Sappi Southern Africa, a renewable resource company that produces sawn timber, paper pulp, dissolving pulp, biomaterials, packaging and speciality papers, among other products, operates five mills and owns and leases close to 400 000 hectares of land in South Africa. The company is working towards a bio-based circular economy, with its products manufactured from wood fibre sourced from its sustainably managed forests.
Dedicated to promoting sustainability, Sappi has embraced the United Nations Sustainable Development Goals (SDGs), setting ambitious targets that are aligned with the SDGs in seven areas: clean water and sanitation; renewable and clean energy; decent work and economic growth; responsible consumption and production; climate action; life on land; and partnerships for the goals.
Its approach to sustainability is structured under three pillars: prosperity, people and planet.
Sappi Khulisa is the winner of the Trialogue Strategic CSI Award 2023.
Programme overview
Sappi Khulisa (which means ‘grow’ in isiZulu), the company’s enterprise development scheme for emerging timber farmers, is a major driver of social change in the regions in which the company operates.
The programme started in KwaZulu-Natal, covering the area from Manguzi near Kosi Bay in the north to Port Edward in the south, and inland as far as Ixopo and Nongoma, and has since expanded into the Eastern Cape, most notably near the towns of Bizana and Lusikisiki.
The successful tree-farming scheme has its roots in the company’s CSI project, Project Grow, an outreach project that was set up in 1983. It initially focused on supporting subsistence farmers with access to 1–20 hectares of land, and assisted three growers in the early stages.
Since then, Sappi Khulisa has become a flagship enterprise and supplier development (ESD) programme. Its success has led to the introduction of Sappi’s dedicated ESD unit, which was established in 2018 and tasked with helping to incorporate small- and medium-sized enterprises (SMEs) into the mainstream economy.
“The programme embodies the company’s business strategy, which drives sustainability solutions through proactive partnerships with customers and communities.”
The programme has evolved from supporting individual subsistence farmers to include the entire forestry value chain, ensuring that SMEs can become part of the company’s core business.
Now in its 40th year, Sappi Khulisa has expanded to support more than 4 200 growers, looking beyond individual growers to encompass the entire value chain, including community projects and contractors. The programme currently supports around 871 SMEs that offer services to growers, including silviculture, harvesting, loading and short- and long-haul activities. These SMEs are supported through the company’s team of experienced foresters as well as its Ulwazi training programme.
Creating local economic opportunities is a priority for the company – in 2022, it spent more than R245 million with SMEs, far exceeding its target of R133 million – and it has successfully integrated around 137 SMEs into its value chain.
Structure of the programme
Growers make their land available for planting eucalyptus trees and Sappi provides growers with sponsored seedlings, technical advice and training, guaranteed access to market and loans. Loans are sufficient to cover all farming input costs, including the annual maintenance of the plantations until they are harvested. Advances are paid to growers for work carried out throughout the generally eight-to-ten-year growing cycle.
At harvesting time, Sappi buys the timber from the growers and pays them a market-related price, minus the advance payments they have received in preceding years. All seedlings supplied are grown by Sappi’s own nurseries to ensure that the growers plant only the best available quality genetic material.
Recognising that Sappi Khulisa’s labour is characterised by poor efficiencies and a large turnover, Sappi established three Khulisa Ulwazi (‘growing knowledge’) training centres. Training is offered to all value-chain participants, including land reform beneficiaries, and covers all aspects of forestry, including core operational skills as well as safety, legal compliance and business management. Training materials have been developed in conjunction with the Institute of Natural Resources.
“Now in its 40th year, Sappi Khulisa has expanded to support more than 4 200 growers, looking beyond individual growers to encompass the entire value chain.”
The Sappi team has also partnered with other institutions such as the Cedara College of Agriculture to provide growers with the tools they need to expand their farming activities and additional sources of income. This is helpful because timber farmers often have to wait several years between harvests to see a return on their investment.
Finally, a grower mobile app has been developed to help Khulisa growers access their plantation information, financial statements and training material.
The shared-value model is transformational as it creates economic value while addressing real social needs and challenges.
