The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Throwing money at displaced communities is not enough

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Community members in Mtwara, Tanzania debate the construction of the natural gas pipeline from Mtwara to Dar es Salaam. (Photo: The Citizen TZ)

Communities displaced from their land by oil, gas, and mining projects need more than financial compensation. Recent projects and studies in Tanzania show why.

This post was co-authored by Dastan Kweka, Research and Policy Advisor for Oxfam Tanzania and Julie Kim, Program Officer for Extractive Industries at Oxfam America.

“If you merely compensate a poor person, you hurt them. They should be compensated and resettled” said Tanzania’s new Minister for Constitution and Legal Affairs, Professor Palamagamba Kabudi.

He is, arguably, the most trusted member of President Magufuli’s administration after overseeing the rapid passage of the surprising legislative package that changed the rules of the country’s extractives sector, and left investors reeling. And now he is tasked to lead tense negotiations with Acacia Mining (a subsidiary of Canada’s Barrick Gold) to resolve a highly controversial tax dispute.

In a recent speech, the minister shared a story. Several decades ago, he said, when the government acquired land to build the University of Dar es Salaam, a poor, elderly man was among those displaced, and who received cash compensation, as required by law. The cash he was given quickly dried up and without assets like land to fall back on, the man ended up worse off than before his land was taken. Nothing better describes the risk to poor people’s livelihoods from land grabs – even those with compensation – than this tragic story told by Tanzania’s most senior constitution and legal affairs official. The irony is that many Tanzanians are still facing the same tragedy today.

Tanzania’s economy is growing fast; and coupled with rapid population growth and the influx of large, land-based investments, the demand for – and conflict over – land has increased. Though protections for affected communities were built into the Land Act and Village Land Act of 1999, they have had limited impact, mainly due to low awareness among communities, corruption, and weak enforcement.  Not to mention, recent reforms to the mining and petroleum sector legislation references the least protective Land Acquisition Act of 1967 rather than the 1999 Land Acts.   And though the constitution guarantees the right to own property and provides for “fair and adequate” compensation in cases of expropriation, presidential powers in the Land Acquisition Act allow for land to be compulsorily acquired for ‘public interest,’ leaving citizens no option for redress. On top of that, the 1967 law favors monetary compensation and only includes land as an alternative, secondary option.

But as the minister acknowledges, monetary compensation alone is problematic. A recent study commissioned by Oxfam in Tanzania confirms this. The study examined the construction process of the Mtwara-Dar es Salaam natural gas pipeline and its impacts on land rights and livelihoods. The national oil company, Tanzania Petroleum Development Corporation, managed the land acquisition process for the 542-kilometer, $1.22 billion pipeline. From interviews with displaced community members, the study found that compensation payments were often inconsistent, delayed, and insufficient leaving many economically worse off.

Good international practice on land acquisition recommends land-for-land compensation and stresses that compensation alone is not enough. It must be supplemented with relocation assistance, and broader livelihood restoration activities to avoid further impoverishing affected communities.  The problem is that Tanzanian minimum compensation standards do not allow for this. What is the reason government officials give for why land-for-land compensation and livelihood restoration assistance is not offered?  To avoid ‘setting a precedent’ for other communities and causing delays to projects.  In this way, the government seems to be prioritizing commercial interests over the well-being of its people.

Another irony is that, other major oil and gas projects in Tanzania, such as the Mnazi Bay and Songo Songo projects, have used community compensation standards from the World Bank and IFC because they were donor financed and there was a concern that Tanzania’s legal framework would leave gaps. Project-specific resettlement policy frameworks like these are created to allow higher standards for compensation and resettlement, without changing the law.  At the same time, these project arrangements can also amount to some form of unintentional discrimination as citizens affected by external, donor-funded projects are treated differently from those affected by private or government-funded projects.

A couple of weeks ago, the presidents of Tanzania and Uganda laid the foundation stone for the construction of $3.5 billion crude oil export pipeline, known as the East Africa Crude Oil Pipeline (EACOP). Given the high cost and high profile of this project, international public financing may be involved and require a special project-specific framework for land acquisition and resettlement. But that is a woefully inadequate band aid on the larger, systemic problem of land rights in Tanzania. Rather than creating extralegal frameworks, it is time to upgrade the laws governing land acquisition and compensation to incorporate resettlement, land-for-land compensation, and a broader focus on livelihood restoration to ensure these projects do not leave people in deeper poverty.

At the ground-breaking ceremony for the EACOP pipeline, President Magufuli urged the project partners to “act with great speed and make sure you finish this project before 2020.” But fast-tracking the project without updating the legal framework will likely leave local communities at risk in the process.

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