Kenya’s closed canopy forest currently covers some 2.35 million ha and is divided into two categories: gazetted forest (1.57 million ha) and ungazetted forest (0.78 million ha). In addition, there is approximately 2.10 million ha of other woodlands, 24.80 million ha of bushland and 10.70 million ha of wooded grassland. A further 9.54 million ha of woody vegetation is also found on farmland and in settled areas
The Forestry Department (FD) manages all gazetted forests and, through agreed arrangements, an additional 180,000 ha of ungazetted trust land forest that belongs to local authorities. Within this total, the FD manages forest plantations that cover about 170,000 ha and which are managed specifically for industrial roundwood production.
Most forest revenue comes from charges (royalties) on the production of major forest products (i.e. roundwood), especially from production in forest plantations. All of this revenue is submitted to the Treasury. In addition, a small amount of revenue is raised from operating licence fees and charges on minor forest products (non-wood forest products and services), which is credited directly to the Ministry’s budget. There are also a number of other taxes and charges paid by the sector to other parts of central and local government.
For roundwood production in forest plantations, forest charges are determined using the replacement cost method. This calculates the charges that would be necessary to recover all forest management costs. These charges should be paid by all producers, but the pulp and paper mill has been allowed to pay less in order to compete with imported products. In the natural forest, high levels of charges have been set to discourage the use of the resource and allow time for regeneration.
The FD is the only institution that assesses and collects forest charges. The total amount of charges that should be paid is based on an assessment of standing volume and a detailed procedure is used to calculate this. In addition, ground scaling (assessment of felled volume) and weight are also occasionally used to assess charges. In general, there have been some problems with the under-reporting of assessed volumes and charges.
Total revenue collection has been less than expected, due to the low charges paid and under-assessment of charges. In addition, there have also been some problems with arrears of charges. Total revenue collection has fallen from Ksh 216 million in 1993-94 to Ksh 128 million in 1999-00, due to the problems noted above and a decline in harvesting. The decline in harvesting has been due to a ban on production from the natural forest and the FD restricting production in forest plantations (due to a lack of funding for reforestation).
The total budget for the FD has fallen from Ksh 1,076 million in 1993-94 to Ksh 883 million in 2000-01. Recurrent expenditure is funded by the government and has increased slightly over the period. However, development expenditure is funded largely by donors and this has declined in recent years. Currently, government funding is largely concentrated on salaries, but this is inefficient and imbalanced because staff to not have the necessary tools and equipment to implement operations. The other major government institution working in the forestry sector is the Kenya Forestry Research Institute and it has similar budget problems.
The forest revenue system in Kenya could be improved in a number of ways. First, the proper implementation of assessment and sales policies could increase revenue collection substantially. In addition, the full amount of charges (royalties) should be collected and charges should be revised regularly to reflect the market price of products. Public auctions and competitive timber sales could help in this respect and improved data collection and information management would also assist with revenue collection.
Financial independence for the FD is proposed as one way to increase the incentive to collect all forest revenue and improve efficiency. It is recommended that the FD should be allowed to keep a proportion of the forest revenue collected, so that this can be reinvested in forest management. It is also suggested that there should be more partnership between the public sector and the private sector in forest plantation management and the development of farm forestry.
More generally, there is a need to increase the participation of other stakeholders in the sector if the goal of sustainable forest management is to be achieved. The FD is working towards this with the implementation of new and revised forestry policies and legislation.
