DISCUSSION AND CONCLUSIONS

The forest revenue systems used in all of the different states in Nigeria are inefficient because, although they differ widely, they do not accurately reflect the specific characteristics within and amongst each of the states. Overall, the forest revenue systems used are also weak and inefficient because of the following reasons:

the systems do not emphasise that production has to be carefully monitored in order for the collection of revenues to be maximised;

the systems result in high compliance costs for the forest users, who are expected to visit forest offices to pay charges (resulting in very low numbers of people obtaining permits, especially for non-wood and minor forest products - even though tariff rates are low); by implication, this encouraging illegal activities and low revenue collection; and

most of the costs of revenue collection are borne by the forest users and not by the government, such that it is not possible to compare the total costs of revenue collection with the amounts collected.

Because of obvious administrative and management lapses, illegal harvesting of forest products is rampart and it is estimated that more than 90 percent of minor forest product producers and about 40 percent of timber producers avoid payment of forest charges. In view of these circumstances, the forest revenue system is not effective.

For example, the forest monitoring system to control exploitation and transportation of forest products has broken down, because of a lack of patrol vehicles and an inadequate number of staff. Moreover, the uniformed forest staff are not motivated and equipped enough to enforce the laws concerning forest exploitation. Most often, forest products are exploited by rural communities bordering the forests without paying the necessary charges for permits to collect the products.

Another factor that contributes to poor revenue collection is the high overhead costs paid by a forest user. The process of paying forest charges can be tedious and complex. For example, to fell a timber tree under tariff on a private farm, the producer first has to obtain the owner’s consent from the land holding community and then from the farmer on whose farm the tree is situated. When the two parties agree that the tree can be felled, the farmer is paid by the producer who then has to obtain a permit from the local forestry office before the tree can be felled.

The tariff rate and the rules regarding payment and harvesting are clear to most members of rural communities. However, in communities who have had their lands reserved or on whose native lands forest resources are being harvested, the collection of forest revenues does not go down well with the people because:

the communities feel alienated from their ancestral lands when they are made to pay for God-given resources, which they consider to be theirs;

the revenues from forest harvesting are not shared with land holding communities in many states;

the money collected as forest revenues is kept by the government and is not usually made available to regenerate and restore the forest resource; and

people are not happy to see "aliens" (i.e. those that have no tenural rights to their land) being allowed to exploit their God-given resources, while the land owners have no free access to the same resources themselves.

Forest revenue generation will be more feasible when the tariff rates are realistic and effective revenue generating machinery is put in place. At present, the tariffs on which forest revenues are based do not represent the realities of the market with respect to the supply and demand for forest products and the cost of forest resource production. An example of where the tariffs are too low is in forest plantations. For example, the cost to establish a Gmelina plantation in the high forest zone in Nigeria is N 26 per cubic metre, but the states that own the land fix the charge for harvesting the timber at N 22 per cubic metre.

Out-turn volume (OTV) charges range from N 8.40 per cubic metre for lesser known species to N 16.80 per cubic metre for highly valued species, yet the delivered sale prices for roundwood vary from N 185 per cubic metre to over N 268 per cubic metre outside the protected forests. In the areas where the unit area charge system is used, the revenue collected from forest users varies from N 200 per hectare in secondary forests to N 600 per hectare in rich forests. However, the forest user can obtain anything from N 30,000 to N 100,000 for the timber taken from each hectare, even when the timber is sold at the forest gate.

Thus, increasing the charges levied under the various forest revenue systems (i.e. stumpage, OTV and unit area charges) could, with intensive production control and monitoring, improve the forest revenue base. In-built and self-regulatory collection of forest charges, in accordance with the pricing policy for forest products and the supply and demand conditions in each state, could improve forest revenue collection and eliminate the fixing of tariffs through the rule of the thumb. Evasion of charges could be minimised or eliminated, if the fixing of tariff rates, production monitoring, revenue collection and revenue sharing was based on participatory approaches, involving the rural communities that have had their lands reserved or whose forest resources are used as sources of revenue by government.

Within the forest revenue and licensing systems employed in Nigeria, the measures intended to promote sustainable forest management include the following:

the payment of royalty fees to land owners;

the requirement that seedlings must be planted for every tree felled;

the prohibition of re-entry to concession areas after harvesting;

the use of girth limits for trees felled;

rapid commencement of timber harvesting when forest areas are approved for harvesting (i.e. operations should not be delayed for administrative reasons);

the prohibition of killing pregnant and infant animals and removal of caramel eggs; and

the use of pass hammers (giving serial numbers to logs) to monitor control and ensure that harvesting rules have been followed.

