Are foreign direct investments affecting property rights in EA?

Yes, they are. Whether or not it is for the mutual benefit of partners, is another question of moot.

Property and the right to property have been previously discussed in various articles. Because it is not only material but the power to own an asset, property will continue dominating many debates on the continent. More so, it will accelerate several conflicts.

Most valuable assets like land do not increase in portion but value. This value is the cause for ownership and the profit-sharing ventures like foreign direct investments.

Recently, media reported a conflict between an Indian (investor) and settlers claiming bonafide occupancy. The reason: forced eviction from the land and destruction of crops belonging to the settlers. The Indian defended his actions saying that he had honestly bought the land from its previous owners. The settlers retaliated, alleging the sale had been fraudulent and that any compensation given to them had been lesser than market value for their portions.

One thing stood out, though. The Indian purchased the property at an agreed price from the legitimate previous owner. He recognized there were settlers and not occupants on the land. And even though the settlers had semi-permanent structures, he made fair compensatory terms with them. From an observer’s position, that seemed fair until the talk of a court order barring the Indian from displacing the settlers was unearthed.

This incident and many others pose the question on how the state handles foreign investments vis a vis property rights for its people.

Foreign Investments

These are creatures of international law. The host state often has intangible assets it transfers to another state to mutually foster and benefit both states under an agreeable system of control of those assets. Of many assets, plantations, manufacturing plants and vast lands attract such relations.

Unfortunately, in the eyes of nationals, these usually look like gifts at the expense of the ordinary citizen.

China and India dominate the industry, especially in East Africa. (See the Standard Gauge Railway and most manufacturing companies). They are better examples of Foreign Direct Investments (FDI).

This scheme faces a challenge of shrewd multi-national and transnational corporations scrambling for reserved natural resources like wetlands, gazetted forests and public lands which otherwise would have catered for settlers’/occupants’ habitat problems.

It dictates that certain standards of corporation be exhibited to foreign investors. The Barcelona Traction, Light and Power Company Limited (New Application, 1962) Belgium versus Spain ICJ GL No.50 [1970] ICJ R1 reiterates this principle. In that case, ‘taking land from a foreigner’ was the issue. Today, a foreigner is entitled to protection, also accorded to his/her property he purchases in the host country, from his host first, but mostly from his own country representative (read Diplomatic mission). Many foreign investors acquire leases on property and because their presence is protected by international relations, they enjoy the immunity that tags along.

Due to limited knowledge on such foreign relations, ordinary citizens may misinterpret government decisions. Sometimes governments are at fault. They disseminate little information, at times only in the official language. A local living in a remote area where his interests will be affected, fails to digest the rationale for such relations.

When the decisions touch on assets like land or a natural resource benefitting locals, miscommunication triggers resistance. In other instances, government policy on compulsory acquisition of a local’s property for a foreign direct investment accelerates the resistance.

The question of actual ownership

 Following the British colonial government policy of ‘divide and rule’ that birthed preference over tribe and class, a lot of displacement occurred.

In Uganda alone, four land tenures emerged: mailo, leasehold, freehold and customary. Different regions kept different properties in any tenure. Noteworthy was the ‘gifting’ of land in other kingdoms (already owned) to collaborators from the central region/Buganda kingdom. It is recorded that people like Semei Kakungulu, a muganda was given large tracts of land in the eastern Gishu region. Other beneficiaries of this unfair colonial system are also recorded in several books inked with Uganda’s history.

The system much alive in Buganda at the time was the mailo tenure. It credited the king more interest in the land, eventually actual ownership. That is why the area experienced mailo and private mailo tendencies, the latter for the ordinary citizen who acquired it after special attention from the king or colonial government. The value of private mailo land is higher than other mailo land because the purchaser gets a freehold title free from kingdom interference. What the purchaser must do to secure his title is to pay 10% of the purchase price to the land owner to acquire a private mailo freehold title. These and many other issues will be addressed by the government when many people yet to be affected find reason in Mr. Mabirizi’s suit (read ‘Subject versus King’)

Today, the issue about absentee landlords who actually own land gifted to them but originally belonging to locals is causing conflicts. Also, history reveals that most of these lands were mere ‘gifts’. So, why should an original owner’s kinsman pay land tax to an absentee landlord who did not own the land in the first place!

Without addressing the disparities, government introduced digitalization of land titles and ownership. This exercise and more increased the value of land and other assets and resources. Coupled with settlements of landless and refugee groups of people, Uganda clearly lost control of much of the several public lands, gazette forests and assets.

Namanve forest, a man made forest and Mabira forest, the former pride of Uganda’s natural forest reserve are almost extinct. Illegal land occupation and ownership of titles on public property has escalated clashes between settlers and government. Gifting some of the land to foreign investors, as well.

Uganda is not alone.

Kenya experienced such isolated clashes throughout 1990s. (See The Akiwumi Report into Tribal Clashes in Kenya in 1991-1998 (Nairobi: The Government Printer, 1999).

In as much as non-citizens cannot own land for more than 99years, they certainly can own it in large tracts for the acceptable period.

Furthermore, the current political situation seems to favor corporations in both countries as is with the European Convention on Human Rights unlike the African Charter of Human & Peoples’ Rights which guarantees communal claims to land ownership.

In foreign direct investments, the element of ‘alien’ fosters a lot of caution.  Aliens generally incorporate businesses, build manufacturing industries, distribute products, compete with local (sometimes poorly run and funded) enterprises etc. in host countries.

But frequently the holding companies are situated in home countries, making it difficult to estimate tax returns for the benefit of the host state, if undeclared.

Often, some ventures are abandoned midway after host states have injected a lot of time and money and effort. In most cases, displacing locals after compulsory acquisition.

World Bank and IMF policies encourage and fund large scale economic activities among members. Such policies are for government to discern and act favorably for citizens. But living in a capitalist economy does not favor citizens. It favors the institution, state and policy, arguably in that order.


The work of foreign direct investments is a draft. Because such relations disrupt the order of societies, they ought to be addressed in light of respect to the differences each society holds. Certain policies will definitely stir resistance and mistrust between states and nationals because the former sub-consciously or consciously denies the latter audience.

FDIs can be profitable once foreign investors and states understand and learn that whichever results, the locals influence the modus operandi for the outcome of the investments. Mere dictatorship over what locals need will only yield resistance and in the long run, create failed ventures. The governments eventually become unpopular.


This article appears in our weekly digital law magazine, The Deuteronomy Vol 1, Issue 1 of 6th January 2017

To receive The Deuteronomy in real time, click HERE

The law permits sharing.

Leave a Reply

Your email address will not be published. Required fields are marked *