understanding land investment deals in africa - Oakland Institute

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entity and does not represent the community ofMukaya. The Three influential natives leased theland behind the backs of the entire communityand without concerned [sic] of the ancestralinhabitants of the land. …The land of MukayaPayam belongs to the community and not to beleased out by the individuals. …The so calledcooperative of Mukaya Payam wherever it mayexist with its administration is answerable to anyissue that may arise thereafter.” 95The president and the state authorities noted thecommunities concern, assuring the community thatno investment would proceed in Mukaya without thecommunity’s consent. 96 However, the government hasnot yet publicly terminated the lease agreement. Norhave the institutions from the Central Equatoria Stategovernment that were involved with the investmentexplained how they could issue a lease over such alarge portion of land without the involvement of thecommunity residing in the area.Southern Cross Mining and ExplorationThrough his contacts in the government of South Sudanand among South Sudanese living in the diaspora,Franklin was able to transition from the agroforestryventure into several mining ventures. His company,Southern Cross Mining and Exploration, is currentlymanaging an artisanal gold operation in MoroboCounty, Central Equatoria State, which he hopes todevelop into a full-scale gold mine. Project operationshave not yet started due to the high levels of water inthe project area, but the company’s geologist has beenconducting exploration activities in order to identifyareas of potential interest. According to Franklin,Southern Cross owns a 65 percent controlling interestin the venture and the SPLA and local communitytogether own the remaining 35 percent. The projectreportedly employs six ex-SPLA personnel as guardsand project managers. According to Franklin, SouthernCross investors have already invested approximatelyUSD 150,000 into the venture.To date, there has been very little mineral explorationin South Sudan and the country’s mineral potentialis largely unknown. Since the signing of the CPA, theRSS Ministry of Energy and Mining has instituted amoratorium on mineral concessions awaiting thepassing of the Mining Bill, now under review by theMinistry of Legal Affairs. However, as Franklin’sactivities demonstrate, foreign investors are usinga variety of means to position themselves to accessSouth Sudan’s resources once the moratorium islifted. It is not only “juniors” such as Franklin that areeyeing South Sudan—South Africa-based AngloGoldAshanti, the world’s third largest gold producer, is alsointerested in expanding operations to South Sudan.Mark Cutifani, AngoGold’s CEO, was recently quotedas saying that South Sudan has “untapped potential.”According to Cutifani:“It’s that simple. When you look at the area thereare lots of historical diggings and works and lotsof smoke and in fact fire. …For us, we’ve only beenthere five minutes when you look at the time,and we’re already seeing gold. That’s why we’reexcited.” 97It is too early to determine whether South Sudan willbe able to manage its mineral resources to benefit localpopulations in South Sudan. However, the fact that thegovernment has effectively limited mining activitieswhile it develops the necessary laws and regulationssuggests that a similar approach may be appropriatefor other business sectors. Given the evidence fromthe interim period demonstrating the government’sinability to enforce its laws on private sector investmentsin agriculture, forestry, biofuels, and carbon credits, thegovernment would be well-advised to limit investmentsin these other sectors until it has had an opportunity todevelop the appropriate institutions.Commonwealth DevelopmentCorporation (CDC) and the FinnishFund for Development Cooperation(Finnfund)This case study involves investments in SouthSudan by two governmental development funds: aBritish development finance institution called theCommonwealth Development Corporation (CDC)and the Finnish Fund for Development Cooperation(Finnfund). Until recently, these two funds heldmajority interests in two companies that are engagedin timber production and harvesting in South Sudan:The Oakland Institute understanding land investment deals in africa: south sudan | 27
the Equatoria Teak Company and its sister company,the Central Equatoria Teak Company. The two projectscover 20,450 ha spread across seven governmentownedforest reserves in Western Equatoria State andCentral Equatoria State. The concession in CentralEquatoria also gives the company rights on 50,000 haof community-owned natural forest in Lainya County.Both concessions have been granted for a period of 32years, equivalent to one full rotation of teak. 98A considerable amount of controversy surrounded thesetwo projects from the start. When the GoSS Ministryof Agriculture and Forestry signed the two concessionagreements in 2007, the ministry reportedly did notconsult either the state governments or the affectedcommunities before granting the concessions. 99 Thisresulted in several years of jurisdictional wranglingand local opposition to the projects. Although theconcession in Western Equatoria was able to beginoperations and has exported a few consignments, theproject in Central Equatoria never managed to beginharvesting timber. Equatoria Teak stopped work on itsproject in Western Equatoria in October 2010, citingan inability to make the plantation profitable anduncertainty about the upcoming referendum on selfdetermination.100 The CDC and Finnfund subsequentlysold their interests in Equatoria Teak and CentralEquatoria Teak to unnamed investors. 101Equatoria Teak and Central Equatoria Teak’s Corporate StructureETC / CETCAfriforest Investments(63%)Ugandan and Sudaneseequity (37%)Actis AfricaAgribusiness Fund(77%)Finnish Fund forIndustrial Cooperation(23%)CommonwealthDevelopmentCorporation (CDC)(100%)State of Finland(82.4%)Finnvera (15.7%)Confederation ofFinnish Industries EK(0.1%)Dept for InternationalDevelopment (DfID)(100%)The Oakland Institute understanding land investment deals in africa: south sudan | 28
Page 2: Understanding Land Investment Deals
Page 5 and 6: Table of Contentslist of Acronyms..
Page 7: executive summaryOn July 9, 2011, t
Page 10 and 11: INTRODUCTIONAround the world, ferti
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: South Sudan. There is a tendency fo
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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