Managed Forest Estates!


The Money Engineer

Uganda loses about 100,000 hectares of forest cover every year, a situation that is worsening the effect of climate change according to the Ministry of Water and Environment. As Uganda’s population increases by over a million new babies each year there is growing pressure on the land. As a result many forests have been encroached on to create more farmland.

The situation is made worse by increased use of charcoal and firewood as the primary energy source for cooking in most households. This is further exacerbated by the low levels of electricity grid access at 22% and high cost of other alternative energy sources like gas.

Another interesting observation is the bare chunks of land one observes as they drive on any of the highways out of Kampala.

This is actually a big opportunity!

Underutilized land, declining forest cover, growing population combined with two rainy seasons is a good opportunity for a concept known as managed farm/forest estates.

Basically an investor/company buys a big chunk of land. They then divide into small plots typically 5 acres which they then sell or lease to individual buyers. The company then provides agronomy services for a management fee. These services might include land clearance, forest establishment, forest management, etc. Because of the economies of scale the management fee is quite small. The company may also provide crop insurance and marketing services as well.

The beauty with this model is that you delegate the hustle of farm/forest management to a third party. This frees your time and energy to continue to pursue your career and other interests.

Currently we have invested in a few acres of pine forest in Nakasongola using this model. An acre cost about UGX 3.5m and it costs about UGX 55k per acre per month to maintain the forest. We visit the forest utmost 4 times a year! This little project maybe worth a billion shillings in 15 – 20 years!

This trend is more common in Kenya with companies such as Africa Plantation Capital managing thousands of acres of bamboo plantation. In Uganda Amaya farms has a similar model of pine forest in Nakasongola. A similar model in an urban setting would involve setting up fully equipped Greenhouses on idle plots of land within town to be leased to individual farmers. This could actually transform the agricultural landscape in Uganda!

So as you plant a forest you help to reverse the adverse effects of reduced forest cover and climate change, employ a few people, and make money in the long run.

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