOs and some donor agencies. AFD can mainly be credited with supporting the process through, and thereby, demonstrating the relevance of the FMP response which reconciles exploitation and sustainable management. Today, it is worth noting that this choice is commended. Forest management has accordingly emerged as an appropriate response in the context of pressure from environmental NGOs on the “mining” type of exploitation and on that score, AFD’s intervention yielded significant outcomes. © AFD / May 2012 125

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A pragmatic approach: pro-private sector, bucking the trend

Among the various donors, AFD pioneered the management process of tropical forests in the Congo Basin. It has already been discussed in the section on relevance. In the nineties, AFD chose, in line with MFEA guidelines, to swim against the tide in relation to the private sector (conservationist approach and distrust of the private sector). Its involvement attracted a wave of criticism before it was gradually recognized as meaningful by most stakeholders. Despite the impediment, AFD stayed the course by gradually incorporating new paradigms and new core trends such as biodiversity and the social dimension in forest management. A favourable process for stakeholder realignment

The process hinges on the redefinition of responsibilities between forest management stakeholders (loggers, administrations, NGOs, local communities, management consultancies) technically embodied by FMP. While AFD was unable to support all the stakeholders, its funding contributed directly to building private sector capacities and new stakeholder interactions. The highlight was certainly the partnership developed between concession companies and NGOs for the implementation of the biodiversity and social components, despite the inherent limitations of the two components. These two groups of stakeholders learned to know each other, to contract and cooperate. AFD funding, and especially FGEF grants, were critical in this regard. Regarding administrations, fewer outcomes were recorded, owing to the fact that AFD brought this stakeholder on board only recently by designing and implementing projects such as the â&#x20AC;&#x153;small concession holderâ&#x20AC;? project in Gabon or PAGEF in Congo or through new C2D funded projects. Support to the administration in the Central African Republic through PARPAF, and the outcome of institutional support delivered through FESP in Cameroon raises some doubts in regard to the actual capacity building of the forest administration in the current context. A ripple effect and catalyst

Forest management plans did not emerge in the Congo Basin over the last few years. They existed elsewhere, in Africa and other continents, and constitute an indispensable forest management tool. Other donors and technical agencies played a key role in the design and development of the forest management tool in the Congo Basin (specifically ITTO and GTZ) and some private forest companies actually made huge efforts (CIB) and initiated the design of the early forest management plan in the region (CEB in Gabon).

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AFD joined the bandwagon and helped sustain the ongoing process. Some large concessions had already decided to embark on FMP and in fact, started the groundwork. The added value of AFD is to have catalyzed (though not a decisive impact) their commitment. Indeed, even without AFDâ&#x20AC;&#x2122;s assistance, these companies would have completed the design process of their FMP to earn certification, but thanks to its tools and status as a donor, AFD fostered the endorsement of the process by all the stakeholders and its extension to other countries. In this regard, AFD acted as a catalyst in the process. The successful projects implemented with pilot companies had a ripple effect on other companies and demonstrated the relevance of the process. Although some funded projects recorded mixed outcomes, specifically from a financial perspective, it is worth noting that the entire process met expectations. The overarching objective of serving as a lever for pilot projects funded in a few countries in the Congo Basin (as discussed in the strategic memo of P. Icard, 2004) was wise. So far, 4.4 million hectares of forest are FSC certified, and some 20 million hectares of forest out of a total 60 million hectares for the four relevant countries of the Congo Basin are technically under a management scheme.

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Conclusion Management has become a major building block (in fact, a cornerstone) of a system, namely, sustainable management of forests and all the resources found in those forests, more generally. AFD certainly facilitated a “virtuous process” when the stakeholders were ready to join. However, it is likely that the certification threshold has been attained and that a sizeable portion of the 20 million hectares said to be “managed” will not result in sustainable management. There are some questions, beyond the large concessions already involved, on the extension of the process to other target groups. There is also a need to put in place the other components of the project to ensure full functionality. Over time, some factors have indeed proven to be indispensable or have buttressed the need for their enhancement (institutional, social, governance factors) in order to ensure the stability of the whole system.

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SECTION 3. Lessons and way forward 9. Replicability in the Amazon Referring to the “replicability” of the African management plan model, especially in the context of the Amazon Basin or Indonesian forests, is probably unsuitable for those regions, “lessons to be drawn” being definitely a more appropriate term. The data collected on this issue essentially refers to the Amazon Basin and the analysis will therefore be based on this region 32. The sustainable management of forests and timber sub-sectors in the Brazilian Amazon is already an AFD priority sector as it fully meets two out of the three funding criteria (combating climate change, conservation of biodiversity, controlling major tropical and emerging diseases).

9.1. Commitment of France and AFD in Brazil • France and AFD are already involved in Brazil and sustainable development in the Amazon forest is one of the seven priority components of the strategic partnership signed between the two countries in December 2008. Although the Amazon tropical rainforests are facing the same challenges as the Congo Basin forests 33, the situation of the Amazon is somewhat different from that of Africa in several areas, including: • the complexity of laws, specifically regarding permits for sustainable forest exploitation, which inhibits funding of the formal forest sector involved in the process of developing a sustainable sub-sector for lumber or fuel wood; • a shaky rural and forest land tenure system; • the existence of public and private forests;

32 Authors of the report are especially indebted to N. Bayol, of FRM office, who provided the data and material used in this section. 33 Today, these forests are also considered as areas reconciling local development and forest exploitation based on the “sustainable management” model.

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• poor coordination between stakeholders, specifically between those of the public sector and those of the private sector; • forests are seemingly more uniform compared to Africa (this assumption has to be confirmed by data generated from more comprehensive inventories); • the predominance of national operators, sometimes in partnership with foreigners; • production mainly targets the domestic market; • nonalignment of the production and processing sector. France embarked on a medium-term investment (two years). Five potential sectors are targeted by the ongoing preliminary study: 1.

sustainable exploitation of natural public and private forests and improvement of the lumber processing sub-sector including co-generation (the importance of ecocertification in furthering developing sustainable management will be analyzed);

timber and fuel wood plantations at an industrial scale, and at a smaller scale, as well as production of charcoal;

regulating land tenure and environmental issues as well as improved surveying;

designing clean development mechanism projects on afforestation, reforestation, and biofuels as well as the planned REDD funding mechanism;

funding the forest sector, the timber sub-sector and fuel wood sub-sector by public and private financial institutions, including corporate social and environmental responsibility component.

The states of Para, Amapa, Amazonas and Matogrosso were selected. Expertise was led in five batches and in one or two stages for each batch. The FRM, ONFI, GRET, CIRAD and PERENI offices were involved in designing the preliminary studies for these five batches: • batch 1 : technical support for the monitoring of the implementation of federal and State forest concessions in the States of Para, Amazonas, Amapa, Matogrosso (two stages: FRM, with the participation of CIRAD); • batch 2 : technical support to assess the funding needs for the sustainable management of forest resources in the Brazilian Amazon (management certification and charcoal sector, FRM with the participation of CIRAD); • batch 3 : technical support for the design and implementation of a programme oriented approach to forest management sustainability in the Brazilian Amazon including land reforms (two stages: GRET); 130 © AFD / May 2012

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â&#x20AC;˘ batch 4 : technical support in the plantation sector (fuel wood sector) of the Clean Development Mechanism and REDD in the Brazilian Amazon (two stages: ONFI); â&#x20AC;˘ batch 5 : technical support to the promotion of bank funding of sustainable management friendly initiatives of the Brazilian Amazon forests (two stages: PERENI 34).

9.2. The concept of forest management in the Brazilian Amazon Brazil decided to introduce a system of forest concessions of public forests based on a model quite similar to the African model advocating sustainable management of the resource. While the area of awarded concessions does not exceed 100,000 hectares 35, an additional 1,000,000 hectares was in the process of being awarded in 2010 and the target is set at some 10,000,000 hectares. While the concept of sustainable management is the stated objective, the process is different from the one used in the Congo Basin. The major difference between the two regions is that the principle of management used in the Brazil Amazon is based on mapping out the forest to be managed into felling areas of equal dimensions (without prior assessment of the resources available on that area) as well as the level and conditions of its regeneration. This method is lacking because it does not comply with two core management principles namely: the equal volume of annual felling areas and management factors (length of the rotation, minimum exploitation diameter) set to ensure the regeneration of forest resources. There is therefore the risk of logging without guaranteeing regular supply of the resource in the long term and therefore its sustainability. On the contrary, the concept of low impact forest exploitation is taken into account as is the case in tropical African forests. Brazil has also gone further in annual planning and seems to be ahead compared to countries of the Congo Basin as far as the social and environmental components are concerned. It is true that the social context is pretty different in the two regions. The social expectations are generally quickly known in the Amazon forest and the social component fits in rather easily in the concept of forest management. Another significant difference between Brazil and Africa lies in the institutional context. In Brazil, institutions are quite effective and therefore do not need enhancement (which may not be wished by administrations). However, there is an area where AFD support may be possible. Indeed,

34 Brazilian entity. 35 This figures changed in 2010, following recent allocations.

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the newly established specific institutions at the Federal and State levels to oversee the new forest concessions systems do not yet have adequate resources nor technical and human capacities. AFD could therefore provide assistance by funding preliminary studies for the tendering of forest concessions specifically for the purpose of: (i) conducting an inventory of the resource in order to provide a basic estimate to concession holders on what could be logged; and (ii) land demarcation and approval of boundaries (a matter which has caused several conflicts). On behalf of AFD, the FRM Consultancy firm just completed a preliminary study of these two aspects in Batch 1 specifically in the two States of Amapa and Para. Another type of support that AFD could provide in the area of forest concessions is funding investments on concessions (Batch 1). Such assistance would directly target the private sector by the establishment of a credit line in banks to enable forest companies to fund major investments which they would have to make when they take over a concession. In Brazil, it must be recalled that the timber sector is not as integrated as in Africa. On the one hand, there are small loggers (who are also involved in first-line processing) and on the other, larger industries which are well organized and supplied by the small holders. With the new system which has been developed, companies which have received concessions would have to embark concurrently on exploitation and first-line processing hence, the need to invest in various areas (exploitation, processing, cogeneration, etc.). Contacts have been established with Brazilian banks for the introduction of such credit lines. In terms of cogeneration for instance, Brazil is certainly more advanced than African countries and its experience could serve as a model. Governance and certification issues

While it has been mentioned that the institutional component is unlikely to be a target component for AFD intervention in the Brazilian Amazon, the issue of governance and the commitment of Brazil in the European FLEG process are also no longer concerns for Brazil, which is moving to a system based on due diligence that requires the importer to establish a system which enables the practice involved in the different transactions to track the origin of timber, to analyze the risk and to make attendant decisions in order to ensure that the marketed timber is indeed the product of legal exploitation. As for certification, it has to be considered in relation to the implementation of concessions. If Brazil was once ahead of Africa in matters of certification, particularly with its private forests, the country today is lagging behind. A fresh boost to certification can now be envisaged in the framework of forest concession implementation.

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Obstacles encountered

The main obstacles constraining the development of AFD’s support programme to the sustainable management of forests in the Brazilian Amazon stem from the need to trigger private sector involvement into some projects that have already been designed particularly with the support of FRM (and its affiliate FR in Brazil) for private operators but the demand is not very strong. The other major difficulty is to attract Brazilian banks to create forest credit lines. It is in this context that the funding argument concluded by PROPARCO which seeks to support the development of CITEL should be understood. It is one of the major integrated forest holdings in Brazil whose activities stretch from forest exploitation to the processing of FSC eco-certified timber. It is also a stakeholder whose social and environmental conduct is exemplary. A forest and industrial investment product was developed by SECURE for a period of two years (2010 to 2011) involving among others: (i) opening of a new production line of floating floors; (ii) creation of a co-generation plant fired by timber wastes; (iii) introducing modern low fuel-efficient equipment. Two of the strategic components of the intervention of the AFD Group in Brazil are involved in this project. • Combating climate change by combating deforestation. • Conservation of biodiversity.

