17 August 2021, Nairobi, Kenya. Within the framework of The Dutch Fund for Climate Development (DFCD), SNV and the Equatoria Teak Company (ETC) have signed a grant funding agreement of USD 330,000 (equivalent to EUR 300,000).
This is for the origination of a business investment proposal for project preparation, de-risking and enhancement of the concept that enhances climate change action and improves the livelihoods of local communities. The grant funding agreement which marks the first funding approval in South Sudan will be in operation up to April 2022 and is crucial for the development of a business proposition that aims to generate a mix of social and commercial benefits to the community.
Based in South Sudan, Equatorial Teak Company’s core business is teak plantation (currently on 2,200ha), and a sawmilling plant. In addition, the company is in the business of buying, selling, and exporting teak wood mostly to Kenya and India for use in the construction and furniture industries. The project site is located within Yambio and Nzara, with multiple locations in Nangondi, Yaboa and Mborizanga in Western Equatoria state and each of them has the spare capacity (forest reserve) into which the ETC project can expand. The company has a further 25,000 ha. that are available for teak cultivation.
'These funds will primarily be used in the growth activities of the company in the region specifically to; undertake market and value chain studies for coffee, sesame and groundnuts, teak and vanilla plantations, intercropping design and planning for optimum yields and crop quality; and Environmental, Social and Governance (ESG) Risk Assessment to ensure best-practice mechanisms are built-in for resilience and sustainability,' ED Stiles, a director from ETC said while acknowledging receipt of the grant.
'The ESG assessment will also include security risk and a gender and social inclusion assessment. In addition, the cost will also cover multi-stakeholder engagement in readiness for Forest Stewardship Council (FSC) Certification and Carbon finance markets', he added.
The company is also seeking to expand the existing teak plantation from 2,200 ha to 5,000 ha over the next eight years, expand the current vanilla plantation from 3 ha to 30 ha; and support a coffee venture expansion from 15ha in 2020 to 565ha by 2026 of primarily out-grower production, (65ha will be grown on ETC’s forestry concession while 500ha will be on out-grower land). In addition, the company will support the out-growers with input supply, crop agronomy, logistics and marketing for groundnuts and sesame.
'We are committed to working with businesses to facilitate system changes in preparation for the inevitable climate change. Our partnership with ETC is exciting because it seeks to address Agroforestry by increasing forest cover in South Sudan, while at the same advancing sustainability of the business which is good for the business investors as well as the community members', Tigere Muzenda, Project Manager for DFCD Africa said.
Under the agreement, SNV one of the partners of the DFCD Consortium will provide origination support to the company to develop the RIO marker 2 business proposition for sustainable Agroforestry. In addition, they will provide technical assistance and specify the organisation of the work between the parties, the management of the project and the rights and obligations.
Teak tree seedlings
A picture of young trees
Established in 2006 jointly by CDC-Actis and Maris Ltd, ETC is an agroforestry business located in Western Equatoria State, South Sudan. ETC is now majority-owned by Maris Ltd through Equatoria Teak Holdings (85%) after CDC-Actis was divested in 2012.
The Dutch Fund for Climate and Development (DFCD) enables private sector investment in projects aimed at climate change adaptation and mitigation in developing countries. The Dutch Ministry of Foreign Affairs has made available €160 million to increase the resilience of communities and ecosystems most vulnerable to climate change. The DFCD is managed by a pioneering consortium.