The mayhem in the timber industry has been brought to the fore by the Zambia National Association for Saw Millers detailing a trail of alleged corruption in the process.
Timber has been dubbed the new mineral mine in Zambia with the Mukula tree attracting high level interest from top government officials that are elbowing legitimate dealers out of business.
Minister of Lands Jean Kapata's name has kept popping up in the conspiracy that has the Chinese businessmen at the centre of it.
Below is the correspondence filed with the Head of State by the small scale dealers that feel victimized:
4th October, 2017 The Secretary to the Cabinet Office Lusaka
RE: Zambian Timber Producers Petition to your office to urgently address matters affecting the timber industry-WHO IS THE BENEFICIARY OF THE TIMBER EXPORT BAN?
1. BRIEF ON THE CURRENT STATUS OF THE INDUSTRY
In 2016, the government of the republic of Zambia through the Forestry Department advertised Concession Licenses throughout the country. Many Zambian companies responded and spent a lot money to apply. Around the last quarter of 2016, the Forestry Department started issuing these Concession Licences to successful companies and business entities.
1.1. However, since the beginning of the year, the country has seen a number of policy inconsistencies on the harvesting, transportation and export of timber resources in the country. People may be wondering why so many changes in an industry about which many Zambians have very little or no information in such a very short space of time. In March 2017, a stakeholders meeting was called upon by the Minister of Lands and Natural Resources, Honourable Jean Kapata, where she categorically said that she needed sanity to come to the timber industry and implored all stakeholders to adhere to the Forest Act.
She also underscored the need for value addition in the industry and warned all those who were dealing in illegal timber activities to stop. Although we timber producers were not given enough time to put across our challenges in the industry, or to put up proposals on how the industry could be best run, the meeting could generally be described as being a positive indication of government commitment to promoting the timber sector in the country. 1.2. Following this meeting, in April 2017 the Forestry Department through the Director of Forestry issued instructions to all Principal Forestry Officers in the provinces to stop issuing production and conveyance licences for all timber species. According to the circular, this was to ensure that all concession holders followed the required procedure in conducting our businesses. To many timber producers, this ban came as a surprise and it actually signalled the beginning of more problems in the industry.
2. ISSUANCE OF SI NO. 31 BANNING TRANSITING THROUGH ZAMBIA OF ROUND LOGS
Firstly, the government started by issuing an SI No. 31 which banned transiting of round logs in Zambia. This was meant to stop Democratic Republic of Congo (DRC) from transporting its round logs through Zambia which the government and many stakeholders believed was a major source of illegal export of Zambian timber, as dealers were getting illegal Congolese papers to smuggle Zambian timber, in particular Mukula tree. Immediately after issuing the SI, many Congolese, Namibian and Tanzanian trucks laden with Mukula logs were intercepted in various borders and check points around the country. However, the exercise also affected many Zambian traders as the security wings cramped on any timber regardless of whether it had legal papers or not. Many people complained to government through the Forestry Department and requested that the Department sensitizes the security wings in screening the documents before trucks were impounded. Unfortunately, the government failed to do anything and many trucks with legal papers continued to be impounded and marooned at various borders and checkpoints countrywide.
3. DEPLOYMENT OF SECURITY WINGS IN THE CONCESSION AREAS
In another turn of events, in May 2017 the government, without any prior notice to us timber traders, deployed the army in all concession areas. Surprisingly, instead of targeting the illegal dealers the army and other security wings went to harass, punish and abuse us the license holders. It did not matter to them whether one showed them the legal documents or not; they simply arrested you and put you in cells. In some areas, like Isoka, the army officer's failure to understand the statutory instrument interpretation even claimed that they were in possession of an SI that revoked all licenses in the country. It turned out, however, that they were referring to SI No. 31 which banned transiting of round logs in the country and not the revocation of concession licenses.
3.1. As all this was going on, timber producers kept pushing for a meeting with the Minister so that the issues of the army in the concession areas and the export ban could be resolved. After many attempts, a meeting was convened in the Minister's office and in attendance was the Minister, the PS, the Director of Forestry and Representatives from the timber producers. We the timber producers conveyed our plea to the Minister to lift the ban on export of all timber species.
