In Liberia, the Government is the owner of the forest resource and has the legal authority to enter into contracts with individuals and enterprises regarding the use of this resource. The forest charges collected from the use of the resource are based on production volumes and the land area under agreements. The volume assessment involves four types of forest charge. The area charge (Land Rental Fee) is levied on the total land area allotted to a logging company. In addition, two charges are also levied on the volumes of roundwood and processed products designated for export.
Currently, the Government of Liberia is not able to collect the full amount of forest charges that should be paid. For example, some individuals and enterprises acquire forest land under a Forest Products Utilization Agreement, but do not have the capability to commence full-scale operations. Sometimes they only operate for one or two months per year and then suspend or stop operations due to a lack of funds. During this inactive period, the assessed land charges (and other charges) start to accumulate. In many cases, the operators eventually abandon the forest land and the un-paid taxes become un-collectable. This situation also occurs with some of the larger companies, which suddenly declare bankruptcy and depart the country.
In addition to the above, the forest revenue system does not capture all of the charges that could be paid. For example, the Government does not assess or collect Land Rental Fees from harvesting activities on private and community land. In such areas, only the volume-based charges are assessed and collected. There are very few charges levied for harvesting and sale of NWFPs, although this is a significant activity in the forest. There are also no forest charges on processed forest products designated for domestic consumption, because these products are exempt from forest charges in order to encourage and promote domestic processing. Because of all of these gaps in the current forest revenue system, the potential contribution of the forestry sector to government revenue is not maximised.
With respect to the procedures for assessing and collecting forest charges, the current system used in Liberia (e.g. the TS, MPSS and WB forms and procedures) is efficient, but the implementation of the system is weak. The costs of collection are low compared with the amount of revenues collected, but the arrears that have accumulated are very high.
Another weakness of the system is that the evasion of charges appears to be quite high. This can be mainly attributed to the unattractive salaries and incentives paid to the field staff that monitor forest operations. Staff under-scale and mis-classify production volumes in favour of companies. For instance, mis-classification is sometimes observed when the Tally Sheets are reconciled with the Monthly Production Summary Sheets. The latter is used to assess the forest charges that an operator should pay and high value species (recorded on the Tally Sheets) are sometimes recorded and assessed as secondary species on the Monthly Production Summary Sheets, so that companies would have to pay a lower amount of total charges to the Government.
The present forest revenue system is simple. The rules for assessment, payment and collection are clear. In addition, the monitoring of the system is adequately defined through the use of closely inter-related production volume data recording documents. However, as the nature of businessmen dictates, there is always reluctance on the part of logging companies to pay the total amount of charges that are due. Thus, the total collection of revenue is not satisfactory.
In view of the above appraisal, the following improvements to the current forest revenue system are suggested for further consideration:
Competitive bidding for the granting of forest harvesting right must be established. This must only allow logging companies to operate, when they can demonstrate that they have the technical and financial capability to sustain their operations and pay all relevant charges.
A regulation must be produced and enforced, which specifies the penalty(ies) for failure to pay charges after a prescribed payment period (now 15 days after submission of bills).
NWFPs should be taxed to reflect the true revenue generating capacity of the forest. The (current) use of annual harvesting permits for production and sale of NWFPs is not enough.
The existing regulations must be used more vigorously to deter and minimise waste and maximise revenue collection (e.g. the provisions concerning the abandonment of concessions, waybills, declassification, etc.).
A minimal charge on processed forest products designated for local consumption should be levied. This would promote the sale of quality products and not just export rejects on the local market.
Before harvesting, every logging company should be required to pay in advance two years Land Rental Fees in addition to the requirement to pay a USD 40,000 deposit against future forest charges. This would enable the government to derive some revenue even if a company does not operate at all. This would compensate the Government for the time that the land is held idle, because another company could have operated (and paid forest charges) during this time.
The charges must remain simple and practicable, but they should be reviewed when necessary. Furthermore, the FDA should carry out a fuller investigation of requests from companies for adjustments in charges before any adjustment is made.
