The unprecedented challenges being faced by the world and South Africa due Covid 19, were compounded this year, by the failed insurrection and resulting civil unrest which took place in July, following the incarceration of the convicted criminal and former President of South Africa, Jacob Zuma. The Industry was recovering from a 10% drop in output during 2020 due to Covid 19 and we were on track to have our best year in terms of timber volumes since 2018, when the impact of the failed insurrection brought almost all forestry activity in KZN to a standstill.
In terms of economic impact, we lost R544m in lost production from the pulp and paper sub-sector, R16m in lost production from the sawmilling sub-sector and R89m in lost timber due to fires which occurred in those two weeks in July. The economic impact on other sectors in KZN, Gauteng and Mpumlanga was over R50 billion. In terms of human impact, the failed insurrection claimed 212 lives and put many more thousands of people out of work, in a country which already has one of the highest unemployment rates in the world. We hope that as those responsible for orchestrating the failed insurrection are arrested and prosecuted, that the human and economic impacts of their deeds, are also considered during their prosecution.
We now expect the total annual tonnage for FSA members to be between 13.2 and 13.4 million tons, which on the back of the ongoing Covid-19 challenges and additional failed insurrection pressures, is quite an achievement. This is also the first year we will experience a year-on-year increase of volumes over the last 8 years even though it is against the low base of 2020 and as mentioned, would have been much higher, had it not been for the failed insurrection
Far less visible than the shocking loss of so many lives and the disturbing images of provincial scale theft and wanton destruction, was the potential impact on domestic and international investment sentiment. There was every chance that companies in our Industry and others abroad, would see the failed insurrection as the final straw and suspend and possibly even withdraw investments in our Sector and others in the economy. Fortunately, ours is a resilient country and just as we may be seeing the last kicks of a dying disease in the latest highly virulent but far less damaging strain of the Covid 19 OMNICROM variant, many people saw the disgusting impacts of the failed July insurrection, as the last grotesque kicks of a dying disease, that had gripped our country for nearly a decade.
Evidence of this was seen in the second half of year, in which we saw a massive rebound in many sectors of our economy, a record trade balance in the last quarter, record-low interest rates, record tax recovery rates, massive demand for government bonds (a highly reliable indicator of investor confidence), the demonstrable commitment from the new administration under President Ramaphosa, to rebuild the economy, strengthen Chapter 9 institutions, build a capable State, root out corruption and join hands with the private sector to support the growth and transformation of our country. The response by the State to the Covid 19 crisis, also remains exemplary (notwithstanding some of the shortcomings which have tarnished it, as was seen in many other countries too).
Fixing a country which was looted and mismanaged for nearly a decade, however, takes time and so we need to take advantage of some of the above-mentioned positive factors in our country, along with others, like our maturing democratic processes, evidenced in the most recent local government elections, to continue to build our communities and our economy.
In terms of investment in our Sector, we are delighted to report that the July impacts have not dented the belief by FSA’s members involved in the PPGI, that South Africa remains a sound investment. The PPGI continues to deliver investment, employment and transformation benefits for South Africa and much better government responses to supporting these outcomes. This was seen in both the R11.7 billion invested to date by our Sector and in the rapid implementation by DFFE of the Cabinet-approved Forestry Sector Masterplan, which captures all the PPGI mega-projects as well as many other key issues and challenges for our Sector. Some of this investment potential was showcased by FSA in an invited presentation to the recent Dubai Expo.
In terms of government delivery, we have seen a great deal of progress in areas like water-use licensing, movement on the recapitalisation of State plantations, support for forest protection and research, funding for black participants in the Sector and a prioritisation of commercial crimes, some of which were making it impossible for our members to operate their businesses. In terms of this last-mentioned challenge, FSA and the PPGI lobbied hard for economic crimes to receive greater attention from law enforcement agencies and during the President’s State of the Nation Address, he announced that economic crimes had been classified as priority crimes. Dr Roelf Meyer who addressed FSA’s AGM in May, was instrumental in securing this crucial outcome. Since that time, the State has established the National Priority Committee for Extortion and Violence at Business Sites and FSA is pleased to be represented through our Operations Director, Francois Oberholzer, in that structure (we are currently the only Industry Association represented). The Committee includes inter alia all the relevant sections of the Justice, Crime Prevention and Security Cluster. Provincial Priority Committees are also being established to deal with issues on a local level and Forestry South Africa is proud to serve on both the national and provincial committees.
The ongoing challenges of lost State funding for research and protection, created some innovative solutions, in which FSA has partnered with other agriculture sub-sectors, to secure both human and institutional capacity. One of these is FSA’s collaboration with Grain SA which has not only leveraged significant funding from that Association but also secured R 1 million from the Department of Science and Innovation (DSI) toward a Biosecurity Platform.
Another major success which has greatly offset the decline of State funding into tertiary forestry education and research, and which was led by our Business Development Director, Norman Dlamini is the Erasmus+ programme of the European Union which funds a joint project for strengthening capacity in South African higher education in forestry. The application secured €1 million to implement a collaboration with five higher education institutions (HEIs) in South Africa that have forestry curricula or will start teaching forestry and will promote climate-smart forestry and entrepreneurial innovativeness in forestry education.
Still on the challenges posed by climate change, in terms of adaptation, mitigation and regulation, FSA continuously strives to put in place structures to respond to these challenges and to best protect our members’ interests. One such example in 2021 was the establishment of the FSA Climate Resilience Working Group, chaired by FSA’s Research and Protection Director, Ronald Heath that will help ensure the Sector’s collective voice is heard regarding the implementation of national climate change mitigation policies such as the National Green House Gas Reporting, Carbon Tax Act and the National Business Initiative’s ‘Just Transition’.
has set the scene for our Industry to continue the upward trajectory in 2022. This will surely be assisted by increasing global shifts towards more conscious consumption and the preference for sustainable products. Sustainability has gone from a buzzword to a mindset, as both consumers and governments demand that natural resources be protected, and the resulting products and services are produced in a sustainable manner. The sustainable nature of forestry, its unparalleled ability to sequester carbon and store it both in plantations and in forestry products, its versatility and potential to provide carbon-beneficial alternatives to many fossil-fuel based products and the Forestry Sector’s contribution to the economy and employment, makes it an obvious component of any green-economic model. The role our Sector can play in combating climate change was well exhibited during the recent COP26 Climate Conference in Scotland.
We would like to thank our members for their continued investment of time and money in support of the work done by FSA and we would like to thank our private and public sector partners in the PPGI and the Masterplan process, whose efforts are starting to produce positive outcomes for our Sector and for the country as a whole. We wish you all a safe and relaxing festive season and every success in 2022.
by Michael Peter