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10. Lessons In this section, there will be attempts to draw lessons from the various experiences studied by laying emphasis on the most relevant cases for the future of AFD support programs aligned on the expected way forward. After revisiting the context of AFD’s intervention for the period under review, two crucial factors for any given forest strategy will be revisited, namely: the role of forests in the economies of these countries and the forest/climate dichotomy. Technical lessons will first be drawn followed by lessons from AFD’s financial instruments. Every effort will be made to address sustainable management beyond the growth of concession holders supported by AFD for objective purposes.

Box 19. Main ideas and lessons AFD support choices were relevant in the previous context. Management is today indispensable in countries of the Congo Basin. Practices have started changing. Despite the contextual difficulties and the hidden agenda of key stakeholders, AFD successfully triggered stakeholder dialogue and collaboration which was decisive in the aforementioned strides. The achievements also derive form a core situational factor of the 1990s namely: pressure from environmental NGOs. These results are however shaky owing to the lack of a genuine will by some of the stakeholders including loggers and administrations to join the process. The position and resources of AFD did not allow it to address structural issues which inhibit the extension of sustainability of the achievements in that area. Today the FMP model used as well as the overall process is inhibited by four main factors:

• The first factor is macroeconomic and is linked to the role of the forest in the national economy as the tendency remains forest exploitation for timber purposes;

• The second technical impediment requires the tailoring of the tool to different contexts and targets; • The third aspect, finance, means finding at a greater scale new funding mechanisms for the social and biodiversity components to ensure their sustainability;

• Lastly, the fourth and most serious factor relates to the various aspects of poor governance in countries of the Congo Basin. The response should not merely entail substituting one tool or instrument with another.

Based on its experience and trust from various stakeholder groups and the diversity of its instruments, AFD is in good stead to continue playing its catalyst role in the implementation of sustainable management of forests in the Congo Basin. Its strategy should be determined to better consider the responses to be provided to the current weaknesses and the new factors on climate change. © AFD / May 2012 135

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10.1. Realigning forest management actions in a comprehensive strategic frame work Overview of previous contexts, benefits and weaknesses of the AFD strategy

AFDs interventions were considered as positive outcomes on two main scales: on the overall management process with its establishment in virtually all countries of the Congo Basin and on the technical level for a target comprising large concessions. It has been reported that the implicitly implemented strategy focused on: (i) upstream intervention on sustainable forest management issues (forest management); (ii) on the technical aspect (the FMP tool which beyond the technical aspect served as the basis for a State/private sector contract for the devolution of the management of a public asset); and (iii) on a defined public target (forest companies comprising initially large concessions which were more inclined and interested). This choice was tailored to the context of the 1990s and 2000s with stakeholders who were reluctant to join this process and a weak administration. The private sector managing large concessions was a gateway to innovate and trigger the process. The outcomes are today eloquent and have been reported in the previous sections. A great leap has been made in terms of quality and the 20 million hectares under management bear hope for the popularization of the process provided it is reflected through serious implementation of FMPs. However, it should be borne in mind that the results are related to pressure from environmental NGOs which prompted large concession holders to join this certification process. These major European holdings worked with AFD and it was AFD that successfully supported this process and focused it on a public/private partnership. The constraint lies in the poor influence of donors in the sector policies of the countries concerned. Admittedly, AFD and other partners had a positive impact on the shift in policies and rules at the end of the 1990S and early 2000s while the legal and regulatory frameworks mainstreamed forest management and concession award systems changed. However, it is worth noting that the implementations of these policies in compliance with these laws are poor. Regarding AFD, it cannot be held responsible either on account of its mandate (it is only recently that the institutional component was devolved from the MFEA to AFD) or its resources (which depend on its oversight authority in terms of flows and rules governing the award of grants). Its justified, dual component, production forests and concession holders, did not enable it to will influence. This shortcoming is felt at several levels: little impact on the capacity of administrations 136 ÂŠ AFD / May 2012

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(institutional impacts), poor consideration of inter-sector components, implementation of FMPs relating to market pressure all of which is reflected in a management process that is currently restricted to a few large holdings driven by European markets and certification, but which has successfully made forest management an indispensable component in the management of the Congo Basin forests. Additionally, there are questions on the lack of willingness of other stakeholders both public and private to pursue the management process. This connects between policies and reality on the ground. Today, AFD, aware of these shortcomings, is considering what should be done to sustain and expand the benefits given its position and its limited resources. Indispensable factors for a future strategy: the role of forests in country economies and climate change mitigation mechanisms The role of forests in country economic policy

The forest policy is not the outcome of guidelines made by the administration in this sector but by choices made by Governments in the area of regional development and natural resource exploitation in order to achieve economic development and policy targets. Accordingly, sustainable management of forest can only be defined if it is considered from a wider integrated inter-sector framework. GDF is not solely a forest management issue as forest resources and areas are subjected to various types of strains: agricultural pressure from a population which is growing and seeking land, mining pressure generally directly visible in certain areas, agro business pressures to use and to transform large areas into industrial plantations etc. In the absence of a satisfactory financial compensation governments may be tempted to transform part of the natural forests into production areas for industrial crops (oil palm, production of bio-fuels, etc.). This choice has been successfully made by other countries (Malaysia, Indonesia or Cote dâ&#x20AC;&#x2122;Ivoire) and there is no guarantee today that it would not be done by certain countries of the Congo Basin. It is generally acknowledged that the harnessing of a natural capital for the purpose of significantly increasing another type of productive capital and human capital is indeed defensible in terms of development strategy. Today, the vision of managing and conserving a public asset appears to be different between on the one hand, States of the Congo Basin and on the other hand, the international community, corporation agencies and NGOs. While progress has been recorded, such as increased willingness demonstrated by the State through their regional commitments, their policies and legal frameworks, this vision of forests as a global public asset, however, remains a delicate public matter. States have not yet actually ÂŠ AFD / May 2012 137

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made a bold step and this resolve is not always crystallized in field actions, thereby inhibiting compliance with the rules as already mentioned. While forest management seeks to mainstream some issues, it constitutes among others, a regional management tool to the extent that it seeks to understand the social demographic and land dynamics as well as to organize the use of land based on different forms of development and conservation. However, its scope is still very limited in this area because it only covers production forests and specifically it is found upstream of governmentâ&#x20AC;&#x2122;s macroeconomic policies. This therefore raises the issue of the real agenda of governments. In the current context, it seems that these agendas are actually and logically more inclined to short-term economic development needs rather than sustainable management. Governments prioritize mining or oil sectors and the development of agriculture for economic and social reasons at the expense of the forest sector, yet the sustainable management of forest hinges on a number of changes and choices (national land tenure and use policies, good governance, consideration of local development needs, efficient poverty reduction programs, etc.) which are the preserve of governments and not only of forest agencies. In the medium-term, the assumption of a significant reduction in forests of the Congo Basin is plausible which directly raises the issue of global public assets and compensation to countries which will give up exploiting their forest resources. Today, forests are predominantly attractive owing to their timber resources and the ensuing employments. That is certainly not enough to guarantee their sustainability in the face of various forms of pressure (agricultural, mining, agro-industrial, etc.) whereas the gamut of environmental services they provide are adequately considered or rewarded. There has been a race against time for several years to prevent the occurrence of this assumption. The outcome depends on the common understanding of the stakes between countries of the North and those of the South or their capacities to design adequate instruments and to mobilize the requisite resources as well as to implement decisions. This matter was thoroughly addressed over the last few years specifically through climate change discussions (reported herein after). Reversing the current trend toward the progressive recession of dense forests requires a recognition of the actual value of forests, the corner stone for a shift in national policies.

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Production and other types of forest; the illegal sector: addional challenges

Another question that needs to be considered in defining a strategy is the following: what are the forests and sectors that comprise current challenges for protecting forests. The State of the Forest â&#x20AC;&#x201C; 2008 (WASSEIGE Etale, 2008) 36 clearly demonstrates that dense forests only account for 40% of forest areas apart from cultivated areas. The management of savannah forests specifically poses a daunting challenge and is therefore more delicate to handle. As an example, letâ&#x20AC;&#x2122;s mention the Central African Republic, where efforts are focused on the sole South-West block. While it is true that a large part of the usable forest area of this block is today in the process of management, it only accounts for a mere 6.4% of the overall forest inventories covered in the country. There is yet another major forest cover in Bangassou in the South-East of the country which has an area of some 1.6 million hectares exploited exclusively using traditional methods owing to its landlocked nature or accessibility problems (Icard and DSP, 2007, see footnote 15, page 34). The Ministry of Water, Forests, Wildlife and Fisheries (MEFCP) plans to develop a community forest approach in that area. Furthermore, the savannah forests alone account for 22 million hectares including specifically esthetic forests. The data quoted in The State of the Forest in Central Africa (Wasseige Etale, 2008) also reports 31 million hectares of other plant holdings without specifically mentioning the details. However, all of these forests are probably home to a significant potential of timber capital which currently lacks any specific management scheme. The fuel wood sectors also significantly contribute to high-impact degradation and deforestation compounded by urban sprawls. This raised questions on illegal timber production sectors basically production of timber for the supply of domestic and sub-regional markets. A recent study conducted by CIFOR in Cameroon shows that timber production in Cameroon peaked at 4,200,000 cm3 per year including some 1.8 million from concessions, 0.5 million from other permits and the rest (about 2,000,000cm3) from logging in the non-permanent domain and illegal logging in the permanent domain which supply the domestic market as well as Chad and Nigeria. As demonstrated previously, there is no legal framework for the domestic and informal market for the simple reason that officials of the sector are involved in the informal companies. The informal and illegal markets are well organized. While the formal sector employs 13,000 people, the informal sector is said to employ 50,000 according to consulted project documents.

36 http://observatoire-comifac.net/edf2008.php

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The point here is not to challenge the rationale of the previous choices (it has been shown that AFD had responded to a specific issue in the context of the 90s on production forests where it had the resources to act and with stakeholders who were ready to act). Instead, the intention is to draw the attention of AFD through these four examples on the need to look back before making future choices bearing in mind that each country is a specific case with different stakes and that AFD resources are limited. The role of forests in climate change: between opportunities and ambiguity

Reference to a sustainable forest management strategy also takes into account the new paradigms on climate change and ongoing mechanisms and establishments. The forest is central to discussions on the climate on account of the fact that: (i) tropical deforestation is a major source of green gas emissions (12-15% of anthropogenic emissions of CO2); (ii) they play a crucial role in carbon stocking. Over the last few years, fuel depends on carbon sequestration and carbon credit mechanisms. The tendency is to compensate countries that have embarked on combating deforestation. This led to the establishment of the REDD mechanism although it did not crystallize and find satisfactory tools for its operationalization. The baseline issue to be used to assess country progress is far from resolved. Since 2008, this mechanism – dubbed REDD+ – mainstreams comprehensively the various components of sustainable forest management such as combating deforestation, conservation, forest management, progress in structural issues as well as plantations etc. it would therefore provide an opportunity to go from FMPs but also to reform the administration. Ongoing discussions and recent developments in Cancun provide fresh opportunities with better consideration of forests in the inter-tropical area. The establishment of a Green Fund would serve as a financial tool in that regard. The website of CPFP summarized the intentions of this fund “The agreement also includes the establishment of a Green Fund that will be put in place in 2011 which will be expected to total 30 billion US dollars in 2012 with a balanced allocation between funding adaptation measures and litigation measures with emphasis on funding of immediate measures for the adaptation of developing countries to global warming and 100 billion US dollars in 2020 to meet the needs of developing countries which may well include other long-term environmental protection projects as well as adaptation and mitigation measures” 37. The progress in Cancun is however considered by several experts as very limited and only defers the more important and requisite decisions38. There is the tendency to evade the issues 37 Extract from the website: http://www.pfbc-cbfp.org/actuallites/items/UNFCCC_Cancun_Outcome_F.html 38 A. Karsenty’s article (CIRAD), 12 December 2010. http://www.telos-eu.com/fr/article/deforestation-cancun-n-a-pas-tenu-ses-promesses

