CDC commits $15m to Sierra Leone forestry project

The UK development finance institution has joined Finnfund in committing to Miro Forestry, a sustainable forestry company operating in Sierra Leone and Ghana.

UK development finance institution CDC has committed $15 million to Miro Forestry, a West Africa-focused timber investment company, in the DFI’s first direct investment in Sierra Leone, according to a press release.

CDC is investing alongside Finnish DFI Finnfund, which provided a conditional commitment of $10 million last summer; it was conditional on Miro attracting another $10 million from an institutional investor, Andrew Collins, chief executive of Miro, said at the time.

Miro will use the funding to expand its eucalyptus and teak tree operations in Sierra Leone and Ghana beyond from 1,700 hectares to 8,700 hectares by 2017.

CDC’s investment into Sierra Leone indicates its confidence in the country’s businesses and its ability to recover from the economic effects of the Ebola crisis. It also follows a risk participation agreement signed between CDC and Standard Chartered Bank in February that will support new working capital lending of up to $50 million to businesses in Sierra Leone, effectively enabling Standard Chartered to issue more loans in Sierra Leone, according to the press release.

“Sierra Leone’s already fragile economy has suffered considerable damage as a result of the Ebola crisis but CDC remains confident that companies like Miro can play a part in the economic recovery that we all want to see,” said Mark Pay, managing director of equity investments at CDC in a statement.

Sierra Leone’s minister of finance and economic development Kaifala Marah welcomed the investment.

“[CDC’s investment] comes at a time when the industry is faced with daunting challenges exacerbated by the Ebola crisis,” he said in a statement. “We will work with Miro Forestry to harness mutual benefits from this venture in ways that will improve and expand our forests, boost job creation and contribute to our post-Ebola recovery efforts.”

Both CDC and Finnfund are experienced investors in the West African region and Finnfund has deep knowledge of forestry markets, according to Miro’s Collins.

Miro started operations in 2010 with just $25,000 and is targeting $50 million overall, of which it has now raised $35 million from a variety of private capital sources. It will now put fundraising efforts on hold until 2017 when it could raise the remaining equity at a premium, Collins told Agri Investor in July. He expects the company’s headcount to increase from 350 to 500 during that time.