document

eastern capePLAN FOR EASTERN CAPE FORESTRY

SECTOR DEVELOPMENT | MARCH 2009

forestry

forestry

PLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009 | 1

1 INTRODUCTION AND BACKGROUND 22 FORESTRY SECTOR OPERATIONAL PLAN 4 2.1 New afforestation 4 2.1.1 Issue: Streamlining of licensing processes 7 2.1.2 Issue: “Models” for commercial community forestry 8 2.1.3 Issue: Mobilisation of communities for afforestation 9 2.1.4 Issue: Matching of species to sites and market 10 2.1.5 Issue: Operational implementation 11 2.1.6 Issue: Transfer of existing plantations to communities 12 2.1.7 Issue: Conversion of existing wattle “jungles” 13 2.2 Wood Processing 14 2.2.1 Issue: Support for small sawmillers 14 2.2.2 Issue: Adding value to primary products 14 2.3 General 16 2.3.1 Issue: Availability of skills and competencies 16 2.3.2 Issue: Transformation of the sector 16 2.3.3 Issue: Provision of finance 17 2.3.4 Issue: Infrastructure weaknesses 173 IMPLEMENTATION PLAN 20 3.1 Direction, Policy and Governance 20 3.2 Organisational Principles 21 3.3 Institutional Roles and Responsibilities 21 3.4 Organisational Structure 21 3.5 Key Personnel 22 3.5.1 Forestry Director 22 3.5.2 Forestry Sector Strategic and Technical Support 22 3.5.3 Implementing Agents 22 3.6 Funding Requirements 224 CONCLUSION 245 ACRONYMS 24

TABLES Table 1 - Afforestation and yield potential 4 Table 2 - Options for forestry on community land 8 Table 3 - Institutional roles and responsibilities 21 Table 4 - Estimated funding requirements (over 10 years) 22

Contents

2 | PLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009

The Eastern Cape’s Provincial Growth and Development Plan (PGDP), a blue print for the province’s growth and development, identifies the following as its targets: • Economicgrowthrateof5-8%perannum• 50%reductioninunemploymentby2014• 50%reductionofpovertyby2014• Foodself-sufficiencyintheprovinceby2014• Cleanwaterandeliminationofsanitationbacklogsby2010• HaltthespreadofHIVandAIDS.

As part of the PDGP review process in 2007, the province identified, amongst others, the following critical areas that continue to confront the province: • Unevendevelopmentandspatialimbalances• Pervasivepoverty(dependencyandpovertytrap)• Lackofskills• Sub-optimalgrowthineastoftheprovince(mainlycharacterisedby the dominance of the public sector)• Unequal terms of trade (high external account and sub-optimal local beneficiation)• Highunemployment• Complexregulatorybottlenecks(particularlyrelatingtoland)• Sub-optimal impact of existing agrarian and rural development initiatives• Significant infrastructurebacklogs (lackof enabling infrastructure and logistics for economic development)• Sub-optimalresourcesatprovincialandlocal levelforinvestment requirements• State capacity (planning, implementation, project development, partnership facilitation, monitoring)• Absenceofviablegrowthcoalitions.

The provincial government recognises that in order to achieve these targets a new approach and impetus to economic growth and development is required.

At a national level, the National Spatial Development Perspective, Macro Economic Strategy, Regional Industrial Development Programme and the Accelerated and Shared Growth Initiative of South Africa (AsgiSA) are the main informants of AsgiSA Eastern Cape’s programmes.

AsgiSA is the base upon which AsgiSA Eastern Cape (EC) is founded. AsgiSA plans to improve skills, remove logistical bottlenecks and increase economic participation. AsgiSA is an implementation programme, focused the following themes:• Infrastructureprogrammes• Sectorinvestment(orindustrial)strategies• Skillsandeducationissues• Secondeconomyinterventions• Macro-economicissues• Publicadministrationissues

AsgiSA aims to accelerate levels of growth in the country, with targets of 4-5%until2009,and6%between2010-2014.Itputsmeasuresinplaceto ensure that growth reduces poverty and inequality in the country, by calling on the state to play a more active role in correcting market failures and accelerating economic transformation. In order to stimulate economic growth, AsgiSA aims to remove a number of obstacles to growth, including:• Reducethecostandeaseofdoingbusiness• Reduce barriers to entry by targeting pro-poor growth sectors and through a range of second economy interventions including the provision of support packages and use of state procurement to

1 Introduction and background


enable BBBEE participation and partnerships in major investments• Reducethecostandincreasetheefficiencyoflogisticsthroughthe development of world-class logistics capability in the IDZs, and access linkages to the rural economy• De-bottleneck regulatory barriers by addressing Environmental Impact Assessment (EIA) obstacles and identifying red tape issues in municipalities• Address the skills deficit through a targeted skills plan, and the establishment of Joint Initiative on Priority Skills Acquisition (JIPSA) to prioritise and co-ordinate skills development• Improve the capacity of the state to facilitate economic planning and development.

AsgiSA’s activities are also guided by the 2014 Millennium Development Goals (MDP) and the five South African government’s People’s Contract principles, namely:• Reduce poverty by half through economic development, comprehensive social security, land reform and improved household and community assets• Provide the skills required by the economy, build capacity and provide resources across society to encourage self employment with an education system that is geared fro productive work, good citizenship and a caring society• Reduceunemploymentbyhalfthroughnewjobs,skillsdevelopment, assistance to small businesses, opportunities for self-employment and sustainable community livelihoods (including large-scale multi year public works programmes)• Massively reduce cases of tuberculosis, diabetes, malnutrition, andmaternaldeaths;turnthetideagainstHIVandAIDS;working with the rest of the southern Africa, strive to eliminate malaria; and improve services to achieve a better national health profile and reduce preventable causes of death, including violent crime and road accidents. To these ends, ensure that each South African household has access to clean running water by 2009 and to electricity by 2012.• PositionSouthAfricastrategicallyasaforceinglobalrelations,with a vibrant and balanced trade; and in other relations with countries of the South and the North, and in an Africa that is growing, prospering and benefiting all Africans, especially the poor.

The Eastern Cape Industrial Development Strategy (ECIDS), whose basis is the National Regional Industrial Development Strategy and the PDGP also provides a useful bedrock upon which AsgiISA EC is founded. The ECIDS captures the rationale for the establishment of AsgiSA Eastern Cape when it argues that:

‘After ten years of democracy, the structure of the Eastern Cape economy has not shifted significantly. After three years of implementing the PGDP, there is still too little real engagement between the public and private sectors and the objectives of economic transformation are largely based on fairly broad strategies for agrarian transformation, diversifying the manufacturing sector and overcoming the structural constraints associated with the legacy of apartheid.

