Invest in promising forestry sector

 Invest in promising forestry sector

Uganda has excellent conditions to support commercial tree growing. With good management and adoption of intensive farming practices, growth rates can match the best in the world, and offer solid return on investment. There is abundant potential in areas like timber processing for export, manufacture of high quality wood products and various packaging materials. The plantation resource is currently at 0.2% but also very productive – 16 tonnes/ha/year. It is estimated on average to cost around US$700 per hectare to establish a plantation. This cost covers all expected costs up to canopy closure.

Investment opportunities

Potential areas include;
• Planting of soft wood plantations for timber and poles
• Planting of soft wood plantation for pulp
• Production of value added products from both hard and soft wood
• Tourism and recreation
• Planting palm trees and processing of palm oil
• Planting for medicinal purposes.

Conditions

Biodiversity: Globally, Uganda is regarded as one of the most 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 a wide range of forest products can be developed at a lower cost and environmental cost.

Land: Most of the land in the country is suitable for tree plantations and has excellent soils.

Climate:  With a temperature range of 15 -30oC, and a rainfall range of 750 – 2000 mm, Uganda is excellent for forest production.

Yields (m³/ha/yr): Ugandan plantations can match (or even exceed) some of the best growth rates in the world at 20-35 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 Eucalyptus). 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%).

Incentives

Investors in the forestry sector have the following specific incentives
• Security of land and trees, for instance 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 hectares to 500hectares. The maximum amount paid is US$360 per hectare, which has been estimated as 50% of the total costs of establishing a plantation. SPGS will run until end of 2008
• Negotiated license fee rates e.g eco-tourism
• Access to a forest tree fund to support tree growing
• Transparent competitive bidding for licenses
• Partnerships agreements and collaborative forest management arrangement including MOU
• Joint management venture with the National Forest Authority

For more details on the forestry opportunities contact the Uganda Investment Authority.

Key contact: Issa Mukasa
Investment Promotion Division
Email: imukasa@ugandainvest.com

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