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rather than solve them. The REDD+ mechanism will become a genuine package including funding profitable industrial plantations. The lack of a strong consensus on the mechanism and its objectives has been equivocal and explains the difficulty which stakeholder groups encounter in agreeing on its operationalization and which can only lead to its inefficiency. â&#x20AC;&#x153;The increased expansion of the scope of REDD+ is presented as progress by those who mistake progress for escapismâ&#x20AC;? (A.Karsenty). This calls for full participation in discussions on this mechanism in being a force in bringing forward proposals for channeling a significant share of the funds towards one of the core components in climate change mitigation, which is the protection of the forest. Poor governance should not be overlooked

This issue has partially been addressed. Deforestation first and foremost occurs as a result of structural issues which cannot be resolved from the sole perspective of forest management. Addressing the structural causes is tantamount to prompting the development of genuine policies in the agriculture and land tenure policies since the two components are often intertwined. It also offers an opportunity for countries to protect their agriculture and to access productive markets. The establishment of funding schemes for such agriculture will also help the countries to embark on a more intensive drive. The management of the fuel wood sector is also a core objective. Funding needs deriving from supporting reforms in agricultural practices are significant and cannot be covered by the current flows of assistance which tend to decline. These issues which are already quite complex cannot be solved without addressing one of the core weak links of these countries notably, governance, the cornerstone of public policies. A cardinal lesson is that current governance in the forest sector and beyond the Congo Basin is a major impediment if not the main drawback to the success of sustainable forest management. Governance, an indispensable factor

Accordingly, the extension of FMPs involves all large and medium-scale concessions beyond the large holders which are already involved. Today, out of the 61 million hectares of large forest areas, 31 million hectares have been awarded as concessions including 20 million hectares under management (meaning having started the FMP design process). 4.4 million hectares are FSC certified. These are predominantly large concessions supported by AFD which target certified markets and which therefore have a business interest to join the forest management process. But, what about the others and what are the actual surface areas under management? Is this commitment solid enough for FMP to be viable at a large scale in the Congo Basin? This issue is partially covered in the section on sustainability but from the perspective of concessions supported by AFD. This section will expand the issue to other loggers. While there is a lack of data to clearly respond to this question, strong doubts remain. ÂŠ AFD / May 2012 141

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Stakeholder roles and relations are not problematic. They are clear and have changed. Similarly, despite some deficiencies (implementation instruments and social components) the statutes in terms of legal and regulatory frameworks and standards have evolved separately from the clear FMP process. Achievements must also be reported in the area of governance namely: (i) increased transparency and objectivity in the award of forest concessions; (ii) involvement of NGOs and local communities in discussions on forest management and in the process of designing forest management plans (with the aforementioned limitations); (iii) establishment of independent observers in two countries (Congo and Cameroon); (iv) genuine commitment to the FLEGT processes. Compared to the other sectors (mining specifically), the forest sector seems to be ahead. Despite these achievements, the current system is still plagued by poor governance. Indeed, if these rules are enforced, it must be noted that they are not complied with. This is at three levels: (i) non-compliance with timelines in designing FMPs (frequent delays despite the statutory requirements and commitments of private entities in different types of agreements); (ii) uneven quality of forest management plans (see the example of Cameroon presented hereafter); (iii) the non-compliance with the specification contract, an issue for the small and/or medium scale concessions (see Central African Republic or non-compliance with specification contracts for Congo which leave the impression that the provisions of the specification contracts of FMPs may not be complied with in future). In the two countries covered by the independent observers there are several violations of the specification contracts by concession holders including basic violations which undermine the sustainable management of resources (e.g. non- compliance with the felling areas or DMAs). These violations which do not trigger any response from the administration have a direct bearing on the FMP process specifically significant delays and great doubts on actual current and future implementation. The delays in the migration from provisional agreements to final concessions in several countries (Gabon, Cameroon and even Congo) reveal, as has been demonstrated, a tacit agreement between the administration and some loggers to continue to exploit some concessions without changing their practices (to the extent of abandoning the concession once it has been over-exploited and is no longer productive, a case recorded already in concessions deemed to be under management). The study on 20 FMPs in Cameroon (GTZ funded) is disturbing: three quarters of these management plans do not meet 50% of the certification requirements yet these standards (PCI for SFC) are today considered as minimum requirements for sustainable management 39.

39 It should be noted that Cameroon ranks last in AFDâ&#x20AC;&#x2122;s FMP support interventions.

142 ÂŠ AFD / May 2012

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It is obvious today that the achievements in terms of processes, tools and their reflection in statutory instruments are not followed by actual enforcement. It seems that the administrations concerned, or more generally the stakeholders who have a share in the forest proceeds, are able to meet the various requirements of external partners, to internalize the language and to seek ways and means of postponing the implementation of critical measures.The constant quest for new technical responses and new tools which will need some years to be designed, tried and tested before they are abandoned for a new tool is a pretty rampant trend. An example is once again the case of Cameroon, which had relied a few years back on a computerized forest management system (SIGIF), a computer tool expected to solve most of the governance problems of the sector. Today, this tool has been forgotten. Means have been devised to avoid rendering it fully operational and a new technical elite view has been embraced to ensure adequate traceability. In the meantime, it is business as usual. The difficulties encountered by independent observers clearly demonstrate the limitations of the endeavour. The crux of the matter is related to a lack of governance in the forest sector which is a major impediment to the popularization of forest management plans. Causes of poor governance in the sector

The generic term â&#x20AC;&#x153;poor governanceâ&#x20AC;? conceals three core factors which must be distinguished from the causes of poor forest governance. The primary cause is probably related to the different perceptions of importance and role of forest between the international community and the countries concerned in the Congo Basin. It is the perception of local public assets which is at stake on the one hand and on the other hand, that of the importance of services provided by forests. The States of the Congo Basin consider their forests like one among other natural resources as short term resource potential and not as a global public asset. The resulting forest policy and management reflect this vision. The second cause relates to the absence or the weakness in the capacity to design appropriate policies in the sector (institutional capacities). It is unfortunately a general deficiency often characterized by the unwillingness of administrations owing to the weakness of institutions (lack of loyalty, disinterest of national assemblies etc). The poor technical capacity is a fact but is peripheral compared to the unproductive institutional environment. The third cause relates to corruption. It is probably the predominant factor in the sector. The sharing of forest proceeds underpin this corruption and explains the unwillingness to set up efficient controls and to strictly monitor the implementation of FMPs. ÂŠ AFD / May 2012 143

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So far, only concessions driven by certification, mainly due to market pressure, will make progress without good governance. Once we continue to operate as usual and the benefits of poor governance will be shared. The â&#x20AC;&#x153;small concession holder" projects therefore risk heading to the abyss because non-professionals (not to mention profiteers) and exploiters who operate on short term strategies without any area to safeguard their investments cannot become sound managers. AFD could therefore be required to provide public funds to such stakeholders (see section on relevance) and should ensure that necessary safeguards are put in place. It is therefore not a matter of capacities of the administration which are clearly inadequate but it is specifically the political will that is lacking. The forest sector is governed by organizing generalized sharing of proceeds from their forests between the administration, policy makers and the private sector without any genuine concern for sustainable development. It is an important factor to be considered for the future of interventions or their replication. Without basic good governance specifically fighting corruption, the drive for sustainable management will have little impact because sustainable management requirements are not met by most of the operators. To go further, it can be said that the sustainable management model or the FMP typical tool are secondary. The problem is not the model or the tool but compliance with regulations through adequate governance which means the existence of a political will to implement a consistent policy in the sector. Poor or misgovernance, despite the recent benefits in the area of instruments and tools, is a major impediment to the popularization of FMPs and their smooth implementation after the pilot phase. Poor governance is deep-seated and will therefore remain an essential factor for the short and medium terms. What response should be brought to avert an accelerated degradation of the system bearing in mind that it is indispensable for donors to stay in the sector? The current benefits show that a combination of an internal and external approach relying on tools to support reform may bring about a change in positions. Inadequate institutional capacities, outcome of poor governance

An analysis of country reports and the present report highlight the major impediment at the constitutional level. That is, weakness of forest administration. It is obviously related to the context of poor governance as previously highlighted. The FMP approach and the process supported by AFD have prioritized forest concessions. This choice was justified in the circumstances although it had to cope with pressure to embark on sustainable development although the same pressure could not be exerted on the administration. The administration has not taken ownership of the implementation of this process may be because it was designed hurriedly to be mastered by a low capacity forest administration (owing 144 ÂŠ AFD / May 2012

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to lack of requisite assistance or appropriate operating system) but also due to unwillingness to translate policies into concrete action. Institutional capacity building is inevitable; forging the issue will only impact on the sustainability of actions. As shown in the White Paper, the capacity building target is today a cross cutting component for AFD in all sectors. In the forest sector following the divestment of MFEA, it is a new target and AFD is set on achieving it. Beyond French assistance, the poor results of institutional support projects can be explained by specific project factors namely: a positioning often external to the administration; consultancies prioritizing technical aspects (which are of interest to them) over technical aspects (where they are less comfortable). But that is specifically explained by general factors which relate to general state reforms and are more felt in the forest sector: • support to administrations without genuine will for policy reforms (misunderstanding or underestimation of initial context); • inability to rely on structural factors (no matter the level of compensation, type of client management, public service culture as a job and not an office); • reforms built on European models, inappropriate to the formal and informal organizational format of administrations. In the forest sector, calling into question the traditional relations between the administration, the private sector and the attendant profits is an additional factor. How can capacity building be addressed? To respond to this question is tantamount to identifying the real causes of the observed shortcomings namely: what are the possible and feasible changes, what are the critical functions to be highlighted and what drivers should be relied upon that lead to choosing the types of assistance to be provided and specifically to properly define the operating systems which will have a direct bearing on the efficiency of funded actions. It must be recalled that although AFD and a number of partners are able to design good projects in terms of definition relevance, “things get stuck" after implementation. Who is the proper contractor to be selected? What operating system should be adopted in providing support and financial mechanisms? What are the safeguards and monitoring and evaluation systems to be developed? Pending State-building and gradual improvement of governance, what is the modus operandi? We are in change processes which can only be sped up over time and/or with crises. In the meantime there is the need to refine the critical and indispensable functions in the sector, more specifically by piloting production of standards control. Emphasis should be laid as a matter of priority on compliance with the rules implying a strong and collective pressure lobby from partners combined with the sustained intervention of the civil society in the countries concerned. However, there is a doubt; can the administration be expected to carry out satisfactory control © AFD / May 2012 145

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on the enforcement of complex standards related to FMPs whereas it is not able to ensure compliance with simple regulations such as compliance with felling or logging sites? These questions and its answers (unfortunately negative) support proponents of privatization (devolution of the public service) of control duties. The coordination of various donor interventions is also a critical factor to ensure the complementary and concerted nature of actions. With regard to improved coordination, efficiency is undermined yet, it has been demonstrated that donor pressure has led to a number of achievements. The question of coordination and convergence on governance issues has to be resolved. FLEGT Process

The FLEGT process opens a new era which will ensure coordination on the technically shared objectives with national parties specifically on matters of governance. This initiative (enforcement of forest legislations, governance and trade) launched by the European Union seeks to improve governance in the forest sector by prohibiting the import into the European Union of uncertified legal timber. This system based on voluntary partnership accords between the European Union and producer countries is pretty complex to establish (designing legality charts, the legality compliance system and independent audit). The main issue is the pragmatic implementation owing to the interpretations that may be made of the legality chart requirements on the actual verifications conducted by the administration which is weak yet, predominant in addition to the fact that it is a state body which will issue the export permit. AFD has embarked on providing assistance to the structures and mechanisms established by the European Union. AFD's contribution has been analyzed through its support to the private sector in ensuring the design and disemination of the FMP tool. This choice by certification stakeholders and FMPs were rational to the point that if such a choice had not been made at the time, there would probably have been no management today and consequently no certification. Therefore, there would have been little progress toward sustainable management of the resource, if the choice had been to achieve good governance, a preferred method by the FLEGT. Countries that have signed the VPAs would recently not have been involved as swiftly in the FLEGT process. Today however, the context has changed and seems now to be conducive to embarking on such a step. It is in this context that AFD support to SA COMIFAC through technical assistance supporting the development of the FLEGT process in member states of the organization should be understood.

