RELUFA. Le Réseau de Lutte contre la Faim au Cameroun:

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1 RELUFA Le Réseau de Lutte contre la Faim au Cameroun: 1) Economic Justice 2) Trade/Land Justice 3) Food Sovereignty 4) Extractive Industries Free Trainings: 1) We have accumulated knowledge on important topics 2) We have a mission to share information with the public 3) We can meet interesting people and exchange ideas

2 Subnational Forest and Mining Royalties in Cameroon B R E N D A N S C H W A R T Z P R O G R A M A S S I S T A N T B S C H W A R T R E L U F A. O R G

3 Vertical Distribution What Are Subnational (EI) Payments? National Government % National Government vs. % Local Governments Local Government A Horizontal Distribution Local Government B % Local Government A vs. % Local Government B

4 Does Cameroon Make Subnational EI Payments? Yes: 1) Agro-industrial Sector- Land Fee 2) Hunting Sector- COVAREF 3) Forest Sector- RFA 4) Mining Sector- Local Mining Royalty 5) Oil Sector? - Law of 2009 on Local Fiscal Regime leaves the door open for transfers to REGIONS

5 Agro-industry Local Land Fee LAND FEE PAID ANNUALLY BY COMPANY BASED UPON CONTRACT 40% to National Treasury 40% to Local Council 20% to Local Communities

6 Hunting Royalty 10% of lease fees MINFOF COMPTE POSTAL GUIDE DE CHASSE Chef de Poste MINFOF COVAREF Voie officielle des dus des COVAREF Raccourci illegal Fig 2: Procédure de décaissement des fonds COVAREF Source : Comprendre les COVAREFS. MINFOF, 2005

7 Forest Royalty RFA = Nha * price (often cfa) PSRF 1) Validation des montants de RFA à recouvrer 2) Recouvrement des parts respectives de l Etat, de la Commune et des Communautés Rurales 3) Rétrocession aux bénéficiaires RECEVEUR MUNICIPAL Perception des 20% revenant à la commune Perception des 10% revenant aux communautés rurales TRESOR PUBLIC Rétrocession des 50% revenant à l Etat dont: a) 45% du montant alimentent le Fonds Spécial de Développement Forestier b) les 55% restant reviennent au Trésor Source : Actualisation de l audit de la Fiscalité Décentralisée du Secteur Forestier Camerounais

8 Mining Sector SALE OF MINERAL Tax collected at local or national level DGE/DGI Ad Valorem Tax 2.5% - 8% of mineral value REGIONAL MINING AND FINANCE DELEGATIONS Ad Valorem Tax 2.5% - 8% of mineral value NATIONAL TREASURY 50% of Tax MINISTRY OF MINES 25% of Tax LOCAL ROYALTY 25% of Tax LOCAL COUNCILS 15% of Tax LOCAL COMMUNITIES 10% of Tax

9 Why Make Subnational Payments for Natural Resources? What justifies making a subnational payment derived from the extraction of natural resources that belong to all Cameroonians? According to Cameroon s Laws: Compensation CODE MINIER Art ) Les populations affectées par une exploitation minière ont droit à une compensation. Other important Reasons: (i) compensation for the depletion natural resources (ii) revenues for economic development for the future generations (iii) compensation for environmental damages caused by extraction (iv) preserving harmonious political relations between the central government and local communities

10 Why Are Subnational Payments Important to Local Communities? Possible Benefits from Natural Resource Extraction: 1) JOBS few are created and most are not well-paid 2) LOCAL CONTENT sub-contracts and services are dominated by foreign companies or companies based in Ynde- Douala 3) INFRASTRUCTURE often uniquely benefits the extractive company (Edea Hydro-power station, Lom Pangar Dam, and Kribi Gas Plant almost exclusively benefit ALUCAM) 4) CSR PROJECTS Depends on the profitability and goodwill of the company 5) LOCAL ROYALTY = $$$ millions in Forest and Mining Sector (depends on taxation, management and expenditure)

11 Subnational Payments in Cameroon s Forest Sector W H A T S H A P P E N E D?

12 FOREST ROYALTIES over 55 billion FCFA in RFA was paid to 90 local councils and local communities from (RFA represented in white portion of column)

13 FOREST ROYALTIES RFA paid at the local level represents 18% of all Forest-related taxes from Taxes du secteur: Redevance Forestière Annuelle (RFA) ; Taxe d Abattage (TA) ; Précompte sur Achat de Bois en Grumes ou Débités (PABGD) ; Taxe d Entrée Usine (TEU) ; Taxe de Transfert (TT); vente des produits forestiers (PVPF).

14 History of RFA Regulation 1) PERIOD NO REGULATION $$$ sent to local council by Check (40%) $$$ given to communities in Cash (10%) 2) PERIOD Joint Ministerial Order 122 from MINFOF, MINFI, & MINADT Guidelines on Community Expenditure (10%) Local Councils use RFA for Functioning, not Investment (40%) 3) PERIOD 2010-Present Joint Ministerial Order 520 from from MINFOF, MINFI, & MINADT Guidelines on Community Expenditure STRICT! (10%) Guidelines for Local Council Expenditure (20%) 520 contested!

15 Results from RFA Expenditure Yokadouma Elsewhere??? RFA has produced timid results Corruption, mismanagement and recurrent expenditures Unfinished Council Building

16 Criteria for Strong Subnational System CRITERIA RFA System in Cameroon 1) Clear Rules 2) Traceability and Transparency 3) Reduce Volatility 4) Fair Sub-national Distribution 5) Strong local development planning and citizen monitoring 1) Getting better with time, but conflicts with local fiscal regime (% functioning v % investment) 2) Inconsistent efforts from local councils and PSRF. Citizens have no idea! (Yoka) 3) Large volatility with INTL market changes and Ventes de coupe 4) 18% of all taxes went to local level FAIR??? 5) PNDP aids local planning, but sometimes not followed. Citizens have little power to monitor and can t sue!

17 RECOMMENDATION NEED TO RE-THINK FOREST ROYALTIES FROM THE COLLECTION A ND A LLOCATION OF TAXES TO EXPENDITURE MONITORING

18 Mining Royalties in Cameroon W H E R E A R E W E G O I N G?

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27 ARTICLE Mining Code Application Decree (2) Les modalités d'affectation des quotes-parts des populations riveraines et de la commune seront définies par arrêté conjoint, du Ministre chargé des mines et du Ministre chargé de l'économie et des finances.

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29 Mining Royalty Projections GEOVIC - LOMIE CAMIRON - MBALAM Projections show the locality will receive: $4 million US ( 2 billon cfa) Over 10 years Projections show the locality will receive: $250 million US (125 billion cfa) Over 10 years Can they spend that? Is it FAIR??