eastern and southern africa region forest investment forum · southern africa region forest...

EASTERN AND

SOUTHERN AFRICA

REGION FOREST

INVESTMENT FORUM

Investment Opportunities:

Constraints to Investment

and Potential Solutions

Pietermaritzburg, South Africa

June 13–16, 2006

The World BankWashington, D.C.

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Material in this book can be copied and quoted freely provided acknowledgement is given to the authors.

Publication prepared by:PROFOR at the World Bank1818 H Street NWWashington DC, 20433United StatesE-mail: [email protected]: http://www.profor.info

Published November 2006. PROFOR book number 6.Printed on 80% post consumer fiber paper.Cover photos by Leila Mead. Images are from an excursion during the Forum to see community-companypartnerships between Zulu rural communities and SAPPI (South African Pulp and Paper Industry).

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Foreword v

Executive Summary vii

Acronyms and Abbreviations xi

Chapter 1. Summary of Forum DiscussionsOpening Session 1

Keynote Addresses 3

Global Trends in the Forest Industry 3Building Better Corporate-Smallholder Partnerships: Sharing Lessons

across Southern African Countries 4Incorporating Social and Environmental Safeguards into the Lending

Policies of Financial Institutions 5

Panel 1: Financing Sustainable Forest Management: Investment Opportunities and Constraints 6

Panel 2: Financing Forest Industries and Development: Investment Opportunities and Constraints 8

Panel 3: Social and Environmental Safeguard Poliicies: Key Issues 11

Working Groups 13

Financing Sustainable Forest Management 13Constraints to Private Sector Investment in Forestry Industry 14

Closing Panel 15

Contentsiii

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Chapter 2. Regional Investment Opportunities, Constraints to Investment, and Potential Solutions 17

Forest Resource Investment Opportunities 17

South Africa 17Kenya 17Mozambique 18Uganda 18Zambia 18Zimbabwe 18Malawi 19Tanzania 19Madagascar 19Swaziland 19Investment Opportunities in Forest-Based Industries 20The Pulp and Paper Industry 20Building and Transmission Poles 21Lumber and Wood-Based Panels 21Furniture and Joinery 21Bamboo-Based Forest Industries 22Constraints to Investment and Possible Solutions 22

Access to Land 22

Access to State Forest Lands 23Access to Large-Scale Privately Owned and Agribusiness Lands 23Access to Private Company-Owned Forest Lands 23

Security of Raw Material Supply: Concession Policies 24

Accessing Capital 24

Collateral 25Lack of Commercial Bank “In-House” Forest Expertise 25Improving Financial Returns from Plantation Investments 26Subsidy and Incentive Schemes 26Payments for Forest-Related Environmental Services 26Timber Investment Management Organizations 26Access to Insurance 27

Raising Technical Efficiency and Business Management Skills 27

Subcontracting of Forest Operations 28

Strengthening Grower Associations 28

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EASTERN AND SOUTHERN AFRICA REGION FOREST INVESTMENT FORUM

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Environmental Concerns 28

Social and Environmental Safeguard Policies 29

Illegal Logging 30

Infrastructure 31

Reducing Transaction Costs 31

Possibilities for Financing Small Scale Forest-Based Enterprises (SMFEs) in Mozambique 31

The Forests Dialogue 32

Next Steps: Possibilities for Follow-Up Investment 34

Appendix A. Forum Agenda 35

Appendix B. Forum Participants Contacts List 39

Appendix C. Forum Background Reading Material 53

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CHAPTER TITLE: CHAPTER SUBTITLE

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The first chapter of this report is an objectivesummary of the Forum discussions pre-pared on the basis of presentations delivered

and discussions held at the workshop.The second chapter provides further details of

emerging investment opportunities in the regionand possible approaches to overcoming constraintsto community participation and private sectorinvestment. The proposed strategies for overcomingconstraints to investments put forward are based ona synthesis developed by the Forum Secretariatwhich combines (a) suggestions made by partici-

pants during the course of the Forum panel; (b) asynthesis of written submissions from many policyresearchers who contributed background materials;and (c) comments by representatives of industrialcompanies, governments, local communities, con-servation agencies, and financial institutions con-sulted in the course of developing the Forum agen-da. For further details, please see Appendix 2 of thisreport, which lists the Forum background readingmaterial, available on the companion CD to thisreport.

Forewordvii

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This Eastern and Southern Africa InvestmentForum was a continuation of a series ofinvestment forums supported by the World

Bank and the International Finance Corporation(IFC), along with the Bank’s partnership pro-

grams with the Program on Forests (PROFOR), theWorld Bank/WWF Alliance, Forest Trends, and theInternational Tropical Timber Organization (ITTO).Two earlier Forums in this series were hosted by theWorld Bank and IFC in Washington, D.C., inOctober 2003 and in Nairobi, Kenya, in April 2005.Athird International Investment Forum was hosted byITTO, Forest Trends, and CONAFOR in Cancún,Mexico, in May 2006. These investment forums areintended to create opportunities for representativesof governments, local communities, forest industrialcompanies, conservation agencies, financial institu-tions, and private investors to identify emerging for-est and forest industry investment opportunities,constraints to such investment, and measures toovercome identified constraints. The purpose is toagree on actions to be taken to create an enablingenvironment for community involvement and forsocially, environmentally, and economically sustain-able private sector investment.

This Eastern and Southern Africa Forum wascohosted by South Africa’s Ministry of Water Affairsand Forests (DWAF), Forestry South Africa (a forestindustry association that supports corporate com-munity partnerships), and the International Tropical

Timber Organization (ITTO). The Forum focusedon Kenya, Madagascar, Malawi, Mozambique, SouthAfrica, Swaziland, Tanzania, Uganda, Zambia, andZimbabwe, drawing 120 delegates primarily from theregion. Participants represented a reasonably bal-anced spectrum of government, local community,private forest industry, conservation agency, andfinancial institution interests.

Over the course of the three-day Forum, discus-sions focused on identifying (a) the most promisingforest and forest industry investment opportunitiesin the region; (b) how forest-based partnershipsbetween communities, smallholders and compa-nies, and state forest administrations can help toalleviate poverty and create sustainable livelihoods;and (c) the actions that governments, financialinstitutions, and donor agencies should be taking toovercome constraints to private sector engagementand create an enabling investment environment.

Throughout the region, there is potential forinvestment in both large- and small-scale planta-tion-based forest industries. Rising rural popula-tion pressure on indigenous forests suggests thatfuture forest industry development will depend to asignificant degree on planted forests. The key issueswill be the following: (a) how to develop sociallyand financially equitable partnership arrangementsbetween forest industrial companies, local commu-nities, and smallholders who could supply anincreasing proportion of the industrial roundwood

Executive Summaryix

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requirements of the region; (b) the ability of gov-ernments to create an enabling political and eco-nomic environment for private sector investment;and (c) the willingness of both domestic and over-seas forest industrial companies and financial insti-tutions to invest in the region.

The region has a comparative advantage fordeveloping short rotation fast-growing plantationsand on farm trees. In all 10 countries, there are rap-idly expanding domestic markets for fuelwood,building poles, and fruits and for construction-grade timber, paper and paper board, and wood-based panel products. This Forum focused in par-ticular on the potential of fast-growing tree speciesto supply industrial roundwood needs in ways thatwill benefit low-income communities. Studies inSouth Africa suggest that possibilities for communi-ties to engage in tree farming will be enhanced ifopportunities can be created for them to participatein downstream processing.

The Forum identified specific opportunities forinvestments that would support the expansion,modernization, and improved efficiency and prof-itability of both large- and small-scale timber,wood-based panel, and pulp and paper industries. Itgave special emphasis to the potential of small andmedium forest-based enterprises (SMFEs) to createoff-farm employment opportunities and to con-tribute to poverty alleviation and sustainable liveli-hoods. It noted that Mozambique, South Africa,and Tanzania are well placed to take advantage ofexport opportunities, especially for production ofwood-based pulp and paper to the Middle East andto the South Asia region, within which China isemerging as a major market.

The Forum discussed possible markets and pay-ment mechanisms for forest-related environmentalservices such as protection of water resources, car-bon sequestration, and biodiversity. It discussedenvironmental concerns about plantation forestryand forest industrial development. It noted progressbeing made by financial institutions toward adop-tion of safeguard policies that will help to ensurethat their forest investments are socially and envi-ronmentally acceptable.

The main constraints to community/smallhold-er involvement and private sector investment dis-cussed were the following:

n How to improve access to land for tree plantingby both local communities and forest compa-nies, given the constraints of increasing popula-tion pressure and the priority that has to begiven to food production

n Insecurity of raw material supply for forest-based industries—a problem that is exacerbatedby unclear and nontransparent forest concessionallocation policies

n Low levels of technology, wasteful conversion,and weak business management skills

n Difficulties faced by small- and medium-scaleforest-based industries in accessing capital

n The negative impact on the forest income ofdependent local communities and forest compa-ny employees of a trend by larger forest compa-nies toward the subcontracting of forest harvest-ing and management operations

n The weak bargaining position of local commu-nities, smallholders, and SMFEs when it comesto negotiating contracts with larger-scale forestcompanies and achieving fair prices for commu-nity- and farm-grown timber

n Environmental concerns about the impact ofplantations on water resources and on the biodi-versity of natural forest resources

n The impact of illegal logging on the ability ofmore responsible forest companies to accessmarkets and to obtain fair selling prices for man-ufactured forest products

n Inadequate road, rail, and port infrastructure;the high cost of transporting forest products;and delays experienced in obtaining permits forexport of forest products

n High transaction costs that act as a deterrent toinvestment in SMFEs by both commercial anddevelopment financing institutions

This report summarizes the many useful sugges-tions made by Forum participants for overcomingsuch constraints (further details of which are con-tained in part 2 and in the background documentslisted in part 3 of this report).

The Forum deliberations leaned heavily on, andbenefited from, the experiences of South Africa,which for the past 10 years has been going througha process of privatization of state-owned forests andfostering company/community partnerships for

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securing industrial wood supply. Such develop-ments have assumed increasing importance sincethe government of South Africa declared targets foracceleration of Black Empowerment. Many of thepolicy measures that are being introduced toachieve that objective are of great relevance to othercountries in the region.

Forum discussions also benefited from materialprovided by The Forests Dialogue (TFD), whichwas created in 1999 as an outgrowth of dialoguesand activities that began separately under the aus-pices of the World Business Council for SustainableDevelopment (WBCSD), the World Bank, theInternational Institute for Environment andDevelopment (IIED), and the World ResourcesInstitute (WRI). TFD’s mission is to bring togetherkey leaders to build relationships and to generatesubstantive discussion on issues relating to achieve-ment of sustainable forest management.

Of special relevance to this Forum were papersprepared for a TFD meeting in Richard’s Bay, SouthAfrica, that was held during the week following thisInvestment Forum. The purpose of that TFD meet-ing was to identify key areas for potential collabora-tion among stakeholders and to catalyze progresstoward improving commercial forestry’s contribu-tion to poverty reduction. (Part 2 of this report sum-marizes emerging TFD conclusions on that topic.)

The most important outcome of this InvestmentForum will be the extent to which concrete invest-ment deals and programs of technical assistance canrapidly be concluded between some of the financialand development institutions that participated andthe many forest agencies and forest industrial com-panies in the region that are proactively seekingfinancial support. At the time of drafting thisreport, several such potential deals and technicalassistance projects are under active discussion.

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EXECUTIVE SUMMARY

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AFLEG Africa Forest Law Enforcement andGovernance

BCF BioCarbon Fund (World Bank)

BEE Black Economic Empowerment

CDM Clean Development Mechanism (of the Kyoto Protocol)

CER certified emission reduction

CIFOR Center for International ForestryResearch

DIDC Department for InternationalDevelopment Cooperation (Finland)

DFID Department for InternationalDevelopment (U.K.)

DINATEF National Directorate of Land andForest (Mozambique)

DPE Department of Public Enterprises(South Africa)

DWAF (Ministry of) Water Affairs and Forests(South Africa)

EAC East African Community

ESSD Environmentally and SociallySustainable Development

FAO Food and Agriculture Organization (of the United Nations)

FCAG Forest Certification Assessment Guide

FGLG Forest Governance Learning Group(Ghana)

Finnfund Finnish Fund for IndustrialCooperation Ltd.

FINNIDA Finnish International DevelopmentAgency

FLEG Forest Law Enforcement andGovernance

FORDA Forestry Research and DevelopmentAgency

FSA Forestry South Africa

FSC Forest Stewardship Council

IBRD International Bank for Reconstructionand Development

IDC Industrial Development Corporation

IFC International Finance Corporation

IIED International Institute forEnvironment and Development

ITTO International Tropical TimberOrganization

JFM joint forest management

MOU memorandum of understanding

NFP National Forest Program

NGO nongovernmental organization

NTFP nontimber forest product

ODA official development assistance

OSB oriented strand board

PDI previously disadvantaged individual

Acronyms and Abbreviationsxiii

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PEP Private Enterprise Partnership

PROFOR Program on Forests

PSI private sector involvement

SADC Southern African DevelopmentCommunity

SASA South African Sugar Association

SBU strategic business unit

SME small and medium enterprise

SMFE small and medium forest-based enterprise

SPGS Sawlog Production Grant Scheme(Uganda)

TFD The Forests Dialogue

TIMO timber investment management organ-ization

UNEP United Nations EnvironmentProgramme

UNFCCC United Nations FrameworkConvention on Climate Change

USAID U.S. Agency for InternationalDevelopment

WB World Bank

WBCSD World Business Council forSustainable Development

WRI World Resources Institute

WWF World Wide Fund for Nature (formerly called the World Wildlife Fund)

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The following summary was prepared on thebasis of presentations delivered and discus-sions held at the workshop. It is not compre-

hensive, but rather a synthesis of and overview ofthe contents of the forum.

OPENING SESSION

Gerhard Dieterle, Forestry Advisor, World Bank(WB, or the Bank), welcomed participants, hopingfor fruitful and forward-looking discussions. Heemphasized the importance of forest conservationto deliver local and global forest environmental val-ues, noting that sustainable forest management out-side of protected areas is critical to achieving thisgoal. Moreover, he noted the need for clear manage-ment concepts for forests outside of protected areasto meet the livelihood needs of the rural poor, har-ness forests’ potential to contribute to economicdevelopment, and reverse deforestation trends bymaking forests competitive against other land usesover the long term. He called for improved forestsector governance, remarking that widespread ille-gal logging and corruption weaken the rule of lawand undermine forest markets.

Dieterle stated that the Forum’s purpose was toidentify emerging investment project opportunitiesand to agree on actions that could be taken by

Forum participants to create an enabling environ-ment for socially, environmentally, and economical-ly responsible investments. In closing, he raised sev-eral questions for consideration at the Forum,including whether partnerships between companiesand communities can improve livelihoods, whethernewly emerging markets for environmental servicescan contribute to livelihoods, and whether publicland can be managed in a more transparent way forsustainable growth.

Linda Mossop-Rousseau, Chief Director ofForestry, Ministry of Water Affairs and Forestry(DWAF), opened the Investment Forum, stating thatshe hoped the Forum would provide a good oppor-tunity for networking and that participants wouldhave “ubuntu,” a Zulu concept of a community spir-it and collaboration that is mutually constructive.She said that South Africa’s forestry is at a crossroads,with a process of privatizing state plantations underway, managed by the Department of PublicEnterprises (DPE). Larger-scale commercial planta-tions (category A) are being handed over to the pri-vate sector, and the smaller plantations (categories Band C) are to be transferred to communities.

Mossop-Rousseau explained that South Africa istrying to identify the right mix of ownership/man-agement to deliver long-term sustainable manage-ment of the plantations, and poverty alleviationbenefits from forestry to the rural poor. In the

Summary of Forum DiscussionsLaura Ivers, PROFOR and Leila Mead,World Bank Consultant

CHAPTER ONE

1

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future, South Africa envisions local government asthe driver of economic development, with thenational government supporting this by creating anenabling environment for sustainable development.She said that the South African Department ofWater and Forestry (DWAF) is engaged in imple-menting the Broad-Based Black EconomicEmpowerment (BEE) Charter for the forest sector(see box 1), and she hoped that the Forum wouldcontribute to this mandate by helping to identifyfinancing and extension services to ensure success-ful results from the BEE in forestry.

Ole Sand, Head, Forest Products Group, Inter-national Finance Corporation (IFC) explained thatthe IFC is the arm of the World Bank Group thatfocuses on private sector investments, with invest-ments of about US$2.5 billion in the forestry sector,ranging from plantations to processing to creatingfurniture and paper products. At present, China,India, and the Russian Federation are dominantcountries for such investments, but IFC is interest-ed in targeting forestry investments in Africa. Sand

attributed the IFC’s limited engagement in Africa tothe World Bank’s ban throughout the 1990s oninvestment in commercial forestry in tropicalforests. He explained that the World Bank’s revised2002 forest policy allows for such investments ifthey meet specific conditions, including require-ments for forest certification for any project involv-ing industrial forests. This change in strategy, com-bined with the Bank’s emphasis on Africa, presentsan opportunity for IFC to invest in Africa.

Mike Edwards, Executive Director, ForestrySouth Africa (FSA), explained that FSA, establishedin 2002, is a registered nonprofit organization withmembership comprising 20,000 timber growers.The objectives of FSA are to promote the interestsof all growers of all trees for commercial purposes,promote growth of members, promote policies forinnovation, provide training and technology trans-fer, gather and disseminate information on forestindustry, and represent the views of members toensure that the industry can grow and prosper.Moreover, FSA promotes the forestry industry with-

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BOX 1

Since 1994, the South African government hasbeen implementing a comprehensive programto undo the economic damage of apartheid andcreate equitable opportunities for black SouthAfricans. New laws have restored rights to landand tenure, proscribed unfair discrimination,and introduced specific active measures to over-come the distortions in the labor market and toprovide new economic opportunities to histori-cally disadvantaged persons. The Broad-BasedBlack Economic Empowerment Act of 2003covers the economic empowerment of all blackpeople (including women, workers, youth, peo-ple with disabilities, and people living in ruralareas) through diverse but integrated socioeco-nomic strategies designed to (among otherthings)

n increase the number of black people whomanage, own, and control enterprises andproductive assets;

n facilitate ownership and management ofenterprises and productive assets by com-munities, workers, cooperatives, and othercollective enterprises;

n develop human resources and skills; andn promote investment in enterprises that are

owned or managed by black people.

In 2005, a participatory process for develop-ing a Forest Sector Broad-Based Black EconomicEmpowerment Charter was launched, withstakeholder consultations held throughout thecountry. The process identified the need to estab-lish dedicated funding instruments for fundingBEE transactions, develop a Code of GoodConduct for contracting work, and improveorganization within the sawmilling and contract-ing subsectors.

Sources: http://bee.sabinet.co.za/bee_overview.html and http://www.info.gov.za/.

Broad-Based Black Economic Empowerment


in the broader context of national economic devel-opment. FSA’s small-business development isfocused on implementation on the ground—encouraging growth in emerging sectors and facili-tating sustainable enterprise growth. Edwards saidthat a goal of the BEE Forestry Charter is the estab-lishment of 100,000 hectares in the next 10 years forsmallholders. He emphasized that there are manyinvestment opportunities, but that investment andfunding are prerequisites to make aspirations a real-ity and that FSA needs support and partnershipfrom the World Bank and IFC. In closing, he saidthat there are investment opportunities in SouthAfrica that can make a huge difference to liveli-hoods, and that there is a need to find mechanismsto turn opportunities into reality.

