Environmental Programmes: briefings by DEFF, Forest Sector Charter Council, Forestry South Africa & Safcol; with Minister & DPE Deputy Minister

Environment, Forestry and Fisheries

03 December 2021
Chairperson: Ms F Muthambi (ANC)
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Meeting Summary

Video 

In a virtual meeting, the Department of Forestry, Fisheries and the Environment, the Forest Sector Charter Council, Forestry South Africa and the South African Forestry Company Limited briefed the Committee on a range of issues. The Minister and Deputy Minister of Forestry, Fisheries and the Environment, and the Minister of Public Enterprises attended.

The Department gave an overview of the work of each of its Environmental Programmes, indicating where targets were behind schedule, and discussed three critical challenges facing the Programmes and the solutions being implemented.

Members asked about firefighting arrangements, progress on invasive plant clearing, training and job creation, the possibility of the Programmes assisting in municipal cleansing, recycling buy-back centres, and eco-furniture factories. They raised concerns about the use of the Expanded Public Works Programme to hire workers, and problems arising from the reliance on implementing agents.

The Forest Sector Charter Council provided an overview of the broad-based black economic empowerment certificates and affidavits submitted to the Council by medium and large enterprises, qualifying small enterprises and exempted micro-enterprises. The number of certificates had declined in all three size categories in 2020/21. Among medium and large enterprises, there had been an improvement in meeting targets for most indicators, with the exception of management control.

Forestry South Africa gave an overview of the state of the forestry industry. The sector appreciated the support given to it during the pandemic and reported that the failed insurrection in July 2021 had cost R656m. The single biggest challenge to the sector was to increase the area of timber planted and to halt the deterioration of existing state-run plantations. Forestry South Africa welcomed the creation of the Forestry Master Plan and reported that there had been a major turnaround in the relationship between government, industry and labour.

The South African Forestry Company Limited (SAFCOL) discussed its dual commercial and developmental mandate, noting that the developmental mandate would not be achievable unless the company was commercially successful. The briefing covered progress in addressing land claims, which affected over half of its land, and its promotion of transformation.

Members drew attention to negative effects of the privatisation of state forests in the Western Cape, and asked questions about eco-tourism on plantations; the Knoflokskraal community that had arisen on land near Grabouw; water-related concerns about eucalyptus in particular and non-indigenous trees in general; plans in the sector to offset the negative effects of mechanisation on employment and combat beetle infestation; prospects for community forestry initiatives; the future of furniture factories; the Department’s urban tree-planting programme; black economic empowerment in the sector; illegal logging, and the impact of COVID-19.

 

Meeting report

The Chairperson said that the Environmental Programmes of the Department of Forestry, Fisheries and the Environment (DFFE) were very valuable. She approved of their rural focus but believed that they could achieve more on skills development. She invited Ms Barbara Creecy, Minister of Forestry, Fisheries and the Environment, to make an introduction.

Minister Creecy agreed about the value of the Environmental Programmes, noting that they were responsible for the largest portion of the Department’s budget. It was important to link them to the Department's audit and spending outcomes, as they had experienced difficulties in complying with the Public Finance Management Act (PFMA). As a consequence, the Department was looking at institutional reforms that would improve performance and enable them to perform their dual mandate of protecting ecosystems and providing work opportunities. The presentation would focus on challenges and the institutional reforms being implemented to address them. She noted that the Programmes often worked in partnership with departmental entities which carried out a lot of actual infrastructure work.

Presentation on the DFFE Environmental Programmes
Ms Nonhlanhla Mkhize, Deputy Director-General: Environmental Programmes, DFFE, gave an overview of the work of each of the Programmes, and provided a high-level summary of the performance trends. These indicated that 2023/24 targets for full-time equivalent (FTE) jobs, training, invasive plant clearing and coastline cleaning were either delayed or only partially on track. She discussed three critical challenges facing the Programmes – contract and project management inefficiency; suboptimal collaboration with partners including other departmental entities, provincial and local government; and suboptimal impact and sustainability of their projects. In reaction, the Programmes were, amongst others, developing standard operating procedures; replacing the prepayment system for services rendered; reviewing relationships with partners; and working with the Department of Small Business Development (DSBD) to support small contractors.

[For details, see the presentation slides.]

Discussion
Ms C Phillips (DA) asked for an update on contract problems in the Working on Fire programme identified in 2019. It seemed that the same contractor was about to be reappointed despite suspected irregularities. She requested copies of the contracts and information on what the problems had been. She reported that local firefighting associations battled to get information on available teams when a fire broke out, compromising their ability to fight the fires. What was the policy on sharing this information? There had been some horrendous fires in the North-West Province recently and she had seen Working on Fire personnel sleeping under a tree at the time.

