at a Launch of the Sappi/Lereko Investments BEE transaction, Sappi Head Office,
Johannesburg
19 April 2006
Salutations!
The growth of the commercial timber products sector is one of the great
success stories of our economy. The sector has grown from humble beginnings in
the 1940s to one of the largest value adding sectors of our economy. The
commercial plantation resource of approximately 1,37 million hectares provides
a basis for a number of value added timber enterprises, ranging from pulp and
paper products to saw milling, board products, poles, mining timber, wood chip
and charcoal.
Today the commercial timber products sector makes a major contribution to
South Africaâs economy. The value addition of this sector amounted to R12,3
billion in 2003, contributing one percent to the total Republic of South Africa
(RSA) Gross Domestic Product (GDP), 2,4% to the Primary Sector GDP and 4,3% to
the Manufacturing Sector GDP. The forest products industry ranks amongst the
top exporting industries in the country, contributing some nine percent to the
overall export of manufactured goods.
The Forest Sector is also recognised as a high growth potential sector of
the economy. The Sector needs to contribute substantially to the Accelerated
and Shared Growth Initiative for South Africa (AsgiSA) to achieve the annual
growth target of six percent that has been set for the economy. This
accelerated growth is 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 ensuring an equitable participation by all
South Africans in the ownership, management control and benefits of our
productive resources is a national imperative and must happen for the new
democracy to succeed.
Yet, making it happen for a company that has followed a successful recipe in
building the business into a powerful multi-national organisation requires
courage and commitment from its managers and shareholders. Today we celebrate
Sappiâs substantial contribution to transformation not only of the countyâs
forest sector but also to our economy as a whole.
As the Government representing the people of our country we welcome this
achievement. At the same time Government recognises that it is an important
partner to the Forest Industry in effecting meaningful and sustainable
transformation. We take this role seriously. I officially launched the process
to draft a Forest Sector Broad-Based Black Economic Empowerment (BBBEE) Charter
at an Indaba held on 18 April 2005. Since then Government, industry, and other
stakeholders in the sector have worked tirelessly through the Charter Steering
Committee and its sub-sector Working Groups in developing the Forest Sector
Charter. From the outset, it was agreed that BBBEE and economic prosperity and
growth in the Forestry Sector must go hand-in-hand. Sustainable growth is
simply not possible without BBBEE and the scope for sustainable black economic
empowerment (BEE) is severely constrained without prospects for growth. The
importance of this link needs to be understood within the context of the forest
sectorâs role in the South African economy.
The Charter Steering Committee has identified the looming shortage of
round-wood supply as a key constraint to growth, sustainability and equity in
the forestry value chain. The Committee is in the process of finalising
recommendations on how this matter should be addressed and the role of both
Government and Industry in dealing with the matter. The BEE transaction
announced today broadens the base of black economic empowerment in the
round-wood supply chain and brings Lereko into the fold to become a key partner
to the solution of the problem.
However, it must be clearly understood that broad-based black economic
empowerment does not stop with the conclusion of large-scale BEE deals such as
the one that has brought us together today. 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;
* Skills development;
* Preferential procurement;
* Enterprise development, and
* Social investment.
Furthermore, whilst I commend Sappi, I must emphasise that such deals also
need to happen across the value chain and not only on the upstream side. For
the country to meet the envisaged shortage of round-wood supply, it is
necessary for new areas to be planted with trees. I am referring specifically
to the Eastern Cape and KwaZulu-Natal where potential for growth of the
resource has been identified. There must be incentives for these communities to
embark on tree growing initiatives. Our communities need to benefit more in the
downstream rather than only from the growing of trees. I, therefore, challenge
the Industry to ensure that tangible benefits from across the value chain
accrue too many more participants in the sector.
Finally, Government is committed to playing its role in addressing the
shortage of round-wood supply. This entails amongst others expediting the
afforestation authorisation process, securing land holding rights and
structures to support new afforestation opportunities, and transport
infrastructure improvements to reduce the cost of transporting timber.
Government and industry also need to work together in securing sources of
finance to support black owned forest enterprise development that will increase
the supply of round-wood, improve the productivity and yield of existing
resources and to create new value adding opportunities in the sector. The
effective transfer of skills and technology form established enterprises to
small scale and emerging black owned enterprises is of equal importance and
also needs to be addressed in the Forestry Charter. I, therefore challenge
Sappi to give support to Lereko amongst others by mentoring and sharing
technical skills.
Let me conclude be reminding you of the words of the Freedom Charter,
written just over 50 years ago, where the people of South Africa said âThe
national wealth of our country, the heritage of South Africans, shall be
restored to the peopleâ. Land, water and the capacity to grow trees, to process
them and reap money from this, are part of this national wealth. Today marks
one step on that journey to restore the national wealth of our people to the
people. There are still many steps to take, but let this one give us the
motivation to take many, many more.
Thank you.
Issued by: Ministry of Water Affairs and Forestry
19 April 2006