A forestry sector cost study should be implemented to investigate production costs (e.g. logging, transport, processing and shipping costs). This would help to set forest charges in a way that reflects the social, economic and environmental objectives of the government.
Analysis and monitoring of world timber prices must be strengthened. The present system is weak, because the FDA relies on the FOB prices quoted by producers and exporters when they come to examine forest charges.
The forest revenue system is mainly an administrative instrument rather than a technical instrument. The main purpose of the system is to assess and enforce revenue collection. The main contribution of the system to sustainable forest management is through the different levels of forest charges that are levied on designated exports. Charges levied on exported roundwood are higher for the primary species (redwoods) and lower for the secondary species. These differences in charges are designed to discourage operators from only taking the most valuable species and to encourage them to take the lower valued species. In this way, they encourage operators to harvest the maximum sustainable yield, which is one aspect of sustainable forest management.
The impact of the forest revenue system on other aspects of sustainable forest management is not easy to assess. In general, the forest revenue system is not optimal because it does not maximise the benefits of forest operations to the country. The technical provisions of forest management plans (the restrictions on annual coupe size, diameter cutting limits and other measures) would probably have more of positive impact on sustainable forest management if they were enforced properly. There is a Performance Bond, which is supposed to ensure sustainable forest management, but in reality it is not very effective.
The FDA is the government agency that is responsible for monitoring and supervising the activities of logging companies. Forest laws, rules and regulations are enforced with the aim of ensuring that companies practice sustainable forest management. The companies decide their own markets outlets, negotiate prices and conclude sale contracts without the interference of the FDA. When it comes to the exportation of timber and timber products, the FDA simply monitors and supervises such activities to ensure that the appropriate species and corresponding volumes declared are shipped and there is no mis-classification. Given the strength of international market forces and the speed with which they change, it is doubtful whether the forest revenue system can be used to bring supply and demand into balance effectively in the short-term.
Liberia is a unitary state and forest revenue assessment and collection are centralised. This is carried out in the capital of the country and not by counties or local communities. The central government makes annual budgetary allotments to county administrations (15 counties), but there is no sharing of forest revenue with other stakeholders (e.g. private logging companies, forest owners and forest-based indigenous peoples). Because of this, it can be concluded that the forest revenue system is, on the whole, unfair and inequitable.
Recommendations to improve the impact of the forest revenue system on sustainable forest management are as follows:
An improved relationship with the local population (e.g. indigenous people) should be established and they should be given incentives to manage local forests sustainably.
Indigenous and local people should be consulted at all stages of forest operations.
Indigenous and local people should be given opportunities for participation and gainful employment in forest operations and industries. Such action would encourage them to sustain the productive and protective functions of the forest,
Deforestation and forest degradation is increased by hunters and farmers who live in the heart of the forest and carry out shifting cultivation (slash and burn farming). They must be persuaded to relocate from the National Forests.
In recent years, the overall level of government expenditure on sustainable forest management has not been adequate. For instance, prior to Executive Order No. 4, the FDA was only entitled (by law) to receive 20 percent of the revenue from stumpage and land rental fees collected by the MOF. However, in reality, the full amount of this subsidy was never received. It is estimated that, on average, only about 15 percent of the FDA’s total entitlement was transferred to the FDA by the MOF (see Table 23).
Table 23 Comparison of FDA budget entitlement and actual budget transfers from the MOF in 1996 to 1999
|
Year |
Amount of subsidy received by the FDA
from the MOF |
Estimated entitlement for the FDA (in USD) |
Proportion of entitlement |
|
1996 |
131,481 |
? |
? |
|
1997 |
? |
? |
? |
|
1998 |
165,000 |
1,056,000 |
16 |
|
1999 |
200,000 |
1,490,444 |
13 |
The aspects of sustainable forest management that are currently receiving the highest funding in the FDA are the monitoring and supervision of logging companies. Reforestation (forest plantation development) and forest research currently receive less funding. In order of priority, the following forestry activities must be adequately funded:
Forestry research and extension services
Currently, there are two critical problems with financing the FDA. The first is the lack of foreign financial assistance and the second is the difficulty in securing funds locally. Since the end of the civil crisis and the subsequent democratic election in 1997, the international community (including the World Bank and the African Development Bank) has been reluctant to assist the Government of Liberia. On the other hand, foreign logging companies accumulate huge arrears of forest charges.
