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November 24, 2008

Daewoo's Madagascar land investment deal promises jobs, but at what price?

by Billy Head

    Dawn near Antananarivo, and in the first light the red hills slowly took shape. Rice fields stretched into the distance, where half-lit figures were arched over their crop. This land feeds 4 million people around the capital of Madagascar, but down in his red-brick house, vegetable farmer André Rakatobe had two concerns: that his children were late for school and that South Koreans were poised to become his country's biggest farm tenant.

    "It's just too sad," he said, staring at his feet. Land rights are a sensitive topic in Madagascar, as in much of post-colonial Africa. "My worry is leasing land today could lead to its eventual sale."

    His response hinted at rural concern in this vast country of the precedent being set by South Korea's Daewoo Logistics, which announced last week it had secured a 99-year lease of land, largely for planting corn in Madagascar's remote west. With a likely spend of $6bn (£4bn) over 25 years according to Daewoo officials, the venture is said to be the biggest of its kind in the world.

    Though the Madagascar government says the deal is not yet sealed, it could signal a turning point in the country's development. Madagascar is the world's fourth largest island but like many African countries, it lacks the capital and technical expertise to harness natural resources. And herein, officials say, lies the project's chief benefit. It will also create jobs - 70,000 of them according to South Korean projections.

    But the Daewoo concession, amounting to as much as 1.3m hectares, would eat up an area of arable land half the size of Belgium. Much of Madagascar is arid. Food crises have hit the desert south three times in five years, often hampered by a cyclone season affecting points of access from the north. Crucially, the South Koreans have indicated that they want to ship their output back home for their own domestic market, which is overdependent on imports.

    Officials in Antananarivo insist they will be able to keep some of the new supplies within the country, enabling them to build up a reserve of produce for drought or famine. "We're very excited because we're frightened by this food crisis," said Eric Beantanana, a spokesman at the Madagascar Economic Development Board. According to one rural landowner, the development of a large-scale crop production would make "all the difference" to a country with no meaningful state food reserves.

    There are some doubts about the Malagasy people's taste for corn. While the plant is a central part of the South Korean diet, used for the production of syrups flavouring meat, the dominance of rice in Madagascar is deep-rooted and may prove hard to break.

    The other attraction to the Malagasy government is that revenue from corn produce and land rental would be channelled back into developing regional economies, the minister of land reform, Marius Ratolojanahar, explained - particularly for infrastructure. With floods affecting the main road between western cities Morondava and Mahajanga, parts of western Madagascar are inaccessible for several months a year, he said.

    Madagascar's separation from the rest of the world for 100m years has meant a unique natural history - 80% of the island's plants and animals are unique - and some environmentalists have voiced concern about the potential damage from the large-scale farming project and the impact upon western Madagascar's Sakalava cattle-herders.

    The Guardian

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