3.2. We requested for a window period so that we can clear our outstanding orders with international clients. However, the Minister was very unwilling and put all hope in the dark when she said she wanted all timber producers to do value addition in the country. She even pointed out that she was going to find ways to declare Mukula an endangered species. What was more unfortunate was that the Minister went further to dare the timber producers to take the government to court if they were not happy with government decision to ban timber export. Sadly, the Minister did not agree with any of our suggestions. The Minister could not change her position. A few days later the Minister held a press briefing where she announced that all timber exports were banned with immediate effect. However, timber traders were free to trade in all species within the country. Please Sir, take note that in this pronouncement, the Minister did not say anything about banning of Mukula tree from being harvested and traded locally; she only banned exports of all timber species from the country.
3.3. Following this, the Director of Forestry wrote to his Principal Officers in the provinces directing them to start issuing timber production and conveyance. Unfortunately, this instruction was short-lived, as five days later the same Director of Forestry issued another instruction banning issuance of timber production and conveyance. Please also take note that even before he issued this second instruction, the soldiers who were stationed in the concession areas could not allow the few that obtained the production and conveyance permits during the first instruction to go in the bush and work freely.
4. ILLEGAL GRABBING OF LEGAL TIMBER FROM CONCESSION HOLDERS BY THE SECURITY WINGS
In the meantime, in July 2017 the soldiers went back into the concession areas and started collecting legally harvested timber which had all the necessary papers, with timber marks from the Forestry Department and some already processed timber from license holders. When confronted, the soldiers would only say "we have instructions" or "we are operating under orders". Many affected companies made formal complaints to the relevant departments. Some even went as far as seeing the Minister responsible to understand what was happening in the industry. According to the Forest Act and according to the Zambian Law, no one is supposed to confiscate anything from another without any seizure notice or forfeiture notice. Therefore, whoever issued instructions to soldiers to confiscate timber from factories and yards of legal owners defied these laws.
4.1. After most timber license holders had had their timbers confiscated, a few days later the Minister held another press briefing and announced that she had put a total ban on Mukula harvesting, conveying and export.
5. FAILURE TO LEARN FROM THE 2012 SUSPENSION OF CONCESSION LICENSES
To take you backwards Sir, you will remember that in late 2012, the government through the then Minister of Natural Resources and Environment Wilbur Simuusa also suspended all timber concession licenses. However, during the announcement the Minister pointed out that the suspension would not apply to exotic timber plantations or to timber that was legally extracted, processed and is in timber yards, factories or markets. Here is where the difference in the new pronouncement and the one in 2012 is. In 2012, the government recognised that people already had productions in their concession areas, yards, factories, on transit and markets, so they declared that those should not be affected. This year, however, the government sent soldiers to collect timber from concession areas, yards, factories on transit and markets with all necessary government documents according to the Forest Act.
6. WHO IS THE BENEFICIARY OF THE TIMBER EXPORT BAN?
As the title of this write up suggests Sir, we really would like to know who the real beneficiary of this timber export ban is. First and foremost, after the suspension of all timber licenses in 2012, a number of trucks laden with Mukula logs were impounded and the suspects were taken to court and convicted. Most of this timber was forfeited to the state. By 2015 the government had confiscated a lot of timber through the courts. ZAFFICO was then tasked to sell this timber to the public. However, instead of following the Government of the Republic of Zambia Procurement procedures on disposal of public property, where Zambians could also take part, ZAFFICO and the then Permanent Secretary of the Ministry of Natural Resources and Environment Barnaby Mulenga, decided to go to China and single-sourced four companies who came to buy this timber.
6.1. This was in total disregard of the Zambian law on public auction which is supposed to be done transparently by the sheriffs of Zambia. We Timber producers cried foul and we even had a meeting first with the then Permanent Secretary, Barnaby Mulenga and further with ZAFFICO and the Forestry Department in Ndola, but our cries were not heard. ZAFFICO went ahead and sold all the timber to their single-sourced four companies from China at a price of $400 per ton or ($10,000 per 40 foot container) instead of the minimum of $1400 per ton or ($35,000 per 40 foot container) which was the average for low grade timber in China at that time.
