GOVERNMENT EXPENDITURE ON FORESTRY

Government expenditure on forestry includes the following: expenditure by the Forestry Department; foreign assistance to the forestry sector that is channelled through the Forestry Department; and government expenditure on other institutions involved in forestry. Currently, grants or subsidies are not available to companies and individuals operating in the forestry sector. However, there is a plan to use grants to encourage private-sector participation in forestry, which will be implemented when the Forestry Department is transformed into the new Forest Authority.

Expenditure by the Forestry Department

The Forestry Department is the lead agency in the forestry sector and is part of the Ministry of Lands, Water and Environment. The expenditure of the Forestry Department is set-out in a budget that is approved by the Ministry of Finance and Economic Planning at the beginning of every financial year. 

Budget preparation and approval

The preparation of the Forestry Department budget starts at the district level.  Each DFO prepares a work-plan and budget for their planned activities. This budget is categorised into the following types of expenditure: employee costs; administration costs; supplies and services; material supplies and manufactured goods; transport and plant costs; operation and maintenance of vehicles; electricity; water; maintenance of buildings, grounds and equipment; transfer payments to other agencies or persons; transfers to local authorities; and participation in other programmes.  These estimates are submitted to the Commissioner for Forestry who compiles them, together with the headquarters budget estimate, into a Forestry Department budget estimate. This is then submitted to the Permanent Secretary of the Ministry.

The Minister for Lands, Water and Environment collects the estimates from all of the departments in the Ministry and submits them to the Ministry of Finance, Planning and Economic Development.  In the Ministry of Finance, Planning and Economic Development, Planning and Sector Working Groups (SWG) have been established to discuss the budget proposals. The objectives of the discussion are: to review the previous year's budget framework paper (published in the background to the budget); to comment on the progress made in implementing the recommendations agreed by cabinet; and to propose resource allocations to programmes (within the ceiling for that sector) that will maximise impact and ensure efficiency and equity in the composition of spending and technical efficiency in the use of budgeted resources.

The outputs of discussions in the SWG are:

an analysis of the outstanding issues and options in the sector, identifying the activities or reforms undertaken to address them and including an indicative expenditure plan for the next three years;

identification of outstanding or new issues not dealt with and proposals for requisite action;

a review of budget performance for the three previous financial years; and

a proposed medium-term expenditure plan for the sector (within the overall ceiling for that sector) for both recurrent expenditure and development and capital expenditure programmes.

The Forestry Department is in the working group of Water, Natural Resources and Environment.  Other members of the group are: Ministry for Lands, Water and Environment (as the chair); National Environment Management Authority; Directorate of Water Resources; Department of Lands; and Ministry of Finance, Planning and Economic Development (as the secretary).

The budget estimate document is later passed to the Minister for Lands, Water and Environment, who presents and defends this in front of the Parliamentary Committee on Natural Resources. The Commissioner for Forestry attends the defence on behalf of the Forestry Department and as the person that is ultimately in charge of finance in the Department. The Committee critically reviews the budget estimate and looks for omissions in the proposal.  Audits of activities in the past year are also examined and activities that seem to be of less urgency are removed from the budget.

The output from this process is an edited budget that is ready for the Chairman of the Natural Resource Committee to present to Parliament for approval.  This stage involves further scrutiny of the budget by Members of Parliament. Any issues that are raised in Parliament have to be addressed by the responsible Minister and his civil servants until Parliament is satisfied with the proposal. The budget proposal is then approved by Parliament (with or without amendments) and becomes the approved budget for the Department.

The approved budget is then sent by the Speaker of Parliament to the Minister of Finance, Planning and Economic Development, for inclusion in the National Budget. The final stage in the budget preparation process occurs when the President endorses the National Budget. However, from the time that Parliament approves the budget, the Forestry Department is authorised to spend money from the approved budget under an authority called the “Vote on Account” (VoA), while waiting for the endorsement of the budget by the President.

To summarise, the procedure for budget preparation and approval are as follows:

Ministries and Departments prepare and submit budget estimates to the Ministry of Finance, Planning and Economic Development for discussion.

The Minster of Finance, Planning and Economic Development reads the draft estimates of expenditure from the various Ministries as the Budget Speech.

Committees of Parliament submit ministerial policy statements and the draft budget estimates to Parliament for consideration.

Committee reports and the estimates are discussed and approved by Parliament.

The Finance and Appropriation bills are then presented to Parliament for consideration and approval.

Alterations to any draft estimates already submitted are implemented by the Minister of Finance, Planning and Economic Development by formally presenting any such alterations to Parliament as amendments to the estimates.

The approved budget for the Forestry Department in the financial year 2000-01 is shown in Table 4 below.

