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Local wood businesses find better global opportunities with sustainability certification

Women carve wood side by side. Photo by Deanna Ramsay/CIFOR
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Sitting in Mbak Njum’s tiny office in the coastal Central Java town of Jepara, Indonesia, talk was of exports, trends in furniture styles, cargo containers and logistics.

“Business used to be much better, and Western Europe used to be my biggest market,” said Mbak Njum, who has had her business since 1997. She added that Indonesian customers now make up 10 percent of her sales. A whiteboard in her office noted where else her items were headed: Saudi Arabia, Canada, Australia.

Jepara’s economy – almost completely dedicated to wood products – has experienced booms and busts over the decades. The 1998 Asian financial crisis actually opened up its export market, but 2008’s global economic collapse meant declines and a pivot to local buyers.

Scientist Herry Purnomo from the Center for International Forestry Research (CIFOR) has been working in the area for years, supporting the use of certified and legal wood and improved supply chains to benefit the town’s many small- and medium-scale enterprises, with research that forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA).

“Almost 30 percent of Jepara’s economy relies on furniture. If furniture disappears from Jepara, then the woodcarving culture will disappear too. Woodcraft carving and furniture-making are essential to Jepara and they need raw materials, and those raw materials are trees – specifically teak and mahogany,” he said.

Watch: Carving a niche in the global market: The woodworkers of Jepara

MOTLEY CREW

Just last year, Indonesia’s timber legality assurance system (SVLK) was the first in the world to be approved for the European Union’s Forest Law Enforcement, Governance and Trade (FLEGT) license, which allows legal timber and timber products to smoothly enter Europe’s markets. With this license, people are hoping for a boon for Jepara’s small businesses.

To say that Jepara’s economic life is centered around wood and woodcrafts would be an understatement. The town’s streets are littered with scenes of logs being loaded onto and off of trucks, women carving intricate designs at roadside stalls, men cutting and measuring slabs of teak, and a motley assortment of furniture available for sale at shops both large and small.

Pak Tafrikhan owns one of those stores, complete with a workshop in the back where his furniture is made and sold to Jakartans, and people in Dubai and Taiwan. Like any true entrepreneur, he is passionate about his craft and a keen observer of trends.

“My father’s principle was, don’t be afraid to make things; they’ll always sell. I still remember that message, so I never hesitate to produce. They’ll definitely sell because furniture has an extraordinarily wide-ranging market share. It depends on which segment we direct it towards,” he said, gesturing to an intricately grained teak coffee table of his own design.

Jepara has definitely cornered the market in Indonesia, so now the question is certification and licenses to expand. Many in the town aren’t yet knowledgeable about how to get their products certified, or are avoiding the levels of bureaucracy involved.

“Is the SVLK beneficial in financial terms? Perhaps it hasn’t been yet. But if this can be done, at least it will change the furniture industry’s culture in Jepara,” small business owner Pak Trisno said as the sun set at his warehouse.

Read more: New kid on the block in Indonesia’s timber export industry

Women carve wood side by side. Photo by Deanna Ramsay/CIFOR

PASSION PLAY

As a carved relief of the Beatles serenaded men wrapping coffee table tops and women prepping stools and chairs to be sent to Australia, a carving of Jesus laid hobbled on its side, waiting for the final touches of arms and a crucifix – and hopefully a church to purchase the finished piece.

Nur Hamidah, who had been carving a decorative wood piece together with a lively group of women along a small lane, said, “This is work we all have been familiar with since we were kids – this job is like our own family, it’s in our blood.”

Here, markets, certifications and international agreements are only the finishing touches to an industry based on tradition, passion and creativity.

“People have been using teakwood for centuries, and for hundreds of years it has sustained the lives of Jepara’s people. It’s given birth to many artisans; many great works. Carvings, reliefs and many things from these trees – from this teak – have been exported to many countries, and have made Jepara famous throughout the world,” Purnomo said.

Helping craftspeople out by giving them access to sustainable wood and markets is the next step, he added, and SVLK or FLEGT licensing can help with both.

