Rigging the Rules: Unfair Land Deals in South Sudan

Aerial view of parts of South Sudan

According to a recent report by the Oakland Institute, ‘Understanding Land Investment Deals in Africa: South Sudan’, a large influx of one-sided foreign investment has flooded into South Sudan. These unfair land deals undermine the land rights of rural communities, increase food insecurity, further entrench poverty, and might result in skewed development patterns in South Sudan. One case studied by the report involves an Egyptian equity firm, Citadel Capital.

Foreign investors have increased investment in South Sudan since 2005 and the ability to obtain one-sided agreements through local power brokers has caused conflicts. Just from 2007 to the end of 2010, private interests sought or secured more than eight percent of South Sudan’s total land area. In order to ease growing tensions, in September 2011, President Salva Kiir Mayardit promised to review lease agreements signed during the interim period as well as to pass new procurement legislation to regulate future land deals.

In 2009, Citadel Capital obtained a 25-year lease to 105,000 ha of land in Gwit and Pariang counties of Unity State in South Sudan through a portfolio company, Concord Agriculture. Concord estimates that there are about five villages in the project area with a total population of approximately 1,250 people, not including Fellata pastoralists from across the border in Sudan who pass through the area on a seasonal basis. Concord reports that the purpose of the investment is to grow maize and sorghum for sale in primarily local markets.

GROUND REALITY

Although Concord’s leasehold is entirely on community-owned land, the company signed its lease agreement directly with the state government with no lease payments for the community landowners or any other form of direct community benefit. Additionally, Concord has disregarded community requests for employment opportunities, preferring to outsource labour from other countries in Africa.

Furthermore, the 2009 Land Act requires for the first time that companies must conduct environmental and social impact assessments (ESIAs) prior to land allocation. When asked if Concord had conducted ESIAs, the Unity State governor asserted that the company had brought in an expert from the World Bank to conduct the studies. According to CEO of Concord Agriculture, Peter Schuurs, however, Concord did not conduct any assessment of likely impacts. ‘Since the funders were funding the start-up out of their own pocket, there was no need for a detailed ESIA, nor did the government or the agreement require it,’ Schuurs reasoned.

Disregarding the need for impact assessments and mitigation plan can sharply increase the risk of negative impacts on host communities.

ONE-SIDED INVESTMENT

In a conversation with the Oakland Institute researchers, Schuurs stated that the agreement ‘is strongly tilted in favour of the lessee.’ He cited that Concord is exempt from taxes on machinery, agricultural imports, and profits for the first 10 years. Concord is also permitted unlimited capital repatriation.

Although Concord asserts that it will prioritize sale of its produce in local markets in the short to medium term, its clear priority is to make money. With no export restrictions within the investment agreement, Concord is free to export as much as they would like even in times of increased food insecurity in the country. Also as reported to the Oakland Institute, the company is hoping to secure a contract for feeding the South Sudan Liberation Army.

To achieve food security, Schuurs and Unity Governor, Taban Deng, believe that large-scale industrial agriculture projects (such as that of Concord) are the answer, as opposed to smallholder farming and pastoralism in Unity State. This skepticism is due to the widely held misconception that pastoralists are solely concerned with their cattle. While agriculture is not as central to pastoralist communities as with agriculturalist communities, family farms that pastoralist communities maintain with their cattle are crucial to local food security.

Schuurs maintains that Concord will take further steps in being a responsible investor, but acknowledges that any steps taken are not binding: ‘I don’t want us to be seen as money grabbing, land grabbing thieves. But none of [these obligations are] in the investment agreement.’ This has created an agreement void of any formal community benefit and has left the possibility of future steps to be taken only through informal discussions with the Unity State government.

CARTE BLANCHE TREATMENT

Because Citadel has funded the Concord project without outside investment, it intends to scale down its interest in the company over time. According to Deng, Citadel has explored having the Bank of South Sudan (BoSS) provide a guaranty for Concord to pursue a loan or outside investors to compensate for the loss of the capital from Citadel. If Concord were to default on a loan guaranteed by the BoSS, then the government would be required to pay back the loan for Citadel. For a project that has yet to prove itself economically viable, it is shocking to see how far the government is willing to go in order to facilitate foreign investment in South Sudan.

UNFULFILLED PROMISES

Both Schuurs and Deng claim that Concord maintains a good relationship with the local community. The locals however complain about lack of employment opportunities and Concord’s preference for migrant labourers from Southern Africa. According to Schuurs, the company employs 15 to 20 local people as casual laborers and nine permanent staff.

In addition to employment, Concord claims to provide numerous social services including a health clinic, horticultural training, and technology transfers. The residents, however, reported to the Oakland Institute that the health clinic is not functional and with a largely absent nurse. Locals further report that agricultural training, although promised, has not yet been implemented by Concord.

 

* Nickolas Johnson, 2012 Intern Scholar at the Oakland Institute (OI), is majoring in Political Science at San Francisco State University. This backgrounder on Concord Agriculture in South Sudan is based on OI’s project, Understanding Land Investment Deals in Africa: Country Report South Sudan.