Forest Taxation in Post-1994 Cameroon
Distributional Mechanisms and Emerging Links with Poverty Alleviation and Equity
This working paper documents a study of the Cameroonian forest taxation system, examining the distribution practices of the government.
The various actors involved in this process have different perceptions of the Annual Forestry Fee, according to interviews conducted across the study sites:
- Policy-makers believe the actual system for decentralization of forest tax revenue is an effective tool for local development and poverty reduction;
- Mayors generally see the distribution of the Annual Forestry Fee as justice more properly served to local communities who consider the surrounding forest resources to be their own. However, they criticize the many problems with the current Annual Forestry Fee distribution system, including: the delays in delivering the Annual Forestry Fee checks, the discrepancies between the amounts received and those published at the central level, and the inadequacy of the sums received at the Council level from the Annual Forestry Fee, given that all local development concerns fall henceforth to the Rural Councils;
- Local administrative authorities have mixed perceptions. When limited to the approbation of council budgets (the 40 percent), their appraisal of the poor results of the forest revenue distribution process remains objective, and they have a negative opinion of the mayors; but when they are involved with the execution of the actual projects conceived, their opinion of the mayors switches to positive;
- Local communities believe the distribution and utilization of the Annual Forestry Fee to be unfair and only contribute to increasing the wealth of the State, the mayors and the souspréfets;
- Municipal authorities in the non-forested zones focus on equity issues at the national level. Since wood is a national resource, these authorities contend that all Cameroonians should be able to benefit, thus supporting a national realignment of the Annual Forestry Fee redistribution.
In order to address shortcomings in the Annual Forestry Fee distribution process, we propose the following structures and mechanisms:
- Increase public information on the amount of Annual Forestry Fee distributed and its impacts;
- Monitor the entire process of Annual Forestry Fee distribution and promote transparency in its management;
- Improve the Annual Forestry Fee management process and focus on building capacity of those actors responsible for its execution (e.g., mayors, Rural Council members, Village Development Committee representatives);
- Develop and implement structures for downward and upward accountability, including enforcement of sanctions, when necessary.
This report documents a study carried out on the Cameroonian forest taxation system, particularly covering: (i) the distribution practices of the government, as demonstrated through transfers from the central government to the local authorities and from the latter to the local communities; and (ii) the interrelations of these transfers with equality and livelihoods. The study was conducted in the forested zone of Cameroon in 2006. It covers three Rural Councils in the East and Center provinces, with the inclusion of a “non-forested” council in the North-West province. In total, 22 villages and 525 households were targeted by the exploratory work and evaluation.
The emphasis on forests in the Millennium Development Goals as well as in the National Strategies for the Reduction of Poverty is an illustration of how political discourse is translated into the economic planning of human well-being. With significant forest resources—the third or the fourth largest by area in the Congo Basin, according to estimates—Cameroon has placed a key emphasis on sustainable use of them to meet national development objectives. Revenues generated by forest taxes constitute one of the options that could help Cameroonian forests contribute to the fight against poverty.
The forest tax system in Cameroon aims at a series of objectives, including: (i) the creation of revenues and of national prosperity; (ii) distributional equity and the reduction of poverty; (iii) fiscal decentralization; and (iv) the inclusion of local communities in access to forest benefits. The Cameroonian forest tax system also brings together a number of mechanisms. One of these, the Annual Forestry Fee, is representative of the political desire of the central government to use part of the revenues generated by logging activities to improve local development and livelihoods. Since 1999, however, the Annual Forestry Fee does not appear to have led to a significant improvement in the conditions of life at the village or household level in the forested zone. This fee is the primary focus of this report.
The Annual Forestry Fee is an area-based forestry tax and stems from Article 68 of the 1994 Forestry Law and subsequent modifying and accompanying texts. The Annual Forestry Fee is presented as an annual “governmental transfer” towards the Rural Councils and villages—one of the many forest taxes applied in Cameroon. In the logic of the transfer, 50 percent of the annual tax goes to the central government and the other 50 percent is allocated to relevant sub-national parties. The 50 percent allocated to local entities is further divided between the Rural Council with jurisdiction over the forest titles and the village communities surrounding these titles, with a 40:10 ratio, for the execution of socio-economic projects in the villages.
