Is commercial forestry next frontier for investment?


A shining gum plantation for logging. FILE PHOTO | NMG

During the just-concluded COP26, over 100 world leaders promised to end and reverse deforestation by 2030. This is one of the summit’s major deals that is in the right direction towards the achievement of net-zero carbon emission.

The pledge made to actualise the same includes almost $19.2 billion of public and private funds. Some of the pledged funds will go to developing countries to restore damaged land, tackle wildfires and support indigenous communities.

According to the Kenya Forestry Research Institute, forestry contributes to 3.6 percent of Kenya's GDP, excluding charcoal and direct subsistence uses. The researcher says forest and tree resources support the country's most productive sectors, particularly agriculture, fisheries, livestock, energy, wildlife, water, tourism and trade.

However, as the country's population grows, the future of wood has been grim with increasing demand for various wood products against a diminishing resource base.

Wood deficit in Kenya stands at 10.3 million cubic metres. Kenya can only meet 70 percent of its demand through sustainable supply meaning, small and medium-sized enterprises are forced to operate below capacity. Meeting this deficit has led to unsustainable extraction of wood from natural forests and informal imports.

In this regard, commercial forestry has the potential to bridge the wood deficit in the country and increase forest cover. Success lies in extending commercial forestry to private, community lands and arid and semi-arid lands that constitute over 80 percent of the total land in Kenya.

For a long time, trees on farms and private forests have not experienced the accelerated decline of forest cover registered in public plantations, bushlands, and indigenous closed forests. This demonstrates the private sector's efficiency in managing trees and forests, presenting an opportunity to leverage on Public-Private Partnerships (PPPs).

These can provide access to private-sector financial capital and benefit from transferring technological and operational efficiencies from the private sector into public forest management.

Improving the sector's performance will reduce wood supply deficit in the country and create jobs along the value chain, raise incomes, increase tax revenues, and contribute to the achievement of the government's Big 4 Agenda through boosting affordable manufacturing housing.

At the same time, it will facilitate the achievement of 10 percent tree cover as part of Kenya’s commitment to global obligations.

I was privileged to speak at the conference and share my opinion on commercial forestry and reflect on the challenges that the sector has faced and how we can unlock such challenges.

We need to design programmes that seek to ensure sustainable growth of private commercial forestry and overcome critical constraints along the production cycle, timber processing and marketing value chain of forest products.

In 2019, KCIC developed a new strategic plan that involved supporting entrepreneurs and businesses around commercial forestry. Further, we signed an agreement with KEFRI to support innovative climate change solutions and sustainable forest management by conducting research and development, environmental conservation and natural resources management, capacity building, knowledge management, technology development and transfer.

Our goal is to showcase how to make money from trees and forestry and transform that into a sustainable venture that will increase our forest cover to 13 percent. That way, we would have helped the government as far as the international obligations are concerned. In addition, communities will be able to get disposable income from commercial forestry.

With the United Nations Development Programme (UNDP) support, KCIC also launched an innovation challenge to inspire new businesses that will provide young people in Kenya with sustainable incomes while protecting forest ecosystems.

The innovation, dubbed Green Economy Youth Activation Programme, seeks to strengthen youth-led businesses in the forestry and agroforestry sectors by building their capacity to establish and run sustainable enterprises.

In this challenge, up to 40 finalists were selected and have been enrolled in a one-year incubation programme to support the development of their ideas before pitching them to investors.

The private sector forms a key component to help Kenya achieve its ambitious Nationally Determined Contributions - NDCs of reducing its carbon emissions. In addition, the strategy is positioned to be Kenya's Private Sector Corporate Commitment on Climate Change.

Hailing from the 10-point charter, adopted as part of COP 26 Kenya private sector commitment to climate action in the recently completed 4C-Conference, commercial forestry presents an ideal space to take action.

Helping stakeholders catalyse the growth of the Kenyan commercial forestry sector could have a significant impact. It would create jobs, raise incomes and increase tax revenue.