Zambia - Oakland Institute

ACQUIRING CUSTOMARY LAND
As discussed earlier, there is little management or
administration of the 90-94 percent of Zambia’s
land base that are customary lands, so it is difficult
to assess the scale of agricultural investment on
customary lands. However, in the majority of cases,
customary land acquired by investors is converted
to state land, as it is only then that the land has
“title” and can thus be used as collateral to access
credit, etc. Conservative estimates of land that has
been converted from customary to state land is
approximately 6 percent of the country’s total land
mass which amounts to approximately 450,000 ha
(which is not solely for agricultural land use, but
likely the majority, also this includes some land that
has been converted but is not actively being used
i.e. land bank). ZDA told the research team that they
strongly discourage investors dealing directly with
chiefs as it opens up the potential for corruption, lack
of transparency, lack of central planning, increases
uncertainties, and limits government’s role.
“Banks cannot lend money to farmers.
But land can be secured for free from the
chief. All you need to do is bring a bottle
of whiskey. Once you secure land, banks
will lend.”
– Valentine Chiatalu, Chairman, MTN (Zambia)
Ltd., Chairman, Phatisa (Africa Agricultural Fund)-
appointed to oversee privatization of Zambian
firms during the WB/IMF mandated SAP.
Source: Direct communication, February 2011.
Chiefs will often give land to foreign investors at a
fraction of the cost of going through the ZDA sanctioned
process. As the land technically has no value until it is
converted into a sellable asset (i.e. until it is converted
to state land), many chiefs dramatically underestimate
the value of this land. More than once we were told that
a new car, upgrades to the chief’s house, or other gifts,
were all that was required to secure the chief’s blessing
to the land.
Some chiefs also responded very positively to some
of the promised benefits that would accrue to their
chiefdom from the development including jobs,
infrastructure development, etc. These grants in land
often involve displacement of the chief’s subjects to
marginal lands. Once the land has been granted to the
investor, it is converted to state land (and thus has a
realized value – can be bought and sold), and ceases to
be customary land or under the jurisdiction of the chief
anymore as per the Lands Act.
One study suggests that the Land Reform Working
Group may play a significant role in facilitating investor
acquisition of customary land. It suggests that in half
of the cases studied the LRWG assisted investors
in identifying appropriate land and facilitating the
negotiations with the chiefs. One investor in Mpike
District acquired 302,749 ha in this manner from five
different chiefdoms in order to cultivate jatropha, while
another company was in the final stages of securing
79,300 ha in Kasama and Isoka District. 121
PURCHASE FROM OTHER OWNER
Given the existence of a fledgling land market for the
6-10 percent of lands that are currently state land, there
are more and more transactions involving the direct sale
of lands from their owner. Anecdotally, these seem to
be from medium-size farmers to large-scale investors.
In many cases these transactions have involved sales
to South African or Zimbabwean farmers.
Content of Deals
PERMITS AND AGREEMENTS REQUIRED FOR ALL
COMMERCIAL OPERATIONS
For larger investments (over USD 10 million) an IPPA
is required that outlines a Local Business Development
Program (LBDP), employment statistics, and reporting
requirements. In addition, farm block land awards
will require the signing of a “Sales and Purchase
Agreement” that will have terms more specific to the
individual investment granted including monitoring
and evaluation, clauses relating to minimum
work requirements, cancellation clauses, etc. This
agreement will be the mechanism through which the
ZDA will ensure that the proponent is carrying out their
project as designed, and not merely engaging in land
speculation.
The Oakland Institute UNDERSTANDING LAND INVESTMENT DEALS IN AFRICA: ZAMBIA | 33