Liberia - Growth with development - basic economic report (Vol. 4 of 7) : Forestry and forest industries

CIRCULATING COPY RETURN tO Report No. 426a-L3R TO BE RETURNED TO REPORTS D EPORTS DESK Liberia WITHIN Growth with Development ONE WEEK A Basic Economic Report (In Seven Volumes) Volume IV: Forestry and Forest Industries F GUry March 1, 1975 Western Africa Region Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association E=:- --- This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY BY2UIVALENT The official monetary unit is the Liberian dollar, with a par value equal to that of the U.S. dollar. Apart from the Liberian dollar, the U.S. dollar is a legal tender in liberia.  LIBERIA: GROWTH WITH DEVELOPMENT: A BASIC ECONOMIC REPORT Volume IV: Forestry and Forest Industries Table of Contents Page I. The Role of Forestry and Forest Industries in the Liberian Economy 1 II. Recent Developments 8 III. Development of Forestry Policy 16 IV. Timber Concession Policy 21 V. Some Policy Issues, Proposals and Recommendations 28 VI. Projected Export Earnings and Government Revenue 15 Map APPENDICES I-I   I. The Role of Forestry and Forest Industries in the Liberian Economy 1. Despite the phenomenal expansion of timber production in recent years, the role played by the forestry sector in the Liberian economy is still relatively small if compared with the importance of iron-mining and rubber production. However, under a proper set of government policies, forestry and forest industries could play a vital role in the development of the Liberian economy in the future. In the face of the expected leveling- off in the production of iron ore and rubber, at least, in the medium-term, a continued rapid expansion of timber exploitation over the next few years and the immediate establishment of a sizeable timber processing industry could play a key role in mitigating the likely slowdown of the economy's overall growth. In the longer term, in view of the bright demand prospects for forest products, forest resources, which are renewable, could form a permanent resource basis for the development of an increasingly sophisticated timber processing industry in Liberia with the possible benefits of "linkages" for the rest of the economy. 2. Forestry's contribution to GDP at current factor cost is estimated to have been about 8.1 million dollars in 1972, accounting for 2.2 percent of the total estimated GDP in money economy in that year. 3. Export earnings from forest products were 8.2 million dollars in 1972, accounting for 3.3 percent of total merchandise exports in that year. Export earnings from forestry have increased very sharply in the last five years, rising from less than 1 million dollars in 1967 to over 8 million dollars in 1972 and quite probably to about 15 million dollars in 1973. h. "Direct" contribution of the forestry sector to government revenue -has also been increasing sharply in recent years. -The sum o the sur ace rents charged on forest concession areas and the stumpage fees collected on the timber felled increased from less than 300 thousand 4ollars iJi 1968 to about one million dollars in 1972; the latter is to be compared with the 1.9 million dollar revenue from rubber concessions during the same year. ' In 1972, the "direct revenue" from forestry accounted for only 1.5 percent of the overall government revenue and 5.5 percent of the total revenue from iron ore, rubber and forestry concessions. 5. There are no official estimates of total mp2loment engBged in forestry and sawmilling. However, based on a very limited nimber of intel- views with large timber companies, it is estimated that, as of March 1973# 2,500-3,000 workers were engaged in forest utilization and sawmilling activities including transportation of logs and sawnwood by timber companies' trucks. Estimated total employment in the money economy sector as of the final quarter of 1972 was around 45 thousand. Contribution of forestry to employment thus appears to be roughly 6 percent as of early 1973. 1/ No significant amount of corporate income tax has been collected by the Government from the forestry concessions, either because of tjpx holidqys or because of lack of reported profits.  6. The resource base: Liberia has a total area of 11.1 million hectares (ha)l/ of whichi about 2.5 million ha, or 6.2 million acres, are covered by areas of closed tropical rain forests (Table 1). Two-thirds of the closed rain forests are located in the southeast of Liberia.2/, nearly one-third in the northwest, and only 2 percent in the north around Nimba. 7. A complete inventory work covering all National Forests was carried out from 1960 to 1967 by a German-Liberian team under the bilateral technical aid program of the Federal Republic of Germany, and the report has been published in 12 volumes subsequently. 8. For the purpose of national planning the great variety of structures of Liberian closed forests has been classified into seven timber areas, on the basis of the major marketable timber 3pecies. The most important criteria used were distribution of Tetraberlinia,3 mixed "saw timber" and "export" species. The seven areas thus classified are identified as Areas WI, W2, N3, El, E2 and E3 in Map 1. 9. In Table 2, the closed forest in the seven timber areas mentioned above is broken down into: a. e rl itable arsas inside and outside national fores4s, and b. unexploitable areas. In the opinion of the inventory team, of the 25,000 sq. km. (2.5 million ha) available, about half is exploitable, while the other half is eithftr too poor in marketable timber or inaccessible due to rough terrain. Irn the southeastern region of Liberia, the major portion of the closed fovest is exploitable; i.e., 10,800 sq. km. (1.1 million ha) with 40 percent being accounted for by territory outside the national forests. As for t1e north- west region, the major portion of forests is inaccessible (W2 and W3) and only the southern forests are exploitable; 1,000 sq. km. in Wl and a minor part of W2. Furthermore, the exploitable forests in the northwest are expected to be depleted within a few years, due not so much to logging operations as to shifting cultivation. 10. The most important timber areas, thus, are located in the south- east of Liberia with more than 80 percent of the exploitable forest of the country. Thie exploitavle timber in this area in terms of the Minimum Timber 1/ 1 sq. km. - 100 ha - 247 acres. 2/ Roughly speaking, the area east of the LAMCO railroad connecting Nimba and Buchanan. 3/ Tetraberlinia tubmania. Traded under the trade names of Tet, Sekon and Rose wood. A uniquely Liberian species quite suitable for veneers, ply- wood and sawnwood. Cf. German Forestry Mission Report No. 10, Monograph on Tetraberlinia tubmania, 1970.  - 3 - Table 1: Closed Forest Areas in Liberia Northwest-Liberia sq.km. appr. acres National Forests 5,400 1,330,000 National Park 280 70,000 unprotected For. 2,700 670,000 total 8,380 2,070,000 North-Liberia National Forests 415 100,000 unprotected For. 200 50,000 total 615 150,000 Southeast-Liberia National Forests (mostly unpopulated) 9,600 2,400,000 National Park 130 30,000 unprotected For. 6,000 1,500,000 total 15,730 3,930,000 Overall Total for Liberia: appr. 25,000 sq.km. or appr. 6 million Acres out of this: National Forests and Parks 16,000 sq.km. 4 million acres Unprotected Forest 9,000 sq.km. 2 million acres Source: German Forestry Mission to Liberia, General Report on National Forest Inventory in Liberia Technical Report No. 1, 1968, Table 4.  -14- Potential (MTP) has been estimated by the inventory team and is shown in Table 3; with a breakdown into three timber areas, El-3, and by marketable species groups and in terms of the MT? of Tetraberlinia. 11. Total volume of exoloitable, marketable timber of above-cut-limit sizes in the southeast has been estimated at 31.9 million ml as shown in Table 3. The same timber areas are believed to contain at least an equal volume of the same species in the below-cut-limit sizes. Although annial mean increments of various species involved are not known in any degree of accuracy, the maximum annual exoloitation of all Liberian timber areas on a sustained-yield basis may be presumed to be around half a million m-) assuming that it takes an average of 6