Ms A Weber (DA) requested specific details on wetlands being rehabilitated and invasive plant clearance. Where was this work taking place and how exactly was it being done? Why did it take so long to clear invasive plants? The Expanded Public Works Programme (EPWP) workers doing the work did not seem to be winning. They should be retained to maintain areas which they did manage to clear. She asked for clarity on whether the budget for invasive plant clearance came from the Department of Water and Sanitation (DWS) or the DFFE. She asked whether the Centre for Biological Control (CBC) at Rhodes University was part of the Environmental Programmes branch of the Department, and why greening programmes seemed to work very well in some municipalities and less well in others. To whom were greening programmes accountable?

Mr N Paulsen (EFF) was concerned about the use of the EPWP to carry out the Environmental Programmes. Because the Department did not employ these workers directly but rather paid a service provider to manage them, it had little control over their remuneration, performance and skills development. It should be an internal competency of the Department. He was also concerned that the reach of the Environmental Programmes did not extend to the oceans beyond the coast.

Mr N Singh (IFP) remarked that the Environmental Programmes were commendable but that challenges remained, hindering them from achieving their dual objective of providing employment and protecting the environment. He shared Mr Paulsen’s concerns about the use of the EPWP to some extent. What were the current stipends being paid? Did the Department continue to outsource the management of the workers and how were these service providers chosen? How were sites for environmental rehabilitation chosen? What had happened to the Programmes during the COVID-19 lockdowns? What was the link between the Environmental Programmes and the National Resource Management (NRM) projects? He remembered the President calling for cleaning up towns and wondered whether the Environmental Programmes could assist municipalities to cope with clearing waste.

Mr D Bryant (DA) asked whether the figures for FTE jobs created in the presentation referred to EPWP jobs. He asked why no data on training outcomes was available for the first quarter of 2020/21. It was essential that workers were trained, and the Programmes could not continue to rely on workers with short-term EPWP contracts. Invasive plant clearance was lagging far behind schedule, as evidenced by the recent fire on Table Mountain which had been caused by uncleared alien vegetation. What was the plan to speed up the clearance of invasive plants? He noted that municipalities were able to use EPWP programmes, but they should not be used to cover up inefficiencies elsewhere, the root cause of which was the insufficiency of training.

Ms S Mbatha (ANC) asked how many recycling buy-back centres were operational across the country. There was a big one near Atteridgeville that seemed to have been abandoned. Did the Department monitor the compliance of recycling companies, which were mushrooming all over? What could be done about people who collected recyclable waste from domestic bins? They caused a lot of mess in the streets. How did the Environmental Programmes link up with Operation Phakisa? What happened to workers trained by the Programmes after they were declared competent? How many had been placed in employment? She said that the National Department needed to monitor and support provinces and municipalities to implement programmes. She was also uncomfortable with the practice of appointing service providers to manage EPWP workers because most of the funds ended up in the hands of managers rather than the workers.

The Chairperson asked about the role of the partners of the Programmes. She was also concerned about what happened to workers after they had been trained. Was there a way to ensure that the workers were included in the economy once they were trained? What did it mean to say that they had been “declared competent”? How did the Department quantify the effect of the EPWP on poverty and livelihoods? What portion of funding ended up going to implementing agents rather than the workers? Were they competent? Who audited their performance, how were they held accountable, and for how long did their contracts run? Were any workers employed directly by the Department? She was dismayed that there were still inefficiencies in the Working For Water programme despite the fact that it had been running for 26 years.

Responses
Minister Creecy said that funding for EPWP contracts came with conditions set for government as a whole. In other words the DFFE was a policy taker rather than a policy maker in this instance. Moreover, the according to the PFMA and National Treasury regulations, these programmes were classified as goods and services so any contracts had to be put out to tender. The Department had run the programmes directly until about around 2014, but under the current system it did not have much leeway to choose how workers were employed. She also noted that public works programmes were managed at all different levels of government, so the national Department would not necessarily always have processes of direct performance monitoring, and therefore the Committee might want to engage with the relevant level of government. In addition, the national Department’s invasive plant clearing mandate did not cover private land. In the case of the Table Mountain fire, an independent investigation had cleared the Department of any failure to clear invasive plants and had identified stone pines protected by the City of Cape Town as one of the causes. She said that she could not comment on the Working on Fire contracts as they were sub judice.