However, we need to formalise an agenda for economic transformation and industrial development by developing a programmatic response through which to tackle the challenges of economic growth and employment creation facing the province. It is increasingly obvious that this cannot be done without engaging the private sector, targeting growth and labour absorptive sectors, developing Industrial Action Plans which emerge out of intensive sector engagements, and building greater co-ordination capacity within government and between government, labour and the private sector’.

The District Growth and Development Summit Agreements (DGS), adopted by the various district municipalities in the Eastern Cape, also

provide a useful guide for AsgiSA Eastern Cape. Despite commitment by various parties who were signatories in the agreements, there is little progress in the implementation of the identified priority programme, in particular around economic growth and development. The parties to the DGSs recognise the need for accelerated and shared growth in their respective municipalities and need to build the capacity of the developmental State to implement successful and sustainable programmes.

The development paradigm that has led to the establishment of AsgiSA EC rests on six pillars, namely:• Agriculture and agro-processing aimed at managing one million livestock units and putting 40 000ha under irrigated cultivation and 346 000ha under dry-land cultivation, focusing on food and industrial crops for agro-processing and bio-fuel production• Water storage and transfer aimed at using 640 million m3 for forestry, agricultural, livestock watering, domestic and industrial use within the Mzimvubu Development Zone (MDZ) and surrounding areas, and transferring 660 million m3 to other water scarce areas of the country (Nelson Mandela Metro, Western Cape, etc)• Hydro-power and alternative energy aimed at generating 1 500 MW of clean, renewable energy• Tourism development linking eco-tourism on the Wild Coast with the adventure hotspots of the Southern Drakensberg through a branded tourism corridor that includes Mandela’s birthplace and the Mandela Museum in Mthatha• Forestry development through new afforestation, the improved management of existing forests, and the development of downstream manufacturing opportunities in the timber industry • Addressing sustainable human settlement patterns in the MDZ through the urban and economic renewal of Mthatha, Port St Johns andotherruraltownssuchasLusikisiki.

It is clear from the above analysis that there is a need to build the capacity of the state to accelerate the implementation of programmes which are able to unlock the potential of the Eastern Cape. In particular, the PDGP identifies the rural hinterlands as the most negatively affected by lack of investment and consequent underdevelopment, unemployment and poverty. The lack of investment and poorly co-ordinated interventions continue to occur despite the enormous comparative advantages the Eastern Cape province boasts of in agriculture, forestry and tourism.

The PDGP recognises that, within the Eastern Cape province, the eastern part of the province is the hardest hit by lack of underdevelopment, poverty and unemployment. To respond to the challenges the region faces, more focused and deliberate interventions are needed.

This AsgiSA EC Forestry Sector Business Plan flows from the Forestry Sector Industrial Action Plan which was formulated following the Forestry Sector Growth and Development Summit held in March 2007.

The plan reflects the culmination of a process by a wide range of stakeholders within the Eastern Cape which have been collaborating over recent years to facilitate commercial forestry development which derives benefits for people who have rights to communal land in areas with forestry potential.

The nature of potential developments and implementation strategies is largely dependent on the context in which they occur. As a way of characterising the current situation for strategic planning purposes, the strengths, weaknesses, opportunities and constraints are described, and key strategic issues are highlighted.

The forestry sector already plays a significant role in the rural economy. Given the current state of the forestry resource and existing processors, and the opportunities associated with these sectors, there is potential for greater developmental impact.

The sector could become a key economic driver in rural areas, both as a result of the establishment of new plantations, and the secondary processing and value-adding industries that would arise from an increase in timber resources.

2.1 New afforestation

A Strategic Environmental Assessment (SEA) of the areas in the Eastern Cape, with the most likely potential for commercial forestry, was undertaken by the Department of Water Affairs and Forestry during 2003.

The study identified nearly 390 000ha as being suitable for commercial forestry. However, given the need to accommodate conservationobjectives, competing land uses such as various forms of agriculture, a target of 100,000ha of new commercial afforestation is more realistic. This target area takes into account areas that should be excluded due to residential and agriculture use, biodiversity value, hydrological limitations, and impact on natural features and landscapes. It is important to note that this target is based on a desktop study that identified suitability – consultation with affected communities regarding the availability of land has not yet taken place.

Map 1 shows the predominant areas with forestry potential in the

Eastern Cape. Due to the proximity of processors, existing plantations and scale of potential, it is expected that the areas of focus will be Mt Ayliff,Pondoland,Ugie/MatiwaneandAmathole,althoughthisdoesnotexclude the possibility for developments in other areas.

Table 1 shows a breakdown of existing and potential forestry areas with current and estimated future yields. It shows that with the maturing and rehabilitation of existing plantations, together with additional yields from new plantations, it may be possible to increase the existing yields from 0.75millionm3/ato3.5millionm3/a.

The South African forestry industry is largely based on private land ownership or long-term business arrangements with formal legal entities, empowered authorities or individuals. The areas with forestry potential in the Eastern Cape are, however, mainly owned by the State and are subject to traditional communal land tenure arrangements where legal entitlement is informal. The nature of business arrangements with communities is, by definition, new to South African forestry companies. Business arrangements between communities and private sector companies (or other third parties) are also new to most communities, although examples of successful projects do exist.

The successful realisation of 100 000ha will depend largely on the willingness of communities to convert to forestry, the willingness of the private sector (forestry companies or others) to formalise business arrangements with communities, the availability of funding (private sector, loans or grants) and the ability to deploy the skills, expertise and experience required for the implementation of a development of this scale.

The implementation of projects will require that preparatory work is done to address land ownership issues, to secure necessary authorisation and afforestation licences, and to obtain the necessary operational and management support for project implementation.

The larger private sector companies are usually strong on technical, managerial and administrative capacity, but relatively weak on community facilitation/engagement capacity. This situation providesthe opportunity for private-public sector collaboration around new afforestation. DWAF is promoting a set of community engagement protocols which will satisfy the range of government officials involved, and which will meet with the developmental approach required.


2 Forestry sector operational plan

Block

Area (ha) Yield (m3/a)

Existing New Total

Current

New TotalLowBase

Increased Yield (to15m3/ha/a)

Mt Ayliff 6539 15000 21539 40000 60000 225000 325000

Pondoland 7408 30000 37408 40000 70000 450000 560000

Ugie/Matiwane 49492 18000 67492 280000 460000 270000 1010000

Amathole 17784 2000 19784 100000 170000 30000 300000

Other 51730 35000 86730 290000 490000 525000 1305000

Total 132953 100000 232953 750000 1250000 1500000 3500000

Table 1 - Afforestation and yield potential

There are strong indications that some development institutions and government departments are willing to finance forestry projects on a project-by-project basis, with certain private sector companies indicating a willingness to do the same. The scale of funding requirements is significant, and needs to be long-term in nature. A rough estimate of funding requirements indicates that around R1.8bn (2007 value ) will be required to cover the costs of:• Consultation and establishment of appropriate structures within communities• Establishmentof100000haandrehabilitationofexistingforestry• Maintenanceandmanagementforaperiodof10yearsuntilthefirst harvesting• Institutional resources to drive, facilitate and coordinate implementation.

