PUBLIC HEARINGS

•Forest Sector Transformation Charter

•National Forest Action Plan• Industrial Policy

12 March 2008

FOREST SECTOR BBBEE CHARTER PRESENTATION CONTENTS

• Process and progress to date• Scope of application of Charter• Vision for the Forest Sector• Forest Sector challenges• How charter addresses challenges• Process to finalize and implement Charter• Ensuring compliance with the Charter• Potential benefits from the Charter

PROCESS & PROGRESS TO DATE (1)• Official launch of Charter process by Minister Sonjica at Indaba in

Midrand on 18 April 2005• Charter Steering Committee established and began work in June

2005• Steering Committee established Sub-sector Working Groups:

• Growers• Forestry Contractors• Fibre (pulp paper, timber board and woodchip)• Sawmillers• Pole & Charcoal

• Three sets of regional consultation meetings (including women’s workshops) were held to solicit stakeholder inputs

• Six drafts of Charter prepared between Dec 05 and July 06• DWAF-DLA workshop on how to fast-track land reform issues in

forestry areas (Jan 06)• Appoint Task Teams to address skills development instruments,

financial instruments and Government undertakings (Feb 06)

PROCESS & PROGRESS TO DATE (2)• Negotiations on Scorecard targets and Government undertakings

on BBBEE implementation instruments (July 06)• Draft Companion Document to the Charter compiled (background

information, explanatory notes and implementation plan)• User Guide on how to implement Charter prepared• Draft Charter launched for public comment on 25 June 2007 in

Benoni• 13 stakeholder consultations in the provinces held until August

2007• Comments form public consultations incorporated into the

Charter• Steering Committee approved Charter in November 2007• Minister appointed Charter Council in December 2007• Minister appointed Charter Council Chairperson in February 2008

CHARTER – SCOPE OF APPLICATION

• All enterprises involved with plantation forestry and first level processing of wood products:- Plantation forestry growers and nurseries- Forestry contractors- Fibre processors - pulp, paper, paperboard, timber board

product, woodchip and wattle bark- Sawmilling - Pole producers- Charcoal producers

• Note: NTFP enterprise not included but will benefit from Charter conditions for Growers

VISION - FOREST SECTOR• An inclusive and equitable forest sector in which

black women and men fully participate

• A forest sector that is characterised by sustainable use of resources, sustainable growth, international

competitiveness and profitability for all its participants

• A forest sector that contributes meaningfully to poverty eradication, job creation, rural development and economic value adding activities in the country

FOREST SECTOR CHALLENGES

1. Greater equity in the entire value chain

2. Increase in the local supply of roundwood to underpin growth throughout the value chain

3. Sustainable supply and better utilisation of limited saw timber resources

4. Increased local beneficiation in and through the fibre production sub sector

5. Greater empowerment and profitability of existing small scale forest enterprises

6. Linking forestry as a rural based industry with poverty eradication and local economic development

HOW CHARTER ADDRESSES FOREST SECTOR CHALLENGES

1. GREATER EQUITY IN THE ENTIRE VALUE CHAIN• Increased black ownership through the scorecard

Potential income from small scale tree growing is estimated at R3900/annum for a 2.4 ha plot – Greatest value in downstream

processing

Imperative that emerging growers also share in downstream processing

• Restructuring of State Forest Assets must support BBBEE

• Greater emphasis on empowerment of women, youth and rural

poor through the scorecard • Growth in value adding enterprises through procurement

HOW CHARTER ADDRESSES FOREST SECTOR CHALLENGES

2. INCREASE IN ROUNDWOOD SUPPLY• New afforestation- 100 000 ha over 10 years• Improved yields from existing plantations• Secure land holding rights and structure on communal land to

support emerging growers• Community facilitation, extension support and training for new

entrants• Access to funds and financial services for new entrants

3. SUSTAINABLE SUPPLY AND BETTER UTILISATION OF SAWLOGS

• Agreement on a saw log strategy• Review of State Forest Exit strategy in the Southern and

