LAND RIGHTS
RESEARCH AND RESOURCES INSTITUTE
LARRRI/HAKIARDHI
By Bernard Baha Senior Programme
Officer Research Publication and Documentation
THE POLITICS OF INVESTMENT IN LARGE
SCALE AGRICULTURAL VENTURES; CASE OF MPANDA RUKWA TANZANIA
1.0 Introduction
Tanzania has always
been a country in the spotlight over cases of land grabbing for various uses.
Over the recent past there has been a lot of information in both print and
electronic media of land being taken for various investment purposes. Little is
known to the public of the deals the government is entering with these foreign
investment companies that are eyeing Tanzania as a destination in agricultural
investment. Investment in agricultural land has been a key driving force in
Tanzania as a rush now has intensified in which agricultural land is being
taken for various uses. An empirical study on the ground identifies three key
motives for the rush; land for bio-energy purposes, food for export and carbon
credit. This is taking place in different places and regions in Tanzania, of
recent Rukwa region and Kigoma have joined the race in land acquisition thanks
to the Iowa-based Summit Group and Global Agriculture Fund of the Pharos
Financial Group, in partnership with AgriSol Energy LLC and the College of Agriculture
and Life Sciences at Iowa State University and The Tanzanian arm of AgriSol
Energy: AgriSol Energy Tanzania and Serengeti Advisers Limited, a Tanzanian investment
and consulting firm who are currently planning to invest in agriculture in the
land that is currently designated as refugee settlements in Katumba and Mishamo
in Mpanda district and Lugufu which has already been evacuated in Kigoma rural
district.
It is Serengeti Advisers that are key to the
AgriSol Energy LLC decision to choose Tanzania as its investment destination
over Kenya and Mozambique. According to Mr. Bertram Eyakuze, who is currently
serving as AgriSol Tanzania Ltd CEO[1]
Serengeti Advisers’ primary role is to advice investors on how best they can
invest in the country and for the best interest of both Tanzanians and the
Investors. For the purpose of AgriSol, Serengeti Advisers have assumed lead
role and used their resources to make sure that advanced and highly mechanized
agriculture is used in Tanzania for consumption of Tanzanian and foreign
market. This is in line with the National Kilimo
Kwanza initiative which was promulgated in 2009. Through Kilimo kwanza the
private sector is being encouraged to enter into production with a view that as
a nation we need capital, technology and skills to transform the agricultural
sector. Private sector is therefore being mobilized to take part in the sector
that has long been neglected.
HAKIARDHI in
collaboration with Tanzania Land Alliance, Tanzania Bio-Energy Forum (TABEF)
made a follow up visit to Mpanda to explore the nature of
capital investment taking place in Rukwa
and Kigoma and the socio-political implications for the peasantry in the area.
In this briefing report a highlight of the findings on the basis of the
objective and specific objective is given, specifically on the nature of the
process of land acquisition and the response from different actors on the
ground. This brief is limited only to Mpanda district where the team managed to
visit two settlements planned to be used for investment after the resettlement
process of the refugees and now newly naturalized Tanzanians in Katumba and
Mishamo.
2.1 AgriSol Energy and its quest for investment in the area
The story of
AgriSol Energy LLC is incomplete without deducing the role of a young Tanzanian
who spent over 10 years in America, in his submission to the LARRRI/HAKIARDHI
(Land Rights Research and Resources Institute) team Mr. Bertram who is now the
CEO of AgriSol Tanzania Ltd was approached by colleagues in America who wanted
his advice over investment opportunities in Africa and linked him with AgriSol
Energy LLC a company which is among the biggest agricultural investor in America.
According to Mr. Bertram three countries in Africa were given priority for agricultural
investment, due to the following criteria; Favorable climate, fertile soil, and
political stability and on this benchmark at the time Tanzania, Kenya and
Mozambique were considered as the only African countries that can be accorded
investment by AgriSol. At latter stage it is Tanzania that was selected
fulfilling the adage that charity begins at home. After these considerations,
negotiation took off between AgriSol and government agencies as to which land
can be used for investment. The claim that Tanzania has large pieces of land
was unrealistic since the government couldn’t locate or prove the existence of
unused land. It was at this negotiation the idea to use Refugee Camps that were
to be evacuated after resettlement and repatriation process geminated, this
Idea found favor of the government and the investors. Earlier to this, land
owned by National Service, Prisons and some of the defunct government
plantations and Ranches were in the mind of negotiators.
AgriSol Energy
LLC and its sister company AgriSol Energy Tanzania Ltd whose share is 25% draw
much of their investment objectives from the Kilimo Kwanza initiative drive
whose main thrust is agricultural transformation. In his press release AgriSol
Tanzania Chairperson Iddi
Simba[2],
states that the company intents to create large-scale agriculture zones that;
help stabilize local food supplies and bring lasting food security to our
country; create jobs and economic opportunity for local infrastructure
improvements; spur investment in local infrastructure improvements; develop new
markets for our agricultural products; and attract investment in related
businesses. This is corroborated by the statement from Rastetter[3]
AgiriSol Energy LLC CEO who says the project will show how the use of
high-quality seeds, machinery and chemicals common to U.S. agriculture can
dramatically increase food production in Africa and improve the livelihoods of
local, poor farmers.
