20 April 2006

South Africa: A Call for Forestry Sector to Contribute to Asgisa

The forestry sector needs to contribute significantly to the country's target of growing the economy to six percent by 2014.

This was said by Water Affairs and Forestry Minister Buyelwa Sonjica at the launch of the Sappi/Lereko Investments Black Economic Empowerment (BEE) transaction in Johannesburg yesterday.

Sappi, the world's largest paper maker, has sold at R224 million a quarter of its forestland in the country to Lereko Property Consortium, which integrates Sappi workers.

Lereko Investments owns 46 percent of the consortium while the Sappi Worker's Trust owns 30 percent.

A women's group Malibongwe owns 10 percent while AMB Capital, a financial services company, owns 14 percent.

The group is reportedly set to explore property expansion opportunities in Sappi's underused land, particularly in Mpumalanga and KwaZulu-Natal where most of Sappi's land is.

Ms Sonjica said accelerated growth was necessary to optimise the broad-based impact of the economy in terms of increased employment, black ownership and enterprise development.

"The transformation of our economy must ensure an equitable participation by all South Africans in the ownership and management control.

"It is a national imperative and must happen for the new democracy to succeed," she said.

Ms Sonjica said the forestry sector was recognised as a high growth potential sector of the economy.

The commercial timber products make a major contribution to South Africa's economy with the value addition amounting to R12.3 billion in 2003, contributing one percent to the total country's Gross Domestic Products (GDP), 2.4 percent to the Primary Sector GDP and 4.3 percent to the Manufacturing Sector GDP.

She commended Sappi for its substantial contribution in transforming not only the county's forest sector but also the economy.

However, she challenged Sappi to give support to Lereko by mentoring and sharing technical skills.

In this regard, she said it must be understood that Broad-Based Black Economic Empowerment did not stop with the conclusion of large-scale BEE deals.

"Today is an important first step in the process of fundamental transformation that also needs to attend to matters such as ownership by women, management control and skills development among others," she said.

Ms Sonjica said that government was committed in playing its role in addressing the shortage of round wood supply.

Among other things government would speed up the process of converting unused land into forest, securing land holding rights and structures to support new forest opportunities, and transport infrastructure improvements to reduce the cost of transporting timber.

In addition government and industry would need to work together in securing finance to support black owned forestry enterprises that would increase the supply of round wood and improve productivity in the sector, she said.

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