Support to micro, small and medium enterprises
Promoting legality within the private forest sector: obstacles and incentives to formalization
Informal forest sector micro, small and medium-sized enterprises (MSMEs) are often equated with being “illegal” when their mode of production, source of raw materials, or even their legal existence does not conform with their country’s regulatory requirements. This characterization fails to recognize the complex circumstances many MSMEs faces, especially in countries where the requirements for legality compliance and achieving formal status are not clear. This situation raises a question frequently faced by practitioners who work with forest sector MSMEs – should MSMEs be encouraged to formalize to avoid being labeled as ‘illegal’? Acknowledging that MSMEs have valid reasons to either pursue or avoid formalization, this brief does not judge this question but instead argues that it is more important to ensure that MSMEs receive concrete benefits when deciding to become formalized. It is the task of practitioners, governments, and stakeholders to contribute towards the creation of an enabling environment that rewards MSMEs for formalizing. By doing that, practitioners enable MSMEs to reap the expected benefits of formal status, such as securing livelihoods and opportunities for economic growth and decent employment.
Full report available here.
Unlocking the potential of community timber
The experience of the FAO-EU FLEGT Programme
Growing international and domestic demand for tropical timber has resulted in critical wood supply gaps for many tropical timber-producing countries, in some instances linked to a surge in illegal logging. Growing shortages of legal timber supply have necessitated the exploration of alternative sources of legally produced timber. Community forestry has been recognized as a potential source that could boost legal timber supply on the domestic market of tropical timber-producing countries. This brief seeks to share the experience accrued across Asia, Africa and Latin America in addressing and overcoming challenges faced in legal frameworks, market access, and capacity building.
Full report available here.
Supporting forest sector micro, small and medium enterprises at scale
The experience of the FAO-EU FLEGT Programme
Between 2016-2021, the FAO-EU FLEGT Programme funded 96 MSME support projects in 20 countries globally. These projects reached 3,300 MSMEs in total, but the 41 projects with a specific capacity building focus were able to train an average of 71 MSMEs per project. Although these projects were instrumental in helping beneficiaries to operate legally and access new markets, the number of MSMEs reached remains small compared to the sheer number that require support in tropical timber-producing countries. The current scale of engagement is not entirely limited by investment and resources, but also by several challenges that make it inherently difficult to effectively engage MSMEs.
As part of a Programme-wide global experience capitalisation process, staff members conducted interviews with local partners and, where possible, end beneficiaries of the projects. Local partners were asked to reflect on strategies that could have allowed them to reach more MSMEs in their projects, and on the broader enabling conditions that would need to be put in place to enable MSMEs to participate in legal timber production at a larger scale.
Through these interviews, and the collective experience of these MSME support projects, the Programme has identified strategies for overcoming these challenges and that could be adopted by future interventions to reach tens of thousands – rather than hundreds – of MSMEs. These strategies are discussed in the paper.
Full report available here.
Stronger together: How trade associations in tropical timber-producing countries multiply benefits for forest sector MSMEs
The experience of the FAO-EU FLEGT Programme
A wide body of experience within and beyond the forestry sector recognizes the power of associations in bringing together small-scale actors, especially micro, small and medium-scale enterprises (MSMEs). Associations offer increased economies of scale in purchasing, producing, and providing greater bargaining power. For this reason, support to forest sector associations has been at the heart of the FAO-EU FLEGT Programme’s engagement with the private sector, recognizing that achieving legality in the forest sector of tropical timber-producing countries is not possible without effective and meaningful collaboration with the private sector. Associations of companies provide critical entry points to gaining access to larger groups of enterprises.
The arguments put forward in this paper draw upon the experience accrued in supporting associations of timber producers through the FAO-EU FLEGT Programme. As part of a Programme-experience capitalisation process, staff members conducted interviews with both service providers and, where possible, end beneficiaries of the projects. The Programme analyzed the impacts of these projects to determine best practices for supporting associations and the benefits they bring to MSMEs.
Full report available here.