Governing the land rush in Africa
The food and energy price crises of the mid-2000s exposed the vulnerability of import-dependent economies to fluctuations and instabilities in international commodity markets. This has revealed distinctive geographic disparities between those countries that possess the necessary natural resources to alleviate global scarcities and those that are not. This presents new opportunities for private investors, for example in securing access to cheap land well suited to the cultivation of food crops or biofuel feedstock. Those lacking the funds or capacity to actually invest in the land, bank on profiting from rising land values. Others look towards the favourable long-term prospects within global soft commodity markets, such as sugar. For more established agribusinesses seeking to consolidate their market position, rapidly rising land prices emboldens them to foray away from traditional production centres in Latin America and Asia to the agricultural frontiers. This ultimately leads many investors to Africa. Due to largely informal agricultural economies, the absence of well-functioning land markets, and rundown infrastructure, African farmland is comparatively cheap and seemingly abundant.
In the context of market liberalization and downsizing of the state, Africa’s agricultural markets have long struggled to achieve the competitiveness and productivity of its other Southern counterparts. Government spending on the sector has been steadily declining, donors are losing interest, and Africa’s younger generations are increasingly opting to exchange their hoes for hope of pay cheques in the cities. Africa is the most food-insecure region in the world, despite its potential to become the world’s breadbasket. Large proportions of the rural population fail to consistently produce enough food to meet their own dietary needs.
Few people would dispute that investment is urgently needed in the sector to achieve food security objectives. According to the FAO’s ‘High Level Expert Forum on How to Feed the World in 2050’, for example, average annual net investment in developing country agriculture needs to increase by US$83 billion. This is equivalent to almost 50% of current investment levels.
Many important governance challenges arise due to the lack of corporate attunement to local realities and strikingly consistent negative outcomes. These apply not just for the way farmland investments are regulated, but also for the way Africa interacts with globalization processes more generally. Substantive analyses of the countless relevant host country laws and regulations highlight structural deficiencies and also large variability between countries. This relates in particular to the way in which different types of land rights are recognized and protected.
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In most African countries, issues related to post-colonialism, ethnicity, public sector legitimacy, and the symbolic representation of statehood have undermined the quality of societal representation and sustained dual political systems.
The rights to make land transactions have taken on new meaning as African farmland becomes an increasingly sought-after and valuable commodity. In countries such as Ghana and Sierra Leone, these rights are legally held by chiefs. However, in most other countries, land rights are held by the state; albeit in countries such as Mozambique, Tanzania, and Zambia, community consultation and/or consent is a legal precondition for alienation. In situations where chiefs have free rein to lease out community land, research has highlighted how marked sense of entitlement to land and its proceeds by many chiefs has compelled the more unscrupulous ones to sign over lands to investors that are actively used by their subjects. Additionally they can do this for simple individual gains – they may be given anything from new vehicles and palaces to large one-off cash contributions and periodic royalties. However, even in countries where nationalization of land has removed these chieftaincy rights, due to the lasting political relevance of the institution, most chiefs continue to wield significant influence in the alienation process. Since many governments seek to legitimize the transfer of land and absolve themselves from responsibility in case of strife and investors require a ‘social license to operate’, both parties recognize the importance of carefully managing their relations with chiefs when acquiring land.Consequently, even in countries where chiefs have fewer statutory powers, they are well positioned to derive ample rents from the land alienation process and in practice have been shown to be easily co-opted.
In many ways, the interests of state actors, the customary elite, and farmland investors are neatly aligned, despite historic tensions. The state and the customary elite want investment, as the host communities often do, at least initially. While opportunities for extracting rents by chiefs and well-placed state actors undeniably underlie much of this, reality is a little more complex. A highly Westernized modernization discourse prevails across much of Africa. Typically without qualification, investments are good since they bring progress and civility through employment, the introduction of input- and capital-intensive production, and modern infrastructure. Poor and neglected rural communities understandably want the same and are easily lured into submission by these prospects. The state regularly employs discriminatory ideologies about customary land-use practices to justify its actions. This often includes maintaining that land without houses or permanent crops is ‘unused’ and ‘unproductive’, that non-sedentary livelihoods are archaic and that land uses involving fire or shifting cultivation are environmentally destructive. Many Africans are clearly ready to abandon many of their cultural and economic practices in exchange for urban amenities.
