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GEXSI Livelihood Project Madagascar Short V5a 17Feb2012

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GEXSI The Global Exchange for Social Investment CONCEPT NOTE THE ANKARAFANTSIKA LIVELIHOODS PROJECT A Social Business Approach for Livelihoods Improvement and Nature Conservation 17 February 2012 EXECUTIVE SUMMARY GEXSI has engineered a unique impact investment opportunity that supports nature conservation and community uplift in Madagascar, one of the poorest countries in Africa. In a nutshell: § Project Developer: GEXSI Capital Partners / The Global Exchange for Social Investment § Social Enterprise: Plantinum Madagascar sarl, Mahajanga § Financing need: 1.1 – 1.8m € for full project implementation / 400k for initial milestones § Return on Investment: Business break-even in year 5; IRR of 12% (over 25 years, thereby covering sales of plantation teak). § Social Impact: Livelihoods of up to 5,000 smallholder farmers improved; sustainable local economic development § Environmental Impact: 3 million trees planted; up to one million tons of CO2 captured ; restoration of park buffer zone; securing watershed for Madagascar‘s second largest rice growing area. WHO WE ARE The project has been developed by a highly committed team that brings together long- standing experience in social enterprise and smallholder agri-business development. Florian Winckler Jutta Nambena Social Business Development Community Development Master (MSc) in International Relations PhD in Biology at University of Heidelberg from the London School of Economics Founding Member of Malagasy NGO FFA Deputy Director GEXSI Berlin till 2007, 12 years smallholder farmer project then relocation to Madagascar as co- development experience founder and manager of Plantinum Expert on spatial planning methodology for Madagascar sarl. PGME/GIZ environmental programme Andreas Renner Simon Nambena Social Business Development Agro-Forestry Management PhD in Economics at University Freiburg Biologist by training, PhD in 5 years stakeholder communication decentralized resource management in consultancy at IFOK. Madagascar; founding member of FFA Founder of various companies, including 20 years consultancy work GEXSI Capital Partners and Plantinum. Plantation manager for international CEO of GEXSI Charity. agro-company (300 ha) THE ANKARAFANTSIKA LIVELIHOOD PROJECT is a private sector initiative that pilots innovative strategies to protect a unique national park in Madagascar through agro-forestry development in three local communities. Mozambican MAHAJANGA N LOCATION Channel Ankarafantsika W O Park S Lac Amboromalandy MAROVOAY ANKAZOMBORONA LEGEND Intervention Zones MAROSAKOA NATIONAL PARK ANKARAFANTSIKA Rice Pads Betsiboka 130,000 ha River Drylands Virgin Forest Mixed vegetation ANDRANOFASIKA AMBATO River BOENY City / Village OBJECTIVE The project tackles the region‘s key environmental challenges caused by continued deforestation of sensitive eco-systems that face accentuated dry seasons. Ankazomborona Mahajanga Bushfires during Charcoal demand of 7 month dry season 10,000 tons p.a. entails aggravate soil erosion logging of remaining forests and threaten the park Ankarafantsika Stand-alone forest that nurtures the watershed for the whole region. Betsiboka River Rain washes fertile Andranofasika top soil into the sea High population pressure Rice Pads of Marovoay & Ambato Boeny accelerates deforestation Second largest rice growing area Madagascar‘s threatened from soil erosion and diminished watershed. A SOCIAL BUSINESS APPROACH We build an agri-forestry business that uses the expertise gained to mentor smallholder farmers to improve their own horticulture. Synergies: Social enterprise as lead entity, § Carbon credits with long-term perspective and § Offtake Conservation-led socio solid own business model Park Border Restoration ParkBorder Restoration economic development sarl) (Operatedby Plantinum § 1,000 ha managed § Increased revenue for plantation smallholder farmer families § Blended revenue stream § Cohesion: Women group from short, medium and supported community long-term plants development, participatory land use planning § Plantation designed as protective shield for Catalyst for smallholder national park farmer agro-forestry initiative (Guided by Association FFA) Association FFA) by (Guided Community Reforestation Community Reforestation § Carbon finance development Synergies: § Land Preparation § Provides management & agro forestry § Technical Expertise expertise § Facilitates access to capital and markets AGRO-FORESTRY The project generates a multitude of revenue streams that are captured both by individual local farmers and the social enterprise. Local Farmers Agri-Business § Short distance from village: Trees Product manioc for self-consumption, § Teak exotic hardwood chili & indigo natural colour