Hearing of Evidence on Restructuring of State Forests; presentations by Safcol & Department of Water Affairs & Forestry Restruct

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Meeting Summary

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Meeting report

AGRICULTURE, WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
4 May 1998
HEARING OF EVIDENCE ON RESTRUCTURING OF STATE FORESTS; PRESENTATIONS BY SAFCOL AND DEPARTMENT OF WATER AFFAIRS AND FORESTRY RESTRUCTURING COMMITTEES.

Documents handed out
Background to the preliminary draft National Forest Bill
Restructuring of the Forestry Industry: Securing of Land Rights

Presentation by the Director-General of the Department of Water Affairs and Forestry on restructuring of state commercial forestry assets.
Components of the state forestry sector include community forestry, conservation forestry and commercial forestry, which focuses on forestry as a business.
Safcol holds forestry assets of the former RSA commercial forests while the DWAF (Department of water affairs and forestry) holds the assets of the former homelands.

The restructuring process
The restructuring process involves transferring forestry operations from government to the private sector. The Safcol RT (Restructuring and Transformation) process started in 1995. The DWAF process differed in that the assets first had to be consolidated. An audit was conducted and was followed by an options study, which was completed in March 1998. The DWAF RTC was established in February 1998 and was based on the National Framework Agreement (NFA) principles.

The Relationship between the DWAF and the Safcol Processes
The two processes are separate, one being a public enterprise and the other being a government service. In many areas the assets are spatially contingent but they follow radically different timetables. The problem of boundaries between Safcol and DWAF forests is most important in the Eastern Cape. The Eastern Cape is the only region with large investment potential – about 120 000 hectares.

IMCC Decisions
In considering the restructuring process it was decided that the two entities should be kept separate but that the Eastern Cape should be reviewed separately.
It was felt that a special solution was required for the Eastern Cape. It was determined that one option was to offer the DWAF and Safcol assets for the Eastern Cape. This option is to be placed on the market so that the Government can choose on a basis of offers.

Questions
Is there a policy for the restructuring process?
How does Kwazulu/Natal benefit from the restructuring?
Answers
There is a clear sectoral policy for forests and the department is working to restructure the forestry within this.

The restructuring of a public service is very different from that of a public enterprise, although the same process is being followed as that used by Safcol. The greatest problem in the restructuring process is that it poses a threat to the labour force. As it is there is a 300 million loss in the commercial forestry sector.

Presentation by Liale Bethlehem – in-coming chief directorate of forestry – DWAF
The state of the DWAF assets.
There is a cash loss of R300 million. The staffing ratio is 2.8 times the industry average; salaries are double that of corporate salaries. The staffing problem is exacerbated by a pension issue in the former Transkei – this results in a high age in the work force. The department is not yet in a position to renegotiate long-term contracts. The uncertainty within the labour force is decreasing the morale of the workers.

Options study recommendations.
Dispose of commercial assets within 3 years. The idea is not to dispose of land but to allow investors to make use of the assets and to allow benefit to the community.
A staged approach is required. The Eastern Cape is in stage 1. The assets are offered in 25 lots as defined in the report. The land will not be sold and community rights will be recognised. There is a proposal for a forestry and managerial agency.

Implementation of the plan.
A restructuring office will be implemented on a three year basis, which includes a land agency. Assistance will be available from the UK DFID.

Communication and consultation.
The plan needs to be finalised with Minister Asmal. There is an inter-governmental forum on 22 June 1998. It is planned to consult employees jointly with trade union officials. There would also be communication with the Eastern Cape political committee and forestry liaison committee. Furthermore, consultation and communication will take place with customers and general public.

Questions.
Will the restructuring result in the redundancy of the forestry department?
Is there a mechanism for including the historically disadvantaged in the privatisation process? (Mr Ginida – ANC )
With regards to the three million loss, is there not an option other than privatisation, such as returns on a contract basis? ( Mr Mentz – IFP )

Answers
Operation within commercial forestry is not the only function of the department. There is also conservation and community forestry. The department also plays a regulatory function in forestry.
Part of the restructuring process ensures that the way in which the land is managed does not take away any rights.
Restructuring will be subject to certain criteria such as job creation and the use of wood to empower the community. The take-overs will come with proposals to allow participation by the disadvantaged. Shares should be made available and assistance for those obtaining the shares should also be available.
The difficulty with contracting the assets out is that there are inhibitory problems in the labour force.

Presentation by Mr Myalusa – NEHAWU.
Mr Myalusa did not have a formal presentation since he had only recently received the options study report. He felt that the loss of the R300 million was not only attributable to long term contract management but suggested that it was also attributable to poor management. As to labour, he suggested that some form of external agency should be brought in to assist with improving the management.
He also felt that there was not enough input in terms of human resources development and that this should be built into the restructuring programme. This should also include a solution to the pension problem. He indicated that there should be an increase in black empowerment. He stated that labour would like to work closely with the department to address the problems in the work force.