2.2 Land grabbing or
investment venture?
AgriSol plans to invest
in the area has attracted wide attention both within and outside Tanzania[4].
It has been defended by the top leadership of the country and some members of
the parliament as a right investment venture that will benefit the local
communities and contribute in transformation of agriculture in Tanzania.
Likewise it has been vindicated by supporters of investment that through this
venture Tanzania is going to be self sufficient in terms of food security and
it stands a chance to be a top exporter of cereals to the region and beyond
apart from benefiting through technology transfer and out growers schemes that
will benefit the surrounding communities that are said to also through this
venture secure the market for their produce. However this position is not
shared by all sections of the society locally and internationally. Like many
other similar ventures this is seen as another land grab. Since the actual
implementation of the investment has not yet started critics are singling out
the Memorandum of Understanding (MoU) clauses as a sign that it is going to be
another case of land grabbing and of course through experience of similar cases
in Tanzania. In this highlight we are trying to build the case through the
findings from the field and general knowledge and experience on cases of land
grabbing in Tanzania and Africa in particular.
Tanzania like
many other African countries have opened up its door for investment capital
from within and outside, with more weight on attracting foreign direct
investment. Agriculture sector has also seen its share of the same with many
companies looking for ventures into food crops for export and related
investments in bio-energy and carbon credit schemes involving huge chunks of
land. Large-scale agricultural investments in Tanzania not only receive support
from the political elite establishment, it also has its backing in the legislative
frame work, in its quest for preparing conducive environment for investment the
government has in place the framework that concentrates much of the decision
making powers at the centre to enable easy transfer of land and where necessary
acquire land for public interest, there is a framework that governs investment
in general and an organ responsible for coordination of the same, Tanzania
Investment Centre which apart from facilitation role manages incentives for
would be investors in Tanzania.
The justification
for investing in agriculture is on the basis that as a country, arable
land accounts for 44 million
hectares out of which 10.1 million hectares are currently under cultivation. Irrigation
accounts for about 29.4 million hectares suitable for irrigation; out of
which 2.3 million hectares are of high development potential and 4.8 million
hectares are of medium development potential. There are many lakes, permanent
and seasonal rivers and underground water sources for irrigation and other
uses.[5]
It is this kind of conclusions that brings the notion that there is plenty of
unused land to be handed to private developers. In a bid to attract investors
the government offers the following investment
incentives package in agriculture sector: Zero-rated duty on capital
goods, all farm inputs including fertilizer, pesticides and herbicides,
Favorable investment allowances and deductions on agricultural machinery and
implements, Deferment of VAT payment on project capital goods, Imports duty
drawback on raw materials for inputs for exports, Zero-rated VAT on agricultural exports and
for domestically produced agricultural inputs, Indefinite carry-over of
business losses against future profit for income tax and Reasonable corporate
and withholding tax rates on dividends.
The AgriSol investment
is a good case in justifying that in Tanzania it is the state which grabs on
behalf of the investors as opposed in other areas where land is acquired
illegally. In Tanzania land commercialization is seen and taken by the
political elite as the root through which modernization in the agricultural
sector will take place. With the use of high-tech and modern farm implements
the potential to tape much of the so called un-used or underutilized land will
be realized. The Prime Minister has emphasized from time to time over the
importance of investment in the agricultural sector and again building on the
statement he gave in Kilombero district in Morogoro region that the government
would not hesitate to take over underutilized farms from the villagers should
they get serious investors, this time in the parliament he vowed to die with
this venture if need be.
Findings on the ground
indicate a lot of land related conflicts between peasants and pastoralists as
well as between pastoralists and different government organs disputing greatly
the notion that there is plenty of land in the area. Even the official
statistics from the district points out clearly that arable land accounts for
only 19% of total land, game reserve 18, forest reserve 59% and water bodies 4%
in total reserve land accounts for 77% of
land in Mpanda district no wonder that conflicts between pastoralists
and game warders are rampant. Speaking
to the team of researchers a leader of pastoralists’ network in the area
testified that in 2009 they had presented recommendation to the Prime Minister
to use part of the settlement after refugees’ resettlement for pastoralism as a
way of resolving conflicts between farmers and pastoralists in the area until
now they have not received in response only to hear that the land in question
have been earmarked for agribusiness investment. There is no doubt from the
very beginning that the whole process was centrally coordinated with
involvement of key personalities like
Ministers and the executive branch in general from central to local government.
