Indonesia will fund green projects and rural livelihoods

The first-of-its-kind green fund is seen to create jobs in rural communities, protect forests and help to meet the country’s climate targets.

rural Indonesia
A man from rural village Situ Gunung, Sukabumi, West Java, Indonesia casts his net to catch fish in the lake. Image: Ricky Martin for Center for International Forestry Research (CIFOR), CC BY-NC-ND 2.0

The Indonesian government and key partners have launched a unique financing platform that taps on public funding to unlock private finance for long-term green projects and to stimulate livelihoods in the country’s rural communities.

Launched on 26 October in Jakarta, the Tropical Landscapes Financing Facility (TLFF) will give smallholder farmers and other land users access to long-term financing at lower interest rates, with the understanding that the funds will be used for environmentally sustainable projects in Indonesia’s rural landscapes.

The TLFF was launched in partnership with the UN Environment Programme (UNEP), BNP Paribas, a member of the UN Environment Finance Initiative, and ADM Capital, which will act as fund manager.

The funding facility is envisioned to help Indonesia’s rural poor populations through a mix of loans and grants to fuel investments in renewable energy production, reforestation, and the restoration of degraded lands.

Investing in green projects is also seen to help the country achieve its climate targets under the Paris Agreement.

We need to ensure that our landscapes produce sustainable goods.

Siti Nurbaya Bakar, minister of environment and forestry, Indonesia

Speaking at the launch event, Kuntoro Mangkusubroto, chair of the Facility’s Steering Committee, described the new financial platform, as “a world’s first,” that can transform the lives and livelihoods of millions of Indonesians in rural areas.

Indonesia’s minister of environment and forestry Siti Nurbaya Bakar said the funding facility aligns with the country’s sustainable development aspirations.

“We need to ensure that our landscapes produce sustainable goods,” she said.

BNP Paribas, an international banking institution, said that the TLFF initiative also supports the bank’s sustainable projects in the country, in particular, its domestic onshore renewable energy projects.

“By joining in partnership with the Tropical Landscapes Financing Facility in the capacity of capital markets and structuring adviser, BNP Paribas will help create innovative and collaborative financing mechanisms to bring private capital at scale with good governance and risk management principles to fund long-term sustainable projects,” Luc Cardyn, country head and CEO for PT Bank BNP Paribas Indonesia said.

Further details on how the funding will actually be facilitated and when this could be available to smallholder producers and rural community members have yet to be announced.

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