BCSDZ ANNUAL CONFERENCE 2011 (2-3 NOVEMBER 2011) ENDORSING INCLUSIVE BUSINESS THROUGH A SUCCESSFULL PROJECT IN THE TIMBER INDUSTRY By Dr Joseph Kanyekanye President – Confederation of Zimbabwe Industries & Group Chief Executive Officer – Allied Timbers Holdings

Presentation Summary Introduction & Scope Forestry in Zimbabwe at a glance Money grows on trees Challenges experienced Picture of an Alternative route to Indigenisation Opportunities for Improvement Lessons leant Conclusions

Introduction Stability and political unity since 2009 Resource rich country with arable land Education – unquestionably Mugabe legacy GDP growth averaging 7% in last 2 years Come to share, learn and adapt - NOT AN ORACLE Malaysia palm trees – an inclusive business model based on technology from Africa This is an objective story of my company and how INCLUSIVE BUSINESSES can improve the bottom-line.

FORESTRY IN ZIM. AT A GLANCE 1954 PLANTING OF TREES MOSTLY GUM AND PINE SPECIES ROTATIONS RETURNS INTERMEDIATE PRODUCTS FORESTRY SILVICULTURE AND DDDs THINNING TO WASTE TO PRODUCTIVE THINNINGS TRADITIONAL ZIMBABWE FORESTRY PRACTICE CONTRACTORS MAIN SAWMILLERS Zimbabwe

Money grows on Trees Timber industry in Zimbabwe at a glance: sustainable, free from drought and environmental friendly way of doing business ATH has the greatest timber resource with 7 sawmills Concept of contract milling: DDDs concept Buying of logs initially led to cash flow constraints Movement towards contract milling PRODUCT SHARING RISK OF MARKET DISTORTION MANAGEMENT OF QUALITY

CHALLENGES EXPERIENCED FINANCIAL DISCIPLINE – FANCY PROJECTS CORPORATE FATIGUE – 35 TO 10 contractors FUNDING – NGOS Failure technical advise needed as most are not trained in business or forestry but have passion for work political warlords – required firm decisions

WHAT WAS ACHIEVED PRODUCTIONN IN EXCESS OF COMPETITORS – 4900M3 VALUE OF $1,2 MILLION PER MONTH CHEAPEST COST OF PRODUCTION ALLOWING LOCAL DOMINATIONN ONN PRICE IF NEEDED ENHANCED PROFITABILITY COMMUNITY COMMONWEALTH EMPLOYMENT – 300 NEW ENTREPRENEURSHIP EMPOWERMENT AWARDS

AN ALTERNATIVE PICTURE OF INDIGENISATION

Opportunities For Improvement Value addition especially in furniture, pallet manufacture If you do not buy my timber ……….. we will certainly bury you. Opportunities for further value addition Training in sawmilling and entrepreneurship in modules Chain of custody to deal with timber poachers SME Financing models – CABS model is most ideal Exchange programme: an opportunity arose to look at this in South America Government incentives in the form of tax credits, rebates and subsidies Government guarantees for accessing funds Commodity swaps; raw materials for machinery or product sharing

Lessons learnt An alternative road map to indigenisation via new enterprises Product sharing The virtual organisation Community empowerment on strictly market principles Alternative path to enhancing productivity Scope to expand this to other areas such as transport National growth strategy anchored on SMEs is possible Inclusive business can be profitable – publish success models and replicate

Objective optimism anchored by resource index. CONCLUSION Building blocks for inclusive businesses are market based principles Funding and more funding needed but new approaches besides FDI can arise from using SMEs Objective optimism anchored by resource index. Africa its is our time!

‘I am not smart, I spend more time on the problem than other people" - Albert Einstein THANK YOU 12