Project detail - KOMAZA GROUP INC.

KOMAZA GROUP INC.

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Who is our client

Komaza Group Inc. (“Komaza”) is a vertically integrated micro-forestry company working with smallholder farmers in Coastal and Central Kenya to address a large and fast-growing wood market in Africa.

Funding objective

The main funding objective is to support the growth of Komaza within Kenya and potentially across Sub-Saharan Africa.

Why we fund this project

This investment is funded from the land use facility of the Dutch Fund for Climate and Development (“DFCD”). The DFCD seeks to improve the well-being, economic prospects, and livelihoods of vulnerable groups and enhance the health of critical ecosystems, from river basins to tropical rainforests, marshland, and mangroves. Komaza is providing (additional) economic prospects and livelihood opportunities for smallholder farmers in Africa by making them the company’s core partner and by providing the tools and services through an innovative model. Majority of smallholders Komaza works with can be considered the base of the pyramid, and especially in these rural regions the improved livelihood of large groups of farmers will have a positive impact on the larger community. In addition to supporting vulnerable groups the company aims to plant 2,500 hectares per year in its greenfield operations and plant 3 trees for each tree cut down in its brownfield operations, yielding significant carbon sequestration.

Environmental and social rationale

This transaction is categorized as B+, as the growing forestry operations have a significant effect on a diverse set of environmental and social risks and impacts: Occupational Health and Safety (PS 2) in processing facilities, Community Health and Safety (PS 4) for the logistics operations and PS 6 related biodiversity impacts are topics that bring specific risks to this transaction. The company has a significant amount of smallholder partners, which also influences the perceived E&S risk. The company has very good operating procedures in place, based on good international industry practice (GIIP); FMO agreed an action plan to cover remaining gaps with IFC PS. FMO will help the Company further substantiate and professionalize E&S Management Systems, which will amongst others have a further positive effect on stakeholder engagement and Occupational Health and Safety practices at processing facilities. As the company does not own any plantations, PS 5, 7 and 8 are not triggered.

Region
Africa
Country
Kenya
Sector
Agribusiness, Food & Water
Signing date
7/6/2020
Total FMO financing
USD 7.50 MLN
Fund
DFCD Land Use Facility
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B+