An Overview: Context and Key Questions
In some parts of Sudan, there is foreign-owned land for as far as the eye can see. Evidenced by the almost 800,000 hectares of land acquisitions in Sudan, the Gulf states’ interest in agricultural investments in central Africa has increased over the past few years along cycles of economic booms and busts. In the 1970s, OPEC, a collective of petroleum-rich states, acted to raise the global price of oil. As a result, the Gulf states saw a massive inflow of cash. As oil-rich, water-scarce nations, they were drawn to foreign direct investments funding ambitious and large-scale projects. These projects seek to diversify the Gulf’s economies and find avenues to feed the growing regional population in spite of a difficult geographical destiny.
In 2011, Sudan split into two parts after years of political infighting: Sudan and South Sudan. With oil resources transferred to the control of South Sudan, yet still blessed with the land’s fertility and an abundant river system, Sudan found itself in precisely the opposite situation as its Gulf counterpart: low on cash and petroleum but promising a high propensity for agricultural productivity.
On face, it would seem as though Gulf investments in Sudan would be a mutually beneficial trade: Sudan benefits from much-needed inflow of cash and the Gulf creates more reliable supply chains for food to nourish their populations. However, mounting tensions in Sudan at both the local and national level shed light into how these investments may be stirring up trouble.
A more in-depth understanding of the nature and implications of these investments enable us to better engage in the debate of whether these investments unlock economic opportunity to prey on local communities.
The Gulf’s Incentive
While the GCC states have seen improvements in agriculture output due to concentrated investments in agricultural technologies, it has not been sufficient to satisfy demand. While the production of fruits and vegetables in the GCC is predicted to grow by 8.6% in the coming years, the population of member nations is predicted to grow by roughly 20-30% by the end of the decade.
Geographical positioning in a desert climate has, for obvious reasons, has greatly slowed-down growth in the agriculture industry. So, ownership of land for agribusiness in Sudan, a nation with fertile soil and a history of supporting thriving farming communities, is a sensible avenue to pursue opportunities for sustainable food production. For perspective, Sudan’s arable land is as large as approximately 45% of the arable land in all of the Middle East.
In Sudan, land is cheap and regulations are low. Laid-back financial and legal standards combined with agricultural potential make Sudan a prime location for Gulf investors to engage.
Sudan’s Incentive
In 2013, The National Investment Encouragement Act (the “Act”) was passed as a means to ease the bureaucratic and legal regulations around foreign investments in Sudan. The legislation stated that through the creation of a more robust private sector, key development goals such as “economic diversification,” “develop[ing] entrepreneurship,” “upgrad[ing] the capacity of the labor force” and protection of “environment and public health” would be better secured. Following the passage of this legislation, Sudan saw an uptick in Arab investments.
Land Rights
If the question is whether agricultural investments are modes of economic opportunity or economic extraction, then the question of land rights must take center stage. This is because the nature of land rights in Sudan explains the links and relationships between relevant stakeholders: local communities, Sudanese government officials, and Gulf investors.
First, it is critical to understand the nature of land ownership. Specifically, there are two frameworks that operate simultaneously that shape land rights and ownership.
- The official legal framework
- The informal framework based on ancestral claim to land and local community dynamics.
The Unregistered Land Act of 1970 is a key piece of legislation to understand. This law effectively “ nationalize[d] all unregistered land in the country.” With many local communities lacking documents to prove their historical inhabitation of and claim to the land, the implication was that local communities lost legal ownership of their land. While their ownership was respected at the level of the local communities, ownership was not recognized by Sudan’s national government.
Because this land is recognized as national property and not private property, the Sudanese government is at liberty to sell local land informally owned by rural communities and pastoralists to GCC-sponsored companies. Land holds great personal value to many communities, and is often their primary source of livelihood. Thus, government occupation and appropriation of the land have serious implications for human rights. Also, because rural communities are often governed by informal tribal associations, they lack legal and political leverage to fight back against powerful companies and central government agencies threatening their rights.
Tensions between local landowners, the Sudanese government, and Gulf investors have sparked conflict over the past decade. Protests fueled by anger from local community members have often turned violent.
Implications for Sudanese Politics and Economy
With little positive reform and increased regulations surrounding investment deals, current Gulf investments threaten to negatively affect Sudan’s economy in a few ways.
First, 60% of food production from foreign-owned land and business are exported back into the investor’s country; they seldom enter markets in the local community. Ultimately, the result of this is the potential for local food shortages and lack of stimulation for local economies. Second, many foreign businesses pay highly reduced taxes, citing the difficulty of doing business in a conflict-impacted context. Third, low-capacity governments often undervalue the price of land they sell to investors. All three of these issues ultimately lead to economic losses.
What’s Next?
As of April 2023, violent civil conflict has erupted across Sudan, thereby destabilizing the country and presenting an uncertain political future. There is yet to be solid evidence indicating the impact of this conflict on Gulf Investments. Will investors fear risk and pull out of Sudan or will they see opportunity in the conflict and take advantage of weakened governance to intensify their investments?