Consultancy to Support Sustainable Finance Mechanisms for the Kenya Project Finance for Permanence (PFP) Initiative

1. Background

The mission of The Nature Conservancy (TNC) is to conserve the lands and waters upon which all life depends. As one of the largest global conservation organizations, TNC—working closely with partners—advances scientifically-based, inclusive, and equitable conservation programs in 72 countries. In 2020, TNC, World Wildlife Fund (WWF), Pew Charitable Trusts and ZomaLab formed a collaborative partnership entitled “Enduring Earth” (EE), designed to dramatically scale up Project Finance for Permanence (PFP) initiatives. PFPs aim to secure durable, long-term, system-wide protection of the world’s most important natural ecosystems to address the biodiversity and climate change crises and promote human well-being. PFP initiatives follow a unique approach to conservation where the government, communities, and other relevant stakeholders:

• Build a plan to achieve target/agreed upon conservation outcomes;
• Agree on the milestones for an enabling framework;
• Determine the cost of implementing this program over the long term (typically at least 10 years); and
• Establish sustainable financial mechanisms to secure funding flows to cover the costs.

All PFPs go through four phases of development: viability, feasibility, planning, and implementation.
Kenya’s economy relies heavily on rain-fed agriculture and tourism, both of which face serious climate change and human-wildlife conflict challenges. Management of the country’s natural resources has been supported by annual Government of Kenya (GoK) allocations, proceeds from tourism and ecosystem services, and additional financing from overseas development agencies and private donors. However, this funding is neither sufficient nor adequately sustainable to address current and future needs for protecting the country’s natural resources. Durable and sustainable financing is critically required to address climate challenges and incentivize communities that coexist with wildlife to protect Kenya’s national heritage.

The GoK and The Nature Conservancy (TNC) have collaborated since 2020 on developing a durable conservation initiative to protect important ecosystems for nature, people, and the climate. After an extensive feasibility assessment, TNC, supported by its Enduring Earth partners—WWF; Pew Charitable Trusts; and Zomalab, the family office for the Walton family—concluded in May 2022 that there were sufficient enabling conditions to move the PFP into the planning phase. Those conditions included prospective funding, political will, and community engagement.
The Kenya PFP aims to achieve durable conservation outcomes through sustainable financing using innovative mechanisms. The PFP will support protected and conserved areas to achieve greater effectiveness and increase the acreage under conservation in line with the government’s 30×30 commitment under the Convention for Biological Diversity. The Program aims to see Kenya’s important landscapes become ecologically, economically and socially viable in the long-term.

One cornerstone of the PFP will be sustainable finance mechanisms (SFMs) that generate reliable and long-term funding to support the final agreed PFP goals. A consultant with significant expertise on SFMs will be contracted to support this work during the Planning Stage. The general scope of work is outlined below

2. Scope of work

The aim of this consultancy is to design sustainable finance mechanisms touching on tax, levies, royalties, and other government related sustainable revenues collected in favor of conservation of the country:

i. Review efforts to date on various sustainable finance mechanisms (SFMs) for conservation available to the state conservation areas including taxes, licenses and other government fee/ subscription related sustainable conservation revenues through desktop research, interviews with TNC staff, government officials and relevant partners and organizations, summarizing this into a baseline report
The assessments are expected to include the following at minimum:
a. Review of existing project materials relevant to the assignment including prior works from Conservation capital and IRPA to be provided
b. An indication of current annual revenues captured through each SFM, including identification of payors
c. A summary/ illustration of flow of funds from source to conservation area/landscape for each SFM
ii. Investigate feasible revenue potential of the identified government sustainable revenues available to conservation that are currently in effect in Kenya along with additional and relevant sustainable finance mechanisms from comparable countries and other PFPs including:

• National carbon tax
• A general environmental royalty system
• Environmental licenses including a percentage water resource levy for sector players with high water consumption
• Electricity sector transfers, for environment component of electricity fees
• Fuel levy transfers, and the environment component of electricity fees
• Biodiversity offsets and feasible multiplicative factors.
• License & permit fees for infrastructure development as a percentage of setup costs
• Feasibility analysis of a tax rebate/incentive to companies funding nature
• Pollution related fees
• Other tax/ fee-based avenues for revenue generation not here mentioned.

The assessments are expected to include the following at minimum, summarized in a feasibility report:
a. Production of a benchmark of relevant tax-based finance mechanisms for conservation that have worked in similar jurisdictions
b. A detailed analysis and summary showing the potential for each of the above SFM quantifying the potential contribution of each SFM to conservation in Kenya after optimization.
c. An assessment of feasibility & potential revenues to be ring-fenced for financing of conservation activities including what is available as a total and the percentage flow to conservation.
d. An estimate of the potential scale of revenue over time under different scenarios
e. Recommendations with reasons on whether to pursue each of the identified SFM
f. A summary/ illustration of flow of funds from source to conservation area/landscape for each of the additional SFMs
iii. Develop a roadmap outlining next steps to advance selected SFMs – including needed policy and legislative actions/reforms;
a. Define the gap and needs to improve or develop these SFMs including identification of risks and risk mitigation steps associated with each SFM.
b. Define conditions needed for the successful implementation of identified SFMs highlighting the policy reforms to support SFMs
c. Identify all stakeholders to be involved in the process, map synergies and possible collaboration with other related initiatives & actors in the country
d. Draft an action plan to implement each of the recommended SFMs in a SFM development strategy document

3. Geographical scope

The geographical scope of work includes resources that can be sourced in Kenya and applied to terrestrial protected and conserved areas across Kenya. A comprehensive list will be supplied by The Nature Conservancy. An analysis of the SFMs revenue performance and potential per key ecosystems in the country would be useful.

4. Duration of assignment

The assignment will be carried out within a period of forty (40) working days from the date of signing the Contract.

5. Deliverables

# Deliverables Installment
1. Baseline report …..30%
2. Feasibility report….40%
3. SFM development strategy…30%

6. Reporting arrangement

The Consultant will be accountable to The Nature Conservancy’s Director, Durable Finance Africa Region. It will also be invited to participate in internal or, as the case may be, external, meetings to discuss findings.

7. Qualifications

The consultant will have the following skills and experience:
a) Extensive knowledge of and experience with SFMs and knowledge of how they have performed in different countries and regions of the world
b) Extensive tax background in Kenya
c) Extensive knowledge and expertise conducting financial analysis
d) Solid knowledge of protected areas issues, particularly in developing countries
e) Strong communications skills, including ability to convey SFM concepts effectively to senior government officials and other relevant stakeholders and rights holders
f) Knowledge of Kenya context and institutional structures.
g) Conservation & policy background/ previous works in Kenya preferred
h) A professional network of contacts in the tax, government license & conservation fees and conservation industries in Kenya
i) Demonstrated experience conducting similar research in the past