understanding land investment deals in africa - Oakland Institute

officials with the state and central governments, OI wasnot able to secure a copy of the agreement and wastold to ask the investor instead. In an interview withOI researchers, Peter Schuurs, the CEO of ConcordAgriculture, candidly admitted that in his opinion, theagreement “is strongly tilted in favor of the lessee.” 156Schuurs confirmed that the company is exempt fromtaxes on machinery and agricultural imports and frompaying company tax on profits for the first 10 years. Itis also permitted unlimited capital repatriation. WhileConcord’s leasehold does not have any riverfront land,the agreement allows for an easement to the Bahr el-Ghazal River, which is about 3 to 4 kilometers southof the project boundary. Schuurs maintains that theprice of the water will have to be determined at thetime of use. 157 However, a 2009 annual report fromCitadel Capital states that the agreement includes “fullirrigation rights.” 158Despite the reported weakness of the investmentagreement in catering to local interests, Schuursasserts that the company has taken on additionalresponsibilities of its own accord in order to be seenas responsible investors: “I don’t want to be seen asmoney grabbing, land grabbing thieves. But none of[these obligations are] in the investment agreement.” 159According to Schuurs, the company contracted acommunity development expert to come to Unity Statein 2009 in order to determine community concernsabout the project. Local residents confirmed to OI thatConcord had held a series of consultations with hostcommunities in which considerable numbers of peopleattended. 160 The communities’ main requests were thatlocal residents be given employment opportunitieson the farm and that the company provides technicalassistance to help local farmers, water, school, andhealth care facilities. No monetary lease payments forthe community landowners or any other form of directcommunity benefit are formalized in the investmentagreement. According to Schuurs, the social benefitsthat the company provides are managed throughinformal discussions with the Unity State government.Considerable Returns Despite LogisticalChallenges of Operating in South SudanCommercial agriculture ventures are confrontedwith considerable logistical challenges in the SouthSudanese context. Due to the lack of road infrastructure,companies must overcome high transport costs inorder to get their goods to market. Security risks arealso a constant threat, particularly in Unity State, withits proximity to the border with Sudan.The difficulties that Concord has faced in importing itssupplies illustrate many of these logistical constraints.The company had planned to import its machinerythrough Port Sudan, on the Red Sea across the borderto the north. However, in June 2011, when severalConcord employees went across the border to receivea shipment of machinery, Sudanese security personneldetained the employees and confiscated the company’sproperty. 161 The employees were reportedly held formore than a month before Concord was able to securetheir release, but the company’s property was neverreturned. By the time Concord had made the necessaryadjustments and began importing its supplies throughKenya, it had already lost valuable time and money andwas forced to delay its planting.These difficulties complicated what was already achallenging venture in establishing a Greenfield projectin South Sudan. According to Schuurs, “There is noinformation. There is no scientific data. We’re the firstpeople doing anything here.” 162 Nonetheless, Schuursremains optimistic about the future of agriculturein the South Sudan. “With the proper management,the development of transportation infrastructure andthe strategic investment of capital, agriculture hasa very bright future in the region.” 163 Schuurs alsoanticipates considerable returns from the investmentin Unity State: “We can get a 20 percent return on thisinvestment. We’ve been here long enough to prove toourselves that it is possible.” 164Yet, with more than USD 20 million already investedinto the farm, Concord has not yet harvested its firstcrop. Furthermore, according to Schuurs, Citadel hasfunded the project entirely out of their balance sheet andis expecting to scale down its interest in the companyover time. 165 One possibility that the firm is exploring,according to Deng, is for the Bank of South Sudan(BoSS) to provide a guaranty for Concord to pursue aloan or outside investors to compensate for the loss ofthe capital from Egypt. 166 This would be a risky movefor the government of South Sudan. If Concord wereto default on a loan for which the BoSS provided aThe Oakland Institute understanding land investment deals in africa: south sudan | 38