Africa News blog

African business, politics and lifestyle

Selling Africa by the pound

January 13, 2009

The announcement by a U.S. investor that he has a deal to lease a swathe of South Sudan for farmland has again focused attention on foreigners trying to snap up African agricultural land.

A few months ago, South Korea’s Daweoo Logistics said it had secured rights to plant corn and palm oil in an even bigger patch of Madagascar – although local authorities said the deal was not done yet. Investors from Asia and the Gulf are looking elsewhere in Africa too.

Investor interest in farmland – not only in Africa – grew sharply after food prices shot to record highs last year. Although commodity prices have fallen since, there is still anticipation of long term demand growth once the world emerges from its current economic troubles.

Philippe Heilberg, chairman and CEO of New York-based investment firm Jarch Capital, told Reuters he saw ripe opportunity for decades in south Sudan’s Mayom county. The deal covers land nearly twice the size of the Indian Ocean island of Mauritius.

Land is being leased from General Paulino Matip Nhial, Deputy Commander-in-Chief of the Sudan People’s Liberation Army (SPLA) – the armed wing of the ruling Sudan People’s Liberation Movement (SPLM) in semi-autonomous South Sudan. Jarch Management is also buying an interest in a local company from Matip’s son.

But should Africa be handing out its land to foreign investors and will the local people and countries involved be the ones to benefit?

This commentary in the Financial Times made comparisons with the colonial grab for Africa’s resources and points out the damaging legacy that remains.

“There is a need for investment if the continent’s full agricultural potential is to be achieved. At a time of growing shortages, there is also an obvious need for African governments to prioritise domestic supplies. If the continent is to avoid repeating history, the big deals and speculation should come later,” it said.

Is it wise to discourage such investment, though, if investors are willing to bring big money to put the land to more efficient use than is currently the case? While some areas of Africa are densely populated and every scrap of ground is farmed, other hugely fertile areas are barely used.

Investors argue that they can bring jobs long term and will improve local infrastructure – perhaps more so than if they were taking land for less emotive mining or oil concessions – as well as increasing food supplies and foreign exchange earnings. Elsewhere in the world, mechanised agriculture and bigger farms have led to major productivity increases – although environmentalists argue they can cause damage too. Despite their best efforts, African governments have not always proven themselves the best at managing agricultural resources. Might Africa miss out on development that has helped fuel broader economic growth in countries such as Brazil?

Land ownership could also prove contentious. In the distant past, it was often held by communities as a whole or vested in traditional authorities. State officials now often have the greatest say. That opens the potential for official abuse of yet another valuable resource. Since governments can come and go unpredictably that also means an increase in risk for investors and can only be a further encouragement to cut costs for a quick return.

Heilberg said Jarch felt comfortable investing in Mayom and that the local politicians and population would be accepting of the investment.

“With risk, you have to look at risk and reward together – this is why we pick our areas very carefully,” he said.

So is major foreign investment in land a danger to Africa or is it an opportunity that the continent cannot afford to miss? Is there a way of making it work for everyone’s benefit? What do you think?

(Picture 1: A farmer cuts rice plants to sow at a paddy field in Ivory Coast, REUTERS/Luc Gnago)

(Picture 2: Boys carry sacks of weeds through fields of rice in Senegal. REUTERS/Normand Blouin)

Comments

If Africa is to ever feed itself it needs to graduate from subsistence farming to commercial food production. Investment from outside teaches locals, through farmer-to-farmer transfer of knowledge, the benefits of mechanisation, improved seed and fertilizer use. All this through example, and at no cost to anyone. Unlike the massive amounts of aid money wasted on projects that fall flat on their faces as soon as donor support ends. In any case these investors are leasing the land. When the lease expires it will be valuable farmland that remains in Africa, with the skills at hand to manage it.

Posted by Miodon | Report as abusive
 

Back to square one. Land ownership passing into the hands of foreigners again. We all know what that means.The foreigners, the masters, the Africans once again the underdogs who will benefit from the crumbs that fall from the table.Excellent!! Why don´t we sell the whole continent to the investors, so that they transform Africa into economic paradise, as well as transforming the Africans into second class citizens in their own country.Ending with private armies of the investors guarding their properties (remember Katanga?).Eventually the investors, will become a political force to reckon with,sure they can not allow an emerging populist(socialist) Government to try and spread the wealth around, can they? This is all an old familiar story. A hundred years from now the Africans will still be servants and labourers in this paradise.

Posted by Nanaama | Report as abusive
 

There is no easy solution to this dilemma but there are mutually beneficial and convenient compromises. China and India offer one of the better set of models whereby capital and technical domain knowledge from non-locals is coupled with labor, local knowledge and privilege from the locals. These two combine in a single entity where ownership reflects contributions. In much of Asia, it was and may still be required to have enterprises in certain sectors be majority owned by locals.

A question to ponder is “is this fair?”; “is the capital resource taking second priority to labor resource?” No, it is compensating for privilege like any other commercial transaction. How will this work for listed companies? China and other countries has public companies with dual-class shares limiting transfer of “local-only” stock.