Western Cape• Improved utilisation rates by small sawmillers• Greater investment by large sawmillers in raw material supply • Skills development and training

HOW CHARTER ADDRESSES FOREST SECTOR CHALLENGES

4. LOCAL BENEFICIATION IN AND THROUGH THE FIBRE PRODUCTION• Allocation of Water licensing through BBBEE• Encourage local production of chemicals and machinery used

by the processing industry• Encourage enterprise development through the use of fibre

waste• Access to finance for emerging entrepreneurs • Skills development and training

5. EMPOWERMENT AND SUSTAINABILITY OF SMALL OPERATORS• Strengthen representative industry structures where they exist &

establish representative structures where they do not exist• Regulate contracting and employment relationships through

industry Codes of Good Practice• Improved access to financial services • Skills development and training• Mechanism to ensure adequate supply of raw material (State

assets)

HOW CHARTER ADDRESSES FOREST SECTOR CHALLENGES

6. LINKING FORESTRY WITH POVERTY ERADICATION & LOCAL ECONOMIC DEVELOPMENT• Fair and equitable conditions of employment

• Provide social services and amenities to the rural poor thorough the corporate social investment targets

• Regulate contracting and employment relationships through industry Codes of Good Practice

• Use buying power of Industry as a catalyst for downstream local economic development through the procurement targets

• Provide access to non-timber forest products for rural households

PROCESS TO FINALIZE AND IMPLEMENT CHARTER

• Signing of Charter in March/April 2008

• Gazetting of the Charter in terms of Section 12 of the BBBEE Act by the Minister of Trade and Industry

• First meeting of Charter Council in March/April 2008

• DWAF Forest Charter Implementation Unit to monitor Charter implementation in place (government undertakings)

• DWAF compliance instruments to ensure compliance with the Charter in place (water use licensing and procurement)

• Submission of Charter for third party analysis and gazetted in terms of Section 9 of the BBBEE Act as a sector code by June 2008

ENSURING COMPLIANCE WITH THE CHARTER

• Instruments available to DWAF: Licensing under the NWA – could have wide impact

Licensing under the NFA – has limited impact

Preferential procurement – limited but targeted impact (refer to next slide)

Application of state owned forest assets – limited but targeted impact, particularly in shaping the sawlog sub-sector

• Legal opinion procured on using the NWA to ensure compliance with the Forestry Transformation Charter

COMPLIANCE THROUGH PREFERENTIAL PROCUREMENT

Sub-sector Estimated Public Sector Procurement

% of Total Sales

Points of Leverage

Pulp and Paper (Fibre)

R1 000 million 8% State Tender Board Government Printing Works Tenders of municipalities and state

owned enterprises

Lumber (Sawn timber)

R600 million 12% Building and construction contracts awarded by public works departments, housing departments and state owned enterprises

Board Products R150 million 5% Tenders for furniture awarded by public institutions

Poles R300 million 50% Tenders for poles awarded by municipalities, Eskom, Spoornet, Telkom and government farms

Charcoal Negligible 0% None

Contracting Unknown - Harvesting contracts of KLF and DWAFOther contracting tenders

HOW DOES THE CHARTER BENEFIT THE POOR AND WOMEN

• Higher black ownership target set in the scorecard for Black designated groups, Black participants in Employee Ownership Schemes, Black beneficiaries of Broad-based Ownership Schemes and Black Participants in Cooperatives [higher weighting (2% instead of 1%) and target (7,5% instead of 2,5%)] than in the generic Scorecard Target.