Ms Nomfundo Tshabalala, Director-General, DFFE, confirmed that the Working on Fire contracts were sub judice. The Department was going to file a responding affidavit later in the day, after which a court date would be set. She agreed that there were issues related to the contracts, however. The Department was looking into whether the EPWP was having the intended effect on poverty and livelihoods. She confirmed that the Department had implemented programmes directly in the past, and added that the current system of appointing implementing agents by tender had been intended to bring transparency in response to adverse audit findings. The supply chain management (SCM) capacity of the national Department had also been insufficient to procure the services for the whole country. She assured the Committee that implementing agents were appointed according to their ability to deliver the services they were hired for. The Department was looking into a decentralised model of appointing the agents, which would speed up delivery on the ground. This model would require a high level of collaboration with provincial and local government. She said that the budget for the invasive plant clearing at Hartebeespoort did come from DFFE, although it was a collaborative project with DWS.

Ms Mkhize undertook to provide detailed information on wetlands in writing. She explained that the CBC was not part of the Department. It provided biological control services to the Department, like the Centre for Invasion Biology at Stellenbosch University. The Department agreed, however, that biological control was critical to the control of invasive plants. She explained that the Environmental Programmes had been halted during the level 5 lockdown, and as restrictions were relaxed, new health and safety training had had to be introduced. However, since most of the work was done outdoors, it was relatively easy to practice social distancing. EPWP participants were exposed to core and functional training in the course of work, but there was also developmental training, undertaken by a dedicated portfolio, which looked at opportunities in the local economy. The Department did pursue placement for the trainees although admittedly it was not as extensive as it could be. She confirmed that various studies had established the value of clearing invasive species, and studies by the Department of Planning, Monitoring and Evaluation (DPME) had established that the Environmental Programmes remained relevant to creating work opportunities, although there was room for improvement.

Ms Matilda Skosana, Chief Director: Information Management & Sector Coordination, DFFE, said that the minimum stipend for EPWP workers was R95 per day. Recruitment was done according to guidelines published by the Department of Public Works and Infrastructure (DPWI) and in partnership with local municipalities. She confirmed that the figures [on slide 10] for FTE jobs created referred to EPWP jobs, and explained that there had been no target for training in the first quarter of 2020/21, which was the reason that no figure was given. She reported that the national Department provided oversight to all the implementing bodies in the sector through a monitoring and reporting forum that it had established. The Department had studied the impact of its EPWP projects from 2012 to 2016 and found that they were having a positive impact on individuals and households, but it had also found that they were inherently limited by the fact that they provided only short- to medium-term employment. The Department was currently collecting baseline data for another study to be conducted in 2023/24.

Mr Ahmed Khan, Director: Operational Support and Planning, DFFE, explained that NRM projects focussed on invasive species and degraded environments. Sites where the greatest impact could be achieved were identified in collaboration with the South African National Biodiversity Institute (SANBI), academic institutions and the Centre for Scientific and Industrial Research (CSIR). It was important to note that the work took place over ten- to twenty-year time-frames.

Ms Mamogala Musekene, DDG: Chemicals and Waste Management, DFFE, reported that the Department’s current priority for addressing plastic pollution was to progressively increase the minimum percentage of recycled material in plastic bags, finally reaching 100% in 2027. This policy would be supported by a policy of extended producer responsibility (EPR). She stated that buy-back centres were a critical link in the recycled product value chain. The Department’s annual performance plan (APP) did include a target for environmental performance assessment, which could be seen as part of its internal auditing. There was also a recycling enterprise support programme, which had supported waste pickers with personal protective equipment (PPE) in 2020 and was now working with DSBD to support small recyclers.

Follow-up questions
Mr Singh asked for confirmation that fire protection associations (FPAs) were volunteer organisations outside of state and municipal land. Had they been constituted in all state-owned and municipal areas, and had fire protection officers been appointed? Did they still have to pay for detailed weather forecasts from the South African Weather Service (SAWS)?

Mr Bryant apologised for creating the impression that the national Department was responsible for the Cape Town fire. He remained concerned about the slow pace of alien plant clearing, however, because dense vegetation could contribute to the spread of fires. He also wanted to know why there had been not target for training in the first quarter of 2020/21.

Responses
Minister Creecy replied that the Department had taken an amendment to the National Veld and Forest Fire Act to Cabinet, which would make it compulsory for state entities to belong to FPAs.