“If we see these teak trees standing tall there is huge potential to preserve the furniture industry in Jepara. And on Java small-scale forestry is actually developing rapidly. Many people are planting trees because the industry is good on Java. We want this to continue so we can preserve Java’s forests with economic incentives,” Purnomo said.

Read more: Linking sustainable supply, inclusive business models and innovative finance

A woodworking student practices his craft at a workshop that doubles as a classroom. Photo by Deanna Ramsay/CIFOR

CRAFTY

In an interview at a CIFOR workshop on the topic, Inah Nuroniah, head of the Department of Industry and Commerce in Jepara, said, “Jepara now has approximately 1.2 million people, and the furniture industry is the central source of income. We’re now working together to look for ways in which the furniture industry can better support small enterprises now and into the future.”

As Pak Tafrikhan put it, “Jepara must return to its earlier creativity,” as well as utilizing the wisdom of people centuries before who planted vast forests of teak with specific knowledge of the best land to allow the trees to flourish.

“We really hope this business community can always be creative and innovative together. So we’re not left behind by other regions or other competitors, because we’re now in the era of globalization; there’s Vietnam, there’s China; maybe there are other countries too who are our competitors,” Nuroniah said.

“It’s these challenges that we must turn into opportunities; how we can improve performance into the future, improve quality, be more innovative, be more creative – together with the regional government we can do all of that,” she added.

Pak Trisno circled back to the forests themselves, the trees that are sustaining this unique corner of the world. “My long-term hope is for there to be wood so the timber, the raw materials can be renewed. So we should plant them as well – not just cut down and use trees.”

By Deanna Ramsay, originally published at CIFOR’s Forests News

For more information on this topic, please contact Herry Purnomo at [email protected].


This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by CGIAR Fund Donors.

This research was supported by UK aid from the UK government.

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  • New kid on the block in Indonesia’s timber export industry

New kid on the block in Indonesia’s timber export industry

Women assemble a sofa in Jepara, Central Java, Indonesia. Photo by M. Usman/CIFOR
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Women assemble a sofa in Jepara, Central Java, Indonesia. Photo by M. Usman/CIFOR

Forest Law Enforcement, Governance and Trade (FLEGT) licensing is like an anak sholeh — a good and pious child — according to several speakers at a recent national policy dialogue held in Jakarta, Indonesia.

From forests to workshops, marketplaces and homes, Indonesia’s timber products form a long and complex supply chain, which FLEGT is helping to regulate and strengthen.

The country’s timber exports are valued at US$11 billion annually. Thanks to its timber legality verification system known as SVLK and the subsequent issuance of FLEGT, with which businesses can export timber and wood products to the European Union with greater ease, the government expects furniture exports to increase significantly.

Indonesia is the only country in the world to have implemented the licensing so far, giving its furniture a competitive advantage in an increasingly discerning market as consumers pay more attention to the issues of a green environment, illegal logging, deforestation and sustainable production.

Watch: Policy dialogue: CIFOR cohosts FLEGT talks in Jakarta

Speakers pose with tokens of appreciation made from SVLK-certified wood following one of the sessions at the National Policy Dialogue in Jakarta. Photo by M. Edliadi/CIFOR

However, issues remain in the widespread implementation of FLEGT in Indonesia, especially among small and medium enterprises (SMEs).

The recent policy dialogue, cohosted by the Center for International Forestry Research (CIFOR) and supported by the CGIAR Research Program on Forests, Trees and Agroforestry (FTA) on July 13, tackled the topic of FLEGT licensing and supporting SMEs to access global markets.

The dialogue brought together scientists, government representatives, local furniture producers and community leaders to discuss challenges for SMEs to meet FLEGT requirements; a strategy to maximize the impacts of the license on SMEs; and the role of province and district governments to ensure the legality of SME production.

Read more: Indonesia’s timber going green – and global

Ida Bagus Putera Parthama, Director General of Sustainable Forest Management at Indonesia’s Forestry and Environment Ministry, said the initiative stemmed from an effort to eliminate illegal logging, and a desire to “stop the stigma attached to Indonesia about illegal wood.”

He described the license as “a good boy that the whole country has been waiting for” and said “everyone should support it.”

