Final monitoring report on the operations and the scale down of Addax Bioenergy (2016)

"People do not have access to their lands. The leasing contracts with Addax are still valid and enforced, even if Addax does not cultivate the land at the moment."
SILNORF and Bread for All | June 2016

Final Monitoring Report
On the operations and the scale down of Addax Bioenergy in Makeni, Sierra Leone (period July 2014 – June 2016)

By Sierra Leone Network on the Right to Food (SiLNoRF); in cooperation with Bread for all (Bfa)

June, 2016

Executive summary

This report describes the Addax Bioenergy Project in Makeni. It covers the period of July 2014 to June 2015 when Addax was still operational as well as the period of July 2015 to June 2016 when Addax scaled down its operations.

Addax was given the opportunity to comment on this Report. But besides a general critique, Addax resigned to delivering substantial comments or facts.

Addax scale down: consequences (2015-2016)

This part is based on research by SiLNoRF and Bfa and relies on interviews with people in villages. It also refers to Addax documents as well as to two Swiss academic studies on the impacts of the Makeni project.

Access to land – no land: People do not have access to their lands. The leasing contracts with Addax are still valid and enforced, even if Addax does not cultivate the land at the moment. The restrictions are enforced even more strictly than before and people are not even allowed to use the residual land (between the pivots). Moreover, the land used for sugarcane production had been levelled and drained and the trees removed. It became therefore useless for the diverse production systems of smallholders. A woman described the situation as follows: “Now this land is useless for us. All the land is infertile. We want support to continue with farming.” In a study of the legal NGO Namati, it became clear that it is close to impossible for the landowners to get back their land.

Jobs and salaries – no money: The permant workers (over 1128) were sent on garden leave and receive only 45% of their monthly salaries, which is not enough at all. All the casual workers (2243 people) lost their job. These workers relied on their seasonal jobs in order to cater for the needs of the family. Many petty businesses (mostly run by women) disappeared. People became dependent on the money from the company for their livelihoods and reported that they had never experienced this kind of poverty before. The chief of a village aptly put that “we are thankful to Addax. They came with money. Before, we were all poor. Then people got used to the money from the company. Now we have no land and no employment. We never experienced this sort of poverty before.”

Farming operations: The normal farming activities are severely disrupted: because of the lack of agricultural land and labour and the FDP/FDS that does not work accordingly. The lack of labour is caused by outmigration of the youth, by the high wages of labour, by the unwillingness of people to work on the fields and by the break down of earlier systems how to organise farming practices. People‟s hopes to mechanized farming had been shattered.

Addax social programs: The longer the scale down goes on, the clearer it becomes that the services (FDP, FDS and VVG) offered by Addax are diminishing. Most machinery and tractors that are supposed to be hired through FDS are no longer in working conditions. Therefore, many farmers depend on manual labor to plough large acreages. The current output will be inadequate to meet food security measures for their communities. VVG and FFLS are not working anymore. One man explained that “now after the scale down, it is again the women with their hoes that have to do the farming.”

Food security: The scale down has (and threatens to have) severe consequences for the food security of people: without money and land, the threat of hunger is omnipresent.

  • Rice and palm oil: People grow much less native rice and have to rely more on imported rice, which is expensive. They reported that they have to ration rice now. The situation for palm oil is similar.

  • Vegetables/fruits/fish: These items used to be available on the fields or in the bush around the villages. Now women have to buy them, often in far-away places like Makeni. This makes the diets of people (particularly of the children) less diverse. The same is true for fish that people used to catch around the villages. Some of these items people could also sell earlier giving them an additional source of income – particularly for women.

  • Non-food items: The situation for items like sticks for construction or firewood is similar. Villagers have to walk far now and pay – and lose an additional income. This also includes a higher workload and increased time burden for women, mainly responsible to collect firewood.

  • Access to food: A number of small traders stopped working and communities find it hard to access basic food commodities. Many have to make expensive journeys to the nearby town.

Village life: All these changes also affect the living together within the villages. Many formerly employed young people and men are now idle, while the workload for women becomes bigger. The young people either migrate out or stay in the villages, where people report increased incidenses of alcoholism, fighting and domestic violence. Additionally, the lack of money makes people fail to pay back their credits in the village credit schemes or to pay their kids‟ school fees.