Ms Mkhize assured the Committee that training was taking place in the first quarter of 2020/21, even though there was no performance target for this period. The reason for not having an explicit target for the first quarter had to do with the Department’s engagement with the training service providers. She acknowledged that the Programmes had had a limited impact on small contractors, but the Department was engaged in a deliberate intervention in partnership with the DSBD to help them grow and participate more fully in the value chain. For instance, small contractors were awarded certificates of competence when they completed work for the Programmes which they could use to unlock other work opportunities. Most projects were implemented by service providers, appointed through the PFMA. These service providers were only paid on delivery, not in advance, and were audited independently. The Department was in the process of recovering fruitless, wasteful and irregular expenditure from service providers where it had occurred. She noted that the Working for Water programme had been run by the Department of Water Affairs and Forestry (now DWS) until 2012, but also acknowledged that it had some contract and project management problems, which the DFFE was doing its best to address.

Ms Nomfundiso Mtalana, Municipal Programme Coordinator, SANBI, explained that the greening projects were funded as part of the greening and open space management sub-programme. Funds could go to various entities, from municipalities to community groups and non-governmental organisations (NGOs), and the projects encompassed a wide range of interventions, not limited to planting, such as solar panel and borehole installation. She said that the Environmental Programmes had a target for exit opportunities of 70%, with a specific focus on youth-focused programmes, from which 319 youth had exited to full employment. She offered to provide more comprehensive records if requested. She said that 37 recycling buy-back centres had been established since 2014, which included material transfer, recovery and composting facilities. Four more centres were to be delivered this year and another eight in upcoming years. Workers for the Programmes were selected according to EPWP guidelines, in some cases in consultation with municipalities.

Ms Pumeza Nodada, Chief Director, DFFE, reported that FPAs did still pay fees to SAWS for weather forecasts. The Department was looking into ways it could assist FPAs.

Further discussion
The Chairperson asked for an update on the status of the eco-furniture factories that had been set up across the country, in partnership with the Department of Economic Development (DED), some of which had become white elephants. She also asked for clarity about the monitoring and reporting framework for the Working for Ecosystems Programme, which covered a range of factors, including the type of areas treated, the number of people employed and trained, habitat recovery, carbon sequestration, biodiversity, water retention, erosion and desertification. She said she would have liked to have heard more about job creation, skills development, the rehabilitation of neglected state plantations, and the impact of interventions on communities.

Ms Mkhize said that the Department had reviewed its involvement in the eco-furniture projects and found that, while valuable, their alignment with the overall mandate of the Department was limited, as was the extent to which the Department had been able to develop them into viable enterprises. Transferring the infrastructure to other departments and certain municipalities was being explored, but the projects were not being budgeted for over the long term. Another output of the Department’s investment, however, was intellectual property related to biomass-insulated cement, which Infrastructure South Africa was looking to use as part of social infrastructure such as schools and housing.

The Chairperson observed that the factories had been funded by DED. Whose decision had it been to close them? They could have been very valuable if they had met their objective. What were the reasons for their failure? Had the project not been properly thought through?

Minister Creecy clarified that it was not a policy of the Department to close the factories down. However, the DFFE did not have a mandate to run them. The question was where they should be located within government. Prior to COVID-19, DFFE had been in the process of setting up a partnership with DSBD, which DFFE thought would be an appropriate location. Discussions had been put on hold but she had reached out to the new Minister of Small Business Development. There had also been interest at local government level, and the Department of Education had expressed interest in the products, as had the Department of Correctional Services.

Briefing by the Forest Sector Charter Council (FSCC) on transformation in the forestry sector
Ms Maggie Sotyu, Deputy Minister of Forestry, Fisheries and the Environment, gave a brief outline of the establishment of the Council, noting that 60% of its budget was provided by the state, with the private sector providing the remaining 40%, and that it was accountable to the DFFE and the Department of Public Enterprises (DPE).

Ms Makhosazana Mavimbela, Executive Director, FSCC, provided an overview of the broad-based black economic empowerment (B-BBEE) certificates and affidavits submitted to the Council by medium and large enterprises (MLEs), qualifying small enterprises (QSEs) and exempted micro-enterprises (EMEs). The number of certificates had declined in all three size categories in 2020/21. Among MLEs that had submitted certificates, there had been an improvement in meeting targets for most B-BBEE indicators, the exception being management control, which was concerned with the promotion of black people into senior management. She was hopeful that this would improve with the passing of the Employment Equity Bill, which would allow the Minister to set sectoral employment equity targets. She discussed the general impact of COVID-19 and the lockdowns on transformation in the sector, observing that skills development and enterprise and supplier development in particular had been negatively affected.

