Southern Sudan Sustainable Ag-For Fund: Human Rights and Profit in Sudan

Southern Sudan Sustainable Ag-For Fund: Human Rights and Profit in Sudan

Greg CarlsonSergio Ibarra Bolanos

Justin Overdevest

The International Land Grab Story

Since 2004, 6.5 million acres and growing…

Playing the Land Grab…

Geographic Focus: Southern Sudan

• Human Rights & Potential Partnerships• Agricultural Opportunity: Ag Land + Potential • Changing Governance

• Land and Agriculture• Carbon• Water

Opportunity: Crossing the Chasm

Market Opportunity

• Focus: Long-term viability and sustenance of the land and its people rather than short term extraction

• Inefficiencies– Market: this land grab strategy has inherent

ecological, social, and political risk – Information: Both an inefficient as a market and

lack of credible and important information. As well most land grab players have no ag experience

Investment Vehicle: Starts with Structure

Land Trust

Priority 1: Develop Land TrustDonations provide necessary capital for community membersInvestor funds go to accessing lands for agro-forestry products

• Local Mkt. %• Farmer Equity• + Community Impact• Agro-forestry

MFI

non-MFI

MFI

non-MFI

Returns Model Builds off of StructurePriority 2: Develop Returns ModelCo-operative Formed in Community + MFI

Co-op

Individual Farmers

Land Trust

40%

40%

15%

5%

Layering Value: Aligning Values and Investors

Agriculture

Timber

Wildlife

Carbon

2009: Southern Sudan Investment Promotion Act

• For the first time, an Investment Authority has been established in Southern Sudan that provides “investment guarantees and incentives .”– Particular Investment Focus: Agriculture

• “Indeed, the Southern Sudanese are very eager to attract investment and if a company comes with plans to invest, they will rarely be turned away.”

Investors

• Institutional:– Pension Funds (TIAA-CREF

Global Microfinance Investment Program)

– Socially-driven Funds (Threshold, Heirs Ltd., Root Capital)

• Individuals• Foundations • Charitable Trusts

Partners

• NGOs – Coordination on the ground– Farm Africa (Rehabilitation of Agricultural Livelihoods

in Southern Sudan)– Oxfam (Extensive history of NGO Collaboration to

fight poverty and injustice)– USAID (FARM project: Agricultural infrastructure

development in Southern Sudan)• MFIs – Local Financial Expertise– BRAC (Global Network)– SUMI (Sudan Microfinance Institution)

Currency Spectrum

Layered StructureBlending Investment Motivations and Financial Returns

Impact First Financial First

NGOs Charitable Trusts Foundations

MFIs Pension FundsBanks

Impact Investors

68%15%

11%

6%

Southern Sudan MFI In-vestments

Trade and Service

Agriculture and Livestock

Manufacturing

Other

MFIs in Southern SudanMFI # Borrowers Portfolio Avg. Loan

Loans Past Due (>30

Days)

Non Performing Loans (>90

Days)

BRAC SS 10,402 $1,422,729 $137 2.65% 1.96%

Sudan Microfinance

Institution (SUMI)

8,657 $1,650,946 $191 6.15% 1.90%

• World Bank: “Overall, the MFIs in Southern Sudan experience a low default rate.

• But, only 1% coverage of potential market in Southern Sudan• Constraint to the provision of microfinance: Access to Funds

Land Acquisition

• Avg. Investment in Community Land = 271,000 ha• Avg. Investment in Government Land = 8,250 ha

98%

2%

Land Investment Breakdown

Community-Owned

Government-Owned

Land Availability

• 58,337,800 ha of total available land• 3,785,000 ha of available land in Green Belt region• Large potential for responsible land investment

Agro-Ecological Zone

Area (ha) Area Covered by Investments (ha)

Available Land (ha)

Green Belt 5,050,000 1,265,000 3,785,000Nile and Sobal

Corridor 7,900,000 1,010,000 6,890,000

Floodplains 32,700,000 720,000 31,980,000

Ironside Plateau 13,300,000 160,000 13,140,000

Hills and Mountains 845,000 12,200 832,800

Arid Belt 1,710,000 0 1,710,000

Lease Structures

• Lease periods : Some up to 99 years• Terms:

– Yearly Payments (Green Resources)– Lump Sum (Eyat Oilfield Services)– Combinations w/ royalty deposits (Central Equatoria Teak)

Government Land

Community Land

0 10 20 30 40 50 60 70 80 90 100

Average Lease Periods (years)

Target Structure

• Work with communities AND involve government from onset

• Strive for maximum possible lease• Examples

• 99 yr. Lease of 179,000 ha • $12,500/yr. payments to local communities• Local Development Goals• Community and Government Engagement!