“The final outcome we expect from the system is to increase our market share, competitiveness of products, revenue for communities and in the end improve the livelihoods of those involved,” Parthama explained.

Charles-Michel Geurts, deputy head of the EU Delegation to Indonesia and Brunei, speaks at the National Policy Dialogue in Jakarta. Photo by M. Edliadi/CIFOR

Charles-Michel Geurts, deputy head of the EU Delegation to Indonesia and Brunei, concurred. “The world is looking to Indonesia,” he said. “Anak sholeh is a role model; everybody likes him [and] wants to adopt him.”

However, some business people voiced concerns. Jepara Small-Scale Furniture Producers Association (APKJ) representative Sulthon Muhamad Amin said that while medium and large companies may not be lumbered with the requirements, the costs associated with the licensing were too onerous for small-scale workshops. Thus, some still preferred to partner with exporters in the local market rather than become exporters themselves.

Sulthon later said small businesses must change this mindset. However, he questioned how this could happen, stating that many small-scale businesses had never heard of FLEGT.

Despite dissemination efforts, local administrations must be more proactive in providing assistance to small businesses, Sulthon said. “If an SME is like a small boy being led by a mother, it doesn’t mean he can be given the information and then left alone.”

Read more: Brexit rattles Indonesia’s timber trade prospects with Europe

FTA scientist Herry Purnomo of CIFOR speaks at the National Policy Dialogue. Photo by M. Edliadi/CIFOR

FTA scientist Herry Purnomo of CIFOR, whose work looks at furniture value chains, said SLVK promoted a balance between economic progress and environmental conservation. The system was not only driven by the EU’s system, he explained, as advancing people’s economies through participation and in an environmentally friendly manner was also mandated by the country’s Constitution.

In line with this, sustainable value chains and investments to support forest conservation and equitable development are a key part of FTA’s work.

Purnomo also echoed Sulthon’s thoughts, saying small-scale businesses faced different issues to big companies. Thus, local administrations should be more active in maximizing the benefits of FLEGT licenses for SMEs.

“We should also think about the domestic market, not only about the EU market,” Purnomo added. “Maybe we need to use SVLK more in domestic procurement processes.”

Taking note of Indonesia’s status as the first country to have FLEGT licenses, the scientist said environmental awareness would continue to grow, including in other emerging markets across the region such as Korea and Singapore. “Later it will be very difficult for us to catch up.”

For business people, exporters and consumers, FLEGT is a new kid on the block worth getting to know.

By Hannah Maddison-Harris, FTA Communications and Editorial Coordinator. 

Related publications


This work forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA). We would like to thank all donors who supported this work through their contributions to the CGIAR Fund.

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  • Policy dialogue: CIFOR cohosts FLEGT talks in Jakarta

Policy dialogue: CIFOR cohosts FLEGT talks in Jakarta

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A national policy dialogue cohosted by the Center for International Forestry Research (CIFOR) on July 13 brought together more than 200 policy makers, scientists, business owners, craftsmen and more to discuss the potential benefits of Forest, Law Enforcement, Governance and Trade (FLEGT) licenses for small and medium enterprises in Jakarta, Indonesia. The event was also supported by the CGIAR Research Program on Forests, Trees and Agroforestry (FTA).

Originally published at CIFOR.org.

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  • Legalizing Cameroon’s timber production chain

Legalizing Cameroon’s timber production chain

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By Leona Liu, originally posted at CIFOR’s Forests News

A recent study presents the most comprehensive scientific analysis of illegal logging to date. Its findings indicate that one third of tropical timber traded globally comes from illegal deforestation.

“Forestry crime including corporate crimes and illegal logging account for up to $152 billion every year, more than all official development aid combined,” said Erik Solheim, Head of UN Environment, one of the partner organizations supporting the assessment.

More than 40 scientists around the world, including several scientists from the Center for International Forestry Research (CIFOR), produced the report. The study was coordinated by the International Union of Forest Research Organisations (IUFRO) in association with the Collaborative Partnership on Forests (CPF).

