Uganda Forestry Sector Business Investment

All the details you would need to start a forestry sector business in Uganda. Uganda has more than 50 national forest reserves and for that matter who ever wants to start a forestry investment opportunity is assured of smooth business running with a lot of profits. The Forestry sector is of high economic importance to Uganda.

The country possesses abundant potential in areas like timber processing for export, manufacture of high quality furniture/wood products and various packaging materials.

The distribution of forest varies greatly by region; the northern region dominated by woodland, while the majority of the tropical high forest is in the western region.

The plantation resource is currently very small (0.2%) but also very productive (16 tonnes/ha/year) with great potential for expansion in area and yields.

The annual consumption of wood in Uganda is estimated to be around 25 million tonnes or approximately 1.1 tonnes per capita. About 95% of this is consumed as fuel wood

CONDITIONS FAVOURING FORESTRY SECTOR INVESTMENT IN UGANDA

Excellent growing conditions: Uganda has excellent growing conditions to support commercial tree growing. With good management and the adoption of intensive farming practices, growth rates can match the best in the world and timber plantations can offer a solid return on investment.

Biodiversity: Uganda is the richest in biodiversity among the East African countries and globally is regarded as one of the important centers of biodiversity.

It has a diversity of ecological communities because of the overlapping between the dry East African savanna and those of West African rain forests.

This means that a wide range of forest products can be developed at a lower cost and environmental risks.

Land: Most of the land in the country is suitable for tree plantations and has better soils than in many countries in Eastern and Southern Africa.

Water: Uganda is a well watered country richly endowed with renewable natural resources and water shortage is not a major constraint especially areas of the country suitable for tree plantations.

Climate: With a temperature range of 15 -30oC, and a rainfall range of 750 - 2000 mm, Uganda is best suited for forest production in the East African region.

Yields (m³/ha/yr): Ugandan plantations can match (or even exceed) some of the best growth rates in the world: Uganda (20-35 for saw logs); Australia (15 for saw logs); South Africa (15 for saw logs), and Tanzania (14 for saw logs).

Returns: Timber plantations offer attractive rates of return on one’s investment – in the order of 15-18% (more with well grown Eucalypts). This compares very favorably with many other countries e.g. Germany (0.5-1%); UK (3-5%); Brazil, Chile, Spain, Turkey (10-12%); and New Zealand and Australia (8 to 8.5%).

Cost of establishing Plantations: It is estimated on average to cost around Ushs1.2M per hectare (US$700) to establish a plantation. This cost covers all expected costs up to canopy closure around 3 years with Pinus caribaea, 1-2 years with E. grandis.

FORESTRY SECTOR SPECIFIC INCENTIVES FOR INVESTORS

• Availability /security of land and trees e.g. license validity of 25 years for small scale private tree farming and 50 years for large scale commercial private tree farming.

• The Saw Log Production Grant Scheme (SPGS) provides a direct subsidy grant for private timber growers planting from 25 ha to 500 ha. The maximum amount paid is UGX 600,000 (US$360) per ha, which has been estimated as 50% of the total costs of establishing a plantation. SPGS is running until end of 2008.• Negotiated license fee rates e.g. eco-tourism.

• Forest tree fund to support tree growing (to be operationalized).

• Open Competitive bidding for licenses.

• Partnerships agreements and collaborative forest management arrangement including Memoranda of Understanding.

• Joint management ventures with the National Forestry Authority.

UGANDA FORESTRY SECTOR INVESTMENT OPPORTUNITIES

The projected future increase in demand for timber, coupled with a likely shortage of supply of sawlogs from plantations and natural forests, make forest production a promising enterprise.

Potential areas include:

• Planting of soft wood plantations for timber and poles

• Planting of soft wood plantation for pulp

• Value added products from both hard and soft wood

• Tourism and recreation

• Planting palm trees and processing of palm oil

• Planting for medicinal purposes.

For more information on the opportunities in the sector please download the sector profile below. All profiles are PDF documents, you must have acrobat reader in order to read the file.

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