Region: KwaZulu Natal, UThungulu District Municipality.
Sector: Value chain and Agro processing
The Kwambo Poles business venture is a bankable undertaking. A study has shown that not only will the business double its production capacity in the first year, but it will also create export capacity for value-added timber to earn the country much needed foreign exchange income. The business valuation conducted using the discounted cash flow earnings method has shown a projected value of R26 million by 2018. This implies the possibility of a full repayment of shareholders loans within three years and subsequent reinvestment of profits for further expansion. In addition, the availability of a large pool of resident labour within the vicinity of the plant indicates adequate manpower supply to the company.
The project presents a unique opportunity for small timber growers in rural KwaZulu-Natal to gain active participation in downstream activities in the forestry sector. As more State plantations are transferred to communities, this project presents a useful marketing channel for rural people to enter the mainstream and realize significant economic benefits that the industry has to offer. Furthermore, there is sufficient untapped opportunity in agro-logistics in both short and long-haul transportation of saw logs.
The project value proposition promises community and emerging forester’s better prices for fully mature timber (on a 7 to 8-year cycle of eucalyptus grandis, via access to treatment facilities). Achievement of this proposition would contribute immensely towards the realization of one particular objective of the National Development Plan (NDP) goals, that of faster and more inclusive economic growth. Because as the NDP states, South Africa:
“Needs an economy that is more inclusive, more dynamic in which the fruits of growth are shared equitably”.