Researchers found that bilateral trade agreements between producer and consumer countries- like the European Union’s Forest Law Enforcement, Governance and Trade Action Plan (FLEGT), which requires timber products imported into the EU be legally sourced – have prompted shifts in the timber trade from industrial export-oriented markets to small-scale logging operations for the domestic market.

This pattern can be observed in Cameroon, Africa’s largest exporter of tropical hardwood to the EU, most of which is sawn timber that goes to Italy and Spain. Due to a lack of government regulation concerning the domestic wood sector, approximately half of the country’s timber is sold on the black market.

Timber produced for domestic consumption is generally absent from official statistics and produced without a valid permit. But now, under a voluntary partnership agreement signed with the EU under FLEGT, Cameroon is developing the systems needed to control, verify and license legal timber.

This video documents the challenges facing small-scale loggers in Cameroon. The country’s entire domestic timber sector is marked by informal practices, from felling trees to selling sawnwood. Although informal methods do not respect all the national regulations, they do not necessarily break the law either. This is why researchers prefer the word ‘informal’ to ‘illegal.’

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  • Brexit rattles Indonesia's timber trade prospects with Europe

Brexit rattles Indonesia’s timber trade prospects with Europe

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Photo by Murdani Usman/CIFOR
Unloading teak logs in Jepara, Central Java, Indonesia. Photo by Murdani Usman for CIFOR.

By Herry Purnomo, originally published at CIFOR’s Forests News

Shortly after the British people voted on June 24 to leave the European Union, the country witnessed a change of prime minister and economic uncertainties radiated around the globe.

For timber traders and advocates of environmental sustainability in Indonesia, this development was a major concern. The country was about to clear the final hurdle toward getting the Forest Law Enforcement, Governance and Trade (FLEGT) license for its timber trade. The license would allow Indonesia’s timber to enter the EU easily, bypassing strict EU timber regulation requirements.

This was made possible in April, when President Joko “Jokowi” Widodo met European Commission president Jean-Claude Juncker in Brussels and agreed to smoothen the FLEGT licensing path for Indonesian timber.

The repercussions of Brexit may affect the terms of this licensing, but what is its likely impact on timber legality and the sustainability of forests in Indonesia? Sustainability and legality are main issues in managing forest and timber products; timber legality was thus discussed at the recent Asia-Pacific Rainforest Summit held in Brunei from Aug. 3 to 5.

These issues are especially a concern in Indonesia, which has 69 million hectares of production forest, of which 36 million hectares are under forest concession permits. The 1945 Constitution mandates that Indonesia manage its forest and natural resources sustainably.

However, after 20 years of certification processes, Indonesia has only 5 million hectares of certified production forest under the Forest Stewardship Council (FSC), the Eco-labeling Institute (LEI) and the Program for Endorsement Forest Certification (PEFC) as stated by the Indonesian Forest Certification Forum, but these voluntary schemes have not worked optimally to create sustainable forests.

In 2003 the government initiated a mandatory Timber Legality Assurance System (SVLK) to reduce illegal logging — the result of an agreement between Indonesia and the EU. Currently, 4.6 million hectares of concessions, 500,000 hectares of community forest and 1,908 timber industries have been SVLK-certified.

With Brexit, there will be at least two types of impact on Indonesian forests: economic and political.

Economists predict Brexit will slow down the UK economy as well as those across the EU and China. Indonesia’s timber exports to the EU reached US$609 million in 2015, but with Brexit they could shrink by 2 percent, $12 million, this year.

It could see additional reduction if Chinese demand for Indonesian timber drops, as China is the main timber exporter to the EU. This is not the whole story. The domino effect of a Brexit fallout can lead to conservative spending and cutbacks that could see reduced investment in Indonesia’s timber industry.

If this happens, the government’s optimism in being able to raise exports of its timber products such as furniture, pulp and paper and plywood, valued at $11 billion through FLEGT licensing could now be a dream. Jokowi, a former furniture businessman, had an ambitious plan to boost furniture exports from $1.8 billion to $5 billion in 2020.

If realized, it would improve the livelihoods of millions of small-scale furniture producers and craftspeople in a country where 98 percent of furniture making is done by small and medium enterprises.

