Increasing legality compliance amongst forest sector MSMEs: creating an enabling environment for responsible forest product trade and socio-economic recovery
Micro, small and medium-sized enterprises (MSMEs) play a critical role in meeting the growing demand for forest products worldwide, with potential to contribute to responsible supply chains that combat illegal logging while promoting economic growth. However, MSMEs have been challenged by the emergence of regulated markets requiring verified legal timber, which involve more stringent regulatory compliance and additional up-front costs. Recognizing the need to ensure MSMEs can benefit from – and are not penalized by – the responsible forest trade, the FAO-EU FLEGT Programme supported 100+ projects in 20 countries between 2016 and 2021 that sought to improve MSME capacity to supply legal timber. These projects employed several strategies:
1. Increasing MSME legal compliance through capacity building, mentoring and technical assistance; 2. Formalizing MSMEs to achieve legal status and access to benefits such as credit, training programs, and labour protections. 3. Strengthening associations that represent MSMEs and provide technical and financial assistance; 4. Reducing the regulatory burden through the simplification of existing legal frameworks; and 5. Integrating MSMEs into responsible value chains by linking with buyers or manufacturers.
The Programme analyzed the impacts of these projects to determine best practices for supporting MSMEs at scale. It was found that the formation of associations was the most impactful intervention for helping MSMEs to formalize and produce legal timber. Capacity-building efforts also must integrate business skill development with training on legality compliance. The paper discusses options for further deployment of these strategies at scale, emphasizing the importance of building an “ecosystem of support” by forming a variety of mutually supporting partnerships. This will be central to assisting MSMEs negatively impacted by COVID-19 imposed lockdowns and economic slowdown.
Hewitt, Daphne1; Pohnan, Erica1; Cammaert, Bruno1
1. Food and Agriculture Organization of the United Nations, Rome, Lazio, Italy.