Ensuring Sustainable Agriculture Investment Through A Regional Model Contract Mohamed Coulibaly, Francine Picard, Carin Smaller and Will Speller, IISD World Bank Land Conference, 22 March 2017

Background IISD requested to: Prepare a comparative review of the domestic legal and policy frameworks related to investment in agriculture in the East African Community (EAC) member States. Identify gaps or weaknesses that do not meet international standards. Develop a non-binding model contract for investment in farmland.

Methodology Review of individual countries’ laws and regulations Comparison with international standards and best practice Identification of individual countries’ gaps, weaknesses and inconsistencies Comparison of EAC countries’ gaps and weaknesses, identification of common themes Proposal of potential contractual solutions Review of existing research to corroborate findings

International benchmarks

Methodology: Three Categories of Concern Weak implementation of existing laws that conform to international standards  The contract helps ensure compliance with existing laws. Gaps or weaknesses in existing laws  The contract temporarily fills the gap. Confusion or conflict between different existing laws  The contract helps clarify.

The Role of Model Contract Sub-optimal solution. Best solution is to improve laws and implement them effectively. Only one tool in the investment process. Screening and monitoring. Cannot be taken “off-the-shelf”. Adapt to individual country circumstances.

Key issues covered in the model contract Legitimate title holders and Land Use Agreement. Women’s access to land. Granting land use rights. Social and Environmental Impact Assessments and Management Plans. Water Use Rights. Employment numbers and composition. Training. Points for speaker to emphasise: Land Use Agreement Failure to recognise existing land rights has been a significant negative impact of previous farmland investments. Government and investor must work together to establish all rights to land and agree with them that the investment can proceed according to a Land Use Agreement. There need to be extensive consultations to establish rights holders and to negotiate (not merely explain!) the land use agreement. This includes formal and informal rights. Women’s Access to Land Women’s rights to land are particularly weak in all EAC countries, either do to legislation or to customary practices that preclude implementation of the law. As such, the contract should pay special attention to empowering women through upholding and advancing their rights to land. Granting of Land Rights When land rights are granted, the contract must specify for what purpose the land is granted, including the crop/livestock to be grown/reared, as well as ancillary purposes such as construction of processing facilities, employee housing, water use etc. Land rights are not granted unconditionally to the investor. They are granted for a specific purpose that the contract must specify. Termination of return of unused land UNCTAD/WB research showed that a quarter of investments were using less than 10% of the land allocated. This is a deplorable waste of productive resources and leads to community tension, especially when investors have moved people from the land. Many contracts were signed with no means to ensure the investor was putting the land to use. The contract must thus include targets for the development of the operation and consequences if those are not met, including termination and return of unused land.

Key issues covered in the model contract Economic linkages Outgrower schemes, processing operations. Local business development plan. Feasibility Study and Business Plan. Community Engagement and Development. Community Development Plans. Transparency and access to information. Points for speaker to emphasise: Land Use Agreement Failure to recognise existing land rights has been a significant negative impact of previous farmland investments. Government and investor must work together to establish all rights to land and agree with them that the investment can proceed according to a Land Use Agreement. There need to be extensive consultations to establish rights holders and to negotiate (not merely explain!) the land use agreement. This includes formal and informal rights. Women’s Access to Land Women’s rights to land are particularly weak in all EAC countries, either do to legislation or to customary practices that preclude implementation of the law. As such, the contract should pay special attention to empowering women through upholding and advancing their rights to land. Granting of Land Rights When land rights are granted, the contract must specify for what purpose the land is granted, including the crop/livestock to be grown/reared, as well as ancillary purposes such as construction of processing facilities, employee housing, water use etc. Land rights are not granted unconditionally to the investor. They are granted for a specific purpose that the contract must specify. Termination of return of unused land UNCTAD/WB research showed that a quarter of investments were using less than 10% of the land allocated. This is a deplorable waste of productive resources and leads to community tension, especially when investors have moved people from the land. Many contracts were signed with no means to ensure the investor was putting the land to use. The contract must thus include targets for the development of the operation and consequences if those are not met, including termination and return of unused land.

Key issues covered in the model contract Dispute settlement and conflict resolution Grievance redress mechanisms Dispute settlement procedures Termination of the contract Partial termination for no land use. Points for speaker to emphasise: Land Use Agreement Failure to recognise existing land rights has been a significant negative impact of previous farmland investments. Government and investor must work together to establish all rights to land and agree with them that the investment can proceed according to a Land Use Agreement. There need to be extensive consultations to establish rights holders and to negotiate (not merely explain!) the land use agreement. This includes formal and informal rights. Women’s Access to Land Women’s rights to land are particularly weak in all EAC countries, either do to legislation or to customary practices that preclude implementation of the law. As such, the contract should pay special attention to empowering women through upholding and advancing their rights to land. Granting of Land Rights When land rights are granted, the contract must specify for what purpose the land is granted, including the crop/livestock to be grown/reared, as well as ancillary purposes such as construction of processing facilities, employee housing, water use etc. Land rights are not granted unconditionally to the investor. They are granted for a specific purpose that the contract must specify. Termination of return of unused land UNCTAD/WB research showed that a quarter of investments were using less than 10% of the land allocated. This is a deplorable waste of productive resources and leads to community tension, especially when investors have moved people from the land. Many contracts were signed with no means to ensure the investor was putting the land to use. The contract must thus include targets for the development of the operation and consequences if those are not met, including termination and return of unused land.

Thank You! Questions and discussion