STATE OF THE WORLD's FORESTs 2003 Recent trends in fiscal policies in the forest sector in africa A s interest in sustainable forest It concludes by suggesting how fiscal policies in anagement has grown, so ha as the the sector might be improved and offers importance of finding ways to finance it. Indeed, comments on the broader debate on financing one of the main points of agreement at various sustainable forest management. international meetings on forestry has been the need for support for it(UN, 2000). Little progress PUBLIC EXPENDITURE ON FORESTRY has been observed, however, and considerable Public expenditure on forestry is likely to be the differences of opinion remain as to how funding driving force for implementing sustainable forest can management in Africa. Although public funding The present chapter is based on 32 countr supports the management of protected areas and reports on forest finance produced by African a few small production forests, most public national experts between 2000 and 2002, with the expenditure is used to monitor and control assistance of a joint European Commission/FAo private sector operations. It is in this latter project on sustainable forest management in regard that an increase is particularly nee Africa(FAO, 2001, 2002a)(see Box for list of forest management is to improve on the if countries covered ). It presents recent trends in continent public expenditure on forestry and revenue Public expenditure on forestry usually comes collection from the sector, and then describes from two main sources: domestic financing, some recent innovations in related fiscal policies. including government revenue from taxes and Countries covered in the fao study on forest finance in Africa Guinea Burkina Faso Central African Republic South africa Chad Madagascar Sudan amoros Togo Cote d lvoire Mali Uganda Democratic Republic of the Congo Mauritius United Republic of Tanzania Gambia Niger Zimbabwe Ghana
2003 FORESTS S’WORLD THE OF STATE 108 in trends Recent the in policies fiscal Africa in sector forest forest sustainable in interest As the has so, grown has management ,Indeed. it finance to ways finding of importance various at agreement of points main the of one the been has forestry on meetings international progress Little). 2000, UN (it for support for need considerable and, however, observed been has funding how to as remain opinion of differences .obtained be can forestry for country 32 on based is chapter present The African by produced finance forest on reports the with, 2002 and 2000 between experts national FAO/Commission European joint a of assistance in management forest sustainable on project of list for Box see) (2002a, 2001, FAO (Africa in trends recent presents It). covered countries revenue and forestry on expenditure public describes then and, sector the from collection .policies fiscal related in innovations recent some Benin Faso Burkina Burundi Republic African Central Chad Comoros Ivoire’d Côte Congo the of Republic Democratic Ethiopia Gambia Ghana Africa in finance forest on study FAO the in covered Countries Guinea Kenya Lesotho Liberia Madagascar Malawi Mali Mauritius Namibia Niger Nigeria Senegal Seychelles Leone Sierra Africa South Sudan Togo Uganda Tanzania of Republic United Zambia Zimbabwe in policies fiscal how suggesting by concludes It offers and improved be might sector the financing on debate broader the on comments .management forest sustainable FORESTRY ON EXPENDITURE PUBLIC the be to likely is forestry on expenditure Public forest sustainable implementing for force driving funding public Although. Africa in management and areas protected of management the supports public most, forests production small few a control and monitor to used is expenditure latter this in is It. operations sector private if needed particularly is increase an that regard the on improve to is management forest .continent comes usually forestry on expenditure Public ,financing domestic: sources main two from and taxes from revenue government including
PART II SELECTED CURRENT ISSUES IN THE FOREST SECTOR duties, as well as government borrowing; and, reports, the average total public expenditure on in the case of developing countries, forestry in 1999 was USS0.82 per hectare(FAO international financing through grants and 2002a). However, international financing loans. In addition, an important component of accounted for about 45 percent, making the domestic financing in some countries is revenue average level of domestic financing only collected in the form of charges, fees and levies. US$0. 45 per hectare Figure 7 shows total public expenditure on Trends in total public expenditure on forestry forestry per hectare in countries where Faced with many demands for public services, information was available. The countries with most governments assign a low priority to the highest levels of public expenditure on financing of forestry. In fact, several country forestry per hectare were those with relatively reports noted that public expenditure on small forested areas(Lesotho and Burundi). forestry accounted for less than 1 percent of the Others with high levels of public expenditure total, and it seems likely that this is the case Ethiopia, Cote d'Ivoire an throughout Africa. On the basis of 24 country Ghana. In the Niger, the high expenditure is Public expenditure on forestry per hectare in African countries, 1999 - Chad Central African Republic Gambia.43 1.54 5.49 Ethiopia Liberia 0.04 Cote d'lvoire /Burkina Fa Kenya Democratic Republic 14.76 Rwanda Malawi Madagascar sector in USS per hectare: Zimbabwe hore than USS2/ha 4567 Lesotho ■USs1-2/ha less than USSl/ha