Paul Vantomme, Assistant Director, ForestIndustries, International Tropical Timber Organi-zation (ITTO), said that the core business of ITTOis to promote sustainable development and con-tribute to livelihoods through the conservation andsustainable management of forests. ITTO has 58member countries, representing 97 percent of tradein tropical forests and 80 percent of the total tropi-cal forest area. It funds projects for forest manage-ment and conservation projects, as well as forimproved use, processing, and marketing of timberand nontimber forest products. Vantomme said thatforest enterprises depend on the sustainable supplyof raw materials and that proceeds from such enter-prises should thus be invested in forest resourcemanagement.

Although investments often focus on large-scaleplantations and wood crops, Vantomme empha-sized the importance of investment in small- andmedium-size enterprises and forest activities withinnatural forests to build up rural economies for localpopulations and to sustain livelihoods. ITTO isworking to address obstacles to investment in thisarea (for example, the recent ITTO InvestmentForum in Cancún focused largely on investments innatural forests). Vantomme noted that preparationsare under way for additional investment forums inpartnership with organizers of this Forum in LatinAmerica, Central and West Africa, and TropicalSoutheast Asia.

Harrison Ochieng Kojwang, Southern AfricaProgram Office, Zimbabwe, WWF, said thatWWF’s mission, relevant to this meeting, was topromote conservation of biodiversity and the use of

renewable resources in a sustainable way and toreduce the release or unwise use of toxics. He saidthat when investing in woodlands, financing mustbe sustainable, with equitable distribution ofresources, noting that, for the most part, the publicwas excluded from the benefits of commercialexploitation of dry woodlands. More products mustbe brought to the market, particularly if poverty isto be reduced through forestry activities.

Kojwang commented that the few valuablespecies are overexploited and that there is a need tolook at the value of other species. He said that newtechnologies are needed for reconstituted woodproducts and that WWF and the World Banktogether could promote technology transfer and usea greater number of species. From a conservationpoint of view, he said that forest conservation mustbe done in the broader context of landscape man-agement, with landscape systems and ecologicalprinciples respected and multiple production sys-tems encouraged. Noting challenges for forestry inSouth Africa, he said that poverty reduction mustbe focused on, through socially equitable produc-tion and a legitimate role for the poor to contributeto the economy.

KEYNOTE ADDRESSES

Keynote addresses were delivered on global trendsin the forest sector, building corporate-smallholderpartnerships, and incorporating social and environ-mental safeguards into lending policies of financialinstitutions.

Global Trends in the Forest Industry

Rainer Haggblom, Chairman, Jaakko PöyryConsulting, said that paper consumption wasgrowing faster then ever, despite slow growth inEurope, Japan, and North America (see figure 1).Fast-growing plantations represent a major trend inthe paper industry, and consumption of wood isexpected to increase. Recycled fiber and fast-grow-ing plantations (that is, eucalyptus, acacia, and fast-growing pine) represent this growth, and the shiftfrom natural forest to plantations was a result ofcompetitiveness, environmental factors, and avail-ability of wood. With regard to meeting the growingdemand for papermaking fiber, he said that recov-

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SUMMARY OF FORUM DISCUSSIONS


ered paper will continue to be used, along withincreases in the use of bleached hardwood kraft (seefigure 2). Instead of using recovered paper, which ismore expensive, more bulk wood resources areneeded.

Haggblom noted particular growth in paperconsumption in Asia, specifically the result ofincreased outsourcing of industry to Asia, whichrequires more packaging, more documentation, andso forth. Chinese paper consumption is growing sofast that to supply projected demand through 2015,an additional 3 million tons of hardwood kraft arestill needed, which would require three or four millsto process. He said that industry is moving southbecause it is more cost-effective and efficient withregard to mills and plantation growth (an estimateof annual wood growth in the north is 4 cubicmeters per hectare, while in some areas of the southit can reach 50 cubic meters per hectare or more).

Haggblom commented that pulp mills are costlyventures, costing US$1 billion per mill to produceapproximately 1.3 million tons of pulp, and thatcreating conditions to encourage investment of this

scale is challenging. He said that pulp mills shouldnot be 100 percent self-sufficient for wood supplyand that opportunities for local growers to makemoney must be created. In closing, he noted theimportance of recognizing the benefits of sustain-able plantation forestry to help develop economiesand industry and of making rural people part ofindustrial development.

Building Better Corporate-SmallholderPartnerships: Sharing Lessons acrossSouthern African Countries

Dale Doré, University of Alberta/Center forInternational Forestry Research (CIFOR), dis-cussed a three-year project under way withinCIFOR’s Livelihoods and Forests Program, in part-nership with the University of Alberta. In broadterms, the project is addressing public sector reformand regulatory frameworks, incentives for the pri-vate sector to develop pro-poor partnerships, theinvolvement of civil society, giving smallholders astronger voice and more choice, and the role of

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FIGURE 1Wood Demand for Paper and Paperboard, 1980–2020

Source: Rainer Haggblom, presentation at Eastern and Southern Africa Region Investment Forum

500

400

300

200

100

0

1980 1985 1990 1995 2000 2005 2010 2015 2020

Forecast Emergingmarkets

ComoundAnnualGrowth

Rate(CAGR)4.1%/a

OtherLatin America

Rest of Asia

China

Eastern EuropeJapan

Western Europe

North America

MaturemarketsCAGR0.5%/a


international organizations in promoting good gov-ernance. Study objectives are to enhance livelihoodthrough participation and better access to land andthrough increasing smallholder and subcontractingbargaining power.

Dore noted the importance of returning benefitsto households, including poor and vulnerablehouseholds; employing subcontractors from poorcommunities, including a high proportion ofwomen in projects; and a clear understanding ofroles and responsibilities among stakeholders. Hesaid that South Africa’s experiences demonstratethat the private sector can play a key role in povertyalleviation. He also said that other lessons learnedinclude how to lower transaction costs by develop-ing systematic and operational procedures withsmallholders and by overcoming opportunity costsand high discount rates through capital accumula-tion (stock of trees) and improved cash flows (peri-odic payments). He said that future challengesinclude transforming the traditional system of gov-ernance and land tenure, ensuring greater participa-tion and representation of smallholders and con-tractors, and investigating alternative models forpro-poor forestry. In closing, Dore said that models

elsewhere in Africa should be reviewed to share les-sons learned across the region.

Incorporating Social and EnvironmentalSafeguards into the Lending Policies ofFinancial Institutions

Christina Wood, Sustainable Finance Limited,remarked that growing awareness of social andenvironmental risks in lending and investment hasbeen made clear through the United NationsEnvironment Programme (UNEP) FinanceInitiative, the King Report on CorporateGovernance in South Africa (see box 2), and theadoption of the Equator Principles1 by more than40 banks. Several banks have adopted or are devel-oping their own forestry policies, with measures toavoid investment in illegal logging and “risky”countries. Wood said that risk management is the

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FIGURE 2Forecast for Papermaking Fiber Demand

Source: Haggblom, presentation

500

400

300

200

100

01990 1995 2000 2005 2010 2015

Recovered paper

Bleached hardwood kraft

Other

Million Ton

1. The Equator Principles are a voluntary industry frameworkfor addressing environmental and social risks in projectfinance. They aim to ensure that projects are developed in asocially responsible manner and according to sound environ-mental management practices.


primary driver for banks to adopt such policies andnoted that nongovernmental organization (NGO)campaigns targeting banks for irresponsible forestsector investments have caused some banks to turnaway from forest investments. Certification is agood means to reassure banks; however, the flood ofcertification schemes (more than 50) makes it diffi-cult for banks to determine effectiveness.

Wood indicated that a number of Equator banksare operating in Africa and that the top five SouthAfrican banks—as well as some Nigerian banks—are developing environmental and social policies.She identified several challenges related to applyingenvironmental and social safeguards for forest sec-tor finance:

n The limited relevance of the Equator Principlesto small-scale forest investments, given that theyfocus on projects larger than US$50 million

n The possible backlash from identifying somecountries as “high risk,” because this may send achilling effect to sound projects in those countries

n The increasing influence of finance from Chinain Africa and elsewhere, with little commitmentto integrating social and environmental safe-guards

n The large market that China represents for tim-ber sourced from Africa, without any certifica-tion and sustainability requirements

n Confusion in the market over the more than 50certification schemes

n Uncertainty within the financial communityabout when and how to apply forest lending con-ditions (for example, whether they should bebased on geographic location or investment scale)

Wood suggested that agreement on simple andachievable requirements by all banks (that is, legaltimber, plus some elements of sustainability) wouldbe helpful. In closing, Wood said that markets willdrive investments—meaning that if illegal timbermarkets are thriving, then the safeguards are notgoing to stop investments (finance from less restric-tive institutions will be sought instead).

PANEL 1: FINANCING SUSTAINABLEFOREST MANAGEMENT: INVESTMENTOPPORTUNITIES AND CONSTRAINTS

This panel session addressed three basic questions:Where are the investment opportunities? How dowe ensure that low-income families benefit fromforests? What are the potential sources of invest-ment? Olli Haltia, Managing Director, SavcorIndufor Oy, chaired the panel session. In hisoverview of the session, he noted an increasingdemand for fiber in China and India and said that

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BOX 2

Corporate governance in South Africa was insti-tutionalized by the publication of the “KingReport on Corporate Governance” (King Report1994) in November 1994. The King Committeeon Corporate Governance was formed in 1992to consider corporate governance in the contextof South Africa. This coincided with profoundsocial and political transformation in SouthAfrica. The purpose of the King Report was, andremains, to promote the highest standards ofcorporate governance in South Africa. Unlike itscounterparts in other countries at the time, theKing Report 1994 went beyond the financial andregulatory aspects of corporate governance in

advocating an integrated approach to good gov-ernance in the interests of a wide range of stake-holders, having regard for the fundamentalprinciples of good financial, social, ethical, andenvironmental practice. In adopting a participa-tive corporate governance system of enterprisewith integrity, the King Committee in 1994 suc-cessfully formalized the need for companies torecognize that they can no longer act independ-ently from the societies and the environment inwhich they operate.

Source: Executive Summary of the King Reporton Corporate Governance 2002.

King Report on Corporate Governance in South Africa


Africa is now in a position to supply part of thisdemand. Few locations exist globally where fast-growing plantations can be established—Southernand Eastern Africa provide a unique opportunityfor these plantations. When discussing new large-scale industrial plantations to meet Asia’s demand,he said that more attention must be paid to quality,including through certification schemes.

Looking toward the future, he stressed moreencouragement of private sector investment in Africaand said that a road map for investors should be cre-ated to attract more foreign capital. He said that part-nerships with smallholders and communities werecritical and relevant and that plantations should bedeveloped consistent with requirements of the mod-ern pulp industry, taking into account such potentialfuture investments. In the short term, however, itwould be important to support SMFEs, which cangenerate immediate value added and employment.

Discussing the Kenyan forestry sector, DavidMbugwa, Chief Conservator of Forests, Kenya, saidthat the sector was vibrant 15–20 years ago and hadstarted declining in the mid-1990s, partly becauseof inflexible legislation and policy. Subsequently, anew forest law and draft forest development policywere developed that emphasize partnerships, bring-ing in the private sector in managing plantations,and community participation in forest manage-ment. He said that the new law, passed in October2005, includes rules and regulations and will guidenew institutions. By January 2006, the new lawshould be operational, and there will be in-depthconsultations to develop the system for such part-nerships with the private sector. In Kenya, commu-nities own the land and thus need to be partnersand part owners in any reforestation project. Somecommunities have reservations about the privatesector taking over the forests; however, plannedgovernment pilot scale outreach programs will helpto inform communities about potential opportuni-ties for collaboration.

During the discussion, the process of acquiringland as an obstacle to investment was raised. Oneparticipant urged the Bank, the UN’s Food andAgriculture Organization (FAO), and others to cre-ate an enabling investment climate by establishingland banks and investment centers and supportingland tenure reform to reduce transaction costs forinvestors. Uganda was identified as a role model inthis regard because it has overcome some obstacles

to acquiring access to government owned land. OlavBjella, National Forest Authority, Uganda, said thatfirm policies must be in place to create an enablingenvironment and to deal with disputed landencroachment. He said that Uganda has a pre-dictable legal framework for licensing and a timber-monitoring system.

Other issues raised included grant funding tomake tree growing more attractive, improving thebottom line for communities, and the potential forforestry to do more for local communities and tolift people out of poverty. Expressing uncertainty asto whether South African industry is fully preparedto deal with potential impacts from land redistribu-tion and restitution, a participant noted the chal-lenge of keeping new farm owners producing toensure a steady timber supply. Another participantdrew attention to the need to engage privateinvestors to help smallholders have options beyondproducing timber.

Steven Ngubane, Forestry South Africa (FSA),explained that FSA’s membership spans from small-holders (up to 100 hectares) to medium growers(up to 1,000 hectares) and to big corporations. Hesuggested that there are opportunities in industrialplantations and from forest industry subsectors;however, financing institutions see risks that mustbe managed. Good governance is important to min-imize perceived risks, including with licensing sys-tems. Market access is important for developing aprocessing industry, making forest plantations farfrom markets not financially viable. Reducing thecost of investments in such locales, possibly throughgrants, is one option that could be considered.

Humphrey Ngibueni, TreeFarms, Tanzania,highlighted work in Tanzania and Uganda. InTanzania, land is acquired through negotiation withcommunities, often for benefits such as a road net-work, schools, and water distribution. This can be along process, and obtaining a title for the land cantake months or years. The Tanzanian government isbecoming cautious about risks from big investorstaking land from communities and is thus promot-ing land use plans for grazing, timber, and otherland uses. After 10 years of activity and investment,the standard of living is improving as a result ofincome from plantations. Initiatives are under wayto encourage farmers to plant trees for woodlots ontheir land and to develop avoided-deforestationschemes.

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Monika Branks shared experiences from theMalonda Foundation (funded by Mozambique andSweden) in the Niassa province of Mozambique.The Foundation’s primary roles are establishing keylegal, business, and information services; fosteringrelationships between different decision makers tomobilize private investments; and providing riskcapital. The Foundation decided that to eventuallydevelop SMFEs, there was a need to create a criticalmass for plantations and the necessary associatedinfrastructure, such as roads, railways, and generalservices. In light of this, the Foundation is initiallyworking with ethical and profitable larger players toreach this goal; it will give special emphasis to work-ing with smallholders subsequently. TheFoundation requires Forest Stewardship Council(FSC) certification and has guidelines for investors.It expects to create 4,000 jobs in the next five toseven years. In closing, Branks said that makingforestry economically viable takes time and that inMozambique, there is the political will to do so, butlimited resources for investments to this end.

Ole Sand, IFC, said that if investors see success-ful examples, they will follow. The lack of big pro-cessing companies in countries in the region—other than South Africa—is part of the problem.The processing creates demand for the plantationsthat provide jobs and poverty reduction. Sand saidthat there is a need for fiber and that Africa has thebenefit of good growing conditions to take advan-tage of meeting that demand.

Anna Chilesh Masinja, Forestry Department,Zambia, said that the private sector and civil socie-ty are encouraged to participate in the forest sector.Half of the forest lands are indigenous forestreserves managed by local populations. The NewForest Act currently under consideration by thecabinet would establish a semiautonomous body tomanage production forests. Promoting joint forestmanagement (JFM) to benefit local people andinvestments in plantations are also needed. There isgrowing demand for timber for construction, aswell as opportunities to develop the pulp and paperand panel industries. She called Zambia an “invest-ment destination” and explained that investmentsmust be approved through the ministries of justice,tourism, environment, and natural resources toensure that they benefit the people of Zambia.

Portia Molefe, Department of Public Enterprises(DPE), South Africa, explained how some forests

have been privatized through packages that includetransfer of 10 percent of equity to local communi-ties. She raised the question of how to ensure thatcommunities receive benefits from the equity, giventhat in some cases no dividend has been distributed.

Andrew Tillery, Actis Africa/Agribusiness Fund,a US$100 million investment fund based in Kenya,explained that the Fund’s equity investment criteriaare growth potential, security of land tenure, quali-ty of management, and quick liquidity (returns). Hesaid that associations of local communities orsmallholders help to secure land tenure and thatoutreach and extension programs in investmentareas help to ensure assure establishment of qualityplantations.

Olli Haltia summarized that the region offersgood investment opportunities, but that the invest-ment climate should be further improved to attractcapital equal to the region’s full potential. There isprogress from new laws and rules that will improvethe investment environment and attract newsources for investment such as private equity invest-ment in tree growing. Partnership models appliedbetween various stakeholders, including smallhold-ers, companies, state forestry agencies, and govern-ments, vary greatly between the countries. Mostlikely, a single optimal model does not exist, but thefact is that some models work better than others.Going forward, the evolution of partnership modelsand their effectiveness should be monitored with aview to sharing experience across the region.

In addition, although public sector financingwill remain important to contributing toward forestsector infrastructure and to supporting majorindustrial ventures, private financing will play anincreasing role in the development of the sector.The goal of private and public financing could be tocreate success stories that would trigger furthermarket-driven finance in the sector.

PANEL 2: FINANCING FORESTINDUSTRIES AND DEVELOPMENT:INVESTMENT OPPORTUNITIES ANDCONSTRAINTS

This panel on forest industries identified invest-ment opportunities and constraints and discussedhow to encourage investment in small and mediumenterprises (SMEs).

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Charles Bengough chaired the panel and deliv-ered an overview presentation on the status of for-est-based industries in the Forum countries.

Bengough provided information on the numberof medium- and large-size forest industrial enter-prises in the region (see table 1), with South Africahaving the largest number of sawmills and furnitureenterprises. With regard to the pulp and paperindustry, South Africa is clearly the regional leader.

In his presentation, Bengough identified generalconstraints in the region: inadequate legal and mean-ingful forest concession legislation, lack of reliablesources of raw material, inadequate market intelli-gence to develop investment strategies, poor infra-structure and government support for development,and inadequate revision of forest policy (bills/acts)and restructuring of departments/services. Outdatedtechnology and lack of skilled workers also result ininefficient operations and poor products.

Bengough also identified a number of country-specific investment opportunities, such as rehabili-tation of Kenya’s timber sector with introduction ofa new forest concessioning system; development ofMozambique’s indigenous timber resource, plusplantation-based pulp and timber industries; andassistance to Zimbabwe’s and Zambia’s softwoodprocessing, aimed at increased exports to SouthAfrica.

James Mayers, IIED, highlighted work on com-pany-community partnerships and on SMFEs, par-ticularly associations that show the way forward.

Eric Obese-Jecty, IFC, Operations Officer,Entrepreneurship and SME Development, PrivateEnterprise Partnership (PEP) for Africa, describedPEP’s programs to support SME enterprisesthroughout sub-Saharan Africa (see box 3).

Regarding main investment opportunities,Michael Peter, Director of Forestry Technical andInformation Services, South Africa, stated thatgrowing trees is high-risk and low-return and thatprocessing is the profitable part of forestry. He sug-gested that communities should have equity in theprocessing or value adding chain, in addition totree growing.

Ole Sand, IFC, said that where the profit isdepends on the market chain concentration. Henoted the experience of the pulp and paper indus-try in North America with selling off its timberlandto timber investment management organizations(TIMOs). Over time, the TIMOs became moreprofitable.

A participant from a wood-processing firm inGhana highlighted the ongoing competition forland use between agriculture (primarily for cocoa)and forestry. When the whole value chain is con-sidered, forestry is more competitive than cocoa;however, cocoa can guarantee farmers a betterprice for their crop and so farms often choose toplant cocoa despite programs to encourage invest-ment in forests. James Mayers, IIED, commentedthat the flood of illegal timber supply on thedomestic market in Ghana is an obstacle that

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TABLE 1 Medium- and Large-Size Forest Industrial Enterprises in Forum Countries

Sawmills Panels Furniture PulpSouth Africa 108 5 100* 9Zimbabwe 41 3 * 2Kenya 20 5 8 1Tanzania 3 2 * 2Uganda 11 2 -Malawi 7 2 5Madagascar 5 2 3Zambia 15 17Swaziland 2 2Mozambique 4 2 3 -

Sources: FAOSTAT and regional information.* = subject to verification


needs to be addressed to improve the market valueof timber.

