Gov’t to be blamed for financial woes at GFC, says Ali
The financial woes of the Guyana Forestry Commission (GFC) is not a reflection of its own doing, but rather the effects of the implementation of direct policies by the Government.
That’s the contention of Irfaan Ali, the People’s Progressive Party’s Presidential Candidate and former Minister of Housing.
Ali said that post-2016, the GFC has experienced severe financial difficulties, a direct result of the contraction of the industry whereby over two million hectares have been removed from production forest.
This, he pointed out, is a clear consequence of the Government’s actions and measures.
“This driving factor has seen the fall in production and export levels within the forest sector and operators struggling to make a profit. Revenues from export and production comprise the main financing streams of the GFC,” Ali explained.
He added, “The impacts of this have seen the inability of the GFC to meet core costs, such as payment of staff salaries and field expenses. Staff are feeling the brunt of the effect by having their salaries paid late. In actual fact, this is no fault of the GFC, but rather has been as a result of direct government policy that has directly and negatively affected the sector.”
The former Tourism Minister argued that reducing production forest by over two million hectares, which is a third of productive area allocation pre-2015, will definitely have a negative impact on forest sector performance, “and the GFC has been collateral damage in this process.”
Also, the state of hinterland roads, Ali highlighted, has plagued forest concession holders.
“It’s the worst it has ever been with no clear plan on continued upkeep. This frustrates forest operators and the trickle-down effect is poor sector performance and low revenues for GFC.”
He continued, “The Government has built up so much, the idea of green economy, the GFC is central to this ambition, yet the GFC is being neglected and not supported at all by government. Ironically, the sector is being shrunk without any plan to build back up its capacity.”
Guyana’s international reputation on forest and environment has made it stand out at a country that has prioritised forest protection and strong forest management.
Guyana’s relationship with the UK, EU and Norway all exemplify shared goals on natural resources.
“These are all suffering owing to GFC being stifled,” Ali declared.
“It’s a shame what has happened to the GFC and the forest sector and Government must own up to its responsibilities in causing this. Unless proactive steps are taken by Government up revitalise the industry which will have a trickle-down positive effect on GFC, the future for the forest sector and GFC staff is uncertain.”
Sectorial Review: 2014-18
- Production level decline from $10.6B in 2014 to $7.5B in 2018, or 29.2%. Overall, total production loss amounts to more than $17B, which resulted to the decline of export by more than US$48.2M.
- In 2019 alone the sector is expected to further contract by another $2.9B when compared to 2014. Similarly, export is also projected to contract by another US$8.4M.
- Output of sawn wood in 2018 declined by 7.1%, which was primarily attributed to poor road and weather conditions (BoG 2018 Annual Report).
- According to the first quarter report of 2019, the output of logs fell by 5.4%.
- Private investment in the forestry sector in June 2015 amounted to $1.09B. However, in June 2019 the amount was a mere $300M, which represent a reduction by 70%.
Causes of Decline
- Institution of VAT on machinery and equipment used in the sector
- High fuel prices
- Deteriorated hinterland roads
- Lack of support for community forestry operations
- Lack of market
- Reduction in the allocation of State Forest to small and medium scale loggers
The Foresty Sector
The forestry sector directly employs more than 22,000 persons, most of whom are low skilled workers. In most Amerindian villages, logging is one of the main sources of income especially if they are directly engaged in the timber production business.
“Since the coalition took office in 2015, the forestry sector has greatly ostracised small and medium scale loggers. What is even more daunting, is the fact that these individuals are all low-income earners, with jobs ranging from chain-saw operators to road cutters,” Ali explained.
He added, “Given the current situation, their average monthly salary now fluctuates between $40,000 to $70,000 for a productive month. However, during the raining season, which unfortunately corresponds to the period of low productivity, the expense of these workers in some cases outstrips total income, leading to indebtedness.”
Ali highlighted that in Amerindian villages such as St. Cuthbert’s Mission and Moraikobai, where the reservations are virtually exhausted of commercially viable species of wood, no attempt has been made by the government to provide alternative state forest areas for loggers to continue their operation.
Inevitably, the wellbeing of families and residents is directly affected.
“At the local level, these workers play an important role in stimulating small businesses. By the mere fact that they are low-income earners, their propensity to save is minuscule, rendering them effective in boosting consumption,” Ali asserted.