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Resource Key: VPCYRXH7

Document Type: Report

Creator:

Author:

  • Leslie Hannay
  • Laura Eshbach

Creators Name: {mb_resource_zotero_creatorsname}

Place: Washington D.C.

Institution: USAID Integrated Land and Resource Governance Task Order under the Strengthening Tenure and Resource Rights II (STARR II) IDIQ.

Date: December 2023

Language: en

Guides for responsible land-based investments tend to focus on the beginning of an investment, but there has been far less attention to what happens to land at the end of an investment – when investments fail, projects reach a natural conclusion, or companies need to divest. National laws tend not to contemplate the end of an investment or the withdrawal of a company that has acquired community lands; best practices and international standards likewise provide limited direct guidance. While there is little information available on the extent of land divestment, available data on land investment indicates a significant amount of company-acquired land globally is not being used for its intended investment purpose and that some lands may be beneficial for companies and communities to return. A recent study of 4,558 land deals covering an area of 179,120,562 ha estimated that 19 percent of deals and 23 percent of land area subject to investment had been abandoned, were still under negotiation, had expired (without any use or occupation of the land), or the investment had failed or ended (Borras et al, 2022). These estimates suggest that a significant proportion of land deals have not resulted in the anticipated commercial use, and raises the question of how governments and companies have responsibly considered and addressed community rights in the process. Two recent cases of voluntary relinquishment of land by a company offer a rare opportunity to better understand land divestment, and to identify motivations, risks, and good practices to carry out a responsible exit that supports communities’ rights and benefits. Established in 1995, Green Resources, A.S. (GRAS) is the largest forest development and wood processing company in East Africa, with operations in Uganda, Tanzania, and Mozambique. The company recently carried out large-scale land divestments under different circumstances and at different scales in Mozambique and Tanzania. In Mozambique, GRAS carried out a divestment process in which it relinquished approximately 239,000 hectares (ha) of land and transferred related assets to communities in Zambézia, Nampula, and Niassa Provinces. Engaging in this process between 2018 and 2023, GRAS partnered with local subcontractor Terra Firma and a range of non-governmental organizations and community-based organizations through financial support of the United States Agency for International Development’s (USAID) Integrated Land and Resource Governance Program (ILRG). The GRAS relinquishment process faced a number of challenges, including an unclear legal framework regarding the disposition of assets found on the land upon relinquishment; the need to address legacy land issues; poor record keeping and inconsistent processes; and the scale, complexity and relatively short timeline of the intervention. Despite these challenges, GRAS successfully relinquished all its rights of use and benefit of land – referred to by its Portuguese name Direito de Uso e Aproveitamento da Terra (DUAT) – titles to the state, registered high-value immoveable assets in the Real Property Register (Registo Predial), and drafted the sale and purchase contracts for the transfer of existing plantations and other assets to the communities. Over the course of the process, ILRG supported the delimitation or reconfirmation of community land, strengthened community governance institutions and capacity on land rights, supported the formation of community land associations with equitable gender representation, and supported communities to manage and benefit from natural resources and land. assets. These efforts reached over 109 communities comprising 334,00 people (177,000 adults age 15+) over more than 720,000 hectares. In Tanzania, Green Resources, Ltd. (GRL), a GRAS subsidiary, initiated and completed the voluntary relinquishment of three parcels comprising 14,173 ha to communities in Mufindi and Kilombero Districts in 2022 to 2023. With the support of Haki Ardhi, a Tanzanian land rights organization, and Landesa, an international land rights organization with offices in Tanzania, the project worked to fortify communities’ land rights and capacity to sustainably manage the returned land by supporting a review of each community’s Village Land Use Plans (VLUP) and through targeted capacity strengthening and awareness raising following the land return. The GRL land process aimed to ensure that communities benefited from the land return. The main barrier that the project faced was the legal framework, which offers few options for transferring company land back to communities. This report draws on project and company documents, supplementary desk research, and remote interviews with participants in the land divestment cases. A review of these experiences in Tanzania and Mozambique demonstrates good practices for responsible land investment that should apply to divestment, which is a part of the investment life cycle. The end of an investment should be planned for as any other aspect of investment and should employ many of the elements of good practice that should be familiar to responsible investors: risk assessment; identification of land rights holders; documentation of rights; engagement and establishing transparent, continual, multi-directional communication between a company and communities, as well as with government and civil society; support for institutional capacities to administer land and resources and support for participatory land management; and transparency. Having employed these elements, the GRAS examples demonstrate: Community outcomes can be positive, particularly where the company has an interest in maintaining a positive relationship with the communities involved; Responsible land divestment has monetary and time costs that companies should plan for; The legal framework – and how it defines communities’ rights to land and assets – is important to understanding how divestment can or should happen. Ambiguities or gaps in the legal framework can create conflicts and insecurity, especially in cases where communities and government authorities have competing interests; As with other phases of the land investment life cycle, responsible land divestment requires doing more than just following the letter of the law. Responsible divestment processes should include: Risk assessments for companies and communities; Rights clarification and boundary demarcation; and Additional support for communities to realize and defend their rights to land and assets; Despite the substantial benefits to communities seen in these two cases, such outcomes may not be the norm. Responsible divestment is more time-consuming and far costlier than just walking away from a failed investment and so may not be the path of choice for companies seeking to relinquish lands which tend to be companies in financial distress. Additionally, the Tanzania case in particular illustrates issues in the national legal framework that leave communities vulnerable to permanent disenfranchisement once village land has been ceded to an investor, a circumstance likely repeated in other country contexts. Further research and learning are needed to more fully understand the range of risks and opportunities land divestment presents for communities and companies and to develop guidance for responsible land divestment.

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