The perennial food shortage that has plagued Kenya has not shown signs of abating. This critically calls for a more visionary approach from the government. The recent crises in food and commodity markets worldwide are necessitating investments in agricultural land. This represents an opportunity for Africa generally and Kenya in particular, with the large reserves of arable land available.
Some level of protection is necessary to assist farmers who have less bargaining power reap the rewards of such investments. These investments promise to bring with them access to capital, technology and foreign markets. However, an enabling legal and institutional framework is vital to bolster the investments. It is against this backdrop that we undertake a review of the proposed Land Control Bill of 2022. This bill has undergone a first reading before the legislature.
What the Law Says
Table of Contents
The Land Control Bill, 2022
This bill proposes to repeal the existing Land Control Act (Cap 302).
The Land Control Act is the existing legislation that regulates dealings in agricultural land in Kenya. The definition of Agricultural land under the existing Land Control Act (Cap 302, Laws of Kenya) includes land that is not within;
(i) a municipality or a township
(ii) an area which was, on or at any time after the 1st July 1952, a township or a trading center
(iv) a market as well as land declared by the Minister, by notice in the Gazette.
From the definition alone, we note that the statute is archaic.
The Land Control Bill, 2022 retains the definition of agricultural land as an area that is not designated as a city or urban area under the Urban Areas and Cities Act, 2011. Additionally, the Cabinet Secretary can declare land to be agricultural land by notice in the Gazette.
It however extends the definition to include land used for agricultural purposes. However, the exact definition of what exactly constitutes agricultural purposes is not available.
The categorization of land as agricultural land holds legal significance, as any dealing with such land requires the consent of the Land Control Board (LCB) in the area where the property is located. For instance, agricultural lands in Kwale, Kilifi, and upcountry areas in such zones.
The Existing Legislation
The existing legislation covers every manner of dealing with Agricultural Land. In essence, the sale, transfer, lease, mortgage, exchange, partition or other disposal of, subdivision or dealing with any agricultural land by individuals and the sale, mortgage disposal of shares by a private company owning Agricultural Land is void unless LCB is issued. The President is however empowered to exempt transactions or persons or lands from the ambit of the Act. The Land Control Bill proposes to empower the Cabinet Secretary in charge of the Ministry of Lands and Physical Planning to be issuing exemption in place of the President.
Under Sections 6(1) and 2 of the Land Control Act, LCB consent must be issued in accordance with the provisions of the Land Control Act.
Section 9 of the Land Control Act prescribes the considerations that the LCB must take into account when deciding whether to grant or refuse consent. The LCB is only empowered to issue consent where the counterparty to the relevant transaction relating to sale, transfer, lease, exchange or partition of Agricultural land is a Kenyan citizen, a wholly owned Kenyan company, or a state corporation. This completely bars foreign nationals from dealing in Agricultural land. The Land Control Bill preserves this prohibition.
Apart from a few surface changes such as:
- establishment of Land Control Committees in each constituency to replace the current Land Control Boards; and
- introducing a 30-day period within which one may process and obtain consent for a controlled transaction.
There is little sign of great change or vision in the proposed Bill.
In Conclusion,
In the current economic climate, there are private equity funds seeking to invest in agriculture in Africa. Developed countries have capital but no land to invest in. It seems short-sighted to block all access to agricultural land when a lot of the population seems to be moving away from agriculture. Most of the population is now seeking formal employment in cities. The governments should be reviewing existing laws so that they allow access to agricultural land by foreign investors. This will ensure that the livelihoods of rural peasants should remain safeguarded. The government must ensure that it does not undermine local access to land and natural resources. It should also prevent environmental degradation, and avoid prejudicing local production for consumption by the Kenyan public. The Kenyan government should therefore be more of a regulator to keep investors in check as opposed to gatekeeping.
Whereas investors would prefer to either own or lease arable land the legislation, however, does not allow this. It also does not allow a foreign entity or national to own shares in a company dealing in agricultural land. Where the government creates an enabling environment for foreign investment in agriculture, properly crafted contracts can accurately protect land rights (of the Kenyans) and land investment (of foreign investors).
Are you are looking to purchase a property in Kenya? Please reach out to Divinah Ongaki (d.ongaki@agema-analysts.com ) or Elizabeth Omol (e.omol@agema-analysts.com) for more specific advice.
The author is Divinah Ongaki, Managing Partner at Agema Analysts-Mombasa Office. Divinah is an Advocate of the High Court of Kenya, has been practicing law for over seven years in Kenya. Divinah has worked for the best firms and as an in-house counsel for some of the best companies in Kenya. Her expertise spans various practice groups under Kenyan law such as real estate and finance, corporate law & M&A, IP law and Labour Law.
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