ECONOMICS OF PRIVATE INVESTMENT IN FOREST PLANTATION DEVELOPMENT IN SOUTHWESTERN NIGERIA

Abstract

Forest plantation has the capacity of increasing wood supply and stemming the pressure on natural forest in Nigeria. Nevertheless, the performance of public sector forest plantation development in Nigeria has fallen short of expectations of various stakeholders, hence, the need for investment in Private Forest Plantations Development (PFPD). However, there isinadequate information on the economics of investment's returns from PFPD in Southwestern Nigeria. Therefore, economics of PFPD in Southwestern Nigeria was investigated. Ogun, Oyo and Ekiti States were purposively selected based on the prevalence of private forest plantation Owners (PFPOs), having done a reconnaissance survey of Southwestern Nigeria. Random sampling technique was used at 50% sampling intensity to select 27, 39 and 81 PFPOs from Ogun, Oyo and Ekiti States, respectively. Structured questionnaire was used to obtain data on demographic characteristics (age, gender, education and occupation); challenges associated with investments;species and size of plantations: small (0.1- 4.99ha), medium (5.0-29.99ha) and large (≥30ha), cost and returns; and willingness of foreststakeholders to participate in PFPD. Data were analysed using descriptive statistics, Net Present Value (NPV), Benefit Cost Ratio (BCR), Internal Rate of Return (IRR), Annual Equivalent Value (AEV), Land Expected Value (LEV), Return on Investment (ROI), Discounted Payback Period (DPBP) and Logistic regression (α0.05). Mean age of PFPOs was 53.5±11.3 years, 88.4% were men, 64.7% had tertiary education and 34.3% were civil servants. Major constraints to PFPD include: inadequate capital (22.5%), ineffective policy and legislation (19.7%), land scarcity and insecurity (15.5%). In Ogun State, 40.9% each had small and medium scale plantations, while 13.6% had large scale plantations. Fifty two percent, 30.8% and 15.9% had small, medium and large scale plantations, respectively in Oyo State. Ekiti State had 43.5%, 30.4% and 21.7% small, medium and large scale plantations, respectively. Fourteen species were identified in the plantations, of which Tectonia grandis and Gmelina arborea accounted for 55.6% and 19.4%; 54.8% and 33.3%; 39.6% and 22.6%, respectively in Ogun, Oyo and Ekiti States. Nineteen percent, 34.6% and 21.7% of PFPOs planted both T. grandis and G. arborea while 19.0%, 15.4% and 43.5% planted more than the two species in Ogun, Oyo and Ekiti States, respectively. Small scale T. grandis plantation with 12 year rotation had NPV (₦1,096,118.00), BCR(2.62), IRR(35.30%), AEV(₦208,262.42ha-1), LEV(₦1,608,350.84ha-1), ROI (162%) and DPBP (5.6 years). Medium scale mixed plantation of T. grandis and G. arboreawith 18 year rotation had NPV(₦1,504,841.70), BCR(1.35), IRR (24.43%), AEV (₦316,016.76ha-1), LEV (₦2,186,997.89ha-1), ROI (35%) and DPBP(17.7 years). Large scale T. grandis plantation with 16 year rotation had NPV (₦16,581,015.00), BCR (2.04), IRR (29.71%), AEV (₦3,979,443.60ha-1), LEV (₦23,046,894.46ha-1), ROI(104%) and DPBP (15.2 years). Being a male (2.288) had significant positive influence on PFPD, while thewillingness to participate in PFPD increased down the age groups; however this was not statistically significant. Investment in forest plantation development is profitable based on the economic returns indices. However,multiple land use system may be adopted to increase economic returns and reduce the payback period in private forest plantation development.