Presentation by Mr van de Zel – Public Services Association.
Mr van de Zel stressed the importance of redeployment as a part of addressing the problems in the work force. Redeployment opportunities include:
in-house environmental management; capacity building in conservation forestry; capacity building for community forestry; filling other DWAF vacancies; addressing established and silvicultural backlogs; activating new afforestation programmes; a massive and immediate training programme; offering new voluntary severance packages; offering instant retirement to workers above 55, 60 and 65; carrying out a skills audit (the department should carry out the rest of the plantation work itself) and helping to establish SMMEs.

He stated that the redeployment must be implemented by August which is when SAFCOL carries through with its bid.

Presentation by Dr van Vuuren – Safcol
Status of Safcol restructuring.
The RTC accepts the IMCC decision to offer Safcol as four options. The Safcol and DWAF assets in the Eastern Cape are to be offered as a unit.

Dr van Vuuren then read out the restructuring objectives. The appointed transaction adviser is Real Africa Durally. He reported on the employee road show, where every employee had been personally addressed. Safcol has made an informational room at the head office available to interested parties. Investment interest has been shown from all over the world. The process should be completed by the last quarter of 1998 or the first quarter of 1999.

Delays to restructuring.
There is a moratorium on Safcol restructuring, pending a decision on ex-homeland forests. Further potential delays include:
Ex homeland forests may not be ready (e.g. Demarcation)
Land not transferred (land agency)
Competition board investigation. Dr van Vuuren stated that this did not effect Safcol negatively.

RTC.
There is a close relationship between management and labour. The working committee of the RTC is involved in every aspect but the final decisions are taken by government.

Land Claims.
Safcol is not aware of any land claims.

Strategy to sell.
Transaction advisers report to the RC.

Employee share options.
There are no details yet although they are aware of that the government has plans regarding NEF and ESOPS schemes. Employees will buy shares at a discount.
There must be caution against low short term returns although Safcol operates at a profit.

Note that Safcol is no longer bound by evergreen contracts but is running purely on a commercial basis.

Presentation by Doctor Perez - Eastern Cape Government.
The Eastern Cape is the second poorest province in the country. Its only natural resource is forestry. It is targeted as the province with the greatest investment potential with respect to forestry. Issues pertaining to Dwarf forests are who works for them. At the moment there are large and medium sized concerns and small bush millers. Almost all the bush mills are black owned and work with little money. This section feels very threatened by the restructuring process – especially the one-year contracts. The bush millers have formed forest forums with the view to represent their interests collectively. These forums wish to participate in the restructuring process to a greater degree. Questions are investment for whose benefit, development for whose benefit and empowerment for whom. Dr. Perez cautions against hidden agendas by Safcol and pleads against finalisation of privatisation is on board.

Presentation by Margot Pienaar – Department of Land Affairs.
The presentation was a summary of the memorandum handed out to the committee. Note that the document has the stature of a proposal.

Questions.
Mrs Mabuza (ANC)
How many unions is Safcol involved with?

Mr Cronje (ANC)
How much mixed farming is practiced on Safcol land to maximise utilisation?
Why are there not, say, 500 units to facilitate better utilisation?.

Mr Mentz (IFP)
Is the loss of 300 million Rand not a managerial problem ?
What is NEHAWU’s reaction to the use of contracting out to small bush entrepreneurs?

An unidentified member (ANC)
How far have they gotten with stage one in the Eastern Cape?
Which committee do they refer to when they mention ‘Political Committee’?
Which of the four options do Safcol and the community each favour?
Does Safcol have hidden agendas?

Mrs Ngwenya (ANC)
How is black participation going to be increased?
What role are workers going to play in the transformation process?

Mrs Ntuli (ANC).
Are workers who are going to be retrenched going to be given the chance to be share holders?
What claims are there on Safcol land?
Why was there a loss running for so long before 1994?

Mrs Seperepere (ANC)
Why where affected communities not given the chance for representation here?

Mrs Love (ANC)
Mrs love questioned the illogicality of the division between Safcol and DWAF.
She stated that the management of the forests have not been properly represented in terms of the R300 million loss.
She sees a problem with the portrayal of the lack of management as secondary to other issues.

