Establishing Environmental Funds for Protected Areas in Francophone Africa: Challenges and Opportunities

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1 V th World Parks Congress: Sustainable Finance Stream September 2003 Durban, South Africa Applications Session Learning from concrete successes of sustainably financing protected areas Workshop 2 Trust and Endowment Funds Establishing Environmental Funds for Protected Areas in Francophone Africa: Challenges and Opportunities The experience of the Sangha Tri-National Initiative and proposed Madagascar Foundation for Protected Areas and Biodiversity Introduction by Uwe Klug 1 with Melissa Moye 2 and Brigitte Carr-Dirick 3 World Wildlife Fund The countries of Francophone Africa, including the Western Indian Ocean Islands, are home to some of the most outstanding tropical ecosystems of the continent, with a wide range of natural habitats and climatic conditions. This includes areas which harbour some of the richest biodiversity on the planet, such as the West African marine and coastal ecosystems, the Sahelo-Sudanese savannas and dry forests stretching from West to Central Africa, the Niger Basin, the afromontane regions in Cameroon and Eastern Democratic Republic of Congo, and the forests of the Congo Basin, the world's second largest expanse of rainforest after the Amazon. In Madagascar, the dry, spiny and moist forests and the coastal and marine ecosystems also contain exceptionally high species diversity and levels of endemism. Beyond their national, regional and global importance as biodiversity centers, these areas are also essential life-support systems for millions of people whose livelihoods directly depend on the use of natural resources. These countries recognize the gazetting of protected areas as a suitable instrument to effectively contribute to biodiversity conservation and development. Some of them, such as Gabon, Cameroon and Madagascar, are in the process of establishing or expanding a national protected area system aimed at adequately representing the variety of ecosystems and biodiversity, with support from the donor community and international NGOs, and, more and more, support from civil society and local communities. 1 Program Advisor, Forest Team, WWF Germany, klug@firstnet1.com. 2 Director, Center for Conservation Finance, WWF US, Melissa.Moye@wwfus.org. 3 Consultant, carrbrigitte@hotmail.com. V th World Parks Congress: Sustainable Finance Stream 1

2 Increasing areas under protection implies an increase in the funding needs to ensure effective management of the protected areas. In all francophone countries, there are urgent financial needs to, first, ensure that appropriate infrastructures and management systems are in place ( investment phase), and, second, cover recurrent costs so that the threats can be tackled in the long-term. In a number of them, the investment phase has been put in place with short- and medium-term support from the international community, and in some cases, within the framework of multi-donor sectorial programs (e.g. in Benin, Ivory Coast, Cameroon, and Madagascar). Developing strategies combining a range of funding sources is crucial to keeping these efforts active and effective over the long-term. As part of these strategies, environmental trust funds are often identified as the most appropriate means to finance recurrent costs of protected area management on a sustainable basis. Convinced of the urgent need to secure the financial future of globally important protected areas, WWF Germany and WWF US as part of the WWF Network are committed to contributing to the design and implementation of long-term funding strategies, including environmental trust fund initiatives, in Francophone Africa countries which are home to WWF priority ecoregions such as Central Africa and Madagascar. Because of their historical, institutional and legal context, Francophone African countries are facing specific challenges in the establishment of environmental trust funds. This paper reviews trust fund design and operational issues specific to Francophone Africa with a view to drawing lessons on how best to address constraints and foster opportunities. Special emphasis has been placed on two initiatives currently under development with support from the WWF Network: the proposed trust fund aimed at financing activities in the Sangha Tri-National, a forest complex shared by Cameroon, the Central African Republic and the Republic of Congo, and the proposed Madagascar Foundation for Protected Areas and Biodiversity. Overview of current trust fund initiatives A common feature of francophone countries is that there is still limited experience with environmental trust funds. A study conducted by the Interagency Planning Group on Environmental Funds in identified nine existing funds in Africa, of which there are only two in Francophone Africa: Tany Meva, the Malagasy Environment Foundation and the West African Rural Foundation (WARF), a regional fund created in 1993 as a not-for-profit international organization recognized in Senegal. Neither of these funds is targeting protected area financing. The study also listed seven funds in the process of establishment, of which two are in Francophone Africa: foundations for the financing of the national system of protected areas proposed in both Cameroon and Ivory Coast. Today, three more funds have been set up in Francophone African countries. In Ivory Coast, the Fondation Parcs Nationaux et Réserves (FPNR) was created in mid-2002 to finance recurrent costs of the national parks and reserves. In Cameroon, the Foundation for Environment and Development in Cameroon (FEDEC) 5 was established in 2001 as compensation for environmental impacts resulting from the Chad-Cameroon oil pipeline. The Cameroon Mountains Conservation Foundation (CAMCOF) 6 was also created in 2001 to promote and finance cultural, educational and scientific activities devoted to conservation and sustainable management of biodiversity and natural resources in the mountain range of Cameroon (South-west of Cameroon). There are currently initiatives to establish environmental trust funds in several countries in Francophone Africa including: Mauritania (Banc d Arguin National Park), Benin (protected area system), Gabon (protected area system and site-specific funds), Sangha Tri-National (Nouabale Ndoki National Park, 4 Moye, Melissa and Norris, Ruth (2000). Preliminary Assessment. The Current Situation and Capacity Building Needs of Environmental Trust Funds in Africa. Interagency Planning Group on Environmental Funds. In English and French. ( 5 See 6 See V th World Parks Congress: Sustainable Finance Stream 2

