Charges on domestic trade in wood products

The major sources of revenue from charges on domestic forest products trade are the Inter-State Wood Transportation Taxes. In a number of states, fees are paid on wood transported to other states and the details of these fees are given below.

Ondo State. In Ondo State, for lorries up to 10 tonnes in weight, a fee of N 50 per log is paid on any legally removed log crossing the border to another state. For a vehicle over 10 tonnes in weight, N 100 is charged for each plank and sawlog.

Oyo State. In Oyo State, a fee of N 50 per log is charged on logs going out of the state. Charges on planks vary from N 25 to N 50 per piece, depending on the capacity of the vehicle.

Osun State. In Osun State, transportation of logs out of the state is prohibited. A fee of between N 25 and N 50 per piece is collected on sawnwood transported out of the state.

Ogun State. In Ogun State, charges on transportation to other states include: N 100 per pole; N 1,500 per trailer of planks; N 500 per lorry-load of planks; and N 150 per 10-tonne lorry-load of planks.

Lagos State. In Lagos State, charges on transportation to other states are: N 1,000 for a lorry-load of sawn planks; N 2,500 for a trailer-load of sawn planks; N 500 for lorry-load of billets; and N 1, 000 for a trailer-load of billets. Charges on firewood are N 250 per lorry-load and N 500 per trailer-load.

Ekiti State. In Ekiti State, the charge for transporting a log below 12 feet in length to other states is N 1,000, while the charge for logs above 12 feet length is N 2,000. A 10-tonne lorry-load of planks is charged N 1,000, while a trailer-load is charged N 3,000.

Taraba State. In Taraba State, the charges for transporting sawnwood to other states are as follows:

2" x 2" x 12’ - N 50

2" x 3" x 12’ - N 80

2" x 4" x 12’ - N 100

2" x 6" x 12’ - N 140

1" x 12" x 12’ - N 350

Charges on domestic trade in non-wood and minor forest products

In most of the states in Nigeria, charges are not levied on trade in non-wood and minor forest products. However, the notable exception is Taraba State. In addition to charges on extraction of some non-wood and minor forest products, the Taraba State Government also collects revenue from traders in these products. Products that are covered by charges on trade include: split borassus; palm wine; phoenix leaves; honey; charcoal; and fruit. Because these products are numerous, they could constitute a very good source of revenue for government if properly harnessed.

The charges levied on domestic trade in non-wood and minor forest products in Taraba State take the form of monthly charges per person to trade in these products. These charges are levied whether these products are exported to other states or not. The charges in 1993 and 2000 are shown in Table 16.

As the table shows, the amount charged to trade in these products has increased by as much as 150 percent for split borassus and palm wine and 400 percent for honey in the last seven years. However, although the charges on most of these products increased in terms of the local currency (Nairas) over the period, they actually fell in terms of US$. This indicates that there is a need to increase the charges payable on these products in order to reflect their true value and to take into account the drastic fall in the value of the Naira over the last few years.

Charges on international trade

Nigeria has been exporting wood and wood products for a long time, exporting mostly roundwood to countries such as: United Kingdom, United States of America; Germany; Italy; Belgium; Norway; Spain; Niger; Ghana; and Gambia. Trends in exports from Nigeria are shown in Figure 4 below, both in terms of volume and value.

Log exports were high during the 1960’s, with a peak in exports of 773 thousand cubic metres in 1964, with a value of about US$ 18 million. By 1970, the forestry sector generated about 2.5 percent of Nigeria’s Gross Domestic Product (GDP), with wood and wood product exports accounting for about 1 percent of total foreign exchange earnings (Okorie et al, 1981). Adeyoju (1975), suggested that Nigeria ranked second amongst the seven largest tropical wood producing countries in Africa in 1966, in terms of total quantity of logs produced and exported and the proportion of processed wood to log production.

However, the advent of trade in petroleum led to a decline in timber exports over the following years. Umeh (1981) observed that, although production of industrial roundwood had doubled from 1962 to 1971, the value of logs, lumber and plywood exports had fallen from N 13.8 million to N 6.8 million. The value of forest product imports over the same period increased from N 12.4 million to N 31.8 million, implying that Nigeria had become a net importer of forest products.

In 1976, the Government banned the export of unprocessed logs to protect supplies of roundwood to the local market, which was expanding fast because of increases in local purchasing power and an expansion in the construction industry. This led to some reduction in exports as shown in Figure 4.

In 1985, there was a further ban on all wood product exports (whether processed or not), excluding only furniture components and Gmelina wood. However, in the early 1990’s, there was an upsurge in the extraction and export of Teak. Much of this trade was not properly controlled, so it is difficult to assess the volumes that were extracted and exported with any accuracy.

Export duty on timber is collected by the Customs Department for the Federal Government of Nigeria at the port of shipment. The duty varies according to the species and the Federal Government usually remits half of all such collections to the state where the timber came from. Only the former Western and Mid Western regions benefited from this revenue source.

The variations in forest charges from state to state, as shown in the previous figures and tables, are due to two main reasons.

Firstly, charges differ because forests are managed by the Forest Services of autonomous State Governments (and in some cases Local Governments in the Northern States). Each management authority is free to determine both the level and structure of forest charges and to vary these over time as it sees fit. This results in great differences in forest charges for some species. For example, the stumpage rate for Mansonia altissima is set at very different levels in the following states: N 225 in Kogi State; N 500 in Ogun State; N 750 in Ondo State; N 300 in Lagos State; and N 1,000 in Ekiti State. Another example is Alstonia spp, for which the following stumpage charges are levied: N 150 in Ogun State; N 200 in Ondo State; N 250 in Lagos State; N 250 in Kogi State; and N 400 in Kwara and Ekiti states.

However, a uniform stumpage rate is applied throughout a given state. This reflects the need for administrative convenience, but fails to account for the fact that variations in physiological factors and transport costs should lead to a geographical variation in the stumpage rate of a species within a state. There is though, some variation according to size within the stumpage charge. For example, Mansonia is only harvested at a minimum breast-height girth of 1.5 m in Lagos (where the stumpage charge is N 300), whereas the same species in Ekiti State is harvested at 1.8 m minimum breast-height girth.

There are also some variations in OTV charges due to differences in wood quality. In Osun State for example, charges are based on the class of wood. The first-class woods (which include Triplochiton, Mansonia and Afzelia spp) are charged at a rate of N 15 per cubic foot. The second-class woods include: Pterygota; Lophira; and Cylicodiscus, which are charged at the rate of N 10 per cubic foot, while other lesser known species, such as Celtis spp, are charged only N 6 per cubic foot.

The second reason for the difference between charges in different states is due to differences in the stand density and, in particular, the density of commercial trees. Thus, the results of forest inventory exercises in recent years generally constitute the parameters upon which the ‘unit area charge’ is imposed. For example, of the twelve major forest reserves in Ondo State, six (namely: Akure; Oluwa-OA2; Oluwa-OA3; Okeluse; Ipele; and Idoani forest reserves) constitute a zone where concessionaires pay a fee of N 4,000 per hectare. Onishere, Oluwa-A41, Ala, Irele and Ore forest reserves are in another zone, where charges are N 3,200 per hectare. Akure-Ofosu and Idanre-OA5 are in a third zone, where charges are N 4,500 per hectare.