Answers.
Liale Bethlehem – DWAF.
With regards to the question on mixed farming – this mode of land use would threaten the downstream forestry operations which require a reliable supply of timber.
Black participation – there is not a single contract with a black owned company. She stated that black empowerment must be a clear and explicit aspect of the restructuring process.
With regards to money that had been lost by the former homelands, her department took over assets which had contracts selling wood at significantly low prices.
With respect to retrenchments the department believes a third of the workers will accept voluntary severance packages.
Redeployment would take place into conservation forestry.
Retrenchment would be avoided by employment enterprises, redeployment and packages.
She was aware of management inadequacies. Additional funding for additional managers would be found. Contract management is an option. The management part of forestry includes retrenchment problems.
Safcol and DWAF are offered jointly in some areas. The Dilemma is that restructuring of Safcol is 3 years ahead of DWAF. Joint restructuring would mean a further delay to Safcol of several years. It is understood that the situation is imperfect but the limits to Safcol are overriding. Over time the effects of separation will be reduced by mergers.

Answers from Safcol representatives.
The preclusion of DWAF is not necessarily a problem – In time DWAF would be added on.
Safcol creates ± 500 extra jobs by having introduced multiple farming such as honey, avocados and flowers.
With regards to profitability, plantations are profitable while sawmills run at a loss since new technology has been introduced. Overall Safcol runs at a profit.
Safcol has been a member of SALMA for a number of years.
Labour would have to read the options study and make definite submissions at a later date.

The chair indicated that the issues discussed today would be further pursued in the meeting of 27th of May 1998.

Appendix 1
DEPARTMENT OF WATER AFFAIRS AND FORESTRY
BACKGROUND TO THE DRAFT NATIONAL FORESTS BILL
CHAPTER 1: Introductory Provisions

1. This chapter states the purpose and scope of the Forests Bill and defines important terms that are used in it.

2. The purpose of the Bill has several parts. These different parts capture the requirements of new forest policy, while at the same time maintaining continuity with previous legislation where appropriate.

3. New policy requirements are satisfied through the purposes that relate to the promotion of sustainable management and development of forest resources, measures to promote sustainable use of forests for cultural economic, environmental and recreational purposes and the promotion of community forestry. Ensuring proper representation in institutions involved in forests, and thus correcting past discrimination, also reflects new policy.

4. Continuity with the previous Forest Act is recognised in the provisions for special measures for the protection of certain forests, woodlands and trees, preventing and combatting veld and forest fires, and for regulating State forests.

5. The scope of the Act is comprehensive. It applies anywhere in South Africa to all kinds of forests, that is, natural forests, natural woodlands, and plantation forests. However, the Bill has been drafted in such a way that its provisions may be applied in ways that discriminate between the different types of forests and take account of local circumstances.

6. The Bill distinguishes between State forests and private forests, much on the lines of the current Act. State forests are all forests and other resources on land acquired and reserved by the State for this purpose, as well as forests on other State lands. This includes communal land held in trust. This inclusive definition of State forest also aligns with the definition in the previous Act. It lays the foundation for a comprehensive approach toward measures to promote protection and sustainable management of forests on State forest land, including the provisions to promote community forests. What is important here too, is that this definition of State forests determines the scope of access rights that members of the public in South Africa will have to enjoy these forest resources, as well as to use them under certain conditions for their own purposes.

7. Through this definition, the application of the Act on private forests is limited and in these cases is designed mainly to enable and promote sustainable forest management and public access where agreement on access is feasible. However, even on private forests, certain minimum standards will be legally binding.

CHAPTER 2: Sustainable Forest Management
Part 1: Management

8. This Chapter contains important provisions to support sustainable forest management in South Africa and to enforce minimum standards. Developing and implementing these is to occur through negotiation and agreement among interested parties, through the Committee for Sustainable Forest Management, a permanent committee of the National Forests Advisory Council.

9. The chapter identifies 13 principles to guide the way our forest resources are managed, used and conserved. These principles are drawn from the outcome of consultations on the contents of forest policy during the period from 1994 to 1998. These reflect the requirements of South Africa as a nation, but are also compatible with international norms regarding sustainable forest management.

10. There is also a provision that recognises that forests may be converted to other forms of land cover if it is beneficial to do so.

11. These principles are important in that they are written to guide the way the new Forest Act would be administered, how regulations would be formulated, how policies should be developed and how institutions should behave when they administer these pieces of law. All other organs of State or bodies to whom their authority has been delegated will be required to consider these principles when they administer other laws that have an influence on forests and forest resources. This means that the actions of any of these parties may be reviewed, and tested in court, and overturned if necessary if they do not meet the requirements of these principles. Specifically the principles must be considered when applying the provisions of the draft National Water Bill, and the regulations for environmental impact assessment in terms of the Environment Conservation Act, when applied to forests and afforestation.

12. Next, the Chapter provides for the determination for criteria, indicators, and standards for sustainable forest management. It requires the Minister to develop these on scientific grounds through the Committee for Sustainable Forest Management. It provides also that among these a set of minimum forest management standards may be set, which then become mandatory on any one who manages a forest. Examples of such minimum standards are already to be seen in the conditions that attach to the afforestation permits issued in terms of the current Act.

