In 1991, the Ethiopian Government introduced a policy of decentralisation and devolution that resulted in new political and administrative institutions. A federal system of government was introduced, which changed the balance of power in favour of nine newly created regional states (see Figure 1). Each state was based on the different tribal settings in the country and was further divided into Woreda and peasant associations, which became the main administrative units within each state.
Figure 1 Map of Ethiopia showing the nine regional states and two urban administrations (Addis Ababa and Dire Dawa)
After this change, the regional agricultural development bureaus became responsible for the preparation of plans and budgets for the forestry administration in their respective regions. The regional states were also given the power to raise their own revenue and to plan and execute their own development activities in accordance with the overall policies of the federal government. Furthermore, the decentralisation and devolution process did not stop at the regional level. The Woreda (which is the lowest level of formal government within the regions) started to play a more prominent role and, below this, the peasant associations, kebelles, tabias and village councils were given the mandate to develop and enforce bylaws governing the management of natural resources.
At both the regional and federal government level, planning and annual budget preparation starts with an assessment of the economic situation. Amongst other things, this includes an estimation of future revenue. This is particularly important for the forestry administration because, unlike the other government departments, the forestry administration is responsible for the collection of numerous fees, taxes, and royalties associated with the exploitation of state forests. Following this initial assessment, the Federal Government and regional governments follow their own procedures to arrive at a final budget for the forestry administrations under their control.
At the federal level, the first stage of the budget process is to produce an estimate of total expected government revenue. This estimate is produced by the co-ordinating ministries (i.e. the Ministry of Economic Development and Co-operation and the Ministry of Finance) in consultation with the National Bank of Ethiopia. This macro framework is then reviewed and approved by the Prime Minister's Office.
Based on the above information, expenditure budgets are then allocated to the regional and federal governments and are divided into budgets for recurrent and capital expenditure. As part of this process, the Ministry of Finance determines an overall budget ceiling, which is the basis for the submission of budget proposals to each ministry. Once budget proposals have been prepared, negotiated and reviewed by the Ministry of Finance, they are submitted to the Council of Ministers. After the Council of Ministers review the proposals and make their recommendations, the budget proposals are submitted to the Council of PeopleÂ’s Representatives for approval. After they have been approved, the Ministry of Finance announces the budgets for each ministry for the next financial year.
One component of the federal budget is a grant from the Federal Government to the state governments. The allocation of this grant is determined by the Federation Council, which bases their decision on a formula that includes variables such as the population in each state and the capacity of each state to generate their own revenue. The states with less capacity to generate their own revenue are entitled to get a larger allocation of this money.
The state governments follow similar budget planning and preparation procedures to the Federal Government. Regional finance bureaus prepare ceilings for expenditure by the regional bureaus for each sector, which include allocations for capital and recurrent expenditure. This is done after the grant for each state from the Federal Government is announced. The finance bureaus at the zonal and Woreda levels also follow this process at their levels of the administration. The regional finance bureaus then submit their budget proposals to the regional councils for approval. Once the budget proposals have been approved, they are published in the regional Negarit Gazeta.
As part of the budgeting process, the Ministry of Agriculture at the federal level and regional level submits their budget plans and proposals to the Ministry of Finance or the regional finance bureaus for discussion. These proposals have to be defended as part of the review process, and then the Ministry of Finance makes their recommendations to the Council of Ministers through the Prime Minister’s Office. Finally, the Council of Peoples` Representatives approves the final plans and budgets and they are published by the Ministry of Finance. The same procedure is used at the state level, except that these plans are submitted to the regional councils through the regional finance bureaus.
The planning of forestry activities starts at the development centre level, where plans are prepared and submitted to their respective Woredas. Woredas then aggregate these plans and formulate the Woreda plan, which is submitted to zonal agricultural offices. The plans for each zone are then aggregated to form the regional plans that are discussed and finally submitted to the regional councils for approval. In the case of the forestry sector, these plans are prepared by the regional forest conservation and development team in each state, which is one section of the Ministry of Agriculture.
The following tables present some statistics on Federal Government expenditure on the forestry sector in recent years. Table 21 shows total Federal Government expenditure in Ethiopia since 1994 and the budget allocation given to the Ministry of Agriculture. As the table shows, the Ministry of Agriculture accounts for much less than one percent of total Federal Government expenditure in Ethiopia.