Table 4           Approved Forestry Department budget for recurrent expenditure in 2000-01

Cost item	Amount - including AiA (in Ush ‘000)
Employee Costs
Staff salaries	200,163
Allowances other than salaries	163,000
Travelling and transport of persons (inland)	60,182
Travelling and transport of persons (abroad)	12,040
Recreation, welfare and entertainment	3,072
Training	3,716
Administration costs
Office expenses	10,254
Advertisements and public relations	1,793
Supplies and services
Materials, supplies and manufactured goods	5,882
Transport and plant costs
Operation and maintenance of vehicles (Administration)	154,035
Fuels, lubricants and oils (Administration)	60,213
Operation and maintenance of vehicles (Operational)	10,413
Property  Costs
Electricity	5,000
Water	118,000
Maintenance of buildings, grounds and equipment	70,000
Total	877,763

Budget disbursement

In the Ministry of Finance, Planning and Economic Development, there is a Department of Budgets, which employs a Desk Officer to manage the budget of each Ministry. In the case of the Forestry Department, the Desk Officer for the Ministry of Land, Water and Environment manages the budget for the Forestry Department. Depending on the actual level of government revenue collection and government priorities at the time, the Department of Budgets can still amend the approved budget for each Department. Core government programmes, such as: Universal Primary Education (UPE); Defence; Poverty Alleviation; and Health, take priority when budgets are amended due to low revenue collection. The Forestry Department is always given a low priority during these exercises, so the amount of money actually disbursed to the Forestry Department always falls short of the approved budget.

For the purpose of budget disbursement, the Ministry of Finance, Planning and Economic Development operates a cash budget system and expenditure is classified as either Automatic Releases or Appropriation in Aid (AiA).

Automatic Releases include money that has to be spent regardless of revenue collection and includes budget items such as: employee costs; administration costs; supplies and services; transport and plant costs; and property costs etc.

The authority to spend AiA is dependent on the amount of revenue collected by the Forestry Department. The amount that can be spent each month is authorised by the Ministry of Finance, Planning and Economic Development and this money is only released when the Commissioner for Forestry produces evidence of the amount of money that has been collected and banked by the Forestry Department. For this purpose, the Ministry has two bank accounts. One is the AiA account, which contains the money authorised by the Ministry of Finance, Planning and Economic Development for direct use by the Forestry Department. The second account is the Ministry of Finance Revenue Account, which contains any money collected in excess of AiA.

AiA includes items that are not included in the Automatic Releases and is used to support activities where the approved budget is insufficient. Much of this money is spent on field operations. The amount of AiA can be reviewed from time to time, depending on the amount of revenue collected by the Forestry Department.  While, in principle, the Commissioner for Forestry should be consulted about the allocation of AiA, this is not always done in practice. This leads to allocations of AiA that are insensitive to the priorities of the Forestry Department, even though the governing regulations do not permit the movement of funds across budget items (activities).

Foreign assistance to the Forestry Department

Since the late 1980’s, there have been a number of foreign development projects in the forestry sector in Uganda. These have included the Forestry Rehabilitation Project (which included several separate projects funded by different agencies), the National Biomass Study and the Tree Seed Project. Donors have included the World Bank, European Union and, in particular, the Norwegian development agency (NORAD), which has supported the forestry sector in Uganda for a very long time (see Box 2).

Box 2              A brief summary of development co-operation in the forestry sector between Uganda and Norway

Development co-operation between Norway and Uganda started in 1963 and support to the forestry sector has always been an important part of this bilateral development programme. In the early years, emphasis was placed on training, with support to Nyabyeya Forestry College and the establishment (in 1970) of the Department of Forestry at Makerere University. The Forestry Department was also strengthened by providing technical assistance and Norway funded a fairly large afforestation programme. Assistance was suddenly withdrawn in 1973 due to the military coup and brutal repression. However, Norwegian involvement in the Ugandan forestry sector resumed in 1987-88 through the Norwegian Forestry Society (NFS), a Norwegian NGO, and IUCN. From the mid 1980’s, the NFS was responsible for the implementation of the following projects: Phases I & II of the National Biomass Study (NBS); the Peri-urban plantations (PUP) component of the Forestry Rehabilitation Project; and the Combined Forestry Training (CFT) Project, which started in late 1984. The Norwegian development agency (NORAD) reviewed these projects in 1993 and recommended continuing support for another four years. This new programme included the following: Phase II of the Peri-urban plantations project; Phase II of the National Biomass Study; further support to the Combined Forestry Training Project and Phase I of the Nyabyeya Forestry College (NFS) Project; Support to the reorganisation and strengthening of the Forestry Department (the RSFD Project) and a Programme Co-ordination Project (including monitoring and evaluation and a small fund for forestry research); and limited unallocated funding, intended for "new projects". In total, NORAD provided NOK 62.4 million (approximately equal to Ush 10 billion) in financial support during the four years (or about NOK 15 million per annum), in addition to the NOK 11.7 million spent on the Forestry Rehabilitation Project during 1987 – 1992.

            The Forestry Rehabilitation Project (1987 - 1992)

After many years of neglect, the Government of Uganda decided to rehabilitate forests and the forestry service in order to protect the environment and ensure an adequate supply of forest products. Donor support was sought and this started with the Forestry Rehabilitation Project, which was supported by a number of donors led by the World Bank.

This project comprised the following six components:

Peri-Urban plantations: to establish and maintain 900 ha of forest plantations for use in nearby urban areas that would replace degraded peri-urban fuelwood and pole plantations on gazetted forestry land.