Another important issue is that the state has very few incentives to properly represent the rural population. In addition to the mediating and exonerative role of chiefs and the absence of effective accountability mechanisms, much of the rural economy is informal. That implies that many local communities fall outside the ‘state-space’ and are therefore almost impossible to formally tax. In the context of decentralization reforms, many local governments are given fiscal autonomy and responsibility, meaning that they need to generate revenues themselves. Although decentralization is meant to enhance societal responsiveness, local governments are increasingly encouraged to align more with investors. This is because new farmland investments offer one of the few material sources of income, – for example, through payment of ground rents and property, corporate income, and employment taxes. Since most investors also pledge to develop social and physical infrastructure, investment projects also promise to alleviate local governments’ service delivery burdens. These conflicts of interest are not only limited to local governments. Many investment promotion agencies are also charged with regulating investment. Various senior officials with regulatory functions are often found to be involved in unofficial capacities to facilitate land transfers or are hired as company ‘consultants’ and numerous chiefs have personal stakes in investment projects. This creates a blurring of public-private boundaries.
Those agencies charged with enforcing social and environmental safeguards, notably environmental protection agencies, often lack enforcement capacity and are actively discouraged by other government agencies from ‘obstructing development’. Regulations formalizing these safeguards are in most countries products of Western technical assistance rather than domestic demand. As a result, they are by and large poorly institutionalized and selectively implemented. Additionally, due to high local expectations of future development prospects, deference to chiefs’ authority and lack of capacity to claim legal rights, affected communities are typically reluctant to contest rights infringements or demand regulatory enforcement. Since negotiations over land are often secretive and opaque, civil society organizations also often miss the most important window of contestation, for example, before terms of alienation are agreed upon. In countries such as Ethiopia and Nigeria they are also actively hindered by the state, for example, by laws that work against them or by coercion.
These observations have important implications for sector governance. However, discussions to date on farmland governance have largely been overshadowed by academic pigeonholing. This has tended to reduce the governance debate to antagonistic discussions ‘for’ FDI in land or ‘against’ so-called ‘land-grabbing’. Particularly popular perspectives have been inspired by (in particular Marxist) agrarian political economy, which have typically called for alternative development models centred around rural social movements, the contestation of existing class dynamics and capitalist structures, as well as the promotion of food and land sovereignty principles.
Above all, the studies in Ethiopia, Ghana, Nigeria, and Zambia suggest that, despite the need for legal reforms, these should be preceded by institutional reforms that enhance the regulatory, as opposed to the facilitatory, functions of the state and customary authorities. Four institutional conditions need to be fulfilled and updated over time; namely clarity of mandate, capacity to act upon granted authority, incentive to adequately represent the right stakeholder – helped by the removal of distortionary incentives – and accountability in case of non-compliance.
Realizing such reforms is by no means a simple task. As we have seen, local state-elite alliances capitalize on legal ambiguities and gaps in enforcement and implementation to capture and internalize new market opportunities. This then serves to advance the interests of global capital. As this capital becomes more entrenched and the state further aligns itself with it as well as becoming increasingly reliant on it, – for example, through revenues that are more difficult to collect from the rural population – much as in the oil-based rentier states, the loss of necessity to adequately represent the local population may further strengthen established lines of inclusion and exclusion rather than provide the foundation for institutional reform.
Given the transboundary nature of the phenomenon, there is also an urgent need to strengthen extraterritorial oversight. However, there are no simple solutions here either. Practice has shown that WTO rules on protectionism and sovereignty issues severely limit the capacity of consumer countries to interfere in host country affairs, especially in social issues. While the most encompassing innovations are taking place in the marketplace – in the form, for example, of voluntary certification schemes that aim to ensure that a product, the used production method or system, show the set characteristics – the adoption and relevance of such instruments in Africa has been negligible to date.
Therefore, in the absence of sufficiently comprehensive and effective international regulatory frameworks, host country governments bear much of the farmland governance burden. Since they tend to be ill-equipped or disinclined to provide the necessary oversight, despite the hypothetical developmental potential of these investments, Africa risks importing the costs of global resource scarcities, while the gains are exported. This calls for an urgent exploration of innovative regulatory architectures that bring together different approaches, across scales, in a manner that is complementary and mutually reinforcing. Unravelling the ways that different types of investors respond to different types of regulatory impulses will be instrumental to achieving this.