Almost half of all land disputes between sugar companies and local communities across Africa last for more than ten years, new research from the Overseas Development Institute (ODI) and TMP Systems has found.

As part of a new initiative to encourage responsible investment in African agriculture, experts have warned how disputes over land can lead to negative social and economic outcomes for local communities as well as causing financial and reputational damage for businesses.

Researchers have calculated that land disputes can causes losses of up to US$101 million across a range of agricultural projects in Africa, while at the same time cause significant harm and stress to local communities who have a claim to the land.

However, the project also highlights the potential benefits if companies engage with local communities in a transparent way to build trust. Researchers found that initial costs to reduce tenure risk do not typically exceed 2% of the original investment but can help prevent damage to local communities and save companies millions down the line.

The Quantifying Tenure Risk (QTR) initiative has developed a new economic modelling tool to accurately determine the potential cost of a dispute in a bid to help companies avoid harmful investments.

Joseph Feyertag, Research Fellow in ODI’s Agricultural Development and Policy programme, said: ‘Done badly, investing in agriculture in Africa can cause severe damage to local communities and make projects financially unviable for businesses. This can stifle much-needed investment in the world’s poorest countries.

‘We spoke to over 30 companies and reviewed 180 cases of land disputes to better understand tenure risk and make the business case to investors for social due diligence.

‘When commodity prices rise again, growing demand for land will increase the number and severity of land disputes. It is vital that companies act now to invest responsibly and the QTR initiative is designed to help them do just that.’

Benedick Bowie, partner at TMP Systems, said: ‘Our work helps investors to avoid conflict and puts a quantified premium on developing good local relationships. Over time, use of our model will send a strong signal for governments about how important good tenure governance is when you are trying to attract investment.’

More information on the QTR initiative, funded by the UK Department for International Development, is available here.

Notes to editors

• The Quantifying Tenure Risk is a joint initiative between the Overseas Development Institute and TMP Systems to provide data and analysis to reduce land conflict and improve land governance through better informed investment decisions

For more information or to arrange an interview with one of the researchers please contact James Rush on [email protected] or +44 (0)7808 791265