Bushfires and the misery of Romaro: In the whole Addax area, huge parts of the pivots had been destroyed by bushfires. These fires have severe consequences for the people, e.g. in the village of Romaro. Fires that started from the sugarcane had taken over to the village and the bolilands around the village, where the rice was laying to get dry. It seemed plausible that the mechanisms that hindered the fires from spreading out ceased to exist because of the sugarcane fields.

The indomitable Masethleh: Masethleh, in the centre of Addax project area, gave very little land to Addax but kept the majority land for their community – including bolilands and trees. People report that they still had their own rice, as well as vegetables, fruits or sticks. People from other villages said that now, Masethleh was better off then themselves. But because of their resistance, the people of Masethleh did not get many jobs, no bore-well and could not benefit much from mechanized farming (as they had wished).

Feelings of being cheated: Many villagers expressed feelings of being cheated by Addax as well as their own authorities. Some reported how they felt unable to say no in the beginning, mostly because it was clear to them that the project was strongly supported by the authorities and the government. Further, Addax together with the authorities tried to convince people who were – according to them – often not totally aware about the consequences and believed the empty promises for “development”.

Insecurity about the future: The very high insecurity about the future leads to a feeling of hopelessness. Communities were not informed properly about the reasons, the duration and the consequences of the scale down – and they do not have any say. Further, they would not know who was responsible for this situation, who is the owner of Addax – where they can go with their protest.

Ebola and other catastrophes – issues of vulnerability and resilience: Addax‟ scale down is only the next in a row of catastrophes. In 2014, Ebola has hit hard. Certainly, not all of the issues of food security and poverty can be tied to Addax. But the available data show clearly that the situation is desperate for people in Addax project area and that the Addax project made people vulnerable. This vulnerability of people and their decreasing resilience is also a finding of the Swiss National Research Programm 68 study.

Future expectations of people People have no say in whatever happens to the project. A study about the legal possibilities of landowners or Chiefdom Councils urges to renegotiate all legal contracts, and at the same time state that certain clauses guarantee that the council would be unable to terminate the lease before its end date.

Expectations towards Addax: People were very disappointed and angry about Addax. At the same time, a majority of communities was expecting the company to resume full operations soonest. Even though they had problems and perceived that most of the promises were empty, they accepted the company – if only for a lack of alternatives. They had been forced to rely on the company and if no seller would be found a complete shutdown would be announced, people will suffer the consequences.

Expectations towards a new company: If a new company is going to take over, many people would expect it to continue and improve on the programs of Addax and fulfil the promises. All expected the investor to be willing to renegotiate land deals in the nearest future.

Expectations in case of shutdown: Many people said that they would go back to farming as this has been their occupation as far as they could remember. But also for that, support would be needed to restore the land, to organise themselves into farmer based organisations (FBO‟s), to get access to credit and other services.

Now, Addax is about to sell its operations probably to the British-Chinese investor Sunbird Bioenergy – a company with a questionable reputation. Development finance institutions (DFIs) who gave roughly 50% of the investment in the Makeni project do have a responsibility (i.e. the Development Banks of Germany, the Netherlands or Sweden and indirectly also from Switzerland). Even if the DFIs are or were ending their contractual relationship with Addax this does not end the responsibility of the DFIs. SiLNoRF and Bread for all demand, first, that these institutions have to take over their responsiblilty and support the people in Makeni in the new situation. And second, that the DFIs divest from projects involving large corporations taking control over land.

Addax scale down: reasons

On June 25th 2015, Addax announced on their website that they are going to scale down the Makeni project in order to conduct a review of their operations. On July 1st , Addax called an emergency meeting to inform the public that with effect on 1st July 2015, the company will scale down its operations: the factory had been shut down, sugarcane was not to be grown or harvested. Addax announced a period for scale down of six months that was later extended for another three months twice. The reasons are the following:

Unforeseeable events: According to Addax‟ the Ebola outbreak in May 2014 was a major reason for the scale down. But it is likely that more than Ebola, it had been the unforeseeable markets that were the game changer, i.e. the drastic decrease of energy prices. Additionally, EU 10% biofuel target stands on shaky grounds.

Total costs and cost overrun: The scale down has come as a result of the inability of the company to financially support its operations any longer, i.e. a huge deficit. The height of the deficit is not known. Even the heights of the initial and the current investment are unclear with different numbers given by different actors. In terms of reasons, very heigh costs for expatriate workers have been mentioned by Addax officials.

Low yields: Addax had very low yields of sugarcane. There are different numbers circulating, but certainly the difference between target and reality was huge and had negatively impacted the profitability. The company had not been able to fulfill their promise of supplying 15 Megawatt of electricity to the national grid.

