Enviro News Asia, Arusha – A new USD 1 million pilot project to increase direct access to finance for forest and farm producer organizations in the United Republic of Tanzania launched this week in Arusha. The initiative introduces innovative financial mechanisms designed to strengthen financial inclusion for smallholder farmers, rural women’s groups, local communities, and Indigenous Peoples’ institutions.
The Forest and Farm Facility (FFF), hosted by the Food and Agriculture Organization of the United Nations (FAO), implements the pilot. The project aims to help producer organizations secure financing by partnering with national and local financial institutions and deploying tailored blended finance instruments.
Ewald Rametsteiner, Deputy Director of FAO’s Forestry Division and Officer-in-Charge of the FFF, stated that producer organizations play a vital role in improving market access, strengthening livelihoods, and promoting sustainable natural resource management. He emphasized that the pilot seeks to connect these organizations with appropriate financial partners and encourage financial institutions to recognize their investment potential.
The initiative complements broader regional efforts such as the African Forest Landscape Restoration Initiative (AFR100), which targets the restoration of 100 million hectares of degraded land in Africa by 2030 through integrated restoration, entrepreneurship, and financing strategies.
Despite growing investment in sustainable rural development, many small enterprises in forestry, agroforestry, honey, coffee, and nursery value chains struggle to access credit. Financial institutions often require formal documentation and financial records that small-scale producers lack. Additionally, conventional financial products rarely align with the long-term returns typical of land restoration and climate resilience projects.
Supported by FAO’s Flexible Voluntary Contribution, the FFF pilot applies a new operational model that moves beyond grants and microfinance. The project channels funds directly to members of producer organizations through structured collaboration with financial institutions. It tests innovative tools with banks and cooperatives and deploys blended finance instruments, including concessional loans, guarantees, revolving funds, and insurance products tailored to small-scale forestry and farm enterprises.
The Tanzania pilot will serve as a model for similar initiatives planned in Bolivia and Ghana.
FAO launched the project alongside the Tanzania Matchmaking Event held in Arusha starting 25 February. Organized under the programme “Supporting AFR100 by engaging with small-scale forest and farm producers” and coordinated by the FFF, the event convened producer organizations, restoration-focused enterprises, domestic financial institutions, and impact investors. Participants connected viable forest and farm projects with potential financiers and addressed financing barriers affecting the so-called “missing middle”—enterprises too large for microfinance but too small or informal for commercial lending.
Core funding for the FFF comes from the Swedish International Development Cooperation Agency, the Foreign, Commonwealth and Development Office of the United Kingdom, and the German Federal Ministry for Economic Cooperation and Development. The FFF provided the majority of funding for both the matchmaking event and the pilot launch. (*)
