New Forest Company is Rwanda’s fast growing and only forestry and value added wood products company pursuing a triple bottom line investment model and simultaneously supporting the government’s economic strategy of job creation; poverty alleviation; import substitution and economic growth.
The Government of Rwanda (GoR) represented by Ministry of Natural Resources (MINIRENA) and the Rwanda Development Board (RDB) in July 2011 signed a 49-year concession agreement with New Forests Company (NFC) to develop and make productive the Nyungwe forest buffer zone in Rwanda.
Today the New Forest Company is managing an area of 10,046 hectares around Nyungwe National Park with a planted area of 8,215 hectares of which 65% is pine, 15% eucalyptus and 20% other spices.
Simbarashe Dube, the CEO of New Forests Company, explains that the buffer zone was established for conservation purposes with the main goal of ensuring that people do not encroach the national park. So after planting years back there was a realization that there was actually a resource which could be exploited commercially and at the same time be done in a sustainable manner.
So it was in this spirit that the New Forest Company was contracted through a long tender process to manage and commercialize something that was primarily for conservation.
The company is committed to tree replanting in all areas around Nyungwe forest with improved tree species in line with sustainable rotation and socio-economic management strategy where new species of trees are planted to keep the cycle going and to improve the carbon footprint.
The company is a sustainable, socially responsible forest company that does not only cut down trees but also re-plants trees for the forest to continue to be productive in perpetuity. “We have so far planted about a quarter of a million trees ( 180 hectares) in the concession and more would have been planted but we are limited by availability of unplanted land in the current concession.
In 2011 after signing the agreement, NFC embarked on a long process to raise finance and to establish the amount of timber (volume) in the concession. It was only recently that this exercise was complete and it was established that there was approximately 1.8 million cubic meters of timber. Now that this process is complete the company has embarked on commercially developing the resource in the most efficient way which also supports the government’s development goals.
The company currently operates in three business units; wooden CCA treated electric poles mainly for REG – strategically supporting the government’s high priority rural electrification programme; structural sawn timber for the growing Rwandan building and furniture industry and industrial charcoal renewable energy (biomass converted into energy).
Because of the previous management regime, the forest is not yielding a lot of pole material, to grow a pole that meets the strict REG quality standards there is a specific regime which needs to be applied and this was not done to the current forest crop of eucalyptus which constitutes 15% of the concession area. As the yields are low we also accept raw poles from other 3rd parties. ”We have established a pole treatment plant in Nyanza with the capacity of treating 120,000 poles per year allowing us to meet current demand. This is the only pole treatment plant in Rwanda”, explains Simbarashe “And it meets the highest international standards of quality”.
The company is able to win most of the tenders that come from REG due to lower logistic costs and significantly contribute to the “Made in Rwanda” campaign. The country is now saving $7-10 million per annum in foreign exchange.
In the past, treated poles were imported as final product from Uganda or shipped in from as far as South Africa but today, 100% value addition is done in Rwanda and the poles are affordable.
The company also does saw milling.
The Company started its first saw milling operation in February 2016 with an annual input capacity of 13,000 cubic meters and the board of directors recently agreed to immediately double the capacity to 26,000 cubic meters by the 1st of July 2017. The company has already procured equipment for the additional sawmilling capacity which is en route from the United States of America.
“We are doing this because after completing our market analysis for value addition, we will now need more volumes. So we started off with one mill and now we have doubled production,” says Mr Dube.
The company will also start kiln drying of timber by early 2018 so as to produce the best quality timber which will be the first of its kind in the country. Timber value addition starts with proper drying of the timber, this allows for a stable product for use in construction and good quality furniture.
With the kiln dried timber, , NFC will start making construction materials like trusses, tounge and groove timber , various moldings, decking material, doors and door frames, window frames, ceiling which will all cut down the costs of importation of a number of products currently being imported for the use in construction.
Benefiting the communities
Whilst NFC is a private company seeking to deliver profitability to its investors and shareholders, the company also fundamentally believes it must do the right thing for people and the planet creating jobs, improving the lives of our workers and neighbours and protecting the environment and reducing greenhouse gas emissions.
NFC also supports local communities in building schools, beekeeping projects, among other communally owned projects.
Currently, the Company is employing 350 people around the Nyungwe Forest that straddles across five districts. With the doubling of production and value addition, these numbers will definitely double, benefitting communities living around the forests.
NFC also buys pole materials from out-growers and wananchi farmers in Rwanda which encourages them to plant trees thus helping to preserve environment and also earn an income.
NFC gives seedlings to farmers at no cost to grow wood-lots, makes follow ups to check on performance of the trees and advise farmers when it’s time to thin & prune.
NFC has, to date, distributed more than 350,000 seedlings for over 250 hectares to private wananchi growers. “Our philosophy as a forest company is both economic, social and environment oriented. So we look at all the three aspects; the community and how it should benefit from the forest; the environment and making a profit, making it a win-win situation for everyone.”
NFC has so far spent $450,000 on community projects; executed ten clean water projects in communities around the forest; built four classroom blocks; established 150 beehives in various cooperatives and supported third parties that grow seedlings for the company.
“Lastly we have launched a graduate training program and we are sending local foresters to Nelson Mandela Metropolitan University in George South Africa to complete a three year diploma course,” explains Simbarashe.
NFC is proud to have RSSB and BRD as shareholders. ”With the good governance and the leadership of His Excellency the president of Rwanda, Paul Kagame, there is a clear indication that Rwanda is continuously being trusted by investors and we hope we shall realize the country’s full potential in the next few years,” Simbarashe considers.
Mauritius based NFC has management services offices in Johannesburg and currently operates in the East African countries of Uganda, Rwanda and Tanzania. The company spent considerable effort and time building good working relationships with the governments of these countries in order to build a business that will endure and meet East Africa’s economic development goals.