Local Stakeholders’ Preferences for Foreign Land Lease Design Attributes in Kenya David Jakinda Otieno & Willis Oluoch–Kosura University of Nairobi Oral Presentation at the 17 th Annual World Bank Land and Poverty Conference, Washington, DC, USA; 14 – 18, March 2016

1. Research Context  There is huge potential of foreign land leases in economic development – food, employment, capital for infrastructure and other services.  But lack of or inadequate stakeholder consultations in foreign land deals leads to – displacement of land owners, poor/non-compensation, resource use conflicts & disruption of investments.  Lack of empirical insights on key features that should be included in a participatory lease design.

2. Methodology  Setting: Tana Delta area in coastal Kenya with various foreign land lease deals  Focus group discussion with key stakeholders in the land system – to understand & validate land lease attributes  Choice experiment design of land leases options  Random survey of 200 farmers  Random Parameter logit (RPL) analysis of preferences for foreign lease design attributes

Land Lease Attributes in the Design AttributePossible Levels Lease duration in years15; 25; 55 Renewability of the lease (after negotiations)Yes; no % of household land to be leased10%; 25%; 50% Employment to household membersCasual; permanent Payment of land per ha (% of market price)50%; 75%;100%

Example of Lease Options AttributeLease type ALease type BLease type C (Neither A nor B) Lease duration (years)5525 RenewabilityYesNo Lease size (% of land)50%10% EmploymentFormal Payment75%100% Which ONE would you choose?

3. Results - Over 60% of farmers had positive preferences for all lease attributes except long lease duration of 55 years

Marginal Willingness to Accept (WTA) estimates for land lease attributes AttributeWillingness to accept compensation (WTA) in Kenya Shillings (Kshs) t-ratiop-value Short lease duration4547 (2682 to 6412) Long lease duration-3162 (-4722 to -1603) Renewable lease2363 (1350 to 3376) Lease size70 (38 to 102) Formal employment2687 (1629 to 3745)

Compensating Surplus for Land Lease Policy Scenarios ScenarioCompensating Surplus (Kshs) 1Short lease, non-renewable lease, 10% of land, formal employment 7933 (3.12) 2Short lease, non-renewable lease, 10% of land, casual employment 5246 (2.67) 3Medium lease, renewable lease, 25% of land, casual employment 4109 (2.75) 4Medium lease, renewable lease, 25% of land, formal employment 6797 (3.39) 5Short lease, renewable lease, 50% of land, formal employment (3.58)

4. Conclusions & Policy Implications  Incorporate the desired attributes in future foreign land leases  Ensure transparent lease negotiations to promote harmony between land owners and investors  To address local people’s fear of displacement, provide mechanisms for foreign investors to make full disclosure of country of origin, lease intentions & investment plans  Establish an all-stakeholder inclusive local management committee to administer the leases  Need for further insights on farmers’ perception on benefits of foreign land leases to livelihoods and development.

5. Acknowledgements  We are grateful to the Centre for International Governance Innovation (CIGI) Africa Initiative for funding the study from which this paper was produced.  Thanks to Prof. Magnus Jistrom, Sweden for supporting our travel to the conference through a grant from the Urban Agriculture project.