FONAFIFO

Our general objective is to provide financing to small and medium producers - through the granting of credits or other promotion mechanisms of forest management, intervened or not - for forest plantations processes and reforestation, forest nurseries, agroforestry systems, recovery of deforested areas, and technological changes for the exploitation and industrialization of forest resources. Also, it will raise resources for the financing of environmental service payments derived from forests, forest plantations and other activities required for the strengthening of the natural resource sector’s development.

The principles that sustain FONAFIFO's ideals are:

Integrity Ethics Moral Solidarity Acquisition of goods and services from sustainable and non-polluting sources . Recognition of agroforestry ecosystems as producers of multiple goods and services	P R I N C I P L E S

FONAFIFO’s policies originated from the National Development Plan, the National Forestry Development Plan, laws and decrees, ministerial policies and from its own strategic planning. Accordingly, the Board of Directors enacted specific policies that rule the institution’s course of action.

Maintain FONAFIFO’s position as the main forestry promoter by supporting the improvement of productivity and competitiveness, in harmony with the environment; the institution shall contribute to the social and economic well-being of the country’s population, mainly, in the poorest areas. Provide the organizational platform required for a rational, planned and decentralized growth, in favor of modernization and institutional strengthening for the achievement of maximum potential resource management, in accordance with the goals and objectives set forth, striving for continuous improvements in the quality of customer services. Strong fund-raising program both nationally and internationally. Promote and encourage the increase of reforestation, industrialization and use of wood from forest plantations so that producers are able to participate in local and global markets by increasing their competitiveness in such activity. Invest FONAFIFO's financial resources in instruments that guarantee the highest return at the lowest risk, provided the donor establishes otherwise. Promote equal participation in the projects, regardless of the social, gender or ethnic status. Support sustainable development and improvement of socioeconomic conditions of small and medium producers through forest sector development. Involve public and private organizations in the institution’s operations that represent the different sectors from society.	P O L I C I E S

The beginning of FONAFIFO’s historical background goes back to the year 1990 with the enactment of Forestry Law #7174, and its Regulations, and Executive Decree #19886-MIRENEM.

Law #7174 entitled the General Forestry Executive Division (DGF) to establish a Trust Fund for the financing of forestry activities, which also included the creation of the Forestry Financing Department within such Executive Division. It is important to mention that prior to the aforementioned Law, Trust # 178 (now referred to as #340) was in operation and managed the funds from the AID-032 Project, which provided loans for reforestation initiatives in the Central Pacific Region and the Peninsula of Nicoya.

Subsequently, the Fondo Nacional de Financiamiento Forestal was created in 1991 through Law #7216’s Regulation #32 of the Republic’s Ordinary and Extraordinary Budget. This budget allocated the amount of 50 million Colones as seed capital for the creation of another Trust to finance the forestry activities small and medium producers’ (Trust # 19-91).

These events, together with the need of creating an entity to channel financial resources for the forestry sub-sector derived in the creation of the current FONAFIFO. FONAFIFO was created by Forestry Law #7575’s Article 46, which was published on April 16, 1996.

FONAFIFO is a fully decentralized entity within the State Forestry Administration’s organizational structure. The aforementioned Law grants FONAFIFO relative autonomy, rights of representations, which entitle it to enter into any type of non-speculative licit juridical transactions required for the facilitation of an efficient net-worth administration, including the establishment of Trust Funds. FONAFIFO's corporate identity number is three- zero zero seven- two hundred four- thousand seven hundred twenty-four.

Article 47 of the aforementioned Forestry Law stipulates that FONAFIFO's net worth shall be mainly constituted by State financial contributions, donations, credits from international organizations, fundraising and financial facilities obtained from credits and investments, and 40 % of revenues derived from tax on wood and the issuance of forestry bonds or certificates, among others. Likewise, Section "D" establishes that "...Resources from the conversion of foreign debt and Environmental Services Payment made by private or public, national or international organizations..." shall be considered part of FONAFIFO's net-worth.

According to the Forestry Law’s Article 46, FONAFIFO is responsible for: "providing the financing, through credits or other forestry management development mechanisms, both intervened or not, for forest plantations and reforestation processes, forest nurseries, agroforestry systems, the recovery of deforested areas and technological changes in the beneficial use and industrialization of forestry resources. It will also invest to pay for environmental services provided by forests, forest plantations and other activities required to strengthen the development of the natural resources sector".

Likewise, pursuant to Forestry Law # 7575, FONAFIFO, for the accomplishment of its duties, has a Board of Directors constituted by members from the public and private sectors, as stipulated in Article 48 of such Law.

FONAFIFO's financial resources come from various sources; a part comes from the Ordinary National Budget, in accordance with the Tax Simplification and Efficiency Law # 8114 in its Article 5, wherein 3.5% of the selective fuel tax is allocated for the Environmental Services Payment.

Other revenues come from the forestry tax; according to Forestry Law #7575’s Article 43, Section i.

According to LAW #8058, funds are also provided from the approval of the Loan Contract entered into by the International Reconstruction and Development Bank (World Bank) and the Government of Costa Rica, as stipulated in Law # 8058.

Also, some incomes are secured through the German Government’s financial resources, through the KfW Bank, ratified by Law # 8355; by this means, financial cooperation is granted to the Huetar Norte Forestry Program.

Besides, additional revenues are generated from FONAFIFO's national activities, such as the agreements to protect water resources signed with Energía Global S.A., Hidroeléctrica Platanar S.A., as well as Environmental Service Purchase Contracts entered into with the Compañía Nacional de Fuerza y Luz (CNFL) and Florida Ice & Farm.