Social capital and large scale land investments: An experimental investigation in Central Zambia

• The project was motivated by the unprecedented rise in large-scale agricultural investments (LSAIs) in rural Zambia, and addresses the debate of whether they should be regarded as a development opportunity, or a threat for development.
• The study collected information on the social capital of smallholder farmers living close to the LSAIs.
• Results show that social capital and willingness to compete is higher for smallholders living near LSAIs.
• We propose that land tenure insecurity and employment uncertainty should be reduced for smallholders to benefit from these benefits.

Communities with high levels of social capital tend to solve social dilemmas more easily and enjoy higher levels of economic growth and welfare. While social capital is an important driver of welfare, it is difficult to create and maintain.

Our project aims to advance the knowledge on the determinants of social capital in the context of rural Zambia. Nearly 70% of the population in rural Zambia is engaged in small scale subsistence agricultural activities. These smallholder farmers usually cultivate on plots of less than five hectares using rudimentary cultivation techniques and without formal land titles. Despite this, smallholders have been living peacefully in rural communities for generations. Their communities are governed under a system of customary land rights and informal institutions. Customary land systems often require high levels of social capital to ensure that plot boundaries are respected and that land is not expropriated by other community members.

Taking advantage of the recent large-scale land investments (LSAIs) in Central Zambia, our study collects information on the levels of social capital of smallholders residing in villages that are located close to these LSAIs. In recent years, LSAIs have been at the centre of a contentious debate that questions whether they should be regarded as a development opportunity, or a threat for development.

Results from our study reveal that smallholders in villages near LSAIs are more trusting than smallholders in control villages. There is more sharing of public goods in villages near LSAIs, and the increased levels of trust are driven by the communal coping strategies adopted by smallholders who are uncertain of the LSAIs’ intentions. We recommend that information on land rights and boundary demarcations, as well as the intentions of LSAIs, should be made available to smallholders to reduce uncertainty associated with the presence of LSAIs.

Moreover, we fine that smallholders who have worked on LSAIs display more trust and reciprocal behavior compared to those who have no such experience. Employee-employer interactions on the LSAI sites are likely to induce norms of reliability and fairness that are essential for building a good reputation and ensuring repeated mutual benefits. We suggest that government agencies should make sure that LSAIs provide standardised, easily understandable work contracts to all employees. These contracts are likely to foster fair and productive employer-employee relationships, thereby furthering positive benefits that arise from employment on LSAIs.