146 ÂŠ AFD / May 2012

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This support specifically targets the actual development of an autonomous funding mechanism and the development of a multi-stakeholder platform to boost the standardization as well as pull interventions from different COMIFAC support packages in the spirit of the Paris Declaration for efficient assistance. Beyond the direct assistance provided to countries involved in the VPA negotiation process with the EU 40, a strong mandate was given to technical assistance in order to, (i) activate the AFLEG/FLEGT task force, (ii) manage the secretariat of the steering committee and, (iii) oversee email correspondence. Technical assistance will also contribute in the future to enhancing collaboration between donors and improving collaboration for FLEGT. Improvements are already visible on one-off jointly funded activities. Further efforts need to be made to achieve actual co-funding. Technical assistance is an opportunity for AFD to contribute to the debate on the operationalization of FLEGT, on its limitations and thinking outside the box. We have raised concerns on the conduct of this process. However, to better align and to prevent its possible negative impacts, it is important to join the process and to contribute critically and constructively. That will also ensure the creation of a better linkage between the approach developed by AFD in the area of management and the FLEGT process which for the time being is still quite theoretical. These are some of the avenues that might help AFD to intervene in these institutional and governance issues where they had hitherto been hardly involved. Indeed, based on the documents consulted on field discussions or interviews with key resource persons, AFD seems to have underestimated these issues on the grounds that it was the ambit of the MFEA. The documents hardly mention the fact or if at all, from the perspective of institutional capacity which is better understood from the technical aspect of expertise. AFDâ&#x20AC;&#x2122;s preferred approach may have been extremely exclusive and forestalled the development of sector analysis and inter-sector relations that led to the circumvention of governance issues which were however afflicted by serious state failures and corruption which seriously undermined state action. While it is true that it is a delicate matter, it must be noted that other donors are much blunter in their approach. However, by focusing on forest management plans and the private sector, AFD supported an area where few donors were involved. Its action therefore complemented that of other donors (such as the European Union or DFID) which laid emphasis on governance (like the World Bank) of forest sector reforms.

40 Cameroon, which has received GTZ financial and technical assistance since 2005, is not among the countries receiving French TA.

ÂŠ AFD / May 2012 147

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10.2. Technical aspects: how to tailor and pursue the FMP process The previous section discussed the strategic components to be considered before intervening in the forest sector. This section will now examine the more technical lessons drawn from FMP as implemented in the Congo Basin. An indispensable and developing model An appropriate model for technical aspects and large concessions

While forest management plans are not synonymous with sustainable forest management, they are however an indispensable component.They could be very simple or complex based on the needs but also on the context, on the laws, on the qualification of the available human resources and the level of financial resources as well as the readiness of specific stakeholders to embark on their implementation. “Forest management plans which were hitherto used in the Congo Basin by colonial forest managers consisted generally in defining a felling area coupled with compliance with a diameter at breast height for each exploited species. A further step was the introduction of exploitation inventories (not to be confused with management inventories) or post-harvest inventory” 41. The design of the model that has been adopted for the management of Congo Basin forests led to the development of a highly specific tool which has been tested on several concessions. This model is based on the long-term concession system with its State/concession holder contract and design followed by implementation of a forest management plan (modeled on French and European forest management standards). It can be said that the tool is technically ready, standardized in different stages and now mastered by forest experts. This model led to meshing theoretically the economic exploitation targets and sustainable resource management (and to thereby respond to strong pressure from NGOs). Another important point is the fact that this model is lauded by large companies which, though reluctant initially, have adopted the tool today.

41 Professor Delvingt’s note to the Steering Committee of this study.

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An indispensable tool today but have others been considered?

The TOR raised the issue of FMP “alternatives”, or of the selected model. Forest management seeks to achieve sustainable management of the resource, while FMP is the choice implementation tool. While the FMP tool is now indispensable and mainstreamed in national legislation, it also emerged as an indispensable tool to further the certification process (recording positive outcomes in several large concessions). However, with the model adopted in the Congo Basin, a complicated tool was adopted for the purpose of sustainable forest management. Was there an alternative? It is difficult to answer this question since another tool has not been tested. Some expert opinions will be cited once more. According to Fargeot et al. 42, “the current forest management model-which closely involves the industrial sector to management planning based on its technical and economic constraints-fully meets current forest exploitation needs. The socio-economic and biological studies conducted during the preparation of the management document should also take on board the interest of the state, current owner, and those of the industrial sector, in addition to the interest of other relevant local or international stakeholders, and to organize this vital economic sector in the Congo Basin”. According to the same authors, “the management methods currently implemented in the Congo Basin are, indeed, more suitable for designing logging plans rather than genuine forest management plans in the traditional sense of the word. The exploitation management concept is effective in the current context of Central Africa’s forest economy to harness unexploited, unprepared and considerable mature timber potential, high quality timber production primarily exported to the European market and a weak domestic market resulting from low population density. The foregoing factors are favourable to the vertical integration of companies and the production chain control from the forest site to exportation, including timber processing in importing countries. It is specifically desirable to consider the adaptation of the concept to new socio-economic circumstances and possibly, replacement with new models. It is one of the daunting challenges to be addressed by forest research in the coming years. An objective analysis of the implementation of the current concept and its limitations which have been partially discussed in this article should pave the way for the development of new models applicable to forest management in Central African rainforests.”

42 Fargeot, CH. and E. Forni, R. Nais (2004), Réflexions sur l’aménagement des forêts de production dans le Bassin du Congo, BFT, N 0 281 (3).

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An evolving tool

While the model can be improved, it is very unlikely that an alternative to management planning will be found, and backtracking is not an option: management plans are, today, a reality enshrined in national legislations of the various countries. The next phase will entail defining the implementation details and harmonizing the various aspects. Furthermore, it is worth recalling that FM is not static, its design is a dynamic process which could – and must – change and there is a lot more ground to cover to define the technical requirements and increase the knowledge base in several fields (consistent with the aforementioned scientific reservations). Natural forests form a highly varied ecosystem and any human activity may induce changes and alterations which the scientific community can hardly fathom today. It is therefore in order to continue debating this issue. This study therefore seeks to investigate means of capitalizing current benefits (monitoring and research), pursuing their expansion (new target groups), and sustaining and consolidating what exists (social and biodiversity issues). The quest for more flexible, less cumbersome and, obviously, less costly models or alternatives is in process (see “small concession holders” subsequently). There should be a fresh drive for similar or new avenues. To report efforts made in forest management over the last 20 years in Central Africa, the FAO launched, in May 2001, a new initiative entitled In Search of Excellence. It fell in line with a new Netherlands/FAO partnership programme on the conservation and sustainable management of tropical rainforest ecosystems in Central Africa. A BFT article published in 2004 43, analyses case studies conducted in 9 countries, on 24 different forests. The findings highlighted the following trends: (i) increased awareness and genuine willingness, as well as a change in mentalities; (ii) participatory forest management, building and sustaining solid partnerships; (iii) increased knowledge of the resource and recognition of the different functions and uses of the forest, and lastly, (iv) a long-term vision. The authors of the article generally observe that the various on-going actions and initiatives, though promising, are often impeded by various factors: political, financial, economic, institutional and regulatory, socio-economic, technical, and insufficient, scattered and poorly disseminated knowledge. The authors draw the following conclusions from their study: “forest management also requires political will, social investments and, more importantly, the active involvement of local stakeholders including local communities and forest operators.

43 Ansallem, I., P. Djiby Kone, M. Loyche Wilkie et M. Ngandji (2004), Gestion Forestière en Afrique Centrale: à la recherche de l’excellence [Forest Management in Central Africa: Research for Excellence]. BFT No. 281 (3). pp.5 -18.

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It further requires greater emphasis on sustainable funding through the development and transparent management of financial mechanisms. Despite numerous constraints to sustainable forest management by the Research for Excellence Project, there are significant on-going field efforts in Central Africa: new approaches and methods are experimented and implemented with various forest management goals, at different scales and for various management agencies/ schemes. Hopefully, these examples will inspire stakeholders of the forest sector and yield positive results for actions implemented holistically and comprising all aspects of sustainable development”. FMPs and “small concession holders” : how is the tool to be adapted?

Although there is visible impact in large concessions that have owned the FMP tool, it is still too early to assess the extent of ownership by the other categories of concession holders. The PAGEF project, that seeks new avenues for small- and medium-sized concessions, is expected to provide specific data in the coming years. Nevertheless, it is clearly recognized that this process has transposed a FMP tool used in Europe to a different context (type of natural forests, level of governance, type of operators and markets, etc.). With hindsight, this model is, in principle, only suitable for large concession holders with the attendant technical and financial resources to design and implement the tool. This factor inhibits its mainstreaming to other categories of operators, as the current FMP is cumbersome, complex and costly for "small concession holders". A complex and costly model for “small concession holders"

There are many challenges relating to technical capacities, cost and the difficulty in rallying small concession holders and their genuine commitment to sustainable management. With regard to technical, organizational and human capacities, it is worth noting that the stakeholders (large private companies) that actually embarked on FM have developed internal capacities. The groups initially relied on external expertise (mainly French consultancies) before gradually building their own capacities by setting up internal management units. However, the problem has not been solved for small- and medium-sized companies. Indeed, these operators are confronted with several challenges, including: (i) the expansion of their company that is further compounded by their small size and traditional (sometimes family) management system; (ii) requisite investment to acquire the necessary expertise, and (iii) the successive financial or economic crises that gripped them. Today, the CAR experience clearly highlights the difficulties facing medium-scale companies to acquire or maintain specialized skills in forest management. Therefore, it is obvious that the current, very complex FMP is not suitable for small© AFD / May 2012 151

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and medium-scale companies. In fact, cost is a major constraint. Implementing the FMP tool involves huge costs (inventory costs and cost of a management unit) which can hardly be borne by these companies, in addition to the fact that the time to recoup their costs might be longer than their economic outlook (they plan, and sometimes exist, for a very short time). According to a renowned forest manager interviewed in the course of the mission, “consultancies played a vital role in the pilot management phase. However, they are yet to find approaches tailored to the various specificities of countries of the sub-region. Current AFD support delivered through schemes such as the “small concession holder” project seems to have relied on the same template, modelled on the standards for large concessions. Besides, this approach involves an inordinate number of experts and consultants, as well as resources for the resource to be managed.” Several other managers share this view and privately acknowledge that there are one or two consultancies peddling the current model.

Box 20. A suitable tool or not? CIB/IFO’s opinion Thanks to the financial support it received, the Congolaise Industrielle du Bois (CIB) developed a great tool, and in fact, it is safe to say that “it raised the bar quite high”. Extensive data was collected, though only 80% was actually used. The Industrie Forestière d’Ouesso (IFO) virtually followed the pattern. However, although they were termed as “pilot management schemes” then, the process and approach became the standard in the country and sub-region. While consultancies played a vital role in the pilot management phase, they are yet to find approaches tailored to the various specificities of countries of the sub-region. Current AFD support delivered through schemes such as the “small concession holder” project seems to have relied on the same template, modelled on the standards for large concessions. Besides, this approach involves an inordinate number of experts and consultants, as well as resources for the resource to be managed. In south Congo, the PAGEF project that kicked off one year ago with a more open and pragmatic approach will determine whether more appropriate solutions can be found and applied to small- and medium-scale logging companies. The major constraint is the fact that the administration has missed the boat and is therefore, unable to own the tool and properly exercise its oversight. Regarding the specific stakes in southern Congo and industrial processing agreements (IPA), a recent PAGEF study was launched to propose technical solutions to the management of the concessions. It is hard to give an answer now, although some pointers have emerged regarding specifically the company’s involvement in further studies (although PAGEF’s funding of the dendrometric studies has been secured, other surveys should be discussed). The issue of a streamlined management scheme has also been raised.