109 SECTOR FOREST THE IN ISSUES CURRENT SELECTED II PART ,and; borrowing government as well as, duties ,countries developing of case the in and grants through financing international of component important an, addition In. loans revenue is countries some in financing domestic .levies and fees, charges of form the in collected forestry on expenditure public total in Trends ,services public for demands many with Faced to priority low a assign governments most country several, fact In. forestry of financing on expenditure public that noted reports the of percent 1 than less for accounted forestry case the is this that likely seems it and, total country 24 of basis the On. Africa throughout on expenditure public total average the, reports ,FAO (hectare per 82.0$US was 1999 in forestry financing international, However). 2002a the making, percent 45 about for accounted only financing domestic of level average .hectare per 45.0$US on expenditure public total shows 7 Figure where countries in hectare per forestry with countries The. available was information on expenditure public of levels highest the relatively with those were hectare per forestry .(Burundi and Lesotho (areas forested small expenditure public of levels high with Others and Ivoire’d Côte, Ethiopia, Niger the included is expenditure high the, Niger the In. Ghana 7 FIGURE 1999, countries African in hectare per forestry on expenditure Public 16.2 Senegal Gambia 43.1 Guinea 30.2 Liberia 10.2 70.5 Ivoire’d Côte 94.4 Ghana 64.0 Faso Burkina 12.1 Mali 54.1 Nigeria 56.5 Niger Chad 35.0 04.0 Republic African Central 01.0 Republic Democratic Congo the of 66.0 Namibia Lesotho 67.45 18.0 Zimbabwe 56.1 Malawi 76.14 Rwanda 01.1 Tanzania of Republic United Madagascar 99.0 88.0 Uganda Kenya 08.1 Ethiopia 49.5 government of level Average forest the on expenditure :hectare per$ US in sector ha/2$US than more ha/2–$1$US ha/1$US than less
110 STATE OF THE WORLDS FORESTS 2003 explained by high levels of international up with inflation, so that in real terms total public financing, but this is not the case in Ethiopia expenditure on forestry grew in only five and Cote d'Ivoire. In general, there is little correlation between total public expenditure on forestry and the level of international Trends in international fi financing Further details about the sources of financing About half the countries in the study also for public expenditure on forestry in Africa are presented information about recent trends in total given in Table 12. Although this table shows a publicexpenditure on forestry As Table 11 shows, wide variation in international financing among it has increased in all countries except two countries countries tend to fall into three However, increases in most countries failed to keep categories A few countries with relatively large and well-developed forest sectors have high levels of public expenditure on forestry and TABLE 11 relatively low levels of int vernation Trends in total public expenditure on forestry financing(e.g. Cote d'lvoire and Ethiopia) in selected African countries A few more countries have quite high levels of public expenditure on forestry but have Average financing as well (e.g. Madagascar, Mali and (%) the United Republic of Tanzania) Most countries have generally low levels of At current prices At constant prices public expenditure on forestry with Burkina Faso 1996-1999 proportionately high levels of international Burundi 1990-2000 financing. In most, the forest sector is not a of the market e 1996-2000 forests have enormous value for subsistence 1991-2000 and for social and environmental benefit Cote d'lvoire These priorities are generally reflected in the 1997-1999 es of project and programme that Gambia 1995-2000 international agencies tend to finance The average contribution of international Ghana 1990-1999 financing to total public expenditure on forestry in 1999 was 41 percent. On the basis of limited 1990-1999 information about trends in international financing since 1990, it appears that this figure 1996-2000+6 has varied by an average of 35 to 40 percent over the past decade and that it declined from a 1991-1999 peak of US$132 million in 1995 to US$110 1993-1999 million in 1999. a fall consistent with broader 1990-1999 global trends, as reported by Madhvani(1999) 1996-2000 +25 and the Organisation for Economic Co- operation and Development(OECD, 2000) Notes: The figures for Ethiopia are an underestimate because the most penditure figures do not include all the states. The figures for the Central African public, Ghana and Malawi exclude expenditure supported by international financing Activities supported by public expenditure on The figures for Nigeria include estimates of spending on forestry by State forest forestry Ministrations, based on the country report plus information about State budgets in Nigeria(IMF, 2000). An important aspect of public expenditure, in