The value of commercial forestry as a legitimate land-use and rural economic driver has recently been endorsed by government, political and business leadership at local, provincial and national levels.

A pre-requisite for new afforestation is a water license from the DWAF, which considers the impacts on hydrology and other environmental features. The licensing process has frustrated forestry developers because of the time that it takes. There is also concern that the protracted process of community consultation will delay developments even further. Some stakeholders have raised the concern about the principle of potential upper catchment developments being prejudiced in favour of lower catchment users.

It is estimated that the scale of new afforestation (100 000ha) will entail the establishment of 500-1000 separate community-based projects (at an average size of 100-200ha). This excludes the rehabilitation of existing plantations, for which at least another 80 projects will need to be established.

Currently, pine species, grown on long rotations (>20 years), constitute 90% of the timber grown in the province. With the investments inindustrialwoodprocessingfacilitiesinUgieandKokstad,andwiththeincreasedhardwoodpulpwooddemandatUmkomaas,theopportunityfor large-scale, short rotation hardwood plantations (gum and wattle) is created.

Development of this nature and scale has the potential to impact both

positively and negatively on the environment. Systems will need to be put into place to ensure that the risks of negative impacts are mitigated while positive impacts are maximised.

The key strategic issues arising from the above analysis include:• Streamliningoftheafforestationlicensingprocesses• Useofappropriate“models”forcommercialcommunityforestry• Mobilisationofcommunitiesforafforestation• Matchingofspeciestositesandmarket• Availabilityofskillsandcompetencies• Provisionoffinance• Operationalimplementation• Transformationofthesector• Provincialco-ordination

AsgiSA EC has undertaken to facilitate and support projects that:• Applybestpracticetogenerateoptimalreturnsfrominvestments• Ensuretransparencyofengagementswithanacceptablywiderange of community interested parties and groups where projects are on land held by communal tenure• Maximisethebenefit flowstocommunitieswho’s landissubjectto development• Maximise independence of growers – avoiding premature market commitments• Recognise and mitigate against weaknesses that may exist in communities in respect of financial, technical, managerial and administrative capacity• Involveindustryoperatorsandserviceproviderstoensurecapacity to apply best practice in a way that: - Empowers local people to operate independently as far as possible - Enables the recovery of costs (financially or in kind) by those who have contributed (financially, technically, managerially, administratively, etc.) - Inputs from others are in terms of formal agreements, based on terms that are acceptable to the communities.

The opportunities presented by new afforestation are shown in the diagram below. It should be noted that major benefits can be derived not only from new afforestation but also from the optimisation of existing plantations. This optimisation will be driven by the growing maturity of new plantations and the improved management of existing plantations.


EXISTING OPTIMISATION POTENTIAL66woodprocessors 1.5xmorewood 80%moreplantations8 000 employed 1.8 x more wood 4 000 new direct

100 000

130 000

1180

770

1500

PLANTATIONAREA(ha) ANNUALWOODPROCESSINGVOLUME(000cubicm3/a)

The speed and extent to which new afforestation will take place is largely dependent on the decisions by the various departments in the StreamFlowReductionActivity(SFRA)LicensingAssessmentAdvisoryCommittee(LAAC).

At the present time, applicants are frustrated by the rate at which approvals take place. To an extent, applicants may bear some responsibility for delays due to the submission of incomplete information as support for applications. On the other hand, there is the sense that there may be insufficient capacity within the departments to process

the applications, and, that in some cases applications may be subject to delays as a result of extreme caution or even opposition to forestry expansion which is based on misunderstandings about the sector or specific issues related to the specific application.

In principle, all spheres of government have expressed the intention to support the accelerated development of the forestry sector in the Eastern Cape. If the record of licensing approvals over the past few years is a reflection of the licensing processes, then there is no doubt that a significant streamlining of the processes is required.


Map 1 - Forestry in the Eastern Cape

Existing plantations

Forestry potential:GoodModerate

Objective Influence a reorganisation of licensing processes to facilitate accelerated, but responsible, forestry expansion.

Responsibility

Strategies •Developaclearunderstandingforthereasonsforblockagesanddelays. •Ensurethatcorrectinformationisprovidedtoaddressmisunderstandings. •Ensurethatapplicantsandauthoritiesshareacommonunderstandingofdecision-makingcriteria. •Quantifytheexpectedworkloadforthevariousrole-playersina100000hanew afforestation situation. •Obtaincommitmentsfromtheauthoritiestorestructureaccordingly. •RefinetheSEAtoenable“pre-qualification”approvalsforspecifictargetareas: -UseReserveDeterminationstoestablishcapacityforafforestationintargetcatchmentareas; - Screen potential afforestation in these catchments for biodiversity value; - In areas not considered a priority for conservation, screen out areas of prime agricultural value. - Facilitate a Class Environmental Impact Assessment as a way of speeding up the process and reducing the intensity of work for authorising departments

AsgiSA EC, DWAF

2.1.1 Issue: Streamlining of licensing processes

forestry8 | PLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009

Most of the forestry expansion is likely to take place on state land, to which rural communities have land-use rights under the custodianship of traditional authorities. In any forestry project in these areas, communities will thus be the de facto (if not de jure) owners of the land.

Forestry projects can be established and implemented in different ways, with variations pertaining to ownership, financing, management and market security. This project is based on the principles of development and transformation and thus seeks to maximise community ownership and management, and minimise management and market security risks.

The model below reflects the key components (funding, shareholding, management and marketing) of projects at community level, showing some of the principles and variables.

Table 2 shows four options (of many), based on the variables listed above. In each case, the land is community-owned. In most cases the plantation is owned by the community, which has benefits for the community and risks for the plantation. Most of the projects are likely to require funding from state development funding institutions, which could take the form of grants or low-interest loans. It would be necessary to

ensure technical and management support for all projects. Some of this support could be provided by third-party experts or private sector forestry companies. In all cases, obligations to supply particular markets should have a clause allowing communities to negotiate market-based prices for portions of timber, at least in the ratio of inputs by each party. Although this may initially be seen negatively by those forestry companies that are making financial investments, there is a long-term risk benefit as communities will feel empowered and not constrained.