Table 21 Total Federal Government expenditure and allocation to the Ministry of Agriculture
|
Year |
Total Federal Government expenditure (in million Birr) |
Allocation of expenditure to Ministry of
Agriculture |
|||
|
Capital expenditure |
Recurrent expenditure |
Total |
(in million Birr) |
(in percent) |
|
|
1994 |
3,156.5 |
5,711.6 |
8,868.1 |
n.a. |
n.a. |
|
1995 |
3,562.5 |
5,894.0 |
9,456.5 |
n.a. |
n.a. |
|
1996 |
4,299.9 |
5,842.8 |
10,142.7 |
25.2 |
0.25 |
|
1997 |
4,265.1 |
7,094.9 |
11,360.0 |
27.5 |
0.24 |
|
1998 |
6,178.9 |
8,771.8 |
14,950.7 |
21.2 |
0.14 |
|
1999 |
n.a. |
n.a. |
n.a. |
28.8 |
n.a. |
|
2000 |
n.a. |
n.a. |
n.a. |
47.0 |
n.a. |
Source: CSA (1999).
Table 22 shows the Federal Government budget allocation to the forestry and wildlife sectors since 1995. This table shows that these two sectors account for about one quarter of the total budget allocation to the Ministry of Agriculture.
Table 22 Federal Government budget allocation to the federal administration for forestry and wildlife resources conservation and development
|
Year |
Forestry budget (in thousand Birr) |
Budget for wildlife resources
conservation and development (in thousand Birr) |
Total (in thousand Birr) |
||
|
Salary |
Operating cost |
Total |
|||
|
1995 |
n.a. |
1,595.6 |
 761.0 |
2,356.6 |
n.a. |
|
1996 |
n.a. |
1,996.4 |
 803.3 |
2,799.7 |
n.a. |
|
1997 |
867.5 |
2,305.5 |
2,119.7 |
4,425.2 |
5,292.7 |
|
1998 |
468.3 |
3,132.4 |
1,337.1 |
4,469.5 |
4,937.8 |
|
1999 |
382.2 |
1,607.3 |
1,841.9 |
3,449.2 |
3,831.4 |
|
2000 |
595.5 |
1,612.6 |
2,023.0 |
3,635.6 |
4,231.1 |
The Federal Government budget allocation to the forestry and wildlife sectors is also shown in Table 23, by source of funds (i.e. foreign assistance and expenditure supported by domestic revenue collection). This table shows that foreign assistance to the sector has declined in recent years, while domestic financing has increased. However, domestic financing has not increased by the amount that foreign assistance has fallen, so the total budget allocation to these sectors has declined overall. (Note, the figures presented in Table 22 and Table 23 differ slightly, due to the different data sources used).
Table 23 Budget allocation to the federal administration for forestry and wildlife resources conservation and development, by source of funds
|
Year |
Budget allocated from foreign assistance (in thousand Birr) |
Budget allocated from Central Treasury (in thousand Birr) |
Total (in thousand Birr) |
|
1995 |
7,383.5 |
2,878.4 |
10,261.9 |
|
1996 |
1,209.0 |
2,357.1 |
3,566.1 |
|
1997 |
1,738.2 |
3,989.1 |
5,727.3 |
|
1998 |
953.6 |
5,265.5 |
6,219.1 |
|
1999 |
n.a. |
4,145.1 |
n.a. |
Table 24 shows the forestry and wildlife budget allocation (or the level of the Federal Government grant) from the Federal Government to the state administrations in recent years. As the table shows, the overall level of grant appears to have increased over time. In addition, the grant for recurrent expenditure is several times larger than the grant for capital expenditure.
The capital budgets of the state governments are fully covered by the Federal Government grant and the states may not add to this. However, the recurrent budgets of the state governments are only partially covered by the Federal Government grant. States can supplement their recurrent budgets with the revenue that they collect (after this has been approved by their respective councils). Unfortunately, information about the amount of money that is collected by the states is not readily available and the amount that is used to supplement their budgets for forestry is not known.