Data shows that from 1999 to 2005 the Annual Forestry Fee generated approximately 70 billion CFA francs (FCFA). The three Rural Councils considered for this study regularly received their share of the Annual Forestry Fee. However, discrepancies were found between the distributed amounts as published at the central level through the Forest Revenue Enhancement Program and the amounts declared as received by the municipal authorities. For instance, in one of these councils, the Rural Council of Mindourou (Eastern province), data from the central level indicates a transfer of 578 million FCFA as the 40 percent allocated to the council in 2004, while the municipal authorities acknowledged a transfer reported at 544 million FCFA. In the Rural Council of Gari-Gombo, figures from the central level indicate a transfer of 321 million FCFA as the 40 percent allocated to the community in 2004, while the municipal authorities acknowledge receipt of approximately 230 million FCFA.
Discrepancies were even greater when the 10 percent of Annual Forestry Fee allocated to the village communities was considered. For example, in 2005, in the Rural Council of Gari- Gombo (Eastern province), the amount registered by the municipal authorities as the village communities’ AFF allotment was only 55 percent of the amount registered by the Forest Revenues Enhancement Program (PSRF ). These discrepancies are indicative of an overall lack of transparency that surrounds the management and redistribution of the Annual Forestry Fee.
Differences also exist in the way the 10 percent actually committed to village communities is disbursed by the Council. In the Rural Council of Mindourou, for instance, each of the 16 villages received 8.5 million FCFA for the implementation of socio-economic projects in 2005, while other councils decided to allocate money according to different and not clearly defined rules.
As far as the impact of the 10 percent is concerned, results show that when data could be gathered the actual money spent on planned activities in a number of villages was found to be less than the amount supposedly allocated. Results show that several of the village-level projects carried out had been over-budgeted and recorded inflated costs, as already found by previous audits done on the Annual Forestry Fee distribution and disbursement.
The distribution and transfer of the Annual Forestry Fee on paper, therefore, does not necessarily reflect the actual execution of socio-economic projects at either the village or Council levels. Numerous villages have yet to benefit from any projects while their forests are exploited, mostly because of lack of responsible management practices and safeguards. As for the councils, this study found—in concordance with previous studies—that the 40 percent was allocated to diverse uses (such as overall administrative costs) and that the first objective of the transfers (local development) has not been an absolute priority. Though exceptions do exist, a swift evaluation of the undertakings in key places of the targeted communities, when data could be found, shows wide discrepancies between the amount allocated under the 40 percent and the actual value of implemented projects or activities.
For the purpose of analysis and comparison, the study calculated the theoretical amount of Annual Forestry Fee allocated per household annually in the three Rural Councils for 2005, based on the amount of the 10 percent actually received by the Rural Council. The resulting figures (18,000 FCFA/household in Mindourdou, 12,500 FCFA/household in Bibey, and 800 FCFA/ household in Gari Gombo) show that there exists asymmetry in the horizontal distribution of the Annual Forestry Fee (i.e., amongst forested Rural Councils) and that overall, the amounts of Annual Forestry Fee allocated per household are often extremely small in relation to median annual household income in Cameroon (340,000 FCFA). Thus, the amounts collected and redistributed annually do not guarantee by themselves that measurable impacts on the incidence of poverty or well-being are occurring.
This study found that the households interviewed perceived themselves as being poorer nowadays than a decade ago (i.e., comparison 1995–2005) in the study area. The perceptions of the local communities were put in context by data collected on basic social services and infrastructure. Results show that close to 96 percent of the villages visited are lacking electricity, 82 percent did not have health centers, 70 percent did not have wells installed and 30 percent did not have a primary school for all grades. In addition, the access that minority pygmy enclaves have to benefits of the Annual Forestry Fee remains marginal.
Furthermore, it is important to note that over the period of time considered by this study (2000-2005), the annual amount of the Annual Forestry Fee grew approximately by 25 percent, while other sources of governmental budget allocation (central government to regional) aimed at poverty reduction declined nationally by 17 percent. Though this inverse relationship would need a deeper analysis to be fully understood, it nonetheless shows that the Annual Forestry Fee not only boosted the budgets of many concerned councils, but it also replaced the money normally disbursed by other state agencies (i.e., the fee acted in part as a substitute and not wholly as additional funds).