Title: Broad Based Black Economic Empowerment in the Forest Sector
1Broad Based Black Economic Empowerment in the
Forest Sector Presentation to the Portfolio
Committee 19 October 2005 Barbara Schreiner,
Senior Executive Manager Policy and Regulation,
Department of Water Affairs and Forestry
2Contents
- The Context
- Forest Sector
- BBBEE tools and requirements
- Progress to date with development of the Forest
Sector Charter - Work programme
- Strategic issues to be addressed in the Charter
- Way forward
3The Forest Sector
- Forest sector contributes R14 billion annually to
economy (2), provides 170 000 jobs - Substantial increase in demand for pulp, paper,
saw timber, timber board and charcoal over next
25 years - Non-timber forest products (firewood, building
poles, medicinal plants, edible fruits) critical
to livelihoods of rural poor - Provides eco-tourism and rural development
opportunities - Very low levels of black ownership and senior
management in all sub-sectors - Limited information, but low levels of
participation by women and disabled
4Commercial Forest Sector
5WHAT IS BBBEE?
- The economic empowerment of all black people
including women, workers, youth, people with
disabilities and people living in rural areas
through diverse but integrated social or economic
strategies that include - Increasing the number of black people that
manage, own and control enterprises and
productive assets - Facilitating ownership and management of
enterprise and productive assets by communities,
workers, cooperatives and other collectives
enterprises - Employment equity-all occupational
categories/levels - Human resources and skills development
- Preferential procurement
- Investment in enterprises development owned
managed by black people
6BBBEE Strategic Objectives
- Contribute to the economic transformation of
South Africa - Significant increase in number of black women and
men who manage, own and control the countrys
economy - new and existing enterprises
- including community enterprises
- Significant decrease in income inequalities
- Contribute to first and second economies, poverty
eradication and job creation - Significant increase in number of
- new black enterprises,
- black empowered enterprises and
- black engendered enterprises
- Increased black ownership of land and other
productive assets. - BBBEE and economic growth are complementary
processes
7BBBEE Tools
- The tool for ensuring BBBEE achievement is the
scorecard that applies to individual enterprises - Generic scorecard for those not falling under a
Charter - Sector specific scorecards for sectors with
Charters - To develop Sector Charters it is necessary to
- Formulate a vision for the sector
- Develop key principles for the Charter
- Know the current status of empowerment in the
sector - Agree on the challenges facing the sector and
possible solutions - Agree on targets and timeframes for BBBEE in the
sector - Identify and develop the (financial, legal, and
institutional) instruments for implementing the
scorecard - Identify roles and responsibilities for
implementation - Establish mechanisms to monitor implementation
8BBBEE Generic Scorecard
Core Component of BEE Indicators Indicator weighting
Direct Empowerment Score Direct Empowerment Score Direct Empowerment Score
Equity Ownership share of economic benefits 20
Management black persons in executive management and/or executive board and board committees 10
Human Resource development and employment equity score Human Resource development and employment equity score Human Resource development and employment equity score
Employment equity Weighted employment equity analysis 10
Skills development Skills development expenditure as a proportion of total payroll 20
Indirect empowerment score Indirect empowerment score Indirect empowerment score
Preferential procurement Procurement from black owned and empowered enterprises as a proportion of total procurement 20
Enterprise development Investment in black owned and empowered enterprises as a proportion of total assets 10
Residual Residual Residual
To be defined To be determined by sector/enterprise 10
Total Score out of 100 Total Score out of 100 Total Score out of 100
9Charter Process Requirements
- BBBEE Act and Code of Good Practice defines
Charter as a partnership agreement between
government and the private sector, including
trade unions and community based organisations - Charter must be developed through consultation
and negotiation between sector stakeholders - Code of Good Practice provides for the
establishment of a Charter Steering Committee to
drive the Charter development process Working
Groups to assist the Steering Committee - Wider public consultation required to input into
the Charter process
10Progress to date
- Official launch of Charter by Minister Sonjica at
the National Forestry Indaba in Midrand on 18th
April 2005. - Stakeholders agreed to develop a Forest Sector
Charter and to establish a Steering Committee
assisted by Working Groups to drive the process. - Minister accepted nominations from sector