The UK, as a main sponsor of the SVLK initiative through its multi-stakeholder forestry program, is a strong supporter of this program in Indonesia. As a result, Indonesia benefitted from the significant backing of EU countries, led by the UK, in the FLEGT process.

After Brexit, there are doubts about the UK’s political influence to push through this FLEGT licensing process among SVLK stakeholders in EU member states by the end of this year.

WHAT CAN INDONESIA DO?

First, Indonesia should continue to improve forest governance regardless of international assistance and pressure; this can be understood as working toward stipulations in the 1945 Constitution to implement sustainable development.

Second, Indonesia can provide more support for forest certifications such as the FSC, LEI and PEFC that are independent of a state or bloc.

The government needs to endorse voluntary forest certification by providing more economic incentives to those certified, which could then attract others to join the process. More funds need to be allocated to help small-scale forestry comply with FSC, LEI and PEFC standards.

Five million hectares of certified forest after 20 years of certification in Indonesia is not good at all. Indonesia needs to double or triple this figure in the next five years.

Encouraging more investments into sustainable practices will boost exports of forest products to meet Jokowi’s goals and support the millions working in small and medium scale enterprises.

Third, talk with the UK on its timber market to manage the impact of Brexit and deepen engagement with Germany and France to access the timber legality market in the EU. Since timber legality is required by many countries, there could only be more incentive for Indonesia to obtain global recognition for this.

Timber legality is just one step toward ensuring the sustainability of Indonesia’s forests and reducing carbon emissions, conserving biodiversity and improving the livelihoods of forest-dependent people.’

*This article was originally published in the Jakarta Post

For more information on this topic, please contact Herry Purnomo at [email protected].
This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry.
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  • Indonesia’s timber going green – and global

Indonesia’s timber going green – and global

Workers moving teak (Teactona grandis) logs to transport to sawmills. Jepara, Central Java, Indonesia. Photo: Dita Alangkara/CIFOR
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Workers moving teak (Teactona grandis) logs to transport to sawmills. Jepara, Central Java, Indonesia. Photo: Dita Alangkara/CIFOR
Workers moving teak (Teactona grandis) logs to transport to sawmills. Jepara, Central Java, Indonesia. Photo: Dita Alangkara/CIFOR

By Deanna Ramsay, originally published at CIFOR’s Forests News

Forests provide both environmental benefits and economic opportunities. Striking a balance between the two – especially in developing countries where forests are being depleted and livelihoods can be precarious – is critical.

For pulp and paper, plywood and furniture producers in Indonesia, billions of dollars in investment is flowing into the country, together with increasing pressures for sustainability assurances in exports.

Ahead of the Asia-Pacific Rainforest Summit in Brunei 3-5 August, Herry Purnomo, Center for International Forestry Research (CIFOR) scientist and Bogor Agricultural University professor, said the entire region was struggling with how to turn forest extractive industries green. Research on timber and other commodities is a key theme of the CGIAR Program on Forests, Trees and Agroforestry.

“It is no easy task. Deforestation is happening and institutions and governance need to be strong to address sustainable forestry,” Purnomo said.

Indonesia established its Timber Legality Verification System (SLVK) in 2013, a scheme that certifies wood was harvested legally and required for exports to Europe, the United States and Australia.

If Indonesia obtains a license under the Forest Law Enforcement, Governance and Trade (FLEGT), the careful, creative work of this wood carver in Jepara could enter markets he had no access to before. Photo: Dita Alangkara/CIFOR
If Indonesia obtains a license under the Forest Law Enforcement, Governance and Trade (FLEGT), this wood carver in Jepara could enter markets he had no access to before. Photo: Dita Alangkara/CIFOR

Abdullah Rufi’ie, director of forest products processing and marketing with the Indonesian Ministry of Environment and Forestry, said, “Since this legality, the value of our timber exports has increased, and we have been exporting more certified timber.”

At the source

The increasing demand around the world for sustainably sourced wood and wood products has implications on the ground. Indonesia’s legal timber certification means the country now has expanded access to markets, and the supply must follow.

For Purnomo, where this wood will come from is the question.

