African farmland investments face governance challenges

Failure to accept that large-scale farmland investments are a new reality in Africa may hinder dialogue on effective frameworks.
Nigna Latifa, 26, carries a basket of freshly harvested cotton, outside the Zorro villager, Burkina Faso.

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(A version of this article appeared previously in The Broker.)

The rush for African farmland has created new opportunities for local elites to capture rents from what have been — until now — poorly monetized land resources. This has stimulated the formation of influential new local coalitions serving the interests of international capital. As a result, the quality of societal representation and the potential for much-needed agricultural investments to contribute to rural poverty alleviation is severely undermined.

Foreign investor interest in farmland gained momentum in the wake of the food and energy price crises of the mid-2000s. Investors lacking funds or capacity to actually invest in the land, bank on profiting from rising land values; others, on favorable long-term prospects within international commodity markets.

For more established agribusinesses, the need to cut costs of production emboldens them to foray away from traditional production centers in Latin American and Asia to the agricultural frontiers. This ultimately brings many to Africa, where fertile agricultural lands are comparatively cheap and ostensibly abundant.

Few would dispute that investment is urgently needed in Africa’s agricultural sector. According to the 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, equivalent to almost 50 percent of current investment levels. An emerging body of research is, however, raising important questions about whether the dominant investment models that rely on large areas of land for plantation monoculture are the best form of agricultural investment.

These types of investments often generate only insecure and poorly remunerated employment without fostering meaningful productive linkages, while causing involuntary displacement of the rural poor that lack secure title to their land and destruction of important biodiversity hotspots.

Such outcomes unfortunately appear to be the rule rather than the exception.

This raises numerous important governance challenges, not just for the way farmland investments are regulated but also for the way globalization processes more generally play out in Africa. Research conducted in Ethiopia, Ghana, Nigeria and Zambia, explored in greater detail in the book The Governance of Large-Scale Farmland Investments in sub-Saharan Africa, shows that despite marked differences in the level of legal recognition and protection of customary claims and quality of governance, there is, curiously, no real difference between countries, neither in the procedural aspects such as the degree of consultation with affected communities and payment of compensation for land loss, nor in the impacts.

This can be ascribed to the ease with which statutory safeguards are ignored or (re)interpreted in practice, highlighting the pivotal role that domestic regulatory institutions and structural social and economic issues — as opposed to the law — play in shaping outcomes.

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. One is represented by modern political parties and the other by “customary” institutions such as chieftaincy systems. Since the formal political system tends to have strong urban biases, customary institutions typically offer the most tangible form of political participation in rural areas.

Despite efforts in the post-independence era to rein in chieftaincy authority, in most African countries chieftaincy institutions have proven to be surprisingly resilient and are increasingly exploited by states for political ends; for example to influence voting decisions and to sensitize communities to government policies and initiatives. It is widely argued that unsuccessful nation-building has incited a “resurgence of chiefs.”

As African farmland becomes an increasingly sought-after and valuable commodity, the right to make land transactions has taken on new meaning. In countries where chiefs have the legal right to lease out community land, many are found to sign over land actively used for subsistence farming, grazing, and collection of forest products for simple individual gains.

Even in countries where nationalization of land has removed these chieftaincy rights, chiefs still wield significant de facto influence when it comes to land allocation decisions.

Despite historic tensions, in many ways the interests of many state actors, customary elite, and farmland investors are neatly aligned. The state and the customary elite want investment, and often so do host communities — at least initially.

Public-private boundaries are in practice often blurred

George Schoneveld

A highly Westernized modernization discourse prevails across much of Africa: Typically without qualification, investments are promoted as good since they purport to bring progress and civility through employment, the introduction of input- and capital-intensive production, and modern infrastructure. Cash-strapped 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, often maintaining that land without houses or permanent crops is “unused” and “unproductive,” non-sedentary livelihoods are archaic, and land uses involving fire or itinerancy are by definition environmentally destructive.

Many Africans are clearly ready to abandon many of their cultural and economic practices in exchange for urban amenities, or the dream thereof.

Another important issue is that the state has very few incentives to properly represent the rural population. Although fiscal decentralization is meant to enhance societal responsiveness, local governments are increasingly encouraged to align with investors since these offer one of the few material sources of income — for example, through payment of ground rents and corporate income and employment taxes.

Since most investors pledge to develop social and physical infrastructure, investment projects also promise to alleviate not only local governments’ internal revenue generation, but also their service delivery burden. These conflicts of interest are limited not only to local governments. Many investment promotion agencies are also charged with regulating investment; many 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 many chiefs have personal stakes in investment projects.

Public-private boundaries are in practice often blurred.

Agencies charged with enforcing social and environmental safeguards, notably environmental protection agencies, are typically a product of Western technical assistance. Since such safeguards are therefore poorly institutionalized, these agencies often lack enforcement capacity and are actively discouraged by other government agencies from “obstructing development.”

Nor are countervailing forces coming from affected communities, which, due to their high expectations of future development prospects, deference to chiefs’ authority and lack of knowledge of or capacity to claim their legal rights, are typically disinclined to contest rights infringements. Additionally, since negotiations over land are often secretive and opaque, civil society organizations often miss the most important window of contestation (e.g. before terms of land deals are agreed upon).

In countries such as Ethiopia and Nigeria, they are also actively hindered by the state.

Discussions to date on farmland governance have been overshadowed by antagonistic debates “for” foreign direct investment in land or “against” so-called land-grabbing. But failure to accept that large-scale farmland investments are a new reality in Africa will hinder dialogue on more effective and rational institutional and regulatory frameworks aimed at mitigating costs and leveraging potential investment spillovers.

Foremost, the book suggests that despite the need for legal reforms, these should be preceded by institutional reforms that enhance the regulatory, as opposed to the facilitating functions of the state and customary authorities. Realizing such reforms is no 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 articulate and advance the interests of global capital and reinforce existing accumulation structures, rather than provide the necessary foundation for realizing institutional reform.

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