TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

out in the absence of strategic planning. It is
useful to discuss these challenges in greater
depth.
The first striking feature of the various
agricultural investment contracts signed by the
Malian Government concerned is the diversity of
entry points chosen by investors (Cotula, 2011). In
theory, the process for obtaining a lease involves
an application to the ON management, followed
by a ‘letter of intent’ and then a lease contract.
This process is followed by most Malian investors
(with a few exceptions). But large foreign
investors mostly rely on ‘investment agreements’
(or ‘conventions of establishment’) with the
central state, which effectively take the place of
the ‘letter of intent’. Moreover, different contracts
have been signed by different government
agencies. For example, the agreement with
Malibya Agriculture was signed by the Minister
of Agriculture, the agreement concerning the
Markala Sugar Project (PSM) was signed by the
Minister of Industry and Trade, while the N-Sukala
contract was signed by the Minister of Housing,
Land-Use and Town Planning. Another contract
with GDCM was concluded by SEDIZON. And
the allocation of 100 000 hectares to the Tomota
group was not the subject of any agreement with
the central government, despite the large land
area concerned.
As a consequence of this situation, the
ON management tends to be faced with a
fait accompli. Based on the contract signed
by the central government, the ON is legally
required to do everything it can to meet the
various commitments undertaken by the state
(Cotula, 2011). Also, signature of the lease
contract by the ON management should, in
principle, be preceded by validation by an
ON lease committee on the basis of a final
discussion between the various ON officials and
preparation of a schedule of conditions clarifying
various aspects of the contract, particularly the
investor’s obligations. This committee was set
up at the Office du Niger at the end of 2007 as
a result of the large numbers of applications,
but is apparently not yet operational. Therefore,
existing lease contracts were signed directly by
the CEO of the Office du Niger, with no prior
assessment by the committee.
Part 4: Business models for agricultural
investment: Impacts on local development
Furthermore, while the structure of the
investment agreements and lease contracts is
more or less the same for all private investors,
there are major differences in their content,
particularly as regards the tenure rights allocated
to the investor, land and water fees, and various
other important aspects of the contract. In other
words, the content of the contracts can vary in
important respects from one project to another
depending on the institutional entry point chosen
by the investor.
For example, while the Malibya agreement
provides for a long-term lease free of charge,
the agreement concerning the Markala Sugar
Project (PSM) project involves a long-term lease
for much of the land area, and transfer of land
ownership for the land where the processing
facility will be located (857 hectares), with land
fees being determined and deemed to be an
in-kind contribution from the Malian state in
exchange for an equity stake in the project.
Similar considerations apply to water rights and
fees, which are mentioned in all the investment
agreements and lease contracts. According
to the Malibya agreement, for example, Mali
undertakes to give Malibya any necessary permits
to use the water from the Macina canal and
underground water as per the project’s economic
feasibility study. It also undertakes to ‘permit
Malibya to use the quantity of water needed,
without restriction, during the rainy season’ and
to ‘provide the necessary quantity of water for
less water-dependent crops’ from the Macina
canal during the low-water period (the authors’
translation). The water fee is set at FCFA 2 470
per hectare/year for sprinkler irrigation and FCFA
67 000 per hectare/year for gravity irrigation.
The latter is the same amount paid by smallscale
farmers on plots developed by the state.
The same amounts appear in the investment
agreement with another company, M3 SA. Setting
the amount of the water fee in the investment
agreement seems to conflict with the provisions
of the ON management decree, which states that
this amount should be set by an Order adopted by
the Minister of the Agriculture. The desire to bring
contracts into line with national law may explain
why the lease contract with M3 SA, unlike the
investment agreement, does not fix the water fee,
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