A Policy and Legal Analysis of SMALL AND MEDIUM FOREST ENTERPRISES IN LIBERIA

1. Cllr. S. Lofen Keneah Silas Kpanan’Ayoung Siakor* A Policy and Legal Analysis of SMALL AND MEDIUM FOREST ENTERPRISES IN LIBERIA

2. Structure of Presentation Introduction SMFEs in context The global context The local context Local context The analysis The policy The Legal Main conclusions Recommendations

3. SMFEs: what are they? Business operations aimed at making a profit from forest-linked activity, employing 10 -100 full-time employees, or with an annual turnover of US$10,000 - US$30 million, or with an annual round-wood consumption of 3,000 - 20,000 m³ (Macqueen, 2008) Enterprises whose economic activities are undertaken mainly at the individual or household level, usually employing members of the family or close relatives and neighbors, and where salaried labor is negligible (Kozak, 2008) All business entities, including those owned and operated by individuals or households, involved in the small scale extraction, processing and marketing of both timber and non timber forest resources. (Adapted for Liberia) Startup capital may range from the unpaid labor of the gatherer, up to USD5000 mainly for pit sawing groups.

4. SMFEs include Pit sawing groups; Plank and timber sellers; Furniture makers; Commercial hunters; Bush meat traders; Palm oil producers and traders; Charcoal producers and traders; Snail gatherers and traders; Rattan chair makers; Carvers (wood carvings); Bee keepers and natural honey gatherers; and Traders of plant-based and other herbal medicine (barks and roots)

5. SMFEs in context (global and local) SMFEs help to reduce poverty, ex. income to local entrepreneurs including women (bush meat traders) Sector employs 20 million people and generate USD130 billion world wide (Macqueen, 2008) In 2007 the FDA reported USD513,000 as fees collected from pit sawing Approximately 100,000 cubic meters of sawn timber produced annually by pit sawing (Blackett & Gardette, 2008)

6. The policy framework Government of Liberia recognizes the importance of forest resources to local communities and small operators Progressive policies including PRS and National Forest Policy “Develop the forestry sector as a source of higher incomes for the rural population, ensuring that the benefits are shared equitably…” (PRS, 2008) “To encourage local communities to sustainably manage their forests by creating rights, transferring control and building local capacity for forest management within communities” (PRS, 2008)

7. The Legal framework 1976, An Act creating the Forestry Development Authority which call for the protection of forest products and its productive usages National Forest Reform Law (2006) which mandated FDA to develop regulation that will grant local community user and management right, transfer to then control of forest use and sustainable forest management Community Right Law (2009) related to forest lands NTFP Regulation (2008) Review does not include pit-sawing regulations and CRL regulations

8. The legal framework The laws and regulations address SMFEs and provide opportunities for bringing them into the formal sector; BUT Imposes restrictions on local gatherers and entrepreneurs to unprofitable local market Creates multiple structures that leads to confusion and undefined authorities and the regulation of forest products Unnecessary and unenforceable legal provisions, which provide opportunities for rent-seeking or corruption Multiple fees on forest products that create obstacle to their commercial viability (if you want to operate legally)

9. Examples NTFP Reg. 111-08, Section 9e Resident community members/producer groups may sustainably harvest NTFPs from their forest lands for use within the community, or for commercial purposes within the community NTFP Reg. 118-08, Section 9b Forest use permit holders harvesting NTFPs within any community should provide compensation/ return some of the benefits to the community before lifting of the products to the market Allows resident community members to engage in trade of NTFPs but restricts them to unprofitable markets within their communities but does not impose such restrictions on those from outside the community (see 9b)

10. Summary of fees and costs for SMFEs

11. Examples of fees

12. Main Conclusions Forward looking policy agenda, but confusing and at times contradictory legal provisions. Addressing these confusions and contradictions is critical if the SMFE sector and by extension the informal forestry sector is to contribute significantly to the overall forest economy of Liberia. Accessible and accountable rule making and enforcement bodies (regardless of whether they are CFDCs or CFMBs) at the local level to coordinate with FDA is crucial. However, given the long history of excessively centralized forest governance and management in Liberia, these changes will require more than provisions in law; although those would be useful starting points. Creating CFMBs or CFDCs and giving them authority is not enough.

13. Conclusions cont’d Realizing the full potential of SMFEs will depend on the extent to which the government and stakeholders go to fulfill the policy vision established in the PRS and the National Forest Policy, particularly the objectives for poverty reduction and improving governance of forest resources. A progressive regulatory framework and proper implementation, would no doubt improve the situation of SMFEs and the (informal) sector delivering benefits for small operators and communities.

14. Conclusions cont’d The absence of a progressive, equitable, clear and robust regulatory framework means SMFEs, especially those owned and managed by forest dependent peoples will continue to face two contradictory and conflicting choices It tells local people to either continue to operate outside of the formal sector and develop more creative ways of beating the system or submit to a regulatory regime that is impractical and unenforceable and therefore open to abuse and unequal enforcement.

15. Conclusions cont’d  Efforts to bring informal operators into the mainstream forest economy and by extension the national economy, which may require better regulation is laudable. If it is done right, this could enable Liberia to better access the full value of the forests in terms of the range of goods and services it provides. Not only will the forest be valued for its timber stock, it will also be valued for its variety of non-timber forest products. There is no doubt that SMFEs have the potential to contribute to the fight against poverty in rural Liberia, especially in forest communities.

16. Recommendations cont’d Build into the law and regulations provisions that are gender sensitive and specifically favorable to women involved in gathering, processing and trading in NTFPs. This may include, for example exemptions from paying fees on certain products and scale of activities. In the short term address the information and knowledge gaps that exist locally and nationally. This will enable the government and stakeholders to develop the knowledge base that will be required to improve the laws and regulations in the medium and long term.

17. Recommendations Amend the laws and regulations to make them consistent with the policy vision. The legal framework should promote compliance and remove the restrictions on local gatherers and entrepreneurs. Simplify the fee regimes and collection structures to minimize the confusion facing SMFEs, especially local gatherers and entrepreneurs. Eliminate unnecessary fees to prevent corruption and rent-seeking behaviors.

18. Recommendations cont’d Put in place and strengthen the local institutions that are required to play the new roles devolved to the local levels. The CFDCs and CFMBs that are now poised to play major roles in the formal sector should be supported to function properly. Without targeted and sustained support they are likely to become part of the challenges SMFEs face. Clarify the status of NTFPs in the various categories of forests and the institutions responsible for managing those NTFPs. For example, there is no clear distinction between NTFPs within concessions, outside of concessions and within community forests. As different institutions have different levels of authorities over these categories of forests, there is a need to clarify their roles and responsibilities related to NTFPs in each category.

19. Recommendations Empower forest dependent communities and rural poor to engage and benefit more from the formal forest economy through proper business organization. This could have positive impacts on governance, as more people at the local level engage with governance processes since they would now have more direct economic interest in the sector. Provide incentives for external financiers to collaborate with Liberian entrepreneurs, especially local businesses and gatherers of forest products. This could include provisions favoring partnerships with Liberians

20. Recommendations Adopt a phased approach to implementation of the rules to allow for actors to learn and adapt to the new responsibilities, procedures and systems. This will ensure that the local institutions are not overwhelmed. Failure to ensure this may create conditions for the early collapse of these community structures. THANK YOU!!