However, because charges are far below the market values of forest products, the revenue system has unfortunately become counter effective. It has encouraged the number of professional forest contractors to increase dramatically, because of the huge incomes that can be generated from the forestry sector. Thus, because the tariffs are below realistic price levels, they have encouraged forest harvesting to expand beyond the level of sustainable yield.

The problem of the forest revenue system in Nigeria is basically one of market failure. The setting and collection of forest revenues is determined by the government and is not based on the interaction of supply and demand. Thus, because the market is not used to fix suitable tariff rates, the charges on forest harvesting do not result in prices that would equilibrate wood product demand with the sustainable level of supply.

Another problem concerns the sharing of forest revenues. In theory, government is supposed to share a percentage of revenues collected from outside forest reserves with local communities (25 - 40 percent in the savannah areas and 30 - 35 percent in the main forest areas). However, in practice, forest revenues are not shared with stakeholders.

Also, in most states, forest revenues are not administered through an independent Forestry Commission, but are paid into the state’s consolidated revenue fund. This money is not usually made available to the forestry sector for forestry management and development.

The fact that there is no uniform forest revenue system in the country may also be a problem. For example, because the tariff rates for forest products vary so much across the country, there may not be an equitable distribution of taxes and subsidies to the forestry sector across the country.

With the current rates of forest tariffs and levels of forest revenue generation, it is doubtful if the forest revenue system contributes positively to the sustainable management of forests in Nigeria. The two main impacts of the forest revenue system on forest management are over-harvesting of the forest resource and poor co-operation between the forest services and rural communities, who are neglected in revenue collection, monitoring and benefit sharing activities.

In order to ensure the co-operation of rural communities in forest revenue generation, rural communities should take part in fixing the tariffs, collecting revenues and revenue sharing. Furthermore, the major forest users should be made to invest in forest management and regeneration, in addition to the fees that they pay to harvest the resource. Finally, all stakeholders should be encouraged to actively participate in all aspects of forest management and the issue of forestry development should not be seen solely as a government enterprise.

As already noted, forest management in Nigeria is the responsibility of the state governments and the Federal Capital Territory Authority. The role of the Federal Government is mainly to co-ordinate policy and manage the flow of certain funds to the state forestry services. Unfortunately, the allocation of capital to the sector from state budgets in the past ten years has varied from zero to less than two percent of the total budget for capital in the agricultural sector.

An analysis of budget proposals for capital expenditure on forest management in the Federal Government and state governments over the last ten years is presented in Table 23. Although the figures in the table do not give information about actual government capital expenditure on forestry management, they show the anticipated level of capital expenditure that would be required to achieve sustainable forest management in the sector.

With respect to sustainable forest management, the primary concern of the government is to restore and rehabilitate the forests that have been degraded through agricultural development, over-harvesting of forest resources and infrastructural development. The government is aware that, unless the forest resource is sustained, most of Nigeria’s forest reserves may end up as "paper parks". Thus, the major occupation of the forest service is afforestation and this accounts for the bulk (47.6 percent) of the proposed expenditure.

Wildlife management accounts for about 20.2 percent of proposed capital expenditure. These funds are used for the development and maintenance of ex-situ conservation areas (e.g. zoological gardens and rescue centres) and for protection. In-situ conservation accounts for 10.2 percent of the proposed expenditure and would cover the protection of the forest estate and management and planning in forest reserves. Further capacity building accounts for 10 percent of the proposed expenditure.

Research accounts for the lowest share of the proposed capital budget (3 percent). Basically, forest research in Nigeria is carried out at two levels. The first is at the Forestry Research Institute of Nigeria, which is responsible for carrying out research into the sustainable development of the forest resource. The second is research carried out at the tertiary education institutions (i.e. polytechnics and universities) in Nigeria. Unfortunately, the very low levels of funding for the forestry sector in Nigeria means that the results coming from these research institutions are mostly irrelevant under current forest management conditions.

The main financing problems faced by the various government institutions responsible for forest management are as follows:

The lack of awareness of politicians and decision-makers on the role of forestry in national development. For the determination and allocation of funds to the sector, forestry is usually compared with agriculture on the basis of the sector’s contribution to GDP. Unfortunately however, most outputs from forests (e.g. non-timber products) are excluded from these calculations, which gives the appearance that the forestry sector is insignificant in the economy.

Under-funding and late or non-release of agreed budgetary allocations to the sector.

A lack of support from the private-sector. Forest management is largely regarded as a government concern and hence it does not attract development funds from the private-sector.

A lack of political will on the part of the government to support forestry development in the country more generally.