2003 FORESTS S’WORLD THE OF STATE 110 international of levels high by explained Ethiopia in case the not is this but, financing little is there, general In. Ivoire’d Côte and expenditure public total between correlation international of level the and forestry on .financing also study the in countries the half About total in trends recent about information presented ,shows 11 Table As. forestry on expenditure public .two except countries all in increased has it keep to failed countries most in increases, However public total terms real in that so, inflation with up five only in grew forestry on expenditure .countries financing international in Trends financing of sources the about details Further are Africa in forestry on expenditure public for a shows table this Although. 12 Table in given among financing international in variation wide three into fall to tend countries, countries .categories and large relatively with countries few A• high have sectors forest developed-well and forestry on expenditure public of levels international of levels low relatively .(Ethiopia and Ivoire’d Côte. g.e (financing levels high quite have countries more few A• have but forestry on expenditure public of international of levels higher much and Mali, Madagascar. g.e (well as financing .(Tanzania of Republic United the of levels low generally have countries Most• with forestry on expenditure public international of levels high proportionately a not is sector forest the, most In. financing although, economy market the of part major subsistence for value enormous have forests .benefits environmental and social for and the in reflected generally are priorities These that programme and project of types .finance to tend agencies international international of contribution average The forestry on expenditure public total to financing limited of basis the On. percent 41 was 1999 in international in trends about information figure this that appears it, 1990 since financing percent 40 to 35 of average an by varied has a from declined it that and decade past the over 110$US to 1995 in million 132$US of peak broader with consistent fall a, 1999 in million (1999 (Madhvani by reported as, trends global .(2000, OECD (Development and operationCo Economic for Organisation the and on expenditure public by supported Activities forestry in, expenditure public of aspect important An contribution the is, amount total its to addition total in increase annual Average period Time Country forestry on expenditure public period time specified the over (%) prices constant At prices current At 11 - 6 - 1999–1996 Faso Burkina 5 - 4 + 2000–1990 Burundi 11 - 8 + 2000–1996 Republic African Central 1 + 10 + 2000–1991 Chad 4 - 5 + 1999–1990 Ivoire’d Côte 5 - 3 + 1999–1997 Ethiopia 3 - 1 + 2000–1995 Gambia 8 + 37 + 1999–1990 Ghana 18 - 7 - 2000–1995 Kenya 4 - 26 + 1999–1990 Malawi 6 + 16 + 1999–1992 Mali 3 - 6 + 2000–1996 Mauritius 1 + 8 + 1999–1991 Niger 18 - 16 + 1999–1993 Nigeria 0 6 + 1999–1990 Senegal 25 + 59 + 2000–1996 Zimbabwe .2002a, 2001, FAO: Source recent most the because underestimate an are Ethiopia for figures The: Notes African Central the for figures The. states the all include not do figures expenditure .financing international by supported expenditure exclude Malawi and Ghana, Republic forest State by forestry on spending of estimates include Nigeria for figures The in budgets State about information plus report country the on based, administrations .(2000, IMF (Nigeria 11 TABLE forestry on expenditure public total in Trends countries African selected in
PART II SELECTED CURRENT ISSUES IN THE FOREST SECTOR 111 it makes to sustainable forest management. than to investment(86 percent in 1999) Based on information provided by 17 countries, Most current expenditure covers staff costs the following general observations can be made. About half the countries reported that these Most public expenditure from domestic costs accounted for more than 70 percent of financing goes to current expenditure rather TABLE 12 Sources of public expenditure in the forest sector in selected African countries, 1999 Country Forest revenue Total public expenditure Sources of funds SUS000F Externa Forest xternal financing 2328 Burundi 193 1198 Central African Republ 1030 na Chad 3960 4431 41561 7566 40538 Democratic Republic of the Congo 03 1277 0 15 Ghana 12559 31294 <4 7362 8551 1054 18461 10 119 7317 Madagascar 2734 4385 7255 11641 3992 Mali 321 4830 5603 5603 Namibia 2548 2787 5335 2572 8241 1579 2835 10578 13413 Uganda 2386 United Republic of Tanzan 2763 31773 39340 Zimbabwe 908 2132 1254 3386 27 otes: Although figures were not available it should be noted that both Ghana and Malawi receive significant levels of external financing for the forest sector. It hould also be noted that intermational financing might be higher than shown because these figures may not include support to forestry under more general rural development and environmental projects in some countries
