Technical Report: Socio- Economic Impact of Forest Harvesting Moratorium in Kenya

EXECUTIVE SUMMARY

Kenya has had two harvesting moratoriums in public and community forests; the first one was from 1999 to 2012 and the current one from 2018 to date. The current moratorium was imposed to allow for streamlining management and governance in the forestry sector. Kenya Forestry Research Institute undertook a study to assess the socio-economic impact of the forest harvesting moratorium to inform policy decisions. To collect data and information the study applied several approaches namely; literature review; industry and market surveys; case studies; key stakeholders and key informant interviews, focus group discussion and extrapolation of results. The study stratified the country into Western, Central and Coast regions for purposes of data collection and information gathering. Sample representative counties with significant forestry resources that supported vibrant wood consumption and processing were selected and key actors in forest products value chain were selected for data collection. A structured questionnaire was administered to sawmillers, owners of wood treatment plants, industrial wood users, tree growers and SMFE’s on forest products. Market surveys for key forest products were undertaken in selected urban towns.

The findings indicate that the harvesting moratorium had both positive and negative socio-economic impact on various actors and players in the forestry industry. Many stakeholders in the sector realized significant losses due to the moratorium. The sawmilling industry which relied on 80% of raw materials from public forest plantations had a reduced turnover of over 65% from an estimated annual peak of KES 27 billion in 2017 to KES 9.5 billion in 2018. Following the imposition of the moratorium many sawmills were operating at about 35% of their installed capacity resulting in losses associated with idle machinery estimated at KES 10 billion.

The moratorium led to employees redundancies in the sector with an estimated 85% of the employees laid off translating to income losses of about KES 3.9 billion per annum. The moratorium also affected the supply of wood materials resulting in scarcity and higher prices. Firewood prices increased by 25.5% from an average of KES 1,857 in 2017 to KES 2,330 per m3 in 2018. As a result, the firewood dependent industries, institutions and farmers incurred additional expenditure of KES 1.28 billion, KES 3 billion and KES 46 million for tea factories, schools and tobacco farmers respectively. The price of charcoal rose by 40% from KES 1,020 per 50 Kg bag in 2017 to KES 1,430 per bag in 2018. The moratorium had a negative impact on production and trade in charcoal as consumers incurred an additional cost of KES 19.7 billion. The moratorium increased the market prices of timber and wood products. Prices of sawn timber increased by a mean of 22.65% with prices increasing by 36.1%, 28.7%, 14.7% and 11.1% for Cypress, Pine, Eucalyptus and Grevillea timber respectively.

For treated fencing poles price increase varied depending on the sizes of the poles; small diameter treated poles increased by 24.4%, medium poles by 14.7%, large by 16.6% and standard transmission poles by 5.5%. The moratorium also affected the reconstituted wood industry, furniture making and wood carving business.

In addition, the economies and livelihoods of forest dependant towns and communities were negatively affected leading to unemployment and poverty. A case study in Rift Valley and Western Kenya showed that on average, about 27.5% of employees working in SMFE’s were laid off, most of them being youth. The moratorium also affected key forestry public institutions with Kenya Forest Service losing an estimated KES 2.75 billion per annum in revenue from plantations. The moratorium resulted in an increase in importation of timber from 3,231.38 m3 in 2017 to 29,355.39 m3 in 2018 leading to a loss of foreign exchange of KES 1.04 billion in 2018.

The unexpected imposition of the moratorium also impacted negatively on sustainable management of public forests as no meaningful planting and silvicultural operations were undertaken. In general, the private tree growers and importers of timber were the key beneficiaries of the moratorium. The moratorium provided opportunities for purchase of trees grown on farms leading to enhanced incomes to farmers and commercial tree growers. The study recommends; review of current licensing of forest logging, fast tracking forestry sector reforms to create good governance structures, development of an effective monitoring system to ensure sustainable management of forest resources and promoting investment in secondary forest products processing for wealth creation and employment.

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