Through Norway’s International Climate and Forest Initiative, the Norwegian Ministry of Climate and Environment recently disbursed NOK 90 million (USD 10.3 million) for a microfinance and technical assistance project meant to help smallholder farmers in Indonesia “increase the production of palm oil without further encroaching on the rain forest.”
The Nordic Microfinance Initiative (NMI), a Norway-based public-private partnership that supports microfinance institutions (MFIs) in developing countries, will manage the fund, with microloans serviced by existing MFIs in the province of West Kalimantan.
NMI CEO Arthur Sletteberg said farmers will be offered “long-term working capital and agricultural professional assistance. In turn, the peasant farmers must commit not to clear the rainforest.”
The goal of the initial phase of the project is to serve 3,000 farmers, conserving an estimated 750 hectares of rainforest. Mr Sletteberg added, “Private investors will be invited into the fund as soon as we have proved that the concept works.” This would support the overall goal of serving 25,000 smallholders, conserving 20,000 hectares of rainforest.
NMI was founded in 2008 with the goal of creating jobs and wealth via financial inclusion. The organization first launched the NMI Global Fund to invest in MFIs that are deemed “large and sustainable” as well as the NMI Frontier Fund to focus on sub-Saharan Africa and South Asia. In 2013, it initiated the NMI Fund III to invest in MFIs considered to be financially sustainable or likely to become so in the near future. Launched in 2019, NMI Fund IV supports financial service providers that supply “social loans (e.g. for education or housing), savings, micro-leasing, micro-insurance or payment services” in Africa and Asia. The funds hold aggregate assets of USD 260 million, including debt and equity placements in 21 MFIs that reach 8 million people, of whom “95 percent are women and 71 percent reside in rural areas.” NMI is one-third owned by: (1) Norfund, which is backed by the government of Norway; (2) the Danish Investment Fund for Developing Countries, which is known by its Danish acronym IFU; and (3) a group of five private companies.
The International Climate and Forest Initiative receives approximately NOK 3 billion (USD 341 million) annually from the government of Norway to protect rainforest in the Amazon region, the Congo Basin and Indonesia. The funding is used to reward countries for successful conservation efforts, enforce relevant laws, support stakeholder NGOs and nurture cooperation with private businesses.
Sources and Additional Resources
Information provided directly to MicroCapital by NMI
Norwegian Ministry of Climate and Environment – NMI press release
https://www.regjeringen.no/no/aktuelt/mikrofinans-for-regnskog-i-indonesia/id2645694/
NMI homepage
http://nmimicro.no
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