13. Furthermore, the Bill provides for the Minister, also in consultation with the Committee for Sustainable Forest Management, to provide legal recognition for forest certification schemes. These and other incentives should encourage the implementation of sustainable forest management, often through the market forces that command certification. The Bill recognises that whereas principles and criteria might be appropriate at national scale, there needs to be discrimination locally and between forest types regarding the way these criteria are further developed and translated into indicators and standards. A hierarchy would be needed, for the national level, regional or catchment level, and the forest management unit. The Bill lists seven elements that should be addressed in the development of criteria and indicators of sustainable forest management. This list has been drawn from the consultations on national forest policy, but may be augmented in future. The Bill also provides for mandatory certification of forest management in State forests.

14. Measures to enforce minimum standards allow for agreement with the forest owner on a step-by-step schedule of improvements until the desired standard is achieved.

15. Later in the Bill, the Director General is required to monitor and the Minister to report on the state of forest management in South Africa, according to these criteria.

Part 2: Research, Monitoring and Reporting

16. This part recognises that, in general, much of the country's progress in achieving sustainable forest management will depend on a well-informed public and ongoing improvements in forest policy and practice.

17. The Bill requires the Director General to carry out and commission research. This research must promote the objectives of forest policy. The Bill acknowledges the national importance of scientific research and innovation in support of national goals. This policy is captured in the White Paper on Science and Technology.

18. This part also obliges the Director General to monitor the country's forest resources with respect to several criteria and to generate appropriate forest resource statistics. The Minister is required to report annually on the results of this assessment of the country's forest resources, the facts and trends which emerge from the monitoring, and also on the measures that are contemplated to address any trends which are not in the national interest. It further requires the Director General to ensure the dissemination of the results of the forest resource monitoring, to promote sustainable forest management.

CHAPTER 3: Special Measures to Protect Trees And Forests

20. The Bill provides for measures to protect natural forests and woodlands. The first measure is through prohibiting the destruction of trees and natural forests. Second, protection through measures for setting aside protected areas, and third, measures to control and remedy deforestation. Although the focus is on natural forests, this chapter may also be applied to protect special cases of plantations when in the public interest.

Part 1: Prohibition of destruction of natural forests and woodlands

21. This part places a general prohibition on destruction of any natural forest in South Africa. Exception is possible through a licensing provision, and when the change of land use that causes destruction of the forest is properly authorised in
terms of any other legislation, such as the Environment Conservation Act.

22. Regarding types of forests not easily identified at natural forests as defined in the draft Bill, there is provision for their general protection in that the Minister may declare them to be natural forests.

Part 2: Protected areas

23. The Bill provides for measures to protect forest resources both on State forests and on private land.

24. In the case of State forests or on land acquired for the purpose, the Minister may declare different categories of protected area. He may also purchase or expropriate land to declare protected areas of this kind. In addition, where the owner of private land requests similar protected areas may be proclaimed on his or her land.

25. This power of declaration is limited by the fact that the Minister may not declare such protected areas if they are already adequately protected in terms of other legislation. The Minister is further required to consult the public as well as a variety of bodies which play a key role in conservation.

26. Declaration of protected areas has the effect of limiting the conditions under which any person may enter or use forest resources, and setting rules for the proper management of the area, while at the same time providing for an agreed basis for the management of the resources, especially where neighbouring communities have an interest in the management, and the benefits that they derive from it.
27. Protected areas of different categories included here are:
· a forest nature reserve
· a forest wilderness area
· or any other recognised category of protected area.

28. This provision allows for continuity in respect of the protected areas proclaimed as such in terms of the current Act. Important wilderness areas and nature reserves are currently protected through these measures.

29. Revocation of protected areas would require proper consultation and the approval by resolution by the National Assembly and the National Council of Provinces and notice in the Government Gazette. Changes to their boundaries would not require the consent of the National Assembly and the National Council of Provinces but the other procedures would apply.

30. Management of protected areas may be delegated to appropriate authorities or individuals.

Part 3: Protection of Trees

31. This part provides for declaration by the Minister of any individual tree, or a
group of trees, or trees belonging to a particular species, as protected tree or protected species. Proper consultation is required prior to declaration.

32. This provision will be applied according to the principles of the Forest Bill, and may therefore be employed, not only to protect forest biological diversity, but also to protect trees which are valued for their cultural or historical value.

33. The Chapter concludes with the provision for the noting of protected areas, protected trees or groups of trees against the Title Deed for the property in question. This means that, when land changes ownership, the new owners will remain obliged by the provisions of the Act.

