Why CSFEP doesn’t start with export markets

Should East Africa prioritise exporting its timber — or building with it at home?

At first glance, the answer seems obvious. Global demand for timber is rising, particularly in Europe and North America, where construction sectors are searching for lower-carbon alternatives to steel and concrete. East Africa has land, labour, and expanding plantation and smallholder resources. Why not supply raw logs into established manufacturing systems in the Global North?

If the goal were simply to maximise carbon substitution as quickly as possible, prioritising exporting timber to places with existing processing infrastructure might seem efficient. Export markets can offer scale, established buyers and, in some cases, predictable revenue streams. 

Recent analysis also suggests that shipping emissions from timber remain relatively small compared to the carbon benefits of using wood in construction.

Yet at the Climate Smart Forest Economy Program (CSFEP), we believe that the starting point of a forest economy matters. What a system optimises for at the beginning shapes everything that follows.

If the ambition is to build regenerative forest economies in East Africa — economies that restore landscapes, strengthen rural livelihoods, build industrial capability and meet pressing domestic needs — then sequencing becomes critical.

The question is not whether export markets have value. There is no doubt that export markets can play an important role in developing a local market, just as imports can. The question is whether they should define the system from the outset — or whether they should grow out of domestic strength. 

The challenge is that global markets often hold far more power than domestic ones – an imbalance that can distort how a local market grows. 

At CSFEP, we believe the priority is to strengthen local markets first. When producers design products for local builders, local climates and local price points, the industry develops around real local needs rather than distant demand. This creates the conditions for a healthier forest economy: one where value is added locally, where smallholder farmers can participate, and where safeguards for forests and water systems can take root alongside industry growth.

Export markets can still play an important role. But when they emerge from a strong domestic foundation, they tend to reward high-value products rather than raw materials. In that sequence, exports become an extension of a healthy local industry — not the force that shapes it.

Argument #1: Local-first value chains serve real local needs

East Africa faces a significant housing deficit driven by rapid population growth and urbanisation. Builders need materials that perform well in local climates, meet local price points, and suit local construction practices.

A Localworks builder at the St. Stephen’s Secondary School in Budondo, Jinja construction site

If producers in East Africa build for the East African housing market, they will focus on scalable, cost-effective products that will perform well against the region’s challenges (including rain, flooding, and termites).

If, on the other hand, producers organise around export demand, they will prioritise the kinds of highly manufactured, uniform, high-cost products that will perform well in Europe or North America. Species selection will reflect the preferences of those markets – rather than local ecological resilience.

Finland offers a useful example. There, cross-laminated timber (CLT) emerged as the natural evolution of Finnish forests, Finnish manufacturing, and Finnish building practices, before becoming a major export product. Because the domestic market was built first, CLT serves local Finnish residents well – while also serving an international market.  

Argument #2: Export-first models create the conditions for extraction

Another concern is that export-first systems, because they reward uniformity and scale, often encourage extractive patterns.

External demand can influence land-use decisions that do not always align with local ecological resilience. For example, international buyers may request familiar species such as eucalyptus. In the right context, eucalyptus can be productive.  But large monoculture eucalyptus groves in water-scarce areas can affect local hydrology – depleting water tables or affecting river flows. 

Export markets also tend to favour large commercial plantations capable of delivering high volumes at consistent specifications. Yet across East Africa, many trees are grown by smallholder farmers. A regenerative forest economy should create viable pathways for these farmers to participate — not sideline them.

There is also the question of where value accumulates. When raw logs are exported to distant factories, most value addition happens elsewhere. Manufacturing wages, industrial know-how, profits and innovation accrue in the importing country. The producing region remains a supplier of commodities rather than a centre of industrial capability.

Mozambique’s timber industry provides a cautionary example. There, significant volumes of timber have been harvested for export to factories abroad with limited domestic processing. Replanting has struggled to keep pace. There is little evidence of widespread job creation, skills development or industrial upgrading within the country.