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Ongoing “small concession holder” projects

PARPAF has provided an initial response by pooling funds and outsourcing the design of FMPs. The section on performance showed how it fast-tracked FM in CAR. However, ownership of FMPs by concession holders remains an issue, as is their effective implementation in future. Indeed, this requires specialized skills and this model cannot be replicated in countries with more than half a dozen concessions. The same applies to medium-sized concessions. Furthermore, the proposed model is entirely production-based, which, until very recently, overlooked social issues, and was inconsistent with the trend in Cameroon, Gabon, and even Congo-Brazzaville 44. The PAGEF project in the South of Congo kicked off in 2009 based on a rather open and pragmatic approach. It will determine whether more tailor-made solutions can be found and applied to small- and medium-sized logging companies. The “small concession holder” project in Gabon may soon show its limits. Admittedly, the rationale is sound theoretically: rallying smallholders to pool funding, including the cost of requisite technical expertise, to secure a sizeable area that meets minimum management standards in order to design a management plan, which would otherwise not have been met by each smallholder. Without delving into the details of the difficulties encountered by the project or potential doubling of the project cost, we have serious reservations to this project for the following two reasons: • the beneficiaries are predominantly rentiers and successfully turning them into professionals will be an uphill task; internal group challenges will likely emerge during the conclusion of provisional agreements; and • there is no compelling argument to use public money for stakeholders who derived their permits from “patronage” and often evade taxes. Once more, it is all about governance

Generally, and regardless of the country, the major challenge in tailoring the FMP tool for "small concession holders" is their genuine commitment to sustainable management. Putting in place and supporting “small concession holder” projects can be successful only if all the requirements for designing and implementing FMPs are fully met. For the time being, these requirements have not been met. In the prevailing context of poor governance, “goalposts are often moved” and smallholders are often non-professionals in the sector who are out to make brisk earnings from their concessions, which they consider as just another rent. While there are serious operators who are inclined to play by the rules, most rentiers consider FM more as

44 Data drawn from discussions with A. Karsenty (CIRAD Forêts).

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a cosmetic rather than a genuine process. Consequently, the issue of adapting the tool becomes somewhat skewed. Hence, the fundamental issue in the forest sector stands: the tool is worthless if the rules of the game are not respected. It is therefore essential to envisage the simplest possible tool that will rapidly drive governance. Social and biodiversity components of FMP: out of the scope of foresters Social issues: a complex component left in the hands of unqualified foresters

The section on impact assessment revealed the social component as the weak link in the current implementation of FMPs. The legal framework of the social component is more or less developed depending on the country. It clearly supports the need and duty to involve local communities in designing FMPs, and more importantly, the spin-offs therefrom. Unfortunately, the legal framework does not adequately cover this component and the implementation instruments are lacking in many countries. This determines the extent to which concession holders involved in FMPs will more or less further the implementation and quality of FMP. Thus, some certified companies have recently laid down very stringent social criteria (such as those applicable to FSC certification or the recent development of the concept of free, prior and informed consent â&#x20AC;&#x201C; FPIC), and are recording relevant achievements (e.g. CIB Congo). Conversely, other concession holders are far less concerned about their social responsibility. One lesson learnt from the history of FMPs in the Congo Basin is that the complexity of the social component was underestimated, often hastily designed and highly standardized. The most successful experiences, like CIB Congo, derive from years of groundwork with experts in socioeconomic trends. Furthermore, most concession holders are not enthusiastic about social issues, as they are more interested in buying industrial peace from a few local authorities or implementing one-off actions in problematic villages, without a real development vision and involving a larger segment of the riparian communities. Since companies are not motivated, the social component is not correctly implemented. The component which is particularly difficult to implement, was left in the hands of private operators who are neither motivated nor equipped to carry out local development actions: logging companies have little motivation, it is not within their scope and fail, therefore, to deliver the goods in this area. There was an attempt to devolve these developmental responsibilities, the preserve of the State, on these companies. The envisaged devolution was understandable insofar as the operator was virtually the sole creator of wealth and large-scale operator in the vast land-locked areas, but that choice proved to be a fiasco.

154 ÂŠ AFD / May 2012

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Other reasons for this weakness include: • difficult implementation of local development actions for less structured forest communities, often based on harvesting rather than organized development; • very poor mainstreaming of support measures (supporting local NGOs in needs assessment, implementation and monitoring); • frequently dysfunctional financial systems when development is based on ploughing back taxes to local communities or governments; • weak local governments, specifically at the communal level, which cannot drive development or coordinate actions It is worth noting that the social component is multi-tiered: • the negotiation and consultation process for FMP design should lead to reciprocal commitments in the area of land-use, management and harnessing the different resources; • the improvement of the living conditions of employees of the concession; • the provision and recognition of access rights of local communities, in particular, access to non-wood resources; • spin-offs for local communities. Clearly, concession holders are responsible for raising the living conditions of their employees (under State control); meanwhile, the other three areas require pragmatic and tailor-made solutions. Therefore, should there be a change in the stakeholder in order to implement the social component? The point is: there are little alternatives in the Congo Basin: local governments and technical services of the State are often very weak and riddled with poor governance. Biodiversity: a complex and costly component

The same question arises for the biodiversity component of FMPs. The section on impact portrayed its shortcomings: as in the social component, it is difficult to implement, it is costly and concession holders are neither motivated nor equipped for the task. The latter aspect can be explained by the following factors: • there are no direct benefits deriving from such actions: they are implemented under “constraint” and at the last minute; • it is a technically complex component, and human resources are scarce (people are trained on timber but very few on wildlife); © AFD / May 2012 155

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• the implementation cost is high, especially for surveys or monitoring, conducted in remote settlements. According to some references, the cost of designing the biodiversity component ranges from CFAF150 to 200 per hectare. It certainly costs a lot more for higher value components, as designing a FMP costs between CFAF1,500 to 2,000 per hectare. These costs are all the more high because implementing wildlife management activities requires a large chunk of land, at least 200,000ha. The WCS, for example, manages the Mban-Djem Park which is only 60,000ha. Today, the challenge is to figure out how to work efficiently in a complex area, and on vast areas. Although some progress has been made, through inventories (at least, on wildlife), such knowledge is still to be translated into sustainable and holistic biodiversity management. We also observed that it is mainly thanks to FGEF’s grants that most biodiversity actions were implemented. On the whole, such actions were limited to combating poaching. There were no inventories or monitoring of biodiversity except for “flagship” species. Conversely, contrary to the social component, more solid partnerships were established with NGOs. However, the concession holders primarily sought to take this component out of their scope, by outsourcing, and complying with certification due diligence. NGOs whose activities depend on external financing are apprehensive about the sustainability of the actions after their departure. This raises the issue of the limitations of the operator’s responsibilities and the appropriate concession holder to support the implementation of FMPs: Rougier and CBG. The NGO that supported SBL in implementing its social plan is ready to help companies which already designed FMP and intend to pursue the process of certification (concessions along protected areas will receive priority support). Tripartite agreements are concluded between the World Wildlife Fund (WWF), the concession holder and the administration. Under the Rougier concessions, for example, WWF on own funds, financed eco-guards and supported the administration in enhancing oversight and combatting poaching (e.g. purchasing three vehicles). WWF observed that the administration lacks the capacity to monitor FMPs, notably the wildlife and biodiversity components. Monitoring under the social component only consists in verifying the existence of constructions. In most cases, the administration controls concessions that have scrapped FMPs or management plans. It is illogical for the WWF to pay the salaries of eco-guards, purchase vehicles for administrative staff or bear travel expenses while the State is doing nothing.

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Regarding the involvement of concession holders in the social and biodiversity components, WWF’s finding is damning: concession holders tend to pass the buck onto NGOs rather than seek to establish sustainable partnerships. Efforts made over the years by WWF on CBG, for example, may be in vain: while there have been accomplishments, CBG has not taken any action to step into WWF’s shoes after it leaves. Consequently, the actions will not be sustainable. Although the social arena is challenging, the continuum of assistance prevails over partnership with the people. On the whole, dual concern about genuine ownership of the process and tool

Doubts about the process of FMPs in the Congo Basin remain. The undeniable strides have been highlighted, but apart from diehard concession holders seeking certification, are the designed FMPs and “sustainably managed areas” not just covering up a “business as usual" mentality? In the current context, is the FMP tool not fudging the issue when compliance with basic rules of good forest governance would already have brought significant progress? Will the complexity of the technical tool not become, in fine, an excuse for its belated design and implementation? These questions do not intend to disregard the efforts and achievements made by companies, partners, and administration reformers who have been working for years on this tool, it rather seeks to set the records straight in order to sustain the initial achievements of FMPs. This highly effective technical tool is suitable for large concessions that have a direct interest in implementing it, in the light of pressure from environmental NGOs and certification requirements. These questions must be juxtaposed with the process to change of methods. It should be recalled that the introduction of FMPs has prompted new stakeholder relations, especially in public/private partnerships in forest management, as well as between concession holders and NGOs for their implementation.

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10.3. AFD’s financial instruments: limitations of loan instruments and benefits of a gamut of instruments Direct loans and credit lines

Direct loans have proven to be a moderately attractive financial tool to major groups. Their attractiveness is mostly due both to the credibility provided by the international image of AFD as well as the coupled FGEF grant. They had no disruptive effect because it was a particular context of national banks being suspicious of the forest sector (in other words, there was no medium/long-term products for foresters in the banking sector, thus, no possible distortions). Moreover, as financial tools, credit lines had limited success (total failure in Cameroon and partial failure in Gabon). We have identified the causes (see section on tool performance): lack of interest of banks, notwithstanding their over-liquidity, excessive collateral requirements, red tape, etc. Credit lines are more efficient when they are combined with either technical support or a guarantee mechanism. On that score, was the AFD offer ill targeted? No, as a development bank, the Agency played a dual role: • contributing to the implementation of pilot operations to demonstrate the relevance of an approach (here lies the interest of direct loans to businesses at concessional rates to initiate the process and drive innovation in the private sector, when the banking sector is not ready); • finding a relay instrument through domestic banks, credit lines as an incentive for other operators to engage in this approach through concessional interest rates. While companies inclined to join the FMP process could be counted on the fingers of one hand, AFD’s design of this financial product is justified, all the more so because the initial costs to develop a FMP were high (two to three Euros/ha or more in some cases) and that domestic banks were distrustful of a sector in crisis. The following remarks can be made with hindsight: • large companies, backed by viable groups, do not need new sources of credit to finance the development and implementation of FMPs: they have either sufficient internal cash flow or credit facilities within the group’s pool of banks. These are credit-worthy businesses that can provide the required bank guarantee;

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• even though these companies are ready to finance all that relates to production, these companies are nevertheless reluctant to finance biodiversity and social activities (outside the company). In this regard, they are seeking grants to fund actions which are normally the prerogative of the State; • medium-sized companies (usually located in one country and operating as a family business or with one or two active shareholders) have a low investment capacity: the lack of collateral and structural weakness seldom allows them access to credit. Domestic banks will not accept to channel AFD credit flows for such companies, unless the latter offer guarantees or if the risk is borne by a mechanism such as ARIZ. Increasingly, particularly with the ban on log exports, the companies have forged partnerships with major groups and supply the processing plants of the latter (the case of the CAR is atypical, local companies are medium-sized and are not backed by any group). This very heterogeneous group of companies constitutes a buffer area for potential sustainable management schemes. There are genuine gaps in financing and/or providing guarantees to access credit. The most professional companies in this group might be interested in an AFD loan offer, provided that access requirements are not too stringent: these companies will only turn to sustainable management if there is some form of coercion to comply with the rules of the game 45. Grants

The use of grants as a tool to support “small concession holders”, mainly for the design of FMPs (which is the most expensive), has proven to be interesting and relevant on two counts: • grants enable these small/medium-sized operators to “go one step further”, which would not have been possible with own resources (the design of an FMP is too costly for them and they often lack access to bank financing for this type of investment); • grants are used for the purpose of sustainable management (long-term) of a public resource owned by the State. The use of this tool was even more justified in the context of CAR, where the State is responsible for designing the FMP. In addition, grants help pool expenses for consultancy fees under (PARPAF model) the combined technical support scheme. They must nevertheless be pegged to a mechanism to ensure, as much as possible, the involvement of concession holders in a sustainable management process.

45 NB: in Congo, the future Wood Sector Support Project (PAGEF) which combines into a synergy a mechanism of credit lines and technical support and the envisaged use of hard loans, particularly geared towards industrialization.