Part 4: Measures to Control and Remedy Deforestation

34. This part makes provision for the Minister to declare a controlled forest area to prevent deforestation or to rehabilitate deforested areas. This allows the Minister to prescribe steps for the rehabilitation of the forest resource. Declaration would be by publication of a notice, which would also set out the measures required to protect or rehabilitate the forest. Hearings may be held to ensure fair procedures, and to amend the measures in the notice. Alternatively, or in addition to the declaration, the Minister may enter into an agreement with the landowner about the measures needed to remedy the situation.

CHAPTER 4: Use of Forests
Part 1: Access for Recreation and Related Purposes

35. This part provides for measures to promote access to the values and benefits of forests in South Africa. The ultimate purpose is to contribute to a South African public which is educated in the values of forest resources, and sympathetic to their sustainable management. It is also directed at satisfying the spiritual and psychological needs of South Africans, especially from previously disadvantaged communities and marginalised people. The National Forest Recreation and Access Board (the Recreation Board) is to guide the implementation and administration of this part of the Act (see Chapter 6 Part 2).

36. This part provides for access to State forest and confers a right on any member of the public to have access for cultural advancement, environmental education, and recreation. It provides for conditions on which people may enjoy this access. Access areas are to be designated, and reasonable restrictions may be set. The Access Board has a role in mediation and conflict resolution when needed.

37. In private forests, the Bill provides for measures to promote the voluntary grant of access and to protect the interests of the parties concerned. It provides for the owner to designate access areas and to lay down rules and conditions of access. It affirms the rights of owners to privacy and property. It assigns a role to the Recreation Board of facilitating negotiations between parties on access to private forests, and for the Board to assist financially or through compensation in justifiable cases.
Part 2: Vesting and Granting of Rights to Use State forests

38. In Section 22 of this part, the Bill vests the right to forest resources in State forests in the national executive. This provides the basis for the Department to continue to administer forests on Trust land, while recognising the trustee role of the Minister of Land Affairs and the Board of the Ingonyama Trust. It also provides a basis for the leasing of forests for commercial purposes (Section 26).

39. Section 23 provides for the kinds of economic utilisation that a member of the public or an organ of State may exercise in State forests, and the conditions under which these uses may be exercised under license. It provides for activities on protected areas, as long as these do not frustrate the achievement of the objectives of the protected area. This is to allow for the situation where, through negotiation with interested parties, especially local communities, a form of joint forest management might be established.

40. Section 26, on the leasing of State forests, allows for the situation envisaged regarding the resources of the State land used by Safcol, as well as the forest resources of the former homeland administrations, now managed by the Department.

41. In Sections 27 and 28, the Bill provides for the establishment of community forests through which the exercising of rights of use may be established. This provision is for State forests only. It accommodates cases where forest resources occur on communal land and where members of the community wish to codify the kinds of local regulations of use that would suit their requirements. This may take the form of a codification of traditional arrangements that might, in some cases, have continued up to the time that the Bill is applied.

42. Section 29 provides for services by the Department to community forestry. These services could include support to community forest management agreements on communal land outside State forests.

CHAPTER 5: Fire Management and Control

43. This Chapter encompasses both forest lands and non-forest lands. It
includes the best of the provisions in the current Act, but improves on these in several ways.

Part 1: Fire Protection Associations

44. The Bill provides for the establishment of voluntary fire protection associations in regions where fire hazard requires land owners to cooperate. The Director General may establish such associations where they do not arise voluntarily. It prescribes the procedure for registering an association, and gives a model constitution.

45. The provision for fire protection associations is intended to recognise the fact that control and management of fires in veld and forest, requires ability for institutions to organise across administrative boundaries. These provisions are written in full recognition of the provisions in the Fire Brigades Act, and are linked with those where necessary. In many cases, the provisions could simply be adopted by existing structures established in terms of the Fire Brigades Act. In other cases, existing fire protection associations may choose to employ these provisions to give legal standing to their constitutions and to empower them to manage affairs within their regions more effectively. The provisions are designed to ensure that associations are inclusive, and that members of associations are able to negotiate to agreement on how their interests would be served through the work of the associations.

46. Fire protection associations would be required to develop strategies, rules, and other measures that are appropriate to their regions within the framework of national criteria and guidelines. Each would appoint a fire protection officer, who would be given powers to act for the association.

Presumption of Negligence

47. The Bill provides for the presumption of negligence on the part of a land owner in cases where fire spread from his or her land and caused damage to neighbouring property. This is similar to the provisions of the current Forest Act. It is included because experience in administration of the law and of the courts in cases that arise from damage from fires shows that enforcement officers and aggrieved parties are seldom able to gather evidence of negligence where fires do break out and spread. This provision has also been tested by the Constitutional Court and accepted. This would not apply where the land owner is a paid up
member of a fire protection association.

