MUN Academy attended CFS 44 side event: The Impact of increasing Capital-Flows to Rural Areas: Experiences in Sub-Saharan Africa (SSA)

The event was organized by the Global Donor Working Group on Land and USAID.

It explored the various aspects of increasing capital flows to rural areas in Sub-Saharan Africa and the implication for land policy and agricultural transformation in the region.

 

  1. The topic was first discussed one year ago in Brussels, and the aim of the side event at CFS 44 was to draw more attention to the transformative -but currently not well understood- phenomenon driving change across Sub-Saharan Africa. Increased capital flows to rural areas are transforming the region, with profound impacts on farm structure, urbanisation and the security of land tenure.

 

The African continent is vast with an unequally distributed population. It has experienced high population growth over the last 50 years and if current dynamics continue, the result will be population densification, with serious implications for the relationship between people and natural resources, and changes to territorial configurations.

The population is expected to reach almost 2.5 billion people in 2050 and most of them will leave in cities. This growth will result in a complete reversal of relative demographic weights.

Even if SSA is still for the major part rural, the progressive trend is a population shift from rural to urban. Seeking job opportunities and better life prospects are the major rational drives to such shift.

The most growing reality are medium size cities.

 

Challenges:

  • Lack of decentralised authority – no consistent delegation of power to local authorities
  • Local authority/city administration are weak and lacking of human capital = incapable to manage the situation in loco. This is an enormous issue considering that African economy, in the next few decades, will be urban-based, therefore is highly relevant how cities are and how will be planned and run.
  • lack of (integrated) urbanisation planning —> cities faces high risks linked to natural disasters, spread inefficiency (e.g. regarding transportation, services etc.)
  • Governments de facto enact anti-poor and anti-urban policies, (for instance cities’s mayors think that investing in rural areas can be the answer to stop people’s migration to cities, but it is not. They should focus on “where they are and not where they wish they were”).
  • land-markets need to be addressed

 

 

  1. From public investment in infrastructure to a growing based elite with capital in search of land[1] as a stable, valuable asset much of these capital flows originate from domestic sources and have received far less attention than international land-based investment.

Most agricultural investments are financed from domestic resources -both public and private, but for the most part by the latter = Private domestic (e.g.farmers and businesses)-. Only a small share of funding comes from international sources.

 

Big Issue is lack of Transparency:

  • Lack of transparency that permeates land investments also extends to domestic investments in land, both large and small.
  • Addressing systematic lack of transparency = critical for building clearer picture of nature and implications of these investments.

 

Large-scale investments in land, agriculture, and forestry can have serious implications for land users and local communities, as well as for host governments’ sustainable development efforts. These investments are often governed by contracts between host governments and investors that define the parties’ respective responsibilities and affect a range of social and environmental issues. However, the contracts can be difficult to access, and even when publicly disclosed, the resources available to assess the key provisions of such contracts and the fact of comparing them with other contracts may be limited. This, in turn, can result in a critical lack of knowledge. Host governments lose the opportunity to learn from other countries’experiences, including by comparing the terms that other governments offer for similar investments. Communities are less able to hold governments and investors to account throughout the lifecycle of a project, and are less able to assert their rights. Furthermore, investors risk heightened community tensions over their land deals, increasing the potential for local conflict and possibly imperiling their investment.

That’s why has been created a website called OpenLandContracts, an online repository of publicly available contracts for large-scale land, agriculture, and forestry projects, to better understand and analyse them. OpenLand website is a sister website of ResourceContracts which is a repository of publicly available oil, gas, and mining contracts.

 

 

III. The causes and the consequences of changing farm sizes distributions in sub-Saharan Africa: Milo Muyanga brought evidence from Kenya, Ghana, Tanzania and Zambia.

The medium scale farms (5-10 hectars/ 10-20 hectars and 20-100hectars) in the aforementioned countries grew rapidly during 2008-2012 time period and are still growing. On the other side the number of small farms is growing slowly and the share of area under small farms is declining.

N.B. SMEs produce 51% of GDP in low income countries.

 

The causes of changing farm size distributions are several:

  1. Rise in world food prices – heightened investor interest in farmland
  2. Urban farmer capture of land policy/farm lobbies
  3. Rapid population growth
    • Fragmentation/subdivision in areas of favourable market access
    • Land inheritance declining
    • Rising land scarcity —> land markets —> rising land prices
    • Rising challenges of youth access to land —> migration

 

Positive aspects regarding consequences of changing farm size distributions:

  1. Rising use of mechanisation
  2. More capital using/labor saving forms of agricultural production
  3. Medium-scale farm contributing a large share of marketed grains
    • selling to large grain traders
    • higher prices due to reduced transaction costs
  4. Productivity differences between small and medium scale farms – limited evidence, but is agreeable to believe that capitalised and educated MS farms will be more productive

 

Negative aspects are land scarcity and an unequal use of land.

 

Some Implications for policy:

Agricultural sector policies must anticipate and respond to

  • rising land prices, decline of inheritance, market as increasingly important mode of acquiring land that has to be regulated
  • Resources needed for youth to succeed in farming, like access to land, finance etc.
  • Distinguish between “trying to keep youth in agriculture” vs. “giving youth viable choices”

 

How to face the challenges regarding land policies:

  • Strengthen land use planning
  • Encourage access to unutilized land to those who can raise agricultural productivity
  • Provide stronger land rights for women: while many African countries have new laws recognising gender equality, implementation is weak, especially given continued dominance of customary practices, which tend to discriminate women.

[1] The issue regarding land is land acquisition (who and how) – they come from private owners or are controlled by government?

The traditional categorisation is: public land, private land and costmary land. But today’s situation is more complex and opaque.

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