3 Republic of Congo; Dzanga-Sangha Complex of Protected Areas, Central African Republic; and Lobeke National Park, Cameroon), Republic of Congo (Odzala National Park), Democratic Republic of Congo (World Heritage Sites), Comoros (biodiversity conservation) and Madagascar (protected area system). Some common issues All these initiatives share a number of similar challenges 7 in their efforts to implement financing strategies and to meet the criteria considered as important for establishing environmental trust funds, in particular by one of the main sources of funding, the Global Environment Facility (GEF) 8. One issue is the lack of a tradition of public-private initiatives. In many cases, it is still difficult to convince governments to accept the principle of mixed management where they do not hold the majority position, as was the case in the process leading to the creation of CAMCOF. Another major constraint is political unrest, which slowed down the process of creation of the Madagascar Foundation for Protected Areas and Biodiversity for several months in In Ivory Coast, the start-up of operation of the FPNR has been temporarily interrupted as a result of the civil war, and will only begin again following the expected visit of a multi-donor team in September A history of civil conflict in other countries is the reason why some of the trust fund initiatives, such as in the Republic of Congo, propose the creation of an offshore trust fund. A major challenge for Francophone countries is that most of them are civil law countries and therefore do not possess the framework to create a trust fund in the strict legal sense of the concept and can only rely on the legal provisions for associations, often outdated and inadequate. However, Ivory Coast specifically introduced the concept through the Law on the Creation, Management and Financing of National Parks and Natural Reserves, which was the basis for creating FPRN and a similar solution is proposed in Benin. Gabon enacted a law on foundation in Several years back, Madagascar also adopted a law on foundations as a donor condition to set up Tany Meva. In Cameroon, CAMCOF was created in 2001 as a national association under Cameroon law a law that provides some flexibility as a legal basis for appropriate statutes. However, CAMCOF was only granted public benefit status (a condition to benefit from funding from the national budget and a pre-requisite to full donor commitment) in April 2003 and will therefore only become fully operational within the next few months. In the absence of a law on foundations, the option chosen in the case of FEDEC was to create a Dutch foundation (Stichting), which was subsequently authorized to operate in Cameroon as a foreign entity recognized under the law on associations, with the benefit of tax exemption and public benefit status. Some current initiatives (such as in Mauritania) also envisage setting up an offshore trust fund or foundation because the creation of a local association may not provide adequate legal protection. Other institutional and legal constraints to the operations of trust funds in Francophone African countries include the weakness of the banking sector and the limited range of investment products available at the national or regional levels, factors aggravated by limitations and / or prohibitions imposed on offshore investment by national and regional regulations. Finally, the successful implementation of a long-term financing strategy and an environmental fund depends on adopting business-like approaches to protected area management. Two main aspects should be noted in this respect. First, too often, protected area management in Francophone Africa is still characterized by a lack of flexibility, autonomy and accountability. Protected area authorities need to have the legal and institutional framework to allow them to raise revenues and manage them to implement their programs. This is gradually being achieved in some countries through the creation of 7 Some of these issues were highlighted during the Conference for African Environmental Funds, April 3-6, 2002, Lake Manyara, Tanzania. See Report of Proceedings on ( 8 See Global Environment Facility (GEF), (January 1999, February 1999, April 1999). GEF Lessons Notes #5, 6 et 7 ( V th World Parks Congress: Sustainable Finance Stream 3

