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Corporate firms to embrace forest cover by 10 per cent

George Kebaso @Morarak

Corporate firms have taken up a challenge contained in a government circular Ref. No. OP/CAB/26/1/3A of June 2018 calling for all institutions; public, private and individual Kenyans to participate in planting trees with an aim to raise 10 per cent national forest cover by 2022.

The circular was addressed to all Cabinet Secretaries; the Attorney General, the Head of Public Service and directed to all parastatals to allocate 10 per cent of their Corporate Social Responsibility (CSR) budgets for the raising of tree seedlings for distribution to Kenyans to support implementation of this directive.

“In-order to effectively implement the directive, consultations, collaboration and creation of synergy on this national agenda of tree growing is the way to go,” the circular read. And faced with the realty of dwindling business and revenue opportunities in products obtained from forests and other natural resources, financial firms that are supporting Small andmedium-sized enterprises (SMEs), do not want to be left out.

Last Friday, three financial institutions planted 10,000 in Kereita Forest, Kiambu County, in these latest efforts by the government to increase pace in achieving that forest cover. The current cover is 7.2 percent.

The Ministry of Environment and Forestry estimates that in order to realise the 10 per cent national forest cover by 2022, the government, private sector and communities require to produce and plant 360 million seedlings every year for the next 5 years.

This will bring the total number of seedlings to be planted to 1.8 billion. The Campaign is aimed at mobilising Kenyans to embrace the culture of growing trees, so that they can contribute to increasing our national forest cover, enhance environmental sustainability and improve livelihoods.

Supported by the African Guarantee Fund (AGF), led by Credit Bank Limited, Family bank and Musoni Microfinance Institution planted the trees at Kireita Forest, a portion of the giant Aberdare Forest. On the database of AGF, is an increasing number of SMEs that have ventured into businesses that tackle climate change and its negative impacts.

Speaking during the tree planting exercise AGF Chief Executive Officer, Felix Bikpo said the aspirations of the Kenyan government are in tandem with the organisation’s climate finance policies. “We support what the Kenyan government is doing in reclaiming water catchment areas, because we realise that loss of forest cover will affect businesses and incomes,” Bikpo stated.

In June this year, AGF announced in Nairobi that small firms carrying out projects deemed as environmentally friendly would benefit from Sh2.6 billion “affordable” loan guarantee. Bikpo said the funds are aimed at empowering firms, through local currency-denominated funds such as Credit Bank, to participate in tendering opportunities in energy, infrastructure, agri-business and green growth.

“Strengthening African Small and Medium Enterprises is critical to enhancing their global competitiveness in the development agenda. With this increased capacity, AGF will support larger local currency transactions for SMEs involved in all sectors,” he said. He urged SME lenders to increase their lending towards the SMEs in the green sector. AGF has been keen to foster Climate Finance through one of its products – the Green Guarantee Facility.

The Green Guarantee is a unique product that assists financial institutions to partially cover the risks associated with financing SMEs with green investments and thus enable them increase their portfolio in that asset class. In the past six years the organisation has availed Sh143 billion (US$ 1.4 billion) of financing for SMEs. Currently, the guarantee fund has more than ten partner financial institutions in Kenya.

“Without a good environment especially for African countries, there is no future,” he said. Bikpo said economy could only grow with sustainable environment. “Small and Medium Enterprises needs to apply appropriate green technology for them to be competitive,” he said. SMEs are widely recognized as big drivers of economic growth, innovation, regional development and job creation.

However, SME financing is often considered by many financial sector players in Africa to be a risky activity as promoters quite more often than not, fail to come up with the collateral levels required to secure bank facilities. Apart from risk considerations, these studies have attributed low levels of bank financing to SMEs in Africa to among other reasons, relatively very low levels of SME banking capacity.

It is in response to the two related challenges that AGF was created. Through its guarantee facility, AGF assists financial institutions partially cover the risks associated with SME financing and thus enable them increase their portfolio in that asset class. Through its capacity development facility, AGF assists financial institutions enhance their SME financing capabilities and thus be able to execute their growth strategies in that sector with ease.

A combination of AGF’s guarantee and capacity development facilities enables partner financial institutions bring their SME financing business to the required scale. Bikpo said money from donors have dwindled and there is need to look for alternative sources of money. Head of Trade Finance at the Credit Bank John Gichuki said their partnership with the AGF would ensure that SMEs contributes effectively to conservation efforts.

“We cannot support customers that does destructive things to the environment,” he said. Kereita Forest station Manager Jennifer Maina said they have trees nurseries with 40,000 seedlings, 20,000 of which are ready for planting. “These efforts compliments what the government is doing in its bid to increase forest cover,”she said.

Kiambu County Executive member in charge (CEC) for environment David Kuria said they have partnered with local community to provide seedlings. Kuria said 100,000 seedlings are set to be given to schools, in a bid aimed at increasing forest cover and inculcating conservation to students. “Earlier in the year, 600,000 seedlings were planted with 80 percent survival rate,” he said.

Kuria said 80 percent of water comes from the forest situated in the heart of the Aberdare Ranges. “We are anchoring this to the big four agenda,” he said. Kuria said the main challenge facing the forest is population growth that has increased demand for forest products.

He said the forest cover in Kiambu that is currently 16 percent is set to hit 20 percent next year. Kuria said the County needs one million tree seedlings per year up from the current 800,000.

The planting drive comes after President Uhuru Kenyatta directed all government agencies and Parastatals to allocate at least 10 percent of their Community Social Responsibility budgets to raising of tree seedlings. Al ready, Environment CS Keriako Tobiko through his ministry has initiated a tree planting/growing campaign for the short rains during October- November –December 2018.

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