Previously: Billionaires at play in the fields of the poor (part 5) Chinnakannan Sivasankaran

There is a great deal of buzz about Africa’s economic awakening, with some countries experiencing substantial growth in gross domestic product that is being driven by waves of foreign capital, as investors from Asia, Europe, North America, the Middle East and also Latin America descend on the continent. Many of the investors are after natural resources, mineral and oil riches and also farmland. This raises the question: is the foreign investment benefitting the continent or is it just another scramble for Africa, the last stage of colonialism? In this, the last of six articles on the issue, Joan Baxter profiles another of five billionaire investors in Sierra Leone, French national Vincent Bolloré and his complex investment portfolio in Africa. The article concludes the series by looking at how — even if — the wave of foreign investment in Sierra Leone benefits the country.

 Billionaire investors and prosperity for whom?

Not even 50 kilometres from the disputed land lease taken out by the Siva Group  in Kpaka Chiefdom in Sierra Leone’s Pujehun District, where angry youth leaders and local chiefs are denouncing their Paramount Chief for signing away their precious farmland, there is similar discontent and dis-accord over a land deal in the Malen Chiefdom. There, Socfin Agricultural Company (SL) Ltd, or SAC, has leased 6,575 hectares and converted more than half of that into monoculture oil palm plantation. It is now seeking to lease and plant an additional 5,500 hectares, for a total of 12,000.[i]

SAC is 85 percent owned by Socfinaf,[ii] part of the extremely complex Socfin [Société Financière des Caoutchoucs] Group, with its contact address[iii] in Luxembourg, a ”major” secrecy jurisdiction at the ”dirty” end of the spectrum. [iv] Thirty-nine percent of the shares of Socfin are held by the Bolloré Group,[v] of which the prominent French billionaire Vincent Bolloré is Chair and Chief Executive Officer. Although the Group is listed on the Paris stock exchange, the Bolloré family holds ”majority control of the company through a complex and indirect holding structure”.[vi] The major shareholders of SOCFIN SA are all very much associated with the Bolloré Group, as they are controlled by the Fabri or de Ribes families, who are intertwined in the various interconnected companies.

In addition to its interest in the Socfin lease and industrial oil palm plantation in Sierra Leone, in 2010, the Bolloré Group, through Bolloré Africa Logistics, acquired another valuable asset in the country when it signed a 20-year deal with the Government of Sierra Leone for control of the Freetown port.[vii] The World Bank facilitated and financed the privatization process and the deal with the Bolloré Group for both the National Commission for Privatisation in Sierra Leone, and the Bank-funded Infrastructure Development Project picked up the costs for dredging and upgrading the port facilities that were handed over to Bolloré Africa Logistics. [viii]

The Bolloré Group has interests all over the board and the map, in transport and logistics, energy, media and telecommunications. It has purchased many assets from African governments, which were put up for sale as part of privatization schemes prescribed for them by Structural Adjustment and Poverty Alleviation programs of the World Bank and International Monetary Fund (IMF). Today the Bolloré Group constitutes a veritable ”empire”,[ix] present in 92 countries around the world, 43 of them African.[x]

Bolloré, with a net worth of US$ 4 billion, ranked 329 on the 2013 Forbes List.[xi] He is well connected politically both in Africa and at home in France. In 2007 he hosted his ”close friend”, former French President Sarkozy, on his yacht for a post-election holiday off Malta.[xii]

Bolloré’s amiable relations do not always extend to those in the media and civil society that criticize the operations of Socfin subsidiaries; he has filed lawsuits against journalists for reports about the Group’s operations in Cameroon.[xiii] In Sierra Leone, the Socfin Agricultural Company sent a writ of summons to the small local NGO, Green Scenery, because of a press release it circulated about the company’s operations. In an “analysis”[xiv] by Socfin of a brief by the Oakland Institute on Socfin investment in Sierra Leone,[xv] an unidentified author warns that the Socfin group reserves the right to undertake legal action for defamation against the authors/publisher of the report.