“Every year the amount of timber cut from natural forests has decreased, along with forest concessions. And some forest concession areas have been converted to oil palm and other uses.

“How can we continue providing timber products at the same level?”

Rufi’ie said the new sustainability requirements entailed wise use of source materials.

“The trend now is to obtain raw material from private forests and community forests, especially in Java. People are planting fast-growing teak species that can be used for furniture – and there is increasing demand because the wood is widely available and of good quality,” he said.

Teak forest in Jepara, Central Java. Photo: Murdani Usman/CIFOR
Teak forest in Jepara, Central Java. Photo: Murdani Usman/CIFOR

Many markets

Following SLVK, Indonesia is in the process of obtaining the Forest Law Enforcement, Governance and Trade (FLEGT) license for its timber trade. This will allow Indonesia’s timber to easily enter EU markets, bypassing strict timber regulation requirements.

In a recent op-ed in The Jakarta Post, Purnomo wrote, “If realized, [FLEGT] would improve the livelihoods of millions of small-scale furniture producers and craftspeople in a country where 98 percent of furniture making is done by small and medium enterprises.”

Purnomo’s Furniture Value Chain Project with CIFOR has worked with such craftspeople since 2008 to improve the furniture value chain in Jepara, on the north coast of East Java.

With FLEGT licensing, the careful, creative work of people in Jepara and other towns in Indonesia could enter markets they had no access to before, increasing incomes for millions of people. But there are other markets aside from the EU.

Rufi’ie discussed plans for agreements with other countries that have specific timber certification guidelines.

“We are trying to get mutual recognition agreements with many countries. But our system doesn’t only consist of exports but imports as well, and we want to ensure that any timber that enters our supply chain is legal, demonstrated with certificates of origin and legality,” he said.

For Purnomo, the domestic market is important. “There is a lot in the domestic market to work on,” he said.

More investment into sustainable practices is needed to boost exports and encourage the domestic market, as well as supporting small and medium businesses’ moves to sustainability.

At the Asia-Pacific Rainforest Summit (APRS) in Brunei from 3 to 5 August, ways to support domestic, regional and global markets for sustainable products were be discussed by representatives from government, business, civil society and the research community.

In the session titled “Inclusive forest industries for a green economy”, panelists will delve into managing the shift from unsustainable forest industries and how to improve forest certification.

“Five million hectares of certified forest after 20 years of certification in Indonesia is not good at all. Indonesia needs to double or triple this figure in the next five years,” Purnomo said.

Indonesia’s timber, especially with FLEGT to be finalized later this year, is tied to international markets, and finding ways to manage this process sustainably to support small-scale and informal contributors is key to many conservation goals.

Purnomo said, “Timber legality is just one step toward ensuring the sustainability of Indonesia’s forests and reducing carbon emissions, conserving biodiversity and improving the livelihoods of forest-dependent people.”

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  • Participation, public policy-making, and legitimacy in the EU Voluntary Partnership Agreement process: The Cameroon case

Participation, public policy-making, and legitimacy in the EU Voluntary Partnership Agreement process: The Cameroon case

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This paper discusses how participatory policy-making processes such as the Voluntary Partnership Agreement (VPA) negotiations are and should be organised to foster political legitimacy and support. The VPAs are bilateral agreements between the European Union (EU) and timber producing countries. VPAs constitute a cornerstone in EU’s Forest Law Enforcement, Governance and Trade (FLEGT) programme, the most important tool for the EU to address illegal logging problems. The EU requires that national VPA negotiations include participation by the relevant stakeholders. Based on primary data, we compare the VPA negotiations in Cameroon (2006–2009) with three different ‘ideal’ models of participatory policy-making: the rationalist, the communicative incremental and the mixed model, which we expect have different implications for legitimacy. We conclude that the Cameroonian process is closest to a rationalist model with elements of the mixed model, and that this has increased legitimacy and support only to a limited extent. For future processes in other countries, we recommend stronger elements of the mixed model, and more careful considerations about stakeholder identification processes; how to adapt policy-process to specific contexts; and how to strengthen communication and information flows. Considerations about these elements could also strengthen the applicability of the ideal models.

Source: CIFOR publications


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