Part 2: Fire Prevention Through Information Gathering,
Processing and Publication

48. The most important provision in this part is for the development of systems for fire danger rating. The systems are to be based on scientific knowledge of climate, weather, topography, and vegetation, and how the occurrence and spread and intensity of fires is affected by these variables. Fire danger rating is a proven way of supporting improved fire control and management in countries such as Australia, Canada and the United States. It is already applied by some fire protection associations in South Africa.

49. The proposed fire danger system allows for the classification or grading of
conditions in respect to the likely occurrence and spread of fires. It is intended to be
a basis for forecasting the danger, derived from a knowledge of local conditions and
weather forecasts available from the SA National Weather Bureau.

50. Forecast levels of fire danger in different classes would be used to prohibit or sanction various measures for preventing and controlling fires. So, for example, when the rating reaches a class of high fire danger, a variety of prohibitions would
fall into place, such as a prohibition on the lighting of fires in the open air.

51. The Bill provides for publication of forecast fire danger conditions, which then would automatically result in implementation of prohibitions and sanctions if they fall into a dangerous class. The publication may be done through newspapers, radio, television, or other means appropriate to the districts which fall within the fire protection association's ambit. This allows a dynamic approach, with maximum publicity given to conditions of fire danger and the kinds of measures that members of the public should take under various conditions.

Part 3: Fire Prevention through Fire Belts

52. In general, land owners throughout South Africa, where there is a hazard of fire, need to take adequate measures on the boundaries of their properties as well as within their properties, to prevent the spread of fire from their land, or onto their land: Thus, this part of the Bill would provide for these kinds of measures, irrespective of whether a property falls within the region of a fire protection association or not. This reflects the contents of the current Forest Act. It includes provision for a variety of measures such as agreement between neighbours, which have been proven over the past decades.

Part 4: Fire Fighting

53. As in the current Forest Act, the Draft Bill provides for various measures that may be reasonably imposed on land owners to ensure that they are adequately equipped to fight fires on their own land, and where necessary, to provide assistance in the case of fires on neighbouring properties.

CHAPTER 6: Institutions
Part 1: The National Forests Advisory Council

54. The Bill provides for a National Forests Advisory Council who would advise the Minister on any matter related to forestry. It also obliges the Minister to seek advice from the Council and to give proper consideration to the advice given. it provides for the constitution of a Council which would be representative, while at the same time being expert and interested in the development of the forest sector. It provides for permanent committees in the Council, including the Committee for Sustainable Forest Management.

Part 2: The Forest Recreation and Access Board

55. The Bill provides for the establishment of a Forest Recreation and Access
Board as a juristic person, i.e. it would be a legal entity which would be able to accumulate and disburse funds, enter into contracts, and so on. The main objects of the Board are to promote the use of forests for recreation, environmental education, and cultural advancement in South Africa and to oversee and resolve disputes arising from the exercise of the right of access to State forests. The Board
would succeed the National Hiking Way Board, but would not have the task of administering the National Hiking Way system.

56. Board would he constituted in such a way as to be representative, and give special attention to the needs of the disadvantaged and the marginalised in respect of access and recreation.

57. This Part also provides for the establishment by the Minister of a panel of mediators and arbitrators. Members of this panel may be called on to assist in resolving disputes about access to forest lands.

CHAPTER 7: Administration of the Act

58. This Chapter provides for the general powers, functions and responsibilities of the Minister and of the Director General.

59. The Minister has the principal function of developing forest policy. He or she may also assign or withdraw powers to and from the provinces, delegate certain powers and functions, intervene in litigation on forests, and make regulations in terms of the Bill.

60. This Chapter includes provisions for the control over the quality of timber, much as they are in the current Act. This is a temporary arrangement until current differences regarding the need and desirability of this kind of control are resolved.

61. The Director General is responsible for managing State forests, and implementing policy made by the Minister. The Director General may also delegate powers, functions and duties.

CHAPTER 8: Offences and Penalties

62 This Chapter identifies relevant offences that could be committed under the Act, and attaches a scale of penalties to each possible offence.

CHAPTER 9: General and Transitional Provisions

63. This Chapter has a part including a variety of miscellaneous provisions.

64. Part 2 deals with the repeals of law and various related things. It allows for the provisions in the current Act that govern the National Botanical Institute to remain in force until a new law is passed for it.

Appendix 2
Memorandum: Department of Land Affairs
SUBMISSION TO THE PORTFOLIO COMMITTEE ON AGRICULTURE, WATER, AND FORESTRY

RESTRUCTURING OF THE FORESTRY INDUSTRY:
SECURING OF LAND RIGHTS

1. PURPOSE
Briefing regarding the protection of informal land rights in areas subject to the restructuring of the state owned forestry industry; and the proposed institutional arrangements pertaining thereto.