Table 24 Budget allocation from the Federal Government to the state administrations for forestry and wildlife
|
Region |
Capital budget |
Recurrent budget |
|||||
|
1995 |
1996 |
1997 |
1998 |
1999 |
1997 |
1998 |
|
|
Addis
Ababa (Region 14) |
n.a. |
394.7 |
n.a. |
2,762.0 |
2,088.0 |
895.4 |
968.4 |
|
Afar |
1,994.6 |
915.4 |
930.0 |
2,168.5 |
838.07 |
1942.8 |
2,539.8 |
|
Amhara |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
81,184.6 |
105,727.0 |
|
Benshangul |
175.0 |
270.0 |
864.0 |
n.a. |
547.5 |
1,625.7 |
1,818.0 |
|
Dire
Dawa |
418.7 |
888.0 |
170.0 |
n.a. |
90.10 |
2,615.1 |
3,035.3 |
|
Gambella |
750.0 |
n.a. |
3,658.3 |
3,936.5 |
n.a. |
1,848.5 |
1,983.0 |
|
Harari |
55.1 |
142.6 |
n.a. |
n.a. |
n.a. |
1,352.1 |
1,830.7 |
|
Oromiya |
4,398.5 |
4,491.8 |
4,107.0 |
1,855.1 |
2,456.6 |
n.a. |
n.a. |
|
Somali< o:p> |
1,270.0 |
956.7 |
1,281.7 |
804.0 |
92.6 |
1,869.2 |
3,010.2 |
|
Southern
Region (SNNP) |
162.5 |
5,713.2 |
981.8 |
2,850.2 |
n.a. |
5,770.7 |
4,971.1 |
|
Tigray |
1,321.0 |
n.a. |
20,100.5 |
21,461.4 |
n.a. |
20,100.5 |
21,461.4 |
|
Total |
10,545.4 |
13,772.4 |
32,093.3 |
35,837.7 |
6,112.9 |
119,204.6 |
147,344.9 |
Note: all figures are in
thousand Birr.
As already noted, all forest revenue collected in the states is deposited in the Regional Treasury, unless approval has been given to use some of this money for reinvestment in the sector. In most states, the forest revenue that is collected is used as a general source of revenue for the state governments and is not used for the development of the sector. However, in Oromiya Regional State, the forestry administration is allowed to retain and utilise some of the forest revenue that is collected for reinvestment in the sector. It is believed that this is the only state where this is allowed at the moment.
Table 25 shows the amount of forest revenue that has been retained for reinvestment in the forestry sector in Oromiya Regional State and the amount of additional money that is made available to the forestry administration from the state government budget. As the table shows, the amount of forest revenue retained by the administration only covers about half of the total government expenditure on forestry in the state. Most of the additional budget for forest conservation and development is used for forest extension. It is believed that most of the budget allocations in the other state governments are also used mainly for this purpose.
Table 25 Retention of forest revenue and state budget allocated to forestry in Oromiya Regional State
|
Year |
Retained forest revenue |
State budget allocated to forestry |
|||
|
Forest protection |
Forest extension |
National parks |
Total |
||
|
1994 |
2,916 |
n.a. |
n.a. |
n.a. |
n.a. |
|
1995 |
5,638 |
n.a. |
n.a. |
n.a. |
n.a. |
|
1996 |
4,391 |
924 |
4,155 |
n.a. |
5,079 |
|
1997 |
3,399 |
824 |
4,063 |
192 |
5,079 |
|
1998 |
4,507 |
1,116 |
2,790 |
302 |
4,208 |
|
1999 |
5,845 |
1,060 |
2,650 |
302 |
4,012 |
|
2000 |
4,386 |
650 |
1,785 |
211 |
2,646 |
|
Average |
4,506 |
915 |
3,089 |
252 |
4,205 |
Note: all figures are in
thousand Birr.
Other revenue retention schemes that are currently being developed include the following:
Environmental Protection Authority. The Environmental Protection Authority supports environmental and conservation activities at the local level and has initiated non-profit funding mechanism. This innovative scheme to raise revenue from domestic sources has been developed because the prospects for external assistance in this area are not encouraging
Bale Zone Development and Conservation Fund. A community development and conservation fund has been started to support sustainable natural resource use in the Bale Zone of Oromiya Regional State. The fund amounts to US$ 135,898 and is disbursed in form of small loans or grants to support small-scale development projects in the zone. At the moment the fund is largely supported by donors, but the fund should become self-financing at some pint in the future.
Shashemene Munessa Forest Development Enterprise. The Shashemene Munessa Forest Development Enterprise is allowed to retain and use the forest revenue it generates (see below).
Menagesha Suba. One final case worth mentioning is the Menagesha Suba Forest Development and Conservation Centre. This centre operates at the federal level and is supervised by the Federal Ministry of Agriculture. In the year 2001, the centre will be allowed to use 1.6 million Birr of the revenue that they expect to collect. Amongst other things, this will be used for the development and implementation of participatory forest management practices.
The Ministry of Education, Ministry of Agriculture and Institute of Biodiversity, Conservation and Research account for most of the expenditure on forestry by other government institutions. Expenditure by all three of these institutions has been supported to a large extent by foreign assistance.
Forestry training is the responsibility of the Ministry of Education, which has received a lot of support for this activity from SIDA since 1978. The development of a capacity to train foresters in Ethiopia started with courses at diploma level and has now progressed to training foresters at the MSc. Level. Forestry courses are held at Southern University and part of the support to the university is collaboration with universities in Sweden. A summary of capital expenditure on forestry training in recent years is given in Table 26.