111 SECTOR FOREST THE IN ISSUES CURRENT SELECTED II PART .management forest sustainable to makes it ,countries 17 by provided information on Based .made be can observations general following the domestic from expenditure public Most• rather expenditure current to goes financing .(1999 in percent 86 (investment to than .costs staff covers expenditure current Most• these that reported countries the half About of percent 70 than more for accounted costs .total the funds of Sources expenditure public Total revenue Forest Country (%) a)000’US($ External Government Forest Total External Domestic (net (revenue financing financing 51 31 17 530 4 328 2 201 2 780 Faso Burkina 86 10 4 391 1 198 1 193 50 Burundi .a.n. a.n 541 030 1. a.n 030 1 566 5 Republic African Central 89 9 1 431 4 960 3 471 60 Chad 19 21 -103 538 40 566 7 971 32 561 41 Ivoire’d Côte 0 37 63 277 1 0 277 1 803 Congo the of Republic Democratic 15 76 9 209 25 865 3 345 21 283 2 Ethiopia 65 2 33 686 445 242 225 Gambia .a.n. a.n 40 < 294 31. a.n 294 31 559 12 Ghana 54 41 6 913 15 551 8 362 7 902 Guinea 6 84 10 461 18 054 1 407 17 845 1 Kenya 19 75 7 639 119 521 44 Lesotho 0 58 42 317 7 0 317 7 100 3 Liberia 62 14 23 641 11 255 7 385 4 734 2 Madagascar .a.n. a.n 3 < 992 3. a.n 992 3 110 Malawi 67 31 2 726 14 896 9 830 4 321 Mali 0 86 14 603 5 0 603 5 770 Mauritius 52 46 1 335 5 787 2 548 2 68 Namibia 90 6 5 385 7 612 6 773 351 Niger 40 48 12 821 20 241 8 580 12 572 2 Nigeria 79 9 12 413 13 578 10 835 2 579 1 Senegal 65 14 21 668 3 386 2 282 1 763 Uganda 81 12 7 340 39 773 31 567 7 763 2 Tanzania of Republic United 37 36 27 386 3 254 1 132 2 908 Zimbabwe .2002a, 2001, FAO: Source .available not. = a.n a .rates exchange 1999 At It. sector forest the for financing external of levels significant receive Malawi and Ghana both that noted be should it, available not were figures Although: Notes rural general more under forestry to support include not may figures these because shown than higher be might financing international that noted be also should .countries some in projects environmental and development 12 TABLE 1999, countries African selected in sector forest the in expenditure public of Sources
112 STATE OF THE WORLDS FORESTS 2003 In contrast, nearly all expenditure supported products, non-wood forest products by international financing was spent on (NWFPs)and forest services investment(73 percent in 1999), mostly or Forest charges are reviewed every three to relatively small and specific areas four years on average, but four countries Only five countries reported investment had not reviewed their charges since 1990 programmes supported by domestic Since 1990, charges had increased by more financing of more than USSI million per than the rate of inflation in only four of the year in the forest sector. Given that public expenditure covers a wide Governments set most forest charges by range of activities in forestry, most countries using market-based formulae or by could not easily identify how much was consulting with interested parties. When devoted to sustainable forest management. Only market-based methods have been used community forestry and protected area forest charges have tended to increase. management were distinguished. The most consultation, often with the forest industry ommonly reported areas for investment were has tended to restrict increases projects related to infrastructure and to Of the 22 countries that provided adequate reforestation for community forestry, data on the total revenue collected 17 had commercial forestry and desertification increased it since 1990, although only 13 control had done so by more than the rate of inflation. Given that forest charges generally Revenue collection fell over the period, most countries have Where forests are owned by the State, it has become more efficient in revenue collection been suggested that one way to increase public (O.L. Ajewole, in preparation) expenditure is to increase forest charges and The average revenue collected per cubic metre revenue collection However, a number of was calculated by dividing total revenue studies have shown that the forest revenue collected by total production Using total collected is low in many countries(FAO, 1983; roundwood production, the average revenue Repetto and Gillis, 1988 Grut, Gray and egli, collected in Africa in 1999 was USS019 per cubic 91). Low forest revenue not only has a metre. However, excluding woodfuel negative impact on total government revenue production, the figure is US$2. 