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Changing Ownership and Management of State Forest Plantations in South Africa. Draft

This draft paper was drawn up following the International Conference of the same title Cape Town, South Africa, 6-8 November 2002. The key lessons learnt were: Set clear, politically acceptable objectives through consultation with key stakeholders and reference to sector and macro policy; Communicate the objectives clearly and early to potential bidders and take feedback on their reaction to determine the feasibility of achieving an acceptable transaction; Maintain dialogue with key stakeholders as the process unfolds, and as delays inevitably arise; Use the various instruments within the transaction to achieve the multiple objectives: Use the bid process as a market instrument and evaluate bids (transparently) to select a preferred bidder Use the sale of business agreements to secure commitments to economic development including down-stream processing Use the lease as the central instrument for transferring use rights over State forest land from the State to the private sector (and avoid loading the lease with other issues that can be covered elsewhere) Use existing legislation to regulate. Do not over-regulate by encumbering the lease, try to allow the leaseholders to operate on a level playing field with other private companies, all of whom must operate within the law; Provide incentives for sustainability rather than regulate for it. If you use the lease to provide the private sector with long-term security to yield a return on its investment and the right to trade its investment then it has an incentive to mange the resource to its full potential rather than deplete it; A requirement for certification in the lease enables government to transfer much of the cost of monitoring and reporting on sustainability to the private sector operator; Create adequate capacity to manage Government’s residual responsibilities in terms of the lease and other transaction commitments.

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