Government expenditure on forest management may be improved by carrying out the following activities:

Forest managers should be actively involved in inter-sectoral matters that affect forestry development. For example, when forestry is recognised as a significant contributor to domestic energy supply in the country, the forestry sub-sector might be considered along with the petroleum sector when the funding of energy programmes is being determined.

Forest managers should create awareness among the legislators, members of the executive arms of government and the public to improve their understanding of the role of forestry in the stability of the environment and the socio-economic wellbeing of the people.

The major users of forest products should be encouraged to invest in forest management.

The government should continue to attract foreign aid for specific areas of forest management. The grants and loans already made for forestry development have had a substantial positive impact in forestry development in the areas of wildlife conservation, capacity building and development of forest infrastructures.

The revenues generated from the forest should be made available for forest management.

The other fiscal policies that affect sustainable forest management have been characterised by frequent changes and instability. Very few of the policy frameworks and strategies that have been set out to achieve policy objectives, have been based on the fundamental values and goals of Nigerian society or have been generally accepted by the population. Past policies that have had effects on the forestry sector have largely been the result of unstable governments over the last three decades.

The frequent revisions to fiscal policies that have taken place in the past, have been largely due to changes in government and most of these changes have not favoured the forestry sector. For example, between 1973 and 1985, fiscal policies were characterised by a fairly stable and high rate of expansion in expenditure on the agricultural sector. But, between 1986 and 1988, a structural adjustment programme resulted in a tight fiscal policy, aimed at reducing budgetary deficits and redirecting capital expenditure and credit to agriculture, rural development and manufacturing. By the period 1989 - 1992, the fiscal discipline started to break down and huge deficits started to accumulate at an increasing rate. These fluctuations in policy have exerted varying degrees of pressure on the forestry sector.

The major areas where fiscal policies in other sectors affect the forestry sector are as follows: food security; domestic energy supply; housing; trade; and industrial development. Policies in each of these areas have had a varied impact on the sustainability of forestry management.

Fiscal policies to support food security

A major impact of fiscal policies to support food security has been the impact of high food prices and land extensive cultivation on the forest resource. By implication, high food prices have made rural communities over-dependent on natural forests for sustenance. Firstly, in rural communities that are economic ally dependent on forest, individuals have intensified their forest harvesting activities, particularly in the area of minor forest products, in order to raise their income levels. Secondly, the poor who cannot afford livestock have been virtually forced to hunt and fish within the forest estates for animal protein supply. Thirdly, the expansion of poor harvesting practices of non-wood forest products for food has been detrimental to biodiversity conservation.

The sudden increase in food prices had also given smallholder farmers an incentive to expand their farms. Because over 95 percent of food supply in the country comes from smallholder farmers, the expansion of smallholder farming using traditional methods (i.e. shifting cultivation) has been detrimental to the natural forest. For example, the total land devoted to agriculture rose from 8.9 million hectares in 1957, through 9.1 million hectares in 1960, 21.8 million hectares in 1970, to about 59.9 million hectares in 1995 (Federal Office of Statistics (1972), updated with more recent information).

Because of the expanding land area devoted to agricultural production, about 2.4 percent of the designated forest reserves in the country has been lost. Yet the demand for forest products in the country has been on the increase and the supply of forest products remains lower than demand. A large proportion of community forests devoted to cultural festivals (such as sacred groves) and a majority of in-situ conservation sites outside government forest reserves, have been deforested because of high food prices. The Agricultural Development Project and National Agricultural Development Authority also support the production of food through land extensive methods.

Fiscal policies in the energy sector

The efforts of government to integrate fuelwood supply into the energy sector have also been a major cause of forest degradation and biodiversity loss. Nigeria is heavily dependent on wood for domestic energy supply in the country, because the traditional source of household energy is wood. Fuelwood accounts for about 80 percent of domestic energy consumption, involving over 109 million cubic meters of wood consumption per year (Cleaver and Schreiber, 1994).

The main substitute for fuelwood in both the urban and rural areas is kerosene. However, the unstable and high price of kerosene, combined with poor distribution and local shortages, have made the cost of kerosene beyond the reach of the poor in the country. The consequence of this has been an increasing dependence on the natural forest for domestic energy supply. The high rate of logging for fuelwood supply contributes to environmental degradation, soil erosion, desertification and increased loss of biodiversity and natural habitats within the constituted government reserves.

The improved integration of fuelwood supply into the energy sector could ensure that extensive production of fuelwood from forest plantations would meet domestic energy needs in rural areas without increasing pressure on the natural forest.