Accusation against the people: Addax alleged that the activities of the communities, mostly thievery, contributed to the predicament of the company. People in villages asserted that they had not stolen anything. Further, Addax officials and villagers blamed each other for these fires – both without clear evidence. Addax urged the communities to take „ownership‟ of the Addax project, by which they mean not to steal or destroy company property. At the very moment of the shut down and probable selling of the project when people are about to brutaly realize that they do not at all have any ownership of the project at all.

Addax operations (2014-2015): assessment

These are only those issues that are new or have – to our knowledge – changed considerably compared to the monitoring report 2014 5. If the issues of concern mentioned in the monitoring report 2014 are mentioned here then, this means, they are still issues of concern.

Ebola prevention and treatment: When the disease engulfed the operational areas by mid July 2014, Addax provided several measures to prevent, diagnose and treat Ebola – often in cooperation with the Government. Although part of the funding might have come from Addax‟ own funds, a substantial part came from public funds, namely the Austrian Development Bank OeEB. Usually, these funds go through multilateral governmental bodies and reach people through the national government.

Payment of land lease and acknowledgment fees: Addax effected the payment of land lease fees to land owners, the Chiefdom Councils, the District Councils and the national government for the year 2015. The payments for 2016 are not yet issued.

Employment and working conditions: In March 2015, Addax had a total of 3‟850 national employees. The working conditions are satisfactory. But over half of the Addax‟ total employees (2243) were fixed term contracted (casual) doing mostly manual labour at the sugarcane plantation and the factory. They had to work in those times of the year when they would need to work on their own private farms. In the other periods, most of these casual workers became idle. Only a small minority of of the employees were women (6%). The recruitment process was prone to corruption and favoritism.

Social programms: Addax enrolled communities in a Farmer Development Program (FDP) at no cost and provided agricultural operations during the farming period 2014 and 2015. But Addax failed to use local expertise in the implementation of FDP with consequences for the yields. Many families, particularly the poorer ones, could not cope with the workload for rice production on the huge FDP lands and therefore had poor yields. In the Farmer Development Service (FDS), already up to 300 small farmers and women‟s groups from 20 villages were participating. The provision of services (ploughing etc) to the communities was sometimes too late (due to unavailability of tractors and other equipments) leading to poor harvests. The costs to plough one acre were not significantly different compared to commercial providers of tractors. Not all farmers could afford the FDS fee to use heavy machinery putting their food security at an increased risk. The Farmer, Field and Life School and the Village Vegetable Garden project were in place. Two communities reported that they had poor yields due to the late ploughing of garden lands by Addax, unsuitable seeds and Addax‟ ignorance of local knowledge. 13 Farmer Based Organisations (FBOs) from the villages have been registered to the Ministry of Agriculture. But other farmers reported that they did not have enough cash to register as FBOs.

Bolilands: In 2015 Addax began relinquishing some lands that were no longer relevant to their operations, i.e. in Robis Waka and Kiampkakolo. But there were still large portions of the fertile bolilands in many of the 53 communities under direct control of Addax. For community people these lands are very essential for their livelihood. 

Water issues: Addax constructed a hand pump well in Romaro giving the community access to clean water. But the lack of access to clean water continues to be a major threat for communities. There are still many villages without boreholes. Particularly villages close to the factory lost their access to clean water, because Addax told people that they should refrain from using the surrounding water sources. After a long time Addax provided two 500 litre tanks and filled it with water twice in one week to compensate. Most communities within the Addax operational areas rely on the Rokel River, the water source Addax uses for irrigation. People suspected that the wastewater from the fields erodes back to river, now polluted by chemical pesticides and fertilizers. SiLNoRF could testify that process and the hydrological studies of 2013 and 2014 confirmed such pollutions.

Infrastructural improvements: Some the major infrastructural developments took place before the scale down period, e.g. construction of houses, latrines, improvement of road network.

Production of electricity: Addax used the promise to produce electricity as a precept to convince the national and local government, the authorities and the community residents. It was even used to cry down critics of the Addax project as anti-development agents. In reality, the production of electricity did happen but lasted only for a few weeks in November 2014. It is still not public knowledge as to the exact timing, how much electricity produced and supplied to the national grid. Whatever the initial plans were, in reality Addax took away energy from the already scarce national grid without giving much back.

Original source: SiLNoRF & BfA

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