[For details, see the presentation slides.]

Briefing by Forestry South Africa (FSA)
Mr Michael Peter, Executive Director, FSA, said that the total area of timber plantation in the country had not grown since 1999, due to sometimes hostile and vexatious regulation and bad scientific advice. He said that the sector appreciated the support given to it during the pandemic, in particular by seeing that it was classified as an essential service. The failed insurrection in July 2021 had cost the sector R656m. The overall economic contribution of the sector in 2019 was R47bn, down from R60 the year before (Mr Peters used figures from 2019 because the of the disruptions to the sector in 2020 and 2021), and it employed 149 000 people, down from 165 000 a few years earlier, due to ill-advised minimum wage regulations. The single biggest challenge to the sector was to increase the area of timber planted and to halt the deterioration of existing state-run plantations. While it had been official government policy since 1995 to withdraw from direct plantation management, in practice this policy had been only sporadically implemented, even though it was successful where it had been. Unlike in some sectors, the state-run timber plantations were in disarray not because of a lack of competence but because of bad attitudes among officials. Another big problem was with the memorandum of understanding (MOU) between government and the Forestry and Agricultural Biotechnology Institute (FABI). Three years ago the sector had committed to investing R24bn over the five years (of which R11.7bn had now been invested), and to creating 108 000 jobs, (of which unfortunately only 3 000 had been created so far). He acknowledged the leadership shown by senior departmental officials in the creation of the Forestry Master Plan, which was showing good progress. There had been a major turnaround in the relationship between government, industry and labour.

[For details, see the presentation slides.]

Briefing by South African Forestry Company Limited (SAFCOL)
Ms Joanne Yawitch, Non-executive Director, SAFCOL, said that transformation had been a priority for SAFCOL for the last 2-3 years, along with its developmental mandate to ensure that value flowed to workers and communities. She noted that over 50% of SAFCOL’s land was subject to land claims, so it had been necessary to build good relationships with the communities. It was important that they received a significant stake in forestry taking place on their land.

Mr Tsepo Monaheng, Chief Executive Officer (CEO), SAFCOL, explained that the focus of the Company’s transformation efforts were at the processing stage of the value chain, rather than in plantations. The main reason for this was that plantations were unable to provide rapid returns on investment. He noted that SAFCOL had a dual commercial and developmental mandate, and that the developmental mandate would not be achievable unless the Company was commercially successful. He looked at some of the possible gaps and opportunities, such as furniture making, which had been a much larger industry in the country at one point, as well as plywood, veneers, housing, pulp products and biochemicals. These opportunities would be pursued in collaboration with communities, the private sector and foreign investors. He discussed the land claims on SAFCOL land, which were being made in Limpopo, Mpumalanga and Kwazulu-Natal, and the post-settlement model the Company was pursuing, which involved the claimants leasing the land back to SAFCOL at commercial rates, and SAFCOL assisting in the creation of business and employment opportunities for the communities. He looked at the impact of SAFCOL’s activities in various specific communities, procurement from black-owned contractors, and its work with communal property associations (CPAs). [For details, see the presentation slides.]

Discussion
Mr Paulsen disagreed with Mr Peter’s description of the events of July 2021 as an insurrection, preferring to call it a sporadic uprising that had arisen and died out of its own accord. He also doubted that it could have cost the industry as much as R656m, as trees would have continued to grow. He drew attention to the plight of workers at ex-SAFCOL plantations, noting that very little transformation had taken place in the forestry sector, especially in the Western Cape, and salaries had remained stagnant at the lower end. He wondered how it was possible that, two years before, a R90m contract had been awarded to the owner of ex-SAFCOL plantations in the Western Cape, Mountains to Oceans (MTO), without a tender process. He deplored the fact that so much state-owned plantation land had been privatised or handed over to SANParks in the Western Cape, leading to unemployment. The sector had been neglected and corruption was rampant.

Ms Phillips asked for clarity about the R1tn in new investment mentioned in connection with the forestry sector’s commitment to investing R24bn over five years. Where was it going to come from? She also wanted to know what kind of eco-tourism SAFCOL was involved in.

Mr Bryant estimated that the cost of intransigence and negligence in the sector over the years could be up to R1bn. He drew particular attention to the George area, where there had been unresolved land claim issues since the presidency of Thabo Mbeki. He recalled that a tender had been advertised in connection with these issues with a closing date of 15 June 2021. Could the Committee get an update? He also wanted to know why DFFE worked with the Western Cape Forestry Sector Forum but not with municipalities, which played an important role in monitoring what was actually taking place at plantations. He also asked for an update on plans related to the Knoflokskraal community that had arisen on DPWI land near Grabouw that had been earmarked for a plantation.

