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FOREIGN INVESTMENTS IN FARMLAND MAKING AGRICULTURAL INVESTMENTS WORK FOR AFRICA: a parliamentarian’s response to the land rush Kigali, 26-27 April, 2013 IN EAST AFRICA Sue Mbaya Consultant, Land Policy Initiative


Dec 22, 2015



Camron Little
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  • FOREIGN INVESTMENTS IN FARMLANDFOREIGN INVESTMENTS IN FARMLAND MAKING AGRICULTURAL INVESTMENTS WORK FOR AFRICA:MAKING AGRICULTURAL INVESTMENTS WORK FOR AFRICA: a parliamentarians response to the land rusha parliamentarians response to the land rush Kigali, 26-27 April, 2013Kigali, 26-27 April, 2013 IN EAST AFRICA Sue MbayaSue Mbaya Consultant, Land Policy InitiativeConsultant, Land Policy Initiative
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  • WHY FOREIGN INVESTMENT IN AGRICULTUREWHY FOREIGN INVESTMENT IN AGRICULTURE Historic under-investment in agriculture Regional commitments not achieved: 2003Maputo Declaration 10% of budgets CAADP 6% annual growth in agriculture Resulting gap between required investment and domestic allocations
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  • INVESTOR MOTIVESINVESTOR MOTIVES To address food insecurity concerns In search of renewable sources of energy Expansion of industries (mining, timber) Maximizing investments (low land rentals, cheap labour, attractive incentives)
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  • OVERVIEW OF INVESTMENT PROJECTSOVERVIEW OF INVESTMENT PROJECTS BurundiKenyaRwandaTanzaniaUganda Number of deals 153 4 Total area705,38815,150576,02480,000 Uses Mining Agriculture (biofuels and food) Agriculture Forestry Agriculture Forestry
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  • WHO IS INVESTING? HOW?WHO IS INVESTING? HOW? Pvt foreign investor government Pvt foreign partnership government Pvt/local partnership government Local investors government
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  • HOW IS THE LAND USEDHOW IS THE LAND USED Forestry Biofuels Food 99% 1% } }
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  • BurundiKenyaRwandaTanzaniaUganda Institutions Kenya Investment Authority Land Control Board Export Processing Zone Authority Rwanda Development Board Tanzania Investment Center Export processing Zone Authority Uganda Investment Authority Uganda Carbon Bureau Relevant Law/Policy 2005 Constitution Investment Law 2005 Land Law 2005 Organic Land Law Kalimo Kwanza (Agriculture First Policy) ZonesExport processing Zone Export Processing Zone Southern Agricultural Growth Corridor POLICY BASIS FOR INVESTMENTSPOLICY BASIS FOR INVESTMENTS
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  • INCENTIVES FOR INVESTORSINCENTIVES FOR INVESTORS BurundiKenyaRwandaTanzaniaUganda TaxesIncome, property and construction taxes exempt for up to 8 years EPZ investors 10 yr tax holiday Reduced taxes for 10 yrs Exempt for oil related investments VAT and income tax breaks Tax holidays Exempt from Corporate tax on profits Tax holidays up to 10-20 years Withholding tax on plant and machinery Remittance of proceeds Permits to investors to remit Repatriation permitted Other exemptions Protection from acquisition No exchange controls Protection from acquisition Duties for diesel and agricultural equipment Duty on plant, machinery and other inputs Stamp duty Duty draw back (refund of duty on materials)
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  • BENEFITS OF INVESTMENTSBENEFITS OF INVESTMENTS Marginal gains: Employment generally low paying, seasonal jobs Little evidence of foreign currency earnings and technology transfer
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  • IMPACTS OF INVESTMENTS (1)IMPACTS OF INVESTMENTS (1) Human rights considerations of investments highlighted by United Nations Human Rights Council: rights of land users right to food right to development right to self determination human rights of agricultural workers need a clear set of foundational principles which guide investments and define accountabilities for parties involved
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  • IMPACTS OF INVESTMENTS (2)IMPACTS OF INVESTMENTS (2) Alienation of landholdings from communities: Losses extend beyond land (livelihoods, way of life) Rights of women and pastoralists v. vulnerable De facto changes in tenure Communities not compensated fully
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  • IMPACTS OF INVESTMENTS (3)IMPACTS OF INVESTMENTS (3) Incentives to investors accompanied by revenue losses Case Study: The AgriSol Deal 325,000 ha exemption from customs duties on all agricultural inputs exemption from value-added tax (VAT) on all imported inputs Exemption from value added tax on unprocessed agricultural produce guaranteed transfer of net profits or dividends of the investment Guaranteed remittance of net proceeds ?Strategic Investor Status? then exemption from the corporate tax (30% of net profits) Investment: $100 million over a 10 year period Net protfis from corn ONLY on 200,000 ha - $272 million a year Incentives may imply substantial unattained revenue for the government Source Oakland Institute, 2011
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  • Smallholder farmers are marginalized Risks for the environment EIA often not conducted soil degradation, deforestation, loss of biodiversity water depletion use of marshlands for investments (Kenya, Rwanda) to achieve positive agricultural investment, provisions and incentives to protect the environment and to encourage sustainable agriculture are required IMPACTS OF INVESTMENTS (4)IMPACTS OF INVESTMENTS (4)
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  • PRIORITY ACTIONS FOR PARLIAMENTARIANSPRIORITY ACTIONS FOR PARLIAMENTARIANS Priorities for lawmaking: alignment of laws and policies to the F& G principles: democratization, transparency, good governance, popular participation, equity, poverty eradication, subsidiarity, gender equity and sustainability alignment to continental land processes F&G Nairobi Action Plan ADB
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  • Priorities for oversight: Access to timely, accurate information Improved governance of investments scrutiny of contracts legally binding social and environmental commitments and accountabilities for all parties Implementation of global, regional and national human rights conventions Political will for addressing underlying issues Compliance with practices that ensure sustainability PRIORITY ACTIONS FOR PARLIAMENTARIANS (2)PRIORITY ACTIONS FOR PARLIAMENTARIANS (2)
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  • Priorities for representation: Protection of community interests facilitate empowerment of communities (to negotiate, to represent own interests, to monitor) advocate for marginalized groups protect from unlawful evictions provide voice monitor implementation of investments for compliance with contracts and regulations PRIORITY ACTIONS FOR PARLIAMENTARIANS (3)PRIORITY ACTIONS FOR PARLIAMENTARIANS (3)
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