Biofuels investment and community land tenure in Tanzania

Like much of sub-Saharan Africa, Tanzania has experienced a surge in land-based investment during the past decade. While expanding private investment in agriculture is a core ambition of the G8’s New Alliance for Food Security and Nutrition, experiences of prior investments raise questions about possible negative impacts. A notable element of this pattern of international private investment in Tanzania has been the emergence of biofuels as a form of agriculture; biofuel investments occurred rapidly and on a large scale around 2005–2008, with about four million hectares around the country requested for allocation to commercial biofuel projects. Many of those investments were large-scale projects based on the cultivation of jatropha or sugarcane, headed by European companies. One of the most wellknown biofuel investments was that of Bioshape, which acquired approximately 34,000 ha in Kilwa District for the cultivation of jatropha. By 2009, Bioshape was bankrupt and had withdrawn from Kilwa, only ever cultivating a small area of jatropha trial plots and engaging in some timber harvesting from their much larger plot of land. The land they acquired was, according to formal procedures under the Village Land Act, transferred from village land to general land in order to grant the land lease to the investor, Bioshape. Bioshape’s demise, like that of a number of other highprofile biofuels investments in Tanzania and throughout Africa, created uncertainty as to what would be the impacts on the local communities that had ceded their land, and in fact their perpetual customary rights to that land, to the company. This report examines what the impacts and implications are from the collapse of such large-scale land-based investments, and what lessons can in retrospect be derived from the experience of Bioshape in Kilwa. The report documents, insofar as is possible using available information, the process Bioshape and government authorities at national and district level undertook to acquire the land from the four villages in Kilwa where Bioshape established operations. This process deviated from the official legal procedures in a number of key respects, such as in the retention by Kilwa District Council of more than 50 percent of the total compensation paid by Bioshape for the land acquired, the issuance of the land lease by the Ministry of Lands, and the uncertainty surrounding the publication of the transfer from village land to general land in the government gazette. In addition, as other studies have documented, the communities that granted their land to Bioshape did not have an understanding of the details of the agreement, including such critical information as the boundaries or total extent of the land in question, or the fact that it would be transferred from village to general land. This case study has important implications for land tenure, rural development and investment policy in Tanzania, and perhaps other African countries as well. Working Paper 073 Working Paper 073 The investment framework whereby foreign investors acquire village land through its transfer to general land, which extinguishes communities’ customary right to the land in question, results in local communities bearing a high proportion of the risk in these investments. When investments fail, as they often do, particularly in high-risk and speculative industries such as biofuels, using crops of unknown performance such as jatropha, investors lose their money (or rather their own investors’ money), while the villages lose their land in perpetuity. Compensation, as calculated in this and other cases, is not based on true economic opportunity costs to the local people and does not replace the loss of their land assets. Such procedures should be reviewed and amended to strengthen safeguards protecting communities’ customary land rights. Enabling local communities to directly lease land to foreign investors, with safeguards in place to protect customary tenure rights and ensure transparency and accountability to local landholders, could be a component of addressing the problems inherent in the existing arrangements. Beyond questions of the legal framework, the outcomes witnessed in the Bioshape case reveal a range of governance issues revolving around lack of adherence to existing laws and policies by government officials; a failure to adequately inform local communities about their rights, options and interests; and unequal power relations between investors, government and local communities. In order to address existing concerns around similar ‘land grabs’ that are intensifying across Tanzania and much of sub-Saharan Africa at present, legal reform is only one component of the solution; efforts should be redoubled to empower local communities with the tools and information they need to defend their rights and negotiate on more even terms with investors. Ultimately this is a key to reconciling the interests of rural communities with those of commercial agricultural development and investment.