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May 23, 2011

Why the reports of Bangladesh farming mega deals in Africa sound strange

by Chido Makunike

One of the most intensely discussed international economic phenomena in recent years is that of companies from across the globe coming to farm crops for their home markets in Africa.

Opinions about this trend span the ideological spectrum. Doubters and outright opponents seem to have the loudest voices, but this has not discouraged foreign investors who see Africa as the next big farming frontier, nor accommodative African governments hoping these deals will kick-start their moribund agricultural sectors and spur broader-based overall economic development.

The latest reported deal-of-the-month are plans by Bangladesh investors to lease land for a similar purpose in a number of African countries. Very little is known about the claimed Bangladesh farming deals, an opacity common to these arrangements and one of their most criticized aspects. What little has come out in news reports has almost all been from the Bangladeshi entities reportedly involved, with no word yet from the African partners.

But even the little bit that has been leaked out is disturbing, from one African's perspectives. This is not because of any blanket opposition to such deals, but because how they are structured and announced greatly influences how they are perceived and how they are likely to work (or not work.) If the early reports are anything to go by, the Bangladeshi deals already incorporate many elements that suggest they are being done in a way likely to engender fierce resentment and opposition in the African countries concerned.

In 2010 South Korean conglomerate Daewoo negotiated an agreement to farm a huge percentage of the landmass of the island-nation of Madagascar to grow maize for export back to Korea. The controversial nature of the proposed deal and of how it was announced killed it before it could get off the ground. A similar clue-lessness informs the latest reported Bangladeshi deals.

The latest farming deals are all being reported from the Bangladeshi side, with an almost we-can't-believe-we-have-negotiated-such-good-deals breathlessness. There has been no word heard at all so far from the governments of Uganda and Tanzania, two of the countries named as willing, even eager to lease tens of thousands of hectares to Bangladeshi companies.

According to an early BBC report:

''Two Bangladeshi companies have already signed deals to lease unused cultivable land in Uganda, Tanzania and Gambia. Another agreement to lease around 30,000 hectares for 99 years will be signed with the Tanzanian government later this week.

Officials say African countries have huge amounts of unused cultivable land. At the same time they say that Bangladesh has the manpower and expertise to produce staple crops all year round.

Under the plans, the Contract Farming System will enable Bangladeshi companies to get at least 60% of the produce. In return Bangladesh will train African farmers in rain-fed rice cultivation, seed conservation and irrigation.
If these reports are true, why are the African governments concerned being so coy about them? Why have they not seen it fit to announce to their citizens plans to lease to foreigners such large pieces of land, even if it is really 'unused cultivable land,' a claim that may yet be contested, if previous such deals elsewhere are anything to go by?

The fact that deals of such huge political, social and economic import are announced to the world by the private foreign partners, rather than by the host governments to their citizens, is an inauspicious start. It suggests (a) an unseemly, politically insensitive, over-eager naivete on the part of the foreign investors, and (b) an aloof disrespect for their citizens by the African governments concerned.

Neither is a good sign.

The foreign investors would be expected to have done their research enough to know that hopes of jobs and other benefits in the host country will inevitably be mixed with resentment against foreigners being the overlords on large pieces of prime agricultural land. Even if the land is really 'un-utilized;' in any poor country (including Bangladesh!) issues to do with land holding have intersecting cultural, economic, historical, political and other implications that require the foreigner to tread carefully and sensitively.

Being seen to be ahead of the host governments is not the way to do this. Even if all other aspects of the deals have been carefully taken into account to avoid local opposition, for the foreigners to appear to be leading the host governments is a public relations mistake that may well invite automatic local resistance and charges of 'neo-colonialism' in a part of the world where there is particular sensitivity to it. This would be ironic, given Bangladesh's own recent history as a British colony as part of pre-independence Pakistan.              

On the other hand, it is entirely legitimate to ask why the governments of Tanzania and Uganda are not the ones to have announced these deals and their details. Apart from the aforementioned aloofness-to-the-citizenry that this suggests (''Our job is to rule you, the details of how we do so are none of your business''), it also suggests a certain passivity in regards to the foreign private investors. On both counts, this is more likely to invite local popular opposition to the deals than to have them be welcomed.

Furthermore, 'Uganda keen to lease farmland to Bangladesh,' the heading of a Reuters story, almost makes it sound not like a proposed win-win deal for the two countries, but like one in which Uganda is desperately pleading for Bangladesh to come and do it the 'favour' of leasing its farmland! Unless the Bangladeshis are bringing some yet undefined special farming attributes, one can't help wonder why the Ugandan government is not as 'keen to lease farmland' Ugandans, as it is reported to be keen to do to Bangladesh.     

South Korea is a rich, technologically-sophisticated country that was assumed would bring all the lessons of its rapid economic ascendance to bear on its agro-investments in Madagascar if that deal had not fallen through. Saudi Arabia is not widely thought of as a farming powerhouse, but it no doubt has the capital to recruit the best know-how and technology for its foreign farming forays.

Bangladesh, on the other hand, is a country not economically much better off than Tanzania and Uganda. This is not to suggest it has nothing to teach those countries, but it is relevant to ask what special competencies it is offering in return for what its companies are getting. In terms of access to capital, technology or general farming know-how, what do the Bangladeshi investing companies in Tanzania, Uganda and Gambia have that locals can't access on their own or with their governments?        