Social benefits – empowering communities
The Sappi Khulisa programme has supported 4 223 active growers (4 151 individuals and 72 community-managed projects), with around 37 920 hectares under management as at the end of June 2023. Since establishing training centres in 2015, 5 857 individuals have been trained.
In 2022, a total of 217 339 tons of timber worth around R184 million was delivered to Sappi’s operations by Khulisa growers. Since 1995, a total volume of 4 908 850 tons of timber, to the value of R3.3 billion, has been purchased from Khulisa growers.
“The programme is particularly strong when it comes to empowering women, who can take care of their families while supplementing their household incomes.”
Sappi Khulisa has helped to turn small-scale growers into self-reliant, sustainable timber businesses. This has been of inestimable value to individuals from impoverished rural communities, since they might otherwise have been excluded from the industry because of the high cost to entry. Being part of the Khulisa programme provides growers with guaranteed access to market at prevailing market prices.
Aside from the numerous employment opportunities for women and youth, the training and mentorship offered have allowed individuals to start their own businesses – and capacity-building programmes have elevated these SMEs to the extent that they now function as business partners to Sappi, receiving procurement opportunities at the company’s mill and forestry operations.
The programme is particularly strong when it comes to empowering women, who can take care of their families while supplementing their household incomes. Growers can meet their own fencing, building material and firewood needs, and many successful growers have built their own homes and sent their children to university. Some have also started other businesses, providing harvesting and transport services to other growers.
Business benefits – ensuring sustainability
Sappi is committed to the transformation mandate embedded in the Forest Sector Transformation Broad-Based Black Economic Empowerment (BBBEE) codes. By supporting rural participants to enter and participate in the forestry value chain, the company is effectively securing its own access to timber and wood fibre in years to come while building a thriving community.
The company works with land reform beneficiaries, helping them to manage timber on their properties, which has the added advantage of ensuring a sustainable supply of quality timber, even though land redistribution can retard the rate of timber production. This ensures continued profit for the company.
~R29m
Company expenditure on project in 2022/23
> 4200
Number of small growers supported
217339
Tons of timber worth around 184 million delivered to Sappi operations in 2022
4908850
Tons of timber to the value of 3.3 billion purchase from Khulisa growers since 1995
Growing the supply chain has been crucial for the business, along with introducing more participants into the forestry value chain, which strengthens the industry as a whole. The programme has resulted in 315 procurement-ready SMEs and 135 active SMEs in Sappi’s supply chain. In the 2022 financial year, the company spent over R220 million with local SMEs, contributing to sustaining 768 and creating 190 new jobs.
Sappi Khulisa’s approach has seen the company winning a Silver Loerie in the 2022 Loerie Awards in the ‘Shared Value’ category. The programme embodies the company’s business strategy, which drives sustainability solutions through proactive partnerships with customers and communities.
Stakeholder relationships are excellent, with Khulisa foresters interacting with growers and suppliers every day. Foresters provide technical support in terms of silviculture and harvesting expertise as well as business training. Sappi hosts regular farmers’ days where information and knowledge are shared, and networking opportunities are provided. As such, traditional leaders and elected officials are supportive of Sappi, strengthening its reputation and operational efficiencies.
Judges’ feedback
“This is a strong entry that reflects thoughtful and clearly articulated objectives, theory of change and impact. There is a clear, strategic link to the business in terms of stakeholders, community, business operations and needs. What helps this entry is its history of intervention as well as the change in business approach and its understanding of how to involve communities.”
Commendable mention
All Trialogue Strategic CSI Award 2023 entrants are commended for their innovation and commitment to development in South Africa. However, since this award focuses on strategic CSI, entries demonstrating direct and measurable social and business benefits were rated most highly. In addition to the 2023 winner, the judges made special mention of the following high-scoring initiative.
Netcare Foundation’s Ncelisa Milk Banks
The aim of this programme is to provide donor breast milk to low-birth-weight babies who are at risk of acquiring necrotising enterocolitis, a devastating intestinal disease. Providing evidence-based neonatal nutrition helps to reduce neonatal and infant mortality, which remains unacceptably high due to the role played by infection. The programme builds relationships with all human milk service providers in South Africa to provide appropriate nutrition to all neonates, regardless of their caregivers’ ability to pay.