2. BACKGROUND
2.1 It is the policy of the Minister of Water Affairs and Forestry to withdraw the State from commercial forestry, and DWAF has assumed responsibility to ensure that the disposal of the forest assets results in proper and effective management of the resources. DWAF has obtained funding to set up a Restructuring Office which will provide the necessary expertise and advice required to ensure that government manages the re-structuring process with maximum efficiency.

2.2 Effective and efficient management of the industrial plantation resources will require making forest resource use and certain other land uses available to efficient enterprises on terms that would allow and promote viable businesses. The resources would need to be made available in units that each are potentially viable business entities, or which can be incorporated into larger business entities. Overall, this means that the assets will be bundled into management units each including several pieces of land, and each more or less geographically distinct.

2.3 Each of these management units is therefore likely to involve several rights-owning communities. The majority of State forests, both plantations and indigenous, are situated on former SADT land because they are situated within those districts listed in the schedules to the 1913 Black Land Act and the 1936 Trust Act in the former homeland area. The land is now held in trust by the Minister of Land Affairs or by the Ingonyama Trust, while the trees and forestry operations fall under the jurisdiction of the Minister of Water Affairs and Forestry. . Beneficiaries of the former South African Development Trust have underlying ownership rights to the land situated in these areas. While it is understood from archival materials that forestry activities in those areas have always supposed to have been in the favour of the SADT beneficiaries, the ownership of the trees themselves vests with the state, which undertook the costs of the forestry development on the land.

2.4 In these circumstances, the state is tasked with the dual objectives. On the one hand, it is required to transfer inefficient forestry operations (which are currently draining state coffers) to commercial entities. On the other hand, the state may not compromise the underlying rights of local communities to the land on which such forests exist. The above-mentioned facts give rise to a situation where on the one hand, the maintenance of forestry as a land use is considered to be in the public interest - on the other hand, and subject to this public interest, local communities must be able to exercise and enjoy the benefits of their underlying ownership rights to such land. This situation must be informed by a sensitivity in the balancing of interests.

2.5 The equitable combination of these objectives lies in the distinction between the concepts of land use and land ownership. Ownership of the land by local communities does not necessarily imply that communities may unilaterally decide to change the current land use (e.g. of forestry) to another land use. There are plenty of examples in South African law of the regulation of land use by the state. This is particularly the case as regards indigenous forests whose land use is conservation. In principle the State is free to apply the same principle to commercial forests as long as this land use can be justified as being in the public interest.

2.6 During discussions with the Department of Land Affairs, DWAF has accepted this to be a viable and equitable approach and has acknowledged that the transfer to commercial entities of the forestry operations situated on land to which local communities have underlying rights which have not yet been confirmed should be done in a manner which recognises the underlying rights of local communities.

It is further acknowledged by DWAF that the local communities as underlying owners would expect to be recognised as legitimate stakeholders and require the recognition of their rights as well as the opportunity to discuss the opportunity to participate in the planning and management processes which are developed for the conservation of indigenous forests, and I or the operational side of the commercial forestry ventures (whether through equity, lease I rental income, and I or employment).

After extensive discussions between the Department of Land Affairs and the Department of Water Affairs and Forestry the institutional model which emerged is based on the recognition of the land rights of local communities.

The approach recommended here has been designed to allow rapid restructuring, while also finally satisfying the rights of the communities involved. It is envisaged that rights holding communities would, in exchange for value, extend the right to practice forestry operations on the land to an investor. This could take the form of leases, equity, and could possibly include community interest in the downstream enterprises. A number of co-management and benefits-sharing models are available that can accommodate these rights.

3. DISCUSSION
3.1 Restructuring of the forest assets of the Department and those of Safcol requires expert promotion of the policy objectives of government, bipartite or tripartite agreements between State, incoming investors, and holders of rights on communal land, and efficient businesslike administration of the land-related affairs in these arrangements.

To achieve this, it is envisaged that all relevant parcels of land should be placed under the administration of a new Trust (the Forest Land Management Agency
- see below). Simultaneously, the restructuring processes would lead to leasehold agreements between the Trust (and hence Government) and the incoming investors and entrepreneurs.

The task of the Forest Land Management Agency would be to administer all of the land involved on behalf of Government and of rights-owning communities where appropriate, in such a way as to achieve the broader policy objectives of government.

The land administered by the Trust would include the current State forests on Trust land in the former homelands, and the State land used by Safcol in the former RSA. Arrangements relating to the forests on Ingonyama Trust land would need to be negotiated with the Ingonyama Board of Trustees.

