New Forests Company - sustainable forestry in Africa

Over 85 per cent of East Africa’s population does not have access to the electricity grid and therefore use charcoal as their main source of cooking fuel. Together with 5 per cent annual population growth in the region, deforestation is a major driver of environmental degradation and global warming.

Lying on the equator, East Africa is one of the most fertile places in the world, benefitting from intense sun and two rainy seasons every year. Therefore, it is crazy that the region does not have its own sustainable timber resource, instead importing the majority of its timber products.

The New Forests Company (NFC) was founded in 2004 with the vision of reversing deforestation. The sustainable forestry company is establishing green field forests, the majority of which are Forest Stewardship CouncilTM (FSCTM) certified. NFC is the second largest private tree planter in the region, currently managing 24,000 hectares of planted timber and 9,000 hectares of conservation land.

NFC is East Africa’s largest local producer of transmission poles with four treatment plants in Rwanda, Uganda and Tanzania. The company recently diversified into sawn timber as well with three sawmills. Through these operations, NFC has created over 2,000 local jobs, most in rural areas where they are needed most.

As a large land holding investment in Africa, NFC is deeply committed to social impact having invested over USD 6.5 million to date on its community development programme. This programme reaches over 400,000 people and includes 32 schools and double classroom blocks, 23 clean water points, 9 health centres, and 6.5 million tree seedlings for outgrowers. The communities have become strongly aligned partners in preventing grazing, fire, theft and other risks, achieving a mutually beneficial relationship for the investment and its neighbours.

NFC has a long-term investment horizon due to the 10-20 years it takes for the trees to mature and the limited early revenue opportunities available. Therefore, it could not have achieved this level of scale or success without financing from investment partners like Finnfund who are willing to delay their financial returns because of the significant environmental, social and economic benefits created by their investment. Finnfund has worked with NFC since 2014, providing them crucial financing to their Ugandan and Tanzanian operations in a joint debt facility with the Dutch development financier FMO.