Malawi land reforms spark controversy, fear of lost investment

Every morning, well before sunrise, Stanley Sazuze leaves his village in the southern Malawi tea-growing district of Mulanje and cycles into Mozambique. By the time the sun crests the horizon, Sazuze is tending his crops six miles away on a four-acre piece of land that he rents. Sazuze, like many villagers in Mulanje and the neighboring Thyolo district, doesn’t have access to sufficient land to grow crops to sustain his family. According to the Farmers Union of Malawi, around 84.6% of the land is in the hands of large-scale farmers, so he is forced to rent a plot where land is still plentiful. "We are suffering because most of the land here is occupied by tea plantations. We can only manage to get land for construction of our houses, and in most cases, this land is very small," Sazuze, who grows corn and pigeon peas, told Devex. To feed his family of five, Sazuze also works as a tea picker at one of the nearby plantations. There are 44 tea plantations owned by 11 international companies in Mulanje and Thyolo. Malawi’s economy depends on farming, with 84.5% of its labor force engaged in some form of agricultural production. But while some Malawains struggle to own a small strip of land for subsistence farming, the tea, tobacco, sugar, and macadamia estates own hundreds of acres of land, many of which are sitting idle. The government offers few solutions for low-income families such as Sazuze’s, so some have begun farming illegally, encroaching on land held by the plantations, which some claim was “grabbed” from their ancestors by the tea estate owners. That has led to scores of arrests and ongoing protests and calls for land redistribution, most notably in Mulanje and Thyolo. While the southern tea estates are the most hotly contested, other crop estates, including tobacco, sugar, and macadamia, which are mostly farmed in other parts of the country, have also been targets for encroachment and face calls for redistribution. To solve these challenges — at least in southern Malawi — the government in 2005 initiated the Community-Based Rural Land Development Project aimed at relocating landless households from Mulanje and Thyolo to neighboring districts. But the project failed because families found the climate too harsh to farm and the area lacked sufficient social infrastructure. Many returned home. Following the project’s failure, the Malawian Parliament in 2016 passed a suite of new land laws aimed at formalizing land tenure to offer more security and ensure equitable access to land. The laws paved the way for the foreign investment and agricultural commercialization needed to meet the country’s ambitious Malawi 2063 vision to become a “self-reliant industrialized upper-middle-income country” by said year. However, despite broad support for the 2016 reforms, President Lazarus Chakwera — who took office in 2020 — quickly moved to amend the new laws, arguing that they were rushed and had brought discontent. But his latest amendments are populist and could spook investors, say critics. In March last year, Chakwera’s government introduced reforms to six land laws. The changes capped access to agricultural land at 1,000 hectares and introduced ceilings on ownership or leasing of urban residential and commercial land. The new legislation prohibits ‘nonindigenous’ Malawians from owning land and limits them to 50-year leases on customary land. The reforms also give the government sweeping powers to seize land which has not been developed within two years of being acquired and decide whether expired leases should be renewed. Insiders accuse Chakwera’s administration of trying to win support in southern Malawi districts — where there are long-standing issues over land shortages — by introducing populist reforms that play into unrealistic dreams about reclaiming ancestral lands from foreigners. "Neither the 2016 land laws nor the 2022 amendments address the land problem in Mulanje and Thyolo,” Vincent Wandale, a land rights activist fighting for the land rights for the people of Mulanje and Thyolo, told Devex in a WhatsApp interview. The new reforms — especially the 50-year cap on leases — could actually make things worse by driving away plantation owners, he explained. “The government needs to look at the root cause of the problem of landlessness before coming up with a populist law that could worsen the situation if the plantation owners lost tenancy or decided not to reinvest in the estates because they are not satisfied with the law," Wandale said. Meanwhile, private sector groups — mostly foreign investors — and others have said reforms, including the 1,000-hectare land ceilings, will make it impossible to develop large-scale farming, meaning fewer jobs for Malawi’s rapidly growing population and no chance of realizing the Malawi Vision 2063. “Malawi hardly produces anything other than agricultural commodities under fragile rain-fed conditions and so we desperately need foreign direct investment to come in to commercialize production, processing, and get the country into light manufacturing,” Steve Morris, team leader of Traction, a U.K. aid-funded policy program running in Malawi, told Devex. “But these reforms send the