stakeholders and appointed the Charter Steering
Committee on 18 May 2005. - Steering Committee met on 17 June and agreed on
work programme, budget and establish support
infrastructure
11Progress to date
- Steering Committee also established Working
Groups - Delineation Working Group
- Sub-Sector Working Groups for
- Growers (chairMike Edwards, FSA)
- Contractors (chair Thami Zimu, Independent
Grower) - Sawmillers (chair Vince Erasmus, Hans Merensky)
- Charcoal and Pole Treatment (chair Angus Currie,
SAWPA)
12Progress to date
- First tasks assigned to the Sub-sector Working
Groups - Develop a Charter Vision for the Sub-sector
- Identify Key Principles to guide the Charter
- Determine the Current Status of empowerment in
the sub-sector - Determine the Challenges facing the sub-sector
and recommended solutions - Results of work to-date were presented at
regional stakeholder workshops during the third
week of September
13Progress to date
- Workshops offered the opportunity to receive
comments and input from stakeholders - Key issues raised at the workshops
- Training and Skills Development
- Alignment of the Forest Sector Charter to
Agri-BEE - Women empowerment needs special attention
- Procurement system
- HIV/AIDS impact
- The Working Groups will finalise their tasks
based on the inputs received and written inputs - The updated inputs will be submitted to the
Steering Committee that will put it together for
the Charter
14Progress to date
- Sector Delineation Working Group recommended
inclusion of pulp and paper manufacturing
sub-sector in the Charter following a meeting
with the Minister this was agreed to by all
stakeholders at the Steering Committee on 13
October 2005. - Fibre Working Group has now been established and
commences its work on 21 October 2005.
15Progress to date
- The Steering Committee established guidelines for
the Working Groups to develop Scorecard proposal
for the sub-sectors - Second tasks assigned to the Sub-sector Working
Groups on 13 October 2005 - The development of scorecards for the sub-sectors
- The identification of instruments required for
scorecard achievement
16Sub-sector Challenges
- Growers
- Land Availability and land title.
- Afforestation Licensing.
- Profile and awareness about Forestry.
- Skills development and transfer.
- Forest Protection.
- HIV/AIDS.
- Contractors
- Viability issues low profit margins, price
undercutting etc - Empowerment issues lack of bargaining power in
determining contract fees, lack of financial
management and difficulty in accessing credit due
to shirt-term nature of contracts - Labour issues low wages, insecure employment,
poor working conditions and HIV/AIDS - Sawmilling
- Fragmentation and lack of organisation
- Inadequate and irregular sawlog supply
- Inadequate access to finance, skills technology
and inadequate participation in the timber value
chain - HIV/AIDS
17Work Programme
- Working Group meetings
- key principles, vision, challenges
recommendations - Scorecard discussions
- Charter Steering Committee meeting 10 Nov
- consider scorecard proposals and set guidelines
for BBBEE instruments - Consultation workshops
- Eastern Cape 22 Nov
- KwaZulu-Natal 24 Nov
- Limpopo 29 Nov
- Working Group meetings
- BBBEE instruments development
- Charter Steering Committee meeting 6 Dec
- To consider BBBEE proposals and set guidelines
for completion of draft Charter
18Strategic Issues for Charter
- Shortage of roundwood supply inhibiting future
growth and opportunities for BBBEE in the sector - Support to new afforestation opportunities by
- Expediting afforestation authorisation - Sector
funding and support to identify areas suitable
for afforestation under the Enterprise
Development Component of the Scorecard - Secure land rights and land holding structures
for new afforestation - implementation of the
Communal land Rights Act, 2004, to support the
Enterprise Development Component of the Scorecard - Community facilitation, extension support and
training for land holding communities sector
funding and support for the establishment of a
small-grower support facility under the
Preferential Procurement and Enterprise
Development Components of the Scorecard - Access to funds and business support services
as above - Infrastructure development to support
afforestation extended public works programme
linked to private sector investment in social
infrastructure investment under the Residual
Component of the Scorecard
19Strategic Issues for Charter
- Shortage of roundwood supply inhibiting future
growth and opportunities for BBBEE in the sector
(continued) - Improved utilisation of existing plantation
resources by - Restoration of existing state forest resources
restoration and transfer of DWAFs remaining
state forest plantation under the Ownership and
Enterprise Development Components of the
Scorecard - Application of yield enhancement guidelines
affecting 50 000 - 60 000ha Government
initiative under the Residual Component of the
Scorecard - Combating plantation losses caused by forest
fires pests and diseases Sector investment in