Farm forestry: to establish 3,700 nurseries in 24 districts that would produce 14 million seedlings for planting and by farmers for a variety of purposes.

Natural forest management: to re-establish 1,350km of boundaries in the natural high forest and plant them with marker trees.

Industrial softwood plantation rehabilitation: to rehabilitate 15,000 ha of softwood plantations managed on a 15 year rotation.

Training: to rehabilitate Nyabyeya Forestry College and provide in-service training for staff.

Forestry rehabilitation: to provide logistical support and infrastructure to strengthen the Forestry Department’s capability to implement this project and future activities.

The sources of funding and budgets for the six project components are summarised in Table 5 below and an example of a typical annual budget for the project (from 1990-91) is shown in Table 18 in Annex 4. Several of the individual projects included under the Forestry Rehabilitation Project were continued in later phases and project extensions (see below).

Table 5           Funding for the Forestry Rehabilitation Project 1987 - 1992

Project component	Funding agency	Executing agency	Amount	Amount (in US$ million)
Peri-urban plantations	NORAD (grant)	Norwegian Forestry Society	NOK 11,700,000	1.80
Farm forestry	DANIDA (grant)	Forestry Department and CARE	US$ 7,500,000	7.50
	CARE (grant)		US$ 180,000	0.18
Natural forest management	EDF (grant)	EEC	ECU 8,500,000	10.20
Softwood plantations	IDA (credit)	Forestry Department and DMF Forest Consult	SDR 10,000,000	13.46
Rehabilitation of the Forestry Department
Training	UNDP (grant)	FAO	US$ 1,547,663	1.55
Government of Uganda contribution			Ush 561,000,000	1.75
Total				36.44

Note: due to fluctuations in exchange rates, the amounts in US$ are approximate.

Peri-urban Plantations Project: Phase II (1996 - 2000)

Phase I of the Peri-urban Plantations and Pilot Wood Farms Project was one of the original components of the Forestry Rehabilitation Project and was implemented from 1988 to 1994.  The intention of the project was to introduce the Forestry Department to modern participatory forestry practices and to encourage private investment in industrial forest plantations on forest reserve land. The activities of Phase I were largely dominated by procurement and the establishment of infrastructure.

Phase II of the Peri-urban Plantations Project covered the period from July 1996 to June 2000. The objectives of Phase II of the Project were as follows:

to re-orientate the project’s personnel towards new skills in management, organisation, extension and communication;

to introduce commercial forest management into the forest plantations managed by the Forestry Department;

to expand private-sector forest management into existing forest plantations in peri‑urban areas;

to slightly expand Forestry Department forest plantations in peri‑urban areas; and

to establish Forestry Department forest plantations for sawlog production in two Forest Districts (Jinja and Mbarara).

Table 6           Planned NORAD contribution to Phase II of the Peri-urban Plantations Project, by activity and type of expenditure (in NOK ‘000)

Cost item	Total planned expenditure
Building construction and rehabilitation	2,000
Road construction and rehabilitation	600
Sub-total: infrastructure	2,600
4 tractors with trailer and disc plough	1,200
4 motorcycles	60
20 bicycles	20
Tools	100
Materials	100
Sub-total: equipment, machinery and materials	1,480
Old peri-urban areas for poles and fuel (100 ha)	200
New peri-urban areas for poles, fuel and sawlogs (200 ha)	400
Plantations (1,000 ha)	1,930
Sub-total: plantation establishment (Forestry Department)	2,530
Sub-total: all investment costs	6,610
Short courses	400
Pilot projects	100
Study tours	150
Post graduate training	150
Sub-total: human resource development	800
International consultants	660
Local and regional consultants	300
Sub-total: technical assistance	960
Backstopping, review, audits, communication etc.	600
Vehicles and machinery	1,135
Office and miscellaneous	200
Sub-total: other recurrent costs	1,935
Buildings	640
Roads	400
Sub-total: maintenance of infrastructure	1,040
Sub-total: all recurrent costs	4,215
Investment and recurrent costs	10,825
Contingencies (+7%)	875
Total	11,700

Phase II had a total budget of Ush 2.23 billion. NORAD offered to donate NOK 11.7 million (or approximately US$ 1.8 million) to the project (see Table 6) and the Government of Uganda agreed to contribute Ush 0.43 billion (U$ 0.43 million). Most of the direct contribution from the Government of Uganda was in the form of Appropriation‑in‑Aid.

Greater detail about the NORAD contribution to the Project is given in Table 6 above. The contribution from the Government of Uganda was channelled through the Forestry Department budget and included the following:

Ush 152 million in salaries for staff working full-time or part-time on the Project (equal to approximately 9% of the donor contribution to the project);

Ush 1,440 million for the use of the land in the Forest Reserves during the Project;

Ush 41 million to cover the payment of duties and taxes and purchase four tractors, four motorcycles and some other imported materials; and

approximately Ush 450 million in Appropriation-in-Aid, where income from the sale of forest products was ploughed back into staff allowances, vehicle and machinery running costs, plantation maintenance costs and office expenditure.

Detailed annual budgets for Phase II of the Project are shown in Table 20 and Table 21 in Annex 4.