The Governance of Large-Scale Farmland Investments in Sub-Saharan Africa:

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1 The Governance of Large-Scale Farmland Investments in Sub-Saharan Africa: A Comparative Analysis of the Challenges for Sustainability George C. Schoneveld, Ph.D. - Stellenbosch, March 6, 2014

2 Premise Most governance discussions focused on international instruments such as MBI and CoC often highly normative and fail to adequately address structural implementation issues Much literature emerging on impacts, but little emphasis on determinants/ factors that shape outcomes Need to take a step back Not only what is going wrong, but also and WHY? In this way governance innovations can become more demanddriven, locally responsive, and able to address concrete Case problems studies Capture a diversity of governance and socio-cultural and ecological contexts Field research activities (May 2009 April 2013) conducted in: Forest-savanna transition zone in Ghana (9 projects) Dryland forests of Zambia (5 projects) Tropical and arid lowlands and highlands of Ethiopia (10 projects) Tropical coastal rainforests of Nigeria (14 projects)

3 Observed impacts Striking uniformity of negative outcomes All projects involve loss of access to livelihood resources Less farmland = more environmentally sensitive landscapes 52.5% projects in HCV landscapes Most HH unable to recover lost assets Decline in income and food security Few initiatives to mitigate impacts No genuine involvement of communities in project design Employment most direct benefit Purely complementary 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Proportion of projects involving loss of local access to 0% Investor initiatives to mitigate impacts Type of initiative Total (n=27) Contract farming schemes 0.0% Provision of inputs 0.0% Alternative livelihood initiatives 3.7% Preferential hiring policies 3.7% Community development funds 3.7% Physical infrastructure 7.4% Training and development 11.1% Compensation 13.2% Periodic royalties 40.7% Total number of investors engaged in one 48.1% or more activities Ethiopia (n=10) Ghana (n=9) Nigeria (n=14) Zambia (n=5) Total (n=38)

4 Type of land uses within concession boundaries Company Name Karuturi Oromiya Sugar Corporation Origin Total area (in ha) Forest (in ha) ETHIOPIA Cultivated land (in ha) Equivalent number of HH using land India 11, ,312 1, Domestic 110,000 1, Saudi Star Domestic/Saudi 10,000 6, GHANA Kimminic Canada 13,500 4,255 2,359 2, Natural Africa Diesel South Africa 38,000 15,204 3,263 2, ScanFarm Norway 20,450 3,212 2,508 2, NIGERIA Dangote Domestic 14,912 13, Wilmar Singapore 8,688 1,202 1,894 1, Eng Huat USA/China 18,537 6,453 4,417 3, ZAMBIA Ferrostaal Germany 256, ,415 13,852 7, ZamPalm Domestic 21, ETC Bioenergy South Africa 45,457 21,267 8, HH/1,000 ha

5 Exploring Outcome Determinants

6 Structural legal deficiencies No procedures for identifying suitable and available land Only Ethiopia has criteria for identifying land No integrated rural development plans No mechanisms to capture investments development potential No mandates assigned to support spillovers No local engagement or ownership requirements Insufficient protection for customary rights Differs between countries Summary of key parameters on customary rights protection Ethiop Type of provision Ghana Nigeri Zambi ia a a Customary ownership recognized User rights are protected from expropriation for investment Consent of community representatives required Consent of community required Community consultations required Right to compensation for loss of farmland Right to compensation for loss of settlements Right to compensation for loss of common property resources Right for communities to share in land revenues Performance conditionalities in title X YES X X X X X YES X YES X YES X X X X X X X YES YES X YES X YES X YES X X X X X X YES X X YES X X X

7 Enforcement & Implementation Elite Capture Chiefs exploit ambiguities surrounding definition of revenue and custom Limited downwards accountability sense of entitlement to land proceeds As vote brokers and mobilizers, most governments adopt policy of non-interference Highly placed politicians often involved in rather dubious capacities opaque and secretive Centralization and clarity of mandate in Ethiopia nearly eliminated corrupt land allocation practices Conflict of Interest Commercial pressures on land creates distortionary incentives Fiscal decentralization local government receptive to investment as source of income and alleviates service delivery burden Undermines local representation IPA s have both investment approval and promotion roles

8 Enforcement & Implementation (2) Capacity Constraints EPA s understaffed, underfunded, and agency objectives poorly institutionalized external technical support, not domestic demands 10 out of 38 projects completed an ESIA 8 out of 9 projects funded by a development bank/pursue voluntary certification completed an ESIA No cross-accountability between regulatory agencies Limited real capacity to intervene when senior politicians are involved fear job loss High Modernist Ideologies LS farmland investments in line with official policy discourse Negative effects justified in the name of development Investment also mechanism to extend territorial authority and bring peripheral communities into the state-space Discriminatory ideologies destructiveness of shifting cultivation (Zambia), innate inability of smallholders to internalize modern agricultural

9 Structural Social & Economic Issues Limited Contestation Easily swayed communities Lack of legal capacity to claim rights Chiefs and local government actively repress conflicts As custodians of tradition, chiefs can define what is custom Conflict resolution channels often the pathways through which land was acquired Due to opacity, CSO s typically miss window of contestation CSO s repressed in Ethiopia (by law) and in Nigeria (intimidation) Incompatibility of Production Systems Companies are either disinterested in nucleus - outgrower schemes (e.g. rubber, cotton, jatropha) stimulates theft Or, communities are disinterested (e.g. oil palm) undermines local value addition Employment tends to be a complementary activity

10 Implications for Governance

11 Is the law really to blame? Importance of human agency in shaping outcomes No profound differences in outcomes between countries good tenure regime (e.g. Ghana and Zambia) has little effect Structural issues relating to implementation and enforcement (institutions) are much more relevant profound institutional reforms (?) prior to any legalistic reforms Institutional Conditions Mandate: Clarity of mandate that resolves conflicts of interest Capacity: Adequate human and financial capacity to carry out mandates and act upon granted authority Incentives: Removal of certain (distortionary) political and economic incentives and the introduction of new incentives Accountability: Involves particularly downwards accountability and mechanisms that enable land users to hold government and chiefs accountable

12 The imperative of comprehensive and crosssectoral legal and institutional reform Comparatively strong institutions and rules in certain sectors likely produces negative spill-overs Rural land claims in (parts of) Nigeria and Ethiopia more secure in practice than best-case countries land = compensatable good Disproportionately effects vulnerable population groups (e.g. migrants, tribal communities) and environmentally significant landscapes Requires well-functioning environmental protection institutions and secure user rights for all societal groups conflicts with piecemeal approach of donors and reform initiatives Balancing Centralization and Decentralization Inconclusive evidence on the types of institutional structures decentralization though problematic (decentralization of corruption?) Recentralization in Ethiopia has some merits (e.g. simplifying and harmonizing land identification practices, eliminations of local conflicts of

13 FPIC Panacea or Greenwash? FPIC a troublesome concept even when well informed most households will alienate land due to unrealistic expansions This serves to legitimize unsustainable land alienations Assumes a shared will communities are too heterogeneous Too often seen as the sole requirement Additional safeguards clearly needed clear land identification protocol with unambiguous indicators (e.g. active farmland density) Extra-territorial Oversight Greater extra-territorial oversight and strengthening of Corporate Accountability Movements Challenges Hard regulations consumer countries reluctant to become entangled in host country sovereignty issues (WTO compliance) Development banks service a niche (13 out of 563 LS investments) 52.3 % of investors from non-oecd countries

14 Thank You!

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