Is buying land in Africa a high-stakes gamble?

Vast areas in African countries are not densely populated leaving large portions of land open to further developments and investments. Land remains in high demand globally, and as of recent, multinationals are looking for land in emerging markets for agricultural, mining, and other economic activities. Whilst investment in land within Africa is economically beneficial to Africans, it regularly leads to ongoing clashes with local communities who are displaced due to the mass acquisitions of their land. In this article, we explore the complexities and risks associated with purchasing land in Africa, using Tanzania as a case study, emphasising the importance of thorough due diligence, understanding legal frameworks, and navigating regulatory uncertainties to mitigate potential challenges.

International investors seek investment projects which are highly supported by African Governments, but when it comes to land acquisitions, which appear to be plenty in most African countries, foreign investors face critical challenges in securing land for their projects. Even when they do so, there are continuing and repetitive disputes with local communities throughout the project.

Over the years Tanzania has gone through land law changes and overall, freehold land ownership was abolished, and all land ownership is subject to maximum tenure of 99 years, renewable. Tanzania is open for investment especially in agriculture, commercial and residential buildings, mining, oil and gas, and tourism, all of which are land intensive projects. These projects, if managed well bring benefits to the country and the surrounding communities, through taxes, employment and overall CSR obligations imposed on investors under the local laws. When it comes to land acquisition for investment purposes, investors need to understand, take into account and factor in the following in their overall investment initiatives and plans:

Small land is a lifeline for survival of large families

What is critical to understand is that, land for the local village communities is a lifeline to their survival. It might appear that the land is not as developed and there is only subsistence farming activities over the property, and maybe few animals, but this is what these communities survive by. Cultivating crops for their own food, small huts to live in, with few cows for milk and chicken for eggs is how their generations have survived. Whilst investors acquiring their land pay compensation as required by the local laws, and the money may appear to be more than what the entire property is valued at taking into account the meager development on the land, money gets depleted fast and most of these communities eventually end up with no money and no land to live or farm at. Most of these communities do not understand money economy and such pay outs appear large but due to lack of knowledge on investment or business, the money is consumed over a period of time and depleted.

Generations, history and beliefs

Village communities in Tanzania are still strongly linked to their beliefs and history over the piece of land that they occupy. The land is usually within specific families for a number of generations, including traditional practices and beliefs on supernatural deity who are attached to their land (usually their ancestors buried on the same land). There are firm beliefs that the ancestors play a role in theirs and their children’s lives. Regardless of how much money is payable for compensation, such communities feel that they are losing connection to their way of life, their ancestors and deities who are believed to be the source of their livelihood and existence. In these instances, the issue is not money or better life in alternative properties offered by the investor through relocation programmes, it is spiritual and it becomes more complicated to reason with such communities.

Uncertain future

For generations the communities occupying these remote pieces of land have survived on subsistence farming, animal husbandry and traditionally most have never cross borders of their villages, let alone travelling to another region. When their land is acquired for investment purposes, they are promised money, and it might appear as an attractive deal from the investor’s perspective, but for such communities, they have lived for generations with little to no money for pro-longed periods of time. They measure wealth through different means e.g. number of wives, children and cows. It is not that money doesn’t have value to them, but money doesn’t measure as success from their perspective and the opportunity to venture into other areas to set up their lives after being removed from their original land is not something they consider as an achievement or promising. They see it as the end of their way of life by being introduced to other areas which neither them nor their ancestors have ever set foot in.

Unsustainable relocated land

Usually the law offers two options, either pay adequate compensation or relocate such communities to alternative land. For investors who opt for re-location, whilst it may be more beneficial than payment of compensation in cash, the alternative land may not sustainable to the way of life that these communities are used to. For example, the investor implements expensive and state of the art housing projects, that offer each family in the community better house made of bricks, better toilets, access to clean water and overall a modern house suitable for a good standard of living. However, there is no land left within the compound for farming, rearing of animals or allowing multiple wives to one husband to be accommodated in the same compound. From a perspective of a modern way of life, the new planned housing appears better than what most of these communities live in i.e. thatch houses, with no toilets and no separate rooms for children or animals, no running water etc. but they had ample land for farming and food for their animals. Such families when re-located to such housing projects are left struggling to survive because they do not have skills to offer in the market in exchange for money to finance their way of life. They need land and animals to live the way they lived and most of them may not be willing (or be able) to embrace the modern way of life, which is largely cash dependent.

