Economy

Gov’t’s imposition of high taxes on raw timber export paying off.

by Edmond
15 Apr 2024 20:02
1181 views

Unprocessed timber ready for export

Government’s strategy to discourage the export of raw timber through the imposition of high taxes is paying off as more and more operators in the sector are now resorting to processing the product to varying degrees of finesse.
According to recent figures made public by government, during the past six years, from 2017 to 2023, Cameroon gradually increased the export duty on logs from 17.5% to 60%.

These increases, outlined in the country’s finance laws, equate to a 343% relative increase in log export taxation.

In the 2024 Finance Law, the export duty was raised further from 60% to 75% of the Free On Board, FOB, value of the wood species, a move likely to further discourage exporters of raw logs.

The document from the National Institute of Statistics, NIS, also intimates that Cameroon recorded exports of 1.7 million cubic meters of wood and woodwork in 2022, generating an estimated revenue of 314 billion FCFA, up 7.8% year-on-year.

The NIS report also highlighted a significant shift in the country’s forestry exports, focusing more on processed wood products over logs, in line with government’s policy and renewed effort aimed at encouraging local processing of timber.

Logs represented a minor portion of the total exports, with only 746 cubic meters exported in 2022. This brought in more than 77 billion FCFA, accounting for less than 25% of the total export value.

Year-on-year, log shipments fell by 22% from 958.3 cubic meters in 2021, when revenues exceeded 98 billion FCFA, even though officials warn that prices do vary depending on the species of wood exported.

But generally, both operators and NIS experts were unanimous that this decline can be attributed to the Cameroonian government’s decision to impose higher taxes on these products to encourage second-stage processing.

They avert that sawn wood exports, which have also seen an export duty increase of 165% between 2016 and 2023, remain marginal compared to the total volume.

The NIS report notes significant exports of veneers, a product of more advanced processing than simple sawing, with 57,850 cubic meters sold internationally in 2022, a 15% year-on-year increase.

These exports generated 24.4 billion FCFA in 2022, up from 21.8 billion FCFA in 2021. In all, actors say the Cameroonian authorities’ decision to heavily tax logs and, to a lesser extent, sawn wood, precedes the Central African Economic and Monetary Community, CEMAC’s, directive to ban log exports to foster local wood processing.

Initially set to start on January 1, 2022, and then pushed to January 1, 2023, the implementation of the ban has been postponed to 2028.

However, each member state is tasked with gradually implementing the ban starting January 1, 2025.

This move signals a significant shift towards enhancing local wood processing capabilities in the entire six member countries of the sub region.