6.2. This year, the government impounded many Congolese trucks with timber. Out of the over 400 trucks that were impounded, only less than a half had no legal papers and therefore the rest were released to the owners after over three months. As for the remaining ones, government again gave them to ZAFFICO to sell. Unfortunately even this time around ZAFFICO has still disregarded the Public procurement procedures for disposal of government property like they did in 2015 by single-sourcing three companies to buy the timber and export it to China on their behalf. Further, a minimum of forty containers has already left the country from Mansa district alone. Who is using ZAFFICO?
6.3. In all this you will notice that, to date, ZAFFICO has not given any account of how the operation in 2015 had gone. The country has not been availed with information on how much was raised and the details of the auction. The public has also not been availed with information on how ZAFFICO and the government came up with the four companies in 2015 and the three companies in 2017 disregarding the law on disposal of public property.
6.4. Coming back to this year's timber problems, you may need to know that when the soldiers came to confiscate legally harvested timber from concession license holders' yards and factories, it was actually ZAFFICO that was used to facilitate the exercise. It was ZAFFICO that was paying the allowances to the soldiers and other security wings. According to the army, their only role in all this operation has been to provide security, and it is ZAFFICO that is indirectly carrying out this operation. The question that begs an answer is:-
- Why is ZAFFICO undertaking this operation?
- In whose interest is it?
- Could it be that some dishonest government officials are using ZAFFICO may have over-committed to supply a certain number of containers with timber to their clients?
- Could it be that these unscrupulous elements are now under pressure to meet the demands from their clients whom they single-sourced disregarding the Zambian law?
- Are they trying to avoid embarrassment because they already made a commitment and probably received the money upfront?
- Is it that the only way left now is to forcefully grab timber from poor Zambians with concession licenses who have been harvesting and processing legal timber around the country?
- Could it also be that these unscrupulous and dishonest government officials have seen the opportunity in the timber export ban to use their influence to smuggle the timber out?
- Could this be the reason why, despite the ban, trucks are reported passing through roadblocks and borders in transit to various international markets and being claimed to have been cleared?
- Who is clearing the trucks when there is an export ban?
- Why is the law being applied against legally licensed people and poor Zambians?
- Could it be that the sector has been captured from the legal concession holders by some dishonest government officials who are fronts for foreign timber dealers?
- In the same line, if there is a country-wide timber export ban, what law is ZAFFICO being made to use to export the timber they have illegally collected from legal owners?
- What documentation are they using in line with the current 2015 timber export policy, which requires timber for export to be shaped or rather processed, to have been inspected by Zambia Bureau of Standards and issued with a phytosanitary certificate, ZRA export documents, and packing list showing specifications and quantities?
- Distinguished Sir, why should the government be punishing us license holders who paid millions of Kwacha to the same government to acquire the timber concession licenses, production and conveyance to invest in their timber businesses, be made to suffer just so that some greedy officials can benefit from the illegal export of timber? - Why should ZAFFICO and the dishonest government officials involved be allowed to grab timber from poor Zambians whose god-given resource can help them earn their living honourably?
- If indeed the government meant well, why have they abandoned the Forest Act and ignored the role of their trained Forest Officers whom they pay monthly salaries and allowances and resorted to Kangaroo laws of managing the Forestry Sector?
- Why was the ban with immediate effect and not like the 2012 ban which gave a window period for people to clear their stocks?
- Why did the Security wings and ZAFFICO rush to start getting timber from us license holders even before the Minister announced the ban?
- Isn't this pure unfairness?
6.5. In Isoka, timber producers were called for a meeting where they were told that the security wings will give them back 50% of their logs and they have to forfeit 50% to the state.
- Why should timber producers surrender 50% of their legally harvested timber in which they have invested so much money?
- What law is the government using to come up with all these dubious decisions?
- Why is there so much desperation from the government to get timber from legal owners and quickly export it using ZAFFICO?
- How can government exhibit the highest form of unfairness on its own people by inviting Zambians to apply for licences, letting them spend millions of Kwacha on processing these licences, making them incur debts in equipment and field labour, and then confiscating their timber and banning any further operations on timber?
- Isn't it clear that the government is not serving Zambians, but a few greedy officials and their foreign agents?