Table 26 Capital expenditure on forestry training at Southern UniversityÂ
|
Year |
Government contribution |
Foreign assistance |
Total |
|
1997 |
593.6 |
3,362.0 |
3,962.0 |
|
1998 |
60.0 |
340.0 |
400.0 |
|
1999 |
4,000.0 |
12,950.0 |
16,950.0 |
Source: MEDAC, 2000. Note:
all figures are in thousand Birr.
The Institute of Biodiversity, Conservation and Research also works in the forestry sector. The institute is supported mainly by foreign assistance and recent capital expenditure at the institute is shown in Table 27 below. These figures include domestic funding and foreign assistance and show that foreign assistance accounts for over 90% of capital expenditure at the institute. The institute is just about to start a forest genetic resources conservation project, with a technical and financial co-operation from Gesellschaft f�hnische Zusammenarbeit (GTZ). This project will receive funding from GTZ of over 12 million Birr for three years between 2001 and 2004.
Table 27 Capital expenditure on biodiversity at the Institute of Biodiversity, Conservation and Research
|
Year |
Government contribution |
Foreign assistance |
Total |
|
1997 |
782.5 |
8,510.3 |
9,292.8 |
|
1998 |
690.1 |
8,715.0 |
9,405.1 |
|
1999 |
738.5 |
8,139.2 |
8,877.7 |
Source: MEDAC, 2000. Note:
all figures are in thousand Birr.
The Woody Biomass Inventory and Strategic Planning Project was established with the objective of collecting and analysing valuable baseline information about the status and condition of forests in the country. The project is implemented by the Ministry of Agriculture and is funded by the Ethiopian Government with loans from the World Bank. The project will run for a period of 10 years in two phases. The first phase of the project has been completed and the Ministry of Agriculture is still implementing the second phase of the project. The budget for the project is summarised in table Table 28 below.
Table 28 Budget for the Woody Biomass Inventory and Strategic Planning Project
|
Funding source |
1998 |
1999 |
2000 |
2001 |
2002 |
|
Government contribution |
3,893.6 |
4,742.3 |
4,742.3 |
4,742.3 |
2,215.1 |
|
Foreign assistance (World Bank) |
7,935.6 |
9,093.9 |
4,877.1 |
3,239.3 |
3,239.3 |
|
Total |
11,829.3 |
13,836.3 |
9,619.5 |
7,981.7 |
5,454.5 |
Note: all figures are in
thousand Birr.
Information is only readily available about one state forest enterprise and that is the Munnessa Shashemene Forest Development Enterprise in Oromiya Regional State. The objective of the enterprise is to ensure the sustainable development of forest resources through the generation of forest revenue and the correct use of this revenue to ensure that the forest resource is protected and well managed.
As already noted above, this enterprise uses all of the revenue that it generates for forestry development. In 1998, the enterprise generated Birr 3,405,463 and spent Birr 4,032,036. The enterprise could spend more than they collected because they had a surplus of revenue remaining from the previous year, which was carried-over. In 1999, the enterprise generated Birr 5,509,726 in revenue and spent Birr 4,292,340. Most of the money earned by the enterprise is spent on silviculture and forest management.
The major limitation of the enterprise is that land for the establishment of forest plantations is not available and the forest area can not be expanded. If land were available, then the enterprise would probably expand and could be used as a model of sustainable forest management practices. The enterprise is successful, but the adoption of methods used by the enterprise will require changes in attitudes of local investors towards forestry development and conservation.
The Ministry of Agriculture is currently developing policy and legislation that will support the greater involvement of the private-sector in forest conservation and development. In discussions about this subject, there have been a number of proposals in the past to issue long-term leases for forest management and to reduce the taxes paid on forest land. However, these proposals have never been implemented. Furthermore, the forestry sector has not been asked for advice on this subject.
Apart from these proposals, the only two fiscal incentives that affect the forestry sector are as follows:
Low taxes on forest product imports. Many people import lumber and other forest products into Ethiopia. Unlike most other products, these imports are not taxed. This policy has been implemented to reduce the pressure to harvest indigenous trees.
Bale Zone Development and Conservation Fund. As already noted above, the Bale Zone Development and Conservation Fund makes loans and grants to support small-scale development projects. At the moment this is mainly a donor project, which focuses on a few selected pilot communities. In the long-run, the objective of the fund is to promote sustainable natural resource use including joint forest management. In addition to forest management, the fund also supports improved agricultural practices, the development of agroforestry techniques and improved harvesting and marketing of non-timber forest products. The fund will also to be used to develop small-scale tourist facilities in the future.
