Investment in Forests

The forest sector is one of the key economic sectors that can drive the national economy. The sector has potential to promote industrialization; provide employment; contribute to gross domestic product (GDP), export earnings and fiscal revenues. This potential is driven by the fact that the sector has rich value chain activities which can reduce the spending of foreign currencies for imports and generate foreign currency from exportation.

Establishment of Forest/bamboo Plantations

The government has areas in degraded forest reserve that can be converted into plantations but it is also acquiring land to establish forest plantations in various areas. In order to bridge the gap of shortage of raw materials, interventions to increase raw materials from plantations is inevitable. Concurrently, management of plantations in this approach will add value for carbon credit initiative and incentives for matching grant scheme for out growers. Five sites potential for plantation have been identified including Pagale, North Ruvu forest plantations, Mafleta (Morogoro), Muhuwesi and Sao Hill.

Establishment of Wood Engineering and Bamboo Processing Industries

Primary processing has been the core value addition activity in Tanzania’s commercial forest sector, dominated mainly by sawmilling which produces structural timber used in construction and furniture production. However, value addition options with substantial economic potential such as Engineered Wood Products (EWPs) processing, which have not been fully explored as demonstrated by limited investments. 

This investment provides diversification of forestry value chains given the growing demand of products such as plywood, fibre boards and block and finger jointed boards. On the other hand, bamboo that covers an area of about 1,025,033 ha in Mainland Tanzania which in most cases is a degraded land, can be processed and fabricated into different products as a substitute for wood products at an industrial scale. Among the products processed from bamboo include furniture, boats, kitchen utensils, incense sticks, charcoal and footwear. Used as a substitute for concrete, it also reduces emissions of greenhouse gases. These are among the many reasons why bamboo is referred to as the "poor man's timber". 

Other value addition options with substantial economic potential are EWPs processing, which has not been fully explored as demonstrated by limited investments. Engineered wood products present notable economic benefits to the investors, the forest sector and the country at large.

This provides an opportunity for investment in bamboo processing industry particularly in Arusha, Tanga, Morogoro, Lindi, Mtwara, Ruvuma, Njombe, Iringa, Mbeya, Katavi and Kigoma regions.

Carbon trading 

Tanzania has about 48.1 million ha of forests with estimated 5.8 Gigatons of carbon stored and a net sink of -0.3 Gigatons of CO2e per year. However, forest loss is estimated at 469,420 ha/year, equal to 43.7 tCO2e of emissions. On the carbon market, this has a potential of generating about one trillion TZS per year. The potential forests for carbon includes mangrove with 158,000 ha with 78.86tC/ha, which sequester 5 to 10 times more carbon than terrestrial forests with estimated net carbon sink of −2425,443.6 tCO2e/year. This is followed by montane and lowland forest with 66.90tC/ha where nature forest reserves are located and closed woodland 47.82, open woodland 29.93tC/ha plantation forest 25.19tC/ha and thickets 12.40tC/ha.

Resin tapping

This is a newfound commercial use of pine trees in Pines plantation forests. The potential for resin production and extraction in Tanzania pine forests remains largely unexplored. TFS has about 74,446 ha planted with pine species with a potential of generating about 8 tons/ha of resin per year for the tree that have attained maturity greater than 10 years until clear-felling. Resin tapping can be operated and provide goods and services through revenue collection and provision of employment. Currently, increased demand for natural resin in China has pushed up prices (> USD 650/ton), therefore, the combined economic benefits of resin collection and timber production in the same forest compartment cannot be doubted in forest investment.