Investing in sustainable agro-forestry company ETC

The Dutch Fund for Climate Development (DFCD) investment committee approved on April 8 2021, € 300,000 grant funding for Equatoria Teak Company (ETC) in South Sudan.

ETC is seeking origination support for the development of an equity investment proposal.

The equity injection will be used for ETC’s business revival and diversification which will involve,

• Expansion of the existing teak plantation from 2,200 ha to 5,000 ha over the next 8 years;
• Expansion of the vanilla plantation from 3 ha to 30 ha;
• A coffee venture expansion from 15 ha in 2020 to 565 ha by 2026 of primarily outgrower production. 65ha will be grown on ETC’s forestry concession while 500 ha will be on outgrower land. The coffee is targeted at export markets and will be intercropped with groundnuts, sesame, bananas and teak which will also generate revenue for the growers, ETC in both the short and long term.

ETC requested the DFCD origination support to de-risk and prove the concept of innovative solutions with scaling potential for economically sound and climate-resilient agro-forestry on ETC’s nucleus estate and among the 1,000 outgrowers. ETC will contribute 46% (€ 260,000) in cash while DFCD’s grant constitutes 54% of the development costs

The origination project will consist of:

• Market & value chain studies: ETC intends to have an in-depth study undertaken of the value chains and markets for coffee, groundnuts and sesame.
• Teak and vanilla plantations, intercropping design and planning: to benefit from advisory services on how to intercrop vanilla, coffee, groundnut and sesame production for optimum yields and crop quality.
• ESG Risk Assessment: Given the geographical area to be covered by the forestry plantations as well as outgrowers, there is a need for a comprehensive environmental, social and governance risk appraisal to ensure best-practice mechanisms are built-in for resilience and sustainability. The ESG assessment will also include security risk and a gender and social inclusion assessment to fine-tune risk mitigation plans and strengthen social inclusion issues in the final business investment plan.
• Multi-stakeholder engagement: It is critical that the investor consults widely with all stakeholders to gain acceptance for the expansion by both the authorities and the communities in and around the project.
• Readiness for FSC Certification and Carbon finance markets
  1. A feasibility assessment will be made for the incorporation of FSC Certification and Carbon Finance markets in the business model.
  2. Technical assistance will be provided to review and strengthen essential systems, processes and capacity that will permit ETC to engage in FSC Certification and Carbon markets during the investment phase, with DFCD co-investment.

About ETC

Equatoria Teak Company (ETC) is South Sudan’s leading sustainable agro-forestry company. ETC was founded in 2006, and along with its sister company, Green Environ Teak Company (GETC) currently manages six teak concessions in Western Equatoria State totalling 2,200 ha. of planted teak and over 25,000 ha. of concession area. The company plants and sustainably harvests Tectona Grandis, the highest quality plantation teak outside Myanmar. The trees produce a fine grain, high density, well coloured timber suitable for all applications. The teak is sold both regionally and internationally for indoor and outdoor applications. ETC has recently moved into vanilla and coffee production through an extensive outgrower programme.

For more information, please visit this page or contact SNV Expert Albert Bokkestijn