Oil Palm Concessions in Liberia
Introduction/Background:
Following a brutal 14-year civil war, in 2006 President Ellen Johnson Sirleaf was elected, becoming the first African female head of state. Because of the civil war, the vast majority of the country lived on less than $2 a day. The majority of Liberians (77%) worked in Agriculture, but many produced below a subsistence level, and 66% of the country’s food supply was imported. In an attempt to bring prosperity to the country, President Sirleaf sought to bring in foreign investment. She joined three neighboring countries in signing a deal with Malaysian palm oil company Sime Darby to develop 220,000 hectares of land between them into plantations. Regions where land was being sold in Liberia comprised 45% of Liberia’s territory and encompassed the homes of 40% of the country’s population. The deal cost Sime Darby $3.1 billion and the company pledged to finance the building of schools, clinics and infrastructure in addition to the creation of 30,000 jobs.
Challenges:
Quickly, the deal turned south when local residents affected by the land concessions began to speak up. There had been little consultation with the affected communities and many felt that the government had overlooked them in signing the deal. Residents could no longer engage in traditional techniques of crop rotation and few could afford fertilizer as a replacement. While Sime Darby had agreed to leave certain areas free for local cultivation, these were often narrow strips, less than 50 meters wide.
Solutions:
In 2011, the EPA fined Sime Darby $50,000 for damaging some riparian zones. Following riots in Senii Town that same year, a task force was created to address the situation. After nearly a year, to the protest of Sirleaf’s government, the task force ordered a moratorium on Sime Darby’s developments.
Sime Darby continued to fight government/international regulation, but after nearly a decade of navigating the red tape, the company sold its holdings to a local manufacturer and divested from Liberia.
Impact:
While the specifics of Sime Darby’s involvement in Liberian palm oil production ended up causing harm on small, local communities, the company’s exit from the country had a massive negative impact on the national economy. Because of the general lack of foreign investment within Liberia, many residents are unable to participate in the global economy, trapping them within Liberia’s circle of poverty. That being said, the company’s exit from the region was a massive win for local rights groups who established their power to disrupt industry that harms their communities.
Lessons Learned:
The sentiment behind the Sime Darby deal is undoubtedly good for the Liberian economy. Any country emerging from a decades long war will have difficulty convincing foreign corporations to invest in its natural resources. Had the deal been negotiated in a more conscious way which considered the needs of local communities, it could have been incredibly beneficial. The most important thing that can be learned from this case study is the importance of consulting all stakeholders in a large economic project such as this one. By underestimating the strength of local communities to disrupt the deal, the government set it up for failure. Had they brought local leaders into the initial negotiations, perhaps a deal that would have worked for everyone could have been organized.
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