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FOREIGN INVESTMENTS IN FARMLAND

FOREIGN INVESTMENTS IN FARMLAND. IN EAST AFRICA . MAKING AGRICULTURAL INVESTMENTS WORK FOR AFRICA: a parliamentarian’s response to the land rush Kigali, 26-27 April, 2013 . Sue Mbaya Consultant, Land Policy Initiative . Contribution of Land to gdp. Why Foreign investment in agriculture .

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FOREIGN INVESTMENTS IN FARMLAND

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

  2. Contribution of Land to gdp

  3. Why 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

  4. Investor 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)

  5. Overview of investments Who Belgium Canada, Germany, Japan, Netherlands, Norway, Switzerland, Sweden, United Kingdom, the USA Bangladesh, India, Qatar, Korea, Singapore Local investors What Where Kenya Tanzania Uganda Rwanda Burundi Food Biofuels Forestry

  6. Overview of investment projects

  7. Who is investing? HOW? Belgium Canada, Germany, Japan, Netherlands, Norway, Switzerland, Sweden, United Kingdom, the USA Bangladesh, India, Qatar, Korea, Singapore Local investors Pvt foreign investor → government Pvt foreign partnership → government Pvt/local partnership → government Local investors → government

  8. How is the land used } What What Food 99% Biofuels } Forestry 1%

  9. Policy basis for investments

  10. Incentives for investors

  11. benefits of investments Marginal gains: • Employment – generally low paying, seasonal jobs • Little evidence of foreign currency earnings and technology transfer

  12. 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

  13. 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

  14. 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

  15. Impacts of investments (4) • 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 andincentives to protect the environment and to encourage sustainable agriculture are required

  16. PRIORITY 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

  17. PRIORITY ACTIONS FOR PARLIAMENTARIANS (2) 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

  18. PRIORITY ACTIONS FOR PARLIAMENTARIANS (3) 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

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