7. SERIOUS LOSS OF REVENUE TO THE GOVERNMENT
So far, because of the confusion deliberately created in the timber sector by unfaithful government officials, the government is losing a lot of revenue.
For instance, 350 concession licenses are supposed to have been issued and these license holders would have been paying monthly royalties of around K70, 000.00 per concession holder bringing the total monthly royalties to government to K24, 500,000.00 or K294, 000,000.00 per year. In the same line, government was going to be collecting an average of K350, 000.00 export duties from one concession holder monthly.
This would have translated to monthly duty collections of K122, 500,000.00 or K1, 470,000,000.00 per year by government. However, due to the greediness of a few individuals this has not been the case and the country has been made to lose out in millions. Any earnings being generated from the illegal sales are instead going into the pockets of these greedy unfaithful few individuals.
7.1. It is also worth noting that the timber sector is one labour intensive sector, on average one concession employs not less than 30 workers and managers. Therefore, more than 10,500 people would have been employed country wide. This could have lessened the burden on the government in terms of job creation. Unfortunately, a few greedy individuals have made thousands of Zambians jobless.
7.2. From the outline above Distinguished Sir, we leave it up to you to judge who the beneficiary of the timber export ban is. However, we believe that the whole exercise of confiscating timber from license holders, the timber export ban and giving of ZAFFICO to single source foreign buyers for the timber and determine the price at which to sell without following government procedure stinks of corruption of the first degree. We are just wondering why the Anti Corruption and other investigative wings of government are quiet on this matter.
7.3. It is indeed our utmost hope that you could act on the things outlined above and bring sanity in the administration of the Forestry Resources by all government wings. As we write, we members are suffering, we are being punished for following the law to engage in timber, we are in debts, and are increasingly losing hope as we have exhausted all channels to have our grievances addressed and all the offices responsible have given us a deaf ear.
7.4. Indeed, distinguished Sir, your office is our last hope and we have faith that you will act on this matter with the urgency it deserves. We are now losing property and our investments for the money we borrowed from the banks and other financial institutions to invest in the timber trade. This money was paid to the government for concession licenses, production and conveyance and other statutory taxes which government is unable to refund and we are just remaining with government receipts while our timber is being grabbed and sold to foreigners by ZAFFICO.
7.5. We hope to hear from you at your earliest as we are mobilizing all our membership country wide to make a peaceful demonstration and submit our grievances to the Head of State at State House.
Written by us concerned timber producers
CC. The Office of the Vice President Lusaka
CC. The Minister of Defence Lusaka
CC. The Minister of Home Affairs Lusaka
CC. The Presidential affairs Minister Lusaka
CC. The Minister of Finance Lusaka
CC. The Minister of National Planning and Development Lusaka
CC. The Minister of Justice Lusaka
CC. The Minister of Commerce Trade and Industry Lusaka
CC. The Minister of Lands and Natural Resources Lusaka
CC. The Minister of Religious and National Guidance Lusaka
CC. The Minister of Chiefs and Traditional Affairs Lusaka
CC. The Speaker of the National Assembly Lusaka
CC. The Permanent Secretary Ministry of Defence Lusaka
CC. The Permanent Secretary Ministry of Home Affairs Lusaka
CC. The Permanent Secretary The Minister of Religious and National Guidance Lusaka
CC. The Permanent Secretary Ministry of Commerce Trade and Industry Lusaka
CC. The Permanent Secretary Ministry of Finance Lusaka
CC. The Army Commander Ministry of Defence Lusaka
CC. The Zambia National Service Commander Ministry of Defence Lusaka
CC. The Attorney General Ministry of Justice Lusaka
CC. The Chairman Lands and Natural Resources Parliamentary Committee Lusaka
CC. The Chairman Public Accounts Committee Parliamentary Committee Lusaka
CC. The Director of Forestry Ministry of Lands and Natural Resources Lusaka
CC. The Director General Zambia Development Agency Lusaka
CC. The Director General Zambia Revenue Authority Lusaka
CC. The Chief Executive Officer ZAFFICO Lusaka
CC. The Commissioner Anti Corruption Commission Lusaka
CC. The Office of the Auditor General Lusaka
CC. Director General Zambia Public Procurement Commission Lusaka