Addax’ transparent approach in realizing their bioenergy project in Sierra Leone is an example of a programme that enables the locals to benefit from it in more than one way. ‘We achieved real buy-in from the people. The project wasn’t imposed on them but co-defined.’
The Addax Bioenergy project covers some 14,000 hectares of mostly unused land near Makeni, Sierra Leone, and includes the development of a Greenfield sugarcane plantation, the construction of an ethanol refinery and a biomass-fuelled power plant. It will produce 90,000m3 of ethanol and 30MW of renewable power each year. Approximately 50% of the energy produced will be supplied to the national grid. Total investment is €267 million; FMO and the Emerging Africa Infrastructure Fund acted as co-lead arrangers for the debt financing of around €142 million.
Obviously, a project of this scale requires careful preparation. Addax Bioenergy’s approach was exceptionally thorough. According to Sierra Leone’s Environmental Protection Agency and local NGOs, it was one of the most extensive and transparent dialogue and consultation processes ever carried out in the country. Nikolai Germann, Managing Director of Addax Bioenergy S.A.: ‘At the very beginning, even baseline data on the project area such as population and income levels was unavailable. So we decided to gather it ourselves, firsthand. We sent in several teams of social and environmental experts to provide us with reliable information on socio-economic dynamics and potential obstacles.’
Gathering facts locally helped Addax Bioenergy to fine-tune the project during the design phase and minimize potentially negative aspects. ‘Our irrigation system is a good example. It sub-divides the sugarcane plantation into over 150 individual fields. This gives us the flexibility to stay clear of bio-diverse areas such as forests and wetlands, minimize economic displacement and avoid physical displacement of populations all together,’ Nikolai Germann explains.
The company purposely adopted a ‘bottom-up’ approach, speaking first to villagers, then to their traditional authorities, to local government and finally to the central government. Nikolai Germann believes this was key to the project’s success: ‘We achieved real buy-in from the people. The project was not imposed on them but co-defined over a period of two to three years. In turn, the positive feedback from the local inhabitants helped convince lenders and their social consultants that the project had a realistic and positive development perspective for the Makeni community.’
Charting the land
Securing the official title to the land involved and making sure that traditional rights of tenure were respected was an important phase in the preparations. ‘One of the challenges we encountered was that land is held in clan-like structures but the property borders are not officially registered,’ Nikolai Germann says. ‘We decided to go the extra mile and chart the lands together with the communities. This helped us to calculate compensation payments and rent fairly and correctly. In order to safeguard traditional rights, we introduced an addition to the existing land law: an acknowledgment agreement. This is a direct agreement that recognizes traditional landowners’ rights to their lands.’ Negotiations with landowners and their traditional authorities were public and lasted many months. Here too Addax Bioenergy’s transparent approach was key in achieving results.
Farmer Development Programme
Food security for the community is one of the project’s top priorities. ‘We identified the lands that were being used for food production and worked around them in the infrastructure and field layout plans’, Nikolai Germann explains. ‘We also set up a Farmer Development Programme (FDP) which helps 2,000 farmers to increase their productivity by training and by access to mechanical equipment and ploughs. In addition, some 2,000 hectares of individual community fields are sown for rice production. This helps farmers to create a surplus which they can keep for their own use or sell to pay for healthcare and education.’ The FDP has proved a great success: the Sierra Leone ministry of agriculture, forestry and food security has ranked it as the biggest single private sector rice producer in the country.
The Addax Bioenergy power plant will provide renewable electricity for the ethanol refinery and supply energy for approximately 20% of Sierra Leone’s national grid. Emission levels are exceptionally low. Nikolai Germann adds: ‘Green harvesting methods and particle filters help us to keep air emissions to a minimum. An independent emissions study has shown CO2 savings in excess of 70% for the entire lifecycle. And we have submitted the project as a Clean Development Project under the UNFCC framework to earn carbon credits.’
Clearly, the project offers tangible benefits for the region and for Sierra Leone. Hopefully, its positive impact will radiate throughout the continent. ‘We are confident that our investment model can be replicated at other sites, in other African countries,’ Nikolai Germann concludes. ‘Our model brings together modern, productive agriculture, competitively priced renewable energy with proven climate benefits, a fair and transparent approach to the use of land and last but certainly not least, real development benefits for the local population. We hope other investors will be encouraged by our example and invest in this field which has so much potential to contribute to poverty reduction in Africa.’