Investment Analysis of Medium Scale Private Forest Plantation Development in Oyo State
Oyinlola Abiodun Fasoro *
Department of Social and Environmental Forestry, University of Ibadan, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
Forest and non-forest products are becoming scarce in Nigeria due to insatiable want of the resources by the people. The performance of public sector forest plantation development in Nigeria has fallen short of expectation of various stakeholders, hence, the need for investment in Private Forest Plantation Development (PFPD), fostered towards increasing wood supply and reducing the pressure on natural forest. In this study, investment analysis of medium scale PFPD was investigated to show its feasibility. Measures such as 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) and Discounted Payback Period (DPBP) were used to analyse the cash flow statement of the investment.
The study showed that medium scale of Tectona grandis, Gmelina arborea, with few Terminalia spp. plantation of 20ha with 18 year rotation had NPV of ₦1,504,841.70, BCR of 1.35, IRR of 24.03%, AEV of ₦316,016.76ha-1, LEV of ₦2,186,997.89ha-1, ROI of 35% and DPBP of 17.7years. The results showed that the investment is feasible based on economic returns indices. It is recommended that PFPD should incorporate multiple land use systems and apply appropriate silvicultural techniques in order to maximize the net return.
Keywords: Private investment, cash flow, investors, forest stakeholders, sustainable forest development