Global Policy Forum

Deals Can be Good News When Not Made Behind Closed Doors

By Loenzo Cotula

March 7, 2010

Land is life for millions of people across the developing world, central to their livelihoods, culture and identity. But there is growing concern that people's connection to their land is being undermined, and especially in Africa, where land is cheapest and where people's rights to land are weakest.

Arab, east Asian, European, American and Indian investors are all leasing more and more large tracts of farmland in Africa, which some commentators have dubbed "land grabs" and say herald a new colonialism. However, blanket statements are misleading. Agricultural investments could be good news for Africa, bringing jobs, capital, know-how, access to markets and infrastructure - but only if they are done right.

These land leases carry with them huge risks, as recent deals demonstrate. People, especially the poorest, most marginalised communities, can lose access to land. Companies may pay very low rents and make only vague investment promises. The key problem is the lack of transparency in the ways governments make land available to investors. This opens the door to corruption and means the rich and powerful can capture the benefits of land deals without sharing them fairly.

Lands that governments and investors consider "empty" may in fact be used by farmers, herders and gatherers. These people are often not properly consulted and have weak rights to the land and resources they see as theirs. Only a tiny percentage of local farmers in Africa have written documents to back their claims for land rights, even if their families have lived off the land for generations.

A 30,000-hectare biofuels project in Mozambique sparked controversy two years ago because of concerns it would undermine people's access to land and water. A few months ago the Mozambican government cancelled the deal as the company failed to deliver on its promises. But it is not clear what will now happen to the land that had been allocated to the investor.

For deals to deliver real social and economic benefits for local people, in addition to transparency, it is essential that African governments have the legal and technical expertise to scrutinise investment proposals in detail and negotiate hard to get good contracts.

A recent renegotiation of a land lease for a large rubber plantation in Liberia shows the difference that strong political will and world-class legal assistance can make, in terms of greater and more reliable public revenues and enforceable commitments on employment and business opportunities, such as the local processing of the crop.

The more promising investments are those that involve supporting smallholders, rather than large land acquisitions. Some ways of working with local farmers are well tested, such as contract farming, where local farmers cultivate land with support from the company, which then purchases produce at guaranteed price. There is also growing experimentation with a wider range of business models. In a biofuels project in Mali, for instance, farmers have an ownership stake in the project.

Recipient governments can do a lot to promote these more inclusive models. For example, charging proper fees for the land sought by investors would create greater incentives to collaborate with smallholders, to ensure the project is a success.

The decisions taken now will have repercussions for the shape of agriculture, food security and land access in Africa for generations to come. Today's choices must be based on strategic thinking and vigorous, transparent public debate, rather than piecemeal negotiations behind closed doors.

Dr Cotula is a senior researcher for the International Institute for Environment and Development


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