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It should be noted that grants are also justified and useful to finance or co-finance social and biodiversity components: firstly, these aspects hardly interest most forest exploiters (who always consider them as an afterthought), secondly, they are either specific public assets (biodiversity) or part of the State’s preserve (socio-economic development of riparian areas). Future financing of FMPs

Reflection on financing FMPs could lead to: • the establishment of a grant facility for biodiversity and social components available to all the companies involved in the process; • the feasibility of providing partial grants for management inventories (provided the data becomes public property); cost-sharing is also a feature of PARAPAF that should be sustained for medium-sized concession holders (as long as it relates to inventories, for instance, and provided the company owns the FMP itself); • the provision of loans to finance the FMP (production aspect) through continued concessional lending to encourage medium-sized companies to join the management process. For credit lines, access to the ARIZ guarantee mechanism would eliminate the bottleneck; • the development of a processing tool will be pursued through PROPARCO and/or by facilitating access to credit through the ARIZ guarantee system. Budget support

Regarding financing provided to the sector through public authorities, the Cameroon experience shows the current limits of budget support in a context of poor governance and structural weakness of government services (which also impacts the efficiency of pool funding). Does it warrant the review of project rationales? The increase in C2D financial flows opens new opportunities for co-financing AFD interventions in the sector. Could these funds not be directed, as a priority, towards supporting structural reforms in the sector, alongside targeted project financing? For the record, the delivery of C2D financial flows to the forest sector is the discretion of national authorities and does not guarantee sustainability in terms of support, projects or critical functions. Beyond its “traditional” instruments, AFD could enhance its involvement in the drive for innovative mechanisms for sustainable forest management, in line with current discussions on climate change mechanisms.

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11. Way forward and recommendations The complexity of forest management dictates some caution in suggesting the way forward and recommendations. We will first discuss AFD’s positioning before highlighting points to be considered in defining its future strategy. Lastly, desirable improvements or building blocks will be examined, followed by levers to improve governance.

Box 21. Key ideas and major recommendations The gains are shaky; it is essential, therefore, to maintain strong pressure to keep the current momentum. This should be progressively extended and consolidated. AFD has a comparative edge in helping to change attitudes in the sector (trust of various groups of players, variety of financial instruments to create incentives, experience and technical knowledge, etc.). The Agency could maintain its “lead” donor position in order to (i) facilitate stakeholder dialogue on various aspects of sustainable forest management and provide a link between various instruments in the pipeline; (ii) offer financial instruments to test and implement new operating systems on the field; (iii) lead the drive for innovative forest and climate mechanisms. It is necessary to broaden the scope of intervention by specifically targeting medium-scale groups and Asian groups that have significantly increased the area potential. The FMP tool should become simpler to cover various types of production forest. Meanwhile, there is a need to redefine roles in the biodiversity and social component and thereby, mainstream environmental and social services provided by forests. One of AFD’s accomplishments, which must be maintained, is the array of financial instruments: it ensures responsiveness and adaptation to different players and activities, as it provides the necessary incentives at this critical stage where the momentum of the process needs to be maintained or increased. Concessional loans should be maintained to target medium-scale groups which are reluctant to embark on sustainable management; the ARIZ mechanism will facilitate access to credit, especially if credit lines are maintained. It is desirable to provide systematic grants for a specific number of activities relating to biodiversity, social issues and, in part, inventories. Sovereign lending would aim to support structural reforms. AFD could lead multilateral initiatives to propose innovative mechanisms for financing sustainable forest management. Reflections on the payment of forest environmental services offer a window of opportunity in this regard.

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It is desirable for AFD to enhance its involvement in governance improvement issues in the sector, through improved donor coordination. Such involvement could be reflected in: (i) the development of instruments for monitoring the state of forests and implementation of FMPs, as well as accountability instruments for forest management stakeholders; (ii) institutional support targeting various components of capacity building in relation to critical functions of sustainable management; (iii) sustained sector dialogue in various national, regional and international bodies; and (iv) support for improved better coordination.

11.1. What role for AFD? AFD has a multitude of comparative advantages in the forest sector: (i) a continuity in its action and a wealth of instructive experience; (ii) the instruments and a capability to work directly with the private sector; (iii) a flexibility of action increased with the diversification of intervention tools following the MFEA transfers; (iv) a pivotal operator role endowing it today with a global vision of French support. At the same time, AFD needs to continue to pursue trends on issues relative to institutional matters and governance and to the links between the forest and the climate. AFD is also confronted with new issues: • the FM ‘market’ is now limited, in terms of the large concessions being already on board; gaining a new customer segment is indispensable and calls for a significant effort; • resources are limited and it is not possible to cover everything without taking the risk of losing in visibility and efficiency; it is thus essential to look for greater synergy with other donors. These issues fit in with the perspective of new challenges: (i) durability and generalization of the FM approach ; (ii) improvement in governance and links with FLEGT; (iii) understanding the importance of the climate and climate tools; (iv) the increasing importance of regional forest policy; (v) the development of multilateral instruments. How can AFD chart new courses in this context? The Group could pursue its position as ‘pilot’ donor by: (i) facilitating dialogue between stakeholders on the different aspects of forest sustainability management and providing a link between the different instruments under implementation, (ii) proposing financial instruments that test and implement new operating procedures in the field; (iii) adopting a position of leader in researching innovative mechanisms on forest-climate issues. 162 © AFD / May 2012

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11.2. Strategy elements to be taken into account Must do: sustaining the momentum of the process

Today, if the forest management process and implementation of the FMP lose steam, it would impact negatively: although the process is underway, it needs consolidation and wider foundations. There will obviously be difficulties, but targets will only be met through sustained activities in conjunction with various groups of stakeholders. The introduction of incentives and proper instruments must be pursued based on lessons drawn from varied experiences. To this end, it is primordial to be present in the field, to further the process of designing solutions with national stakeholders (administration, private sector, NGOs and other partners) and concurrently, participate in consultations at various levels (national, regional and international). AFD’s involvement must be realigned after a review of the role of forestry in the development of countries, and structural factors which require action. AFD’s expertise in the sector has been established and trusted by various groups of stakeholders. Among development assistance agencies, it stands in good stead to catalyse the process and rally stakeholders to change their practices. Supporting change in the forest sector: AFD’s accomplishment

AFD’s prime accomplishment relates to its incentives to spur stakeholders to change their practices. While it is desirable to tailor the tool to medium- and small-scale concessions, FMP is a tool that formalizes stakeholder relations and underpins the establishment of best practices. First and foremost, this concerns State/concessions relations, then concessions/NGOs, and other local stakeholders (communities). It is important to pursue this contracting and incentive process. Incentives are essentially financial, to meet the financial needs involved in the design and implementation of some components. Experience has shown that various AFD instruments can easily be tailored to various types of activities and beneficiaries. Strides made in pilot operations will only be “sustainable” if they are not echoed in national, regional and international policymaking bodies. The technical assistance tool is also useful relevant in this area. AFD’s contribution will reverberate more if the certification process is pursued and broadened. Market pressure remains the strongest incentive. © AFD / May 2012 163

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AFD's involvement in climate change: a new asset to “stay ahead of the game’’

Over the last few years, France has understood that its interventions to support sustainable forest management could not be delinked from the global issue of climate change. It is therefore not surprising that AFD, in accordance with French policy on this issue, gradually beefed up its intervention portfolio to integrate this new paradigm in its approaches. The Agency thus incorporated climate change as a key component of its strategies to demonstrate that it is possible to fund development activities (reducing poverty, bridging disparities and boosting growth) and preserve the global climate at the same time. The involvement of France is thoroughly reviewed in Appendix 11. From the analysis, France emerges as a major stakeholder in abating climate change. Yet, while several countries have pledged additional funding (for the Preparation Fund or Carbon Fund which will soon go operational), AFD only took part in the Preparation Fund and does not contribute to the Carbon Fund. It does not equally contribute to other REDDrelated multilateral funds (UN-REDD and FIP). Finally, the Agency seems not very involved in FPCF general policy issues. Conversely, it appears clearly that its strategic focus in FPCF is to support Congo Basin countries as they move to the readiness phase. This is illustrated through technical assistance financing, and also bilaterally, through the provision of a satellite antenna that will be installed in Libreville to serve the entire sub-region for MRV for REDD 46. The comparative advantages of an entity like AFD compared with other REDD stakeholders should possibly be understood in terms of its high involvement in the Congo Basin sub-region. The Agency equally diversifies intervention regions by lending to Indonesia and Mexico. Its interest in the REDD approach is partly driven by its intention to secure funding under REDD+ for at least part of forest management costs. This is illustrated by AFD’s loan to Indonesia for the purpose of climate change mitigation through, among other actions, reducing deforestation. The option of budget support was weighed up, as previously mentioned, to respect the sovereignty of Indonesia. Through its action, AFD also contributes to developing innovative fundraising solutions for combating climate change and triggering a ripple effect on all financial stakeholders, including the private sector.

46 Monitoring system for measurable, reportable and verifiable emissions (MRV).

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Finally, AFD, through its interventions, builds French influence in international negotiations thanks to its technical expertise and know-how acquired from projects it has been financing for quite a long time. It could become a major player in implementing future French commitments to combating climate change. It is also a vehicle of French influence, as clearly reflected in financial committees, board of governors of multilateral banks and financing pools. It is the yardstick of French influence, not only financial. It is in its interest to be involved in decision-making circles, in other words: to ‘have a say’. Strategic thrusts

As regards strategies, the following recommendations have been made to AFD: – direct efforts, in tandem with other partners, on structural issues that impede sustainable forest management; – focus on the value of environmental and social services provided by forests, a keystone to change in government policies in the sector; – further the public-private partnership process on sustainable forest management (key element in changing practices), and concurrently build the institutional capacity of the public sector; – consolidate and leverage FMP achievements by expanding the intervention scope to involve other stakeholders other than large concessions; – maintain its role in regional and international bodies (COMIFAC support, among others) to influence the design of guidelines and instruments; – participate more actively in discussions on the FLEGT mechanism to preserve certification and FMP efforts and achievements; – pursue its participation in climate and forest consultations and propose innovative implementation mechanisms; take the lead in this regard; – fine-tune the sector development vision of beneficiary countries and assess the intervention leverage for designing a sustainable forest management policy, including governance.

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The implementation of these recommendations requires academic contributions to these issues, in conjunction with specialized bodies (CIFOR, CIRAD, etc.), in addition to research on innovative funding facilities. AFD could chart new courses in on-going work on these topics (like the climate) at sub-regional and international level. This warrants close collaboration among various AFD departments in charge of climate and forestry issues. It is further desirable for AFD to participate in efforts to monitor FMP implementation and refrain from lending credence to misleading claims of “managed areas” when the reality is very different.

11.3. Expanding the intervention scope and consolidating achievements The following recommendations are consistent with the objective of expanding the intervention scope of stakeholders involved in sustainable management with a view to increasing sustainably managed areas: – AFD should continue working with large European groups. Indeed, even these groups do not, a priori, need funding for FMPs, they will continue to drive pilot activities, research for tailor-made solutions, and remain the “catalysts” of the sector. AFD’s support to them would be specifically geared to biodiversity and social issues, and possibly, research. A tailor-made grant in the latter components would sustain contractual ties between AFD and companies of this group. On stakeholder dialogue, sector-based dialogue and paradigm shift strategies, this group would remain a key AFD partner; – in terms of potential managed areas, the large Asian groups and medium-scale holders are dragging their feet. This is a ‘strategic’ group that should be spurred to “embrace” sustainable management, beyond convenient FMPs. If market trends call for further standards, if there is increased pressure for compliance with the rules of the game, then the assumption is that these groups will be receptive to AFD packages. Funding needs are multi-layered: large Asian groups have enough resources in their parent companies, while medium-sized holders will be restrained by low investment capacities, especially in the case of bearish markets. The latter group of operators is also challenged by its inability to meet guarantee requirements. Hence, AFD’s package should be large enough to deliver support on a case-by-case basis (guaranteed loans for designing the plan, including inventories, grants for biodiversity and social components, guarantee facilities like ARIZ). 166 © AFD / May 2012

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Concerning “small concession holders”, lessons on the process and adaptation of the FMP tool will be drawn from closely monitoring the Gabon and South Congo projects. All the same, most members of this group of rent-seeking stakeholders will not be interested in sustainable management. The option of pooling management and logging costs of smallholders may not be viable. Partnerships with concession holders involved in sustainable management are certainly a better option, provided the purpose, size of the concession and scope are attractive enough for concession holders. An avenue to be explored: tailor-made certification for smallholdings. Certification agencies are already considering this option, AFD could support this process.

