November 2021 – Last month a team from Financial Access Consulting Services (FACS) traveled to West Kalimantan, Indonesia to conduct financial sector mapping to identify the willingness of local financial services providers (FSPs) to be involved in an agroforestry financing scheme. FACS met with state-owned and regional banks and credit unions. The Kalimantan Agroforestry Smallholder Investment Preparation (KASIP) project aims to develop an alternative to agricultural monocultures of agricultural commodities that can contribute to improving the livelihoods of local communities while preserving forests and biodiversity.
In West Kalimantan, the existing mosaic landscape is at risk of being turned into oil palm mono-crop plantations. Although oil palm plantations do provide some environmental services such as carbon sequestration and soil conservation, a landscape dominated by oil palm loses diversity and resilience. Therefore, FACS has developed a business case that aims to attract investment for agroforestry systems to enable social and economic benefits for smallholders and the environment.
Smallholders in the region — most of whom are the indigenous Dayak people — have interest in maintaining the existing landscape. Our project aim to develop business cases to achieve this.
The purpose of the field visit was to assess the current challenges in providing finance to smallholders and SMEs in the landscape, the available financial products, and the interest to finance the developed agroforestry schemes. FACS worked closely with partner DIBcoop to prepare the agroforestry business case for the local FSPs in West Kalimantan. The responses from local FSPs were positive and insightful.
Moving forward, FACS will design a pilot project for smallholders in the region. The pilot project will be developed using FACS’ Data2Deal approach where the team will collect, validate, structure, and analyze data. Once the first agroforestry loan portfolio has been assembled, additional funding could be mobilized from other interested FSPs to further expand the scope of the program.
Besides the discussions with the FSPs, FACS also provided training to the field staff from Tropenbos Indonesia (TI), a foundation that supports local, multi-stakeholder interventions on sustainable landscapes in tropical forests. Our training was centered around two topics, including (i) the introduction to the financial system in Indonesia and (ii) inclusive value chains.
FACS prepared an interactive training session with several case studies for the TI team to work on. For instance, the TI team worked on a loan cycle case study and conducted a value chain mapping exercise for the value chains they are working in, including horticulture, rubber, and oil palm. This training helped to improve the TI team’s knowledge of the financial system and supply chain dynamics, and it will help them in the implementation of their programs.
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Curious how FACS can provide tailored-made training to you? Please send an e-mail to info@financialxs.com.