• Bonus points for higher target for economic interest for Blacks and Black women (not allocated in Generic Scorecard)

• Bonus points for compliance with Industry Codes of Good Conduct

• Bonus point for regulated access by local communities to non-timber forest products

HOW DOES THE CHARTER BENEFIT THE POOR AND WOMEN

• Bonus points for Corporate Social Investment benefiting workers and rural communities

• Substantial portion of country’s timber resources will be in the hands of rural communities through:– Transfer of land ownership and lease rentals on

Category A state forest land– Restructuring of remaining DWAF plantation– Most new afforestation on communal land– Settlement of restitution claims on 30% of private

forest landMain challenge is to ensure that the poor and women

benefit from value adding industries

POTENTIAL OUTCOMES RESULTING FROM THE CHARTER

• Weighted black ownership profile of 30% for the sector as a whole within 10-years

• Weighted black women ownership profile of 12.6% for the sector within 10-years

• Afforestation of 100 000 ha over the next ten years, mostly in the EC & KZN through black owned forestry enterprises

• Annual expenditure of R112 million in enterprise development resulting in ± 650 new jobs and 45-85 new small businesses per annum

• Increased participation of black people in forestry value adding industries, such as sawmilling, paper & charcoal production

• Annual spending on skills development sufficient to add ±1 750 new learners into the tertiary education system & more than double this number of other trainees and learners at lower educational levels

• Effective and representative structures for the forest industry• Good practices in contracting and employment throughout the Forest

Sector

NATIONAL FOREST ACTION PLAN / NATIONAL FOREST PROGRAM

PRESENTATION CONTENTS

• Introduction• What is the NFAP?• Objectives of the NFAP/NFP• Features of the NFAP/NFP• Key findings• Way forward

INTRODUCTION AND BACKGROUND

• The NFAP was completed in 1997• Two major processes informed its

development:• IPF/IFF Process• White Paper: The White Paper on

Sustainable Forest Development in SA (Commitment to turn policy into action through a strategic plan, namely NFAP)

WHAT IS THE NFAP/NFP?• A national framework for managing forests and

forest resources in South Africa – It is a framework for action and not a detailed, rigid plan

• The NFAP set out the most important work to be done in the first three years of its implementation & identified specific goals for each issue

OBJECTIVES OF THE NFAP/NFP• To mobilise and organise forestry stakeholders

nationally to develop a shared agenda for the forestry sector

• To mobilise and organise national and international resources and catalyse action to implement programmes / plans in a coordinated manner

FEATURES OF THE NFAP / NFP• It is a framework for action and not a detailed, rigid plan

• It is designed to satisfy national, provincial and local needs while meeting international obligations, e.g. in terms of Agenda 21, MDGs and UNFF

• It is based on wide consultation – it must involve public (national, provincial and local); private (big, medium and small) sectors & communities

• It focuses on mobilizing resources – human and financial

• It covers all aspects of sustainable forestry development – the resources, the socio-economics and governance

• It ensures that the forest sector is integrated with wider resource management strategies, emphasizing the links with land use planning and integrated development

KEY HIGH - / LOWLIGHTS

• Section I deals with the state of the forest sector in South Africa and Section II with the context and background

• Over ambitious – most of the tasks were scheduled for completion by end of 2000 (Initiated in 1997)

• Unrealistic expectations, especially regarding tasks allocated to other government departments (did not factor priorities and resources of other departments)

• NFAP not successfully institutionalised, i.e. no mechanisms were set in place for M&E

• Despite the above, it is felt that most of the tasks have been moderately (and in some cases, adequately performed)

SECTION III: COMMUNITY FORESTRY

KEY ISSUE / TASK FINDING1. Valuation of forest

goods and servicesNFAP called for a system of NFRA to quantify full benefits of forest goods and services

2. Enabling policy and legislative framework for Community Forestry (CF)

Promulgation of the NFA was a major contributor to enabling environment for CF, particularly Sections 29 to 32

