Sida supports investment in large scale agriculture

The Swedish aid agency, Sida, has decided to give SEK 120 million to EcoEnergy as a guarantee for commercial loans to invest in sugarcane production in Tanzania. NAI researcher Linda Engström questions the decision.  

The first surprise in this story is that Sida has decided to provide another kind of funding from what was originally applied for by EcoEnergy. The company’s objective in its application in 2012 was for a credit guarantee for a major loan from African Development Bank (AfDB). Instead, Sida is now providing a guarantee to enable EcoEnergy to get started, with a smaller loan from an anonymous private bank. This indicates that Sida really does believe in the prospect of EcoEnergy’s becoming operational and fulfilling the promise of more than 10,000 jobs, including off-site development. This is probably also the reason Sida is proceeding without awaiting AfDB's long-delayed due diligence report, which was previously a requirement of Sida support.
Sida states in its press release that the project will "contribute to raising the standards in the country in terms of participation and compensation for people who need to move in connection with land investments." As always, the reality is not that simple. In my experience, each agricultural investment site has its own dynamics and procedures. I hesitate to believe that just because one standard is applied in one district, it will automatically be valid for the country as a whole.
Second, when it comes to how local communities perceive their participation and the transparency of the process, the story is quite different. Attitudes towards EcoEnergy’s plans vary among the few settlements on the land, ranging from compliance to outright opposition. One of the more critical of these settlements has expressed its frustration at not knowing when its members will move, where and with what compensation. Members wonder if inflation will be taken into account, given that the evaluation of their assets was made a couple of years ago. Despite considerable efforts by EcoEnergy to approach resettlement in a “proper” way, by, for example, providing compensation to these people even though national law does not demand it, something happens when ideas from ”outside” are integrated into the perspective and logic of local communities, and matters rarely turn out as intended.

For example, few of the people I have talked to have understood who the consultants (International Development Consultants) are. IDC is a consultancy firm brought in and financed by EcoEnergy to cater to the interests of local communities in the resettlement. Many people have not understood who IDC represent – the government or the investor – and also associate some major negative impacts with them.

- IDC put up notes encouraging us to stop planting maize, one farmer says, because they say we are about to move. Now, some of us eat only twice a day.

Another indirect impact relates to a promise by EcoEnergy to set aside land within the project area for Barabaig pastoralists. The original plan was to accommodate 11 households: however, the rumours spread and there are many more Barabaig in the area now.

- They called their relatives and now there are cattle everywhere, the water in our dam is gone.

Instead, farmers now have to buy water from a tanker. This, of course, becomes even more challenging when there is no food surplus being produced to make money. The alternative is to walk farther to fetch water, which is the task of women.

Of course, when people learn about compensation for moving out, they have a good incentive to move in as a short cut to gain money. This is what has happened to some extent, not least in the form of people moving to   cut down trees for the lucrative charcoal market in Dar es Salaam, only an hour to the south. This has caused conflict between them and EcoEnergy, which has plans to evict them. When I visited the project area in March, these tensions were at their peak. Although there was no evidence of physical conflict, people were visibly upset and had started to organise themselves into a committee to lodge complaints. One of the elders on the committee had his own perspective on the reasons for the conflict:

- Charcoal production is perceived as a problem by the investor, because they want to destroy us. If the government could only tell me where to move, and when, I would be satisfied.

When you take these local community perspectives into account, it is no longer so clear that national legislative standards and those of the International Finance Corporation on removal and compensation are being fully met.

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