11.4. Consolidating achievements and concurrently improving the FMP tool for new operators The FMP tool is not to be questioned: beyond the technical aspect, it is first of all an operational instrument for building new links and implementing the paradigm shift. The issue is its adaptation to various types of production forests and, by extension, to the relevant stakeholder groups. The current model, partly drawn from the European model, as previously highlighted, is tailored to large concessions. It is desirable to tap from other global experiences, in addition to the on-going projects in Gabon and Congo. Tailoring the tool

On the technical aspect of FMPs, the first issue relates to tailoring the tool. In this regard, the following recommendations are made: • there is need to envision a simpler and more accessible model to small- and mediumscale holdings. Indeed, this model is “cumbersome” because it requires thorough knowledge of the resource and, therefore, high inventory costs. Thereafter, the concession holder is expected to plan a selective harvest. Is it worth all that trouble to achieve sustainable forest management? • there are simpler models, based on specific felling areas, with minimum MEDs (if need be, this can be supplemented by existing data garnered from inventories of large concessions, in addition to simple area-specific inventories). This forest management model, which is simple, is easily grasped by the concession holders and administration. Admittedly, it can be contended that knowledge of the resource is not enough to achieve sustainable management. However, is that the case with the present FMP model? Besides not knowing the dynamics of forest regeneration after the first cut of the natural forest, it is unlikely that this model is strictly respected in the field. © AFD / May 2012 167

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Once again, focus should not be laid on the tool, to the detriment of expected results: a simple and cost-effective model is more appropriate than a complex and cumbersome tool; • proposed actions must rely on the outcomes of on-going projects to support “small concessional holders”. These outcomes, and possible adaptations of the FMP tool, will constitute a trove of experience. This recommendation obviously applies to the two recent projects (PAGEF Congo and Gabon “smallholders” initiative) as well as to the more advanced PARFMP (RCA) project, and help to monitor the actual implementation of FMPs in the field by recipient concession holders. However, its application requires an independent appraisal of the analysis and implementation, in addition to steering committees with critical oversight functions; • finally, it is important to contribute to the establishment and functioning of FMP implementation monitoring mechanisms. This task would fill a huge gap: lack of visibility on effective implementation of FMPs. This task should be considered in conjunction with tools developed by WRI, OFAC and satellite tracking, as well as on-going or planned AFD support in the provision of satellite images, and possibly, observatories of the sector. Social and biodiversity issues

With further regard to technical issues, specifically on social and biodiversity issues, it is recommended that: • the various components of the social sector be identified, flexible and context-specific approaches be adopted while focusing on designing requisite support measures and that the role of local governments (as appropriate) be recognized; • the operating system be tailored to each situation, with the following main thrusts: – alignment with local governments, which are responsible for the socio-economic development of their jurisdiction (involvement in planning and choice of planned investments) and their implementation through decentralised tax systems (as in Cameroon); the PDRSO project somehow fits this profile and will be interesting to monitor in CAR; – increased support to local communities in the designing phase of FMPs as well as in consultations to determine the system and type of spin-offs (with local governments, if they exist); – increased reliance on national NGOs, as part of support to local communities and governments, to assist and/or pilot social projects (funded by concessions);

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• In the area of biodiversity, the establishment of long-term partnerships between NGOs and concession holders should be sustained. To this end: – draw lessons from completed actions (weaknesses and accomplishments, see impact of biodiversity), specifically in regard to sustainability challenges; – set time-bound, realistic and gradually achievable targets; – formalize the devolution of the biodiversity sector to international and/or national NGOs and consider an appropriate funding mechanism (see next section); – allocate funding (grants) for partnerships.

11.5. Mainstreaming other forest types and deforestation issues Admittedly, AFD cannot do it all and it is wise to focus on its expertise in the management of production forests. However, the following points are worth highlighting: • as already envisaged, emphasis could be laid on forests surrounding protected areas. It will have an obvious impact on biodiversity and wildlife because the surrounding area of protected areas is their weak link; • community forests are also an avenue to be explored, in light of the FGEF-sponsored community forest management support programme in Cameroon. Depending on available resources, CD2 negotiations, etc., it may be desirable to fund fuel wood projects as demand is expected to increase with urban development. In the same vein, the timber and small-scale processing sectors have a huge growth potential; • enhancing the wood sub-sectors also requires investments in secondary and tertiary processing to add value to the sector in countries as well as further harness the diverse existing species. PROPARCO can respond to the above needs by providing funding for these investments. However, it will be necessary to consider the relevance of the vertical integration model (i.e. exploitation and processing by the same stakeholder). Exploitation and processing, notably the primary and secondary stages, are actually separate activities and the drive for a more holistic integration is likely to inhibit the involvement of national stakeholders in the sector.

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11.6. Revitalizing research At the forestry level: re-vitalizing work on forest dynamics

Knowledge of forest dynamics is still patchy. Whereas the FMP model is rightly presented as the answer to sustainable forest management, no one can conclusively affirm that the harvesting rate is sustainable (see aforementioned scientific reservations). The sizeable number of large concessions under management should be leveraged to improve this knowledge. Admittedly, there have been a few attempts, with operators, to establish permanent sample plot systems. However, not only it did not lead to systematic monitoring, but the measurement standards and methods did not sufficiently guarantee the reliability of data collected. In this regard, it would be desirable to take the following measures: • allocate funds to introduce a monitoring system in large concessions for the purpose of establishing standard procedures and a reliable monitoring system; • designate M’Baiki station, which is already part of the process, as one of the focal points of the planned monitoring network; • lobby for the findings of inventories conducted in concessions to become part of the public domain: it is about a forest (public asset) managed by a private stakeholder as a concession; findings on the deriving resource should be available to forest administrators and research bodies; • on economic issues: investigate the value of environmental and social services provided by forests. Discussing the financing of FMPs is tantamount to asking “who does what?” Today, poor knowledge of the value of environmental services accounts for the system which requires the operator to cover all the FMP components. Its inadequacies emerged promptly. While the production component is properly managed, as it is within the operator’s sphere, the biodiversity and social components have been implemented on the side-lines and have greatly depended on grants for their implementation. It is worth noting that these components are crippled by two factors: they are outside the operator’s sphere and their financial dependency is problematic, notably when the sector is rocked by crises. Forests are considered a public asset because they offer environmental and social services. While this fact is generally acknowledged (there are plans to incorporate the value of forests into national accounts), being able to appreciate the value of these services and coming to an agreement on how to finance them is a long way off. The latter point is very controversial due to the conflicting interests of stakeholders and economic stakes involved in a volatile situation. According 170 © AFD / May 2012

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to some views, at the very least, there should be compensation for the opportunity cost borne by the operator who is in compliance with the statutory restrictions. Exploring this avenue will certainly help to find solutions to funding FMP’s. AFD could therefore support intellectual production on this issue in order to fast track the design of innovative funds.

11.7. Financial instruments: maintaining the existing kit to ensure responsiveness and incentive One of the assets of AFD is its kit of intervention instruments. The following recommendations apply to loans, grants, budget support, international funding and institutional programmes. – Lending, on concessional terms, is an incentive to involve companies in FMP. Access to this lending instrument should be safeguarded. Financing FMPs is a typical innovative project that justifies guaranteed loans. Indeed, the issue of profitability does not come into play for several reasons: (i) biodiversity and social components should be funded through grants, (ii) it is very difficult to assess profitability, and (iii) it entails supporting a new approach which must prove its worth. AFD supports an aggressive public policy targeting a major paradigm shift in sustainable forest management and its intervention contributes to removing institutional and technical obstacles to the implementation of these policies. The financial return derived from concessional rates is a bonus for those who join this process and take risks as opposed to those who do business as usual. The relative failure of credit lines in Gabon, and especially Cameroon, is partly attributable to teething problems of such processes. It is desirable to offer a sustainable response to new requests, notably medium-sized concession holders. This also involves sustaining the campaign to increase the awareness of banks on a new sector that is infamously identified with mismanagement. The possibility of accessing the ARIZ guarantee fund is expected to remove one of the impediments to national bank lending. – Regarding grants, they are essential in the successful implementation biodiversity and social actions as well as research actions. AFD should leverage an attendant grant package to complement FGEF's grants. Pegging a grant to implement the social and biodiversity components to a forest management loan is a strong incentive. It would be desirable to offer this grant package (social or biodiversity) to those who can finance the forest component with own resources. © AFD / May 2012 171

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– Regarding budget support, in the present context of national public finance management in the Congo Basin countries, it is advisable to avoid this option. There is no guarantee that the inflows will help to achieve set targets. Common funds, on the contrary, may be sound levers for raising funds and streamlining their utilization to critical needs. If such funds are poorly designed, they may be counter-productive (as is the case in Cameroon), not ruling out the fact that it could be of the donors’ making. The modus operandi must be properly considered; it is recommended to go for a “closed” common fund with a limited number of partners who agree on clearly defined shared objectives. – Regarding international funds such as the “carbon” fund or “green” fund, some caution should be exercised if the new mechanisms do not have relevant funding targets. As regards innovative funding mechanisms, as stated in the section dealing with strategy, AFD initiate thinking outside the box for an innovative mechanism to combat deforestation and forest degradation. Reflection on payment for environmental services (PES) could serve as the gateway. AFD should be commended for proposing the pursuit of regional efforts to sustainably increase managed areas by creating a regional fund open to all the countries. The countries could submit project proposals to bid for financing with other proposals. With further regard to AFD, there is a major impediment to the use of C2D funds: in some countries of the Congo Basin, the forest sector does not rank as a priority sector. In Congo Brazzaville for example, funding earmarked for PAGEF is disproportional to planned activities for the south, but also in relation to gaps in management in the north. The establishment of a competitive fund could spur countries to sustain their sustainable management efforts (and therefore forest management), in addition to the fact that the proposed projects could qualify for the REDD+ process. – Regarding institutional programmes, sovereign loans should be given priority, coupled with grants for research, innovation and technical assistance. C2D funding offers significant fundraising opportunities through the national party provided it is ready to channel such funding to the forest sector. In view of the difficulties to achieve and consolidate outcomes, it is desirable for AFD to maintain is financing toolkit to maximize the opportunities and avenues to advance the sustainable forest management process. In this regard, it is worthwhile citing A. Karsenty in his appeal to countries and donors after Cancun: “do we still have to expect a consensus from this important, yet endless negotiation process to find an effective response to address the causes of deforestation? The creation of an international fund to combat deforestation solely depends on the collective decision of a few countries, which could decide to sustain it with the famous new financing schemes that could be established in their countries.” 47 47 See Karsenty – CIRAD (2010), see footnote 38 page 140.

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11.8. Some levers of governance Monitoring and accountability: sine qua non to improve on governance

In the current context, deliberate efforts to improve the sector’s governance are not foreseeable on account of the fact forest earnings are used to reward the elite. It is therefore indispensable to put in place systems to enhance the accountability of forest management stakeholders. In the absence of accountability and pressure from civil society and NGOs of countries concerned (as well as those of importing countries), it is very unlikely to witness a paradigm shift, especially in the administration. Two types of actions are recommended: – support existing mechanisms such as independent observers, and widely disseminate review findings. It is also necessary to establish reliable mechanisms for the control and implementation of FMPs to ascertain that they are consistent with the “managed” areas. Monitoring tools require thorough knowledge of field activities, as it helps comprehensive forest cover monitoring, on the one hand, and monitoring compliance with regulations in concessions, on the other hand. Satellite imagery is a powerful tool for such actions, provided frequent data updates are made (e.g. monitoring of new tracks, see WRI research findings); – sustain and enhance financing, through AFD, of monitoring tools and mechanisms (in collaboration with other partners). The proposal for a regional system to centralize and process data from the Congo Basin should be explored as well as the feasibility of a regional forest observatory. Institutional support and capacity building

Institutional capacity building is essential for the sustainability of the approach. What are these capacities? The capacity to formulate and implement public policies on the forest and environment. This capacity depends on several factors, namely: (i) the existence of clearly defined and shared objectives by national stakeholders, of appropriate and respected rules of the game, (including a proper definition of stakeholder roles), an enabling legal framework and good governance; (ii) well-established and functional institutional relations among stakeholders, (iii) sound organization, efficient procedures, alignment of resources on specific targets and (iv) available human resources with the requisite performance skills.

