Review of forest plantation funding in South Africa

Motaung, Tsholofelo (2015-04)

Thesis (MDF)--Stellenbosch University, 2015.


ENGLISH ABSTRACT: Developing sustainable forests has been acknowledged to be important, not just as a way of averting deforestation and land degradation, but as another opportunity to contribute positively towards rural development, especially in sub-Saharan Africa. Forestry development has, however, not received the recognition it deserves. Its importance to economic development and its potential contribution have not been explicitly communicated and thus remain undervalued. The long rotations required for trees to mature, plus the associated risk from fires, pests and diseases has affected the sector’s ability to attract investment. In South Africa this reluctance is evident in both the public and private sectors alike. Access to finance for forestry remains a challenge, which negatively affects the supply to the processing part of the value chain. The objective of the study is to review current forestry funding mechanisms in South Africa, specifically plantations and their contributions to rural economic development. Using secondary data, the study reviewed the current sector funding from the state, development funding institutions and the private sector. The study also looked at alternative sources used in other countries and how they can be customised to the South African economy. In this study it was found that there are gaps between policies aimed at the development of the sector on the one hand, and the resources allocated to the sector on the other hand. The available schemes fail to support the sector policies’ objectives. These discrepancies can be attributed to the poor design of the current offering, the development of which failed to fully consider the dynamics of the sector. The conclusion of the study was that the government needs to play more of a leading role in developing the sector, especially with the small-scale growers who cannot be catered for by both commercial and development banks. The sector also stands to benefit significantly from better collaboration between the public and private sectors. Policies that create an enabling environment would also encourage the private sector to invest more. The study also suggested that, in view of the dynamics of the sector and its contribution to climate change risk mitigation, there is room to tap innovative funding such as that offered by environmental funding.

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