CAF invests USD 15 million in Paraguay's Forest Fund

During an event held in the city of Coronel Bogado, in Paraguay's Itapúa Department, CAF—development bank of Latin America and the Caribbean—, signed the subscription agreement for the bank's first equity investment in the South American nation. The investment in the SA Impact Forestry Fund (SAIFF) totals up to USD 15 million, aimed at funding a 60,000-hectare (148,000-acre) forestry plantation project in southern Paraguay, which will help convert degraded and low-productivity lands into high-yielding areas, and is expected to produce environmental, social, and economic benefits for the nation and the region.

The signing ceremony was attended by Paraguay's Environment and Sustainable Development Minister Rolando de Barros Barreto, National Forest Institute President Cristina Goralewski, Silvipar AB CEO Martin Forsen, Astarte Capital Partners founding partner Teresa Farmaki, and CAF Southern Regional Manager Jorge Srur.

The project includes a conservation area to preserve and restore native fauna and flora, is expected to capture large amounts of CO2 and curb emissions of other greenhouse gases. The development bank becomes thus the first of its kind to take part in such an initiative, under globally certified environmental and sustainability standards.

esta operación permitirá generar líneas de financiamiento alternativas a la banca tradicional, y promoverá el ecosistema de capital privado, para atraer y canalizar recursos de inversores globales hacia proyectos de valor estratégico y que fomenten la recuperación económica del país

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Jorge Arbache

For CAF Private Sector VP Jorge Arbache, "this operation will help create financing options other than traditional banking, and will appeal to the private capital ecosystem, with a view to attracting and channeling funds from investors worldwide to strategic projects that boost the nation's economic recovery. It is also set to create formal, high-quality employment, with more than 3,000 direct jobs and 30,000 indirect jobs, with a large positive impact on local communities in rural and surrounding areas.

The Fund will be managed by Sweden's Silvipar AB, a firm specialized in sustainable forest plantation project management, and Astarte Capital Partners LLP, a global asset management company for sustainable sectors. The Fund has a close relationship with its stakeholders, including local NGOs, the Ministry of the Environment, the National Forest Service, Paraguay's Forest Industry Association, among other relevant players, encouraging a continuous, open dialogue to maximize the impact and benefits for all parties.

"Paraguay is Latin America's greatest treasure for investments, based on two major pillars: its people and its natural resources. We will prove that Paraguay is set to become the world's largest natural capital, with CAF's and SilviPar's support, by travelling the world to ensure that this type of forest investment, and others, can be made and implemented in our country. I believe that forest projects are 100% in line with current needs," noted Environment and Sustainable Development Minister Rolando De Barros.

Furthermore, Southern Regional Manager and CAF Representative in Paraguay Jorge Srur explained that this equity investment made by the bank in Paraguay reiterates its commitment and confidence in the nation: "This is a project with significant impact in terms of economic potential and contribution to building a more sustainable, fairer, and more inclusive Paraguay." He also noted that "this 100-percent green operation, as graded by CAF, is proof of the nation's potential in the forestry sector, and we are confident that it will pave the way for other investment initiatives, and, with them, make the wish for sustainable development of our countries come true."

esta operación calificada por CAF como 100 por ciento verde, pone de manifiesto el potencial que tiene el país en el sector forestal, y que estamos seguros servirá como guía para que otras iniciativas de inversión se sumen y con ellas, transformar los deseos de desarrollo sostenible de nuestros países en una realidad

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Jorge Srur

This operation boasts certifications by various entities, including the Forest Stewardship Council, and Verra's Verified Carbon Standard (VCS). It is also making progress in attaining the Climate, Community and Biodiversity (CCB) Standards certification, which recognizes projects that address climate change, support local communities and small farmers, and protect biodiversity at the same time.

Through this and other transactions, CAF's operations in Paraguay include contributing to the diversification of the nation's export production apparatus, in an effort to become the Green Bank of the region, in addition boosting the development of the carbon market in Latin America and the Caribbean, encouraging the attainment of the United Nations Sustainable Development Goals.