Media Room

News Articles

Sobengwe Forestry: growing rural profit

sobengweOf the 240 hectares the Radebe family purchased, 140 is planted with gum trees (Eucalyptus grandis), which take about 10 years to mature.

In 2007 eight members of the Radebe family used their combined Settlement and Land Acquisition Grants and additional financial assistance from the IDC to buy a piece of land from global pulp and paper group, Sappi. This is now Sobengwe Forestry, a small family business near Ixopo in southern KwaZulu-Natal. It is run by Themba Radebe, who has almost 20 years' experience in forestry work, initially with Sappi and Mondi, and subsequently with small-scale black farmer plantations. One of Radebe's brothers has recently left full-time employment to study forestry, and will join him in managing the project.

Of the 240 hectares purchased, 140 is planted with gum trees (Eucalyptus grandis), which take about 10 years to mature, so the business is no quick money-spinner. The remaining area is indigenous forest, and the family is currently seeking advice on how to conserve and protect this valuable resource.

In partnership with Peter Nixon, Radebe is a founding member of Rural Forest Management (RFM), a company that provides training, marketing, administrative and financial management support to forestry projects in southern KwaZulu-Natal and the Eastern Cape. Through RFM, Sobengwe is linked with three well-established forestry projects in the Umzimkulu district, and several more projects are in the process of being established.

The largest of the current KwaZulu-Natal plantations is Mabandla, a 1 300-hectare gum and pine plantation employing over 100 people. Apart from the plantation, there are plans to develop a dairy, a cattle project, an orchard, an indigenous nursery, and a nature tourism venture on Mabandla - an example of how forestry projects can provide a base for broader community development and job creation.

Sobengwe is certified by the international Forestry Stewardship Council. This means it is sustainably managed, and conforms to strict environmental codes of practice. This is a significant achievement for such a small business, and illustrates Sobengwe's commitment to comply with legal and environmental best practices.

Based on an agreement made at the time of the sale, 80% of the timber is sold directly to Sappi, which has the right of first refusal on the remaining 20%. Any remaining timber is sold in the town of Harding to make treated poles for use in housing and fencing.

Ten people are employed permanently by Sobengwe, plus another 40 for the three months of the winter harvesting season. Attempts are being made through NCT Forestry Cooperative, the former Natal Cooperative Timber Company, and neighbouring plantations to secure round-the-year employment for these seasonal workers.

Not only would such an arrangement provide security for the seasonal workers, but it would also establish a pool of trained and experienced labour for plantations in the area. At the moment workers have to be trained for harvesting each year, and many leave to look for work in the towns or with other contractors once the harvesting is over, making it necessary to train new people again the following year.

As at Mabandla, there are plans to use Sobengwe as a base for broader community development and job creation. Immediate options include bee-keeping and commercial agriculture. The family are also looking for funding to build a house on the property, to serve as a centre for the new projects which, in time, will help develop small businesses and local infrastructure.

A plantation of 140 hectares is not really enough to support a family, and ideally another piece of land needs to be bought. Eucalyptus trees yield an average of 21 cubic metres of wood per hectare per year. At Sobengwe, about 15 hectares of trees are harvested each year by motor-manual methods such as felling, de-branching and cross-cutting with chainsaws, de-barking and stacking by hand, producing 3 000 to 4 000 tons of timber which is taken to depots by tractor-trailer bundle-loaders.

With a turnover of R2- to R3-million a year, operating margins are tight. A large part of the profit after running expenses, maintenance, and conservation of the land goes to repaying the IDC loan. Forestry is an important part of the South African economy, directly contributing 1% to the national economy, and creating almost 200 000 jobs, mostly in rural areas. In KwaZulu-Natal the contribution to provincial gross regional product is close to 5% - in Mpumalanga the percentage is even higher. Moreover, forestry stimulates the development of other industries that make use of forest products.

However, despite a supportive policy environment, regulations often make it difficult to establish new community forestry projects. Land-holding entities need to be established and registered. Large forestry companies have legal teams to facilitate the granting of licences, but a small project might struggle for years to obtain the necessary water-use permit and planting licence.

In the Eastern Cape, there are also land-use and tenure issues, with most of the land being owned by the state. It is for these reasons that the IDC recently established a forestry project development fund and appointed a panel of forestry project development specialists to assist communities to comply with the regulatory requirements and develop their projects to the stage of bankability.

Sobengwe is an example of how forestry can create sustainable rural livelihoods, and integrate rural communities into the broader economy.

Our sectors

Our strategic business units work in three distinct areas: the services sector; within the mining and manufacturing sector; and in the agro-processing and new industries environment. MORE >

Our regional support

We make an impact across the country, helping develop new business, growing existing companies, boosting local economies and providing expertise wherever needed. MORE >

Annual report

Advancing Industrial Development covers our financial and non-financial strategy and performance aspects for 2015. MORE >

Our products

We offer a wide range of products from debt equity to providing working capital and equipment finance. MORE >

Our research

Stay informed and read our award-winning research reports, as our team keep tabs on the economic trends globally, regionally and locally. MORE >

Corporate responsibility

We are playing our part in improving the quality of life of all our communities, especially in rural and underdeveloped areas. MORE >

Doing business with us

This is your one-stop-shop where you can engage with us directly via our e-services. MORE >

Domestic Medium Term Note Programme

The Industrial Development Corporation of South Africa Ltd has established a ZAR15,000,000,000 Domestic Medium Term Note Programme (as amended and updated on 17 July 2012). You can read the memorandum here. MORE >

Report Fraud     Email     Call 0800 30 33 36     SMS 39640

PAIA Manual | Terms and Conditions | Employee Webmail | Contact us | Sitemap
© The IDC 2016, ALL RIGHTS NOT EXPRESSLY ALLOWED ARE RESERVED. P.O. Box 784055, Sandton, 2146, South Africa