Land grab issues and how it affects foreign investments in Sub-Saharan Africa

Introduction

Africa is seen as the next frontier, where abundant land and resources are available. Many investors show particular interest in Sub-Saharan Africa for business opportunities such as in mining, timber, large scale plantations, infrastructure and recreational developments. They show special interest in expanding farmlands. Though Africa acknowledges the importance of foreign investments in the agricultural sector, the lack of property rights policies hinders foreign investments to expand. These land deals have the potential to increase investments in agricultural sectors and improve the socio-economic status of communities in the poor, developing countries. At the same time, it raises concerns on land possession and ‘grabbing’ rights of poor people of their land and resources. Land grab is commonly known as taking possession of land inhibited by indigenous or local communities. Many foreign investors are being accused of involving in land grab when they expand their investment in this region.  

GRAIN report that was published back in 2016 reported that over 65 large-scale deals for palm oil plantation in Africa were signed between year 2000 and 2015 covering over 4.7 million hectares. Deals were made with multinational foreign companies and financial institutions. However, in their recent report that was published in 2019, GRAIN pointed out a significant decline in the total areas that was originally signed for. The latest report covers 49 large-scale concessions for oil palm plantation with only 2.7 million hectares of palm oil plantation deals. Out of the 2.7 million hectares, only 463,000 hectares (17%) is planted with palm oil. GRAIN estimates that only 220,608 hectares have been converted into oil palm plantation or replanted with new oil palm trees in the past 10 years.  In the past decade, many of the projects that were initially planned and projected never came into reality. They were either abandoned, failed, reduced momentum, or scaled back. 

There are few major companies that covers 75% of palm oil plantations in Africa (Table 1). SOCFIN of Luxemburg and SIAT of Belgium are two companies from old European agribusiness companies. They cover about quarter of the palm oil plantations in Africa. Wilmar on the other hand, is the most active Southeast Asian company in the region, which has plantations in Côte D’Ivoire, Ghana, Liberia, Nigeria and Uganda.

Table 1. Top five oil palm plantations companies in Africa

Company Area under oil palm plantations (ha) Countries
SOCFIN (Luxembourg) 93,764 Cameroon, Côte d’Ivoire, DRC, Ghana, Guinea, Nigeria, Sao Tome & Principe, Sierra Leone
Wilmar (Singapore) 83,714 Côte D’Ivoire, Ghana, Liberia, Nigeria, Uganda
Olam (Singapore) 71,500 Gabon
SIAT (Belgium) 32,415 Ghana, Nigeria
Feronia (Canada) 23,500 DRC

Source: GRAIN

Community’s perspective

Studies show that due to foreign investment, many small—scale farmers are being displaced and pastoralists or cattle/sheep farmers are losing their grazing lands. People from rural areas are being displaced and losing their resources like water and other essential properties.  The land locals reside in is where they plant their basic food items like, cassava and other vegetables. When the land is sold to foreign investment, the locals are displaced and forced to now buy their food from local market or another village which may not be convenient. In turn this will push the locals further into poverty.

Studies also suggest that women often been marginalized of their right more than men. They are more likely to carry the brunt of land loss than men as their role is usually providing food for household. Men    by contrast benefit from the deal with job offer at the plantations. The cost of rebuilding when displaced is evident, especially in women.

Plantations oftentimes are being accused of practicing poor labor practices and mistreating the residents in and around the concession. They are accused to be engaged in active land clearing, destruction of sacred and grave sites, forceful displacement of people without adequate compensation and active planting and cultivation of palm oil without prior informed consent.

Besides that, foreign companies are also accused of mistreating the residents in and around the concession. In 2018, a major palm oil company was accused of mistreating a suspect who was caught stealing fresh fruit bunch from the plantation in Liberia. Later on, the company took immediate action on the security personnel that was involved and also suspended the Chief of Security.

A world bank report also suggests that foreign investors favor more towards the countries with weak governance, weak land rights, and corruptions so that local people can be easily moved from their land.

Investor’s Perspective

On the other hand, it seems like it is not always accurate when reports and articles written by activists who oppose large scale land deals where numbers and stories are blown out of proportion. Among others, the 2014 Guardian article reported that an investment company acquired an entire village in Mozambique and forcefully evicted the people living there. This has left many small farmers helpless and put at an adverse situation. This kind of stories and reports are being challenged by researchers in Africa, claiming that the amount of land actually changing hands are far less than commonly believed. It is actually very challenging to find out exactly how much land has changed hands since African governments rarely disclose information like this. There is a lack of transparency and much of secrecy that often surrounds the deals. More importantly there is no central cadaster or land registry which leads to question the widespread overestimating of land grabbing.  

Foreign investors, once on site, have challenging times to turn a profit in this region. This leads them to scale back or abandon their projects. Legal ambiguity and weak property rights in the matter of land tenure often cause much trouble and challenge for the foreign investors. Moreover, they also have challenges due to unclear administrative procedures, lack of access to funding and agricultural insurance, gaining access to land and poor infrastructures.

It is also reported that even the companies that are willing to abide rules, are not being able to. “According to Senegalese law, land administered by rural councils cannot be sold or leased and must be allocated to residents of the community. Unfortunately, rural councils sometimes allocate land to foreigners in contravention to that law.” According to the researcher with Institute for Policy Analysis Research (IPAR), this is also due to the modern law and the traditional law that exist. Traditionally in Senegal for instance, land is to be owned by family as a collective family property, and not individual property that can be bought or sold. When government intervene with their new laws and moves, the challenges arise (foreignpolicy.com).   

In Liberia on the other hand, the legal framework remains unclear.  Reports suggest that in the past, under the Aborigines Law (1956) and the Public Land Law (1972-1973), Liberian government granted tribes legal deeds to their chiefdoms and clans.  Later on, 47 deeds out of the total were located, which in combination cover a total of 6.8 million acres (2,751,922 ha) or 29% of Liberia’s total land area. Even then, the Liberian government has not stopped from granting mining and forestry concessions to foreign investors in these areas.

It is notable that Sime Darby who started their plantation project in 2009, pulled out from Liberia after 10 years. Sime Darby only managed to plant palm oil on 10,300 hectares due to many operational challenges, though it had 220,000 hectares of land with over 60 years of concession deal in place. Due to many challenges faced, it couldn’t sustain the business and sold it over to Mano Palm Oil Industries Limited (MPOI). Similar to Sime Darby, many abandoned projects and scaled down projects exists.

Conclusion

The initial perception of foreign investors that Africa is a safe bet for investment and returns changes when they actually get into the nitty gritty of the process. The more complicated process of turning a profit is real. This is mainly due to the poor governance across many nations in Africa. Proper land ownership law, and land registry is utmost important to create a win-win situation for both foreign investors and for the wealth of the nation.

As stated above, not all foreign investment plans that initially starts off, can sustain. This is particularly true for large scale palm oil plantations. There were many failed and abandoned projects in the last decade and this would continue if major changes don’t happen from the root, which is the governance of the particular African country.

Prepared by  Karthigayen Selva Kumar 

*Disclaimer: This document has been prepared based on information from sources believed to be reliable but we do not make any representations as to its accuracy. This document is for information only and opinion expressed may be subject to change without notice and we will not accept any responsibility and shall not be held responsible for any loss or damage arising from or in respect of any use or misuse or reliance on the contents. We reserve our right to delete or edit any information on this site at any time at our absolute discretion without giving any prior notice.

You can share this posts: