The African forestry sector is struggling to overcome development challenges

Forestry is not an industry characterized by rapid development. Trees take years to grow, even in tropical climates. However, there are clear trends supporting the global development of commercial forestry. One factor is the growing consumer demand for wood products. Wood is increasingly seen as a more sustainable alternative to materials such as concrete, which has been the dominant building material in the world for decades. Many consumers also consider paper products to be better than plastic.

Another key factor is the increase in carbon offsetting. Trees remove carbon dioxide from the atmosphere, and landowners who plant trees can sell carbon credits, allowing companies to “offset” their emissions from burning fossil fuels.

Although “carbon forests” can only be planted to remove carbon dioxide, commercial forest plantations can also sell carbon credits. When trees are planted in previously unforested areas, they absorb or “sequester” carbon as they grow. Then, at least theoretically, the carbon is permanently stored in the wood product after the trees are cut down. Plantation operators can thus sell carbon credits in addition to their main business of selling timber.

Africa appears poised to benefit from these global trends, partly due to the climatic conditions prevailing over large parts of the continent. Trees can generally grow much faster near the equator. Fast-growing trees can be harvested more often, generating more income for forest owners. As they grow, they absorb carbon faster and then produce more finished products that store carbon indefinitely.

Despite these advantages, developing the forest sector in Africa will not be easy. Forestry is a highly technical industry; it also requires forest owners to deal with a variety of complex issues, including land rights, water use and biodiversity. Some will never be convinced that commercial plantations actually benefit the continent and its people.

Forestry has always been controversial. Monocultural timber plantations are sometimes found where ancient and extremely biodiverse rainforests once stood. Globally, it is estimated that 13% of deforestation is caused by tree plantations producing paper and wood, which are expanding into areas of native forests.

Another problem is “land grabbing”. Kwami Kpondzo, Africa coordinator at the nonprofit Global Forest Coalition, warns that forest plantations inevitably require “a huge amount of land.” In some cases, planting new plantations involves displacing communities from their agricultural land, he says.

According to Kpondzo, there is no real way to mitigate the more harmful effects of commercial forestry on the continent. “We cannot conduct commercial forest management in Africa without social consequences,” he says.

However, forestry practitioners argue that their activities can bring benefits to communities. Mark Hogg, CEO of Mere Plantations, which produces mainly teak at two plants in Ghana, says building good relationships with local stakeholders is “absolutely crucial” to the success of forestry.

He reports that before acquiring the land, Mere consulted with the government and the Ghana Forestry Commission, as well as the district assembly and local traditional authorities. “We invited them all on board,” he says. Local communities receive a percentage of Mere’s revenues through the Forestry Commission, and the company runs a variety of community programs in response to community needs.

“We fund what the community actually needs, not what we Westerners sitting in our offices think the community probably needs,” Hogg says. “It’s a really big difference.”

But he sees other operators “continually” taking the wrong approach. In his opinion, it often happens that non-governmental organizations approach the sector with good intentions, but without strong “executive capabilities”. He believes that some plantation operators have a “corporate mentality” and get into trouble when they try to impose their solutions on local communities.

Benefits of biodiversity?

It can be easy – and often justified – to criticize commercial forestry in Africa and other tropical parts of the world. However, the industry can also argue that it provides sustainability benefits, particularly when forests are planted on “degraded” land.

Eva Warigia, deputy director at investment management firm New Forests, notes that the Forest Stewardship Council, which runs the best-known forest products certification system, requires plantations to devote at least 10% of their area to restoration and conservation. He says New Forests tries to identify “biodiversity corridors” on its plantations. Their protection provides important habitats, and biodiversity uses the corridor to expand into the rest of the plantation.

Meanwhile, increasing attention is being paid to the need for sustainable forestry. In 2023, the European Union adopted a regulation prohibiting companies from importing certain goods unless they are “deforestation-free”.

Warigia says Africa can play a major role in meeting global demand for sustainable forest products. He notes that there is potentially more land available for forestry in Africa than in most other parts of the world. And Africa itself could be a large market for wood products.

Indeed, as the population grows rapidly, it sees increasing demand for timber in the African real estate sector. Wood can also play an important role in transmitting electricity and digital communications, Warigia says, and wooden poles are needed to transport cables over land.

Carbon forests?

However, what generates the most buzz is the continent’s potential for “carbon forests.” The forest could be planted solely to sequester carbon, and its owners would earn income from selling carbon credits.

However, Warigia says that plantation forestry activities that involve rotational harvesting can also significantly contribute to carbon sequestration. “Every time you harvest, you replant it. With each new seedling, new opportunities for carbon sequestration open up,” he says. “In this way, we are able to create a rotational platform where we build a new carbon sequestration base every year, making plantation forestry one of the most effective areas for expanding the carbon sequestration market.”

However, most commercial forestry operators are still working out how to profit from selling carbon credits. Warigia emphasizes that New Forests is primarily focused on timber production. It has not yet decided how to create a revenue base from emissions markets.

Similarly, Hogg warns that commercial foresters cannot base their strategies on carbon revenues. “I think carbon revenues need to be an additional source of revenue for the project,” he says, noting that Mere expects to generate about 5% of its revenues from selling carbon credits. The impact on business will be “significant but not game-changing,” he says.

Complexities

Time will tell whether some of the new entrants to Africa’s forestry sector truly understand the limitations of carbon markets, let alone the many other complexities involved in forest management.

Over the past year, several Gulf investors have pledged to buy vast swaths of land in Africa both to protect existing forests and to plant new forests on “degraded” land. Their goal is to produce carbon credits that can be sold to national governments or companies operating in industries that are difficult to cut. For example, Dubai-based investment company Blue Carbon LLC has signed memorandums of understanding with several African countries, including Liberia and Zimbabwe, to implement projects that will cover as much as 10% of these countries’ land areas.

Hogg doesn’t believe projects like this will be successful. “A lot of people said they were going to plant carbon forests, but they were doing it wrong,” he says. “They need to replant the forest, they need to use rotational coppice instead of clear-cutting, and then they will see that carbon just happens.”

These projects may also generate exactly the kinds of social conflicts that advocacy groups like the Global Forest Coalition are concerned about. Last July, dozens of non-governmental organizations signed a statement condemning Blue Carbon’s proposed land deal in Liberia, warning that it could impact the livelihoods of one million people. In response, Blue Carbon says it is committed to “engaging local communities.”

There is certainly much room for improvement in the way forestry projects are managed in Africa. There is undoubtedly a long way to go before Africa’s forestry sector can realize its potential.

A February 2024 report commissioned by the Gatsby Africa charity foundation and private equity firm Criterion Africa Partners concluded that on the continent, commercial forestry “remains in a nascent phase and the value chain remains undeveloped.” The report concluded that “commercial investments have largely underperformed, resulting in a significant loss of investor capital” over the past 30 years.

While improvements won’t happen overnight, Hogg sees “pull” in the sector, although he notes that different countries are moving at different speeds in developing commercial forestry. In his opinion, Ghana is one of the leaders on the continent, while Kenya and Côte d’Ivoire, among others, are making significant progress.

Ultimately, he says, developers must have a thorough understanding of local growing conditions for various tree crops, as well as maintain strong community relations. Success in African forestry comes down to “the right tree in the right place,” he says.