Highlights on the Forest Development, Protection, and Utilization Regulation No. 544/2024

In a seamlessly apparent manner, Ethiopia enhanced its pursuit of setting up measures to safeguard its forestry throughout its utilization by enacting an enforcement law in the form of a Council of Ministers (“CoM”) Regulation on Forest Development, Protection, and Utilization. This legislation is a follow-through to the parliamentary enactment made in 2018, the Forest Development, Conservation and Utilization Proclamation No. 1065/2018.

In hindsight of the European Union’s new Deforestation Regulation (“EUDR”) intended to take full effect by the end of 2024, European nations importing agricultural commodities from nations outside the European Union (“EU”) will require certifications of those nations intended to maintain environmental goals.

Although vast cash crop outputs such as coffee in Ethiopia grow in agroforestry systems with limited chemical inputs, traceability requirements are a requirement by the EU from harvest to Europe. Noting the coffee exports being sourced from multiple smallholder farmers, geospatial and GPS tracking information required by EU upon arrival of goods will accrue which enhances the need for technology.

Such regulations may seemingly be a stone in the road with the status relating to land ownership and resources of smallholder farmers. However, the recent action taken by the Ethiopian parliament on rural land management formalizing the longstanding practice of sharecropping contracts hopes to enhance tenure rights, giving room for landholders to legally lease and sharecrop their land.

What does the Council of Ministers Regulation on Forest Development, Protection and Utilization hold?

Considering private forest owners equipped with a land holding status, the regulation intends for the development and utilization of forest on the small-scale level eyeing a maximum ceiling of five (5) hectares. Whereas large-scale forest developers are expected to meet the floor level set at five (5) hectares and seeks them to develop and utilize forest extending beyond the floor level.

Further on forest development activities, it is noted that a forest developer may take the form of a private institution. As such, it is required to develop and sustain the protection of indigenous tree species and protected forests.

Nonetheless, forest developers are expected to submit forest management as per the approved plan, submission of a feasibility study, environmental, and social impact assessment prior to conducting forest development activities.

When we consider the nature of the forest to be developed, it may be developed for economic reasons where plantation or natural forest development is aimed towards the construction industry, fuel wood, or other economic benefits.

On the other hand, forests may be developed for environmental protection the primary objective being watershed management, protection of degraded forest land, wetlands riparian areas, and water towers. The initiative taken in 2019 to establish a wetland buffer zone, taking up the user-pay principle for water utilized ensuring finances are available for interventions and environment sustainability is notable.

This is reflected in the intent to collect payment for forest ecosystem services by forest developers from beneficiaries of ecosystem services. Such services may take the form in drinking and irrigation water provisions, supply of electric energy, and protection from flood. The utility of the Directory of Ethiopian Wetlands will be crucial.

Noting the importance of forestry, both the small and large-scale forest developers are expected to pay 5% and 15% to the federal and regional governments respectively on the sale of carbon where the private developers seek the support of the government in the sale of carbon. This relates to the green bond initiative, attached to it a Climate Bonds Standard Certification Scheme, as part of the capital market initiative in Ethiopia.

No matter the legal personality of the developer, a right to obtain incentives (details to be determined by future legislation) is attached to such activity bringing about incentives for planting and developing endangered indigenous tree species. Yet, there are targets forest developers are expected to hit in order to obtain the different forms of incentives, i.e. grant forest land free of lease, use of carbon sequestration to generate forex, access to redevelopment of degraded land, tax relief and access to loans.

Further on accessing finance for private forest developers, it may be availed for the private forest developer by putting up the developed forest land as collateral. A notable expectation in this regard is the ownership and trading of carbon produced in the forest developed by the private developer is one of the essential rights depicted under the legislation on the topic and one of the benchmarks for accessing loans.

One mentionable attribute set as a criterion to obtain the incentive of land free of lease is in the obligation of the developer to use improved forestry technologies. This is further enhanced by the legislation requiring regional states and city administrations to develop and implement information and technology packages when forest development, protection, and utilization are managed under a concession contract.

Other forms of forest development are recognized as well. Community Forest Developer, which brings in a community living in an area to jointly develop, protect and utilize a forest on communal land or on a catchment with a legally or traditionally obtained holding.

An Association Forest developer, on the other hand, consolidates youth, women, professional associations or community watershed development association, which is not a member of a forest cooperative, but is organized under the auspices of other appropriate legislations to develop, protect and utilize forests.

State Forest, as the naming indicates, are developed and utilized by the State. Demarcation and designation of forest land will be in consultation with appropriate institutions and communities living in the area. The designation may take the form of a productive, protected, or preserved forest once set requirements are fulfilled.

The supervisory organization authorized by law is expected to ensure the management and utilization of State Forest. Different management features are set for the different designations of State Forests, one feature being the assurance that revenue from the sale of carbon is utilized for the development, and protection of forest.

A point to highlight in the management of preserved forests by the state is the involvement of different stakeholders such as the federal government, regional government, and communities involved where they share five percent (5%), fifteen percent (15%), and eighty percent (80%) respectively from the sale of carbon and other sources of income generated from the preserved forest.

Concluding Remarks

We can consider the contribution of such legislation towards national developmental goals to be instrumental.  Actions taken by the African Development Bank (“AfDB”) are notable where intent is set in addressing climate finance. This is signified by the AfDB’s action by setting aside forty percent (40%) of its total financing towards climate finance although it has exceeded expectations for the years 2020 to 2023, as indicated by AfDB’s President Akinwumi Adesina (PhD).

The legislation seems to be in consideration of enhancing the use of green energy with respect to fossil fuels, the CoM legislation impresses the intent to alleviate issues related to forest products. The recognition of cooperative societies intending supply inputs, add value or market forest products beyond its development, protection and utilization may be considered one indication.

Disclaimer: The views and opinions expressed do not reflect the official policy or position of DABLO. The writing is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation.

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