There are a numerous variations. The end result should be that locals take a large leap on the knowledge ladder while benefiting from their efforts while foreign capital acquires enviable and “ripe opportunit[ies]” after waiting for decades.

Posted by PD | Report as abusive
 

Back to square one? It is of course desirable to retain all lands in the hands of the local people and if that means subsistance living out of choice okay. But don’t let the hate of others especially westerners hold back the opportunity for people if they want more opportunities.

Zim is an excellent example of getting rid of commercial farmers who were considered foreigners.

If one thinks only indigineous people should live and own the land then we have a lot of people who own land in NA to leave and return to Africa, Asia, Europe etc. Does this make sense – NO – Is Africa different ??

Posted by buffalojump | Report as abusive
 

As if the colonial exploitation was not enough, African leaders continue to be accomplices in the crime.Look at Congo with all its vast minerals.
King Leopald, and the rest of the west did nothing but exploit this country. We have people living next to and working in diamond and gold mines, yet live pauper lives. The proceeds find their way into pockets and accounts of the filthy rich in the west, who even promote wars in the region because they gain out of the instability there.
Can’t African leaders organize their own people to farm their land and reap the profits for their own children instead of selling the future of their countries to people who realy do not care for the future of their children.
I think the dreams of Patrice Lumumba (RIP), Kwameh Nkurumah(RIP), Haile Silasie (RIP) and Julius Nyerere (RIP) for a United Africa need to be revived. It is only when Africa will have one voice, one government, one economy,and one purpose that it will stop to be exploited even by its own corrupted leaders who only think of their own tummies and families.
Africa needs a new generation of leaders, those who think and look beyond today, beyond the food on their plates into the future. Those ready to sacrifice today for the sake of a better Africa tomorrow

Posted by Kakete John B | Report as abusive
 

Buffalojump, think of what you just said. The indigenous people of NA are not the whites at all. First it was the Native American peoples. Then the Protestants and other Christians came in and forcibly took the land as their own, and after that, took more land as ‘manifest destiny’ took hold. So in this case, yes, indigenous people should live and own their own land. And in that light, the American government and people are intruders on somebody else’s land. So I agree, with Nanaama, this feels all too much like colonialism, except instead of imperialism, governments asserting their powers over more property now its investing. Imperialism has become a private endeavor. Instead of minerals, this time, its the agricultural resources the African people are going to suffer for. This does not bode well at all.

Posted by JD | Report as abusive
 

We do not need foreigners in order to master commercial farming in Africa. Yes Zimbabwe had foreign settlers seizing African lands to develop highly successful cash crops, with lots of revenue, but what good did it do the indigenous people?They were practically squatters on the “foreigners property”. They remained poor, uneducated,without any rights,disenfranchised and victims of oppression under the rule of a minority white elite. South Africa, Angola, S.W. Africa were further examples.Commercial farming has been successfully carried out in Ghana, Ivory Coast, Nigeria etc for cocoa , palm, rubber and a few other products.Unfortunately, this has only been encouraged for cash crops for export by the colonial governments. There is a need to engage such large scale farming for the production of food for home consumption, and more importantly for their preservation and supply all the year round.Hopefully we shall not need to lease or sell our lands to achieve this goal.Land is the most precious human possession, then it is the source of life and the source of all wealth.

Posted by Nanaama | Report as abusive
 

Blame those African leaders and their supporters who benefit themselves from resources they sell for personal benefit.

Colonial rule has been gone for years. Until some African leaders serve the people and not themselves little will change and until blame for colonial times as a scapegoat is gone little will change.

I am an indiginous person who lives in a country which was also a colony but to relive and create a grievence mentality would only hold us back.

Move ahead if you continue to blame the wrongs of the past. Do what will benefit the people and not some of the corrupt leaders.

Their are many excellent African leaders, identify what they are doing right and implement those ideas and processes that are positive.

Posted by buffalojump | Report as abusive
 

To be able to engage in commercial farming, Africa does not need to “lease” its lands to foreigners.Commercial farming has been used successfully for the production of cash crops in many African countries, for example cocoa in Ghana, Ivory Coast and Nigeria. In addition to rubber plantations, palm plantations, cotton, etc. in Ghana Nigeria , Liberia and many other African countries.The problem here is that only the cash crops needed for export have been produced this way.Efforts need to be made to produce foodstuffs for home consumption on similar scale.More importantly the preservation of perishable foods and their wider distribution all year round will have to be included in the planning.Such efforts are already being made in Ghana, and no African nation need to give away any of its lands to foreigners for any reason whatsoever.

Posted by Nanaama | Report as abusive
 

I have been reading about 100′s of thousands of hectares being leased in Kenya. Kenya also just signed a deal where a Qatar company is building a massive complex at the Nairobi airport.

I would have to imagine that many of these deals involved a TON of corruption and even more payoffs. Who gave the General of South Sudan the authority to lease land?

Posted by tm | Report as abusive
 

I don,t know about Africa but from what i see a lot more can be done for the people there,my heart goes out to each and every family there and they will find peace one day and growth the same as us in the United States and we all have to believe that a change is coming.white.corliss@yahoo.com

 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •