The Role of Microfinance in Environmental Projects: A Case Study
This case study examines the feasibility of providing microfinance to farmers and forest owners to encourage them to participate in the Reducing Emissions from Deforestation and Forest Degradation (REDD+) project. REDD+ uses market and financial incentives to discourage forest degradation and deforestation. The Wildlife Conservation Society approached Silver Upholders, a microfinance company in Kampala, to provide financial services in this project. Silver Upholders was eager to identify the possibilities and challenges their involvement in the project would encounter. A research trip to the project area and meetings with involved parties identified varying perceptions and possibilities as to the roles microfinance could have in the project. But the REDD+ project is currently stalled waiting for approval by the Ugandan government. Conclusions include:
- Large amount of capital is required to provide services and financial products that would really benefit private forest owners, farmers, communities, and the project overall;
- Silver Upholders has a high cash flow and cannot afford to finance these products and services alone;
- Silver Upholders cannot achieve much until the project itself is off the ground.