A comparative financial analysis of selling eucalyptus as construction poles or firewood in Wakiso and Kampala.

Abstract

This study compared the financial profitability and investment viability of selling eucalyptus as construction poles and firewood in selected eucalyptus markets of Bwaise, Nateete, and Nsangi. The research aims to guide stakeholders in optimizing economic returns from eucalyptus cultivation and trade; therefore mixed-methods approach, which includes surveys and interviews in Bwaise, Nateete, and Nsangi markets. The study analyzes product characteristics, price trends, and key factors affecting financial viability, employing qualitative financial metrics like Net Present Value and Benefit Cost Analysis. Results show that the selling of eucalyptus as construction poles and firewood is a highly profitable investment. Traders diversify their business to selling of both construction poles and firewood, which is better than specializing in a single product. However, construction poles generally are more viable and profitable than firewood, yielding a higher NPV than firewood that’s 998471.832 Ugshs for small size, 996419.173 Ugshs for medium, and 987638.025 Ugshs at 10% interest rate, but both product lines are financially viable, especially under lower interest rates. As the interest rates increase, the NPV also decreases (appendices). The primary challenges to financial viability include high capital requirements, vulnerability to adverse weather and climate conditions and complex transportation and logistical challenges. Finally, the study recommends product diversification among traders, facilitating access to affordable financing, developing strategies to mitigate climate and operational risks, and optimizing supply chain logistics essential for enhancing sectors' resilience and profitability.