4 autonomous or semi-autonomous entities responsible for managing the national protected area system such as the Association Nationale pour la Gestion des Aires Protégées (ANGAP, in Madagascar), the Institut Congolais pour la Conservation de la Nature (ICCN, in the Democratic Republic of Congo) or the Centre National de Gestion des Réserves de Faune (CENAGREF, in Benin). In some cases, such as in the Dzanga Sangha complex of protected areas (the Central African Republic) and the Banc d Arguin National Park (Mauritania), protected areas have the right to keep at least a percentage of the income generated through, for instance, eco-tourism. In other countries such as in Cameroon and Gabon, discussions are underway to strengthen the institutional, legal and financial autonomy of protected area management authorities. The proposed Madagascar Foundation for Protected Areas and Biodiversity is expected to manage one half of park entry fees collected by ANGAP. Second, most protected areas still need to develop management plans with clear objectives and targets. These should in turn form the basis for transparent business plans that are key to convince other stakeholders and especially potential donors of the justification for creating a trust fund. In an overall context where available financial resources are limited, a clear and well-founded demonstration of investment and recurrent costs will allow sound prioritization of funding. The development of management and business plans has proven to be time-consuming, especially since they properly take into account the interests of different stakeholders and require formal approval from the authorities, but, most importantly, there is a strong need in Francophone Africa for capacity building to strengthen expertise in this area. Proposed Madagascar Foundation for Protected Areas and Biodiversity Context. For more than ten years, the Government of Madagascar has been implementing an Environmental Action Program with support from the international community and conservation NGOs. The third phase of this fifteen-year program is expected to begin 2004 and focus on sustainable financing of the activities carried out since the program inception including the effective management of the protected area network by the National Park Service, ANGAP. A Sustainable Financing Commission was set up in 2000 to design sustainable financing strategies and has identified the creation of a trust fund as the centerpiece for long-term funding of protected areas and biodiversity conservation in the country. Progress. In 2001, the Minister of Environment appointed a Trust Fund Steering Committee to lead the process of the creation of the fund, now scheduled for November The Steering Committee is composed of seven members from both the public and the private sectors with expertise in different areas, including conservation, banking and law. So far, trust fund preparation has been funded mainly by the World Bank (through ANGAP) in connection with the Environmental Action Program. Conservation International (CI), the German Financial Cooperation - KfW, USAID, and the WWF Network have also provided technical assistance. The Steering Committee recommended that the Madagascar Foundation for Protected Areas and Biodiversity be established in Madagascar as a foundation under the Malagasy Foundation Law that was used as the basis for the creation of Tany Meva. Draft statutes and by-laws have been developed and reviewed by key stakeholders. An operational manual and an investment policy are under preparation. Key challenges. Three key challenges can be noted. A first issue was the difficulty of producing a business plan for ANGAP, due to the complexity of the national park system (which includes 46 protected areas) and the lack of practical experience in this area in the country. Financial projections for ANGAP have now been adopted by an ad hoc committee and will be refined with outside assistance. Another key issue is the legal and tax regime of the proposed Foundation. Practice has shown that some of the legal provisions of the current Foundation Law require amendments to ensure proper operation and effectiveness of a fund in the country. Following thorough review of all options available to address these issues, it is now envisaged that an additional specific law be adopted, in particular, to confirm the full tax exemption of the proposed Foundation and to authorize offshore investment of its assets. A third issue is V th World Parks Congress: Sustainable Finance Stream 4

5 the scope of the proposed Foundation, which is broadly defined as focusing on funding protected areas : priorities will have to be defined according to a set of agreed upon criteria. Opportunities. According to the Foundation Law, a minimum of US$ 1 million is required to register the Foundation. This minimum contribution will be met through the debt swap funds to be provided by the Government of Madagascar under an agreement signed with the German Government in April The Government of Madagascar will be a founder of the Foundation, along with Conservation International/Global Conservation Fund and WWF, each of which have also committed to contribute US$ 1 million in endowment funds to the Foundation. The debt swap agreement provides for about 10.2 million (about US$ 11.6 million) to be paid to the Foundation over 20 years, with an initial capital contribution of 1.7 million (about US$ 1.9 million). Discussions are also underway to increase the Government s contribution to the Foundation via allocation of a percentage of debt relief savings under the Heavily Indebted Poor Countries (HIPC) Initiative and a percentage of visa fees collected from foreign tourists. A number of other donors have expressed their interest in contributing to the Foundation. In particular, the World Bank will soon decide whether to channel part of the funding planned under the third phase of the Environmental Action Program through the Foundation. A similar contribution may come from the GEF, with potential US$ 10 million capital contribution by 2006 once the fund has established a solid track record and raised matching funding. KfW and USAID have also expressed interest in channeling about US$ 1.5 million respectively through the Foundation via sinking funds. Sangha Tri-National Initiative Context. In March 1999, the Heads of State of six Central African countries agreed to support the conservation and sustainable management of forest ecosystems in Central Africa, including transboundary areas, by signing the Yaoundé Declaration. In December 2000, the Governments of Cameroon, Central African Republic and Republic of Congo took a major step towards materializing their commitment through the signature of a Cooperation Agreement to establish and manage a transboundary forest complex called Sangha Tri-National (Tri-national de la Sangha, or TNS ). The TNS includes three National Parks - Lobeke (Cameroon), Dzanga-Ndoki (Central African Republic) and Nouabale-Ndoki (Republic of Congo) -, as well as their peripheral zones. National and local protected area authorities are working in the TNS with several long-term partners, including, in particular, WWF and the German Technical Cooperation - GTZ (in the Central African Republic and Cameroon), and the Wildlife Conservation Society WCS (in the Republic of Congo). Recognizing the need to strengthen the long-term financing of conservation activities in the TNS, government representatives of the three countries, as well as several partners, have identified the possibility of creating a conservation trust fund. In 1998, the parties involved in the management of the Dzanga-Sangha complex of protected areas in the Central African Republic had already conducted a feasibility study to establish a fund to ensure effective long-term management of the area. Stakeholders have expressed the need to update and expand this analysis in the context of the TNS. The creation of a fund for the TNS was also recommended by a Feasibility Study on Financing Mechanisms for Conservation and Sustainable Management of Central African Forests" 9 produced and endorsed by the Conference of Ministers in charge of forests of Central Africa, COMIFAC, in Progress. A preparatory meeting was held in May 2003 to launch the process of creating the fund. The meeting was convened by the Executive Secretariat of COMIFAC and facilitated by GTZ and WWF. The 9 Moye, Melissa and Carr-Dirick, Brigitte (January 2002). Etude de faisabilité sur les mécanismes de financement pour la conservation et la gestion durable des forêts d'afrique centrale. Implementation document for the Yaoundé Summit Declaration. Summary report available in English on V th World Parks Congress: Sustainable Finance Stream 5