Argument #3: Export-First Pushes Risk Onto the Most Vulnerable

Raw commodities are especially sensitive to shifts in international demand. By contrast, manufactured products typically carry higher margins and more room to cushion local markets against global, macroeconomic shocks. 

For tree farmers, this matters. A farmer may wait seven to ten years before harvesting. If global prices fall just as trees mature, there is little room to adapt. A price dip can wipe out years of labour.

The impact of the COVID-19 pandemic on Ethiopia’s export-oriented cut-flower sector is a key cautionary tale, showing what can happen when Global South countries’ economies focus on exporting raw commodities to meet Global North demand. As the pandemic spread,  international flights halted and demand collapsed. Overnight, livelihoods were disrupted. 

A product-first strategy does not eliminate risk, but it can diversify it. A portfolio of products serving multiple markets — construction, furniture, joinery, interior finishes — creates more resilience. Developing these products for local markets first, and then layering in export markets, creates a more stable, resilient industry than one that relies on a single export commodity like raw logs.

The Alternative: What a Domestic-First, Resilient Growth Path Looks Like

A domestic-first growth path looks different. It is not anti-trade, but it prioritises building strong local foundations first. This includes investing in processing capacity, developing clear grading and quality standards, strengthening vocational skills, and ensuring that finance supports innovation and value addition — not only extraction. This is critical for the local product market to be developed.

It also requires robust information flows. Growers need data on which species perform best in specific ecological zones. Manufacturers need feedback from builders about material performance. Policymakers need evidence to update building codes and procurement standards. When these feedback loops function well, the system becomes more adaptive and resilient over time.

A subtle bias in expectations

Across Global North countries, many industries grew their export markets only after succeeding domestically – Japan’s car industry, Finland’s CLT industry, or the United States personal computer industry.

Yet in many Global South contexts, sectors are expected to follow a different script. Whether we’re looking at cocoa in Ghana, cashews in Tanzania, flowers in Ethiopia, or timber in Mozambique – in the Global South, we often see  export-led, raw material pathways that leave local processing underdeveloped and farmers exposed to volatility.

UGA Lumber timber mill in Luwero, District

Underneath this difference is a subtle bias:  an assumption that Global North countries are always the best places for complex processing, as well as the best markets to serve. For example, when working with investors, African firms often face the question of when they will expand to Europe or North America. However, European or North American firms rarely face the same early pressure to enter African markets.

This framing assumes that local markets in Africa lack sufficient industrial capacity or purchasing power. But this assumption doesn’t match reality.  In fact, East Africa’s current rapid urbanisation and housing demand represent substantial economic opportunity. Exporting raw products to “better” markets in the Global North is hardly the only route to viability for East African firms. 

But what about the counterarguments?

Nonetheless, it is important to acknowledge practical realities. For one, building domestic manufacturing capacity takes time. It requires coordinated policy, patient finance, skills development, and trust in local materials. For growers seeking reliable buyers, international demand can appear more certain than emerging local industries.

Some also argue that exposure to international quality or environmental standards may strengthen local capabilities. Or, that, under the right conditions, export revenues could be reinvested into processing and replanting.

These arguments deserve serious consideration.

For CSFEP, the question is not whether export markets have a role. It is whether they should set the direction of the system from the beginning — or whether they are most beneficial when layered onto a foundation of domestic demand and local value creation.

What are we optimising for? 

If our ambition is broader than reducing carbon emissions – if our ambition is actually to build regenerative forest economies in East Africa that integrate climate mitigation with livelihoods, biodiversity and industrial development — then sequencing matters.

Biobased house built by Easy Housing in Kampala, Uganda

At CSFEP, we believe East Africa’s forest economy can thrive by prioritising  its domestic market first, then later using export and import as tools in achieving a regenerative forest economy. 

By focusing on building strong, local value chains to process local timber, the region can create a more resilient and equitable system — one that contributes to climate goals while delivering tangible benefits to communities and landscapes.

Export markets can and should play a role. But they should grow out of domestic strength, not replace it.