Indigenous forests and savannas, along with plantation forests, offer numerous benefits to rural communities and society at large. Yet, the role of forests and forestry in contributing to sustainable livelihoods and poverty alleviation are widely debated. However, much of the debate pertains to lessons from the humid tropics, with little consideration of the widespread dry forests and savannas. This paper considers the role of dry forest types, including savannas, using South Africa as a case example. It concludes that a large proportion of the population makes use of forests and the resources from them. These are vital components of local livelihoods, which probably prevent people from slipping into deeper poverty. Moreover, for a measurable proportion, engagement in informal forest activities, as well as the formal forestry sector, has resulted in them being able to move out of poverty. Additionally, the generally dry nature of forests in South Africa, coupled with the high unemployment rate, limit the extent of alternative locally based livelihood options, thereby magnifying the contributions from forests and forest products. The depressing effects of widespread HIV/AIDS on labour availability, economic activities and livelihoods has exacerbated peoples’ dependence on forest products.