combating plantation loses under the Residual
Component of the Scorecard
20Strategic Issues for Charter
- Sustainable supply and better utilisation of saw
timber - Sustainable sawlog supply Industry agreement
within Charter on a sawlog growing strategy and
programme for the Forest Sector as part of the
Residual Component of the Scorecard - Improved utilisation rates in the sawmilling
sector (dealt with hereafter) - Promote value adding in the pulp and paper sector
- Further engagement with the pulp and paper sector
necessary in this regard - Greater equity in the forestry value chain
- Targeted enterprise development support in value
adding enterprises - under the Enterprise
Development Component of the Scorecard - Targeted ownership participation of new black
entrants from the sectors second economy in
established value adding enterprises - under the
Ownership Component of Scorecard
21Strategic Issues for Charter
- Empowerment and sustainability in the forest
small-scale enterprise sector - Forestry contractors
- Establish Code of Good Conduct for Contracting
work under the Preferential Procurement
Component of the scorecard for contracting
companies and the Employment Equity Component of
the Scorecard for contractors - Strengthening the contractor organisation (SAFCA)
- under the residual component of the scorecard - Increasing skills development and training for
small scale and emerging contractors - under the
Preferential Procurement or Enterprise
Development Components of the Scorecard for
contracting companies under the Skills
Development Component for contractor companies
22Strategic Issues for Charter
- Empowerment and sustainability in the forest
small-scale enterprise sector (continued) - Sawmillers
- Establish body that represents and lobbies on
behalf of millers under the Residual Component
of the scorecard for sawmillers - Support capital investment in new technology by
addressing the sawlog supply problems that will
support long term sawlog contracts referred to
earlier - Supporting access to skills, technology and
research for small millers - Skills development training and bursary
programmes for sawmillers - Skills and technology transfer through mentorship
schemes linking large and small millers
23Strategic Issues for Charter
- Empowerment and sustainability in the forest
small-scale enterprise sector (continued) - Small charcoal producers
- Establish a body representing charcoal producers
in the industry under the Residual Component of
the scorecard - Increased skills development and training for
small charcoal producers under the Preferential
Procurement or Enterprise Development of the
scorecard for large producers and under Skills
Development component for small producers.
24Strategic Issues for Charter
- Strengthening the Sectors role in rural
development - Private sector support
- Support to the non-timber forest product sector
to support rural livelihoods (access to firewood,
building poles, medicinal plants and eco-tourism
ventures) through the issuing of permits and
licenses and enterprise development support -
under the Enterprise Residual Component of the
scorecard for growers - Public sector support
- Ensure that communities have the right to access
state forest land and benefit from forest land
held in trust for them - Confirmation of land rights on state forestland
to create opportunities for new afforestation in
the hands of BBBEE owners - Confirmation of land rights with regard to
Category A plantations to enable the release of
the accumulated rentals intended for the right
holding communities - transfer of the 25 state-held shareholding in
Category A companies that is earmarked for labour
and communities
25Key Opportunities
- Greater weighting for Direct Indirect
Empowerment Components of the scorecard could
provide strategic leverage to support BBBEE
linked to growth in the sector - Possible instrument to support these would
include - Afforestation authorisation support facility
- FED support fund
- FED facilitation and business support facility
- Technology transfer and mentorship scheme
- NTFP support programme
26Way Forward
- The next step will be the development of the
Scorecard(s) for the Charter - These proposals will be considered by the
Steering Committee early in November - Stakeholder meetings are planned for the third
week in November to consult on the proposals
27Way Forward
- In the meantime DWAF will be working on
developing the instruments required for the
implementation of the Scorecard - This includes
- instruments to fund BBBEE transactions
- implement skills development training
- employment equity
- support enterprise development
- secure preferential procurement etc.
- Attention also needs to be given to institutional
arrangements needed to implement and monitor the
Charter
28Way Forward
- Draft Charter to be available for public comment
early next year - Final Charter will be submitted to the Minister
of Water Affairs and Forestry and thereafter to
the BEE Council and the Minister of Trade and
Industry for approval
29The End