Fiscal policies in the housing sector

The Government of Nigeria has a policy of providing houses for all by the year 2005. This has encouraged the over-harvesting of forests to satisfy the demands of the housing sector for land and forest products. Because the housing sector meets 98 percent of its wood requirements (e.g. roofing, frames, shutters and furniture, etc) from domestic forest resources, wood removals above the annual allowable cut have overturned many forest management plans in terms of their proposals for regeneration and protection.

Trade and industrial policies

Government policy on trade in forest products in Nigeria has been unstable since the 1980’s. In 1985, the government banned the export of roundwood, but the ban was relaxed in 1986. In 1995, there was a high demand for Teak poles in international markets and the high income such exports could generate led to massive exploitation of the Teak plantations in the country by timber contractors.

The environmental implications of the high level of Teak exports led the government to tighten the ban on exports again in 1997. However, the reintroduction of the ban led to the dumping (in the sea) of high priced teak timber that had already been cut. Because the timber charges were lower than the cost of production in forest plantations and the revenues generated were anyway paid into states’ consolidated accounts, the export trade in timber was not beneficial to the forestry sector.

The desire of government to improve the standard of living among the population has led to the development of transport infrastructure and the promotion of industrial growth. These policies translate into the construction of new roads, the expansion of existing roads and the establishment of industries to provide employment for the growing population. These activities have increased the demand for land, with detrimental consequences for forest management.

Environmental policies

The establishment of eight national parks in the country (Old Oyo, Yankari, Chad Basin, Kainji Lake, Cross River, Gashaka-Gumti, Okomu and Kamuku) has resulted in increased funding from government to support sustainable forest management outside of the forestry sector. For example, the capital budget released to the national parks between 1992 and 1999 was about 60 percent higher than the amount of money released for other forestry projects over the same period.

The establishment of the Federal Ministry of Environment has also widened the scope of sustainable forest management. For example, three Departments (Forestry; Environmental Conservation; and Drought and Desertification Amelioration) now collectively address issues of forest regeneration, biodiversity conservation and soil conservation, which are all relevant to sustainable forest management. Thus, in addition to specific government activities in the forestry sector, more funds are now released to the sector through the activities of other parts of government.

General policy and institutional arrangements

Because of the high rate of desert encroachment in semi-arid areas, the menace of soil erosion, deforestation throughout the country, the problem of environmental pollution and the gradual loss of biodiversity, the President of Nigeria directed the Federal Department of Forestry to urgently embark on an aggressive programme of environmental rehabilitation to combat these processes. This directive, issued in 1999, stated that forest development initiatives should focus on the following:

the development of forestry schemes for each ecological zone;

the establishment of forest reserves in every Local Government Area in the country;

the establishment of a scheme for dryland farm development and management for forest and wildlife conservation; and

a comprehensive review of the national forest policy.

The establishment of the Federal Ministry of Environment, with three technical departments responsible for environmental issues (such as desertification, environmental degradation, forest management and conservation) reflects the Federal Government’s commitment to the forestry sector. The new focus of forestry management has been to review the national forestry policy, introduce national legislation for forestry and wildlife, review state forestry legislation, develop and upgrade forestry management skills, develop forestry research, train and re-train forestry workers and upgrade national forestry resources and support centres.

The present administration has deep concern for forestry development. The support to the sector ranks high in priority rating. The main concern of government is to sustain the environment through afforestation programmes, in order to control desert encroachment, soil erosion and for forests to continue to provide goods and services to the economy.

Inter-sectoral issues

However, the government seems to prefer to prescribe solutions to forestry problems without finding out the causes of the problems. Thus, the actions of the government are not based on a participatory approach and seem to gloss-over some of the fundamental problems inhibiting the growth of the sector.

The solutions to many of the problems in the forestry sector in the country lie outside the scope of forestry policy. For example, even if all of the present land under government reservation was to be put into intensive plantation forestry, the yields in terms of wood and non-wood forest products would not sustain the growing population. Thus, the solution to this problem is first for the government to establish new forest reserves and rehabilitate the old ones. The mandate to put 25 percent of the total land area in Nigeria into forest reservations is crucial in this respect. Secondly, forestry development must extend forestry programme activities outside the boundaries of the forest reserves. The introduction of tree growing onto farms is important to increase the resource base for the production of wood and non-wood forest products and to increase the habitat for small animals (birds, rodents and reptiles).

