Background
The Directorate of Forestry (DoF) was established at Namibia’s independence in 1990, to manage Namibia’s forest resources and highlight the importance of forestry to national development. The main challenges for the DoF are infrastructure and manpower development and the improvement of data and information for forest planning and management.
The first Forestry Strategic plan for Namibia was produced in 1996 and outlines four priority programmes: Capacity Building, Environmental Forestry, Community Forestry and Farm Forestry. In August 1997, the Namibia-Finland Forestry Programme started to implement the four programmes of the Strategic Plan. In addition, Namibia has recently produced new forestry legislation and a new forest policy, which are currently awaiting approval.
Description of the forest revenue system
The DoF is currently the main authority collecting forest revenue and it works independently of other institutions. There is no formal centralised forest revenue system that sees to administering charges, collecting and sharing of forest revenue. In addition to revenue collected from the production of forest products, a significant amount of revenue is collected from wildlife permits issued for forest areas, but information about this is currently unavailable. Hence, this report presents only the data available at the DoF.
The process of pricing and collecting forest revenue is entirely managed by the DoF. The Directorates of Specialist Support Services and Parks and Wildlife Management carry out the pricing and collection of wildlife revenue. All the revenue collected by any government institution goes to the Ministry of Finance and the disbursement of government revenue is managed by the Ministry of Finance in the national budget process.
Forest charges
Charges are levied on all roundwood production in Namibia, irrespective of the type of land holding (see Appendix 1 on page 27 for the schedule of charges). There are currently no land taxes in Namibia, but the government is in the process of introducing a Land Tax Bill.
Charges are also levied on the commercial production of a few non-wood forest products (grasses; reeds; Makalani palm leaves; and ornamental dry roots) and for various permits (including permits for trophy hunting and live game exports and fees to register as an operator in the wildlife sector).
There are no direct charges levied on the production of processed forest products, other than a general sales tax of about eight to ten percent (which is being replaced by a Value Added Tax). In addition to this, DoF collects fees for permits issued to exporters of wood products and the Government collects import duties on wood and wood products. There are also some fines for breaking forest laws, but these are generally quite small.
Administration of the forest revenue system
The DoF consults with all relevant stakeholders when it establishes the levels of forest charges. The charges shown in Appendix 1 were established in 1997 and have not been updated (although there is provision for annual revisions). The forest charges are published in the government gazette rather than the press, but they are disseminated to any interested member of the public through the DoF's offices.
Roundwood charges are collected through the forest permit system. Permits and/or concessions are issued for a fixed area for one year and charges are based on the volume to be cut in the forest. Due to the small size of the DoF (particularly in terms of manpower), it is quite likely that there may be some evasion of charges.
Currently, district offices, regional offices and the head office of the DoF collect all forest revenue and transmit this to the Ministry of Finance, following the rules established in the Finance Act and Treasury Regulations. However, the DoF is currently working on developing alternative arrangements as part of their work on community forestry.
Total revenue collection
From 1993 to 2000, total annual revenue collection amounted to between N$ 209,347 and N$ 937,590. The DoF does not retain any of this revenue, which is all transmitted to the Ministry of Finance.
Government expenditure on forestry
The Government (through the Ministry of Finance) is the main source of funding for the DoF. The annual budget for the DoF has increased from N$ 5,312,000 in 1993-94 to N$ 14,137,011 in 1999-00 and it is expected to increase slightly in the future. There is also some additional expenditure on forestry training at the Ogongo Agricultural College (financed by the Ministry of Agriculture, Water and Rural Development). In addition to domestic government expenditure, foreign assistance to the DoF amounted to N$ 87,778,000 over the last decade. Finland was the largest supporter of the DoF, accounting for 63 percent of all foreign assistance.
The revenue raised from the sector is much less than the budget of the DoF. However, the total economic contribution of Namibia’s forests to society is several times higher than the budget of the DoF.
There are currently no grants or subsidies offered to companies formally registered and operating in the forestry sector. However, informal operators in the sector (e.g. wood carvers) implicitly benefit from falling outside the system (i.e. they do not pay any forest charges).
The effect of fiscal policies on sustainable forest management
The forest revenue system is closely linked to the issuance of harvesting permits, which are based on inventories and farm inspections. This permit system is meant to ensure that harvesting is only allowed at a sustainable level. Thus, it is a mechanism to control and limit the exploitation of forest resources.
The Government has demonstrated a strong commitment to sustainable forest management, by increasing the DoF budget and ensuring that the budget is readily available. The forestry sector is also mentioned in the National Development Plans of Namibia (NDP I and the NDP II, which is currently under preparation) and the Government is actively engaged in a process of policy and legislative reform.
In the agriculture sector, livestock loans have led to fencing of public land, which has led to over-exploitation and overgrazing of the remaining unfenced land. This is the main example of a fiscal policy in another sector that has had an impact on forestry in Namibia.
Discussion and conclusions
At present there is really no comprehensive and unified forest revenue system. DoF, and other related agencies responsible for collecting forestry sector revenue are not yet well co-ordinated in this endeavour. Thus, it is not possible to reliably determine whether or not the DoF budget can be financed solely by taxes and levies from the forestry sector.
There is a need to set up a centralised forestry revenue system for the whole forestry sector that will readily provide data and information on revenues raised by government from the forestry sector. In the meantime, DoF should continue searching for the fiscal data related to forest charges from the pertinent institutions and FAO should extend further support in this regard. In addition, DoF should examine how to increase revenue collection from the forestry sector.
