Monday, October 25, 2010

Putting Foreign Investors Above Nationals

Last year, I wrote about the long-term leasing of African land by governments who brought in foreign investors to cultivate agricultural land for the benefit of foreign citizens at the expense of locals. In the wake of global food price increases, these foreign investors are protecting the interests of their people through “agricultural outsourcing” schemes, but the African governments leasing their land expect that there will be benefits produced by these deals that aren’t as apparent to their countrymen.

The procurement of African land by foreigners isn’t new, of course. The European colonial powers appropriated entire countries in the 19th century. African economies were programmed to produce basic products for the colonial powers. The Industrial Revolution passed Africa by because Great Britain, France, Belgium, Portugal, Germany and Spain had no interest in enabling their colonies to produce their own value-added products, especially in agriculture.

The 2008 world food price rise – reaching the highest levels since the 1970s – led many nations unable to grow sufficient food to look for avenues to provide for their own food needs. Certainly, there were African governments who also feared being unable to produce sufficient food. Nigeria and Zambia brought in displaced white Zimbabwean farmers and their production skills, but many other African governments evidently felt they needed outside expertise. It would seem that making a deal to let outsiders produce food for their own market was acceptable to African governments because of the portion to be provided for African markets and the anticipated infrastructure improvements that would result. According to the Oakland Institute, which produced a report on the global land grab crisis, 50 million hectares of African land have been leased to foreign investors.

Unfortunately, those assumptions fail to allow for capacity building for African farmers and exclude local investors from buying and cultivating land in their own country. A case in point is the Government of Ethiopia, which is in the midst of a massive leasing of its agricultural lands to foreign interests. According to the Indian Ocean Newsletter, about 600,000 hectares of Ethiopian land (approximately 1.48 million acres) has been leased to foreign investors and the plan is to lease more than three million hectares of Ethiopian land by 2013.

The newsletter states that the land, largely in the southwestern Gambella region, was listed as wasteland, but it was useful to the Anuaks who live there. The Anuaks have been at odds with the Government of Ethiopia for some time. In December 2003, 424 Anuaks were killed in Gambella by government security forces. There almost no accountability of the government forces involved in what was described as a massacre. Actually, over the subsequent two years there were allegations of government extrajudicial killings, rape, imprisonment and disappearances. According to Anuak sources, more than 1,000 Anuaks were killed during this period.

Now it seems that Anuaks are being targeted again as they are reportedly being moved off their lands so they can be leased to foreign interests. Karuturi Global Ltd., the largest Indian company operating in Ethiopia, reportedly is negotiating the lease of 300,000 hectares of land in Gambella to grow corn, palm oil, sugar cane, etc. Saudi magnate Mohamed Hussein Al Amoudi has sold the Ethiopian government on a plan to produce cereal s such as rice to minimize imports. His company, Saudi Star Agricultural Development wants to cultivate half a million hectares of Ethiopian land within the next ten years.

The Indian Ocean Newsletter reports that the government in Addis Ababa has withdrawn from regional governments the right of conveying leases of more than 1,000 hectares. Ostensibly, this is to address the problem of corruption, but it also happens to take away any local involvement in the allocations of land. Meanwhile, Anuaks are being moved off their lands to other areas, and arrests of those who oppose these leasing arrangements reportedly have started.

As the Oakland Institute points out in its report, Africa needs investment in agriculture, such as better seeds and other inputs, extension services, education on conservation techniques and the enhancement of farming techniques generally. However, what Ethiopia and other African countries are doing is bypassing the African farmer in favor of foreign farmers operating on plantations. In the short run, production will certainly increase, and unless the deals are completely one-sided, African governments surely will receive agricultural products and likely enhanced infrastructure. However, the people of these countries will be bystanders in this process and will not develop better skills at growing food for their own families or for their countrymen and neighbors in surrounding countries.

Unless African governments insist on the employment of African farmers and allow Africans the opportunity to buy the land they would lease, the largest share of the benefits from these deals will be enjoyed by foreigners. That is a very short-sighted plan on how to develop one’s country.

When the colonial powers seized African lands in the 19th century, they did so at the barrel of a gun, often through divide and conquer strategies. This time, African governments are voluntarily signing away their land and the future of their people. The world’s hungriest continent will rue the day that it turned over its agricultural production to outsiders whose main interest is in producing food for their own people.

What will these leasing governments do during the term of these 50-year or 99-year leases when their foreign partners are unwilling or unable to provide the amount of agricultural products due to a slumping global economy or another food price spike?

1 comment:

  1. This is such an indepth article.
    I don't think encouraging foreign investment at the cost of locals is the way to go. If the government feels of African countries feel they are not capable of fulfilling their growing food demands, they should seek help how to be more productive rather than allowing foreign investors overtake them.
    Foreign investors