Netcare established the first human milk bank at Park Lane Clinic in Gauteng in 2017, and has since set up additional banks in KwaZulu-Natal and the Eastern and Western Cape. To date, the programme has provided donor breast milk to 3 497 eligible neonates nationally. Of these, 838 have been public recipients. Breast milk is provided to three public-sector hospitals on request – Rahima Moosa Mother and Child Hospital, Charlotte Maxeke Johannesburg Hospital and Uitenhage Provincial Hospital.
Judges’ feedback
“This entry deserves recognition – it is a commendable project with very clear links to the core business and is strategically aligned, utilising Netcare’s expertise and resources for greater impact.”
Sappi Khulisa: Celebrating 40 years of success
For people, turning 40 signifies reaching an accomplished maturity and this also holds true for Khulisa – Sappi’s flagship enterprise supplier development programme which celebrates its 40 years ruby anniversary in 2023.
First known as Project Grow and starting with only three beneficiaries in the Zululand South area, the project has grown from strength to strength and today provides support to more than 4,000 growers through a staff complement of 29 employees experienced in responsible forestry management. The maturity of the programme can be witnessed by the hundreds of success stories from participants in the programme, many who have been suppliers to Sappi over several generations.
Stretching from the far north of the KwaZulu-Natal province to the far south and into Mpumalanga and the Eastern Cape, today the total area managed is over 37,000 ha. Since 1995 a grand total of 4,908,850 tons of timber to the value of R3.03 billion has been purchased from Khulisa growers.
The Sappi Khulisa programme enhances the security of fibre supply to Sappi, whilst also creating shared value by uplifting rural communities through equipping them to become sustainable participants in the forestry value chain.
It extends beyond the participating growers to include 871 small, medium and micro enterprises who are involved in silviculture, harvesting, loading and short and long-haul activities supporting the programme. With steady timber supply threatened by land redistribution projects, an ageing grower population, crops with a long growing cycle and poverty levels leading to early harvesting and low crop yields, it has become essential for growers to understand the benefits of participating as self-sufficient suppliers to Sappi.
The Khulisa Enterprise and Supplier development programme is designed to take the growers to new levels and provides training and mentoring, needed to equip growers with core operational skills as well as safety, legal compliance and business management skills to manage their farms productively. Since establishing the Khulisa Ulwazi training centres in 2015 a total number of 5,857 individuals have received training in various aspects of sustainable forestry practices.
Growing in the Eastern Cape
The expansion of the programme to include new value chain participants elsewhere in the country is another of its successes. Since expanding to the Eastern Cape a total of 5,214 hectares have been planted, yielding a volume of 465,409 tons valued at R300 million. Two communities whose timber businesses are thriving here under the Sappi Khulisa banner are the Izinini Trust and Mkambati Land Trust (MLT).
The Bizana area is ideal for the establishment of commercial timber plantations and it’s here where the Izinini Community Trust was formed in 2012, with over two hundred households as beneficiaries. Trust Board member Mrs Nozuko Sukude says the community is reaping the benefits. “Sappi Khulisa equips us with business and technical skills; we now know the importance of cash flows and planning ahead of time and our grower agreement guarantees us a market at the Sappi Saiccor Mill”.
The Mkambati Land Trust, represents seven communities comprising more than 5,000 households. Managing the plantation is a highly motivated team of five ladies who are in charge of weeding and maintenance, planting, harvesting, and managing the truck-loading schedule. A forestry committee oversees the forestry operations that currently employs about 60 local people.
“The Khulisa programme is a jewel in Sappi’s crown. As we celebrate its ruby anniversary this year it makes us appreciate the shared value it has created for us as a company, and for the thousands of Khulisa beneficiaries that have been part of this success story over the years.”
Alex Thiel, Chief Executive Officer of Sappi Southern Africa
sappi.com
Learn more about the strategic CSI awards: Celebrating strategic CSI.
Source: The original version of this article was published in the Trialogue Business in Society Handbook 2023 (26th edition).
