Program Approach

Building on the legacy of MFP1

MFP works to strengthen civic engagement in the forestry sector through strategic grant-making. MFP1 (2000 – 2006) was the first initiative to apply this methodology at scale, investing GBP24 million in over 300 sites of alternative best practice across Indonesia. It was also the first to deploy strategic grants to broker and facilitate partnerships between central government, local government and civil society, for forest governance reform.

This second phase of MFP (2008 – 2011) builds on this important groundwork. With fewer resources at its disposal MFP2 will need to work strategically. MFP1 had the resources to “let a thousand flowers bloom”. MFP2 will need to home in on the best MFP 1 generated, and to institutionalise and scale up those innovations. This includes work to:

• Implement the forest-sector regulatory reforms that MFP 1 helped to achieve, including a range of licenses for community-based forest management (CBFM);
• Translate stronger community institutions into more accountable government;
• Mainstream best-practice examples of public participation, oversight and transparency into the legal and policy process.
• Translate examples of ad hoc conflict resolution into skills and institutions for more effective negotiation;
• Strengthen the constituency and evidence base of civil-society organisations engaged in policy advocacy; and to,
• Mobilise long-term resources for civic engagement in the policy process, in particular in the regions.

Work through Community Foundations (CFs) will be key to MFP’s efforts to institutionalise and scaling up reform. These are perhaps MFP1’s most important legacy, with CFs now established in Sumatra, Java, Sulawesi, Papua, Kalimantan and Nusa Tenggara. All are locally constituted, independent, grant-making institutions, and work to mobilise resources for community economic empowerment and policy advocacy. Crucially, they provide a means to support local-level action to an extent that even MFP1 struggled to reach; and with greater prospect of sustaining momentum.

Responding to the current operating context

MFP2’s current operating context also challenges the programme to focus much more explicitly on pro-poor growth and sustainable, low-carbon investment. This includes efforts to translate CBFM into concrete evidence of job creation and income generation. The following are just some of the contextual factors that the programme now faces:

• Economic recovery since 1997 remains fragile. Many people live just above the poverty line, with rising food and fuel prices, and vulnerability to natural disasters to contend with. By 2006, poverty rates had gone back up to 17.8% (World Bank, 2006).
• Non-income poverty remains acute, with continuing high levels of malnutrition and maternal mortality, especially in remoter rural areas with poor access to services (World Bank, 2006).
• Pathways out of poverty, labour-intensive manufacturing and high-value agriculture have been growing more slowly since the 1997 crisis, leaving the poor and vulnerable with fewer opportunities. This is leading to rising inequality.
• The contribution of the forestry sector to GDP continues to decline. Yet there remains substantial growth and job potential in the small- and medium-scale enterprise (SME) sector if the rights policies and incentives are in place.
• New policy commitments have been made to a low-carbon economy, including efforts to reduce emissions from deforestation and the energy sector, and work to mainstream climate-change mitigation into the Medium- and Long-term Development Plan.
• New investment opportunities are opening up for forest carbon on the voluntary carbon markets, and possible also the compliance markets depending on negotiations over a post-2012 deal on climate change.
• Sustainable forest management and CBFM is now of increasing interest to ethical funds and other institutional investors with commitments to Strategic Corporate Social Responsibility.

Linking economic empowerment with accountability

Emerging opportunities for sustainable investment and efforts to tackle vulnerability and rising inequality demand some of the same solutions – including:

• An economic and financial infrastructure that creates opportunities for the poor;
• Clear determination of land and resource rights, and effective public oversight.

So MFP2 will have a much stronger focus on:

• Growing SMEs within the forestry sectors, including links with the Business Development Service Providers and the banking sector, and work to ensure that SMEs benefit from legal supply chains under an EU – Indonesia Voluntary Partnership Agreement on FLEGT.
• The legal and institutional framework necessary to link CBFM sites with emerging opportunities on the carbon markets.
• Improving the quality and transparency of land and resource allocation processes.
• Strengthening institutional mechanisms for legal dispute resolution, public oversight and public complaints, where these are largely absent on the ground.
• Strengthening corporate governance, including improved due diligence and the development of a ‘gold standard’ for company – community partnerships.