for § Paulownia construction wood sales, § Moringa tree edible oil § Medium distance from village: § Jatropha tree fuel oil Khaja madagascariensis as § Native trees Carbon credits construction wood, moringa for Plantation cooking oil, native trees for essential oil production Other § Long distance from village: § High-intensity Protein-rich food Zyziphus mauritania as energy agriculture additives wood and shadow tree; § Agro-forestry Land preparation stilosanthes for improved cattle Contracts by services for reforestation NGOs and grazing development § Marketing & Offtake for local Local Villages aid Sales smallholders COMMUNITY DEVELOPMENT The project actively engages the local communities through a participatory land use planning scheme and community initiatives that improve the social well-being. PILLAR 1: LAND-USE PLANNING PILLAR 2: WOMEN GROUPS PILLAR 3: ENERGY § Participatory bottom-up process. § Reforestation of gallery forests § Ongoing project: „Clean Fuels for § Provides land security for both managed by local women groups. Local Use“ supported by NL individual smallholder farmer § Focus on productive forests: raphia, Agency. families and our social enterprise. essential oils, fruit etc. § Targets production of 175,000 § Builds on pilot conducted by GIZ, is § Revenues allow support for litres of plant oils per annum to recognized by national authorities community projects such as fuel generators, agricultural and implemented by our partner improved access to water or machinery, taxi brousse, fishing FFA. primary education. boats as well as cooking stoves and lamps § Catalyst for local economic development REACHING CONSIDERABLE SCALE We strive to become Madagascar‘s largest reforestation project, scaling up from our existing 250 ha nucleus to more than 4,000 ha within a 5 year time frame. 5.000 Reforestation in hectares 4.500 4.000 75% of the reforestation is 3.500 implemented by individual 3.000 smallholder farmers 2.500 ha 2.000 The plantation is designed as 1.500 a shield to protect the 1.000 national park Ankarafantsika 500 from bushfires and illegal logging. - 2012 2013 2014 2015 2016 2017 Photo: Our plantation, one Park Boundary Rural Communities year after planting GENERATING VALUE FOR SOCIETY The one-off initial investment empowers local farmers to generate long-term stable revenue streams, mentored by a social enterprise which itself generates significant turn-over. Revenues at farmer and social enterprise level Impact 3,0 ! § Farmer annual revenue increase: 2,5 ! > 1.5 million euro by 2020 2,0 ! § Cost per tree: < 0.60 € over project 1,5 ! 1,0 ! lifespan. 0,5 ! § Ratio initial investment / farmer income 0,0 ! generation over 10 years: 1:5 2012 2013 2014 2015 2016 2017 2018 2019 2020 in million euro -0,5 ! -1,0 ! § Cost per ton CO2 sequestrated: 4,15€ -1,5 ! § Total carbon sequestrated: -2,0 ! > 650,000 tons (over 25 years) -2,5 ! Grant Impact Investment Social Business Local Farmers * Based on the assumption that the project will increase the income of the Photo: Our tree nursery that we participating families by 1€ a day within 5 years. established for phase 1. FIVE PLUS TWO SUCCESS CRITERIA We target 5 key outcomes that result from our agro-forestry activities; they are reinforced by two targeted outcomes related to good governance and community uplift. INPUTS Measures that reshape the agro-forestry value base in the buffer zone communities Creation of Conservation of Adaptation to Increase of rural Value Creation by Carbon biodiversity climate income producing energy, TARGETED Sinks & integrity of change through from agro-forestry timber and food OUTCOMES via seques- National Park the protection of production & local products for local & international (impact categories) tration of C02 Ankarafantsika local watershed employment opportunities markets LONG TERM Promotion of Sustainable Livelihoods in the buffer zone communities, while contributing to OBJECTIVE a sustainable development path of the Boeny Province. Social Cohesion: Improved community infrastructure: TARGETED Reduction of conflicts related to Reduction of health risks from unsafe drinking water OUTCOMES land use & natural resources Improved primary education INPUTS Measures that favour the social well-being and good governance A DIVERSIFIED BUSINESS MODEL Our business builds on a diversified revenue stream that complements the longer-term timber business with revenues from cash crops and carbon credits that kick-in early on. § The business already achieves limited revenues from its plant oil business (non-timber forestry) which will grow until 2018, offering both cooking oils and transport fuels. By growing perennial cash crops (moringa leaf powder, indigo natural colour), we build an additional revenue stream early on. § Carbon credits generate a significant ongoing profit contribution
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