The Co-op: Where to Plant

Agro-Ecological Zone

Area (HA)Number of

Foreign Investments

Number of Domestic

Investments

Area Covered by

Investments

% of Ecological

Zone Covered

Green Belt 5,050,000 7 - 1,265,000 25%Nile and

Sobat Corridor7,900,000 4 - 1,010,000 13%

Floodplains 32,700,000 2 9 720,000 2%Ironstone

Plateau13,300,000 2 - 160,000 1%

Hills & Mountains

845,000 1 - 12,200 1%

Arid Belt 1,710,000 - - - 0%

The Co-op: Where to Plant

The Co-op: Where to Plant

The Co-op: What to PlantCurrent Crops

Crop World Price MarketSorghum $289/mt World

Millet $311/mt AfricaMaize $265/mt World

Green Grams $1,422/mt Africa/SE AsiaPumpkin $1,148/mt World

Other crops include beans, sesame & tobacco

YieldAfrica 1.14 t/HaSudan 1.01 t/Ha

MFI: A Comparison

Global

Average Loan Balance $535.40Number of Institutions 1,934 Gross Loan Portfolio $64.8 BillionBorrowers 90.8 MillionDeposits $27 Billion

Africa Global

Average Loan Balance $356Number of Institutions 434Total Assets $8.5 BillionBorrowers 7.9 MillionDeposits $5.2 BillionNumber of Depositors 20.5 Million

Sudan

MFIPortfolio (Gross)

Active Borrowers

Avg. Loan Balance

BRAC - SS 2,189,739$ 14,889 147$ Finance Sudan 548,663$ 1,332 412$ PASED 1,398,984$ 4,687 298$ TOTAL 4,137,386$ 20,908 198$

ReturnsArea of Investment 125,000 HaLease Cost / Ha 2.00$ Investment in Land 250,000$

MFI Investment: 3,000,000$ Population Impact: 15000Avg. Loan Balance: 200$ Avg. Cost/Borrower 86$ Portfolio Mgmt. Cost 1,290,000$ Avg. Rate of Return: 30%Total Cycle Return 2,610,000$ Avg. Cycle Time: 5 Months

Total Investment 3,250,000$ Yearly MFI Return 2,250,000$ Population Impact +20,000

Agricultural Risk

% Ag. Corruption

Country Risk

• Voiding of leases by government• Land disputes• Conflict• Community Opposition

• Mitigation: Community and Government Involvement ; Partnerships are key!

Impact: Environmental• Reduced land degradation through sustainable

farming

• Food and Natural Resource Security• Wildlife Preservation

Impact: Societal• Community Land Protection

• Avoided Landgrab and Community Displacement

• Human Rights Assurance

Impact: Economic• Local Economic Development

• Labor-Intensive Farming• Thriving Agricultural Industry

Moving the Needle

• Potential impact is enormous: Sudan, Africa and the World– Bringing sustainable land management to post-

CPA Southern Sudan– Developing a thriving economy not based solely

on oil revenue• Scalability: 58 Million ha of available land with

favorable investment climate

Moving the Needle

• “I urge investors worldwide to come and invest in Southern Sudan. In terms of agriculture, it will be the breadbasket of the region and the world.”– President Salva Kiir, Southern Sudan

Sources• “The New Frontier: A baseline survey of large-scale land-based investments in Southern Sudan.”

Norwegian People’s Aid, 2011.• “Expanding the Provision and Impact of Microfinance in Southern Sudan.” Melody Atil, World

Bank, 2009.• “Government Woos Investors to South Sudan.” Juma John Stephen, 2009. www.gurtong.net.• Oxfam: http://www.oxfam.org.uk/resources/learning/landrights/intro.html

http://www.oxfamblogs.org/fp2p/?p=4793• International Land Coalition:http://www.commercialpressuresonland.org/research-papers/

unravelling-land-grab-how-protect-livelihoods-poor• Bloomberg:

http://www.bloomberg.com/news/2011-03-24/foreign-investors-grab-land-in-southern-sudan-norwegian-aid-group-says.html

• Cotula, Lorenzo. Land Grab or Development Opportunity?: Agricultural Investment and International Land Deals in Africa. London: IIED, Food and Agricultural Organization. 2009. Print.

• Green, Duncan. From Poverty to Power: How Active Citizens and Effective States Can Change the World. Oxford: Oxfam International, 2008. Print.

• Yahoo News: South Sudan land grab threatens rights: report http://news.yahoo.com/s/afp/20110322/wl_africa_afp/sudansouthlandrights_20110322181349

• Farm Land Grab. “Jarch doubles its Sudanese empire” http://farmlandgrab.org/post/view/2960

Sources (Cont.)• agricommodityprices: http://www.agricommodityprices.com/• The 50 Top Microfinance Institutions, Forbes

http://www.forbes.com/2007/12/20/microfinance-philanthropy-credit-biz-cz_ms_1220microfinance_table.html

• Microfinance Information Exchange http://www.mixmarket.org/• Agriculture.com http://www.agriculture.com/• (2009). Expanding Agriculture and Food Security Activities in Southern Sudan. Juba, Sudan: United

States Agency for International Development. Retrieved May 15th, 2011, from http://pdf.usaid.gov/pdf_docs/PNADQ841.pdf.

• World Corruption Index http://www.worldaudit.org/corruption.htm