EXECUTIVE SUMMARY
This report describes the relatively straightforward forest revenue system currently used in Lesotho. Lesotho has 12,000 hectares of forest plantations (State Forest Reserves), which are managed by the government. Forest charges are only levied on the production of roundwood from these forests and there are no other forest charges on any other production or trade in forest products. The relatively small area of natural forest in Lesotho is under the control of traditional authorities and falls outside the revenue system.
The first part of the report outlines the charges for roundwood production. It describes how roundwood is sold in five different ways, namely as; headloads; standing trees; felled trees; stacked fuelwood; and poles. Lesotho imports forest products from South Africa and VAT is charged on the value of these imports as they enter the country. Lesotho does not export any forest products and there are not, anyway, any charges trade in on forest products.
Section 3 of the report gives a detailed account of the administration of the forest revenue system. This section outlines the process used to set and collect forest charges, Forest charges are determined using a tariffing system and this is explained here. This section also describes some of the legal instruments underlying the forest revenue system (e.g. the operation of the Forestry Fund, as described in the 1998 Forestry Act). It also presents a detailed description of the standard government procedure used to collect revenue and credit such money to the Government’s bank accounts.
Sections 4 and 5 give some historical information about total revenue collection and expenditure. Up until 14th December 2000, a total of M 985,655 has been collected from forest charges. Sales costs (e.g. the cost of felling and extracting roundwood for sale) are credited to the Forestry Fund. All other forest revenues collected are divided as follows: 80 percent into the Forestry Fund and 20 percent into a Woodlot Community Account. The Forestry Division’s budget is based on an annual workplan and is submitted to the Ministry of Finance as part of a larger departmental budget. Currently, the recurrent budget for the Forestry Division is a little over M 2.5 million. The budget for capital investment is funded entirely by foreign assistance.
The final part of the report gives an overall appraisal of the forest revenue system, including the impact of the forest revenue system and other fiscal policies on sustainable forest management and a discussion of the Government’s overall attitude towards the sector. This section argues that government is committed to supporting the forestry sector, as shown by the National Forestry Policy of 1997. However, it recognises that there are still institutional constraints that have to be addressed (e.g., the future ownership of the State Forest reserves and the relatively low level of forest charges overall).
