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Guidelines for land allocation to investors

Mr. Mizengo Pinda, Tanzania Prime Minister, on a farm

Mpakasi | Jan 3, 2013

Top 20 Tanzania Business Stories of 2012
No. 16: Guidelines for land allocation to investors

Brief:

  • From January 2013, Tanzania will start restricting the size of land that single large-scale foreign and local investors can “lease” for agricultural use: the limit for sugar is 10,000 hectares and rice is 5,000 hectares.
  • Tanzania Investment Centre (TIC)’s announced that guidelines that will make the Tanzania Land Bank functional are expected to be ready early 2013.
  • The government has already given TIC over 63,000 hectares of land in Morogoro Region and over 47,000 sq. metres of land for hotel construction in Arusha.

Significance:

  • Land is always an issue especially on distribution and allocation to investors. Land guidelines and limiting the size of land investors can lease may help to reducing land conflicts that are on the rise in the country.
  • Land in Africa has more than just its economic value
  • In the recent years, the number of wrangles in over land and related resources such as water has increased
  • There have already been wrangles between some big investors and the locals over land
  • Due to the importance Tanzania places on land, it advocated for it not to be part under the East African community but rather under the member states
  • The land story is even more complicated even in the global context with some interesting having been accused of “grabbing” land in Africa.

The Story:

There were two highlights in 2012 as far as agriculture is concerned. First, Prime Minister Mizengo Pinda announced that from January 2013, Tanzania will start restricting the size of land that single large-scale foreign and local investors can “lease” for agricultural use.

Secondly, the Tanzania Investment Centre (TIC) announced that guidelines that will make the Tanzania Land Bank functional are expected to be ready early 2013.

PM Pinda confirmed that the government would limit the amount of land leased to. Previously, there were no limits.

“For a large-scale investor who wants to invest in sugar, the ceiling has been put at 10,000 hectares. The limit for rice is 5,000 hectares. The ceiling for sugar is significantly higher due to the fact that it may also generate power,” he said. Sugarcane fibre is used in the generation of electricity.

“Even within a seven-year period, an investor would not be able to use more than 10,000 hectares…”

Tanzania Investment Centre (TIC) is currently preparing guidelines to make it a fair exercise so that questions don’t arise subsequent to giving out the land, according to the Centre’s Manager for Public Relations, Ms Pendo Gondwe.

Gondwe said that the government has already given them over 63,000 hectares of land in Morogoro Region and over 47,000 square metres of land for hotel construction in Arusha. However, she said that that was still “a small chunk” and they expect to secure land for the Land Bank in every region.

“We need land for investors in every region and we are working on guidelines on how to distribute the land to both local and foreign investors.

“The reason for carefully preparing guidelines for the exercise is because we don’t want it to be problematic to both the local and foreign investors who will be offered the land,” she said.

She was non-committal on the number of people or organisations which have so far applied but noted that many investors have applied, both local and foreign. She noted that most of the investors who have applied for land are in food production and a few of them in real estate at Kigamboni area.

“If one of a few investors gets chunks of land larger than what we have agreed on, it can also strangle the inflow of more agricultural investments,” said Mr Pinda.

Another major issue that the government would peg its conditions on before allocating land to a large scale investor is that an agricultural investor should have a comprehensive plan for the small scale out-growers in the neighbourhood.

“In some areas where big commercial farmers have partnered with small farmer through out-grower schemes, production and productivity among small scale farmers has almost doubled.

“Contract farming in Kilombero sugar plantations is a model to this sort of arrangement, because the out-growers are more than 50 per cent of the entire project,” he noted.

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