There are likely to be further possible variations to the above scenarios, depending on the specific attributes of each project.

The establishment of new afforestation projects is subject to long timelines, to enable:• Adequatetechnicaldecision-making• Operationalandbusinessplanning• Securingoffunding• Obtainingafforestationlicenses• Orderinganddeliveryofseedlings(six-monthlead-timesdepending on the season).• Gradualplantingtoresultinappropriateage/classdistribution.

Objective Support and promote models that maximise empowerment at local level. Responsibility

Strategies Developarangeofcommunity/privatesector/publicsectorparticipationmodelswhichcanbeused•in different situations.

Ensure that models increase the likelihood of long-term viability of projects•

Engage with potential investors to understand proposed forestry models.•

Ensure that appropriate models are used and clearly understood•

Develop the legal frameworks through which these models can be formalised.•

AsgiSA EC, DWAF, DTI,DLA

Shareholding Project Finance Management Support Market

Option 1 Community State 3rd party experts Options

Option 2 Community/investors Investors 3rd party experts Options + committed

Option 3 Community State/privatesector Private sector Options + committed

Option 4 Community/privatesector Private sector Private sector Committed + options

Table 2 - Options for forestry on community land

Community Trust Investor

Shareholding

Product market

Dedicated 1st refusal

COMMUNITYPROJECT

IDC

AsgiSA EC

DBSA Funding Management Community

AsgiSA EC

Strategicpartner

Investor

DWAF

AsgiSA EC (where necessary)

2.1.2 Issue: “Models” for commercial community forestry

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forestryPLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009 | 9

Usingdesktop information,aDWAF-initiatedStrategicEnvironmentalAssessment (SEA) identified certain areas as being suitable for commercial afforestation. Experience shows that site quality on the ground varies and it is, therefore, necessary to carry out detailed evaluations before committing resources to forestry establishment on a particular site.

Most of the areas suitable for commercial afforestation are located on land that is de facto owned by communities, which often lack the structure to enter into sustainable long-term commercial land-uses.

Each project will fall within a Traditional Administrative Area, the level at which community representative structures will be established.

Key steps in community engagement protocolsWith forestry on land which is community-owned, there are additional and sometimes challenging steps which need to be taken: • Identifysuitableland.• Consultwith,andobtainsupportfromawiderangeofleadership– forexample,Localgovernment,Traditional,BroadPolitical.• Identifyandverifycommunitieswithlandrights(withsupportfromthe DepartmentofLandAffairs).• Consult with community leadership to create awareness, express interest and provide information.• Consult with community members to create awareness, provide information and obtain support..• Consultfurthertodiscussland-useoptionsandmodeloptions,andto initiate a process of decision-making.• Mobilisecommunity (if it is interested) toestablisha legalentity– Trust or Communal Property Association (CPA).

• Obtainthenecessaryauthorisationforundertakinganafforestation project.• Establishalegalentity.• Formalisetherelationshipbetweenthecommunityandcompanyor third-party support provider.• Build capacity to strengthen community capability to engage with private companies or third parties.• Providesupportbyestablishingcommunitymanagementstructures and procedures for decision-making.

It is critical to engage, at a fundamental level, with communities to assist them to establish legal entities. It is also imperative to consult about proposed developments in ways that facilitate long-term decisions on land availability.

This process involves the official sanction of government departments inrelevantspheres.TheseincludeDistrictandLocalMunicipalpoliticalleadership, traditional leadership, the Department of Agriculture (for land-usechanges),theDepartmentofLandAffairs(fortheverificationof community rights and overseeing resolutions), the Department of Water Affairs and Forestry (for licenses and overseeing protocols), and the Department of Environmental Affairs (for environmental decisions).

It should be noted that with a target of 100 000ha, at an average of 100-200ha per community, this will require some 500-1 000 community engagement processes.

It may be necessary to deploy neutral government officials or agents to initiate the processes of community mobilisation.

Objective Mobilise communities using accepted protocols in prioritised target areas. Responsibility

Strategies Useoutputofhydrological,biodiversityandagriculturalscreeningprocesstorefinetargetareas•

Consultwithstakeholders(privatesector/municipalities)toagreeontargetareas.•

Quantifytheextent,quantitiesandlocationofthetargetedforestareas.•

Formulate a programme for rapid engagement and mobilisation of communities.•

Quantifyresourcerequirementsandrequirementsforofficialsinvolvedingrantingthevarious•authorities.

AsgiSA EC, DWAF, Municipalities,DLA

Co-ordinate the formulation of business plans, operational plans and feasibility studies which can be •used to facilitate discussions with communities.

Consultwithdevelopers(privatesector/others)tounderstandwhichdevelopmentmodelsarebest•suited for each project.

Agree with developers on appropriate steps to be taken prior to their involvement.•

AsgiSA EC, DWAF, Municipalities,DLA

Appoint implementing agents based on proposals from suitably qualified and experienced service •providers.

AsgiSA EC

2.1.3 Issue: Mobilisation of communities for afforestation


Ninety percent of the species grown in the Eastern Cape (pine) are specifically for softwood sawtimber. Rotation lengths range between 25 and 30 years. Eighty percent of this timber is processed by six large sawmills. The recent construction of a chipboard plant at Ugie, andplans for further industrial wood processing at Kokstad have created the opportunity to optimise the use of trees harvested, and provide alternatives for short rotation timber.

Most of the areas with new afforestation potential are located on land that is subject to communal land tenure. In order to shorten the time-frames within which communities would derive benefits from forestry, the establishment of short-rotation crops would be the preferred option from the grower perspective, to be balanced against the market demand.

There is the opportunity to convert some of the wattle jungles to properly managed, short-rotation wattle plantations.

All these factors combine to justify a mix of long and short-rotation species – softwoods (pine) and hardwoods (a mixture of wattle and gum species) as the preferred forestry crops.

The actual selection of species will depend on biophysical and other environmental constraints, as well as proximity to processing plants, which may have preference for particular species.

The likely mix of species is:• 55%high-yieldingEucalyptusseedlingorclonallyderivedspeciesor hybrids• 10%Acaciaspecies• 35%Pine(predominantlyPinuspatulaandPinuselliottii)

Objective Ensure that species are matched to site conditions and market opportunities. Responsibility

Strategies Quantifythelong-termdemandandsupplyscenariosforspeciesaroundthemajorprocessors.•

At a provincial level and in consultation with the private sector, advise on broad species choices in •specific areas.

Develop guidelines through which species choices can be made for the range of site conditions in •each of the target areas.

