The overall objective of this report is to review the current situation in Lesotho, with respect to financing government forestry institutions from revenues collected from the forestry sector and general government revenues. In other words, it will examine:
how much money flows from the forestry sector to the government (i.e. in taxes and levies paid to government by the forestry sector); and
how much money flows back into the forestry sector from the government (i.e. in the form of government expenditure).
The remainder of this section provides some brief background information about the forestry sector in Lesotho. This is followed by two sections describing the structure of the forest revenue system and administration of the revenue system. Section 4 presents some estimates of total charge collection from the forestry sector in Lesotho and, following this, Section 5 presents estimates of total expenditure on forestry in the country. The final section discusses the impact of fiscal polices in Lesotho on sustainable forest management and presents the conclusions of this study. Appendices give more details about revenue collection and some of the specific procedures used in the revenue collection process.
The main forest resource in Lesotho is 12,000 hectares of forest plantations, which are mostly planted with eucalyptus and pine species. These forest plantations have all been designated as State Forest Reserves and are used for the production of fuelwood and poles. The area of private forest is not known, but is suspected to be much smaller than this.
Currently, there are no forest processing plants operating in Lesotho and all processed forest products are imported. The only organised forestry activities are managed by the government and there are no private forestry companies operating in the country.
Value added tax (VAT) is the only tax levied on forest products in Lesotho and this is levied on imported wood products (i.e. mostly sawnwood) entering Lesotho from South Africa. This tax is collected at the border between Lesotho and South Africa by the Department of Customs and Excise (on behalf of the Ministry of Finance).
Tree seedlings are highly subsidised (i.e. they currently cost 20 lisente per seedling), but this is soon going to be phased out when tree seedling production is privatised.
Before 1987, the main forest product produced in Lesotho was fuelwood, which was produced from the forest plantations and other forest areas. However, in May 1987, the Forestry Division’s Leribe Treatment Facility became operational and large-scale pole production started. Reflecting this, in the financial year 1987/88, the target for revenue from pole sales was set at M 30,000, with a target for revenue from other forest product sales of M 100,000. The figure for these other sales included sales of fuelwood from woodlots, wholesale fuelwood sales (often delivered to customers), revenues from some contract felling activities and sales of minor forest products. Actual achievement for the year 1987/88 was M 105,630, or 82 percent of the target.
Although the actual achievement of revenue collection in the financial year 1987/99 did not meet the target, the revenue collected was an increase of 80 percent over the total amount of revenue collected in the previous year (i.e. M 59,202 in 1986/87). This increase was due to a number of factors, including:
intensified activities on the part of the Harvesting and Marketing Foresters, who increased the number of sales of forest products from 33 to 38 per month;
the start of operations at the Leribe Pole Treatment Facility and, consequently, sales of treated poles;
increased sales of untreated poles (up from M 3,476 in 1986/87 to M 12,487 in 1987/88); and
increased wholesale sales of fuelwood (up from M 1,222 in 1986/87 to M 7,176 in 1987/88).
Total revenue collection has continued to improve from this point forwards. However, the amount of revenue collected each year continues to fail to meet the specified targets. This, in part, emphasises the fact that utilisation activities in Lesotho are low and so, consequently, is revenue collection.
The Forestry Division is failing to market forest products very well and the reason for this, as consistently stressed by the Utilisation Officer in monthly reports to the Forestry Division, is a chronic lack of transport. The lack of forestry personnel and transport has prevented the implementation of a full forest products sales programme, particularly in the south of the country. The average number of forest product sales per month is only six and has not increased over the last year. Moreover, despite an abundant demand for fuelwood in the country, the lack of truck transport has prevented active marketing of surplus fuelwood from the larger State Forest Reserves. This is leaving a legacy of forest areas with increasing stem diameter, which will become increasingly more difficult to market. Due to this lack of transport, the current access difficulties to these areas of local surplus (often situated on plateaux), dictates the need for 4 x 4 capability if this problem is to be overcome in the short to medium-term.