Responding to a reported regional trend towardincreasing dependence on fast-growing Eucalypts,John Spears asked about possibilities in Uganda (forexample) to switch to short-rotation eucalyptus cul-tivation in place of long-rotation pine. In response,Paul Jacovelli, EU Forestry Program in Uganda,remarked that the focus on pines in Uganda is inpart for silvicultural reasons and that Uganda doesnot have adequate access to hybrid, high-yield euca-lyptus plants. He further suggested that growingeucalyptus should be encouraged to avoid theexpected shortfall in timber supply in 10 years. Hedescribed the EU’s program that helps smallholdersestablish plantations by covering approximately 50percent of the cost. Contracts are established with

smallholders with 25–500 hectares. Participants inthe program must adhere to advice on species andplantation management to receive payments.

During the discussion, Ole Sand, IFC, noted thatthe IFC’s emphasis on big projects is the result ofthe transaction costs associated with smaller proj-ects. He said that the IFC’s involvement in, andendorsement of, forest sector investments mightopen up other opportunities, such as adding asawmill to a plantation.

Rentia van Tonder, Industrial DevelopmentCorporation (IDC), South Africa, said that IDC hasaligned itself with the South African governmentgoal of a 6 percent growth rate and the creation of500,000 jobs. For the forest sector, IDC is makingsignificant investments in SMFE development andjob creation. IDC’s aim is to support industry and

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BOX 3

In April 2005, the International FinanceCorporation (IFC) teamed up with donor part-ners to launch a far-reaching new initiative: thePrivate Enterprise Partnership for Africa (PEP-Africa). The objective is to help Africa meet itsneed for a stronger private sector that can raiselocal incomes and hold its own in the globalmarketplace. Based in Johannesburg, PEP-Africa is replacing and expanding on the workof the Africa Project Development Facility, IFC’sinitial program for developing small and medi-um enterprises (SMEs). Under PEP-Africa,work has begun on:

n Entrepreneurship: With approximatelyUS$1.4 million in support from theNetherlands, a new SME EntrepreneurshipDevelopment Initiative is under way. Thiswill continue and expand on the key projectsof the existing facility, which has strength-ened Africa’s small and midsize businessesand their support institutions for more than15 years.

n Leasing: A grant of more than US$900,000from Switzerland is helping IFC adapt itssuccessful efforts in other regions to expand

Tanzania’s access to leasing, an effectivefinancing option for smaller businesses thatcan neither afford to purchase needed newequipment outright nor qualify for bankloans to finance them. A similar Swiss-fund-ed IFC project in Uzbekistan has helped thecountry’s number of leases increase dramat-ically in the past year, and there are indica-tions that similar results can be achieved inTanzania and other East African countries.

In addition to the focus on smaller business-es, PEP-Africa expects to be active in investmentclimate reform, infrastructure, gender equality,and other areas. It thus joins a family of region-al technical assistance facilities managed by IFCthat together have more than 600 full-time staffin the field. PEP-Africa is also a key part of IFC’snew strategy in Africa: other initiatives includethe US$225 million, 10-country, IDA-IFC AfricaMicro, Small, and Medium Enterprise initiativewith the World Bank, as well as the creation ofintegrated SME Solution Centers in Madagascarand Kenya.

Source: http://www.ifc.org.

IFC Private Enterprise Partnership for Africa


government, while ensuring that communities ben-efit. She highlighted a program with 2.5 percentfinancing for up to 25 years, supporting communi-ties and development in rural areas, but acknowl-edged that getting that return rate is not easy. Sheidentified the 25-year time frame as a constraintfrom the financiers’ side.

During the debate, George Wamukoya, WWF,said that follow-up discussions around species wereneeded to encourage (for example) eucalyptus inUganda and Kenya. Policy direction is required toensure that communication is not confusing. Hesuggested discussing these issues in the regionalcommissions, such as within the Southern AfricanDevelopment Community (SADC) and the EastAfrican Community (EAC), to reach a commonunderstanding.

Humphrey Ngibueni, TreeFarms, discussed theimportance of ensuring energy supply for forestindustries, noting that inadequate supplies inhibitproduction. He suggested (a) converting forestwaste into energy to run sawmills and (b) investingin improving the efficiency of charcoal kilns to getbetter recovery as a means to improve the energysupply. He identified the high cost of doing businessas an obstacle to industry development, pointing tobureaucratic and constantly shifting regulationsand lengthy procedures for export.

Panel Chair Charles Bengough said that SouthAfrica has been a big investor in Kenya, Tanzania,Uganda, and Zambia in other sectors and suggestedthat there are opportunities in the forest sector. Oneparticipant, in discussing South African investmentin other countries in the region, expressed concernover investment in other countries, suggesting thatthis should occur only when potential in SouthAfrica in exhausted, not because investments areeasier elsewhere. Regarding the transparent andwell-enforced regulation in South Africa, anotherparticipant said that South Africa is “too squeakyclean,” making it impossible to do the job.

Another constraint identified in the discussionrelated to the inadequacy of research and informa-tion on new species, coupled with poor dissemina-tion of what is known. Mixed messages on someissues such as the appropriate locations for growingeucalyptus and impacts on soil quality and watersupply further exacerbate the problem.

In conclusion, John Spears noted the encourag-ing potential for substantial investments in this

region. He referred to the potential role of IFC’sPrivate Enterprise Partnership for Africa and also toIFC’s Social Responsibility Forum, (formerly theCorporate Citizenship Facility), which helps com-munities enter new businesses if investment is tiedto the Social Responsibility Forum and if benefitsgo to local communities. He commented on theusefulness of IIED’s detailed studies of SMEs inSouth Africa and Uganda and suggested that Forumfollow-up activities might explore the possibility forundertaking similar studies in Zambia and othercountries of the region.

PANEL 3: SOCIAL AND ENVIRONMENTALSAFEGUARD POLIICIES: KEY ISSUES

This session examined key issues related to socialand environmental safeguard policies, with a focuson how to deliver forest environmental services—specifically, water resource management, carbonsequestration, and biodiversity conservation. HegeSalvesen, Forest Trends, chaired the session andintroduced the topic, emphasizing the importanceof long-term financial viability and how to turnenvironmental and social issues from costs into rev-enue-generating opportunities. One example thatshe highlighted is using waste from timber to gener-ate income. Up to 75 percent of the log is lost inprocessing, and the waste left on the forest floor isequal to the resource extracted (for every cubicmeter removed, a cubic meter is left behind). Wastecan be used to generate renewable energy, providingelectricity that can be put into the electrical grid orused to supply energy to a village off the grid.Charcoal, pellet production, and extraction of oilsfor botanical use are other possible uses for waste.

Salvensen said that there is a lot of potential toincrease recovery rates for value added processing,and she cited the example of Orsa Florestal in Brazilentering into a joint venture with a furniture com-pany that is using processing waste, with a recoveryrate up to 80 percent. She encouraged participantsto “think outside the log” to get a fresh perspective.

Collin King, Standard Bank, commenting oncarbon financing and obstacles to complying withthe requirements of the Clean DevelopmentMechanism (CDM) of the Kyoto Protocol, said thatthe key to success lies in packaging projects correct-ly. He said that carbon finance can be a good option

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when struggling to get financing because the carboncredits can be sold up front to provide revenuestreams and additional collateral. Carbon financecan tip the balance in making a project profitable.Salvensen remarked that there are also voluntarycarbon markets for individual actors that want tooffset their carbon footprint.

Gerhard Dieterle, World Bank, highlightedBioCarbon Fund (BCF) projects in Africa, com-menting that such finance is especially interestingfor afforestation projects, where the rate of return islow and the carbon finance makes the difference ofmaking the project financially viable. The EuropeanUnion Greenhouse Gas Emission Trading Schemedoes not allow trading of certified emission reduc-tions (CERs) that are from forests and indicatedthat the World Bank is lobbying to change this. Aparticipant raised concerns about obstacles toaccessing forest finance in countries where there isno designated national authority or in countriesthat have not ratified the Kyoto Protocol. OlmanSerrano, FAO, said that this is not the problem asmuch as the issue that countries need to know whatto do to comply with the CDM requirements. FAOis working to develop capacity for CDM projects, aswell as for adaptation to climate change. On avoid-ed deforestation, Serrano encouraged countries toengage in negotiations on the topic.

Harrison Ochieng Kojwang, WWF, said thatinformation on carbon sequestered by drylands isoften underestimated and that correct informationshould be provided to take advantage of benefitsfrom avoided deforestation. Gerhard Dieterleunderscored the importance of coordinating posi-tions on avoided deforestation and highlightedwork by the World Bank Program on Forests (PRO-FOR) to coordinate positions as input to the processunder way within the United Nations FrameworkConvention on Climate Change (UNFCCC) todevelop a proposal on how avoided deforestationwill work. He said that the issue of confusion overmultiple certification schemes needs to beaddressed, noting that WWF supports the ForestStewardship Council (FSC). With the support of theWorld Bank/WWF Alliance, Kenya andMozambique are developing national certificationstandards through a process with broad stakeholderinvolvement.

Shaun McCartney, FSC, said that certification ismaking a difference toward creating a social and

environmentally sustainable investment climate. Hesaid that the FSC represents a premium certificationscheme; is credible and inclusive; has robust princi-ples and criteria; and includes mutual recognition,third-party verification, and an extensive and grow-ing network. Noting that most products are con-sumed locally, he stressed creating local demand forcertified products, along with appropriate localstandards and procurement policies. To date, 53southern and 26 northern countries are FSC-certi-fied. He said that umbrella schemes illustrate anoth-er approach for lowering costs for certification.

Mike Howard, Fractal Forests, South Africa, dis-cussed development of criteria and indicators, aswell as developing a national certification initiative.He noted the FSC’s opposition to GMOs and saidthat more than 80 percent of South African planta-tions are certified. On natural forests, South Africais one of the forerunners.

James Mayers, IIED, raised the issue of water-shed maintenance being perceived as the “new silverbullet” for protecting forests in watershed areas. Hesaid that the evidence base for a particular land useactually delivering watershed services is often weak,with an unreliable connection between cause andeffect. However, this issue has been seized upon byconservationists, in part, as a “great new hope.” Theassumption is that there are lots of buyers ready tobuy watershed maintenance services in countries,but the reality is that such buyers are scarce and inneed of persuading. Deals tend to get made onlywhen a crisis point is reached, and equity issues inthe distribution of benefits are often overlooked.

Gerhard Dieterle, World Bank, stressed certifica-tion as one of the core aspects of the Bank’s work,and he noted the forthcoming World Bank/WWFAlliance Forest Certification Assessment Guide(FCAG), designed to help verify the rigor of anyscheme. Certification should be looked at as a mar-ket-based mechanism and should be used more,especially in countries with weak government struc-tures, because it could be used by such governmentsto outsource monitoring obligations while promot-ing an incentive system for those who are certified.He underscored the importance of addressing ille-gal logging, corruption, and associated crimesbecause it undermines the sector and results inannual losses of billions of dollars. Using the CongoBasin as an example, he noted disincentives forthose who play by the rules and rewards for those

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who do not. He said that the devolution of stateland to local or communal ownership should becarefully managed and accompanied by land useplanning and zoning to ensure successful outcomes.

Olman Serrano, FAO, called attention to theFAO code for planted forests and an advisory com-mittee on paper and wood products. He said thatthe draft is still under discussion and that manyissues discussed at this Forum are covered by thiscode, which includes strategies for protection ofwater resources, carbon potential, and biodiversity.

Christina Wood, Sustainable Finance Limited,said that although no African banks have yet adopt-ed social and environmental policies, some are inthe process of developing them. Certificationbecomes a good proxy for risk avoidance, and thechallenge is to get the bankers to move beyond com-pliance and to look at new opportunities, includingwithin carbon finance. Another participant suggest-ed reducing the financing premium for certifiedinvestments as an incentive for getting certified.

One participant said that if there is real concernabout governance, new inventories should beundertaken and published. In response, anotherparticipant estimated the cost of an inventory asUS$90 per hectare, stating that inventories areexpensive to undertake and demand hard work.

WORKING GROUPS

On the third day of the Forum, participants met inworking groups on the topics of the panel discus-sions held in Plenary on the first day to deepen thediscussions.

Financing Sustainable Forest Management

One working group focused on financing sustain-able forest management. Participants in that groupdescribed opportunities for forest sector investmentin their countries:

Kenya: There are plantation rehabilitationopportunities, as well as opportunities in plantationdevelopment, inventory, and protection. Kenya’srecently approved Forest Act provides for commu-nities to manage natural and plantation forests andfor industry to manage part of the forest estate.

Malawi: One million hectares of natural forestare set aside in parks, the forest department holds

800,000 hectares, and the rest is customary land.The plantation forest estate is 120,000 hectares. Theplantations near high-demand areas are degraded.Malawi would benefit from the development ofmore processing facilities to make use of matureresources available. There are community manage-ment opportunities for growing seedlings and sell-ing from woodlots. Without woodlots, there isdependence on natural forests. The opportunities inMalawi are plantation rehabilitation, plantationestablishment on public land, development of thefurniture industry, and use of processing waste tomake furniture.

Mozambique: Government investments in for-est sector development have helped to create anenabling environment for investment. The govern-ment is trying to promote plantations and estimatesthat up to 7 million hectares could be established. Atpresent, there are 24,000 hectares of primarily pineand eucalyptus plantations. With regard to naturalforests, Mozambique has some 62 million hectaresof forests, of which 19 million hectares are viable fortimber production. Harvesting in natural forestscan take place with a license (good for one to sixyears) or with a long-term concession. Law enforce-ment is also a constraint that needs a solution.Mozambique’s geographic location facilitatesexport to Asia.

South Africa: Forest concessions for periods of70 years are allocated, with the title retained by thestate. Reform under way will transfer forest titles tobeneficiaries with a minimum of 20 percent, or theprofits will go to Black Economic Empowerment(BEE), and 6 percent of the shares are retained bythe state for use by communities. For example,Mondi has been required to bring in BEE Partners,and the lease it holds requires community involve-ment. Evaluation of the bids for the leases has beenbased not only on price but also on meeting devel-opment needs. South Africa provides a market forother countries’ timber.

Tanzania: Reforms are under way in Tanzania toprivatize all forest-based industry, and a semiau-tonomous forest management agency is beingestablished. The Tanzania Investment Center is thegateway into the country. Teak mosaic plantationsoffer an example of a good practice because there iscommunity engagement in certification. TheNational Forest Program (NFP) Facility is support-ing a participatory process to establish plantations

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and woodlots. Extensive community ownership ofland is a constraint to forest sector investment inTanzania, meaning that to gain access to forest con-cessions in Tanzania, interested parties must firstnegotiate with local communities, and then the gov-ernment can allocate long-term (99-year) leases.Ninety percent of energy in Tanzania comes fromwood, especially charcoal, and lots of wattle isgrown for industrial fuel. Tanzania presents oppor-tunities insofar as land is available, loans are ami-able for leaseholders, it is a stable country, and thereare economic growth and associated increases indemand for product.

Uganda: Opportunities exist for new planta-tions; however, there are few skilled foresters tomanage such plantations, no modern nurseries, andlimited availability of high-quality seeds. The short-age of energy supply in Uganda is an opportunityfor wood bioenergy. Seventy percent of Uganda’sforests are privately owned, and 30 percent are pro-tected. The privately owned forests are being con-verted to corn and tobacco cultivation. There is nosystem in place to support community forestry. TheEuropean Union is supporting grant schemes tofund the establishment of smallholder plantations.

Zambia: The government offers five-year con-cessions in indigenous forests. There are seven JFMareas. Illegal logging is a problem, with illegallysourced timber consumed domestically for buildingmaterials and charcoal and exported to neighboringcountries. Most of the timber in Zambia is sourcedfrom natural forests, and the government is in theprocess of certifying 40,000 hectares. The beekeep-ing industry is a lucrative one and an importantnontimber forest product (NTFP). Opportunitiesin Zambia include improving natural forest man-agement, making the charcoal industry sustainable,and establishing plantations. The Forest IndustryCredit Facility in Zambia, targeted at the Zambianpoor, provides US$500,000 each year for planta-tions. Most concessionaires in Zambia are fromSouth Africa.

Zimbabwe: Zimbabwe has a good infrastructureand technical capacity for forestry. Investmentopportunities include biofuel, rehabilitation ofsawmills and harvesting equipment, use of oversup-ply of small roundwood, and development of small-holder enterprises in natural forests. The govern-ment owns the land, and private companies aregiven long (99-year) concessions. The Forest

Company of Zimbabwe manages forests. Someplantations in Zimbabwe are certified and benefitfrom access to niche markets in the United States.Illegal logging, including of teak, is an issue thatneeds to be addressed. Zimbabwe placed an exportban on unprocessed timber as a step toward puttingan effective legal system in place.

Constraints to Private Sector Investment inForestry Industry

Participants in another working group on con-straints to financing the forestry industry andactions to overcome obstacles discussed the effec-tiveness of various concession systems. Most feltthat legal and transparent forest concession legisla-tion was inadequate. A Tanzanian participant saidthat longer-term concessions should be issued and aresource base for concession expansions secured.Participants said that short-term concessions lackedthe incentive to invest and resulted in overharvest-ing and that longer-term concessions encouraged“playing by the rules.” A participant from Malawiadvocated subsidiary legislation pertaining to con-cessions and negotiating concession extensions. AUgandan representative said that the issue oftenbecomes politicized, particularly during electionperiods.

It was noted that the idea of concessions haschanged over time and that the notion of ongoingpartnerships with other stakeholders needs to betaken on board. The idea of organizing into timberassociations to better lobby governments and pro-mote common goals was suggested. It was pointedout that Uganda is using an auction system thatcould be a good model. One participant suggestedthat a set of guiding principles—rather then anoverriding model—be established, because eachcountry has differing conditions regarding landtenure systems. A participant from Finland empha-sized concessions based on sustainable forest man-agement.

Discussion also addressed constraints and diffi-culties in securing raw materials for industry. ASouth African government representative said thatdemand is higher than supply and that South Africais pushing for 6 percent economic growth. Hepointed to investment opportunities in importingraw materials from other countries that can be uti-lized and processed in South Africa, especially if

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that can support SMFE development. A Zambianrepresentative said that the government shoulddevelop guidelines on how the private sector cantap into resources from rural and industrial govern-ment plantations.

Lack of information provided by governmentswas identified as a problem, with some suggestingthat governments do not invest in inventoriesbecause they are expensive to carry out and otherssuggesting that inventories could be done inexpen-sively. One representative said that the lack of will todo inventories stemmed from the fact that theywould help to address illegal logging and that somegovernment officials have a vested interest in thestatus quo.

The IFC said that through its Private EnterprisePartnership for Africa, it could provide technicalassistance and capacity building. It was stressed thatfinancial capacity is also needed, such as bankingskills. One participant proposed a forest enterprisefacility that would act as a broker, linking investorswith opportunities and connecting the informationwith those who need it. This would be combinedwith a multiinstitutional push toward encouragingthe right forest enterprise in Africa and getting bigdevelopment partners to kick-start a facility with arange of investors.

In discussing bamboo, one participant proposeddeveloping a new SME processing industry in coun-tries in East Africa with significant bamboo—Kenya, Madagascar, Malawi, Mozambique,Tanzania, Uganda, and Zambia—that would inte-grate outgrowers, farmers, and the local communi-ty in the cultivation, harvesting, and primary pro-cessing of bamboo fiber. Secondary processingwould produce high-quality bamboo plywood,moldings, flooring, and components for both thedomestic and export markets.

