Why foreigners should be allowed to buy agricultural land in Kenya
Policies on ownership of agricultural land vary from country to country. Some countries prohibit ownership of agricultural land by foreigners while others have an open door policy allowing foreigners to own agricultural land. For countries that restrict ownership of agricultural land by foreigners, the differential treatment is premised on the need to localize food security.
Kenya is one of the countries that restrict ownership of agricultural land by foreigners. Following the enactment of the 2010 Constitution, most of the then existing statutes dealing with land were repealed by the Land Act and the Land Registration Act, both enacted in 2012. However, this was not the case with the Land Control Act 1967 (Act).
The Act requires the Cabinet Secretary for land to establish a land control board (Board) for every land control area, which is usually a sub-county. Every transaction in agricultural land is subject to consent of the Board. Failure to obtain this consent renders the transaction void. The Act allows the Board to grant consent only in cases where the land is to be disposed to a citizen of Kenya, a private company or co-operative society all of whose members are citizens of Kenya, group representatives incorporated under the Land (Group Representatives) Act, 1968 or a state corporation within the meaning of the State Corporation Act, 1986. Effectively, this leaves out foreigners and foreign owned entities.
The Land Control Bill, 2022 (Bill) which is meant to repeal the Act was published in the Kenya Gazette in February 2022 and is currently pending at the National Assembly. The Bill proposes to establish land control committees to replace the Boards. The functions of the committees will largely mirror those of the Boards under the current law. The statement of objects and reasons for the Bill states that the establishment of the committees comprised of members from within the area that they serve is meant to enable the review of each proposed transaction in agricultural land to ensure proper utilization of the land.
Unfortunately, just like the Act, the Bill also prohibits the committees from granting consent for disposition of agricultural land to a foreigner or a foreign entity. If what has been achieved or not achieved through the current law is anything to go by, restricting ownership of agricultural land is not necessary.
Firstly, Kenyan law allows foreigners and foreign owned entities to own all other types of land, other than agricultural land, provided that such ownership is limited to a leasehold interest for up to 99 years. As a result, foreigners have owned land where they have undertaken projects of significant national importance such as power generation. If the Kenyan government wanted to localize the control of important sectors, the power sector could be localized as well. In this age, electricity is one of the most important utilities. Hospitals, factories, schools, research institutions, security installations and communication systems are highly dependent on electricity. It is unnecessary to apply double standards by allowing foreigners to invest in some important sectors, such as electricity generation, while prohibiting them from investing in others.
Secondly, while Kenya has had the restriction on ownership of agricultural land by foreigners since 1967, the country continues to grapple with perennial shortage of food. Consequently, Kenya imports agricultural products such as sugar and maize which could be produced locally. Fruits such as apples and grapes are also imported from countries such as Egypt and South Africa. It is safe to conclude that prohibiting foreigners from owning agricultural land in Kenya has not led to food security. Given the opportunity, foreign investors may contribute in turning around the agricultural sector as they may have the requisite capital and agricultural technology. This may contribute to food security and create jobs for Kenyans in the agricultural value chain. Moreover, Kenya could earn foreign exchange through export of agricultural commodities and enjoy a wider the tax base through taxation of the foreign investors and their local employees.
One of the options available to a foreigner who wishes to own agricultural land in Kenya is to get the Kenyan owner to procure change of use before transferring the land to the foreigner. This happens even where the foreigner is acquiring the land merely for speculative purposes. The practice continues to reduce the size of agricultural land in Kenya as more and more land is converted from agricultural to other uses to pave way for transfer to foreigners.
Significantly, the Constitution gives every person the right to own property of any description in any part of Kenya. The only restriction under the Constitution relates to tenure whereby foreigners are restricted from owning freehold land. In a recent case of Malindi Law Society & 12 others v Attorney General & 2 others, the High Court found section 47 of the Land Laws (Amendment) Act 2016 that sought to restrict ownership of land by foreigners in certain areas unconstitutional. It is arguable that the statutory provisions restricting foreigners from owning agricultural land are equally unconstitutional and may not stand if challenged in court.
Some of the land which is by law designated as agricultural is no longer used for agricultural purposes. Land in Nairobi satellite towns such as Ruiru and Juja in Kiambu, Kamulu, Joska and Malaa in Machakos and Ngong, Ongata Rongai, Kiserian and Kitengela in Kajiado is still designated as agricultural except where the owner has obtained a change of user. If the government does not consider it necessary to lift the restriction on ownership of agricultural land by foreigners, then it should consider rezoning so that areas which are no longer used for agricultural purposes are not designated as agricultural. This would make it easier for foreign investors to acquire the land for other investments.
It is high time Kenya adopts an approach that encourages investment in agricultural production, without necessarily restricting such investments to citizens. This can be achieved through government interventions such as provision of irrigation and transport infrastructure in rural areas, provision of extension services, provision of incentives to encourage value addition and lowering the cost of farm inputs to make agriculture a more profitable and attractive venture.
The article was published in the Business Daily on 24 April 2023.