ADMINISTRATION OF THE FOREST REVENUE SYSTEM

There are no clear mechanisms for setting forest charges in many states’ Forestry Services in Nigeria. Charges are set administratively with no stated period of review. However, the authority to set charges lies with the State Executive Council, which receives technical advice from the Forestry Departments. According to Skoup (1987), a slight departure from this occurs in the savannah ecosystems in the north, where local governments are given powers for all issues concerning forest revenue.

An example of the legal basis underlying the states forest revenue systems is given in Section 53 of the Forestry Regulations for Bendel State, 1976. An excerpt from these regulations is given in Box 1 below.

Forest charges are not regularly updated. State Forestry Departments put a lot of pressure on state governments for regular upward review of charges, but these are often turned down by governments due to pressure from timber merchants, who influence the governments and lobby them to refuse upward reviews.

Unlike in many other businesses, information about forest charges is not publicly available, nor are they reported in the newspapers or other media. All information about forest charges is available only in the divisional forest offices and all merchants dealing in forest produce are very conversant with them. There is little or no consultation on the setting of forest charges.

The powers set out in Forest Laws empowering the executive to set charges are used to enforce the charges. In general, there are no clear formulae used to fix or calculate forest charges and they are not up dated in line with inflationary trends.

Due to the dual ownership of natural forests (local authorities and state governments), state forest services have the task of and responsibilities for deciding the level and type of logging activities that may be allowed within and outside the forest reserves. They also decide how much forestland should be set aside for other activities, such as: recreation; wildlife preservation; hunting; grazing; and mining. However, these decisions are rarely based on the value of different activities, or even how much wood is readily available. More often than not, they are based on political pressures.

In many states, forest services are forced to aim at revenue targets that are not in tune with either good forest management practices or the interests of the community. Targets are arbitrarily, set since they are usually fixed in relation to the preceding year’s performance. When a target cannot be met in one year, it is reduced in the following year and vice-versa. For example, in Cross River State, the gross revenue target for 1975/76 was N 698,000, but achievement was only 12.01 percent. The following year therefore, the target was reduced to N 580,000 (Udo, 1982). However, in 1977/78, the target was again raised to N 605,000 and achievement was only 27.4 percent, so the target was again reduced to N 290,000 for 1978/79. In that year, 75.54 percent of the revenue target was achieved, so the target was reviewed upwards again to N 370,500 for 1979/80.

In recent times however, most states in the high forest zone have achieved more than their targets, because of extensive exploitation of Teak plantations. These achievements in Ondo, Ogun, Ekiti, Edo and Oyo states since 1995 might not have actually resulted from administrative ingenuity though, but rather from uncontrolled logging operations caused by arbitrary target setting and an unmitigated drive for revenue generation.

Assigning revenue targets is a common revenue collection strategy in Nigeria. However, this is not a suitable method of dealing with forest production, which differs due to diverse geographical and ecological conditions and variability in maturity or readiness for harvesting.

In the colonial era, the Chief Conservator of Forests (now called Directors of State Forestry Services) had powers to review and publish tariffs. Though the enabling act is still intact, in most states, only Anambra and Enugu states still use this administrative power.

With respect to charges on non-timber and minor forest products and other charges, charges are rarely based on precise measurement and the relative economic value of the products available in each state. The administrative supervisors and revenue staff may claim ignorance about the variety of charges for non-timber forest products and their availability. An example is the attitude of Edo State forestry staff towards charges for possession of a property hammer, which yields very high revenues in Ondo, Ekiti and Ogun states, but very little revenue in Edo State.

The methods use to assess forest charges also vary widely in the country. The method adopted is dependent on the product and, to some extent, the ecology of the area. The out-turn volume (OTV) method is common in many of the high forest states, where there are many large commercial trees in the forest. The OTV system allows timber merchants to pay only for the actual volume of wood taken from the forest. This requires the measurement and calculation (by estimation) of the volume of each log that is removed. Based on the estimated volume, the monetary value of each log is calculated in accordance with the approved state tariff.

In Edo and Delta states, the OTV system is gradually being replaced with the unit area charge. This involves the classification of the forest into zones, according to the richness in species composition, stocking, proximity to markets and nature of the terrain. A fixed rate is charged for a classified area or zone. In Oyo State, forest reserves are simply classified into two zones for the purpose of administering the unit area charge. Such classification simply says whether the forest is rich or poor. For the rich forest areas, the charge is N 600 per hectare and for the poor forest areas, the charge is N 200 per hectare. The unit area charge, though based on subjective assessment, appears to have eliminated some of the problems of the OTV method, especially in terms of reducing administrative delays.

In Cross River State and most of the other high forest states, the stumpage fee method is used to assess forest charges. Unlike the OTV system, which covers both trees in forest reserves and outside forest reserve, the stumpage fee method is applied only to trees outside the forest reserve (i.e. in free areas).