CLOSING PANEL

Gorlum Kampingo Inkosi Sibande, a TraditionalChief from Malawi, said that his role as a traditionalleader is to act as a bridge between local communitiesand government and donors. He said that “wheneveryou deal with forests, you deal with the earth and thepeople who live from it.” Investors should makeimprovements for local people and care for theresources for future generations to use, and decisions

should be taken seriously. Emphasizing the impor-tance of good partnership between local people andinvestors, he said that if the relationship is good, thenthe investment will be secure.

Pippin Permadi, Indonesian Forestry Researchand Development Agency, said that Indonesia plansto accelerate the development of plantations, with agoal of cultivating 5 million hectares by 2010.Permadi said that Indonesia also has partnershipprograms between companies and communitiesand aims to increase community ownership ofplantations to 50 percent. He said that land tenurereform is a critical issue in forest management inIndonesia.

Nic Olivier, Director and Professor, SADCCenter for Land-Related Regional andDevelopment Laws and Policy, University ofPretoria, South Africa, said that a crosscuttingtheme at the Forum was the lack of clarity withinthe rural development framework, the policyframework, and the implementation framework.He said that clarity is key to a successful forest uti-lization system and that the roles of government,community, and the private sector need to be clear-ly identified as a first step in creating an enablingenvironment.

Paul Vantomme, Assistant Director, ForestIndustries, ITTO, commenting on the trend oflarge-scale companies outsourcing to SMFEs, saidthat the Forest Enterprise Development of SouthAfrica and the EU grant scheme in Uganda areinteresting initiatives that could have relevance andlessons for other regional forest investment forums.On the topic of improving safeguards for forest sec-tor investments, he suggested the need to establishminimum global safeguard standards.

George Wamukoya, WWF, Eastern AfricaRegional Program Office, said that he was happythat the Forum had brought together the privatesector, civil society, and government to think aboutprogressive approaches to sustainable forest man-agement and local people. He further remarked thatsuch discussions help bring to the surface questionsof equity, justice, and environmental sustainability.Remarking that in recent years, plantations haveattracted negative publicity from civil society, hesaid that open discussion on the topic in such aForum increases transparency on the benefits andrisks surrounding the issue, helping to improve theimage of plantations and reduce negative publicity.

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He applauded companies such as Sappi and Mondi,which have put community partnership schemes inplace. He urged private sector investments inindigenous forests to help reduce poverty and sug-gested that forests should be addressed throughregional and subregional initiatives, especially tocoordinate monitoring transboundary trade.

Linda Mossop-Rousseau, DWAF, South Africa,suggested having a national-level forum for South

Africa to deepen the discussions with banks andother investors. She commented that SADC doeshave a forestry protocol, but that it has not yet beenratified. With regard to the cost of doing business inSouth Africa, she said that if it is too high, actionneeds to be taken to improve the business environ-ment. In closing the meeting, she thanked theWorld Bank, other partner organizations, and theForum staff for their work in making it a success.

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FOREST RESOURCE INVESTMENTOPPORTUNITIES

The total forest area within the 10 countriesof the region comprises about 140 millionhectares, of which plantations cover about

2.6 million hectares.The following sections of this report give special

emphasis to emerging investment opportunities forestablishment of new fast-growing plantationresources and for improved management of existingstate-owned plantations.

South Africa

Total annual timber requirements in South Africaare in the region of 24 million tons, while the forestbase is only capable of sustaining an annual cut of19 million tons. The 5 million ton shortfall is pro-vided from imports and from overcutting.

The South African government’s Black EconomicEmpowerment (BEE) scheme aims to create oppor-tunities for local communities and smallholders toplay a much greater role in supplying the industrialwood requirements of this very substantial forestindustry. Forest concession reforms allow for 20 per-cent of industrial profits to be made available forBEE projects and for 6 percent to be retained by thestate for use by local communities.

Opportunities have been identified for investmentin establishment of about 100,000 hectares of newplantations in KwaZulu-Natal and the Eastern Cape.Much of this could come from the local communityand privately owned smallholdings. Companies suchas Sappi, Mondi, Global Forest Products, and theNCT Forestry Cooperative are proactively working todevelop partnerships with outgrowers.

Regional Investment Opportunities,Constraints to Investment, andPotential Solutions

John Spears,World Bank

CHAPTER TWO

17

TABLE 2Forest Land

Total Total Forest Plantations

No. Country (1,000 ha) (1,000 ha)

1 Kenya 3,522 1202 Uganda 3,627 363 Tanzania 35,257 1504 Zambia 42,451 755 Malawi 3,402 2046 Mozambique 19,262 387 Madagascar 12,838 2938 Zimbabwe 17,540 1549 Swaziland 541 11410 South Africa 9,203 1,426

Total 147,643 2,610

Source: FAOSTAT 2004.ha = hectares


Kenya

A recently approved Forest Act has opened the doorfor engagement of local communities and privatesector forestry industrial companies in the manage-ment of government-owned plantation forests.Investment opportunities have been identified thatcould create opportunities for several of Kenya’slarger sawmilling, wood-based panel companiesand for Pan African Paper Mills (the country’slargest forest industry) to develop contractualagreements with several thousand smallholders andalso with some larger-scale farmers and agribusi-ness companies. A PROFOR/Bank/IFC/WWF-host-ed Forest Investment Forum held in Nairobi inApril 2005 identified several such investmentopportunities. The government’s restructuredForest Service is in the process of developing a seriesof pilot schemes that will test alternative approach-es for engaging the private sector in these partner-ship-based forest projects.

Mozambique

The government is actively promoting private sec-tor investment in establishing and managing forestresources. Its preliminary studies suggested a long-term potential to develop a very large plantationestate . At present, there are 24,000 hectares of pri-marily pine and eucalyptus plantations. Studies bySavcor Indufor Oy associates have screened themost promising areas for new plantation develop-ment. The Malonda Foundation (Church ofSweden, plus private investors) has initiated planta-tion developments in northern Mozambique, whereforest plantations are being integrated into morebroadly based agriculture and rural developmentprograms. Jaakko Pöyry consultants have identifiedpossibilities for development of a plantation-basedpulp industry.

Mozambique also has some 62 million hectaresof natural forests, of which 19 million hectareshave been zoned for sustainable timber produc-tion. The country is geographically well placed totake advantage of emerging export markets. Illegallogging is a difficult problem, and the governmentis taking active steps to tighten up its concessionmanagement arrangements and to strengthen for-est governance.

Uganda

Uganda has successfully initiated a program forencouraging investment by local communities andsmallholders in pine and eucalyptus plantationsthat are intended to supply the country’s very rap-idly rising domestic demand for construction-gradetimber and wood-based panel products. TheEuropean Union is financing a Sawlog ProductionGrant Scheme to support the establishment of suchplantations. This program helps smallholders bycovering approximately 50 percent of the cost ofplantation establishment. Contracts are beingdeveloped with smallholders and larger-scale com-munities for establishment of plantations rangingfrom 25 to 500 or more hectares.

A Norwegian afforestation group, a subsidiary ofTreeFarms A/S (based in Tanzania), has invested inplantations in the Busoga District. A British-financed private sector group (the New ForestCompany) has recently been awarded a 50-yearlicense to grow trees on 6,000 hectares of theNamwasa Forest Reserve in Kasanda subcounty inMubende district.

Zambia

Zambia’s natural forests, covering about 35 millionhectares, play a key role in supplying the subsistenceneeds of its rural population. Only one-half of thegross annual timber yield is utilized; therefore, gov-ernment policy is giving strong emphasis to sustain-able management of indigenous forests, especially forincreased production of NTFPs such as honey.Zambia also has about 75,000 hectares of plantations(mainly pine and eucalyptus), with a total standingvolume in excess of 8 million cubic meters. The gov-ernment is seeking private sector investment fordeveloping an expanded plantation-based timberindustry, with promising opportunities for increas-ing timber exports to South Africa. A Forest IndustryCredit Facility targeted at the Zambian poor providesUS$500,000 each year for plantations.

Zimbabwe

Zimbabwe has about 154,000 hectares of industrialplantation forests, which produce about 95 percentof the country’s industrial wood requirements. Themajor forest plantation species grown in Zimbabwe

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are Pinus patula, P. elliottii, P. taeda, Eucalyptusgrandis, E. cloeziana, and Acacia mearnsii. The pinesare used mainly for structural timber productionand for pulp and paper, eucalyptus is used for polesand for pulp and paper, and the black wattle (A.mearnsii) is used for the production of tannin. Mostof the industrial plantations are managed by theZimbabwe Forestry Commission. Investment possi-bilities lie mainly in the area of improved plantationmanagement and reforestation of logged-over plan-tation forests. Niche markets in the United Statesand Europe are being explored. To discourage illegallogging, the government has introduced an exportban on unprocessed timber.

Malawi

Forests and woodlands cover about 34 millionhectares. Most of this forest area is noncommercialfrom a timber point of view, but extremely impor-tant for environmental protection of river headwa-ters and the steeper mountainous areas. The totalarea of industrial plantations (pines and eucalypts)is about 120,000 hectares, of which about 75,000hectares were originally planted for production ofpulpwood; however, a Viphya Pulp and PaperCorporation, which was being proposed in the1970s, never came to fruition.

These plantation resources, which for manyyears were unpruned and underthinned, are nowbeing used for production of sawnwood and ply-wood. The main plantation softwood species arePinus patula and P. kesiya, and the hardwood plan-tations are mainly Eucalyptus camuldulensis and E.grandis. Local communities in the region aroundBlantyre have been given responsibility for manage-ment of government-owned plantations, withencouraging results. The main private sector invest-ment opportunities lie in plantation rehabilitationand establishing new plantations, on both farm-lands and public lands. Investment opportunitieshave been identified in the furniture industry.

Tanzania

About half of Tanzania’s land is forested (mainlyopen woodlands, covering about 44 millionhectares). This vast area of natural woodland isunder pressure from expanding agriculture, result-ing in conflicts in land use. There are about 80,000

hectares of state-owned plantations and another70,000 hectares of private plantations. One Forumparticipant suggested that Tanzania has the poten-tial to create a plantation-based forestry sector sim-ilar to that of Chile, New Zealand, or South Africa.Much of this could come from company/communi-ty-based partnership schemes. Tanzania has goodgrowing conditions for all of the world’s majorplantation species (for example, acacia, eucalyptus,pine, and teak), in addition to a number of interest-ing indigenous hardwoods. The plantation-basedsector has the potential to generate export revenuesthat could equal in value the country’s entire cur-rent exports. Possibilities for export of wood polesto Kenya are favorable. An NFP Facility is support-ing a participatory process to establish plantationsand woodlots. Participatory forest management isfacilitating community forest management.

Madagascar

Being geographically isolated, Madagascar hasunique forest ecosystems covering about 70 millionhectares, of which upper mountain forests cover 23million hectares, lowland evergreen forests 25 mil-lion hectares, and deciduous broadleaf forests about14 million hectares. About 80,000 hectares of pineand eucalyptus industrial plantations are located onthe Mangoro Plateau midway between Tananarive(the capital ) and Tamatave (the main northeastcoast port). Growing conditions in that region arehighly favorable for fast-growing species. Severaloverseas forest industrial companies and privatesector investors have been proactively exploringpossibilities of establishing additional industrialplantation resources, including the potential forexport of woodchips.

Swaziland

Swaziland has about 540,000 hectares of forest, cov-ering some 31 percent of the land area. Degradationof the indigenous forest as a result of shifting agricul-ture and exploitation is a problem. Industrial planta-tions account for about 114,000 hectares (7 percentof the total land area); most of them are privatelyowned (70 percent are owned by two large compa-nies, Usutu Pulp Company and Peak Timbers). Amajority of the industrial plantations are conifersand are grown for sawlogs and pulpwood (mainly

19

REGIONAL INVESTMENT OPPORTUNITIES


Pinus patula, P. elliottii, and P. taeda). The remainingarea is established with hardwood plantations and isplanted with eucalypts for sawlogs and fuel.

The forest industry is of major significance forthis small country. Pulp and paper are of majorimportance, although with South Africa as a neigh-bor, exports of solid wood products are also of eco-nomic importance. There is potential not only toimprove the state and increase the size of this planta-tion-based industry but also to increase added valuemanufacturing of wood products for South Africa.

INVESTMENT OPPORTUNITIES IN FOREST-BASED INDUSTRIES

Much potential exists for investments aimed atimproving the efficiency and profitability of thetimber industry in Eastern and Southern Africa.With the notable exception of South Africa and onelarger-scale sawmill operating in Tanzania, prevail-ing levels of efficiency, recovery, and technology arelow, and there is much room for new investment totake advantage of the economic potential of forest-based industries in the region to contribute topoverty alleviation, increased trade, and sustainableeconomic growth.

Table 3 summarizes the current status of the for-

est industrial output in the region.

The Pulp and Paper Industry

In addition to existing pulp mills in Kenya, SouthAfrica, Swaziland, and Tanzania, one Forum sub-mission suggested a possibility that within 10 to 15years, it is conceivable that two (or even three) newworld-scale hardwood pulp mills could be built inthe region. Mozambique, South Africa, andTanzania would be the most obvious target coun-tries. The pulp and paper industry has the poten-tial to make a significant contribution to genera-tion of increased rural incomes. Pulpwoodrotations for fast-growing pulpwood crops such asEucalyptus grandis and Acacia mearnsii are on theorder of five to eight years. A combination of fastgrowth rates, short rotations, the ability of pulp-wood crops to coppice, the relatively low laborinput requirement compared with many agricul-tural crops, and reasonable rates of financialreturn make them an attractive investment cropfor smallholders.

The existing pulp and paper companies inKenya, South Africa, and Tanzania are all support-ing outgrower schemes that are creating opportuni-ties for many thousands of smallholders to benefit.Given the high rural population densities through-

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TABLE 3 Production of Forest Industrial Products

Wood-based Wood Paper & Other paper No. Country Sawnwood panels pulp paper products products

Cubic meters Cubic meters Metric tons Metric tons Metric tons (1,000) (1,000) (1,000) (1,000) (1,000)

1 Kenya 78 82 66 80 1202 Uganda 264 5 — 3 —3 Tanzania 24 4 54 25 —4 Zambia 157 18 — 4 —5 Malawi 45 18 — n.a. —6 Mozambique 28 3 — n.a. —7 Madagascar 95 5 — 3 —8 Zimbabwe 397 77 44 80 —9 Swaziland 102 8 191 n.a. —10 South Africa 1,498 476 2,174 2,336 601

Source: FAOSTAT 2004.n.a. = not applicable— = not available


out the region, it is certain that an increasing pro-portion of the pulp and paper industry’s raw mate-rial needs will have to come from smallholder orcommunity-managed plantations and woodlotsand from areas of government forest land beingleased under partnership arrangements betweencompanies and local communities.

There is well-documented evidence to confirmthat even in densely populated regions such asUganda and western Kenya, small farmers willrespond very rapidly to the dual incentives of a guar-anteed market and a fair price for short-rotationfarm-grown pulpwood and timber. Contrary to con-ventional wisdom, forest inventory, aerial photogra-phy, and satellite studies carried out over the past 30years in such regions concluded that the denser thepopulation, the more trees in the landscape.2

Building and Transmission Poles

There is a strong demand in the region for buildingpoles and for posts and poles for power transmis-sion and telecommunications. Much of the trans-mission pole requirement is being supplied fromtreated eucalyptus plantations and on farm wood-lots. In Kenya, for example, there are about sixmajor pole treatment plants that are capable of pro-ducing most of Kenya’s future requirements.Treated poles are currently imported from SouthAfrica and Tanzania.

Lumber and Wood-Based Panels

In the traditional solid forest products industries(sawmilling, joinery, furniture manufacture, andwood-based panels), continuing strong growth ofthe region’s construction sector is creating signifi-cant investment opportunities in several areas.Throughout the region, there are numerous invest-ment opportunities linked to improved utilizationof wood waste. From two-thirds to three-quarters ofthe wood currently harvested in East Africa (forexample) is wasted. There are attractive opportuni-ties for replacing imported fuel oil with locallygrown fuelwood, as is already being done by the teaand pulp and paper industries in Kenya.

There is a large potential for value addedmechanical wood processing. There is potential toincrease door production, utilizing short and small-

dimension pine (typically a waste product). Pine-based pallet production is replacing hardwood withsoftwood in some pallet markets such as Tanzania.A substantial East African market exists for a tim-ber-based prefabricated housing industry, withgood export prospects to southern Sudan. There isan interesting and underexploited export marketfor value added mechanical wood products likeglue-laminated sheets and components and gradedstructural timber. These markets exist in SouthAfrica, Europe, and probably also Asia, but newinvestment is needed properly to service them.

Although there are some well-run and efficientsawmills in South Africa and Tanzania, many of thesawmills in the region are operating at well belowcapacity. Wood recovery in most of these millsvaries from 25 to 35 percent, compared with apotential 45 percent. Much of the equipmentdepends on manual feed/product flow, with result-ing low productivity. Accuracy and cutting toler-ance are also low, and only a small proportion ofsawmill timber output is graded. Most timber issold “green” and untreated.

Most of the wood-based panel mills in the regionhave been more recently installed. Plywood mills areconventional peeling operations, with some slicingof veneers. There is potential for investment in addi-tional fiberboard capacity and in upgrading thequality of existing particleboard (chipboard) andblockboard manufacture. Current reliance on low-grade adhesives makes panels suitable mainly fordomestic end use, with some minor trading betweenneighbors. There is an opportunity for investment inan oriented strand board (OSB) industry.

Furniture and Joinery

This subsector is well represented in the region fortwo basic reasons: first, it is one of the easier andlower investment areas of manufacturing to enterinto, and second, the risks and value added returnsoften appear to be more attractive. The range ofmanufacturing of furniture and joinery varies fromthe very small “one-off” workshops to more sophis-ticated mass-production factories. In between are awide range of reasonably well-equipped specializedunits producing standard ranges of furniture,doors, windows, built-in units, flooring, moldings,and paneling.

While the other forest subsectors tend to be based

21


2. See studies by Peter Holmberg et al. (FAO, 1994).


on plantation softwoods, much of the joinery/furni-ture industry is based on hardwoods and importedwood-based panels. An emerging trend that has pos-itive implications for smallholders interested inshort-rotation tree farming is improved technologyfor converting eucalypts into reasonable-quality tim-ber and furniture. Such technologies—adoption ofwhich is well advanced in South Africa—are nowbeing tested and developed in Uganda. The greatestinvestment opportunities lie in upgrading the quali-ty and value of furniture and joinery output.

Bamboo-Based Forest Industries

A “Bamboo Belt” that runs through seven of thecountries in the region (Kenya, Madagascar,Malawi, Mozambique, Tanzania, Uganda, andZambia) presents significant investment opportuni-ties for private sector investment. Proposals havebeen developed for installation of a bamboo-basedSMFE processing industry in each country thatwould integrate outgrowers, farmers, and the localcommunities in the cultivation, harvesting, and pri-mary processing of bamboo fiber. Secondary pro-cessing will produce high-quality bamboo plywood,moldings, flooring, and components for both thedomestic and export markets. Stakeholders in eachcountry could include growers, primary processors,private individuals, and private industry. A commu-nity-based bamboo enterprise has already been suc-cessfully “project tested” in Ghana.