Ms Weber asked how much progress had been made to address delays to transformation caused by environmental impact assessments and water licenses [inaudible details]. She accepted the economic case for planting non-indigenous tree species such as pine and eucalyptus but asked how their water requirements were managed, and whether job losses to mechanisation were being offset by retraining workers. What was the annual cost of illegal trade in timber, and how could plantations be protected from theft? Had any plantations been infiltrated by polyphagous shot hole borer (PSHB) beetles, and what were the plans to combat this threat? Was a biological control agent being considered? Did the national Department provide guidelines for the planting of trees for greening of urban areas to ensure that municipalities planted trees where they were needed?

Ms Mbatha wondered whether and how SAFCOL and DFFE could assist struggling eco-furniture factories. She asked whether SAFCOL was affected by land claims problems and whether it was following the land claims commissioner. Who exactly would benefit from the 108 000 jobs the sector had pledged to create? She noted the absence of any comments about community benefit from the FSA presentation. In general she found the presentation opaque compared to the SAFCOL presentation and full of blame-shifting, and asked Mr Peter to leave politics out of future presentations.

The Chairperson asked why SAFCOL’s B-BBEE accreditation had dropped from level 3 to 4. What plans were in place to address under-performing areas? Were the community forestry initiatives such as the Hlabekisa and Tzaneen projects sustainable and replicable? What progress had been made toward the creation of black industrialists, and how did it choose communities to partner with? Did SAFCOL have any interest in managing Category B and C plantations? What was the thinking of DFFE and SAFCOL on state plantations in former homelands? She believed that transferring them to SAFCOL would lead to greater efficiency and promote transformation. What did the SAFCOL board think about the Department’s policy of moving away from direct plantation management? She noted that there had been timber shortages during earlier waves of COVID-19 and asked if FSA predicted similar shortages during the fourth wave. She recalled that the Paper Manufacturers Association of South Africa had launched a voluntary programme to promote paper recycling and wondered if it had improved the rate of paper recovery. She asked whether FSA had exhausted all other avenues of recourse before approaching the courts to resolve its dispute with government regarding the water usage of eucalyptus trees, and what were the main points of difference? She asked what contribution could be made by the forestry industry toward the Department’s urban tree-planting programme. She asked FSCC to comment on Sappi’s contractor development programme in Mpumalanga, which did not lead to transforming the ownership of the company, in the context of MLEs poor performance in management control transformation. What was driving the decline in the number of certificates submitted, and what was the Council doing in response? How could the Council assess its success in promoting B-BBEE in the sector as a whole and what were the impediments? Had any tangible progress been made in accessing funds from the Comprehensive Agricultural Support Programme (CASP)? Which jobs in the sector did the Council think would be lost to mechanisation?

Responses
Ms Tshabalala said that the Forestry Master Plan was developed in collaboration with the industry. She appreciated that government was facing challenges but it was addressing them, while looking to industry as a key partner.

Ms Nodada confirmed that there was a close relationship between the Department and the industry, as well as labour, in the preparation of the Master Plan. The expansion of primary production was a key focus area of the Plan, and the Department was trying to create an enabling environment for the entry of communities and small growers, to which end 28 000ha in the Eastern Cape and Kwazulu-Natal had been identified. In the greening programme, the Department was aiming to make settlements look more like established suburbs by planting indigenous trees, including fruit trees, and it had reached out to all its stakeholders to help it reach its target of 2 million trees per year. The Department had been working on agro-forestry projects in Mpumalanga which helped communities to plant crops on plantations, and it was looking to replicate these projects in the Eastern Cape where afforestation was planned. The Department had recognised that it did not have capacity to manage all of its plantations, which is why it had taken the decision to lease out some Western Cape plantations to a trust this year. Potential lessees had been unresponsive at first, so the Department was looking into breaking the package down into smaller plantations. She said that there had been a break in protection services for state-owned plantations, but the Department had submitted an MOU to National Treasury and set aside funding so that protection services could be procured. The Department was also affiliating with FPAs. She recalled that the need to run Category B and C plantations through public-private partnerships (PPPs) had been identified in 2018/19. The legislative process to establish these PPPs was under way.

