M a r k e t N e w s

Forestry’s industrial revolution has job-creation potential

Posted on : Thursday, 25th August 2016

At a recent media briefing, Minister in the Presidency Jeff Radebe stuck to his guns and refused to revise the gross domestic product (GDP) growth targets of 5.4 percent set out in the National Development Plan (NDP), despite the backdrop of stagnant economic growth since the 2008 financial crisis.
As players in South Africa’s forestry industry, we have been asking ourselves the question: what is our contribution to the NDP and most importantly, towards the re-industrialisation of South Africa, particularly the rural part of SA where most forestry operations are located?
At the SA Forestry Company Limited (Safcol), I think we have found the answer to this question - we believe forestry makes a compelling proposition in our nation’s resolve to address SA’s economic growth quagmire. As a state-owned company reporting to the Department of Public Enterprises, we believe we are well positioned to lead this “forestry industrial revolution” of the 21st century.
Historically, in the early 1920s, colonial governments created commercial plantations to ease South Africa's dependence on imported timber, which proved very costly. Again, from about 1952, through the Department of Water Affairs and Forestry, the state entered into contracts for the sale of softwood saw logs from its plantations to private sawmills in order to encourage investment into the sawmilling industry.
This, coupled with other state-led afforestation interventions, had other positive spinoffs, such as addressing the challenge of “poor whites” in the eras preceding and after World War 2.
Arguably, similar strategies could be employed by the current government to address the triple challenge of poverty, unemployment and inequality, with the forestry industry at the centre of a state-led development in South Africa’s rural areas in order to stem the tide of rural to urban migration.
Today, about 1 percent of South Africa’s land mass is used for commercial forestry, equating to 1.2 million hectares. Almost 70 percent of the commercial forests in South Africa are planted with short-rotation pulpwood for paper and packaging.
Some 20 000 workers are employed in sawmilling, and 6 000 in the timber board and 2 200 in the mining timber industries, while a further 11 000 workers are employed in miscellaneous jobs in forestry. It has been calculated that the dependants of the forestry sector employees are 1.2 million people.
The sector contributes 1.6 percent to GDP and 6 percent to manufacturing GDP. In terms of regional GDP, forestry in KwaZulu-Natal contributes 4.4 percent; in Mpumalanga 3.7 percent; in the Eastern Cape 0.6 percent; and in Limpopo about 0.6 percent.
Safcol manages about 10.1 percent of the commercial plantation area in South Africa, making the company the third largest in plantation size after Sappi and Mondi. The strategic importance of the company should not be underestimated since Safcol is a major producer of saw logs, which are mainly used for structural lumber for the construction industry, making South Africa less reliant on imports.
According to Trade and Industry Minister Rob Davies, the forestry sector has the potential to create jobs and presents great opportunities for growth through beneficiation and value addition.
“Within this sector, the furniture industry has also been identified in Ipap (Industrial Policy Action Plan) as an important industry within the South African economy. This is due to the fact that it is labour intensive and has the potential to contribute to reducing the level of unemployment, increase exports and contribute to the development of small and medium enterprises,” Davies said recently.
The furniture manufacturing industry has 2 200 registered firms involved in manufacturing of furniture, bedding and upholstery and employs 26 400 factory workers. It is labour intensive and contributes about 1 percent to the manufacturing GDP and 1.1 percent to manufacturing jobs.
Safcol’s large diameter, high value pruned saw logs, which have been grown for 25 to 30 years - yielding high value clear timber, are best suited for the local furniture industry and other value-adding and beneficiation activities to wood - spawning downstream businesses that never existed before in our economy.
Vision 2021
In addition, our “Vision 2021” strategy has identified the use of timber as a “green” construction method as presenting “low-hanging” fruits with massive job-creation spinoffs. Only about 1 percent of local construction constitute timber structures as opposed to about 70 percent in countries in the northern hemisphere - this is a huge opportunity.
Social infrastructure backlog in the public sector present excellent opportunities. As Safcol, it is our stated intention to assist government in rolling out social infrastructure such as schools, clinics, multipurpose centres, low-cost housing and others, using timber as a cost-efficient and quick method of building.
Through our shareholder, the Department of Public Enterprises, we are already in talks with government entities to promote the use of timber in the construction of social infrastructure and the reception has been extremely positive.
As was the case in the 1950s, when the State led an investment drive into the sawmilling industry, which today employs about 20000 employees, through the Safcol timber-frame construction initiative and many other forestry-related and value-adding activities, we believe we are on the verge of creating a new industry with massive participation by the emerging black industrialist . This is just one product out of about 150 products that have thus far identified as coming from wood.

With the crippling youth unemployment in the country, these initiatives from Safcol, in collaboration with other state institutions such as the Department of Trade and Industry, will provide much needed relief and propel our economy to higher growth levels which are requisite in the achievement of the NDP objectives. Private sector will be encouraged to join the band wagon that only needs ignition to take off. 

Source : www.iol.co.za
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