Impact Fund Denmark puts $25M into East African forestry expansion
What's the deal? Impact Fund Denmark is investing DKK 160M ($25M) in New Forests Company (NFC), a forestry business operating in Uganda and Tanzania. The capital will fund an expansion of NFC's plantation area from 30,000 to 100,000 hectares and finance new facilities to produce plywood and glulam products locally — goods that East Africa currently imports.
About half of the expanded area — 50,000 hectares — will be dedicated to restoring former natural forests and protecting biodiversity. NFC operates FSC-certified plantations and already produces electric poles, sawn wood, and pallets for regional buyers.
Why now? Africa is planting too few commercial forests to meet rising wood demand, putting pressure on natural forests and keeping the region dependent on imported timber. Between 1991 and 2020, East Africa's trade deficit in timber products reached roughly $12.6B. Growing and processing wood locally could redirect jobs, tax revenue, and value creation back to the continent.
"The forest sector in East Africa is a growing sector, and at the same time the investment binds millions of tonnes of CO2 and generates income for thousands of local families," said Lars Bo Bertram, chief executive officer of Impact Fund Denmark.
The investment is backed by EDFI Carbon Sinks, a guarantee scheme managed by EDFI Management Company and financed by the EU under its EFSD+ programme as part of the EU Global Gateway strategy.
What could go wrong? Large-scale plantation forestry in East Africa carries land-use and community-relations risks. Political instability, regulatory shifts, or disputes over land rights in Uganda and Tanzania could slow expansion. Tripling the plantation footprint also demands sustained operational capacity — scaling from 30,000 to 100,000 hectares is ambitious for any forestry company.
Carbon credit markets remain volatile, and revenue from climate credits depends on evolving certification standards and buyer demand.
The signal: The deal reflects a broader push by European development finance to channel private capital into climate-positive projects across Africa. It also signals growing investor appetite for forestry as both a carbon-removal play and an import-substitution opportunity. NFC's plantations are expected to bind around 12M tonnes of CO2 over the investment's lifetime — a metric that increasingly matters to institutional allocators hunting for measurable impact alongside financial returns.
Read more: impactfund.dk
