Forestry

Overview

South Africa has a well-established Forestry sector with a fully integrated value chain including pulp, paper and furniture manufacturing. Forestry and forest products contributed about R10.1bn and R26.6bn respectively to South Africa’s economy in 2017. Across five provinces, South Africa has about 1.2m hectares of afforested land, accounting for 1% of South Africa’s total land area. Pine (49.6%), eucalyptus (43%) and wattle (7%) are the most commonly cultivated tree species on South African plantations. According to StatsSA, wood and wood products, paper, paper products and furniture manufacturing contributed about R134bn to the local economy.

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Value Proposition

The South Africa Forestry sector has a robust market growth. Between 2014 and 2018, wood-related manufacturing output increased more than 25% to almost R135bn, with the paper and paper products segment recording the highest growth of 35% during this period. It’s integrated value chain sees South Africa’s forestry industry supplies into diverse value chains, producing pulp, paper, boards, packaging construction/building material and furniture. South Africa produces about 12.5m cubic metres of pulpwood worth close to R7bn per year. The pulp and paper mills produce close to R18bn in output per year, supplying both the domestic and foreign market. South Africa is the world’s 12th largest pulp exporter, exporting close to R12.5bn of pulp per year. In 2017, the forestry industry attracted more than R46bn in investments. Close to R20bn were in invested in machinery and equipment. Pulp and board production attract the largest share of investment accounting for about R19bn in investment. About 80% of South African plantations are certified under the Forest Stewardship Council (FSC) system. In total 1.4m hectares of South African forest area are FSC-certified, accounting for about 20% of all certified forest areas in Africa.

Where to invest?

South Africa’s forestry industry is concentrated in the Eastern Cape, KwaZulu Natal, Limpopo, Mpumalanga and the Western Cape. The country’s major timber processing mills are located in KwaZulu Natal and Mpumalanga. Pulp and paper manufacturing is concentrated in Gauteng, KwaZulu Natal and Mpumalanga with smaller hubs in the Free State and the Western Cape. Furniture manufacturing is concentrated in Gauteng, KwaZulu Natal and the Western Cape in proximity to major consumer markets. Smaller clusters exist in the Eastern Cape, Mpumalanga and Limpopo, located close to forestry plantations.

In addition to the IDZs, the SA government has developed SEZs policy and legislation as one of the key instruments to accelerate the implementation of its industrialisation agenda. The programme has been designed to attract foreign and domestic direct investments.

Available Support

Local government procurement scheme – State entities requested to procure various types of furniture (office and school furniture) with minimum local content of between 85% and 100%.

Skills Development Support – Nelson Mandela University, Stellenbosch University, University of Witwatersrand, University of Pretoria, University of KwaZulu Natal, Forestry and Agricultural Biotechnology Institute (FABI), IFSCR, Council for Scientific and Industrial Research (CSIR) and Fort Cox Agriculture and Forestry Training Institute offer forestry and wood-science related courses. The Department of Environment, Forestry and Fisheries offers forestry-sector skills development.

Import rebates for inputs – Rebate provision for certain goods used in the manufacturing of furniture in order to improve competitiveness.

Furniture Manufacturing Hub – The South African Government plans to establish a Furniture Manufacturing Hub in the near future. It will function as an incubator and shared manufacturing facility to develop skills, introduce modern manufacturing systems techniques and provide market access.

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Investing in South Africa’s Forestry, Pulp and Paper, and Furniture Sector

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