6 participants included all actors currently involved in the management and financing of the TNS: the Directors of Wildlife and Protected Areas in the three countries, the three Park Managers and their field Technical Advisors, as well as regional and national representatives from WWF, WCS and GTZ, and the World Bank. They shared information on the current prospects for the proposed trust fund, and reviewed the proposed action plan and terms of reference for the design and creation process. They especially focused on the criteria for composition and selection of a Steering Committee with representatives of both the public and the private sector, which will be responsible for the creation of the fund. A core team, composed of representatives from COMIFAC, WWF, GTZ and WCS is now in charge of organizing the first meeting of the Steering Committee in early October 2003 to formally launch the design and creation phase, which will receive support from the WWF Network, the World Bank/WWF Alliance for Forest Conservation and Sustainable Use as well as from GTZ and WCS. It is expected that a fund profile will be defined by November Key challenges. Anticipated key issues in the design and creation process include in particular the definition of the fund s scope. Discussions at the preparatory meeting have already highlighted the need to clarify in a transparent and participatory manner how to prioritize the national and trans-boundary activities to be funded. Another complex issue will be the choice of the legal structure for the fund, given the lack of appropriate framework in the concerned countries and the tri-national nature of the initiative. Opportunities. Through WWF Germany s efforts, a unique and innovative partnership was launched in 2002 with a private German investor, the Krombacher brewery, to raise funds through a targeted marketing campaign. The campaign has now expanded to several other private companies from various business sectors. In April 2003 the Sangha Rainforest Foundation was established as a sub-foundation of WWF-Germany to manage the assets generated through the marketing campaign carried out in 2002 and Cooperation between this foundation and the proposed TNS trust fund will be defined during the design and creation phase. In addition, a number of other donors from both the public and the private sector have, formally or informally, expressed an interest in contributing to the development of a trust fund in connection with the TNS. One of the objectives stated in the Business Plan of the World Bank/WWF Alliance is to build a US$ 25 million trust fund to support long-term conservation objectives in critical trans-boundary areas in Central Africa, with a priority for the TNS. Main lessons learned The main lessons learned in the review of processes leading to the establishment of trust funds in Francophone Africa include: It is vital to foster strong political support from the outset. This is one of the critical factors since, in most cases, the legal and tax framework needs to be reinforced by the adoption of legislative measures to create the fund in satisfactory conditions and provide incentives for investors. The Madagascar Foundation has received support at the Presidential level the initial debt swap agreement was the first international treaty signed by the new Government of Madagascar in In the case of the TNS, political buy-in from COMIFAC has also played a key role for launching this trans-boundary initiative. There is a strong need to increase the capacity to implement business-like approaches, including through the provision of adequate tools adapted to the national context, and preferably in French. Implementing a broad multi-stakeholder participatory process funded by various sources is essential to ensure ownership, and greatly contributes to increasing the expertise available for conservation in the country. V th World Parks Congress: Sustainable Finance Stream 6

7 Mentorship by international conservation organizations or donor agencies plays a significant role in promoting the process both at the national and international levels, accessing international partners and providing technical assistance in the design of innovative financing schemes. Strategic partnerships with the private sector should be strengthened as they are a powerful tool to leverage funds and raise interest from the public and other potential contributors. V th World Parks Congress: Sustainable Finance Stream 7

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