42 per cubic and expenditure, but also sends incorrect pricemetre signals to the market about the value of forests These results show little improvement in this and wood. Such messages are damaging to area Forest charges remain low, complicated sustainable forest management in that low and difficult to collect Countries suggested a prices can result in overharvesting and number of reasons for this, including staff undervaluing of the resource, both of which shortages, poorly motivated staff, infrequent ontribute to deforestation and forest revision of charges and poor governance degradation. However, in some cases, low revenue collection Analysis of the data from Africa reveals the is a deliberate policy of governments that want ollowing to subsidize wood consumption-in the form of Forest charges are complicated and woodfuel, for example -for social reasons duplicated in many countries. If general taxes and levies are included, it is quite NEW FISCAL ARRANGEMENTS common for producers to pay more than ten Given the limitations of public finances, many different taxes and charges African countries are attempting ne Most countries levy charges on several types innovative ways of drawing or retaining of forest output from among, for exan finance. The most notable of these are a move woodfuel, industrial roundwood, processed towards greater decentralization and financial
2003 FORESTS S’WORLD THE OF STATE 112 supported expenditure all nearly, contrast In• on spent was financing international by on mostly), 1999 in percent 73 (investment .areas specific and small relatively investment reported countries five Only• domestic by supported programmes per million 1$US than more of financing .sector forest the in year wide a covers expenditure public that Given countries most, forestry in activities of range was much how identify easily not could Only. management forest sustainable to devoted area protected and forestry community most The. distinguished were management were investment for areas reported commonly to and infrastructure to related projects ,forestry community for reforestation desertification and forestry commercial .control collection Revenue has it, State the by owned are forests Where public increase to way one that suggested been and charges forest increase to is expenditure of number a, However. collection revenue revenue forest the that shown have studies ;1983, FAO (countries many in low is collected ,Egli and Gray, Grut; 1988, Gillis and Repetto a has only not revenue forest Low). 1991 revenue government total on impact negative price incorrect sends also but, expenditure and forests of value the about market the to signals to damaging are messages Such. wood and low that in management forest sustainable and overharvesting in result can prices which of both, resource the of undervaluing forest and deforestation to contribute .degradation the reveals Africa from data the of Analysis .following and complicated are charges Forest• general If. countries many in duplicated quite is it, included are levies and taxes ten than more pay to producers for common .charges and taxes different types several on charges levy countries Most• ,example for, among from output forest of processed, roundwood industrial, woodfuel products forest wood-non, products .services forest and) NWFPs( to three every reviewed are charges Forest• countries four but, average on years four .1990 since charges their reviewed not had more by increased had charges, 1990 Since the of four only in inflation of rate the than .studied countries by charges forest most set Governments• by or formulae based-market using When. parties interested with consulting ,used been have methods based-market .increase to tended have charges forest ,industry forest the with often, Consultation .increases restrict to tended has adequate provided that countries 22 the Of• had 17, collected revenue total the on data 13 only although, 1990 since it increased of rate the than more by so done had generally charges forest that Given. inflation have countries most, period the over fell collection revenue in efficient more become .(preparation in, Ajewole. I.O( metre cubic per collected revenue average The revenue total dividing by calculated was total Using. production total by collected revenue average the, production roundwood cubic per 19.0$US was 1999 in Africa in collected woodfuel excluding, However. metre cubic per 42.2$US is figure the, production .metre this in improvement little show results These complicated, low remain charges Forest. area a suggested Countries. collect to difficult and staff including, this for reasons of number infrequent, staff motivated poorly, shortages .governance poor and charges of revision collection revenue low, cases some in, However want that governments of policy deliberate a is of form the in – consumption wood subsidize to .reasons social for – example for, woodfuel ARRANGEMENTS FISCAL NEW many, finances public of limitations the Given and new attempting are countries African retaining or drawing of ways innovative move a are these of notable most The. finance financial and decentralization greater towards