3. National, Provincial and Local Government

NFAP envisaged a system of CF service delivery that cascaded to local level

4. Urban Forestry Good progress has been made - Piloting integration into IDP

SECTION IV: NATURAL FORESTS &

WOODLANDSKEY ISSUE / TASK FINDING

1. Monitoring, Assessment and Reporting on the State of Natural Forests & Woodlands

Good progress made with indigenous C&I also developed for national forests – still to be developed for woodland

2. Institutional issues Policy developed for management of both indigenous forests and woodlands

3. Joint Forest Management / Community Based Forestry Management

The concepts evolved in SA into Participatory Forest Management (PFM) – A great deal of work has been done to develop the concept into a clear policy framework

SECTION V: INDUSTRIAL FORESTRY

KEY ISSUE / TASK FINDING

1. Creating a policy and strategy for the industrial forest sector generally

DTI was mandated to develop an Industrial Policy – new National Industrial Strategy has been develop

2. Managing for sustainability

•More than 80% of forests certified (51% of world plantations)

•C&Is have been developed•Water issue still the most

contentious

3. Restructuring of State-owned Plantations

Good progress has been made

SECTION VI: HRD AND LABOUR

KEY ISSUE / TASK FINDING1. Capacity to monitor

and report on progress in the sector and provide oversight.

•No progress•The NFP needs to

explore the implications•Is this DWAF’s role?

2. Employment and Employment Conditions

DWAF and DoL initiated an investigation with a view of sectoral determination

3. Tertiary Education Educational institutions well placed to provide quality graduates and diplomats

SECTION VII: RESEARCH, TECHNOLOGY & INNOVATIONKEY ISSUE / TASK FINDING

1.Research Co-ordination (through a co-ordination structure)

•No progress made •Draft Forestry STI Plan

attempts to address this issue

2.National Forestry Research Strategy

A new draft research strategy has been developed

SECTION VIII: PROVIDING LAW FOR SFM

KEY ISSUE / TASK FINDING1. Providing for legislation

to support the development of the forest sector

• Achieved – NFA & NVFFA were promulgated in 1998

• All the suggestions in the NFAP have been addressed in the Acts in some manner

SECTION IX: DEFINING THE ROLE OF GOVERNMENT IN THE FOREST

SECTORKEY ISSUE / TASK FINDING

1. Need to create a national forestry function

Ongoing debate

2. Transfers •DWAF has taken strides towards divesting itself of non-core activities

•Progress on transfer of plantations reported in Section V

3. Internal restructuring •There has been institutional restructuring of both water and forestry

•New Forestry Branch established

4. ‘Home of Forestry’ DWAF

SECTION X: INTEGRATING FOREST SECTOR WITH

OTHER NATURAL RESOURCE POLICIESKEY ISSUE / TASK FINDING

1. SEA to accelerate planting licences for new afforestation

Progress in the Eastern Cape is being made

2. Integration of Forestry into IDP Planning

• Initiated• Ongoing consultation with Local

Authorities

3. Integration of forest policy with other environmental policy & legislation

• Specifics mentioned in NFAP overtaken by events

• DWAF continue to participate in other government departments policy formulation processes

4. C&I for SFM • C&Is to become mandatory reporting framework for sector pending

• National initiative underway & first standards for small growers prioritised

WAY FORWARD

Paragraph 27.6 of the NFAP states: “NFAP is a process of continuous

improvement…, we will quickly learn what improvements will be needed and we must be

ready to implement these improvements as we progress”

The NFP is the next step to “implement these improvements”

TAKING THE NFP FORWARD (1)• Workshop convened on the NFP Process in South Africa,

11-12 October 2007, to identify key forestry priorities with stakeholders

• The following agreement was reached:• The Forestry Charter is the major instrument for development

within forestry in the medium term• The central theme of the Key Priorities will be Forest

Enterprise Development with a focus on BBBEE

• Priorities:• Development of an information hub for dissemination of information to

SMMEs• Promotion of entrepreneurship in the forestry sector focused on

SMMEs• Strengthening the enabling environment for industry associations• Technical support of the FED component of the R & D Strategy and