3.2 The underlying reason for this preferred approach is to:

3.2.1 Act in the interest of government (and hence, the general public) and local communities, and manage any disputes that may arise; and

3.2.2 Set up an efficient accountable office able to administer revenues, investments, and disbursements on business lines. The revenues from these lands are likely to reach about R25 to R1OO million per year, assuming an average annual rental of a minimum of R1OO per hectare and the possibility of royalty income on forest products harvested. The amounts may be increased through appropriate benefits-sharing business models, and would have to be negotiated on an ad hoc basis.

Treasury regulations would render the disbursement to communities of their share of the profits very complex if the land in question was still technically state land, which is a strong motivation to transfer to land to a landholding trust set up by and directed by government.

3.3 The governance arrangements for these lands should have three parts:

3.3.1 a Board of Trustees who would oversee the work of the Forest Land Management Agency, comprising members nominated by the Ministers concerned so as to represent the broad range of interests concerned;

3.3.2 The Forest Land Management Agency itself, established in terms of a trust, and whose functions are set out below.

3.4 The Forest Land Management Agency would have the following functions:

3.4.1 To deal with the land issues involved in these cases in such a way as to support the broader policy objectives of government accountability for the process of resolving tenure issues

3.4.2 Coordination in this respect with the proposed DWAF forestry Restructuring Office while this latter body is in existence by administering leases, concessions, and any other agreements between private-sector operators of forest businesses on the land and Government or communities,

3.4.3 To advise the Restructuring Office on the terms and conditions of these agreements;

3.4.4 To receive the funds accruing from these leases and concessions

3.4.5 To distribute the funds accrued from rentals and other income to Government (for Safcol State forest land; perhaps rather to local development) or the rights-owning communities (in the case of Trust land); except that in the cases of Trust land where rights-owning communities have not yet been identified the funds would accrue to separate identifiable accounts in the interim;

3.4.6 To act on behalf of rights-owning communities and government in dealings with lessees or concessionaires

3.4.7 To coordinate with the Ingonyama Trust to support the development of appropriate legal persons and institutions for communal land, such as Communal Property Associations.

3.5 The Forest Land Management Agency would be responsible for negotiating the terms and conditions of leases and concessions, in consultation with the Restructuring Office and the restructuring Transaction Advisor while necessary. Dealing with tenure would be done through out-sourcing to a competent consultancy.

3.6 Since identification of the actual rights holders for any given piece of land is a time-consuming process, it has been proposed that the disposal of the forest assets of the former homelands should be done in two phases.

3.7 Phase 1: Establishment of a land-holding Trust, identification of
management units and establishment of separate accounts

The objective in this phase is to make interim arrangements through placing all relevant parcels of land under the administration of new landholding Trust. This would require the Minister of Land Affairs to transfer the land in question to the Trust.

The Trust would need to establish a series of special accounts for individual management units identified for restructuring where rights-holding communities would be the ultimate beneficiaries. These accounts would serve to accumulate rent and other income from investors until such time as agreements could be transferred to new legal entities where appropriate, or held in the Trust account and employed to support policy objectives.

This phase should include wide communication and preliminary consultation, to achieve agreement upon the approach and on the terms that would generally be applied to the bidding for leases on the forestry operations.

The underlying reason for this phase is that the legal requirements for the confirmation of informal rights are first of all that the actual rights holders should be identified. Where the rights holders cannot be specifically identified, and the approval of the Minister of Land Affairs is required for land development decisions then democratic procedures for rights holders to decide on the use of the land and the conditions governing that use are an essential prerequisite. These procedures need to be validated by the Minister of Land Affairs through his officials.

In the event that a landholding trust is established, it will be made subject to these procedures.

3.8 Phase 2: Establishment of legal entities for each management unit and final settlement of rights

The key in this phase would be to identify where relevant and appropriate the land-rights beneficiaries for each piece of land involved. The following would be needed for the industrial forest management units in this phase:

3.8.1 Identify community owners of each specific piece of land within a management unit

3.8.2 Establish final legal entities (e.g. CPAs) and transfer the land to these entities; disburse benefits accrued pro rata.

Such CPAs would take transfer of the land subject to the terms and conditions which had been negotiated with investors by the trust. This is why the broad community consultation referred to in phase one is essential.

4. CONCLUSION
The new South African Government is facing a range of transformational challenges unprecedented in its history. The scope of transformation extends across racial, ethnic, cultural and regional boundaries and is in the process of addressing the fundamental transformation of may key aspects of political, economic, social, cultural and intellectual life. Land reform is a critical component of this transformation process for without this security the ability of people to live in meaningful harmony with themselves, one another and the broader fabric of society will be severely impaired. The acknowledgement of this factor and the integration of land reform initiatives within the larger tapestry of economic growth projects such as the re-structuring of the forestry industry will provide the basis for a lasting and durable security for residents and investors alike.

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