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Strengthening this capacity takes into account factors which are partly out of the remit of forest administration (State reform, public service, overall governance) and partly reliant on the internal functioning and management of the forest administration. While the first point goes beyond the AFD sector intervention framework and should be addressed under a more holistic programme framework, some actions may be undertaken on the second point: – participation in current sector reforms focusing on building critical leadership and oversight capacities. Such capacity building is meaningful only if it is considered a tool to attain set objectives through sector dialogue. C2D projects are suitable tools to establish targeted capacity building programmes. The FLEGT process appears as a lever to significantly improve the sector’s governance, monitoring and oversight systems. The EU drives this mechanism, while France is a stakeholder. FLEGT is unlikely to meet its objectives since the mechanism hinges on an administration, which has generally not sent any concrete signal about changing its practices. Chances are that FLEGT certifications and permits may deter operators from seeking certification. Capacity building also includes providing support for the proper use of forest revenue for local community development (similar to planned activities of the future PDRSO in the Central African Republic); – significant contribution to the FLEGT process to help introduce safeguards. Sector dialogue, regional and international bodies Three sets of recommendations have been made:

– AFD’s involvement in national, regional and international sector consultations; this recommendation is dictated by contextual developments and discussions on current stakes (notably the link between forest and climate). Its involvement should be in conjunction with MFEA depending on the consultation level and MFEA-AFD prerogatives. Participating in national sector consultation mechanisms will be AFD’s first platform to announce its proposals, showcase its achievements and build a strong consensus on future milestones and objectives, in order to build on AFD’s achievements and deal with more structural issues. As regards regional bodies, COMIFAC is the appropriate entity to lead consultations and facilitate interaction between Congo Basin countries for sharing practices and harmonizing policies and legislation. France, alongside other donors, has permeated this body, while AFD has dispatched two technical assistants. This presence must be reinforced to serve as a conduit for research and proposals to member countries and international organizations; 174 © AFD / May 2012

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– in addition to other existing institutional organizations, there is need to strengthen dialogue with other stakeholders, notably NGOs in the North. This recommendation has a dual objective: (i) to pursue the common task of providing responses to sustainable forest management; (ii) to step up pressure on markets for stricter certification requirements. The recently adopted EU due diligence directive highlights the stakes and importance of lobbying in Europe and in member countries to avoid potentially regressive measures. – AFD can also mount unwavering pressure for the mainstreaming of sustainable forest management into priorities, notably during climate change consultations. The Agency can actually provide concrete responses to a key driver of climate change: deforestation. It would serve no purpose if it does not keep up efforts in this regard and if it merely announces what has been spent on climate change. Special attention must be paid to REDD+ mechanisms which are being established: despite the lingering uncertainties, finding appropriate mechanisms would pave the way for pilot projects that AFD might propose (relating to funding some components of FMP, for instance), and whose findings will underpin proposals regarding the said mechanism. Enhanced donor coordination

Governance is often enhanced when donors mount pressure. This is the premise for enhancing donor interventions. Though interventions were previously complementary, it must be acknowledged that it was rather a “de facto complementarity” than organized coordination. Today, there are compelling reasons to have such coordination: on the one hand, the EU is increasingly investing in the forest sector (after prioritizing protected areas), and on the other hand, WB interventions are more operational (after the wave of reforms in 2000) and have mainstreamed a forest management approach into its programmes. Forest management has become a central intervention framework for various donors, thereby facilitating coordination. Better alignment of AFD's approaches within the comprehensive framework of on-going donor interventions in the forest sector is therefore required. To this end, it is desirable to strengthen coordination in furtherance of good governance. There is a need to evolve strong common positions based on common sector indicators, as appropriate. This could apply to aforementioned issues like independent observers (common position on the working conditions of independent observers, introducing independent observers in other countries) or export control mechanisms (e.g. Veritas or SGS). Stronger relations can also be envisaged by aligning AFD support packages (on-going “small concession holder” schemes or new flows © AFD / May 2012 175

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for large concession holders) on indicators complying with specifications (see IO rapports) or payment of taxes (with forest revenue collection programmes). It would also be desirable for AFD to maximize its comparative advantages to anchor its interventions on the most complementary donor initiatives in the area of governance. These comparative advantages include: (i) privileged political relations between France and Congo Basin countries, (ii) links with major French groups, (iii) peculiarity of private sector support, (iv) flexibility of pilot approaches. More concretely, the wood sector support project, which is under consideration, in Congo would serve as a model: besides providing upstream and downstream support to the entire sector, it would also afford AFD the opportunity to better align its actions on other donors.

176 ÂŠ AFD / May 2012

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Acronyms and abbreviations ADB

African Development Bank

AFD

Agence Française de Développement

AFLEG

Africa Forest Law Enforcement and Governance

ALPICAM

Alpi Petro et Fils Cameroun

Partnership Agreement

APV

Voluntary Partnership Agreement

ARF

Forestry Research Support

ARIZ

Accompagnement du risque d’investissement dans la zone d’intervention de l’AFD

ATIBT

Association technique internationale des bois tropicaux

ATO

African Timber Organisation

BGD

Banque gabonaise de développement

BICEC

Banque internationale du Cameroun pour l’épargne et le crédit

C2D

Debt Relief and Development Contract

CAR

Central African Republic

CBAF

Forest Lease Agreement

CBC

Commercial Bank Cameroon

CBD

Convention on Biological Diversity

CBFF

Congo Basin Forest Fund

CBFF

Congo Basin Forest Fund

CBFP

Congo Basin Forest Partnership

CEB

Compagnie équatoriale du bois

CEFDHAC

Conference on Dense and Humid Forest Ecosystems of Central Africa

CFAD

Sustainably Managed Forest Concession

Conservation International

CIB

Congolaise industrielle du bois

CICID

Comité interministériel de la coopération internationale et du développement

CIDA

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

CIF

Country Intervention Framework

CIFOR

Centre for International Forestry Research

CIRAD

Agricultural Research Centre for International Development

CLC

Crédit Lyonnais du Cameroun

CNARES

Centre national d’appui et de ressources

CNIAF

Centre national d’inventaire et d’aménagement des ressources forestières et fauniques

COMIFAC

Central African Forest Commission

CTFT

Centre technique forestier tropical

DAC

Development Assistance Committee

DCP

Partnership Framework Document

DFID

Department For International Development

DGCID

Direction générale de la coopération internationale et du développement

DGEF

Direction générale de l’économie forestière

DRC

Democratic Republic of Congo

ECOFAC

Central African Forest Ecosystems

EFI

European Forest Institute

Executive Secretariat

European Union

FAO

Food and Agriculture Organization

FESP

Forest and Environment Sector Programme

FEU

Forest Exploitation Unit

FGEF

French Global Environment Facility

FIP

Forest Investment Programme

FLEGT

Forest Law Enforcement, Governance and Trade

Forest Management

FMP

Forest Management Plan

FMU

Forest Management Unit

FCPF

Forest Carbon Partnership Facility

FPIC

Free, prior and informed consent

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

FRM

Forest Resource Management

FSC

Forest Stewardship Council

GDP

Gross Domestic Product

GFTN

Global Forest and Trade Network

GTZ

Gesellschaft für Technische Zusammenarbeit (German Technical Cooperation Assistance)

hectare

HIPC

Heavily Indebted Poor Countries Initiative

I&D

Institutions et Développement

Intercooperation

IFO

Société industrielle forestière d’Ouesso (RC)

IGEF

Inspection générale de l’économie forestière

Independent Observer

IPA

Industrial Processing Agreement

ISO

International Standardization Organization

ITTO

International Tropical Timber Organisation

IUNC

International Union for Nature Conservation

LDC

Least Developed Countries

LFT

Forestry Legality and Traceability

LMP

Logging and Management Permit

LOT

Legal Origin of Timber

MED

Minimum Exploitable Diameter

MEFCPE

Ministry of Water Management, Forestry, Wildlife and Fisheries

MFEA

Ministry of Foreign and European Affairs

MIC

Middle-Income Countries

MINOF

Ministry of Forest

MMD

Minimum Managed Diameter

Management Plan

NFAP

National Forest Action Plan

NTFP

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NGO

Non-Governmental Organisation

NRMP

Natural Resource Management Project

OECD

Organisation for Economic Cooperation and Development

OFAC

Observatory for the Forests of Central Africa

ONADEF

National Forestry Development Agency

ONF

Office national des forêts

ONFI

Office national des forêts international

PAGEF

Projet d’appui à la gestion durable des forêts du Congo [Sustainable Forest Management Support Project in Congo]

PARPAF

Projet d’appui à la réalisation de plans d’aménagement forestier [Forest Management Planning Design Support Project]

PCBP

Timber Harvesting Permit

PCI

Principles, Criteria and Indicators

PCM

Loan on market terms

PCO

Loan on ordinary terms

PDRSO

Projet de développement régional dans le sud-ouest

PEA

Logging and Management Permits

PES

Payment for Environmental Services

PGDRN

Programme de gestion durable des ressources naturelles

PN2

Ordinary Non-sovereign concessional loan

PNNN

Parc national Nouabalé Ndoki

PROGEPP

Projet de gestion des écosystèmes périphériques au parc

PROPARCO

Promotion et Participation pour la coopération économique (filiale AFD)

PRSP

Poverty Reduction Strategy Paper

PSF

Priority Solidarity Fund

Republic of Congo

REDD

Reducing Emissions from Deforestation and Degradation

REM

Resource Extracting Monitoring

RIF

Regional Intervention Framework

SBL

Société des bois de Lastourville

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SCAC

Service de coopération et d’action culturelle

SCB

Société commerciale de banque

SCPFE

Service de contrôle des produits forestiers à l’exportation

SFID

Société forestière et industrielle de la Doumé

SFM

Sustainable Forest Management

Strategic Guidelines

SGBC

Société générale des banques au Cameroun

SGS

Société générale de surveillance

SHM

Société de la Haute Mondoch

SIBAF

Société industrielle des bois africains

SIF

Sector Intervention Framework

SIP

Smallholder Initiative Programme

SNR

Service national de reboisement

Technical Assistance

TEREA

Terre Environnement Aménagement

TFAP

Tropical Forest Action Plan

TLTV

Timber Legality and Traceability Verification

TNS

Sangha Tri-National

TOR

Terms of Reference

UNCED

United Nations Conference on Development and Environment

USAID

United States Agency for International Development

VMA

Maximum Harvesting Volume

World Bank

WCS

Wildlife Conservation Society

WRI

World Resources Institute

WWF

World Wildlife Fund

WWF CARPO

World Wildlife Fund – Central Africa Regional Programme Office

The Forest Sector in the Congo Basin countries: 20 years of AFD intervention AFD w Ex post Evaluation

Appendices The appendices are available on the AFD Evaluation web site http://PublicationsEvaluation.afd.fr

Appendix 1

Key dates in the evolution of sustainable forest management in Africa

Appendix 2

Sitiuation of forest management by country

Appendix 3

Detailed situation of forest concession in Congo

Appendix 4

Comparative table of forestry code provisions

Appendix 5

Summary table of benchmark data after the evaluation

Appendix 6

Steps taken in the management process

Appendix 7

AFD portfolio by countre

Appendix 8

Summary review of AFD projects

Appendix 9

FLEGT or â&#x20AC;&#x153;forest law enforcement, governance and trade"

Appendix 10

France's commitment in the processes and mechanisms linked to climate change

Appendix 11

FMP cost components

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