Analysis Of Trends In Forest Charges And Government Expenditure On Forestry In Africa A Thematic Study

ABSTRACT

This work is one of the studies commissioned by the EC-FAO Partnership programme on sustainable forest management in African ACP countries to investigate the impacts of fiscal policies on sustainable forest management in Africa. Its main purpose is to evaluate in quantitative terms the forestry fiscal policies in Africa, by examining the factors that might explain the different levels of charge collection and expenditure on forestry in different countries in Africa.

Seventeen countries were selected out of the 28 that submitted country reports for the study. These seventeen countries were selected on the basis that their reports contained adequate data on forest revenue, forest charges and expenditure within the specified period of time (1990-2000). Data for industrial roundwood production for the period of time under consideration in the selected African countries were obtained from FAOSTAT- the FAO database. While data on the Gross Domestic Product (GDP), GDP deflator and Exchange rates of the selected countries were obtained from the International Monetary Fund’s (IMF) and World Bank’s websites. Other information sources include FAO’s State of the World Forests (2001), and some other relevant literature.

All the countries investigated with the exception of Côte d’Ivoire (-1%), Ghana (-2%), and Madagascar (-10%), recorded increase in their industrial roundwood production. The annual changes in real prices of forest charges is lower compared to the changes in current prices in all the countries studied. However, forest prices are worst hit by inflation effect in Sudan, Ghana, Nigeria, Tanzania, and Malawi which recorded 73%, 34%, 30%, 29% and 25% differences respectively between the average annual changes in their current and real forest charges within the studied period of time. All the countries recorded less than 10% increase in their nominal forest charges with the exception of Ethiopia, Gambia, Ghana, Sudan and Tanzania, which had more than 20% increase in their nominal forest charges during the period of study. Only Ghana and Tanzania can be said to review their forest charges once in almost every two years. But more importantly, only three countries: Gambia, Ghana and Guinea representing 17.65% of the selected countries, recorded increased changes in their charges in real terms throughout the period of study. All the countries studied recorded increased changes in their current revenue over the studied period of time, except Burkina Faso which did not record any change in its current revenue, and then Côte d’Ivoire and Kenya which had negative average annual changes of -9% and –19% respectively in their current revenue. Only 58.82 % of the countries improved their efficiency of revenue collection. Furthermore 58.82% collected on the average 10% or less of the revenue expected from industrial roundwood production.

Econometric analysis revealed that 1% increase in the forest revenue collected will lead to 0.53% increase in domestic expenditure for forestry development in the selected African countries; also 1% increase in population will bring about 0.58% increase in government expenditure to forestry development and 1% increase in the GDP will lead to 0.18% increase in domestic expenditure while establishment of forest funds will improve forest revenue-government expenditure relationship by only 0.04%. However, donor funding has an inverse relationship with domestic expenditure on forestry in Africa. Thus 1% increase in foreign funding will bring a corresponding 0.05% decrease in domestic expenditure for forestry development in the selected African countries. A similar inverse relationship exists between the forest cover of the African countries studied and government expenditure on forestry development. Therefore, for every 1% decrease in forest cover the government in the selected African countries studied will increase expenditure on forestry by 0.20%.

The greatest need for sustainable forest management in Africa within the context of fiscal policies, centres on strengthening the forestry departments of African countries as well as building a strong inter sectorial linkages with all the other sectors of the economy. Moreover, setting and collection of appropriate forest fees will require as much political as economic or technical input.