Revenue is also generated from charges made on non-timber forest products. In Ogun and Oyo states, licences are issued on annual basis to people plucking leaves and hunting inside forest reserves. The State Forestry Department employs and trains a group of intermediate officers called Forest Guards. They rise through the ranks to attain the position of Chief Rangers. These officers are trained to assess and grade forest products. Members of rural communities recognise these uniformed staff even more than their non-uniformed supervisors, because they are seen often and it is known that they perform tree inspections and the release of logs.

Payments under the unit area charge method have the advantage that payments must be made in advance before the commencement of logging. In contrast, OTV charges are paid in arrears in cash.

As already stated, forest revenue collection in Nigeria is decentralised. Forest revenue is collected by:

Treasury Clerks in forestry offices in local government areas and state headquarters; and

uniformed forestry officials (Forest Guards and Game Scouts) in the various forest areas.

To gain access to forest products, users have to pay and obtain permits or licenses from forestry offices and use the treasury receipts to gain access to the products in the forest (where they are checked by the forestry officials responsible for the charges). Moreover, Forest Guards also collect revenue from some types of charges and at road blocks mounted to monitor and control log production. Receipts for these charges are issued to users as waybills.

Charges for stumpage, non-wood products and OTV are collected at both the Forestry Service Headquarters and Local Government Area or Zonal Forestry Offices. Charges for the sale of forest produce are collected at the divisional level. Each province has a divisional forest office headed by a Divisional or Provincial Forest Officer, who is responsible for the overall forestry activities in that division.

In most of the states, a revenue bank account is opened and all transactions that deal with revenue are paid into these accounts. Treasury receipts are issued for all charge payments to prove that the merchant has paid for the products and can have access to them. At the end of each year, amounts in receipt book stumps and the actual amount deposited are reconciled and sent to the Forestry Service Headquarters.

Local communities are involved in collection of fees in some states. In Sokoto and Kebbi states, permits for the collection of fuelwood are issued by Districts and village heads for and on behalf of the local governments. These traditional rulers account for revenue generated on monthly basis. Most communities, like those in Edo State, demand for royalties before trees are felled on their farms or around their villages. The revenue from these charges does not go to the government but to the purse of the communities for the purpose of rural developments. In Cross River state, the Ekuri community charges a fee for all the timber taken out of the forest. This method was initiated by a non-governmental organisation (NGO) with the aim of developing and maintaining sustainable forest management. In most states however, governmental staff collect all forest revenues.

Road checks are used to ensure that what is removed is paid for. Patrol teams also check mills, to ensure that logs are properly stamped and paid for before entering the mills On some routes, road blocks are mounted to check all vehicles carrying logs to ensure that they are legally acquired. Legally produced logs must have a valid stamp on both ends (stamped with the number of the authorising officer) and the official receipts must accompany the logs as they are transported. However, despite all of these checks, there is still a lot of illegal felling in all of the forests in Nigeria.

Centralised and decentralised levels of government in revenue administration

The central organ of government at the national level is the Federal Department of Forestry. The main functions of the department include: formulation of national forest policy; land-use planning; forestry development and environmental management; the promotion and funding of projects of national interest; the co-ordination and monitoring of forest activities arising from internationally funded projects; and institutional development. The Federal Government is only involved in the administration of forest revenue in the eight national parks in the country, where gate fees are paid by tourists and where there is some organised harvesting of over-populated animals.

Management of the natural forests and plantations is the responsibility of the State Forestry Department on behalf of the State Government. The state owns all forest reserves, formulates and implements policy, and manages forestry activities. Local governments have no responsibilities for forest management. State Forestry Departments are organised in such a way that headquarters formulate policies (including revenue generation), co-ordinate field programmes and administrate forestry practices. The State Forestry Department area or divisional offices are responsible for one or more local government areas, where they interpret and implement state policies and co-ordinate field activities.

Various state governments have realised the shortcomings of the current systems of forest revenue administration and have attempted to improve on them. Several new types of forest charges have been introduced to complement allocations made to the forestry sector. These include: the introduction of afforestation funds; the forestry development levy; and forestry trust funds etc. These are laudable programmes, but there is hardly one state that has completely implemented these good intentions.

There is a serious concern about the future for forestry development in the country, but bureaucracy constitutes a major bottleneck that restricts proper planning for better forest management. All revenues have to be paid into state accounts and, as such, become very difficult to retrieve for forestry policies and programmes. Funds that are meant to be reinvested in the sector to improve management of the forest are never forthcoming. By and large, the forestry sector waits endlessly for government’s to allocate funds, despite the fact that revenues are generated all the time. As Cnossen (1979) rightly concluded:

However, the real problem with revenue administration in the country lies with the different institutional environment of each state in the federation, in which the forest resource is largely seen as a supplier of regular funds into the treasury, rather than as important natural resource that should be developed through investment.