CONSTRAINTS TO INVESTMENT ANDPOSSIBLE SOLUTIONS

The Forum identified the following as major con-straints to community/smallholder involvementand private sector investment:

n Access by both local communities and forestcompanies to land for tree planting, especiallygiven the constraints of increasing populationpressure and the priority that has to be given tofood production

n Insecurity of raw material supply, aggravated byunclear and nontransparent government forestconcession allocation policies

n Low levels of technology, the high proportion ofwaste, and weak business management skills

n Difficulties faced by small- and medium-scaleforest-based industries in accessing capital

n The negative impact on forest income-depend-ent local communities and forest companyemployees of a trend by larger forest companiestoward subcontracting of forest harvesting andmanagement operations

n The weak bargaining position of local commu-nities, smallholders, and SMFEs when it comesto negotiating contracts with larger-scale forestcompanies and achieving fair prices for commu-nity- and farm-grown timber

n Environmental concerns about the impact ofplantations on water resources and biodiversityof natural forest resources

n The impact of illegal logging on the ability ofmore responsible forest companies to ensureaccess to markets and to obtain attractive sellingprices for manufactured forest products

n Inadequate road, rail, and port infrastructure;the high cost of transporting forest products;and delays experienced in obtaining permits forexport of forest products

n High transaction costs that act as a deterrent toinvestment in SMFEs by both commercial anddevelopment financing institutions

The following sections of this report which dis-cusses possible ways to overcome these constraints,are based on a combination of suggestions made byparticipants during the course of the Forum paneldiscussions, plus a synthesis of written submissionsfrom the many representatives of industrial compa-nies, governments, local communities, conservationagencies, and financial institutions who were con-sulted in the course of developing the Forum agen-da (see appendix 1 and appendix 3).

ACCESS TO LAND

The issue of how to secure the land required for newplantation development surfaced repeatedlythroughout the course of the Forum. Given the ris-ing rural population pressures in most of theregion, there are very limited possibilities for forestcompanies (and especially overseas companies) to

22



purchase outright large areas of land for plantationestablishment.

Access to State Forest Lands

Throughout the region, many state plantationscould be transferred to adjoining communities.With appropriate support, they would offer thesecommunities an attractive stake in a forestry enter-prise. This strategy requires affirmative action byboth governments and companies. This has beenrecognized in the forest policies of countries such asKenya, South Africa, Tanzania, and Uganda: all ofthese governments have committed to devolution ofresponsibility for management of existing state-owned plantations to local communities and to theprivate sector.

Difficult issues that are still in the course ofbeing resolved include the need for independent,transparent inventory and valuation of plantationresources; mobilization of the finance needed tosupport such forest land transfers; and institutionalarrangements for addressing the politically sensitiveissue of land tenure rights.

South Africa has now had almost a decade ofwell-documented experience in dealing with suchissues.3 Partly to relieve political pressure on thegovernment’s Forest Department, it shifted theresponsibility for overseeing and monitoring stateforest land sales to an independent Department ofPublic Enterprises. Privatization packages requiretransfer of 10 percent of the equity to local commu-nities. Problems remain as to how to ensure thatlocal communities receive regular and equitabledividend payments.

Access to Large-Scale Privately Owned and Agribusiness Lands

Transfer of larger-scale privately owned commercialfarmlands and estates to local communities andsmallholders is still an option in some countries ofthe region. The South African Sugar Association(SASA), for example, has set up the Inkezo Land

Company with the specific objective of fast-track-ing the transfer of larger-scale privately ownedlands to previously disadvantaged individual (PDI)growers. Funding for the initiative has come fromboth the private sector and government. The Inkezoinitiative potentially offers a model that could befollowed by the forestry sector to improve the accessto agribusiness land by local communities commit-ted to tree farming. Key issues that must beaddressed include the process for transparent inde-pendent identification and selection of willing buy-ers and sellers of forestry land,4 mobilization offinance, facilitation of the sales transactions, andthe post sale support for growers.

Access to Private Company-Owned Forest Lands

In response to government directives aimed ataccelerated Black Economic Empowerment, initia-tives have been taken by larger forest companiessuch as Sappi and Mondi in South Africa to acceler-ate transfer of substantial areas of company-ownedplantation lands to low-income families.

Sappi, for example, which is South Africa’slargest plantation-based forest industrial company,manages about 360,000 hectares of plantations. Anopportunity has been recently identified to partnerwith an empowerment consortium for mutual ben-efit. Sappi will sell a 25 percent undivided owner-ship to the Lereko Property Consortium (PTY), inwhich will be included meaningful participation ofSappi employees and (through a Workers’ Trust) theMalibongwe Women’s Development Movement.

Similarly, Mondi has established a SiyaQhubekablack empowerment consortium known asImbokodvo Lemabalabala Holdings, covering anarea of 22,000 hectares. A noteworthy feature of thistransaction was an agreement in advance to setaside an adjacent 9,000 hectare area as an additionto a World Heritage site.

Mainly for political reasons as an alternative tooutright privatization and sale of state forest lands,

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4. See proposals contained in the Kenya PROFOR-financedpartnership study by James Mayers (IIED), which sets outguidelines for a democratic and transparent process forselection of participating outgrowers (Forum panel 1, doc-ument 11).

3. See Dlomo and Pitcher, Juggling Social and Economic Goalsin South Africa (document 5 in panel 1 of the Forum BriefingMaterial.)


most governments in the region have opted forusing long-term concessions over areas of state-owned forest lands. Issues raised during the Forumrelating to such concession polices are further dis-cussed below.

SECURITY OF RAW MATERIAL SUPPLY:CONCESSION POLICIES

Participants in a Forum working group on con-straints to financing the forestry industry andactions to overcome obstacles began with a discus-sion of concession policies and what many partici-pants consider to be inadequacies in prevailing legaland transparent forest concession legislation.

The working group discussed these three mainthemes:

n The need for transparent long-term concessionallocation agreements and equitable revenuesharing as essential prerequisites for assuringinvestors in larger-scale forest industrial opera-tions guaranteed security of raw material supply

n The need for government timber allocation andconcession policies to maintain the flexibilityneeded to ensure access by small-scale forest-based industries to government-owned forestresources (preferably through some type of auc-tioning system)

n The potential of partnership-based concessionpolicies to create possibilities for involvement oflocal communities and smallholders in ways thatwill maximize the contribution of forest-basedindustries to poverty alleviation and to protec-tion of forest-related environmental services

Shortcomings in earlier government policies inTanzania were cited as an example of a situation inwhich a past lack of transparency and disagreementover critical issues such as valuation of state-ownedgovernment assets have created problems for bothgovernment and private company investors. On thecredit side, at least one Tanzanian company has madesubstantial progress in developing a dialogue withvillage communities and reaching agreement in prin-ciple on possibilities for future partnership-basedlong-term concession allocations in which provisionis being made to protect the villagers’ rights of accessto essential fuelwood and grazing lands.

Malawi has entered into a long-term concessionagreement with a Kenyan-owned wood-based panelcompany under terms that are reportedly support-ed by local tribal communities. In Uganda, a combi-nation of long-term concessions and an auctioningsystem are attracting overseas private investment inplantation establishment, retaining possibilities forsmall-scale forest industries to access government-owned plantation resources and ensuring maxi-mization of government forest-based revenues.

In Kenya, a similar government concession strat-egy currently in the course of development is seek-ing to balance the needs of both large- and small-scale forest industries. In response to the new ForestAct, several sawmilling companies and the country’sonly pulp and paper company have indicated theirwillingness to enter into partnership arrangementswith local communities and smallholders and toassume financial and management responsibilityfor specific plantation areas. The government is alsoexploring how to ensure that under some sort ofauctioning system, it will be possible to assure logsupplies for smaller-scale operators.

A concern is the need for a royalty system thatwill ensure government a reasonable financialreturn on its past very substantial investment in alarge plantation resource. The government’s ForestDepartment is in the process of developing a seriesof pilot schemes for engaging both industry andlocal communities in partnership-based approachesto concession allocation. IFC’s Private EnterprisePartnership (PEP) for Africa and its SocialResponsibility Forum (formerly, its CorporateCitizenship Facility) has expressed interest (in prin-ciple) in supporting such schemes.

A Zimbabwe participant advocated strengthen-ing regulatory functions of governments regardingfunctioning of the private sector and said that legis-lation and monitoring are lacking.

Several of the private sector financial institutionsparticipating in the Forum stressed the importanceof clear concession policies and land tenurearrangements as a prerequisite for private sectorinvestment. A World Bank and PROFOR studiesincluded in the Forum Briefing Material provide aglobal overview of concession polices.5

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5. See John Gray, “Forest Concession Policies and RevenueSystems,” World Bank Technical Paper 522; also“Institutional Changes in Forest Management” (WorldBank/PROFOR, 2003).


ACCESSING CAPITAL

Forum discussions of this topic focused on theseissues:

n The difficulties faced by small- and medium-scale forest-based industries in accessing capital,especially problems related to the ability of out-growers and SMFEs to provide the collateralrequired by commercial banks

n Most commercial banks lack the in-house socialand environmental expertise required to assessthe technical and financial viability of projectproposals

n The problem of the long gestation period andrelatively low financial returns from some plan-tation-based investment projects

n A lack of insurance facilities and limitations ofprevailing social and environmental safeguardpolicies for forest investment schemes

n The high transaction costs of processing smallloans, which bias lending by development financ-ing such as the IFC toward larger-scale projects

Collateral

Under current circumstances, it is difficult forsmall-scale forest-based industries and for bothlocal communities and outgrowers to attractinvestment capital from commercial banks. A fun-damental issue is how to provide the collateralrequired by such banks. One possible solution pro-posed for Forum consideration by Fractal ForestAfrica (a South Africa Consulting Group) is thepossibility of developing a system wherein thetrees of existing growers (and possibly the userights to the land, pending clarification of long-term tenure and ownership rights) could be usedas collateral. This might be achieved by requiringindependent certification of the grower’s planta-tion assets by an accredited body acceptable to thelending institution.

Under such a scheme, the grower would be givena certificate that could be used as a form of collater-al to secure loan funding. The system could beunderwritten by government to increase the sys-tem’s credibility, and growers could leverage furtherdevelopment off their “track records.” Cooperationof the forestry industry and forest product buyers

could help by offering firm market contracts for theoutput of such schemes.

Independent certification schemes, such as thatof the Forest Stewardship Council (FSC), andnational certification schemes, such as those beingdeveloped with World Bank/WWF Alliance fundingin Kenya6 and Mozambique and by WWF’s GlobalForestry and Trade Network,7 could be used as atesting ground for monitoring performance. Forexample, the World Bank and IFC both requireindependent certification as a precondition for for-est-related financing. Independent certification hasbeen successfully used as one of the criteria formeeting World Bank Group Board requirements.8

Lack of Commercial Bank “In-House”Forest Expertise

Most commercial banks lack the in-house socialand environmental expertise required to assess thetechnical viability and financial soundness offorestry schemes. Many emergent forestry-basedenterprises are having difficulty in interacting withthe formal banking sector mainly because of thevast difference in perspectives between the averagesmall-scale grower or forestry contractor and thebank managers or other customer liaison staff.Many commercial banks operate in a technological-ly advanced mode, while the growers have rural,agrarian-based backgrounds.

Governments can play a useful role in triggeringinitiatives for addressing this issue by supportingworkshops that bring together potential investorsand commercial banks and by supporting trainingof bank staff and potential borrowers, both aimed atimproved awareness of approaches to project finan-cial appraisal in the forest sector.

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6. See report by George Wamukoya, WWF, on progress beingmade in Kenya toward introduction of a national certifica-tion scheme (panel 3, document 6).7. See paper by Steve Gretzinger, WWF LAC Region, whichsuggests—as promising initiatives on which to build—ongo-ing partnerships that have been established by IFC’s RegionalDevelopment Facilities in Latin America and Indonesiaunder memorandums of understanding (MOUs) withWWF’s Global Forest and Trade Network. Under theseMOUs, substantial progress has been made toward improv-ing market access for small-scale forest industry companiesin Bolivia, Indonesia, and Nicaragua and mobilizing financefor expansion of those operations.8. World Bank and IFC certification requirements aredetailed on World Bank Operational Policy 4.36.


In South Africa, the government has endorsed aFinancial Sector Charter as a binding contract onthe financial services sector and as a structured planto provide greater opportunities to low-income anddisadvantaged families to participate in the sector.More importantly for forestry, by year 2008, thefinancial services sector must provide access tobanking facilities within a maximum distance of 20kilometers from where people need them.

Improving Financial Returns fromPlantation Investments

In South Africa, as is likely to be the case in manyother countries where investment is being made inlonger-rotation construction-grade tree species(such as pines), the absolute contribution in cashterms that forestry makes to the average small-grower household has been insufficient to lift thegrowers out of poverty. These are some possiblestrategies for addressing this issue:

n Maximize opportunities for local communitiesand smallholders to earn the typically quite highrates of return that can be obtained by invest-ment in fast-growing short-rotation pulpwood,building and transmission poles, and energysubstitution fuelwood crops.9

n Introduce financial subsidy schemes to kick-start community and smallholder investment inlonger-rotation construction timbers and morevaluable hardwood species.10

n Exploit the potential to support communityinvolvement by taking advantage of emergingschemes to pay for forest-related environmentalservices such as water resources, carbon seques-tration, and biodiversity.

n Give growers a share in the profits associatedwith the downstream processing of their tim-ber. This strategy would take advantage of thefact that value addition and associated profitsalong the forests’ product value chain are heav-ily skewed toward downstream processingactivities.

Subsidy and Incentive Schemes

One possible strategy for improving financial returnsto communities and outgrowers is through financialsubsidies. Although these can have the effect of skew-ing investment, in South Africa (for example) theirintroduction has been justified as part of the govern-ment’s goal for accelerating Black EconomicEmpowerment. It has been argued that subsidies areneeded, first, to encourage these initiatives and, sec-ond, to facilitate the extension of these initiatives toareas where these schemes would be most appropri-ate.11 The subsidies would be for a limited period, andthe requirements to qualify for subsidization veryspecific and focused on the objective of attractingmore low-income families into the forest industry,particularly those living in rural areas.

Payments for Forest-Related Environmental Services

Innovative payments schemes for carbon or otherenvironmental services are a potentially importantsource of funding for rural communities and forestoperators.12 Developing countries could have signif-icant development benefits from a broader recogni-tion of CDM/Kyoto Protocol activities in emissiontrading schemes. There are opportunities for bothgovernments and local communities to benefitfinancially by becoming actively involved in theongoing discussion process on “avoided deforesta-tion” under UNFCCC. Carbon financing can be avaluable additional financing source to improve thefinancial viability of afforestation projects.Examples were cited of ongoing carbon schemes inthe Congo Basin, Kenya, South Africa, and Uganda.

Timber Investment ManagementOrganizations

While the need to raise short- to medium-termfinancial returns from forest investment is a con-straint for many SMFEs and smallholders, the

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9. TreeFarms A/S in Tanzania, Pan African Paper Mills inKenya, and South Africa’s pulp mills are all pursuing thatstrategy.10. See publications of Forest Trends (www.forest-trends.organd Uganda’s Sawlog Grant Scheme (summarized in docu-ment 9 of panel 1).

11. Document 20 of panel 1 provides a summary by LTS con-sultants of the subsidy financial incentive and tax breaks thatare being used around the world for stimulating forest invest-ment.12. See PowerPoint presentation by Hege Salvesen of ForestTrends, prepared as an introductory overview for the panel 3sessions.


Forum took note of the growing interest of globalprivate sector financial institutions, pension funds,and timber investment management organizations(TIMOs) in longer-term forest-land-related invest-ment opportunities in the region.

As pointed out by Clark Binkley, a keynotespeaker who addressed the Word Bank/IFC-hostedForest Investment Forum in October 2003, referredto several institutional investment funds around theworld that are proactively seeking opportunities toinvest in long-term assets. These funds hold trillionsof dollars of capital for investment and typicallyrepresent the broad public. Timberlands are attrac-tive to such institutional investors because they havestrong, sustainable cash yields, are of low to moder-ate risk, provide portfolio diversity, and preservecapital. The average annual return for U.S. timber-land investments in the period 1960–2002 (forexample) was 12 per cent. In the United States as ofearly 2006, more than 5 million hectares of forestland had been purchased by TIMOs.

Non-U.S. investments with a higher-risk profilegenerally require a higher return. In this context, itwas recommended that the World Bank should helpto reduce risks of timberland investments in clientcountries by (a) improving policies, institutions,and legal frameworks; (b) supporting technicalassistance; (c) helping to privatize forest lands; and(d) working to create markets for environmentalservices.

Representatives of several such funds fromEurope, North America, and Kenya represented atthe Forum have already invested in such schemes in(for example) Mozambique, South Africa, Tanzania,and Uganda. They indicate the potential to mobilizesignificant private sector funding for investment inthe region.13

Access to Insurance

It has been difficult for a small-scale grower toinsure his or her trees. There was reportedly only asingle company in South Africa that offered planta-

tion insurance (namely, the Safire InsuranceCompany), and it had been very reluctant to offeremerging growers or communities plantation fireinsurance. There are two issues:

n Most commercial banks will not provide a loanbased on collateral that is not insured.

n Fire insurance has not been of practical impor-tance to many small-scale growers who individ-ually manage a small woodlot of trees. Fuel loadsare very low under fast-growing eucalypts, espe-cially where the sticks have been collected forfuelwood; people are vigilant and respondquickly to the threat of fire.

However, this is not the case where communitieshave established large tracts of land as contiguousblocks of a plantation, very similar to the commer-cial forestry companies. Communities have alsoplanted pines, which, when grown on a pulpwoodregime, have a very high fire hazard compared withthat of wattle or (to a lesser extent) eucalyptus. Inshort, there is an urgent need to insure the invest-ment that communities have made in longer-rota-tion forest plantations. The Forum recommendedthat government and industry should lobby theinsurance industry to get involved in financing theforest sector. Private investment will likely be morereadily forthcoming in situations where arrange-ments are in place so that outgrowers can be paid anadvance to prepare firebreaks and take other fireprotection measures.

RAISING TECHNICAL EFFICIENCY ANDBUSINESS MANAGEMENT SKILLS

Training facilities throughout the region are verybasic, and there are opportunities to strengthentraining, especially in the areas of wood-processingtechnology; mass production systems; saw doctoringand tooling, machine setup and maintenance; andwood products costing, marketing, and sales. Thetraining facilities that do exist tend to be underfund-ed and have rather out-of-date syllabi, and the levelof staffing is also inadequate. Opportunities forwomen to be employed in the sector are way behindthose of many other industries. IFC, through itsPrivate Enterprise Partnership for Africa Facility, iswell placed to provide grant-aid-supported technical

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13. For example, the Actis Africa/Agribusiness Fund (aUS$100-million investment fund based in Kenya), which hasidentified potential forest investment opportunities withinthe region with a value of US$68 million. The fund’s equityinvestment criteria are (a) growth potential, (b) security ofland tenure, (c) quality of management, and (d ) attractivereturns.


assistance and capacity building, including trainingin business management and accounting skills. Thearea of information technology is underdeveloped.Most of the more progressive firms make some useof computer technology for their accounting andgeneral office functions, but very few have fully inte-grated management information systems. This is anarea of investment opportunity that would yieldimpressive results.

SUBCONTRACTING OF FORESTOPERATIONS

A study by Jeanette Clarke and Moenieba Isaacs,“Forestry Contractors in South Africa: What Role inReducing Poverty?”14 highlights the negative impactof an ongoing trend by larger companies towardsubcontracting on the incomes and welfare of ruralcommunities and individuals engaged in harvestingand plantation management.

The study points up several difficult issues,including subcontractors’ lack of financial andmanagement expertise, their weak bargainingpower, low wages, and reduced access to financialand health support services. It also suggests a num-ber of government- and company-initiated actionsthat could be taken to cushion the potentially nega-tive impacts of subcontracting: for example,improved enforcement of existing legislation; espe-cially, respect by companies for minimum wageprovisions; and support from governments forstrengthened rural social services, mitigation ofhealth and safety risks facing workers, and thepotential for contract workers to strengthen theirbargaining position through collective action.