AsgiSA EC, DWAF

Strategies Determine the existing nursery production capability for the range of species within range of the •target areas.

Identify the need for new and expanded nursery facilities.•

Facilitate the investment, construction and operation of new and expanded nursery facilities.•

AsgiSA EC

2.1.4 Issue: Matching of species to sites and market


The real delivery in this project will be the afforestation of 100 000 ha. The actual work required is significant and will be carried out in widely distributed locations, mainly in the former Transkei areas.

The initial steps of community engagement are critical for establishing projects which are sustainable in the long-term. Direct approaches to communities by developers usually raise suspicion from leaders and officials. Initial engagement with communities by neutral parties who follow accepted protocols may help to speed up the process of community mobilisation. It is envisaged that implementing agents will be appointed for this purpose. Interfacing with interested developers will be facilitated when appropriate.

Experience shows that where best silvicultural practice is applied, tree growth has the greatest chance of reaching the full potential of a site, thus maximising its economic potential. This is a critical factor when the

intention is to build a strategic resource of raw material and to generate meaningful benefits for communities.

It is, therefore, important that silvicultural operations are run according to best practice standards. This means that implementation will need to be closely supervised and managed by people with the required skills and competencies. In the Eastern Cape such skills and competencies are scarce, so creative measures will need to be taken through the combined efforts of private sector companies, DWAF, independent forestry professionals and adequately resourced implementing agents.

To boost the availability of such skills and competencies, it is envisaged that suitably qualified and experienced implementing agents be appointed to carry out the full range of silviculture and management activities, especially in areas where the skills and competencies are not available.

Objective Facilitate the provision of technical, managerial and administrative support for identified projects Responsibility

Strategies Assess project requirements•

Assist communities to identify and select third party support for project requirements. These could •include:

- Identify areas suitable for commercial forestry.

- Carry out technical assessments of forestry suitability.

- Identify and verify the administrative areas of communities with beneficial rights to the land.

- Engage with leadership (traditional, government and political) for initial support.

- Facilitate support from government and other stakeholder leadership.

- Prepare feasibility studies, operational plans and business plans, and secure finance.

- Secure afforestation licences.

- Mobilise communities to understand the forestry opportunities in relation to alternatives.

- Establish suitable community-based legal entities.

- Facilitate commercial deals between communities and interested private sector operators.

- Prepare trustees to clearly understand and accept roles and responsibilities in relation to communities and business.

- Ensure that the community business entity understands all management, administration, financial and operational aspects.

- Facilitate formal, mutually beneficial service level agreements with selected third parties

AsgiSA EC, DWAF

2.1.5 Issue: Operational implementation


plantations

A critical component of a forest resource development strategy is bringing the existing plantations to their full yield potential. As indicated previously, large commercial state plantations are now under the control and management of large private sector forestry companies. These companies have implemented ambitious rehabilitation strategies to bring the plantations to their full potential.

The plantations under DWAF control and management are of particular interest in view of the potential for realising greater benefits for communities which have historic rights to the land on which they have been established. These plantations represent 28 305ha (15 888ha of long rotation softwood plantations, and 12 417ha of short rotation hardwood plantations) for use by adjacent communities.

The intention of DWAF is to transfer ownership and control of these plantations to those communities with historic rights to the land on which they are located. It has been decided to rehabilitate the plantations prior to hand-over so that they represent assets rather than liabilities.

This plan assumes that, since many of the new afforestation opportunities are adjacent to existing plantations, it would be beneficial for project viability to transfer the DWAF plantations for integration in community projects. Notwithstanding the current condition of these plantations, the integration with new plantations will have the benefit of shortening the cash-flow deficit periods, exposure to hands-on management experience, and ultimately, improvement of the plantations.

Objective Transfer ownership, control and management of DWAF plantations to properly supported communities with beneficiary land rights by 2010.

Responsibiity

Strategies Determine and verify the communities which are beneficiaries to the plantation land.•

Formulate economic models to indicate the financial implications of plantation management.•

Consult with relevant community representatives to establish their interests in the plantation as a •community resource (using the accepted community engagement protocols).

Determine the skills, expertise and capacity requirements for ongoing management, and facilitate •the transfer of ownership.

Determine the legislative, policy and procedural requirements for transfer of state assets to such •communities

Provide support to DWAF to implement such transfers•

AsgiSA EC, DWAF

Objective Support the rehabilitation of the DWAF plantations by 2012.

Strategies Determine extent of DWAF’s resources for rehabilitation;•

Where gaps exist, develop operational plans for rehabilitation of plantation.•

Secure the necessary funding.•

Facilitate the deployment of appropriate skills, expertise and resources.•

Put monitoring and support mechanisms into place.•

AsgiSA EC, DWAF

2.1.6 Issue: Transfer of existing plantations to communities


Wattles were introduced into the Eastern Cape in the mid-1960ss by the wattle tanning industry in what is now Kwa-Zulu Natal. Farmers were provided with seedlings, encouraged to establish wattle stands on their land, and promised that tanning extract facilities would be established in the province. This promise did not materialise and because there was no value for wattle timber during that time, many of the plantations were left unmanaged and developed into over-aged “jungle” stands.

In recent years, wattle timber has become valuable. It is now even viable to harvest relatively poor-quality stands for pulpmills and chipping plants asfarawayasUmkomaasandRichard’sBayinKwa-ZuluNatal.

Unfortunately the species of wattle established in these jungles areextremely well-adapted to the conditions and propagate wildly with seeds that remain viable for decades. As a result, wattle is considered an environmental threat and the authorities are reluctant to support efforts

which would lead to the expansion or even improved management of wattle plantations.

Notwithstanding this situation, it should be recognised that wattle can be managed in ways that minimise its environmental threat. In fact, improving the management of existing wattle areas is the most effective way of controlling this threat. There is thus the opportunity to harvest the existing wattle jungles and convert them into properly managed stands, and to plant new stands in areas which are economically viable and where threats to the environment are minimal or relatively low.

Of South Africa’s plantation timber, wattle meets the highest specifications for pulpwood because it produces dense fibres. It is also highly sought after for charcoal manufacture, presenting opportunities for local down-stream processing.

Objective Convert selected jungle wattles and plant new areas to generate sufficient scale for a viable wood processing plant in the province.

Responsibility

Strategies Quantifyandmaptheexistingwattlestandsintheprovince.•

Produce a plan to exclude sensitive areas and expand where appropriate.•

Linkwattlesintotherehabilitationandnewafforestationprogrammes.•

Consult with and obtain authorisation from interested and affected parties as well as environmental •authorities.

