The vast majority of logging revenues in the Democratic Republic of Congo (DRC) were lost to tax avoidance and other illegal financial arrangements in 2012, an investigation by Global Witness revealed today. The findings show that in 2012 the Treasury received only 10 per cent of its dues under Congolese law. This states that companies must pay USD$0.50 per hectare in Surface Tax as a condition of highly lucrative logging rights in one of the world's largest and most precious rainforests.
"These findings show exactly what is wrong with the industrial logging trade. It promises sustainable development, yet systematic tax avoidance by companies has deprived one of the world's poorest countries of more than US$11 million in 2011 and 2012, and that is only the start of the abuses," says Reiner Tegtmeyer, International Forest Analyst for Global Witness. "Meanwhile, the trade is stripping the country of one of its most valuable assets, which millions of Congolese rely on for their survival and which the planet cannot do without. We urgently need a rethink on industrial logging in tropical rainforests."
The report, 'The cut-price sale of DRC's forests,' reveals how a range of tax breaks and other illegal incentives offered by the Ministry of Forests, Nature Conservation and Tourism (MECNT) allow the logging industry to skirt Congo's laws and deprive the Congolese people of the few economic benefits they are due in return for the felling of their forests.
"Everything is stacked in favour of the loggers - they are already getting a cut price deal for these incredibly valuable forests, but corruption and bad management are allowing them to avoid even these minimal payments. Today's findings are only symptoms of a much deeper problem, and DRC's government and donors must heed this warning - industrial scale logging is not the answer for the country's development needs," says Tegtmeyer.
DRC is the second most forested country on earth and 40 million Congolese depend on the forest for income, food, building materials or medicine. However, decades of weak laws and poor government have allowed logging companies to plunder the forests, with very few benefits reaching communities. In the light of today's findings, Global Witness is calling on the Congolese government and its donors to clamp down on the illegal financial dealings of logging companies in DRC, and the administrative failings and lack of transparency that allowed them to happen. In the longer term, the organisation is calling for urgent investment in alternative models of forest management which put forest people and civil society at the heart of decision making, and prioritise keeping the trees standing.
"The Prime Minister must urgently set up an inter-ministerial inquiry to examine the economic, environmental and social losses associated with industrial logging and propose alternative ways of forest management more likely to generate sustainable development", says Tegtmeyer.