STRENGTHENING GROWERASSOCIATIONS

Although excellent progress has been made in thedevelopment of grower associations by ForestrySouth Africa, the bargaining power of growers couldbe substantially enhanced by more widespread col-lective action. Surety of supply, especially in times ofshortage, has particular value to the capital-intensivetimber processors; thus, they are prepared to pay

more for an assured and regular supply than they arefor ad hoc lots. By pooling resources, small-scalegrowers could offer larger lots and a regular andassured supply of timber, with a concomitantincrease in the price that could be paid for the timber.

The need has been suggested for increased sup-port by government—from all levels of govern-ment—and by Forestry South Africa for organiza-tion of small-scale individual and communitygrowers to facilitate their representation. Growerassociations could play a more meaningful role inthe representation of individual farmers and pro-vide them with a means of communication that isnot restricted only to forestry matters but couldaddress many other development issues. Theseorganizations are encouraging growers to sharetheir knowledge and experience with others. Thereis potential to extend this to include research anddevelopment information from the forest industry.

IIED is supporting an ongoing Forest GovernanceLearning Group project in Africa and other regionsthat (among other things) aims to strengthen thebargaining power of local communities.

ENVIRONMENTAL CONCERNS

Throughout the region, there have been disagree-ments between companies, governments, environ-mental agencies, and NGOs about the alleged socialand ecologically negative impact of fast-growingplantation species such as eucalypts. This same issuehas surfaced during earlier investment forumssponsored by the Bank/IFC and WWF. NGO con-cerns have included the following:

n The impact on community land rights in situa-tions where lands are being allocated for com-mercial-scale planting

n The negative impact of plantations on waterresources (especially in South Africa)

n The risk of former lands and grasslands beingecologically downgraded through the spread ofinvasive species

n The negative impact of monocultures on thebiodiversity of indigenous forests that are sched-uled for conversion to plantations

As a steo towards consensus on such issues, theCenter for International Forestry Research, (CIFOR)

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14. See panel 2, document 5.


published its findings on the topic in Fast-WoodForestry: Myths and Realities, written by ChristianCossalter and Charlie Pye-Smith (Jakarta, Indonesia:CIFOR, 2003). The FAO did earlier studies on thecomparative levels of water consumption of eucalyp-tus and other species, plus it plans to issue a forth-coming Planted Forest Code, which will includeguidelines for achieving socially and environmental-ly sound plantation investments.

Studies in South Africa have identified thoseareas where plantations pose a threat to waterresources and where they do not. A recent study byGenesis Analytica consultants15 (a summary ofwhich is contained in the Forum background read-ing material) has quantified the impact on waterflow of plantations established in upland watercatchments. Several recent studies have assessed thepotential of fast-growing plantations to sequestercarbon. The recent emergence of carbon creditschemes and their future potential was discussed atsome length by Forum Panel 3.

At the risk of oversimplification, there is recog-nition that plantations in the wrong place can haveserious negative social and ecological impacts; how-ever, there is solid social and scientific evidence toconfirm that plantations established in the rightplace—with built-in, transparent, and readily mon-itorable social and environmental safeguards—canplay a major role in contributing to poverty allevia-tion; economic growth; and protection of carbon,water resources, and biodiversity.

As pointed out in a keynote speech by RainerHaggblom of Jaakko Pöyry Consulting, fast-grow-ing plantations represent a major trend in the paperindustry, and reliance on plantation wood willincrease. He postulated that an ongoing worldwideshift from natural forest to plantations was a resultof competitiveness, environmental factors, andavailability of wood. He noted a particular growthin paper consumption in Asia. Partly because ofincreased outsourcing of industry there and theneed for more packaging and more documentation,the paper industry is increasing its use of bleachedhardwood kraft, which creates opportunities fordevelopment of new eucalyptus-based pulp capaci-

ty. He said that Chinese paper consumption wasgrowing so fast then when looked at in the contextof global fiber balance, through 2015, an additional3 million tons of hardwood kraft pulp will be need-ed, which will require three or four very large-sizemills. He noted an imbalance in terms of the globalfiber balance. Asking where mills should be placed,he said that the industry was moving south becauseof its cost competitiveness.

These observations reaffirm evidence submittedto earlier World Bank–supported forest investmentforums that fast-growing plantations will accountfor an increasing proportion of world industrialwood requirements. In 1990, plantation woodaccounted for less than 5 per cent of industrialwood needs. Today, that has increased to 30 per centand by 2030 will exceed 60 per cent. Since much ofthat increase will require short-fibered species suchas eucalyptus, this will create increasing opportuni-ties for low-income communities and smallholdersto benefit from cash-crop tree farming.

SOCIAL AND ENVIRONMENTALSAFEGUARD POLICIES

A Forum keynote paper16 provided an overview ofthe current status of incorporation of social andenvironmental safeguards into the lending policiesof both commercial banks and private sector finan-cial institutions. Publication of the EquatorPrinciples, developed jointly by IFC and 16 com-mercial banks about three years ago, has triggeredtheir wider adoption: today, about 40 banks havecommitted to them. Within Africa, several Equatorbanks have emerged. In South Africa, the top fivecommercial banks have adopted these principles.Their adoption in other parts of Africa (for exam-ple, Nigeria) is ongoing.

These safeguards are making it easier for financ-ing agencies to reassure their shareholders and thepublic at large that the projects they are supportingare socially and environmentally sustainable.However, several issues have not yet been resolved:

n The Equator Principles apply to projects inexcess of US$40 million, whereas many of the

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16. See PowerPoint presentation prepared by Christina Woodof Sustainable Finance Ltd.

15. Mike Edwards, “Contribution, Costs, and DevelopmentOpportunities of the Forestry, Timber, Pulp, and PaperIndustries in South Africa” (Forestry South Africa, 2005); seepanel 2, document 3.


wood-based enterprises in the region that areseeking to access capital fall within the US$5million to US$20 million range.

n A substantial volume of new investment inAfrica is emanating from China or other Asiaregional financial institutions that so far havenot adopted such safeguard policies.

n The multiplicity of certification schemes nowbeing tested (more than 50) creates confusion inthe minds of both bankers and potential clients.Urgent action is needed to achieve mutuallyacceptable certification processes.17

ILLEGAL LOGGING

The impact of illegal logging on both indigenousforest resources and the possibilities for moreresponsible companies to secure a fair price for theirproducts was cited as a serious issue by Forum par-ticipants from Kenya, Madagascar, and Zambia.

Widespread failure of forest governance—char-acterized by illegal logging, associated illegal trade,and corruption—directly undermines any nation’sattempt to achieve sustainable economic growth,societal equity, and environmental conservation.This situation puts at risk poor and forest-depend-ent populations who rely on timber and nontimberforest products, undermines responsible forestenterprises by distorting timber markets, and resultsin a loss of revenue that could be invested in sustain-able forest management or economic development.The World Bank estimates the market value of glob-al annual losses from illegal cutting of forests atmore than US$10 billion—more than eight timesthe total official development assistance (ODA) thatflows to the sustainable management of forests.

Increased awareness and acknowledgment of thesocial and economic costs of illegal logging, associ-ated illegal trade, and corruption in the forest sectorhave catalyzed action by a range of actors, from gov-ernments to NGOs to the private sector, at both theinternational and national levels. Governmentshave taken steps to introduce new legislative frame-

works, develop log-tracking programs, and reformconcession allocation processes. Recognition of theresponsibility of “consumer nations” has led to theadoption of the G-8 Forest Action Program (with akey focus on illegal logging), the European Union’sForest Law Enforcement, the Governance and TradeAction Plan, and the U.S. President’s Initiative onIllegal Logging.

International organizations such as the WorldBank and the United Nations have also put forestgovernance and illegal logging high on their agen-das. In its 2002 Forest Strategy, the World Bankcommitted to collaborating with borrower coun-tries and partners to reduce by half the estimatedannual financial losses from illegal logging of US$5billion by 2013. The World Bank has also activelysupported regional initiatives on forest governanceand hosts the Forest Law Enforcement andGovernance (FLEG) partnership program, fundedby the European Union, the United Kingdom, theU.S. Agency for International Development(USAID), the U.K. Department for InternationalDevelopment (DFID), the Finnish Department forInternational Development Cooperation (DIDC),and other donor agencies.

Since September 2001, three regional FLEG min-isterial processes have taken place in East Asia(2001), Africa (2003), and Europe and North Asia(2005). These processes were cohosted by both“producer” and “consumer” governments and theWorld Bank. The aim of these ministerial-levelpolitical processes is to mobilize international com-mitment from producer, consumer, and donor gov-ernments—in collaboration with other stakehold-ers—to increase efforts to combat illegal logging, aswell as the associated trade and corruption in theforest sector. They create the political “space” atnational and regional levels to address these com-plex and politically sensitive issues more concerted-ly and in partnership with major stakeholders fromcivil society and the private sector.

In Africa, initial estimates for annual revenuelosses resulting from illegal logging and ineffectiveforest taxation systems in seven African countries(Benin, Cameroon, the Central African Republic,the Democratic Republic of Congo, Gabon,Ghana, and the Republic of Congo) total US$63million—equivalent to 4 percent of ODA to thesecountries. An Africa Forest Law Enforcement and

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17 .The World Bank had developed a Questionnaire forAssessing the Comprehensiveness of (Forest) CertificationSchemes/Schemes (QACC)—now called the ForestCertification Assessment Guide.


Governance (AFLEG) Ministerial Conference,which took place October 13–16, 2003, inYaoundé, Cameroon, resulted in an AFLEGDeclaration and Action Plan. In the Declaration,governments expressed their intention to (amongother things) mobilize financial resources forFLEG; promote cooperation between law enforce-ment agencies within and among countries;involve stakeholders in decision making; andexplore means of demonstrating the legality andsustainability of forest products. An AFLEGSupport Group of active producer, consumer, anddonor governments was established in May 2004,with the purpose of maintaining momentum foraction to implement the declaration.

INFRASTRUCTURE

Investment in transport and other infrastructure isessential for enabling the forest industries of theregion to expand and to contribute to sustainableeconomic growth. Main constraints are costs associ-ated with the regulatory structure (such as harboror licensing costs); inadequate road, rail, and portinfrastructure; lack of feeder roads in rural areas;the high cost of transporting forest products; anddelays experienced in obtaining permits for exportof forest products. They are all adversely affectingthe efficiency and profitability of forest industrialenterprises throughout the region.

Notwithstanding the promising investmentopportunities identified (for example) for develop-ment of a very substantial pulp industry inMozambique and Tanzania for example, these areunlikely to progress unless the government is com-mitted to financing of the internal road, rail, andport infrastructure needed to sustain what has thepotential to emerge into a several-billion-dollar-oriented forest industry.

REDUCING TRANSACTION COSTS

A major constraint to investment is the very hightransaction costs that banks and private sectorinvestment institutions face in developing loan pro-posals that would respond to the needs of the literal-ly hundreds of small- and medium-scale forest and

wood-based enterprises that account for the bulk offorest sector–related employment in the region.

As a first step, the Forum recommended thathigh priority should be given to raising technicalassistance funding that would allow for more in-depth country-by-country analysis of the technical,financial, and management needs of SMFEs, alongthe lines of the already-completed IIED-supportedstudies in South Africa and Uganda.18

Second, there would be advantages in engagingwith specialized development finance institutionssuch as South Africa’s Industrial DevelopmentCorporation and IFC’s Private EnterprisePartnership (PEP) for Africa facility. They have hadmany years of experience in financing SMFEs inother sectors and have access to technical assistancegrant funding that can help to cover the costs of thepreparatory studies needed to assess the technicaland financial viability of geographically widespreadsmall-scale operations.

A representative of IDC South Africa stated dur-ing the Forum that the IDC has allocated 1 billionrand (about US$150 million) for SMFEs and job cre-ation and that IDC had aligned itself with the SouthAfrican government to achieve a 6 percent growthrate and 500,000 jobs. So far, it has contributed toestablishing 26,000 jobs. For forestry, IDC has setaside 600 million rand (about US$90 million) forsmall scale enterprise development and job creation.IDC highlighted a program of 2.5 percent financingup to 25 years for supporting forest and forest indus-try-based community development in rural areas.The 25-year time frame is a constraint for commer-cial banks. The need was stressed for additionaldonor funding. IDC has partnered with Sappi andother companies. Ensuring that communities obtaina stake in value added processing is a high priority.

IFC’s PEP for Africa has also had many years ofexperience in providing a combination of invest-ment and technical assistance to other sector smallscale enterprises in Africa. A key issue for furtherexploration is how to package loan requests to keepdown transaction costs and to identify commercialbanks interested in acting as financial intermedi-aries for IFC funding and technical assistance sup-port. IFC is already experimenting with such

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18. See ahttp://www.iied.org/pubs/search.php?k=uganda&p=1


approaches in Indonesia and Nicaragua in partner-ship with WWF’s Global Forest and Trade Network.

An ongoing project being supported by theNordic Development Fund in Mozambique, whichwas brought to the attention of the Forum, wouldappear to have promising potential for minimizingtransaction costs for larger financial institutionsand for wider replication.

POSSIBILITIES FOR FINANCING SMALLSCALE FOREST-BASED ENTERPRISES(SMFES) IN MOZAMBIQUE

Savcor Indufor Oy of Finland, a specialized forestand forest industry consulting company withNordic Development Fund support, has for the pasttwo years been undertaking an in-depth analysis ofpossibilities for SMFEs in Mozambique to accesscapital from a combination of commercial andregional development bank sources.

This undertaking has three main objectives:

n To work with local commercial and develop-ment banks and other financial institutions indocumenting the technical and other factors thatinhibit SMFE growth

n To stratify types of SMFE activity that couldqualify for financial credit

n To explore issues of interest rates, types of fund-ing, bank collateral and guarantee requirements,and repayment obligations

The main technical constraints to improvingprofitability and expansion were identified as obso-lete equipment and machinery, the high cost ofacquiring machinery and spare parts, the limitedcapacity to absorb modern and appropriate tech-nologies, the lack of technical skills, occupationalsafety, and low-quality production.

The main financial constraints include lack offunds to finance short-term operations such aspurchase of logs; transportation; marketing ofproducts; lack of financial resources such as equi-ty to obtain new technologies, expand operations,and improve the quality of the products; ratherlow financial capacity to invest in new plants,equipment, spare parts, and other accessories; dif-ficulties in accessing credit; and the high cost ofsuch credit.

The main management constraints include lackof skilled manpower, lack of accounting and mar-keting skills, inadequate knowledge of exportopportunities and of public and private procure-ment tender procedures, difficulties in accessingmarket information, and the high cost of manage-ment plans prepared by consultants.

The main infrastructure constraints include weakpublic infrastructure such as the road network,erratic power and water supply, high transport costsresulting from poor road conditions, and long dis-tances between the forest and the processing unit.

The project has defined preconditions for access-ing project loan funds. It proposed concessionarrangements, and it developed a community-basedcomponent for support to sustainable forest man-agement. It identified eligible beneficiaries, legal reg-istration requirements, and eligible project activities.

Based on these findings, it identified thoseSMFEs that present the most promising investmentopportunities. The project initiated negotiationwith six commercial banks and one developmentbank that have expressed serious interest in theproject. On the strength of this analysis, the NordicDevelopment Fund signed a financial assistanceagreement of 7.4 million euros. This financing willcover four main components: institution capacitybuilding, a credit facility of 3 million euros, a com-munity support program, and support for sustain-able forest management.

The Pietermaritzburg Forum sponsors intend toexplore further with IFC and other interested finan-cial institutions the possibility of using this modelas a starting point for developing a clearly definedprogram of investment and technical assistance forforest-related SMFE development in other parts ofthe Eastern and Southern Africa region.

THE FORESTS DIALOGUE

Forum discussions benefited substantially frommaterial provided by The Forests Dialogue (TFD),which was created in 1999. TFD is an outgrowth ofdialogues and activities of the World BusinessCouncil for Sustainable Development,. TFD’s mis-sion is to bring key leaders together to build rela-tionships and to generate substantive discussion onissues relating to achievement of sustainable forestmanagement.

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TFD’s 22-member Steering Committee compris-es representatives of leading forest companies andindustrial associations, conservation agencies, pri-vate forest owners, international policy researchinstitutions, and development financing agencies.Its Secretariat is located at Yale University in theUnited States.

Of special relevance to this Forum werediscusΩions of a TFD meeting in Richard’s Bay,

South Africa, which was held during the week fol-lowing this Investment Forum. The purpose of thatTFD meeting was to identify key areas for potentialcollaboration among stakeholders and to catalyzeprogress toward improving commercial forestry’scontribution to poverty reduction.

Box 5 is extracted from a TFD paper that sum-marizes outcomes of the Richard’s Bay meeting.

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BOX 5

Information, awareness and monitoring

n Identify the contribution of formal forestincome to poverty reduction

n Support research and advocacy on opportu-nities for pro-poor initiatives in forestrysupply chains

n Establish baselines and indicators, and trackprogress

Strengthen rights, capabilities and local deci-sion-making

n Support poor people’s own decision-makingpower

n Secure poor people’s forest rightsn Back up rights with the capability to claim

themn Cut the regulatory burden on poor peoplen Support local control of enterprises

Enable market opportunities to be seized bypoor people

n Remove the barriers to market entryn Ensure that markets for environmental

services benefit poor peoplen Support associations and financing for local

forest businessesn Demand responsible forest enterprise and

fair trade

Policies, institutions and standards

n Improve access by the poor to real decision-making

n Establish cross-agency learning coordinationn Simplify policies and laws, and implement

and enforce them equitablyn Support judicious subsidies, and remove

unreasonable trade barriersn Develop clear articulation of social standards

as they relate to forestry

Finance and incentives

n Establish domestic and global investmentmechanisms

n Develop credit unions and better risk assess-ments

n Build capacity for finance administrationand deals between players

n Create incentives for those that operateresponsibly

Organisation and partnershipsn Foster enterprise leadership and associa-

tions, and support their specific needsn Support unionisation and coordinated col-

lective bargaining amongst the labour forcen Install more equitable benefit sharing from

large-scale commercial forestryn Make landowners accountable for safe work

activity on their landn Develop strategic partnerships amongst

key actors e.g. large scale with small scaleenterprise

Source: James Mayers, “Poverty Reductionthrough Commercial Forestry: What Evidence?What Prospects?” (New Haven, CT: The ForestsDialogue and Yale University, 2006), pp. 22–24.

Actions Needed to Mobilize the Potential of Commercial Forestry to Contribute to Poverty Reduction


NEXT STEPS: POSSIBILITIES FORFOLLOW-UP INVESTMENT

The most important outcome of this InvestmentForum will be the extent to which concrete invest-ment deals and programs of technical assistance can

rapidly be concluded between some of the financialand development institutions that participated andthe many forest agencies and forest industrial com-panies in the region that are proactively seekingfinancial support. At the time of drafting thisreport, several such investment deals and technicalassistance projects are under active discussion.

