1. Forest Sector Broad Based Black Economic Empowerment Charter SKILLS FORUM ROYAL HOTEL, DURBAN 21 AUGUST 2008 Department of Water Affairs and Forestry T. L. Simelane

2. Charter Presentation Contents Process and progress to date Scope of application of Charter Vision for the Forest Sector Forest Sector challenges How charter addresses challenges Charter scorecard on skills Charter undertakings on skills development Potential benefits from the Charter

3. Progress to date Forest Sector Charter – signed by Minister and stakeholders on 22 May 2008. Charter Council members and Chairperson appointed Minister launched Charter Council on the same day – to oversee the monitoring and implementation of the Charter Council has commenced with its work through establishing Task Teams to: - Appoint a CEO - investigate inclusion of the furniture in the Charter - review the EME & QSE threshold - gazetting of the Charter under Section 9 - address land reform matters, and - conduct BEE status survey.

4. Scope of application of the Charter All enterprises involved with plantation forestry and first level processing of wood products: -Plantation forestry growers and nurseries -Forestry contractors -Fibre processors - pulp, paper, paperboard, timber board product, woodchip and wattle bark -Sawmilling -Pole producers -Charcoal producers Note: NTFP enterprise not included but will benefit from Charter conditions for Growers

5. Vision for the Forest Sector An inclusive and equitable forest sector in which black women and men fully participate. A forest sector that is characterised by sustainable use of resources, sustainable growth, international competitiveness and profitability for all its participants. A forest sector that contributes meaningfully to poverty eradication, job creation, rural development and economic value adding activities in the country.

6. Forest Sector Challenges 1.Greater equity in the entire value chain 2.Increase in the local supply of roundwood to underpin growth throughout the value chain 3.Sustainable supply and better utilisation of limited sawtimber resources 4.Increased local beneficiation in and through the fibre production sub sector 5.Greater empowerment and profitability of existing small scale forest enterprises 6.Linking forestry as a rural based industry with poverty eradication and local economic development

7. How Charter addresses challenges 1.Greater equity in the entire value chain Increased black ownership through the scorecard. NB!!! Potential income from small scale tree growing is estimated at R3900/annum for a 2.4 ha plot Greatest value in downstream processing Imperative that emerging growers also share in downstream processing Transfer of State Forest Assets must support BBBEE Greater emphasis on empowerment of women, youth and rural poor through the scorecard Growth in value adding enterprises through procurement Huge implication for skills development

8. How Charter addresses challenges 2.Increase in roundwood supply New afforestation- 100 000 ha over 10 years (technical skills) Improved yields from existing plantations Secure land holding rights and structure on communal land to support emerging growers Community readiness, extension support and training for new entrants Access to funds and financial services for new entrants (financial management)

9. How Charter addresses challenges 3.Sustainable supply and better utilisation of sawlogs Agreement on a sawlog strategy Review of State Forest Exit strategy in the Southern and Western Cape Improved utilisation rates by small sawmillers Greater investment by large sawmillers in raw material supply Skills (business, entrepreneurial, finance etc.)

10. How Charter addresses challenges 4.Local beneficiation in and through the fibre production Allocation of Water licensing through BBBEE Encourage local production of chemicals and machinery used by the processing industry Encourage enterprise development through the use of fibre waste Access to finance for emerging entrepreneurs Skills (business, finance, entrepreneurial etc.)

11. How Charter addresses challenges 5.Empowerment and sustainability of small operators Strengthen representative industry structures where they exist Establish representative structures where they do not exist Regulate contracting and employment relationships through industry Codes of Good Practice Improved access to financial services Skills (business, finance, entrepreneurial etc.) Mechanism to ensure adequate supply of raw material (State assets)

12. How Charter addresses challenges 6.Linking forestry with poverty eradication and local economic development Fair and equitable conditions of employment Provide social services and amenities to the rural poor thorough the corporate social investment targets (negotiation skills, business) Regulate contracting and employment relationships through industry Codes of Good Practice Use buying power of Industry as a catalyst for downstream local economic development through the procurement targets Skills (business, finance, entrepreneurial etc.) Provide access to non-timber forest products for rural households

13. Medium/large Enterprise Scorecard INDICATORS WEIGHTINGS (W) & TARGETS (T) GenericForest Sector Sub-sector specific deviations WTWTWT 4. Skills Development 15 4.1 Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for black employees as a percentage of Leviable Amount using the Adjusted Recognition for Gender 63%6 4.2 Skills Development expenditure on Learning Programmes specified in the Learning Programmes Matrix for black employees with disabilities as a percentage of Leviable Amount using the Adjusted Recognition for Gender 3 0.3% 3 4.3 Number of black employees participating in Learnerships or Category B, C and D Programmes as a percentage of total employees using the Adjusted Recognition for Gender 65%6

14. Qualifying Small Enterprise Scorecard INDICATORS WEIGHTINGS (W) & TARGETS (T) GenericForest Sector Sub-sector specific deviations WTWTWT 4. Skills Development 25 4.1 Skills Development spend on Learning Programmes for black employees as percentage of Leviable Amount using the Adjusted Recognition for Gender 252%252% 5. Preferential Procurement 25 Years 0-5 Years 6-10 25 Years 0-5 Years 6-10 All enterprises engaged in contracting schemes 5.1 BEE Procurement Spend from all Supplies based on their BEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 2540% 50% 2540% 50% 20 5.2 Compliance with Industry Codes of Conduct on contracting for the Forest Sector --5Yes

15. Charter undertakings on skills Strengthen the national framework for skills development Identify scarce, critical and core skills. Conduct skills needs analysis for each sub- sector. Development of appropriate Outcomes Based Unit Standards. Qualifications to match training needs registered with SAQA. Sector wide ABET initiative.

16. Charter undertakings on skills Strengthen sector capacity for skills development delivery Strengthen capacity of FIETA. Implementation mechanisms for the additional skills development spend. Expand training infrastructure.

17. Charter undertakings on skills Promote skills development opportunities for youth and new entrants in the Forest Sector Plan for the promotion of forestry as career of choice. Plan for new and enhanced bridging courses. Enhance quality of secondary education in maths and sciences.

18. Potential outcomes resulting from the charter Weighted black ownership profile of 30% for the sector as a whole within 10-years (skills critical) Weighted black women ownership profile of 12.6% for the sector within 10-years (skills critical) Afforestation of 100 000 ha over the next ten years, mostly in the Eastern Cape and KwaZulu-Natal through black owned forestry enterprises (skills critical) Annual expenditure of R112 million in enterprise development that will result in approx 650 new jobs and 45-85 new small businesses annually (skills critical) Increased participation of black people in forestry value adding industries, such as sawmilling, paper production and charcoal production (skills critical)

19. Potential outcomes resulting from the charter Annual spending on skills development sufficient to add about 1 750 new learners into the tertiary education system, and more than double this number of other trainees and learners at lower educational levels Effective and representative structures for the forest industry Good practices in contracting and employment throughout the Forest Sector All outcomes will be realized provided that skills development and community readiness has been attained