understanding land investment deals in africa - Oakland Institute

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INTRODUCTIONAround the world, fertile land is being made availableto investors, often in long-term leases and at giveawayprices. This trend, often referred to as “land-grabbing,”gained traction after the global food crisis of 2008. 2Corporations, fund managers, and nations anxious tosecure their own future food security have been scoutingout and securing large landholdings for offshore farmsor just for speculation. Increasingly, investors havecome to see farmland as a secure and profitable placefor their capital. Some countries, particularly in Asiaand the Middle East, recognized their own shortage ofland or water resources for food production and beganlooking offshore for arable land—often in Africa—toassure their future food security. New quotas for theuse of agrofuels in the European Union and the UnitedStates have also contributed to the global land rush ascorporations began scouting out the vast land (andwater) resources needed to produce crops that can beconverted to fuels.By the end of 2009, such investment deals covered 56million ha of farmland around the world. 3 The UnitedNations Food and Agriculture Organization (FAO)has suggested that this can engender a “win-win”situation for private investors and host communities, 4and the World Bank has laid out a set of principles for“responsible agro-investment” that in theory, couldmake this the case. 5 Civil society and human rightsgroups, smallholder farmer associations and manyscientists disagree. They argue that the land-grabbingthreatens the food security and human rights of localpopulations. They call instead for investment in andsupport for smallholder agro-ecological farmingsystems. 6As a newly independent nation emerging from decadesof civil war, South Sudan provides a unique glimpseinto large-scale land investments in a transitional,post-conflict state. For 22 years, the North-South civilwar severely restricted public and private investmentin the region. The little infrastructure that existedwas concentrated in a handful of towns and severelydegraded by the years of war. When the ComprehensivePeace Agreement (CPA) ended the war in 2005, therewas only a single seven mile-long paved road in all ofSouth Sudan. 7These circumstances began to change quickly afterthe signing of the CPA. Private investors flocked toaccess new markets and business opportunities in thecountry. Large-scale land investments were particularlyattractive, given South Sudan’s large size, lowpopulation density, and impressive natural resourcewealth. Private sector actors found eager partners inpublic officials and community elites, many of whomview foreign investment as a “silver bullet” that can solvethe country’s problems of underdevelopment, poverty,and food insecurity. The end result was astonishing:According to a recent study, in just four short years,from the beginning of 2007 to the end of 2010, privateinvestors sought or secured approximately 5.15 millionha of land—comprising more than eight percent ofSouth Sudan’s total land area. 8Across the board, these investments display seriousshortcomings in terms of a lack of communityparticipation and one-sided contracts that stronglyfavor the private investor. Companies rarely negotiateinvestment agreements directly with landowningcommunities or their legally empowered representativesas required by the 2009 Land Act, preferring insteadto enter into bilateral agreements with governmentministries. 9 Many projects also involve long-term leasesof up to 99 years, despite government regulationslimiting foreign investments to much shorter terms. 10Government institutions often give away large tractsThe Oakland Institute understanding land investment deals in africa: south sudan | 5
of land for nominal lease payments that do not takeinto account the loss in land-based livelihoods for hostpopulations. Companies’ social obligations also tendto be vague and not formalized, leading to long delaysor nonperformance in the delivery of social benefitssuch as education, health services or road building andinfrastructure.Despite the massive land areas implicated by manyof these investments, there remains relatively littleevidence of investment activity on the ground. This islargely due to the political uncertainty of the currenttransitional context. Investors moved in quickly tosecure their leases, but held off investing money intodeveloping the property until they could see howevents would unfold in the country. The lack of visibleinvestment activity allowed a backlog of investmentsto accrue without anyone appreciating the true scale ofthe transfers. Private investors were able to secure largeareas of land without any significant push back fromcivil society, since in many cases, the communitiesliving on the land were not even aware of the leases.The true test for companies comes when they go to theground to begin construction. The importance of landbasedlivelihoods and the heavily militarized natureof South Sudanese society make for a combustiblemix. There is a long history of social opposition tocontroversial development projects in the country, andin many respects, the government’s approach to largescaleland investments shows that it has not learnedfrom the mistakes of the past. If companies deny localpopulations access to land and natural resourcesthat are indispensible to local livelihoods, they riskcontributing to increased social unrest and conflict.While the role of an unbridled private sector inpromoting conflict is relatively well established, what isless apparent, and perhaps somewhat counterintuitive,is the way in which insecurity can actually serve toencourage certain types of investment. Legacies ofconflict have left a South Sudanese state that is weak andunable to effectively extend its control into rural areas.The underdeveloped regulatory framework providesa fertile ground for “high risk, high return” investors,who are able to exploit the lack of clear land acquisitionprocedures and the jurisdictional gray areas betweenthe levels of government to negotiate favorable dealswith government officials and community elites. Theabsence of a proper regulatory framework also meansthat investors are able to secure leases without havingto demonstrate that they have the necessary capitalwith which to develop their property.Despite the lack of a regulatory framework, internationalfinancial institutions (IFIs) and donor countriesare promoting large-scale industrial agriculture asa shortcut to rapid development in South Sudan.In doing so, they inadvertently compromise locallivelihoods. The government is granting foreigninvestors an assortment of privileges, many of whichare not available to domestic enterprises, such as taxholidays, reduced limits on capital repatriation, andstreamlined procedures of land acquisition. Amidstthese efficiency-driven development models, theimpacts on the human rights and dignity of millions ofthe rural poor are often overlooked or ignored.This report is divided into five sections. The firstsection provides an overview of the political, social andeconomic context. It tells the story of South Sudan’sroad to independence and examines issues underlyingfood security and land availability in the country. Thesecond section explores the legal framework in SouthSudan, including several key legislative reforms thatthe government of South Sudan enacted in 2009.The third section discusses the institutions involvedwith land investments in South Sudan, examininghow various actors view the role of the private sectorin the country’s post-conflict recovery efforts. Thefourth section provides detailed analysis of four casestudies of land investments in South Sudan, includinginvestments in agriculture, agrofuels, forestry, carboncredits, and ecotourism. The final section concludeswith a summary of the main points and a series ofrecommendations for the government.The Oakland Institute understanding land investment deals in africa: south sudan | 6
Page 2: Understanding Land Investment Deals
Page 5 and 6: Table of Contentslist of Acronyms..
Page 7: executive summaryOn July 9, 2011, t
Page 12 and 13: 1. COUNTRY CONTEXTBox 1. South Suda
Page 14 and 15: the population—are moderately or
Page 16 and 17: Questions Surrounding the Availabil
Page 18 and 19: 2. LEGAL FRAMEWORKSouth Sudan’s l
Page 20 and 21: within the local government council
Page 22 and 23: Habila mechanized schemes, Nuba Mou
Page 24 and 25: 4. CASE STUDIESThere was a large in
Page 27 and 28: Nile Trading & Development Contract
Page 29 and 30: when Kinyeti representatives travel
Page 31 and 32: South Sudan. There is a tendency fo
Page 33 and 34: the Equatoria Teak Company and its
Page 36 and 37: of encroachment by the local commun
Page 38: which the CDC and Finnfund are will
Page 41 and 42: provide the local community with so
Page 43 and 44: officials with the state and centra
Page 45 and 46: all of the 50,000 tons of food it c
Page 47 and 48: 5. CONCLUSIONSouth Sudan experience
Page 49 and 50: ENDNOTES1 This is an updated figure
Page 51 and 52: 68 “South Sudan Launches Private
Page 53 and 54: 171 Ibid.172 Taban Deng, op. cit.17

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