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SOUTH AFRICA DEPARTMENT OF WATER AND FORESTRYSOUTHERN AND EAST AFRICA REGION • FOREST INVESTMENT FORUMDRAFT AGENDA

Day 1:Tuesday, June 13

8:00–9:00 Registration

9:00–10:00 Forum Introduction

Gerhard Dieterle, World Bank/PROFOR

Welcoming Remarks

Linda Mossop-Rousseau, Director, Forestry South AfricaMinistry of Water Affairs and Forestry, DWAF

Ole Sand, Head, Forest Products Group, IFC

Mike Edwards, Executive Director, Forestry South Africa

Paul Vantomme, Assistant Director, Forest Industries, ITTO

Harrison Ochieng Kojwang, Coordinator, WWF, Southern Africa Program

Forum Agenda

APPENDIX 1

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10:00–10:45 Keynote Speakers

10:00–10:15 Rainer Haggblom, Chairman, Jaakko Pöyry Consulting “Global Trends in the Forest Industry”

10:15–10:30 Dale Doré, University of Alberta/CIFOR“Building Better Corporate-Smallholder Partnerships;Sharing Lessons across Southern Africa Countries”

10:30–10:45 Christina Wood, Sustainable Finance Limited“Incorporating Social and Environmental Safeguards into the Lending Policies of Financial Institutions”

10:45–11:00 Question and Answer Session

11:00–11:30 Coffee Break/Press ConferenceSouth Africa Department of Water and Forestry

11:30–13:00 PANEL 1: FINANCING SUSTAINABLE FOREST MANAGEMENT: INVESTMENT OPPORTUNITIES AND CONSTRAINTS

Introductory Overview and Panel Chair

Olli Haltia, Managing Director, Savcor Indufor Oy

PanelistsMonika Branks, Operations Manager, Malonda Foundation, MozambiqueDavid Mbugwa, Chief Conservator of Forests, KenyaRory Mack, Lima Rural Development Foundation, South AfricaAndrew Tillery, Actis Agribusiness FundOlav Bjella, National Forest Authority, Uganda

13:00–14:00 Lunch

14:00–15:30 PANEL 2: FINANCING FOREST INDUSTRIAL DEVELOPMENT: INVESTMENT OPPORTUNITIES AND CONSTRAINTS


Charles Bengough, President, Bengough Haddock Associates

PanelistsOle Sand, IFCRussell Morkel, Mondi, South AfricaJames Mayers, IIEDMads Asprem, TreeFarms A/S, TanzaniaRentia Van Tonder, IDC South Africa

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15:30–15:45 Coffee Break

15:45–17:30 PANEL 3: CREATING A SOCIAL AND ENVIRONMENTALLY SUSTAINABLE INVESTMENT CLIMATE


Hege Salvesen, Forest Trends

PanelistsGeorge Wamukoya, WWF, KenyaGerhard Dieterle, World BankOle Sand, IFCShaun McCartney, Global Forest ProductsMike Howard, Fractal Forests, WWF, South AfricaOlman Serrano, FAO

Plenary Discussion

18:30–20:30 Reception

DAY 2:WEDNESDAY, JUNE 14

FIELD VISIT TO CORPORATE/COMMUNITY FOREST OPERATIONS

Forum Field Trip Briefing

Dutliff Smith, Business Manager, Forest Resources, Sappi

DAY 3:THURSDAY, JUNE 15

09:00–10:40 WORKING GROUPS ON PRIORITY AREAS FOR FOLLOW-UP INVESTMENT AND TECHNICAL ASSISTANCE

Working Group 1: Financing Sustainable Forest Management:Investment Opportunities and Constraints

Working Group Chair, Steven Ngubane, Forestry South Africa

Working Group 2: Financing Forest Industrial Development:Investment Opportunities and Constraints

Working Group Chair, Mads Asprem, TreeFarms A/S, Tanzania

Working Group 3: Creating a Social and Environmentally Sustainable Investment Climate

Working Group Chair, Christina Wood, Sustainable Finance Limited

37

FORUM AGENDA


10:45–11:00 Coffee Break

11:00–12:30 SYNTHESIS OF WORKING GROUP RECOMMENDATIONS

Chair, John Spears, World Bank

12:30–14:00 Lunch

14:00–15:00 FORUM CONCLUSIONS AND RECOMMENDATIONS FOR FOLLOW-UP ACTION

38



DENMARK

Droege, Kelly M.Investment Development ForesterInternational Woodland Company (IWC)1875 Frederiksberg CAmalievej 20, DenmarkTelephone: +45 332 44266Direct Line: +45 337 85245Fax: +45 332 40242Mobile: +45 244 [email protected]

FINLAND

Haggblom, RainerChairmanJaakko Pöyry ConsultingFinlandTelephone: +358 9 8947 2610Mobile: +358 40 555 9567Fax: +358 9 878 [email protected]

Haltia, OlliManaging DirectorSavcor Indufor OyTöölönkatu 11 AFIN-00100 Helsinki, FinlandTelephone: +358 9 6840 1140Fax: +358 9 135 2552Mobile: +358 40 901 [email protected]

Lehtonen, PetriHead of Natural Resource ManagementSavcor Indufor OySenior Forestry ConsultantTöölönkatu 11 AFIN-00100 Helsinki, FinlandTelephone: +35896840111Fax: +358 91352552Mobile: +358 40 900 [email protected]

Myllymäki,TarjaSenior Investment ManagerFinnish Fund for Industrial Cooperation Ltd.

(Finnfund)P.O. Box 391FIN-00121 Helsinki, FinlandTelephone: +358 9 3484 3326Fax: +358 9 3484 3347Mobile: +358 5 0353 [email protected]

GHANA

Samuel, Dartey AfariSamartex Timber & Plywood CompanyP.O. Box 1Samreboi, GhanaTelephone: [email protected]

Forum Participants Contacts List

APPENDIX 2

39


INDONESIA

Jurgens, Emile A.ConsultantBank Dunia (The World Bank)Jakarta Stock Exchange BuildingTower 2, 12th FloorJalan Jenderal Sudirman Kav. 52–53Jakarta 12190, IndonesiaTelephone: +62 21 5299 3000Fax: +62 21 5299 3111Mobile: +62 81 3829 [email protected]

Permadi, PipinHead of Program Development SubdivisionForestry Research and Development Agency

(FORDA)Gedung Manggala WanabhaktiBlock I, Lantai 11Jl. Gatot SubrotoJakarta 10270, IndonesiaTelephone: +62 21 572 0189Fax: +62 21 572 [email protected]

Sarsito,AgusSecretaryForestry Research and Development Agency

(FORDA)Ministry of ForestryGedung Manggala WanabhaktiBlock I, Lantai 11Jl. Gatot SubrotoJakarta 10270, IndonesiaTelephone: +021 573 4333Fax: +032 512 [email protected]@yahoo.com

KENYA

Diro, PhillipDeputy Director, Forestry PlanningPan African Paper Mills (E.A.) Ltd.P.O. Box 535Webuye, KenyaTelephone: +254 55 41 329Telephone: +254 55 41 342Mobile: +073 369 [email protected]

Mbugwa, DavidChief Conservator of ForestsForest Department

Ministry of Environment and Natural ResourcesP.O. Box 30513-00100Nairobi, KenyaTelephone: +254 020 3763669 or +254 020

[email protected]

Rai, Jaswant SManaging DirectorRai Plywoods (Kenya) LimitedLunga Lunga RoadP.O. Box 18730-00500Nairobi, KenyaTelephone: +020 65 2240/50Fax: +020 652 [email protected]

Tillery,AndrewInvestment PrincipalActis Africa Agribusiness FundP. O. Box 43233-0100Nairobi, KenyaTelephone: +254 20 219952Fax: +254 20 219744Mobile: +254 734 [email protected]

40



Wamukoya, GeorgeHead of Development and External RelationsEastern Africa Regional Program OfficeWWF5th FloorACS PlazaLenana RoadP.O. Box 62440-00200Nairobi, KenyaTelephone: +254 20 387 7355Fax: +254 20 387 [email protected]

MADAGASCAR

Keck,AndrewProject ManagerInternational Resources GroupMadagascarMobile: +261 3302 00404Telephone: +261 20 22 592 82/2259273Fax: +261 20 22 592 [email protected]

Mamitiana,AndriamanjatoDepartment of Water and ForestsMinistry of Environment, Water, and ForestsMadagascarTelephone: + 261 20 22 41155/22 411 49Mobile: + 261 32 40 596 [email protected]

Rambeloarisoa, GerhardForest Program OfficerMadagascar and West Indian Ocean ProgramWWFP.O. Box 738Antananarivo 101, MadagascarTelephone: + 261 20 22 304 20Telephone: + 261 20 22 348 85Mobile: + 261 33 12 804 06Fax: + 261 20 22 348 [email protected]

Rakotondralambo, MamyConseiller en Promotion du Secteur PriveJariala ProjectEriceinte DGEF NanisamoAntananarivo, MadagascarTelephone: +26 1 0202259272Fax: +26 1 0202259270Mobile: +26 1 [email protected]

Raharindranto, Johnny Jean-GeorgesEconomist Senior ConsultantJariala ProjectEnceinte Direction Generale des Eaux et ForetsNanisana, BP 406Antananarivo, MadagascarTelephone: +261 20 22 592 72Mobile: +261 33 12 613 90Mobile: +261 32 02 351 78Fax: +261 20 22 592 [email protected]

Ramilison, ClaudeTechnical ManagerSociete TIB MORAMANGAMobile: +261 331 190 [email protected]

MALAWI

Kumwembe, Bright B.Deputy Principal SecretaryMinistry of Mines, Natural Resources, and

EnvironmentPrivate Bag 350Capital City, Lilongwe 3, MalawiTelephone: +265 01789488/134Fax: +265 01788689Mobile: +265 [email protected]

Mwale, PaulosChief Conservator of ForestsDepartment of ForestryP.O. Box 30048Lilongwe 3, MalawiTelephone: +265 1340226 or +265 8 359 [email protected]@yahoo.com

41

FORUM PARTICIPANTS CONTACTS LIST


Ngalande, JohnChief Conservator of ForestsDepartment of ForestryP.O. Box 30048Lilongwe 3, MalawiTelephone: +265 1 770 734/771 000Telephone: +265 9 510 [email protected]@malawi.net

Sibande, Gorlum Kampingo InkosiTraditional ChiefVipya DistrictMalawiMobile: +08368569

MOZAMBIQUE

Branks, MonikaOperations ManagerMalonda Foundation, Niassa Resource CenterAvenida Kim Il Sung 1156Maputo, MozambiqueTelephone: +258 21 48 76 71Telephone: +258 82 30 06 930Fax: +258 21 48 76 [email protected]

Brodbeck, FrankGTZ/SADC Forestry ProgramDeutsche Gesellschaft für Technische

Zusammenarbeit (GTZ) GmbH(German Technical Cooperation)C.P. 2766Maputo, MozambiqueTelephone: +258-82-32 28 430Fax: +258-21-492 [email protected]

Cuco,ArlitoDirectorNational Directorate of Land and Forest

(DINATEF)Ministry of AgricultureCx. Postal 1406Maputo, MozambiqueTelephone: + 258 21 [email protected]

Foloma, MarcelinoNational Community Forestry Project CoordinatorNational Directorate of Forest and WildlifeMinistry of AgricultureP.O. Box 1406Praça dos Herois Moçambicanos 2o AndarMaputo, MozambiqueTelephone: +258 1 460036Fax: +258 1 460060Mobile: +258 82 [email protected]@hotmail.com

Issufo,Alima Abdul KadirNational Directorate of Land and Forest

(DINATEF)Ministry of AgricultureCx. Postal 1406Maputo, MozambiqueTelephone: + 258 (01) 460036/96Fax: +258 (01) [email protected]

Mabunda, RitoForest Program CoordinatorWWFRua Dom João IV, No. 213, SommershieldP.O. Box 4560Maputo, MozambiqueTelephone: +258-21-483121Fax: [email protected]

Taquidir, MuinoForest Research Department ChiefAgrarian Research InstituteMinistry of AgriculturePraça dos Herois MoçambicanosC.P. 1406Maputo, MozambiqueTelephone: +258 (21) 460036/96Telephone: +258 825 804 280Fax: +258 (21) [email protected]

42



NEW ZEALAND

Neilson, DennisDirectorInternational Forest Industry AdvisorsP.O. Box 392Rotorua 3201, New ZealandTelephone: +64 7 349 2764Fax: +64 7 349 2763Mobile: +031 976 [email protected]

SOUTH AFRICA

Burger, NerinaSenior Account ManagerWood, Paper, and Other Industries Strategic

Business Unit (SBU)Industrial Development Corporation19 Fredman DriveSandown 2196, South AfricaP.O. Box 784055Sandton 2146, South AfricaTelephone: +27 11 269 3031Telephone: +27 11 269 3000Fax: +27 11 269 [email protected]

Cantrill, JohnSenior AdvisorDepartment of Public EnterprisesPrivate Bag X15, Hatfield 0028Pretoria, South AfricaSuite 401, Infotech Building1090 Arcadia Street, Hatfield 0028Pretoria, South AfricaTelephone: +27 (0) 12 431 1002Mobile: +27 (0) 72 365 [email protected]

Carrihill, GordonIndependent Financial Consultant (Carrihill &

Associates)Global Emerging Markets, Forestry Fund

(Washington, DC)47 Congo RoadEmmarentia 2195Johannesburg, South AfricaTelephone: +27 11 486 2080Fax: +27 86 689 0944Mobile: +27 83 255 [email protected]

Clarke, JeanetteIndependent ConsultantP.O. Box 311Muizenburg 7950Cape Town, South AfricaTelephone/Fax: +27 21 7885098Mobile: +27 82 [email protected]

Chendauka, BwalyaBusiness Manager, ResourcesSappi ForestsP.O. Box 13124Cascades 3202, South AfricaTelephone: +27 333 474 76710Fax: +27 333 [email protected]

Dobson, DaveDirector, Safire HouseFibregro Products (Pty) Ltd.Redlands EstateGeorge McFarlane LanePietermaritzburg 3201, South AfricaP.O. Box 11176Dorpspruit 3206, South AfricaTelephone: +27 33 392 4800Fax: +27 33 342 2310Direct Line (telefax): +27 33 343 4523Mobile: +082 807 [email protected]

Dladla,VusiManager, Development ServicesNCT Forestry Cooperative Ltd.346 Burger StreetPietermaritzburg 3201, South AfricaP.O. Box 1445Pietermaritzburg 3200, South AfricaTelephone: +27(0) 33 8978500Mobile: +27 82 802 8950Fax: +27(0) 33 8978501

Edwards, MikeExecutive DirectorForestry South AfricaP.O. Box 1553Rivonia 2128, South AfricaTelephone: +082 600 [email protected]

43



Feely, JohnNTE CooperativeP.O. Box 11176Dorpspruit 3206, South AfricaTelephone: +033 3924808Fax: +033 3422310Mobile: +076 [email protected]

Harrison, GraemeManager, Forestry DevelopmentDepartment of Water Affairs and ForestryPrivate Bag X7485King William’s Town 5600, South AfricaTelephone: +27 43 6045400/5523Fax: +27 43 6045587Mobile: +082 809 [email protected]

Howard, MikeFractal Forest AfricaP.O. Box 759Umhlali 4390, South AfricaTelephone: +27 (0)32 525 6931Fax: +27(0)866 723 888Mobile: +27 (0)82 920 [email protected]

Jecty, Eric ObeseOperations OfficerIFC/Private Enterprise Partnership for AfricaP.O. Box 41283, Craighall 2024Johannesburg, South AfricaTelephone: +27 11 731 3000Fax: +27 11 268 0030/74Mobile: +27 83 272 [email protected]

Kanyi, DanielSector Operations ManagerIFC/Private Enterprise Partnership for AfricaJohannesburg, South AfricaMobile: +083 272 [email protected]

Kenny,AnthonyManagerLand ReformRestitution ProgramsMondi Business PaperSouth [email protected]

Keyworth, PeterGeneral Manager, Special ProjectsNCT Forestry Cooperative Ltd.346 Burger StreetPietermaritzburg 3201, South AfricaP.O. Box 1445Pietermaritzburg 3200, South AfricaTelephone: +27(0) 33 8978500Mobile: +27 82 802 8950Fax: +27(0) 33 [email protected]

King, ColinManager, Transformational Infrastructure and

Carbon CreditsStandard Bank Corporate and Investment BankingStandard Bank Center3 Simmonds StreetJohannesburg 2001, South AfricaP.O. Box 61297Marshalltown 2107, South AfricaTelephone: +27 11 636 4255Fax: +27 116360240Mobile: [email protected]

Mack, RoryGeneral ManagerLima Rural Development FoundationProgram ManagerAgriculture and Forestry for Teba DevelopmentSouth AfricaTelephone: +27 33 3429043Fax: +27 33 3942691Mobile: +27 82 [email protected]

McCartney, ShaunEnvironmental ManagerGlobal Forest ProductsPrivate Bag X518Sabie 1260, South AfricaTelephone: +013 764 9200Mobile: +083 627 [email protected]

44



Malloch-Brown, DavidGlobal Forest Products (Pty) Ltd.Tree Breeding CenterPrivate Bag Z518Sabie1 260, South AfricaTelephone: +27 13 764 9223Fax: +27 13 764 1027Mobile: +27 82 805 [email protected]

Memani, MziMemani ConsultingP.O. Box 1208Buccleuch 2066, South AfricaTelephone: +27 11 958 2523Mobile: +27 84 555 [email protected]

Morkell, RussellDirectorMondiSouth [email protected]

Mossop-Rousseau, LindaChief Director of ForestryMinistry of Water Affairs and ForestryPrivate Bag X313Pretoria 0001, South AfricaTelephone: +27 12 336 7212Fax: +27 12 336 7240Mobile: + 27 82 801 [email protected]

Molefe, PortiaDirector GeneralDepartment of Public EnterprisesPrivate Bag X15Hatfield 0028Pretoria, South Africa

Robyn Martin(Executive Assistant to the Director General)Telephone: +27 12 431 1121Fax: +27 12 342 [email protected]

Malango,AtupeleInternational Finance Corporation14 Fricker RoadIllovo 2196Johannesburg, South AfricaP.O. Box 41283Craighall 2024Johannesburg, South AfricaTelephone: +27 11 731 3000Fax: +27 11 268 0060/74

Ngassa Batonga, Bernard

International Finance Corporation14 Fricker RoadIllovo 2196Johannesburg, South AfricaP.O. Box 41283Craighall 2024Johannesburg, South AfricaTelephone: +27 11 731 3000Fax: +27 11 268 0060/74

Nicholson, Chris

Wood, Paper, and Other Industries StrategicBusiness Unit

Industrial Development Corporation19 Fredman DriveSandown 2196, South AfricaP.O. Box 784055Sandton 2146, South AfricaTelephone: +27 11 269 3475/3573Fax: +27 11 269 [email protected]

Ngubane, Steven ZamaSmall Business Development ManagerForestry South AfricaP.O. Box 13735Cascades 3202, South AfricaTelephone: +2733 345 1366Fax: +2733 342 1076Mobile: +2782 880 [email protected]

45



Nixon, PeterBreezy Brae FarmP.O. Box 386Creighton 3263, South AfricaTelephone: +270 398 [email protected]

Ndaba, PhumlaDepartment of Public EnterprisesSuite 401, Infotech Building1090 Arcadia StreetHatfield 0028Pretoria, South AfricaTelephone: +27 (0) 12 431 1041Fax: +27 (0) 12 342 [email protected]

Nsuntsha,AubreyAmahlati Emerging Entrepreneurs ForumP.O. Box 2705Pietermaritzburg 3200, South AfricaTelephone: +27 072 [email protected]

Olivier, NicDirector and ProfessorSADC Center for Land-Related Regional and

Development Laws and PolicyUniversity of PretoriaPretoria 0002, South AfricaTelephone: +27 12 420 5044Fax: +27 12 420 [email protected]

Peter, MichaelDirectorForestry Technical and Information ServicesDepartment of Water Affairs and ForestryPrivate Bag X313Pretoria 0001, South AfricaTelephone: +27 (12) 336 8782Fax: +27 (12) 336 8847Mobile: +27 82 808 [email protected]

Rencken, HilmarSenior Account ManagerWood, Paper, and Other Industries SBUIndustrial Development Corporation19 Fredman DriveSandown 2196, South AfricaP.O. Box 784055Sandton 2146, South AfricaTelephone: +27 11 269 3242Telephone: +27112693000Fax: +27 [email protected]

Salvesen, HegeConsultantBusiness Development FacilityForest TrendsCape Town, South AfricaUK Mobile: +44 788 770 3969SA Mobile: +27 761 343 [email protected]