This is from the time that feasibility studies in 2008 started. The manner in
which land acquisition process have been handled raises a lot of questions as
to whether this is not another venture that we are paying at the expense of
local communities that have equally same land demand given the pressure on land
use.
It is evident that
knowledge asymmetry between representatives of the people at the council level
and executives did contribute very greatly to the councilors being used as
rubber stamps. The fact that people could not even name who the investor is and
for what purpose is a clearly indication that there was no transparent and
accountability in general as even Councilors who took part could not explain to
their people fully on the investment plans in the area, at council level the
District legal officer sees this as an opportunity since the government could
have decided on the matter at central government level on what to do with the
land. However this further raises a lot of questions; was the local government
functionaries handled the land and given directives as to who is the suitable
investor? Was there a choice? This form of participation is very common in
Tanzania where people are involved when matters have been already decided; it
is like being informed on a decision that has long been settled.
Much as Tanzania is
doing its level best in attracting foreign direct investments in the
agricultural sector, the government must uphold the etiquettes of good
governance. Transparency, accountability, participation and rule of law should
be the driving forces; a lot of questions that have been raised still need
answers, at whose expense and what terms? There is a need to review the
incentives given as this leaves room for plundering of resources and when we
talk of land grabbing this is it at its best; it is true that we are conceding
too much for nothing.
The condition given in
the title deed for commercial farms and ranches which rates land rent at 200
per acre per annum is outdated how can you give 350,000ha equivalent to
790,728.7acres at 200Tshs?[6]
Per annum. At all three sites of Lugufu,
Mishamo and Katumba, the government will only earn 158,145,740Tshs! At Lugufu
where the company has secured 10,000 ha which is equivalent to 24,710.27acres
the government will earn 4,942,054 per annum as land rent!
Another area that seem to attract attention and which leaders at different
areas are handling carelessly is the question of use of GMOs, listening from
the way they talk about the matter is like they have already decided that GMOs
is allowed, wider consultation should be employed to reach a consensus on the
matter, while there is a hype on the target market being internal and the
interest sited as food security we have all the reason to suspect that this is
just being used as a stepping stone as the overall investment objective is
export, why would the investor think of pushing to irrevocable guarantee for an
export license for maize? Another concern is similar to what happen in Kilwa
with Bioshape exploiting villagers through meager wages making them abandon
farming in their own farms and provide cheap labor to the company plantation,
is this not going to be another way of plunging already poor peasants into
destitution?
3.0 Conclusion
The debate on large
scale land acquisition in Tanzania is far from over as there is a changing
dynamic now as local investors team up in joint venture with foreign investors,
we are made to believe that since we have one of our own in the investment venture our
interests are taken care of. This may not be the case as we are witnessing now
concentration of property in hands of the few well connected. This
concentration of landed properties in the hand of the dominant class in
Tanzania at the expense of the majority peasants and pastoralists is not a sign
of progress but rather signify turbulent relations of classes in the future,
whereas the government is leasing land for 99 years we are still a growing
nation with a population of 45 Million Tanzanians, 80% still depend on agriculture,
much as the government want to get rid or reduce this percentage if not handled
properly this may plunge a once peaceful nation into civil unrest. With regard
to the AgriSol deal much as the land targeted does not involve village lands
still it falls under official land grabbing in which the government decides to
allocate land to the investor regardless of the interests of other users. The
law provides for this as for the case of Tanzania it is the state that holds
the radical title and may decide when it comes to general land allocation. The
centralized system now is manifesting itself in the manner in which we are
currently witnessing rush for land in the hinterland that was not previously
attractive to investments, and the leadership is at the centre stage luring in
potential investors. With the opening up through infrastructure upgrading it is
expected that more ventures will now flow in areas that were previously
regarded as periphery, the land rights of villagers in these areas are at stake
since the modernization path being advocated here has no room for small
peasants and pastoralists.
[1] Personal interview with Mr Betram, Abdu and
Omar of Serengeti Advisers at Sea Cliff Hotel over the issues concerning AgriSol investments in Tanzania
[2]
Simba, I.S, Press Release on behalf of AgriSol Energy Tanzania Limited, 6th
July, 2011, p. 1
[3]
Iowa agribusiness investor Bruce Rastetter is leading a project to turn as much
as 800,000 acres of land in the east African country of Tanzania into a
massive grain-and-livestock operation. Extracted from (www.organicconsumers.org/
[4]
Oakland Institute (2011) Understanding Land Investment Deals in Africa; AgriSol
Energy and Phalos Global Agriculture fund’s Land Deal in Tanzania
[5] URT (-) Ministry of Agriculture and Food
Security; A summary of investment opportunities available in the Tanzania’s
Agricultural Sector
[6]
Note that the figures given as size of land may change for Katumba and Mishamo
at the time of the fact finding mission were still at feasibility study, it is
only Lugufu where 10,000ha are confirmed to have been allocated.
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