Facilitate the conversion of jungle wattle to properly managed plantations where appropriate •

AsgiSA EC

Strategies Facilitate the manufacture and marketing of charcoal in areas where the scale of wattle jungle and •infrastructure allows.

AsgiSA EC, DWAF, DTI, DFIs

2.1.7 Issue: Conversion of existing wattle “jungles”

wood processing14 | PLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009

The commercial Eastern Cape plantations were established mainly for theproductionofsoftwoodsawtimberwith90%ofthewoodgrowninthe province being processed as sawtimber. Small volumes are used to produce veneer, chipboard and treated poles and insignificant volumes are converted into secondary products such as furniture, doors and window-frames.

Most of the wood processing facilities are operating at around half of their design capacity, mainly due to a lack of log (roundwood) supplies. The plantations managed by the large sawmilling companies are being rehabilitated and will over time realise their yield potentials, thus improving capacity utilisation. The supply of wood from the plantations on which small sawmillers rely is declining, threatening future livelihoods. The wide and scattered distribution of current and potential plantations, together with a lack of infrastructure such as rail, roads and ports, reduce the options for large-scale processing such as new pulpmills.

The potential for better utilisation of current capacity and the development of new processing capacity will develop if wood supplies increase as a result of rehabilitation and new afforestation.

There are about 45 small sawmillers in the province, many of whom are operating sub-economic, unsafe business, but which are important in support of livelihoods in some areas. Most of these small sawmillers are under threat from dwindling wood supplies. The diversification of processing creates the opportunity for the downstream production of products such as furniture.

• Integrationofsmallsawmillersintolargesawmillvaluechains• Addingvaluetoprimaryproducts• Transformationofthesector

2.2.1 Issue: Support for small sawmillers

The livelihoods of many, if not most,small sawmillers are at risk due to the declining yields of smaller plantations and the tighter resource control of large plantations.

The declining yields of the smaller plantations (DWAF Category B) are a result of fire-damage and of harvesting without replanting at the rate required. Even if the plantations were to be rehabilitated and replanted, there is likely to be a five to 10-year period during where there are insufficient mature trees for harvesting, resulting in limited raw materials being available for sawmilling operations.

Prior to the restructuring of the large plantations (DWAF Category A), small sawmillers played an integral role in their harvesting activities. Since the control and management of these plantations was transferred through long-term lease arrangements to large sawmilling companies, the conditions, in terms of which quotas were allocated to small sawmillers, may have changed, especially where plantations have been affected by fires and delayed replanting.

Small sawmillers vary in scale, safety, technology, flexibility and production standards. In some, standards are poor and do not meet with commercial market demand, while others are seeking to compete in the commercial market. The allocation of harvesting quotas has never differentiated between production standards, resulting in the perpetuation of unsafe, wasteful and sub-economic production.

Government accepts responsibility to take a developmental approach to the future of small sawmillers, and the support that may be provided will vary over time and depend on the issues faced.

2.2 Wood processing

Objective Provide support to small sawmillers which aim to improve their business sustainability. Responsibility

Strategies Engage with small sawmillers to identify issues which are affecting their business sustainability•

Quantifytheyieldofplantationsintermsofsustainabilityofsupplytosmallsawmillers•

Facilitate the resolution of issues that are affecting small sawmillers, considering alternatives where •limited sustainability of timber supply is the issue

AsgiSA EC, DWAF, DTI, DFIs

wood processing

2.2.2 Issue: Adding value to primary products

Except for the Amathole District, wood products are mostly sold as primary products in the form of logs (or board). In the Amathole District, there are a number of secondary wood processors that manufacture furniture, pallets and various wood-based building materials. In the other districts, such beneficiation is limited.

With the introduction of more diverse primary wood products such as chipboard, medium-density fibre-board and veneer, the opportunity to make secondary products such as furniture emerges.

It may be possible, in collaboration with the private sector, to support the establishment of large furniture manufacturing operations in the Mthatha and Mt Ayliff areas.


Objective Facilitate the establishment of furniture manufacturing operations. Responsibility

Strategies Develop an understanding of the economics of furniture manufacture and marketing in South Africa.•

Consult with key furniture industry private sector operators regarding the establishment of manufactur-•ing operations.

Facilitate and support investments and deals.•

AsgiSA EC, DTI, DFIs

infrastructure16 | PLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009

The range of skills and competency requirements include operational skills (such as basic silviculture), supervisory and management skills, technical forestry expertise, and proven experience in community engagement and mobilisation.

As with many sectors within the growing South African economy, the existing capacity is outweighed by the actual operational demand. The Eastern Cape forestry sector is no exception. Forestry companies are struggling to match capacity requirements with available expertise, and at least one company is sourcing experienced forestry management from outside of South Africa’s boundaries.

The new afforestation programme presents a significant challenge in terms of its scale (100 000ha will almost double the existing plantation area), its distribution throughout the former Transkei areas, and the estimated number of units (up to one thousand units of 100ha each).

Creative and intensive efforts are required to address the issue of skills and expertise capacity. It is known that many qualified forestry practitioners are working outside of the forestry sector, and could be attracted back under the right conditions. It is also known that within institutions such as DWAF, there are qualified forestry practitioners who could possibly be redeployed from administrative functions to assist with the process.

In addition, the relatively temporary nature of some of the work would allow for independent service providers to be contracted for specific projects. Furthermore, as part of a national and provincial skills development and training effort, attention could be paid to existing training facilities to enable them to produce greater numbers of appropriately qualified people. Finally, creative methods could be used to deploy and enhance the capabilities of community members in the affected areas.

Most of the small sawmills are under black ownership, and some of the equityoflargeforestrysectorcompaniesisheldbyblackpeople.However,the control and management of large companies is still mainly white.

DWAF has recently launched the Forestry Sector BBBEE Charter.

The Charter aims to ensure an inclusive and equitable forestry sector:• inwhichblackwomenandmenfullyparticipate

• that is characterised by the use of resources, sustainable growth, international competitiveness and profitability for all participants• whichcontributesmeaningfullytopovertyalleviation,jobcreation,rural development and economic value-adding activities in the country.

Although DWAF will hold responsibility for ensuring compliance, it will be important for those involved in forestry development to be aware of the conditions and to assist the sector to move towards its goals.

2.3 General

Objective Recruit and deploy the appropriate mix of skills, expertise and experience to ensure operational success. Responsibility

Strategies

Quantifytheskillsandcompetencyrequirements.•

Develop a database of existing capacity.•

Formulate strategies through which the appropriate mix of capacity can be deployed.•

AsgiSA EC

Identify training and development requirements.•

Undertakeanassessmentofprovincialandnationaltraininginstitutions.•

Influence the strategies to accommodate forest sector requirements. •

AsgiSA EC, DWAF, DTI, DoL

Facilitate collaboration between projects, programmes and management units to optimise economy of •scale deployment.

