MUMBAI/ADDIS ABABA (Thomson Reuters Foundation) - Large-scale land deals by investors in Africa are coming under greater scrutiny after an Indian firm demanded compensation for the cancellation of its lease by Ethiopia, with analysts saying they are hurting local communities and damaging ecosystems.
Karuturi Global, one of the largest investors in Ethiopia’s commercial farming industry, said the cancellation of its lease for 100,000 hectares (247,105 acres) in the western Gambella region broke the terms of its agreement with the government.
Ethiopian officials, who have earmarked some 11.5 million hectares of land for overseas firms to invest in agriculture, say Karuturi failed to make adequate progress on the land allotted for growing and exporting sugarcane, rice and palm oil.
Critics say neither side addresses the more controversial issue of millions of indigenous people and small farmers being forcefully removed from their ancestral land with little consultation or compensation.
“These large-scale plantations and farms are displacing people who have lived there for generations, without creating jobs for the locals or enhancing food security,” said Anuradha Mittal, executive director of California-based advocacy group Oakland Institute, which has studied these deals.
“It is a horrific abuse of rights,” she told the Thomson Reuters Foundation over the phone.
Across Africa, more than 117 large-scale land deals totaling about 22 million hectares, an area the size of the U.S. state of Utah, have been recorded in the last 12 years, according to data from the United Nations’ Food and Agricultural Organization (FAO).
Millions of small farmers and herders in Ethiopia have been moved from the land offered to investors and relocated under “villagisation” programs, often with threats and assaults, according to rights groups, including GRAIN and the Oakland Institute.
The new villages where they are resettled often lack basic resources including adequate food, agricultural support, and health and education facilities, according to activists.
Ethiopian officials have denied people are being displaced, or that villagisation takes place where overseas investments are planned. The program provides better infrastructure for rural populations, they say.
“We have never replaced farmers, we have never replaced pastoralists in favor of mechanized farming,” said Fitsum Arega, director of the Ethiopian Investment Commission, a government body.
“There is lots of vacant land available that is not taken by any farmers. We believe in encouraging private investors with the capacity to develop large amounts of land,” he said.
Agribusinesses, investment funds and government agencies piled into developing countries, particularly in sub-Saharan Africa, when oil prices peaked in 2007-08, leading to a surge in prices of food.
Cheap land to grow food crops and bio-fuels to enhance food and energy security has become essential as populations expand.
There is plenty of land in Africa, with only 5 percent of an estimated 550 million hectares of arable land in central Africa being cultivated, according to the FAO.
Prices were lower than in other developing countries, the terms were favorable, including no import duties on machinery, and full repatriation of products and profits.
But most deals were cloaked in secrecy, and jobs for locals were often only low-paying manual work, activists say.
Most deals also encompass fertile lands which are inhabited, rather than marginal or infertile land as promised by officials.
“This is the land where indigenous communities have farmed and grazed their animals, and depended on for their livelihoods. This is the land where their ancestors lie,” Mittal said.
There is “irrefutable evidence that the locals have been forcibly evicted from their homes and lands. They have been intimidated, beaten, and even arrested for demanding their right to their land,” she said.
Most of these deals have also failed to achieve the objectives of enhancing food and energy supply and stimulating development in the local communities, activists say.
The FAO confirmed these observations in a recent report, saying “there is little or no monitoring of the land use in terms of sustainability and social responsibility of the investors”.
In Ethiopia, where all land is state-owned, traditional tenure systems exist alongside modern systems. Several regions, including Gambella, where Karuturi had leased land, have no formal tenure and boundaries are agreed by local customs.
In regions where villagisation took place, none of the inhabitants had legal titles, said a Human Rights Watch report.
The relocations may have “life-threatening consequences”, with shifting cultivators - who move from one location to another - made to plant crops in a single location, and pastoralists abandoning their cattle-based livelihoods, it said.
Karuturi told Human Rights Watch it did not cause any displacements for the project.
Karuturi’s 2010 lease for land in Gambella - a remote region near the Sudan border - was canceled December 2015.
The company only developed 1,200 hectares of a total 100,000 hectares in two years, Arega of the Ethiopian Investment Commission said. The company was to get 200,000 hectares eventually.
“They were supposed to fully develop the land or hand it over - they didn’t do either. They really cost the country a lot in terms of bad publicity,” he said.
Karuturi, one of the first foreign firms to lease land in Ethiopia, has disputed Ethiopia’s findings and demanded “adequate and appropriate” compensation after its land was nationalized.
“It is not uncommon to encounter political, social or cultural resistance when an emotive issue such as foreign direct investment in agricultural land is considered,” Managing Director Sai Ramakrishna Karuturi said.
The governments of India and Ethiopia are working to “amicably resolve outstanding Karuturi issues”, he told the Thomson Reuters Foundation in an e-mail.
Arega defended large land deals, saying “not all were bad”, and that a few have succeeded.
Others have taken more action: Tanzania has imposed caps on the size of land given to investors, and last year began a program to seize land left undeveloped by investors and return it to poor farmers, in a bid to quell conflicts.
Stalled or failed deals have a greater impact on locals who have to deal with the loss of livelihood and environmental damage, according to a report this month from Swedish campaign group Swedwatch.
The FAO suggests adoption of its voluntary guidelines for land deals to be “socially, culturally and politically correct, environmentally friendly, and economically mutually profitable”.
Investors have an equal responsibility in ensuring rights are upheld, said Meenakshi Ganguly, South Asia director at Human Rights Watch.
“They need to be conscious that they are not becoming party to rights violations ... (and) ensure that the host government meets its obligations to respect, protect, and fulfill the economic and social rights of its people,” she said.
But Mittal said African nations must scrap these deals entirely to protect the rights of local communities.
It is “wishful thinking ... that large-scale land deals can be beneficial to local communities if done properly,” she said.
“We have looked at hundreds of land deals all across Africa - and have yet to see the benefits accrue for the local populations impacted, or even for national economies. This is a failed development paradigm,” she said.
Reporting by Rina Chandran @rinachandran in Mumbai and Tom Gardner in Addis Ababa. Editing by Astrid Zweynert. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit news.trust.org to see more stories.