Mr Monaheng said that SAFCOL did not have any relationship with workers at plantations now run by MTO, and Mr Paulsen should direct his concerns about their plight to MTO. He said that SAFCOL operated more than 20 tourist sites, and eco-tourism had been identified as a potential growth area, with the added benefit of creating a market for local communities to sell their wares. He reported that there had been discussions about the management of the furniture factories with the Department, but they were still at an early stage. He confirmed that SAFCOL was affected by land claims and said that it was working closely with communities and the relevant government departments to pave the way for future partnerships. The Company had identified sawmills as the most promising entry point for prospective black industrialists in the sector, and it was supporting new entrants through the provision of multi-year contracts. SAFCOL was in talks with the Department to take over the management of its plantations in Mpumalanga and it was looking forward to rehabilitating them in partnership with local communities, which would hopefully put an end to illegal harvesting.

Ms Hazel Banda, Senior Manager: Transformation, SAFCOL, explained that the drop in the Company’s B-BBEE certification from 3 to 4 had been the result of poor performance in the skills development and management control indicators. She assured the Committee that the Company’s leadership was committed to transformation. Skills development for people with disabilities would be prioritised, and biweekly reports were made to the CEO. She reported that 22ha had been allocated to the community at Tzaneen, creating income for 98 people. A similar project was planned in Wilgeboom in Mpumalanga, where jugo beans and ground nuts would be planted.

Mr Pravin Gordhan, Minister of Public Enterprises, said that, as the Minister, he did not deal with tenders, so he could not comment on the tender awarded to MTO. He commended SAFCOL for doing the best it could under conditions of uncertainty about the land on which it operated, and said that any empowerment benefits should go to the community in the vicinity. He committed the DPE to engaging with DFFE to ensure alignment with the Forestry Master Plan, which should be made available to the Committee.

Mr Peter agreed that the Master Plan and also the Public Private Growth Initiative (PPGI) should be made widely available because they would answer many of the questions raised by members. He said he would continue to describe the events of July 2021 as an insurrection as this was the word that had been used by the President. He explained that the R656m loss to the sector was made up of R87m in burnt plantations, R6m in firefighting, R16m in lost sawmill production and R544m in lost production by the pulp and paper industry.

Mr Paulsen again objected to Mr Peter’s use of the word ‘insurrection’. The people involved had been hungry and had not been taken care of during the pandemic.

Mr Peter said he was not referring to the hungry people involved in the unrest on the streets but about the people that orchestrated it.

Mr Paulsen accused Mr Peter of arrogance and disrespect.

Mr Mbatha also said that Mr Peter was showing disrespect and should just answer the questions.

Mr Bryant said that Mr Peter should be allowed to continue with his responses, as he seemed to be trying to do.

Mr Paulsen disagreed, saying that Mr Peter was trying to display arrogance, and described him as the type of CEO of a public company that Minister Gordhan had subjected the country to.

Mr P Modise (ANC) partially agreed with Ms Mbatha and Mr Paulsen and asked Mr Peter to remember that he was a representative of a public entity and therefore accountable to the Committee, not the other way around. He should speak within his area of expertise and not display arrogance.

Ms Keneilwe Mabena, Forestry Oversight Manager, DPE, clarified that Mr Peter was not appointed to his position by, nor did he report to, Minister Gordhan.

The Chairperson added that Mr Peter represented the forestry industry and was not a government employee, and asked him to continue.

Mr Peter explained that that R1tn investment would come from 17 key sectors of the economy. It was a combination of domestic and international investments. He said that there was a pervasive myth that was perpetuated by some officials in the DWS that eucalyptus trees used 30% more water than pine trees. It was only after years of attempts to engage with the DWS on this matter that it had approached the court not to litigate but just for a declaratory order. The court had concluded that the scientific evidence did not warrant reducing the size of plantations when replacing pine with eucalyptus. He said that many plantations would never be suitable for mechanisation because the terrain was too steep. Where companies did resort to mechanisation it was often out of necessity because it was not always possible to find people willing to do the work, and in other cases retraining did take place. He explained that there were differences between his presentation and that of SAFCOL because he had received a different brief. He had not had time to provide detail on the jobs to be created but assured the Committee that it was contained in the PPGI documentation and the Master Plan. He could not comment specifically on the success or otherwise of the Paper Manufacturers Association’s recycling initiative but noted that overall recovery of paper in the sector as a whole had increased significantly over the years.