Plan through the identification of bottlenecks to FED• Raising the profile of forestry (industry promotion)

TAKING THE NFP FORWARD (2)

• Terms of Reference being developed on the identified priorities (will include priorities in the NFAP)

• Terms of Reference will be consulted with the NFAC and reference group that was appointed during the workshop

• Call for proposals based on Terms of Reference will be issued in the media with funding from the FAO NFP Facility

• Appointed service providers to produce research as required

CHALLENGES FOR GOVERNMENT• ASGISA and Industrial Policy

Affirm and recognize forestry as an area of potential growth• Land Claims

More than 30% of forested land under claim• New afforestation

Will occur on communally owned land in the Eastern Cape & KZN

• State owned plantations70 000 ha in the EC and 180 000 in Komatiland

• Skills, financial services, infrastructure, sawlog shortage

Important to note that potentially more than half the land under forest could be in Black hands in 10 years’ time

The most important challenge faced by government is to ensure the current lack of skills (management, business and technical) are

addressed to ensure sustainability

INDUSTRIAL POLICY ACTION PLANPRESENTATION CONTENTS

• Introduction

• Afforestation

• Projects

• Specific Responsibilities

• Transformation Charter

INTRODUCTIONINDUSTRIAL POLICY ACTION PLAN

August 2007

• Fast-track implementation of four lead sectors – Forestry, Pulp & Paper, Furniture

• To realise growth in Forest Sector:

• Afforestation licensing process must be expedited;

• Land rights for land holding communities must be confirmed;

• Technical & financial support must be provided to emerging small growers;

• Transport infrastructure must be improved

AFFORESTATIONDWAF re-structured and the consolidated Forestry Branch plays a critical role to ensure that afforestation takes place through the following interventions:

• Assessment of the whole country to determine afforestation potential (Mapping)

• Eastern Cape: • Draft afforestation protocols are in place awaiting

finalization once all stakeholders have agreed (Protocols guide the working relationship between investors and communities and safeguards community interests)

• A co-operative governance structure is being established at District level to deal with all the bottle necks related to afforestation, including SFRA licenses

PROJECTSForestry Branch supports a number of projects country-wide:

• 15 FED projects – potential to generate income• 110 livelihood projects, these are non-income generating

projects, but they contribute towards the basic needs of rural communities

• Million Trees Programme in partnership with other stakeholders including National, Provincial and Local government Departments, Non-Government Organizations, Community Based Organizations and the Corporate Sector

• To date 407 000 fruit & 107 000 indigenous ornamental trees have been planted country-wide

SPECIFIC RESPONSIBILITIESDWAF’s Responsibility to ensure the following are realised:

Water use licensing• Fast tracking water use licenses for afforestation• Ensure that water use licensing benefits emerging entrepreneurs

Transfer of state owned plantations to appropriate agencies

• Refurbishing plantations and transfer model for DWAF remaining plantations in

place and agreed by all stakeholders Timeous payment of lease rental money to claimant beneficiaries

• Head lease agreements negotiated and concluded with land claimants beneficiaries Timber supply

• Sawlog strategy that will ensure sustainable supply of timber

Forest Protection

• Fire insurance for emerging growers and financial support to research on protecting the resource against ire, insects and diseases

FOREST SECTOR TRANSFORMATION CHARTER

• Forestry Charter Implementation Unit (FCIU) to monitor and ensure government undertakings in Charter are delivered

• FCIU to ensure that government instruments to ensure compliance are in place

• DWAF negotiating with DPE and Land Affairs to ensure that government privatisation supports implementation of the Forestry Transformation Charter

• DWAF entering into Memorandum of Understanding with IDC to ensure alignment of funding for forestry initiatives

• DWAF ensures that there is strong government representation in the Charter Council to drive government transformation agenda

• Support to the furniture cluster in Amathole district