Private sector participation in forest plantation development: an assessment of the prospects of policy incentives

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Investment in forest plantation development by the private sector in Ghana has been very low. The reason underlying this trend is the lack of effective policy incentives, which is needed to encourage investment in that sector. The objectives of this study were: • To examine the extent of private sector plantation development in Ghana • Identify the constraints to private plantation development in Ghana, and; • To examine the prospects of the key policy incentives for private plantation development in Ghana. Semi-structured questionnaires and interviews were employed with desk study in the research. Questionnaires were administered to cover samples of small, medium and large scale investors of forest plantation in Ghana. Some key institutions interviewed were, the Forest Services Division, the Forest Plantations Development Centre and the Forestry Commission. Total forest plantation developed by individuals, communities, NGO’s, and institutions is estimated at 10651 .7 hectares. The largest proportion of plantation established is on small scale basis, forming about 51.3 percent of plantations established by the private sector. The major constraints affecting large-scale plantation development in the country is lack of large portions of land for plantation projects. As far as small and medium scale investors are concerned, the major constraint relates to financial inadequacies and high cost of borrowing from both the formal and informal sectors. Existing policy incentives for the private sector are mainly in the form of tax benefits on imports of machinery, which favour mainly the large-scale investors. A number of incentives have also been proposed in the area of land acquisition, financial benefits and technical support for the private sector. There exist high prospects for the outlined policy incentives formulated for the private sector based on the indicators of assessment. However, the success of these incentives will largely depend on the political will and support to implement them.
A Thesis Submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfilment of the requirements for the degree of Master of Science in Development Policy and Planning, 2000