Furthermore, although forest revenue collection is very low, the amounts that are collected are not used exclusively by the FDA, but have to be shared with the central government to fund other priority programs and projects. These problems could be minimised and or eradicated if the international community extended financial assistance and loans to the country.
In the case of logging companies’ failure to pay their forest charges, stringent measures must be put in place. Reasonable penalties and fines (such as revocation of agreements and transfer of concession rights to others) should be implemented to deter the accumulation of arrears.
The Government does not have any scheme under which grants and subsidies are granted to stakeholders in the forestry sector. As these do not exist, it is extremely difficulty to assess what their impacts (positive or negative) might be on sustainable forest management. It is recommended that incentive schemes should be established for Liberian forest operators. This implies that special provisions should be made for forests under the control of local entrepreneurs and social groups, especially indigenous people who live at the fringes of the forest. This is recommended because the revenue earned by these groups will remain in the country, improve their living conditions and thus bring about social and economic development in the country.
The domestic production of food in Liberia is low. This is especially true for rice (the staple food in Liberia). Consumption of this essential commodity is largely met by imports. Therefore, the Government always prioritises agricultural development and provides subsidies for this sector.
Upland shifting cultivation (slash and burn) is the traditional farming system used in Liberia and farmers are always reluctant to move to lowland areas and swamps, despite public awareness campaigns and extension services that teach them that the yield from the latter is much higher. Subsidies for rice cultivation are a huge incentiv e to clear forest land, which is major cause of deforestation in the country. The FDA is the only government institution that always attempts to provide incentives to support sustainable forest management. The FDA encourages agroforestry and tree farming (community forestry), by providing free seedlings and establishing plantations for fuelwood and charcoal production. The objective of this effort is to reduce the rate of deforestation and forest degradation.
The subsidies to farmers should continue, but the Government must persuade the farmers to work in the degraded, logged over and lowland areas and not in the heart of the National Forests and other forest areas.
The forestry sector now ranks number two in terms of revenue and foreign exchange earnings. In view of the meaningful contribution of this sector to the economy and environmental protection, Government statements have always supported sustainable forest management, in order to maximise the social, economic and environmental contribution of forests to the country. The Government’s recent policy statements emphasise the granting of concessions to large, technically and financially efficient logging companies, which are required to establish wood processing plants and promote the domestic production of quality products.
In an effort to give true meaning to environmental protection, the Government established a Commission on the Environment (COE). This Commission is empowered to draw-up guidelines and formulate policies to govern the activities of ministries and agencies concerned with land-use.
The FDA now has greater financial autonomy and sufficient financial resources, due to Executive Order No. 4. For example, the FDA budget for the 2000-01 financial year is estimated at USD 7.9 million, with a recurrent budget of USD 4.6 million and a conservation budget of USD 3.3 million. However, the current status of FDA staff is inadequate. There is a need for increased employment of trained and qualified staff, especially field technicians, to ensure that control, supervision and monitoring activities are implemented properly.
The attitude to change mentioned above is in the right direction. However, it will be necessary to turn these statements into action if the forest is going to be managed properly for current and future generations. Certainly, the Government’s positive attitude to change in the forestry sector is already turning into action. This is reflected in recent policy documents, such as the Forest Policy Review, the new National Forestry Law and Executive Order No. 4. A National Reconstruction Plan also exists, but this has not yet been implemented due to a lack of funds. The plan includes the forestry sector and environmental protection programs and projects.
In addition to the above, the Government has requested technical and financial assistance from a number of international organisations such as ITTO, FAO, CI and WWF. The proposed projects will analyse how the social, economic and environmental performance of the forestry sector can be improved.
