A case for protection of both local and foreign investors
What you need to know:
- In Africa, our region is emerging as a hotspot for international acquisition of land by multinational players, particularly in Sudan, Ethiopia, Madagascar and Tanzania.
- Investors have to operate in an environment where political power is so diffuse – where one cannot tell whether to seek protection from the national government or from the county government.
President Uhuru Kenyatta recently waded into the dispute between the American conglomerate Del Monte and the political elite of Murang’a County over renewal of a lease for the thousands of acres of land on which the multinational company grows and processes pineapples for export.
It is understood that the President’s action was in response to a petition presented to him by representatives of the US government.
Clearly, the Americans want to take full advantage of the spirit and goodwill coming out of the Free Trade Area negotiations, which Nairobi and Washington are currently deliberating on.
We as a country must renew our faith in free enterprise. Indeed, this dispute has implications on investment climate ratings and on our reputation and desire to project ourselves as an attractive investment location.
LAND ACQUISITION HOTSPOT
In Africa, our region is emerging as a hotspot for international acquisition of land by multinational players, particularly in Sudan, Ethiopia, Madagascar and Tanzania.
International land deals are emerging as an important source of FDI. Why are we not treating well what we have had for centuries? Why are we acting as if the trend of new land acquisitions by international investors means nothing to us?
You can bet that investors are keenly following developments around the Del Monte controversy.
Whichever way the dispute is resolved, it is going to reflect on the capacity of the government to exert its authority and to come out to protect and deliver on the obligations it promises to investors when they come to this country.
Del Monte’s tribulations are just one example of pressures and bullying that multinationals running large companies in the countryside have had to come to terms with from modern-day pretenders to power and influence – governors, MCAs, senators, MPs – all clamouring to exert veto powers over foreign companies operating within their jurisdictions.
POLITICAL POWER
Investors have to operate in an environment where political power is so diffuse – where one cannot tell whether to seek protection from the national government or from the county government.
At one stage, it appeared as if the dispute would be resolved in Parliament. It did not happen.
Is it not just incredible that Murang’a County has been demanding that Del Monte cede hundreds of acres of prime agricultural land fronting the highway, and where all its installations, including dams, pumping stations, water and irrigation pipes and housing estates are located?
And there was a point when Del Monte had to spar with self-styled Kandara Residents Association that entered the fray by coming up with even more parochial demands.
BIG HEADACHE
This association, which claims to represent 5,000 members, has been a big headache to negotiate with because it neither has a formal register nor a convincing mandate.
All it has are signatures. Yet it has proved to be well-organised enough to file multiple lawsuits and petitions to the National Land Commission, where it sought to stop the renewal of the leases on grounds of historical injustices to the ancestors of its members.
Clearly, the entry of this entity into the conflict only served to protract the negotiations. Mark you, Del Monte lodged the application at the National Lands Commission and at the Ministry of Lands way back in February 2013.
Which brings me back to the point I have made above about the case for protecting the interests of private investors whether they are foreign or local.
As a long-term player, you don’t want to commit your resources in an enterprise only to be informed on expiry of land leases that no renewal will be forthcoming unless you cede some leases.
PEPPERCORN RATE
Long-term investors are only prepared to commit billions of dollars when they know that the land leases they have acquired will be renewed at a peppercorn rate when the expiry date calls.
We must come up with transparent ways of managing and protecting expiring long-term leases, especially when it comes to large consolidated pieces of land such as expansive private plantations and individually owned ranches.
What role should county governments play going forward? If I were governor, I would – instead of fighting to cancel leases – get the multinationals to sign MoUs with me detailing clear commitments and benchmarks on investment, employment, running of schools, health facilities, the environment and corporate social responsibility.
I would also introduce strong mechanisms of monitoring and making sure that the multinationals comply with these commitments.
I also have a suggestion for multinationals and plantation companies. They have to rethink long-term engagement and partnerships with the community and not elites.
The future for the likes of Del Monte will be in forging investor-community partnerships and putting more emphasis on community benefits.