Another area that the government should look into is the growing human population that relies on forests for subsistence. What is needed is for government to introduce, through policy reform, programmes that will reduce the pressure on forests for the supply of goods and services. Such programmes should provide alternative supplies of domestic energy to the population and ensure unimpaired access to and improved distribution of kerosene at affordable prices to rural and urban communities. Government should be ready to create awareness among the people to accept and adopt land-use changes that would de-emphasise their current reliance on forests.

Agriculture is the largest land-use in Nigeria, accounting for about 59.9 million hectares or 64 percent of the total land area of the country. Thus, agriculture is the main threat to forestry development in the country. However, it is doubtful whether Nigeria needs 59.9 million hectares of agricultural land to feed about 120 million people. If agricultural production is not intensified at a rate that exceeds population growth, it will not be possible to discourage further invasion of forest reserves in the country and Nigeria will face food insecurity even if all the remaining land in Nigeria is used for agriculture (Cleaver and Schreiber, 1994).

In order for the forestry sector to move forward, the government should carry out a policy review of the sector, including a review of the other sectors that have an effect on forestry development. The recent production of a draft copy of a national forestry act (for consideration by the National Assembly) may influence the government’s attitude when it is passed into law and efficiently implemented. However, the state forestry services, which are largely responsible for forestry development, seem to be unable to apprehend how the economic, social and environmental performance of the sector can be improved. The legacy of military rule from 1979 to 1999, which considered that forests were a self regenerating resource where goods and services could be exploited without any re-investment, seems to linger on. However, the government is trying to improve upon this situation.

Implementing change within a decentralised system

The role of the Federal Government in forestry development is largely advisory. The level of forest charges, which have not reflected prevailing economic conditions for many years, may remain low for some time, because each state exercises its prerogative to control its own forest revenue system. Revising the forest revenue system in the northern states is also difficult, because of the statutory involvement of local governments in the administration and collection of forest revenues.

The state governments have been unable to meet the financial requirements of the sector and this has resulted in the low level of activities in all states, except for those that have had externally funded projects. The motivation of staff in the state forestry services is low, there is no supply of field equipment and protective clothing and allowances are not paid.

The existing forest policy also needs to be revised to involve communities in management decisions, sharing of revenue from natural forests, private forestry development and the regulation of tree harvesting in forest reserves. As part of this process, forestry policy should consider the historical tenure rights of communities in forest areas, when considering forest utilisation and models of benefit sharing.

Changes to the revenue system

There is a high level of heterogeneity within the forest revenue system within and among the states. The forest revenue system should be revised to improve the revenue base. However a discriminatory pricing policy should be introduced to protect the poor that depend on non-wood forest products for subsistence and to protect severely threatened timber species (Federal Department of Forestry, 1995). Stumpage fees and OTV charges should more accurately reflect the market prices of roundwood and unit area charges should be based on the stocking and land area involved.

The stakeholders in terms of forest revenue are the government (the state and the local government) and the rural communities from whose traditional lands the revenues are generated. The revenue that is distributed to local government is based on the revenue sharing formula that is applied at the state level. This varies from 20 percent in the rainforest zone to 40 percent in the savannah areas. The distribution of revenues amongst rural communities varies from 20 - 25 percent. The adequacy of existing revenue sharing formulae can only be determined when stakeholders participate fully in decision making.

Forest products in the country are grossly under priced in the domestic market. This is encouraged by the high variability of forest charges, which is rooted in the independence of each state to fix its own forest tariffs. Hence, there is a great variation between what forest users pay for the same quantity and quality of forest products in different states, even when they share a common boundary. The price of timber in the market bears no relationship to forest charges or the cost of regenerating the forest (Federal Department of Forestry, 1995). Attempts to encourage tree planting are not effective under these conditions. Therefore, a suitable policy for setting forest tariffs should be developed to ensure the sustainable use of forest products in the long-run. In the short-run, the best that could be done is to carry out a public awareness campaign, to educate people about the consequences of unrealistically low forest taxes (i.e. deforestation and land degradation).

Because the majority of forest products supplied to the domestic market are produced without the payment of any charges (i.e. rampant illegal production), domestic market prices do not reflect the true value of these forest products, let alone the broader environmental and social costs and benefits associated with their production. This situation results in waste and inefficiency in production and consumption and discourages private entrepreneurs to grow trees for their own needs and for the market. Thus, the vast difference in revenue systems between the states and contradictory forest regulations results in almost no flow of investment capital into the sector. Some suggested solutions to this problem are as follows:

government should relax all forms of wood export restrictions;

forest revenue systems should be revised, based on a national forest revenue study, comprehensive guidelines for forest management and a comprehensive database of forest establishment and management costs; and

government should involve all stakeholders in forest revenue system formulation, revenue collection and revenue sharing.