Governments should protect citizens’ interests

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Riek Machar: "Come, just come!"
The Star (Nairobi) | Saturday, 17 March 2012

Governments Should Protect Citizens’ Interests

BY ANDREA BOHNSTEDT

As PR goes, this wasn’t ideal: In 2009, through portfolio company Concord, Egypt’s Citadel Capital signed a 25-year lease for 105,000 hectares of land in Gwit and Pariang counties of Unity State in Southern Sudan to grow maize and sorghum for domestic consumption. Given that Southern Sudan’s non-oil economy is largely subsistence-based agriculture, you’d think that anything that increases food production and introduces modern farming methods would be a good thing.

However, the Oakland Institute wasn’t so enthusiastic about this investment and others: They argue that ‘a large influx of one-sided foreign investment has flooded into South Sudan. These unfair land deals undermine the land rights of rural communities, increase food insecurity, further entrench poverty, and might result in skewed development patterns in South Sudan.’ Specifically with regard to Citadel Capital’s investment, they criticised that ‘Concord’s leasehold is entirely on community-owned land, the company signed its lease agreement directly with the state government with no lease payments for the community landowners or any other form of direct community benefit. Additionally, Concord has disregarded community requests for employment opportunities, preferring to outsource labour from other countries in Africa.’ In addition, Oakland highlighted that Concord had been given exemptions from paying taxes on machinery, agricultural imports, and profits for the first decade, and unlimited capital repatriation.

Concord are also in this to make money, asserts the Oakland Institute. Umm, yes, obviously. And that need not be a bad thing – I doubt it will be the armies of NGOs that make a living off poverty and underdevelopment that will change a country, and Southern Sudan urgently needs non-oil investment. And neither will making money be easy: there’s plenty of land in Southern Sudan, but hardly any infrastructure, hardly any skilled labour, and certainly an enormous lot of insecurity, physical, legal, and otherwise. But neither is this to say that Citadel are blameless angels.

Land has always been an emotive and difficult issue, and there have been a number of recent incidences that highlight the challenges for large-scale investors: In Tanzania, African Barrick Gold are building a 14km fence around their Mara North gold mine to ward off trespassing artisanal miners, while the local community around the mine complains about being pushed off their land and not receiving the support that they were promised by the mining company. In Uganda, a British forestry firm gave up on its investment after having been accused of illegally displacing 20,000 people. The company said that it had acquired the land title from the government in good faith, but eventually pulled out after too much negative press.

Last year, the World Bank analysed media reports of land deals from 2008 and 2009. While arguing that large-scale farming investments can, if managed correctly, contribute to smallholder productivity, the World Bank noted: ‘However, recent press and other reports about actual or proposed large farmland acquisition by big investors have raised serious concerns about the danger of neglecting local rights and other problems. They have also raised questions about the extent to which such transactions can provide long-term benefits to local populations and contribute to poverty reduction and sustainable development.’ But here is an obstacle that the World Bank ran into when compiling the analysis, and I think this tiny sentence is incredibly important: ‘Although these reports are worrying, the lack of reliable information has made it difficult to understand what has been actually happening.’ I feel similar about the criticism of Citadel’s Southern Sudan investment and other land-related investments that ran into problems, and not just because the local press is often inaccurate and sensationalist.

Even in countries with a reasonably established institutional and legal infrastructure like Uganda, Tanzania and Kenya, investments involving land can be difficult: Even if the investor has a clean land title, not a fake one, legitimately acquired – and that can be an ‘if’ , there is still often a local community on the land. Even if an investor engages the local community in good faith – and that, too, can be an ‘if’ , their presence may still be manipulated and exploited by local politicians and other vested interests.

In Southern Sudan, there hardly is any established institutional and legal framework to guide such investments yet, and often the reality on the ground overrules whatever has been put down on paper. It’s not a government that is – yet – very used to dealing with the finer technical details of such contracts. Back in 2006, I attended a Southern Sudan investment conference in Nairobi that was packed, reflecting the surging interest in doing business in the post-CPA south. When asked about land titles and land laws, Riek Machar merely stood up, opened his arms wide and, smoothly continuing this quasi-religious symbolism, invited us all to ‘Come, just come!’. If you intend to come with a couple of hundred thousands or even millions in hard currency, that obviously won’t be enough.

And the bottom line in these cases is that it is the responsibility of the respective host governments to set policies and a legal framework that protect their citizens’ interests – by encouraging investment, and protecting the rights of affected individuals. It is easy to complain about an investment firm negotiating the best deal for itself, but who is it negotiating with?
Original source: The Star
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