Using competitive bidding to gain a foothold in Africa
Joensuu-based Arbonaut digitally computes forests and wants to ease climate change. It is one of the few Finnish companies who know how to take advantage of public competitive bidding in development projects.
The Danes are clearly more skilled at playing the game of international public procurements than the other Nordic nations. The Finnish daily newspaper Helsingin Sanomat wrote in February 2018 that Denmark had sold goods and services to the UN, for instance, worth 560 million euros in 2016, while sales figures for Finland were less than 10 million euros (link in Finnish).
The World Bank, the UN and regional development banks spend about 40 billion euros a year on development procurements, according to an estimate by the Finnish Ministry for Foreign Affairs. When procurements from the EU and the other organisations are included, the value of the annual market rises to between 80 and 120 million euros.
Development funding institutions make large procurements in areas that are familiar to Finland: IT, water services, waste management, energy, data systems, cleantech and the sustainable management of forests.
One company that has made competitive bidding a big part of its business is the Joensuu-based Arbonaut, which specialises in modelling forests. In simple terms, their mission is enumerating and analysing world’s forests in digital form.
The company sees all the trees in the forest
Technology and algorithms are currently so developed that it is possible to compute entire forests almost to the accuracy of a single tree. This is done by flying over a forest and “laser scanning” the whole forest. Such detailed information can be valuable when deciding on forest management, says Arbonaut’s CEO Tuomo Kauranne.
Laser scanning of forests has been taking place in Finland since 2010. In the United States, Arbonaut has also carried out laser scanning of power lines, flying in a helicopter and examining more than 100,000 kilometres of high-tension wires and ascertaining which trees might fall on the wires.
Laser scanning requires a functioning society around it. For instance, easily available flying permits and runways. When Arbonaut seeks to take over forest management markets in Africa, other means will be needed for the time being.
“Permits and airports are not available and the implementation would be too costly,” Kauranne says.
Arbonaut has started out by selling know-how.
The World Bank is the payer; the local forest authority the client
Arbonaut does not have designs on being a consultancy company, but in Africa acting as a consultant is currently a necessary first step.
Sustainable forest management in developing countries is often linked with the REDD+ programme (Reducing emissions from deforestation and forest degradation), negotiated within the UN. The aim of the programme is to protect forests, grow carbon sinks and promote a sustainable forest economy.
In practice, the work of Arbonaut in African countries always starts with competitive bidding, says Jarno Hämäläinen, the director of Arbonaut’s REDD+ unit.
The need arises when a REDD+ strategy, forest management plan or equivalent is drafted for the forest authorities of a country, and a consultant is sought for the work. The payer is usually the World Bank or an international climate fund.
Arbonaut has projects around the world and its presence in Africa has advanced already to include South Africa, Ethiopia, Ghana, Cameroon, Kenya, Senegal, Tanzania and Uganda.
“We constantly have in mind that we have not come to some country to win that one bidding competition. We aim to continue the same activity for the next 20 years, or whatever is coming,” Hämäläinen says.
Knowledge is money
Selling knowledge and skills is not always easy in African countries, Hämäläinen says. “Although people quickly adopt new solutions, administrative bodies are often cumbersome or populist.”
Offices can resemble those in Finland 20 or 30 years ago: there is no lack of bureaucracy and people often keep information very close to their chests.
On the practical level, there is not always understanding about why such detailed information is even needed, Hämäläinen explains. Knowledge is not always appreciated very much and someone might even be afraid that if computers model the forest, people might no longer get work. Many are paid extra per diems for work on the terrain, which can be an important supplement to their income, so transferring to more comfortable office work without a corresponding incentive might not necessarily be so attractive.
“But when we achieve results from the point of view of the condition and utilisation of nature, then the local people and the funders will see that this is worth doing,” Hämäläinen says.