AsgiSA EC

Objective Support the achievement of BBBEE Charter goals. Responsibility

Strategies Support the understanding of the Charter amongst sector players and entrants.•

Make compliance with the Charter a condition of support for developments within the sector.•

AsgiSA EC, DWAF

2.3.1 Issue: Availability of skills and competencies

2.3.2 Issue: Transformation of the sector

infrastructurePLAN FOR EC FORESTRY SECTOR DEVELOPMENT MARCH 2009 | 17

For new afforestation of 100 000ha and the rehabilitation of existing DWAF plantations, the funding requirements over a period of 10 years will amount to R1.8 billion (MOD, 2007 ). Of this amount, R1.6 billion will be required for operational purposes and R0.2 billion for institutional purposes (such as community mobilisation, the provision of managerial, technical and operational support, and to ensure proper institutional functioning).

In principle, the objective would be to develop a significant timber resource while maximising ownership, control and management at community level.

It is envisaged that a financial conduit such as AsgiSA EC would source and distribute funding in line with the above principles. Funding could be sourced from the private sector, Treasury, the Industrial Development Corporation and the World Bank in the form of loans.

The finance would be disbursed on the basis of funding proposals, which must be in line with the forestry development objectives, obtain the appropriate licensing and authorities, and demonstrate deployment of the required skills and competencies.

The basis of community empowerment is that communities assume responsibility for the implementation and management of commercial activities. There are examples where this has worked, although not without initial managerial, technical and administrative support. It is, therefore, envisaged that each community entity would eventually manage its own financial transactions and administration.

At the same time, recognising that there are likely to be shortfalls in the skills and competencies required, management will initially be done with the support and resources of third parties on a co-operative or collaborative basis.

2.3.4 Issue: Infrastructure weaknesses

Development projects in the former Transkei areas inevitably suffer from infrastructure deficiencies. Although the existing forestry areas are reasonably serviced by roads and sometimes electricity, areas of new afforestation are unlikely to have this infrastructure, a situation which is not unusual with new forestry projects. Close collaboration with the authorities will therefore be required to ensure that the necessary infrastructure is provided during the course of the project.

Objective Secure the equivalent of R1.8 billion for disbursement over the next 10 years. Responsibility

Strategies Develop the required planning and budgeting proposals.•

Consult with stakeholders to assess possible funding sources.•

AsgiSA EC, DFIs

Develop specific funding proposals for various funding sources.•

Secure the funding.•

AsgiSA EC

Establish the most appropriate funding structures.•

Put the appropriate disbursement and administration systems and procedures into place.•

AsgiSA EC, DFIs

Objective Ensure that infrastructure is phased in according to project requirements. Responsibility

Strategies Determine phased infrastructure requirements for each project.•

Communicate requirements effectively at municipal level.•

Facilitate engagement between projects and municipalities to ensure that realistic infrastructure •expectations are met.

AsgiSA EC, DWAF, municipalities

2.3.3 Issue: Provision of finance


The scale of operations, as outlined, is significant. To put it into context, anareaof100000harepresents75%ofthecurrentextentofplantationsin the Eastern Cape. A particular challenge is that within the target area, the distribution of areas with forestry potential is scattered across many administrative and municipal boundaries.

There are large numbers of stakeholders in the province which have both interests and roles in developing the sector. It is necessary for a provincial level institution to achieve economies of scale where possible, and to avoid duplication of activities.

It will be necessary to establish a management structure which is capable of planning, leading, organising and monitoring the required operational activities. This should be done at appropriate central and provincial levels.

A high-level provincial institution such as AsgiSA EC, with significant financial resources and forestry development as its key area of focus, is well positioned to act as the driver of forestry sector development – playing a role only where there are institutional or resource gaps in the overall effort.

3.1 Direction, policy and governance

As a public entity with the Eastern Cape Government as its shareholder, AsgiSA EC will be governed according to the legislative framework for state-owned public entities.

The appointed Board of Directors will decide on the strategic direction of AsgiSA EC and will implement policies to ensure that governance requirements are addressed, and that it is able to meet its strategic

goals. It will be necessary to establish a management structure that is able to execute the Board’s forestry sector strategies.

It will be prudent for the institution to be guided by the stakeholders which initiated the Forestry Development Initiative. This is a provincial forum that was established to facilitate collaboration between various institutional stakeholders, and to drive forestry in a co-ordinated manner.

The principles which guide AsgiSA EC are reflected below:

AsgiSA Eastern Cape seeks to facilitate and support projects that:- Apply best practice to generate optimal returns from investments- Ensure transparency of engagements with an acceptably wide range of community interested parties and groups where projects are on land held by communal tenure- Maximise the benefit flows to communities whose land is subject to development- Maximise independence of growers – avoiding premature market commitments- Recognise and mitigate against weaknesses that may exist in communities in respect of financial, technical, managerial and administrative capacity- Involve industry operators and service providers to ensure capacity to apply best practice in a way that: - Empowers local people to operate independently as far as possible - Enables the recovery of costs (financially or in kind) by those who have contributed (financially, technically, managerially, administratively, etc.) - Inputs from others are in terms of formal agreements, based on terms that are acceptable to the communities.

3 Implementation plan


3.2 Organisational principles

It should be a principle of AsgiSA EC to recognise the roles and responsibilities of the various stakeholders, and to involve itself where there are gaps in capacity or bottlenecks in interventions.

A key principle of AsgiSA EC will be to secure resources and support from the private sector and other third parties, within a framework that balancescommercial/technicalneedswithadevelopmentalapproach.

An important facet of the work will be interfacing with a wide range of stakeholders, including community leaders, provincial and national government departments and local government officials. In this regard, staff and service providers need to be constructive in their approach and seek to complement initiatives rather than dominate them.

Accordingly, the management structures are expected to be lean, and to allow for the flexible deployment of the required skills and competencies.

3.3 Institutional roles and responsibilities

The ambitious goals and objectives of AsgiSA EC can only be achieved through the successful implementation of national and provincial government programmes. AsgiSA EC’s role is to initiate projects, remove blockages and provide support for those projects that are likely to be high impact and catalytic, and which are aimed at accelerating the economic growth and development of the province.

Apart from the actual implementation of government programmes and projects, various departments and institutions are involved in supporting AsgiSA EC and would have specific roles and responsibilities during implementation.

