Royalties on logging generate GH¢60m

Logging activities generated a total of GH¢60 million in the form of royalties over the last six years (2010-2015), a study on some selected District Assemblies’ (DAs) use of timber royalties, has revealed.

It shows that the quantum of royalties varies hugely from zero payment to GH¢122,000 between districts in a six month period and within the same district from one period to another.

The study said this was a consequence of the location of the commercial forest resource but then has implications for the choice of protocol for accessing the funds.

Civic Response, a natural resources and people's rights non-governmental organisation conducted the study to contribute to improving the use of forest royalties for the development of Ghana.  

It is also part of the Forest Governance Monitoring System developed by Civic Response under the European Union (EU) and Department for International Development (DFID)-project tackling deforestation through linking Reducing Emissions from Deforestation and Forest Degradation (REDD+) and Forest Law Enforcement, Governance and Trade (FLEGT). 

A Programme Officer of Civic Response, Mr Samuel Mawutor, said in an interview on April 20, 2017 that the study assessed the current situation in some selected districts and made recommendations from this evidence to those involved in the distribution and management of DA member royalties. 

He said it particularly identified governance failures and discussed how transparency and accountability might be strengthened.

Findings 

The overlapping geography of the areas makes it hard to see from disbursement reports exactly how much any one recipient should have received. 

So, for some DAs, a dozen or more data-points in each report have to be identified and tallied to obtain the total revenue they can expect. 

This problem is exacerbated when making year-on-year comparisons if administrative district boundaries change.

Also, while there is a general agreement that the system of collection and centralisation operates smoothly, it is not the case that the total royalties sum is available. 

Each edition of the FC / OASL disbursement report had a figure for logging company indebtedness, and this typically runs at about GH¢3.25 million, although by law payment is due within 30 days, and commercial rates of interest may be charged on arrears.

Whereas company indebtedness as reported in disbursement reports may be explained in part by the cycle of invoicing and receiving payments, the Auditor General reported in 2013 that the total debt from timber concessions in 2010-2011 stood at GH¢1.96 million.

Inconsistency in royalties’ usage 

Education on the use of royalties is very low and makes it difficult for various communities to recognise how royalties are used.

This represents a missed opportunity to promote to the public the concept that social infrastructure is a clear benefit from logging, despite the conventional wisdom that losing a country’s or community's natural resources is a fair price to pay for development. 

Generally, the findings suggested that while there has been an improvement, they may also be inadequate to resolve the main problems, as they appear to be aimed at improving accountability between different institutions; DAs, OASL and FC, but do not in themselves advocate transparency and public accountability. 

“Automatic transfer of royalties to the DAs and others entitled to receive them, combined with stronger systems of accounting for use of DA funds as a whole might be a more successful approach to explaining to citizens what public money is used for,” Mr Mawutor said. 

He added that this would oblige DAs to publish a simple presentation of all their incomes and expenditures, and to label projects constructed from royalties.

The new Forest and Wildlife Policy tacitly recognises that state management of forests has not delivered on development and improved lives of people, and therefore introduces important changes in the management of off-reserve areas. 

The first strategy is develop the capacities of decentralised local institutions including the district, municipal and metropolitan assemblies, traditional authorities and civil society organisations in sustainable ‘off-reserve’ timber resources and non-timber forest products management.

Second, government will enact the legislations that will enable communities and individuals to benefit from trees on their farms and fallow lands, provide off reserve tree tenure security, authority to legally dispose of resources and allocate greater proportion of benefits accruing from the resource management to community members individually or collectively.

These strategies indicate that community management of forests, and of the proceeds from logging in off-reserves is likely to be a more viable option for delivering benefit.

Royalties and their distribution

Ghana's 2011 forest policy statement aims at the conservation and sustainable development of forest and wildlife resources for the maintenance of environmental stability and continuous flow of optimum benefits from the socio-cultural and economic goods and services that the forest environment provides to the present and future generations.

At the same time, it fulfills Ghana's commitments under international agreements and conventions. 

Experts say that forest concessions are based on the premise that a country can afford to lose some forests that may or may not be replaced through genuinely sustainable forest management, provided the proceeds are used for the economic development of the country and also ensures positive social and environmental benefits.

Ghana has adopted the timber royalties’ mechanism as one way to achieve this. By taking concession areas out of public control and leasing them to private contractors, wealth generated from subsequent logging should, by rights, be shared.

In Ghana, there is a particularly strong legal and customary sense that the forest owners are local communities as represented by their traditional leadership structures or stools. 

The Constitution expounds this right by detailing the redistribution of member royalties to the Office for the Administration of Stool Lands (OASL), the relevant Stool, Traditional Authority and DA.