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February 07, 2011

Report shows how secret land deals can fail to benefit African nations – and how to make them better

African nations risk giving investors access to large areas of land in rushed, secretive and one-sided deals that fail to deliver real benefits or create new social and environmental problems, according to the first ever legal analysis of contracts (published 31 January) by the International Institute for Environment and Development.

The report analyses 12 recent contracts through which investors have leased large areas of land in East, West, Central and Southern Africa for various agricultural activities. It found many problems with the contracts but also some signs of positive deals.

A number of the contracts reviewed appear to be heavily biased in favour of the investors, granting them long-term access to land at very low costs while, in return, requiring little from investors in the form of benefits for local people and safeguards to protect the environment.

"Contracts define the terms of an investment project, and the way risks, costs and benefits are distributed but most contracts for large-scale land deals in Africa are negotiated in secret," says report author Lorenzo Cotula. "Only rarely do local landholders have a say in those negotiations and few contracts are publicly available after they have been signed."

Over the past few years, agribusiness, investment funds and government agencies have been acquiring long-term rights over large areas of land in Africa, raising both the promise of development opportunities and fears of a new “land grab”.

Some of the contracts analysed by the report are just a few pages long, with scant details on what investors should do to ensure that risks will be properly managed and that expected benefits will materialise.

The long-term nature of the leases – commonly up to 100 years – mean that local communities will be separated from the land for generations. This threatens to eradicate longstanding livelihood strategies and agricultural knowledge. Also, some contracts grant investors priority rights over water, which can have adverse impacts on other water users in times of water shortage.

The land fees can be very low. One contract from Sudan leases land for less than a dollar per hectare per year. Others make no mention of land fees at all, or explicitly allocate land for free – as in one contract investors signed with Mali.

Expected benefits are often in the form of jobs or irrigation and infrastructure development, rather than rental fees. But some contracts appear to lack enforceable commitments, or fail to provide detail about how many and what kind of jobs the investment will create. And some contracts appear to say little about the social and environmental standards needed to protect local people and the environment, or about the mechanisms to protect local food security.

But the report also finds that there are exceptions. For example, some contracts negotiated by Liberia stand out for their shorter duration, their more specific investor commitments on jobs, training, local processing and local procurement, their greater attention to local food security, and their tighter social and environmental safeguards. In addition, the Liberian contracts are ratified by parliament and are available online.

According to the report, determined political leadership, a strong government negotiating team and world-class legal assistance enabled the Liberian government to get better contracts.

The report also argues that, irrespective of contract terms, process is also critical. In many of the contracts reviewed, local people appear to have been marginalised in decision-making – it is the government that usually calls the shots. This is because land is often owned by the state. But local people – farmers, herders, hunter-gatherers – may have used that land for generations and see it as theirs. The problem is that their customary rights may have no or little recognition under national law.

"Even in the better negotiated contracts, the gap between legality – whereby the government owns the land and can allocate it to investors – and legitimacy – whereby local people feel the land is theirs – exposes local groups to the risk of dispossession and investors to the risk of contestation," says Cotula.

Cotula adds: "Land deal negotiations are unfolding fast and behind closed doors. But secrecy and haste are no friends of good deals. Rather than rushing into land contracts, governments should promote transparent, vigorous public debate about the future of agriculture in their country – and producer organisations must be central to that debate."

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