For the forestry initiative, key role playing institutions and departments are:

National Government Department of Water Affairs and Forestry (DWAF) DepartmentofLandAffairs(DLA) Department of Trade and Industry (DTI) Provincial Government Department of Economic Development and Environmental Affairs (DEDEA)

District Municipalities ORTambo,AlfredNzo,ChrisHani,Ukhahlamba,Amathole

Development Finance Institutions Industrial Development Corporation (IDC) Eastern Cape Development Corporation (ECDC) Municipal Development Agencies

It is envisaged that the involvement of the above institutions will be as shown in Table 3.

3.4 Organisational structure

A full-time Forestry Manager will be appointed, initially with a direct reporting line to the Chief Executive Officer, and later through an Operational Director. This position will be supported by financial and administrative staff. It is envisaged that the Forestry Manager will appoint specialist forestry support implementation teams, as and when required.

Institution Key Input

DWAF •Addressinglicensingissuesandprocedures •Communityfacilitation •Plantationassessment •Provisionoffundingsupport •Operationalplanning •Monitoringmodelimplementation •Strategicfacilitation •Promotionofcharter

DTI •Provisionoffundingsupport •Co-ordinationofgovernmentresources

DLA •Addressingoflandtenurematters

Municipalities •Communityleadership •Strategicfacilitation •Institutionalengagement

Traditional Leadership

•Communityleadership

DFIs •Investmentfacilitation •Provisionoffunding

Table 3 - Institutional roles and responsibilities


3.5 Key personnel

3.5.1 Forestry Director

The Forestry Manager will have overall responsibility for the functioning of the Forestry Division.

The incumbent will have a track record of senior management in the private sector (preferably within a forestry company), credibility with political government and the private sector in the Eastern Cape, and a demonstrated ability to operate in ways that are appropriate for a developmental organisation.

The position requires a dynamic person with strong project management experience who is able to engage across a range of cultural differences, and who is comfortable with a senior management role within an environment where most of the operational activities are outsourced or carried out by other institutions.

Responsibilities will include the facilitation of new afforestation and forestry management (including wattle jungles); and the development and improvement of downstream processes, with particular attention to economic transformation and empowerment within the sector.

The incumbent will be supported by forestry specialists with strategic and technical expertise. Much of the project implementation will be managed by implementation agents.

Financial management, administration, human resource management and other key corporate issues will be addressed by general administrative staff.

3.5.2 Forestry sector strategic and technical support

Due to the complexity of the forestry sector, the wide variety of operational requirements, the unique requirements of the Eastern Cape and the geographic range covered by the target area, it may be necessary for the Forestry Manager to be supported from time to time by experts in various aspects pertaining to the responsibilities of the position.

It is envisaged that there will be a database of accredited service providers from which to draw such expertise.

3.5.3 Implementing Agents

Due to the operational requirements of mobility and independent functioning and in line with the principle of a lean organisation, AsgiSA EC will outsource operations to implementing agents with proven experience in forestry development within a community context.

In selecting implementing agents, AsgiSA EC will need to establish a balance between operational scale, geographic spread, technical and managerial capability, and the equitable spread of opportunity.

It would make sense for implementing agents to be responsible for all activities within a predetermined geographic boundary (for example, establishing community entities, assisting with planting permit applications, conducting operational and business planning, facilitating with operational startup).

It is envisaged that the implementing agents will have strong technical and managerial capability, sound knowledge of land tenure and local customs, a thorough understanding of local and traditional government,

and a proven ability to engage with communities around commercial enterprises.

Implementing agents should be mobile, willing and able to manage and operate community-based projects in rural areas, and have the financial capacity to carry out large projects with delayed payments. They should have suitable qualifications and proven experience in:• Operationalforestryplantationmanagement• Forestryplanning,yieldpredictionandeconomicmodeling• Siteevaluation,soilsurveyingandmapping• Businessmanagement• Securingprojectfinance• Establishinglinkagesbetweenplantationsandthemarkets• Communitymobilisationandfacilitation• Theformationofcommunity-basedlegalentities,usingCommunal Property Association principles• Training(managementandoperations,andskillstransfer).

3.6 Funding requirements

Funding for the development of the forestry sector is required for:• Institutionalmanagementandtechnical/strategicsupport• Community engagement and facilitation, forestry operational and financial planning, and licensing and operational support• Operational implementation of new afforestation, and forestry rehabilitation.

Based on the assumption that the scale of new afforestation will be 100 000ha and rehabilitation of 20 000ha (over a period of 10 years), the total cost over the period is estimated at R1.8 billion (MOD 2008).

Table 4 itemises these estimates, showing the total cost without differentiation between the possible sources of funding (state, private sector, loans, etc)

Detailed budgets will be formulated in due course.

R/ha R mil

Institution 500 60

Community support 1000 120

Operations 13500 1620

1800

Table 4 – Estimated Funding Requirements (over 10 years)

eastern cape


Although very small in global terms, the South African forestry sector fulfills an important domestic purpose. The paper and packaging companies, Mondi and Sappi, have become dominant in international nichemarkets.TheEasternCape forestryplantations represent10%of South Africa’s total, and there is the realistic potential to grow this to 17.5%withexpansionby100000ha.Theeconomicvalueofthesectorcould grow significantly with rehabilitation of the existing plantations, coming on stream of the new industrial wood processing facilities and beneficiation of the primary products.

In recent months, there has been interest expressed in expansion of the forestry sector by the private companies and all spheres of local government. It is anticipated that with appropriate engagement processes, communities with suitable forestry land will show interest in participation in the sector.

There are many issues that need to be addressed in order to realise such ambitious rehabilitation, new afforestation and beneficiation goals. The document has listed the key issues and provided possible strategies that could be resolve them.

It is clear that there are many stakeholders, and that this realisation will require galvanisation of collective capacities and resources.

The establishment of AsgiSA EC presents an opportunity through which the provincial effort could be resourced, co-ordinated, facilitated and supported. The organisational requirements are briefly described.

A key success factor for the development of the sector will be the establishment of common goals and understandings, the recognition of roles and responsibilities of the various stakeholders, and the willingness to transcend narrow interests.

AsgiSA EC Accelerated Shared Growth Initiative of South Africa EasternCape(Pty)Ltd.

BBBEE Broad Based Black Economic Empowerment

CPA Communal Property Association

DWAF National Department of Water Affairs and Forestry

EC Eastern Cape

FSA Forestry South Africa

GDP Gross Domestic Product

HDI HistoricallyDisadvantagedIndividual

IDC Industrial Development Corporation

KZN KwaZulu-Natal

LHA LouisHeylAssociates

MOD Money of the Day

NECF North East Cape Forests

PFMA Public Finance Management Act

SEA Strategic Environmental Assessment

SME Small and medium enterprises

4 Conclusion 5 Acronyms

eastern cape


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