message ‘Don’t come to Malawi,’ and we are already seeing evidence of potential investors being scared away. It’s going to make it much harder to achieve growth,” Morris explained. FDI to Malawi averaged $50 million in 2021; Malawi’s 2063 vision requires FDI to hit $3 billion by said year. The Ministries of Land and Justice are drawing up regulations to determine how the new laws are implemented. Private sector groups say they hope it is not too late to strike a deal that gives investors confidence and enables farmers to grow their businesses. Malawi is one of the world’s lowest-income countries, ranked 169 out of 189 according to the U.N. Human Development Index. Over half of the population lives in poverty, the vast majority scratching a living as subsistence farmers. Job creation is urgent given that 80% of Malawi’s population is under the age of 35. Devastation caused by cyclone Freddy in March this year, chronic fuel shortages, and an ongoing foreign exchange crisis that has led some external traders to suspend some of their operations in the country, mean that businesses are already struggling. In his legal analysis of the reforms, land expert Chikosa Silungwe, a former attorney general, described aspects of the legislation as “unconstitutional” and “inconsistent.” He concluded that the reforms were likely to have a negative effect on FDI and could jeopardize ongoing donor-funded agricultural modernization projects. “There are no discernible benefits to the urban poor, the rural poor and the subsistence [of] small holder farmers from the land legislation of 2022,” he wrote. Silungwe wants the government to undergo further consultation on the regulations. His view is shared by the World Bank, which wrote in December 2022 that the land amendment legislation “is seen by many producers as introducing additional obstacles to operating a commercial farm, without significantly improving the security of land tenure,” and could hinder the government’s plans to establish the “mega-farms” envisioned in the Malawi 2063 plan. The reforms are also discriminatory, critics say, since they target “nonindigenous” Malawians by preventing them from owning land. This plays into xenophobic fears around nonblack Malawians, especially those of Asian descent, experts warn. Devex spoke to a Malawian business owner of Asian origin whose family has been in Malawi since the 1870s. “I feel like a second-class citizen now when I see this legislation coming out,” they said. The new restrictions on land ownership for non-Indigenous Malawians are already affecting their land development business, they said, by making it hard to secure foreign backers. Furthermore, the impact of the reforms is being felt in the local financial markets, with banks reluctant to take land as collateral as they did in the past, they added. Another nonindigenous Malawian businessperson, who agreed to speak to Devex anonymously, said that while the “anti-foreigner” reforms are regressive, they are not the biggest problem posed by the latest reforms. “The real issue is the concentration of power being put into the hands of the government and politicians, it’s horrific and undemocratic,” they said during a phone interview. “The anti-foreigner element is being used as a distraction so that people don’t look too closely at the other reforms which are taking Malawi back to a one-party system,” they added. Commercial farmers in Malawi say the new reforms threaten the viability of their business. International tobacco firm Pyxus, which runs 13 farms across Malawi, said it may be forced to abandon plans to diversify into other value chains, including building warehouses and factories, due to the land ceilings and a new requirement for 50% of land converted from agriculture to commercial or residential use to be expropriated by the government with compensation. Although some question whether a fair value will be given for the land and fear it will be handed over to government cronies. “This is another example of badly-drafted, under-consulted laws which add additional layers of complexity to an already complex operating environment,” Ron Ngwira, who heads Pyxus Agriculture Malawi operations, said in a statement. “We’re competing with markets from Zambia to Brazil and it further weakens the case for Malawi,” he added. Similarly, Robin Saunders of the Macadamia Association of Malawi said that caps on land ownership will make expanding the macadamia export business impossible. “Modern commercial cultivation of macadamia could generate an export value of 360 million USD from 30,000 Ha of cultivation [and] Macadamia is only one of many plantation crops that could help change our economy,” he lamented. But fears that the land amendments will scare investors might be misplaced, Loudon Luka, an expert in urban and regional planning at Mzuzu University, told Devex. Large-scale farming interests and similar investments will continue to receive support through the Malawi Investment and Trade Centre, or MITC, he said, providing his personal opinion. Such land holdings will, however, no longer be freeholds but time-limited leaseholds, he explained. "Structures have been put in place to protect the interests of investors who need land for their operations."