China imported 20 times more Mukula from Zambia than what was declared

A report by the Center for International Forest Research (CIFOR) on Mukula production and trade has revealed that Zambia declared to have exported 3,000 m3 of Mukula logs valued at US$900,000 in 2016, while China declared Mukula imports from Zambia of about 61,000 m3 for an approximate value of US$ 87 million.

CIFOR Southern Africa regional scientist and Chief Researcher Dr Davison Gumbo also says the revelation by the Financial Intelligence Center that Zambia lost K4 million through illicit Mukula trade is an understatement of the highest order.

Meanwhile Gumbo says Zambians would continue to lose the much-needed revenue through illicit Mukula trade because high volumes of the logs continue to be exported despite regulations prohibiting it

In an interview, Gumbo told News Diggers! that what leaves Zambia as sawn wood seems to arrive in China as logs and that it seemed clear that mukula, which is largely exported in logs, often gets declared as sawn wood at departure in Zambia to illegally ‘comply’ with regulations.

“High volumes of mukula continue to be exported as logs despite regulations prohibiting it. Recent mukula production in Zambia could have amounted to about 110,000 m3 per annum, with revenue losses of about US$3.2 million and bribes paid to state officials of about US$ 1.7 million. While official statistics remain incomplete and unclear, comparing Zambia and Chinese customs data reveals significant differences. We compared export statistics for logs and sawn wood as declared by Zambia to the Food and Agriculture Organization of the United Nations (FAO), with data from Chinese customs. The two figures illustrate important features of the evolution of the mukula value chain over recent years. First, what leaves Zambia as sawn wood seems to arrive in China as logs,” he observed.

“It seems clear that mukula, which is largely exported in logs, Often gets declared as sawn wood at departure to comply with the legal framework, as a log-export ban remains in force in Zambia. Second, the ’mukula effect’ is clearly visible starting with the 2014 declarations from the Chinese Customs for logs imported from Zambia, both in volume and value. For example, in 2016, Zambia declared to have exported about 3,000 m3 for an approximate value of USD 900,000, while China declared imports of about 61,000 m3 for an approximate value of USD 87 million. The log-export ban should be lifted because mukula logs are being exported in other ways, both legally and illegally, depriving the state of potential revenues. The Forestry Department should propose a revision of the legal framework for appropriate taxation to be applied to exported logs.”

Dr Gumbo also said the revelation by the Financial Intelligence Center that Zambia lost K4 million through illicit Mukula trade was an understatement.

“The revelation from the Financial Intelligence Center that K4 million was lost through illicit Mukula trade is an understatement. But we also use field statistics and we also use Chinese customs data as you can see this lady is from China. She has access to those data. This revelation that K4 million was lost through illicit Mukula trade is an underestimation,” he said.

Dr Gumbo recommended that government should lift the ban, saying the country was losing revenue through the continuous exportation of logs despite an effective ban in place.

“In line with article 8 of the SADC Protocol on Forestry, the Government of Zambia should initiate and promote discussions within the appropriate bodies of the SADC, the East Africa Community and the Economic Community of the States of Central Africa aimed at adopting (i) integrated timber market monitoring systems; and (ii) a rapid response team providing urgent policy Options applicable to member states. The Forestry Department, Customs and Zambia Revenue Authority should consider conducting regular comparative assessments with Chinese Customs, to monitor large inconsistencies in trade data and apply appropriate measures. The export permits issued by the Forestry Department should be aligned with the tariff codes and timber specifications used by the Zambia Revenue Authority. The Chinese Customs should monitor large inconsistencies in the trade data, carry out more frequent spot inspections of containers carrying timber imports from Zambia, and collaborate with Zambian counterparts to harmonize data Specifications and explore ways to share trade data in real time for verification. China’s State Forestry Administration should encourage Chinese importers to abide by the official guidelines,” said Gumbo.

And the research conducted under fours years has revealed that the impact of the increasing mukula trade between Zambia and China had trickled down to rural villagers across the country and that government needed to ensure that citizens started to benefits from the natural resources.

“The mukula trade boomed around 2010-2012 and has continued ever since. Initially, buyers (largely of Chinese origin) would roam rural Zambia asking people to cut and collect as many logs as they could find. High demand met with harsh rural living conditions, and soon cutting replaced farming as the most important source of income for farmer-turned-loggers. Although farming activities were not completely abandoned, women, children and friends were in many cases called upon
to replace absentee farmers who would spend months in the forests looking for mukula trees. The money earned through harvesting served to support school fees, pay for medicines, buy food and house assets and bicycles, telephones, solar panels and livestock. The impacts of the increasing mukula trade have trickled down to rural villagers across Zambia. They have forged direct links with foreign investors, earning crucial cash incomes and producing innovative business models that accelerate the rate of small-scale production and extraction of resources. At the same time, they remain embedded in the rural economic system characterized by legal ambiguity and limited government oversight,” read parts of the report.

“As a consequence, despite the short-term benefits, such models repeat historical patterns of exploitation. Specifically, while local cutters receive an average price of about US$23 per cubic meter of timber harvested, manufacturers in China pay about US$1,100 per cubic meter to importers, before any further processing.”

It stated that Mukula trade was done at a speed that makes it difficult to assess the long-term environmental impacts of harvesting operations.

“Significant environmental risks are not effectively considered in policy making. Given the speed at which trade has been developing, it is difficult to assess the long-term environmental impacts of current mukula harvesting operations. Further research is needed on this front. Yet, several findings do indicate potential environmental problems linked to the speed and scale of operations over the past 5-7 years. For example, awareness of any environmental regulations is low among cutters of mukula. Only six per cent of cutters were found to be harvesting trees at the legally established distance of 50 m or more from a river. Just 4 per cent of cutters seem to be aware of a legally established buffer zone around rivers. About 90 per cent of cutters do not seem to be aware that such a limit, and thus the regulation that establishes it, exists,” read the report.

“Indeed, the only reported ‘verification’ is at the loading bay, where the log’s diameter and length are checked. This is done for payment purposes, and clearly not to verify whether environmental or sustainability criteria, or the origin of the log, have been respected. This lack of monitoring is caused chiefly by the significant resource and capacity constraints of the Forestry Department. The officially mandated government authority to manage the forests is not empowered to do so. The business structures and models applied to mukula are largely unrelated to – and indeed unconstrained by – established national borders and regulations. They are ‘in nature and easily move across borders if need be. In Zambia’s case, the search for mukula and rosewood more generally has spread across neighboring countries such as the DRC, Mozambique and Malawi over a short period, wreaking havoc on those countries’ natural capital.”

The report suggested that government should maximize the benefits of global capital flowing directly to rural populations and minimize the negative impacts

“Such a ’globalized’ rural informal economy urgently calls for innovative policies. These should maximize the benefits of global capital flowing directly to rural populations and minimize the negative impacts associated with the environment, revenue losses and resource governance,” stated the report.

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