Smit,WinstonDirectorForestry DevelopmentDepartment of Water Affairs and ForestryPrivate Bag X93Pretoria 0001, South AfricaTelephone: +27 12 336 7718Fax: +27 12 336 8847Mobile: +27 82 808 [email protected]

Smith, DutliffBusiness ManagerSappi ForestsP. O. Box 13124Cascades 3202, South AfricaTelephone: +27 (0)33 3476710Fax: +27 (0)33 3476792Mobile: +27 (0)83 661 [email protected]

Thompson,TrevorGlobal Forest Products (Pty) Ltd.Tree Breeding CenterPrivate Bag X518Sabie 1260, South AfricaTelephone: +27 13 764 9250Fax: +27 13 764 [email protected]

46



Underwood, MikeProgram CoordinatorCommunity ForestryUniversity of KwaZulu-NatalPrivate Bag X01Scottsville 3209, South AfricaTelephone: +27332606088Fax: +27332606005

Mobile: [email protected]

Van Loggerenberg, CarlArea Projects ManagerSappi Forest ProductsP.O. Box 7Kwambonambi 3915, South AfricaTelephone: +035 5801211Fax: +035 5801698Mobile: +082 329 7115Project GrowSappiSouth AfricaTelephone: +082 329 [email protected]

Verschuur, JackAfrican OperationsEarth Consultancy BV48 Hilltop RoadHillcrest 3610, South AfricaPhone: +27 (0)31 7651926Mobile: +27 (0)82 [email protected]

Van Tonder, RentiaHead of Wood, Paper, and Other Industries SBUInternational Development CorporationSouth AfricaTelephone: +27 11 269 3441Mobile: +27 82 806 [email protected]

Wood, Christina

AssociateSustainable Finance Limited3 Glamorgan RoadParkwood 2193Johannesburg, South AfricaTelephone: +083 718 [email protected]

Zimela, Masizakhe

Chief DirectorResource-Based IndustriesDepartment of Trade and IndustryEnterprise and Industry Development DivisionPrivate Bag X84Pretoria 0001, South AfricaDTI Campus77 Meintjies StreetSunnyside 0002, South AfricaTelephone: +27 12 394 2395Fax: +27 12 394 2395Mobile: +27 83 [email protected]

SWEDEN

Jonsson,TomasProgram ManagerRamboll Natura ABKapellgrand 7P.O. Box 4205SE-102 65 Stockholm, SwedenTelephone: +46 8 615 60 00Fax: +46 8 702 1914Direct Telephone: +4686156578Mobile: [email protected]

TANZANIA

Akitanda, PatrickAgricultural Assistant Director, Forest

DevelopmentMinistry of Natural Resources and TourismIvory Room, Nyerere RoadP.O. Box 426Dar es Salaam, TanzaniaMobile: +255 745 [email protected]

Asprem, MadsChairmanTreeFarms A/STanzaniaTelephone: +44 7887 628 [email protected]

47



48


Choudary,Y.V.General ManagerMufindi Paper Mill Ltd.Mill SiteP.O. Box 1Mgololo, TanzaniaTelephone: +255 262 700325Fax: +255 262 700372Mobile: +074 568 [email protected]

Kamwenda, Gerald JonesComponent LeaderPrivate Sector Involvement (PSI) in Plantation

Forests ManagementTanzania Forest Conservation and Management

ProjectP.O. Box 11979Dar es Salaam, [email protected]

Ngibuini, MwanikiManaging Director, East AfricaTreeFarms A/SP.O. Box 55Mafinga, TanzaniaP.O. Box 4730Dar es Salaam, TanzaniaMobile (Tanzania): +255 748 737 796Mobile (Kenya): +254 [email protected]

UGANDA

Amumpe,AllanAdministration ManagerSawlog Production Grant Scheme (SPGS)P.O. Box 5244Kampala, UgandaTelephone: +256 782 [email protected]@sawlog.ug

Bjella, OlavExecutive DirectorNational Forestry AuthorityP.O. Box 70863Kampala, UgandaTelephone: +256 31 264 035/6Fax: +256 41 230 269Mobile: +256 78 378 [email protected]

Cunningham, LeeGeneral ManagerThe New Forests Company (Uganda) Ltd.P.O. Box 71435Kampala, UgandaTelephone: +256 41 268 247Fax: +256 41 268 271Mobile: +256 78 272 [email protected]

Gershom, OnyangoForestry Inspection DivisionP.O. Box 7096Kampala, UgandaOffice: +256 41 2340684Home: +256 41 2572995Mobile: +256 77 [email protected]

Jacovelli, PaulChief Technical AdvisorEU Forestry Program (Uganda)P.O. Box 5244Kampala, UgandaTelephone: +256 772 312 769Fax: +256 41 342 [email protected]

UNITED KINGDOM

Abbott, PatrickSenior ConsultantLTS InternationalPentlands Science ParkBush LoanPenicuik EH26 0PH, ScotlandUnited KingdomTelephone: +44 131 440 5500Fax: +44 131 440 [email protected]

Bengough, CharlesSenior PartnerBengough Haddock InternationalP.O. Box 372Stafford ST18 9HZ, EnglandUnited KingdomTelephone: +254 20 531050Mobile: +254 772 [email protected]


Cottle, PhilManaging DirectorForestReAFRM Ltd.Crosby Court38 BishopsgateLondon EC2N 4AF, EnglandUnited KingdomTelephone: +44 20 7374 5655Fax: +44 20 7374 5651Mobile: +44 7769 895 [email protected]

Haddock, Peter

Senior PartnerBengough Haddock InternationalForestry and Forest ProductsManufacturing, Processing, Marketing, and

Sourcing SpecialistP.O. Box 372Stafford ST18 9HZ, EnglandUnited KingdomTelephone/Fax: +44 (0) 1785 [email protected]

Mayers, JamesHead, Natural Resources GroupInternational Institute for Environment and

Development4 Hanover StreetEdinburgh EH2 2EN, ScotlandUnited KingdomTelephone: +44 131 624 7041Fax: +44 131 624 [email protected]

Ozanne, JulianGeneral ManagerThe New Forests Company (Uganda) Ltd.P.O. Box 71435Kampala, UgandaOffice: +256 41 268 247Fax: +256 41 268 271Mobile:+256 78 272 3032lee@newforestscompany

ZAMBIA

Aongola, Lubinda MasuleDirector, Planning and Information DepartmentMinistry of Tourism, Environment, and

Natural Resources4th FloorKwacha HouseCairo RoadP.O. Box 34011Lusaka, Zambia 10101Telephone: +(260-1) 238772Fax: +(260-1) [email protected]@mtenr.gov.zm

Masinja,Anna ChilesheDirector of ForestryMinistry of Tourism, Environment, and

Natural ResourcesForestry DepartmentP.O. Box 50042Lusaka, ZambiaTelephone: +260 1 234375Fax: +260 1 226131Mobile: +097 772 [email protected]@zamnet.zm

Mutafu, Kelvin MZambia Forestry and Forest Industries

Corporation (ZAFFICO)P.O. Box 71566Ndola, ZambiaTelephone: +260 616 027Telephone/Fax: +260 616 029–30Mobile: +095 923 [email protected]

Nkhata, DavyFoundation AdvisorMwanka Rural Development and Environment

FoundationP.O. Box 510520Chipata, ZambiaTelephone: +06 221 808Mobile: +097 767 [email protected]

49



ZIMBABWE

Doré, DaleAdvisorShanduko TrustCenter for Agrarian and Environmental Research195 Fife AvenueHarare, ZimbabweTelephone: +(263-4) 722376Fax: +(263-4) [email protected]

Duwa, DarlingtonGeneral Manager, Forestry CommissionForestry Commission Head Office1 Orange Grove DriveP.O. Box HG139Highlands, Harare, ZimbabweTelephone: +263 449 84336/9Fax: +263 449 7066Mobile: +263 116 [email protected][email protected]

Kojwang, Harrison OchiengRegional RepresentativeSouthern Africa Program OfficeWWF10 Lanark RoadBelgravia, Harare, ZimbabweP.O. Box CY 1409Causeway, Harare, ZimbabweTelephone/Fax: +263-4-252 533 34Mobile: +263-91-251 [email protected]

Kottulinsky, FranzRift Valley Holdings, LimitedProjectsTanganyika House23 Third StreetP.O. Box 10455Harare, ZimbabweTelephone: +263 720067/8/9Fax: +263 700580Mobile: +263 91 219 [email protected]

Lowe, PeterForest Conservation OfficerFood and Agriculture Organization of the

United NationsFAO Subregional Office for Southern and

East AfricaOld Mutual Center, 11th FloorCorner, Jason Moyo Avenue and 3rd StreetP.O. Box 3730Harare, ZimbabweTelephone: +263 4 253655, ext. 221Fax: +263 4 700 724Mobile: +263 91 428 [email protected]

Mudekwe, JohnLecturerNational University of Science and TechnologyDepartment of Forestry Resources and

Wildlife ManagementP.O. Box AC 939Ascot, Bulawayo, ZimbabweTelephone: +263 9 282842/286557Fax: +263 9 286390/286 803Mobile: +023 836 [email protected]

Mufandaedza, EdwardChief Conservator of ForestsForestry Commission Building717 Fife StreetP.O. Box 467Bulawayo, ZimbabweTelephone: +(263-9) 61495/6Mobile: +011 862 [email protected]

INTERNATIONAL ORGANIZATIONS

Dieterle, GerhardAdvisorForestry Unit, Environmentally and Socially

Sustainable DevelopmentWorld Bank1818 H Street, N.W.Washington, DC 20433United StatesTelephone: +202 458 [email protected]

50



51


Ivers, LauraCommunications OfficerProgram on Forests (PROFOR)World BankTelephone: +202 473 23 96Fax: +202 522 [email protected]

Mead, LeilaCommunications ConsultantWorld [email protected]

O’Donnell, DwightSenior Industry SpecialistInternational Finance CorporationGlobal Manufacturing Service2121 Pennsylvania Avenue, N.W., F9K-905Washington, DC 20433United StatesTelephone: +202 473 8428Fax: +202 974 [email protected]

Reed, CarolCoordinatorEastern and Southern African Forest

Investment ForumWorld [email protected]

Sand, OlePrincipal Investment OfficerInternational Finance CorporationTeam Leader, Forest Production Sector2121 Pennsylvania Avenue, N.W., F9K-126Washington, DC 20433United StatesTelephone: +202 473 9134Fax: +202 974 [email protected]

Serrano, OlmanSenior Forestry OfficerWood IndustriesForest Products ServiceForest Products and Economics DivisionForestry DepartmentFood and Agriculture OrganizationRoom D 403Vialle delle Terme di Caracalla00100 Rome, ItalyTelephone: +065 705 4056Fax: +065 [email protected]

Spears, JohnForest Policy ConsultantEnvironmentally and Socially Sustainable

Development (ESSD) Vice PresidencyThe World Bank1818 H Street, N.W.Washington, DC 20433United StatesTelephone: +202 458 1542Fax: +202 522 [email protected]

Vantomme, PaulAssistant DirectorForest IndustriesInternational Tropical Timber Organization

(ITTO)International Organizations Center - 5FPacifico-Yokohama 1-1-1Minato-Mirai, Nishi-kuYokohama 220-0012, JapanTelephone: +(81-45) 223-1110Fax: +(81-45) [email protected]


Panel 1: Financing Social,Environmental, and EconomicallySustainable Forest Management

1. “Overview of Investment Opportunities forForest Plantations in Southern and EastAfrica,” Savcor Indufor Oy (PowerPoint pres-entation).

2. “Sappi Announces a Land-BasedEmpowerment Scheme” (Sappi Web site, May5, 2006).

3. “Mondi Involvement in CommunityPartnerships” (note prepared for the October2003 Forest Investment Forum).

4. “Going Forward Together” (Mondi Web sitesummary of the joint company/communitypartnerships in Siya Qhubeka forests, May2006).

5. “Juggling Social and Economic Goals in SouthAfrica,” Maud Dlomo and Mike Pitcher (IIED,2004).

6. “Mozambique: Investing Risk Capital inAgriculture, Tourism, and Forestry,” MonikaBranks, Malonda Foundation (PowerPointpresentation, 2006).

7. “A Case Study of Approaches to Planning ofPlantation Investments in Mozambique,”Savcor Indufor Oy (PowerPoint presentation).

8. “National Forest Authority: Timber PlantationInvestment Program,” NFA, Uganda (a briefingnote, March 2006).

9. “Uganda Sawlog Production Grant Scheme.”(NFA. 2006).

10. “The New Forests Company, Uganda” (Website report).

11. “Partnership-Based Approaches toManagement of Kenya’s Forest Resources,”James Mayers (PROFOR, 2005).

12. “Kenya Forestry: Economic and FinancialViability,” Roger Sedjo (PROFOR, 2004).

13. “Supporting Sustainable Environment andForest Ecosystems Management inMadagascar,” International Resources Groupconsultants (2005); see especially sections onReforestation Strategy (pages 20–25).

14. “The World Bank Forests Program,” GerhardDieterle (PowerPoint presentation).

15. “Current Status of World Bank Africa RegionSupport for Forests.” (ARD, 2006).

Forum Background Reading Material

APPENDIX 3

53

The materials listed below according to the themes of the three panels from the Forum are made available onthe CD included with this book. However, materials listed under ?other publications? are not on the CD.


54


16. “Ongoing Projects in Kenya, the DemocraticRepublic of Congo, and Uganda,” World BankCarbon Finance Unit.

17. “Examples of Innovative PartnershipContracts,” World Bank/IFC/IIED (2005).

18. “Fastwood Forest Plantations: Notes and IssuesArising from a WWF Study Tour to SouthAfrica,” (April 2005).

19. “Financing Sustainable Forestry in the Tropics:A Global Overview,” Adrian Whiteman, FAO(PowerPoint presentation, prepared for ITTOForest Investment Forum, May 2006).

20. “Financial Incentives for Plantation Forestry,”LTS consultants (2002).

Panel 2: Financing Social, Environmental,and Economically Sustainable Forest Industrial Development

1. “Trends in the Global Forest Industry: AnOverview,” Rainer Haggblom (Jaakko PöyryConsulting).

2. “Current Status of Forest-Based Industries inthe Southern and East Africa Regions:Investment Opportunities and Constraints,”Charles Bengough and Peter Haddock (2006).

3. Summary of the Genesis report,“Contribution, Costs, and DevelopmentOpportunities of the Forestry, Timber, Pulp,and Paper Industries in South Africa,” MikeEdwards (Forestry South Africa).

4. Small-Scale Timber Production in South Africa:What Role in Reducing Poverty? Mike Howard,Phumzile Matikinca, Dominic Mitchell, FionaBrown, Fonda Lewis, Isaiah Mahlangu, AndileMsimang, Peter Nixon, and Themba Radebe(London: IIED, 2005).

5. Forestry Contractors in South Africa: What Rolein Reducing Poverty? Jeanette Clarke andMoenieba Isaacs (London: IIED, 2005).

6. “Small-Medium Forestry Enterprises: The‘Best-Bet’ for Reducing Poverty and SustainingForests?” James Mayers (PowerPoint presenta-tion, prepared for ITTO Cancún (Mexico)Investment Forum).

7. “Community-Based Forest Enterprises inTropical Forest Countries: Status and Potential,”Augusta Molnar, Forest Rights and ResourcesGroup (PowerPoint summary, 2005).

8. “Building Better Corporate-SmallholderPartnerships: Sharing Lessons across SouthernAfrican Countries,” Dale Doré and AloisMandondo (University of Alberta/CIFOR,2005).

9. “TreesFarms A/S: Tanzania” (Web site informa-tion on sawmilling and forest plantation-basedindustries in Sao Hill).

10. “Potential for a Plantation Wood-Based PulpIndustry in Mozambique,” Jaakko PöyryConsulting (PowerPoint presentation, March2006).

11. “Small and Medium-Scale Forestry Enterprisesin Uganda” A discussion paper RosinaAurenard and Krystyna Krassowska (IIED,2002).

12. “Financing Responsible Forest Managementand Trade: Working Examples of JointIFC/GFTN Activities in Latin America,” SteveGretzinger (WWF/GFTN).

13. “PENSA: Joint IFC/GFTN Activities inIndonesia: Access to Materials, Access toMarkets,” Moray McLeish (IFC, Indonesia).

14. “Forest Industry Investment Portfolio,” IFC.15. “Improving Lives by Creating Opportunities in

Small Business” (IFC Web site:http://www.ifc.org).

Panel 3: Creating a Socially andEnvironmentally Sustainable InvestmentClimate

1. “Incorporating Social and EnvironmentalSafeguards into the Lending Policies ofFinancial Institutions,” Christina Wood(Sustainable Finance Limited).

2. “Revised World Bank Forest Strategy:Operational Policy 4.36.”

3. “Environmental and Social PerformanceStandards,” IFC (2006).

4. “Draft Planted Forest Code” (Rome: FAO,December 2005).

5. “Forest Law Enforcement and Governance,”World Bank, FLEG Secretariat (September2005).

6. “Report on Progress Being Made in Kenyatoward Introduction of a CertificationScheme,” George Wamukoya (WWF).


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CREATING A SOCIALLY AND ENVIRONMENTALLY SUSTAINABLE INVESTMENT CLIMATE

7. “Developing National Criteria and Indicatorsfor Sustainable Forest Management inMozambique,” Rito Mabundo, WorldBank/WWF Alliance (concept note).

8. “Forest Trends Business Development Facility”(PowerPoint presentation to the ITTOInternational Tropical Investment Forum,April 2006).

OTHER PUBLICATIONS

“Forest Investment Forum: Opportunities andConstraints,” PROFOR (2003).

Plantations, Privatization, Poverty, and Power,Michael Garforth and James Mayers (London:Earthscan, 2005).

“Forest Concession Policies and Revenue Systems,”John Gray (World Bank Technical AssistanceNote 522, 2002).

Company-Community Forest Partnerships, JamesMayers and Sonja Vermeulen (London: IIED,2002).

Towards Equitable Partnerships between Corporateand Smallholder Partners (Bogor, Indonesia:FAO/CIFOR, 2002).

Fast-Wood Forestry: Myths and Realities, ChristianCossalter and Charlie Pye-Smith (Jakarta,Indonesia: CIFOR, 2003).

Selling Forest Environmental Services: Market-BasedMechanisms for Conservation and Development,Stefano Pagiola, Joshua Bishop, and NatashaLandell-Mills (London and Sterling, VA:Earthscan, 2002).

Forests in Landscapes: Ecosystem Approaches toSustainability, Jeffrey Sayer and StewartMaginnis (London: IUCN/Earthscan, 2005).

“Poverty Reduction through Commercial Forestry:What Evidence? What Prospects?” JamesMayers (New Haven, CT: The Forests Dialogueand Yale University, 2006).

Environmental Sustainability in Water ResourcesManagement in Southern Africa”(SADV/IUCN/SARDC/IBRD, 2000).

“Allocating Water Use Licenses for Stream FlowReduction Activities (Forestry) on InvadedLands, Based on the Principle of YieldEnhancement,” DWAF (2005).

Tools for Civil Society Action to Reduce ForestCorruption — Drawing Lessons fromTransparency International (TI). (WashingtonDC, PROFOR, 2005)

Reforming Forest Fiscal Systems: An Overview ofCountry Approaches and Experiences(Washington DC, PROFOR, 2004)

Institutional Changes in Forest Management(Washington DC, PROFOR, 2003)

Development Policy Lending and Forest Outcomes(Washington DC, World Bank, 2005)

Forestry Outlook Study for Africa (Rome, FAO,2003).

Options for Managing Rural Transport Infratructure(Washington DC, World Bank Technical Paper411, 1998)


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