The above are just a few causes of communities’ resistance that investors encounter when acquiring land in most African countries. There is a way to overcome and address these issues in advance by implementing the following (among others):

Seeing the challenges from the communities’ perspective

Investors should understand that the measure of development, satisfaction and success differs from community to community, and person to person. There is no one size-fits all solution, and money may not carry the same value or importance to all communities and all persons alike, even if it is within the same emerging markets. While contemplating taking local community land for investment projects, even with full support from the relevant Government i.e. from the village level to the Ministerial level, investors should look at the community and consider what alternatives can be offered to ensure that their way of life is maintained as much as possible, and not throwing money to every problem. Offering a suitable alternative land, which is not further off from where the communities were living is a better solution than paying full compensation in money. At the same time, the investor must afford such communities with adequate alternative land for their continued subsistence farming activities, whilst offering better housing than their former residences. Promising modern employment opportunities to the communities even after the investment is operational may not be a fit for all communities and/or persons because that is not how they have survived historically and neither do they have the skills to take advantage of the employment opportunities offered by the project. Also, the project can only accommodate so many of the community members, and agriculture activities remain to be the best and reliable solution for the long term.

Open communication and involvement throughout

Under the law, such communities must be notified and involved in the process of valuation of their land. Most of the detailed discussions are usually held by village authorities and their committees but at times the individual community members are left in the dark on most of the matters. Investors must understand that as much as there are Government bodies who they have to engage, investors shouldn’t forget that the ultimate affected persons are the individual community members. Efforts should be made to make sure the individual community members are included in the decision making and establish what the community members need or how to structure the process to accommodate their way of living.

Corporate Social Responsibility (CSR)

Under the laws of Tanzania, mandatory CSR is currently imposed in the extractive sector but most other sectors e.g. agriculture negotiations are usually done with village authorities what the investor will do for the community as a whole. CSR is usually implemented after the project is established or simultaneously, and it is for a good cause because the guarantee of being allocated land without community resistance is low meaning an investor wants to ensure that all its rights over the land are granted before the investor puts money in a CSR project. However, having CSR initiatives done earlier on i.e. during the acquisition phase, have proved to reduce the risk of resistance from communities and establish trust in the long run. It goes without saying that such CSR projects and commitments must be in writing and signed by the authorised persons from the Government’s side. The CSR programme should involve educating and equipping the community to enjoy the benefits of the project in the long run.

Shared benefits

Communities should be engaged and used early on in the project and gain income from such initial initiatives as opposed to promising them employment after the project is operational, which can be more than 5 years later. The investor must be intentional in creating opportunities and source of income to the locals (who are mostly unskilled and uneducated) when the project is still in its initial phases and see growth and alignment with the community over a pro-longed period of time. Call it intertwining the interests and success of the project with the community, meaning the community members become more invested in seeing the project succeed because they can see direct benefits from the project. Same view as the industries operating in remote communities in Europe and America – one can see how the community’s success is so intertwined with the industries that they would protect the project as they would protect their own properties.

Time

This is what most investors underestimate when seeking to acquire land for investment in Tanzania, and in most African countries. Despite the area concerned being underdeveloped and people living to what appears to be poverty, such communities have survived like that for generations and they are in no hurry to be relocated, and most of them never thought or wished for relocation. Most of them just need basics like water, access to hospitals, seeds, insecticides and maybe a market for their small produce. When looking to acquire their land for investment purposes, an investor must allocate adequate time for this exercise because it is not just about money and contracts, it is about changing the minds of these communities to be open to the offers by the investor and see the benefits to their individual’s lives. These communities want to be involved, their queries answered, and concept of time does not carry the same value to them as it does to the investors. All they have is time and being hurried or pushed is not something these communities take positively. Whilst valuation exercise should be undertaken promptly but during this exercise, time should be afforded to the individuals to address their concerns and to be given an opportunity to see what the alternative life offers after being removed from their land.

Pride

It may appear that the communities are poor with no money and very low way of living, but what they have is pride. It would be a mistake for any investor to look at them as persons who are destitute (despite appearing as such) and think they can be pushed around. They do have their own way of resisting and end up costing the investor large amounts of money and still fail to acquire their land. Communication breakdown is common, and what follows are disputes and litigation which will delay the acquisition, and the project as a whole. The community needs to see the investor as one of them, who values their inputs and involves them in the project processes, gives them time, and touches the lives of each of these individuals in singularity. Such projects has a higher chance of success.

Conclusion

 Any type of business is a gamble because any business has potential for success or failure, and the same is applicable for investment in land. Overall, land acquisition in African countries, should be handled in a delicate way and afford a clear communication between an investor and the community involved. The investor must consider what is critical and important to each community and implement the acquisition of land by meeting what the community considers important, as much as taking into account the land acquisition processes stipulated in the law. Offering alternative land which allows continued way of life that the communities are accustomed to is better in the long run and allowing the communities to play a role in the project from the onset will offer benefits to the project in the long run. It is worth closing on this note: ‘Success means different things to different people’ and each acquisition should be subject to its own unique requirements and implementation processes. If you have any questions about land acquisition in Africa or about any other themes raised in this insight, please contact Amalia Lui.