The “analysis” denies the problems associated with its operations that have been documented by Green Scenery and a local association of affected landowners and land-users opposed to the company’s operations in Malen Chiefdom. But the police in Pujehun admit there has been serious tension in the area and there have also been arrests. In an interview in late 2012, Local Unit Commander in Puejhun District, Tamba R. Seddu, said, “We know people are dissatisfied about how the land was acquired, but they elected the Chief. They should go back to their Chief.”

Prosperity and profits for whom?

The purported benefits of such large foreign investments that their proponents nearly always cite include jobs they will create in countries where youth unemployment is extreme, and the revenues these will bring to cash-strapped governments. But how many jobs are really created, and do they outweigh the number of job losses when farming people lose their fertile lands and the negative environmental impacts of large-scale mining and agricultural operations? This is a question that has yet to be studied in depth, and no one has calculated how many self-employed farmers, fishermen and -women, traditional herbalists and hunters may have lost their income and livelihoods because of the destruction of farms and forest fallows for mining, industrial plantations and infrastructure.

A study of three agricultural investments [pdf] in Sierra Leone showed that to date the large agricultural investments may have harmed or eliminated more jobs and livelihoods than they created. Although they can fluctuate dramatically depending on the stage of operations, here are some figures on the number of Sierra Leoneans employed directly by five large foreign investors.

• OCTÉA (Koidu Mining) employed 992 Sierra Leoneans, or 91% of its 1,200 employees in Sierra Leone, as of March 2013 [xvi]
• African Minerals at its Tonkolili mine employed 850 Sierra Leoneans, or 85% of its 1,000 workforce, and claimed to have produced 4,000 jobs through sub-contractors, of whom only 65% or 2,600 are Sierra Leonean, as of May 2011[xvii]
• Addax Bioenergy employed 1,400 Sierra Leoneans as of 6 March 2013 (according to communication with Derek Higgo, Addax Bioenergy) [xviii]
• Sierra Leone Agriculture (Siva) employed approximately 600 men as of October 2012 (according to Siva representative December 2012)
• Socfin Agricultural Company (SL) Limited employed 1,938 Sierra Leoneans as of 18 October 2012 (according to Jean-Christophe Dienst, then General Manager, SAC)

So five corporate groups, all of which are headed by billionaires, directly employ somewhere around 6,000 people in a country of nearly 6 million. Many of those are jobs as menial labourers that bring in less than US$ 100 a month or US$ 1,200 a year, less than the average annual per capital income of US$ 1,400.

Nor does it appear that the government is getting much in the way of revenues from the investors. Possibly because of the generous tax holidays and fiscal incentives accorded foreign investors, in 2012, all taxes and other revenues received by the government of Sierra Leone accounted for just 13.8 % of the GDP in Sierra Leone, a very low percentage indeed, placing the country 197^th of 212 for the tax revenue and GDP ratios.

The International Monetary Fund has highlighted many disadvantages and risks of using tax incentives to attract foreign investors. They deprive impoverished governments of crucial tax revenue and they can also be non-transparent and outside the budget, resulting in “undesirable activities” such as rent-seeking and attracting “mainly footloose firms”.[xix]

When a group of countries attempt to draw investment with such incentives, they can also produce a “race to the bottom”. A recent study of tax incentives and exemptions in Tanzania found that the winners are “a small group of foreign investors” and the losers “are the general population and the country as a whole”.[xx]  There is no reason to believe that the same is not the case in Sierra Leone.

Sierra Leone remains an “extremely poor nation with tremendous inequality in income distribution”. It languishes near the very bottom of the United Nations list of least developed countries, with the third highest rate of maternal mortality on earth, dismal statistics on access to safe water and sanitation,[xxi] and ”dire” food insecurity and poverty.[xxii] But such statistics seem unlikely to improve if foreign investors are permitted to maximize profits and benefit from unwavering government protection.

Ernest Bai Koroma’s mantra for his second term in office as president of Sierra Leone is “Agenda for Prosperity”. Perhaps the question that needs to be asked is: prosperity and profits for whom?