March 2, 2010, AllAfrica - Due to financial constraints, Uganda has still failed to meet the increasing demand for timber from the booming housing sector. The country still imports timber and paper from South Africa and even South America especially for electricity polls worth millions.

Information from the National Forest Authority indicates that there are only 35,000 hectares of commercial trees that have been planted so far against the required target of 200,000 hectares to sustain the timber demand.

We have so far issued 3,000 licenses to private commercial tree planters but only about 100 of these have fully started the activity," NFA's Plantation Development Specialist Obed Tugumisirize, said told Business Power in a recent interview. He said the country needs 4,000 hectares fully with trees cut to be able to meet the annual demand of timber and paper.

Commercial tree planting is an expensive investment which would require one to have at least Shs1 million per hectare yet the returns are long-term ranging from 10-20 years when the trees mature.

Unlike other businesses, which can access funds from commercial banks to be able to set off and then service the loan, in commercial tree planting there is lack of Green 'Investment' Banks in the country like it is in the developed world where such investments get funds. He urged the government to set up a fund as it is stipulated in the Forest Act of 2003.

However, efforts by the NFA in its partnerships with the European Union and the Norwegian government have started bearing fruit to assist with grants.

Through the Sawlog Production Grant Scheme (SPGS) Project, the Norwegian government gives grants of up to Shs850,000 per hectare, which is spread over a period of three-years.

Some of the companies which have come up to invest in commercial tree planting include; the New Forest Company (NFC) which is so far the largest, Budongo Forest Company, Kikonda Forest Reserve and another in Lira.

NFC is a UK-based company with subsidiaries in Uganda, Tanzania and Mozambique. It started its Uganda operations in 2005. "We plan to plant a further 2,500 hectares in 2010, to finish off the year with 9,500 hectares," NFC's Chief Executive Officer Julian Ozanne said.

The company operates in the districts of Bugiri, Kiboga and Mubende and having just begun construction of a pole treatment factory in Mityana district at the end of 2009, to be completed in March 2010.

NFC is also expanding rapidly across east and southern Africa with operations in Mozambique and Tanzania and plans to open in Rwanda and Swaziland in 2010. "We have invested $12 million (Shs24 billion) cumulatively by the end of 2009. We plan to invest another $35million (Shs70.1 billion) in forestry, pole treatment, sawmilling and sustainable charcoal production," Ozanne added.

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