Ms Mavimbela acknowledged that declines in the B-BBEE indicator on management control were a challenge, but she hoped that the Employment Equity Bill would help. She said she would ask Sappi to provide a written response to the Chairperson’s question about its contractor development programme. She attributed the decline in certificates and affidavits submitted by QSEs and EMEs to COVID-19-related business distress. The FSCC was planning to ask MLEs to assist smaller supplying companies to submit information to the Council. She also reported that there were provisions in the B-BBEE code that required employers to retrain workers to operate the machines that replaced them.

Follow-up questions
Ms Weber noted that neither pine nor eucalyptus were indigenous trees, and asked what the sector as a whole was doing to ensure that forestry did not contribute to future water shortages in the country.

The Chairperson wanted to know the extent to which the forestry value chain had been affected by measures taken to reduce the spread of COVID-19 and the July unrest. Were operations now back to normal? Was there likely to be another timber shortage? How much did illegal logging cost the sector, and where did the majority of illegal timber trading take place? She asked what SAFCOL’s targets were for the creation of black industrialists, and she wanted more detail about the replicability and expandability of agro-forestry projects like the ones in Mpumalanga.

Responses
Mr Peter acknowledged that pine and eucalyptus trees used more water than indigenous species, but noted that the same was true of crops like cotton and maize. He added that forestry used rain water exclusively, which meant that its water costs were a fraction of other industries. The industry had voluntarily removed trees which had been determined to be too close to riparian zones where they would consume too much water. The discussion should not be about whether to plant indigenous or non-indigenous trees but rather about the efficient use of water. Forestry accounted for just 5% of water consumption in the agricultural sector whilst returning 27% of its economic value and a similar percentage of jobs. It had been discovered that shot hole borer did not have a serious effect on the three major plantation tree species in South Africa, but it did seriously threaten other crops like macadamias, pecan nuts and avocados. FABI was looking at possible BCAs to contain it. He stressed that the sector was extremely grateful for the government’s support during the pandemic. The lockdown had cost the sector about R5bn but if certain sub-sectors had not been declared essential services this figure could have been closer to R15bn. Business was now returning to normal although production for 2021 was still expected to be lower than 2019 due to the July unrest. It had been estimated that up to 50% of timber treated in the country was either stolen or treated illegally or improperly. The percentage of illegal timber traded in the private sector was however less than 1%. The more serious problems including rent-seeking behaviours such as demanding operators pay to access a site. He did not expect a shortage of timber that would affect the production of coffins and caskets, but noted that suppliers might struggle to keep up if there was a sudden spike in demand.

Mr Monaheng explained that the focus of SAFCOL’s attempts to develop black industrialists was on the sawmilling part of the value chain. It was currently partnering with five companies, including a pellet plant at Sabie, a plywood plant in Kwazulu-Natal, a sawmill in the Highveld, and two pallet plants, one in the Highveld and one in the Lowveld. He would be able to report on their progress by the end of the financial year.

Ms Banda said that the agro-forestry projects were replicated in three provinces. The project at Tzaneen was going to be rolled out at a number of other sites. Support for small-scale farmers was also ongoing in the three provinces where SAFCOL operated.

Mr Mpho Makwana, chairperson of the SAFCOL board, said that the board was hard at work to make SAFCOL a profitable enterprise. He had noted all the questions and comments from the Committee about what it could do better, and in particular he hoped that in future he would be able to talk about the black industrialists that SAFCOL had developed. The Company was also looking at ongoing partnerships with bigger players in the industry. He noted that the sector was facing a tough economic climate.

Ms Morongoa Leseke, acting Deputy Director-General: Forestry Management, DFFE, explained that the Department was working with DPWI to solve the problem at Grabouw. An eviction order against the Knoflokskraal community had been granted and the eviction carried out, but thereafter the settlement had been reoccupied by different individuals, who could not be evicted under the first eviction order. Cases had now been opened at Grabouw Police Station and security guards had been appointed jointly with DPWI, but invasions had persisted. The two departments’ legal teams were now hoping to obtain a blanket eviction order.

Deputy Minister Sotyu thanked the Committee for its questions. She committed the Department to respond to any outstanding questions in writing. She thanked the other bodies for their presentations, and stressed that they were all working together closely. She also suggested that the Master Plan be presented to the Committee, along with the plan to plant ten million trees over the next five years.

The Chairperson warned SAFCOL that the Committee would check with land claimants that it was meeting its commitments. She also noted that there was a lack of support for small forestry growers. She said that Mr Peter should bring some of the member organisations of FSA to the Committee to talk about their corporate social responsibility, especially those that were leasing state land, and that FSA should also talk about the industry’s role in mitigating climate change.

The meeting was adjourned.
 

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