Farming in densely-populated Bangladesh is mostly small-scale and subsistence, like most farming in Africa. So there is not a national tradition of large-scale intensive farming that these investors can be automatically presumed to be bringing to Tanzania and Uganda.

Flood-prone Bangladesh is ideal for successful farming of rice even by smallholders. What special skills will the Bangladeshi investors bring to the very different rice-growing environments of Gambia, Tanzania and Uganda? If these countries need particular foreign rice-growing expertise, might they not be better advised to seek it from the closer agro-environmental successes of Senegal at growing rain and irrigation-fed rice, in the process making giant strides towards rice self-sufficiency?

If, as the BBC reported, In return (for a Contract farming system in which 60% of the produce will go to the Bangladeshi companies) Bangladesh will train African farmers in rain-fed rice cultivation, seed conservation and irrigation, one can't help asking if the lack of  such 'training' is the limitation in the target countries, or if it is instead the lack of resources. In Gambia, Uganda and Tanzania, are lack of local know-how in 'rain-fed rice cultivation, seed conservation and irrigation' the main problems in those countries' rice sectors, or is it lack of the means of poor subsistence farmers to implement what they know?

If it is the former, then indeed the 'training' of these aspects of the Bangladeshi investors might help. If, on the other hand, it is the latter, the lack of resources, then the foreign 'training' will be a waste of time, unless the Bangladeshi investors augment it with the missing resources.            

One must trust that the governments concerned have asked all these questions and more, and answered them satisfactorily. But even if so, not sharing the thinking involved in arriving at those satisfactory answers with their citizens does not bode well for how those citizens are likely to perceive the 'gift' of Bangladeshi farming expertise.       

So far these points address issues of how these deals are perceived, and how that may in turn affect how they are received by host country populations. But the little bit of information that has leaked out about the actual terms of the deals is cause for even more unease.

Perhaps the main 'competitive advantage' over host-country locals that the Bangladeshi investors have mobilized is international capital for their farming operations which Gambians, Ugandans and Tanzanians are not readily able to do. This was part of the stated appeal of the doomed South Korean investment in Madagascar; and of those from Saudi Arabia, India and other nations recently active in African land lease deals.

Alas, a report on what Bhati Bangla Agritech hopes to wrangle out of the Tanzanian government is far from encouraging in this regard. Speaking from Tanzania to a Bangladeshi publication, the company's CEO was quoted as saying he would like to sign an initial 30, 000 hectare lease for 99 years, but ''had a plan to have 2.0 to 2.5 million hectares of land in Tanzania for cultivation.''

 ''I discussed 18 major points to be included in the deal (with the government)," the CEO is quoted as saying. "I want to incorporate protection of investment, personnel and establishments, and immunities and privileges of investors in the deal," Mizan pointed out. "I also discussed other major issues, including permission to grow any crop, procurement of farmers and seed from any country, repatriation of profit, and provision of loans," the Bhatibangla official said.

Perhaps it is more the fault of the reporter who wrote the article (or the cynicism of the reader) but this doesn't sound like a foreign private company official negotiating with the government of a country where he is seeking to do business. It sounds more like a conquering general dictating the terms of surrender to a vanquished army!         

Furthermore, in outlining the terms he expects to get from the Tanzanian government, he reveals that the 'deal' would actually have a built-in absence of many of the 'advantages' that are touted as being potential benefits for locals in such deals.

'Permission to grow any crop,' instead of one for which the company has proven competence (experience, know-how, capital, market, etc) potentially means license to upset many delicate local agricultural sectors. It is to potentially have carte blanche to cause more problems than bring benefits from the 'investment.'

'Procurement of farmers from any country' should be a red flag for any African country. With one of the world's highest populations densities, there will be no shortage of Bangladeshis eager to go and be bosses in Tanzania, but Africa has no shortage of manpower. 'Procurement of farmers from any country' sounds suspiciously different from 'procurement of needed technical skills absent in Tanzania from any country.'

Perhaps most disconcertingly, the 'investor' expects 'provision of loans' by the host country! This may not be new or particularly unusual, but taken together with all the other conditions the investor is obviously expecting from the Tanzanian government, there is already enough information this early on to cause one to question whether the 'deal' can come anywhere even close to being win-win from the host country's point of view. The 'investor' is actually expecting the host country to not only provide generous terms in every respect, he is even expecting them to provide the finance for his 'investment!'

One would hope and expect that the Tanzanian government would negotiate to offer reasonably attractive incentives while protecting the country's best interests. In the absence of the government's side of these reports it is hard to say if this hope is justified or not.

But even then, the brief quoted comments of the CEO of one of the investing companies is uncomfortably suggestive of not merely a tough businessman negotiating a hard bargain, but of someone expecting to sign a deal that sounds exploitative of the host country. Before one even gets to the terms of the deal, one already has doubts about the basic motives of the 'investor.' Can a government force the implementation of a good, genuinely win-win deal out of a partner who by his public comments suggests his idea of a 'good deal' is virtual capitulation by the host country?  

Contrary to the perception of many, large-scale foreign agri-deals are not at all new to Africa. They are as old as colonialism, when they were highly lucrative to the 'investors' partly precisely because they were so exploitative of the 'natives.' Those then-forced deals certainly did introduce 'modern' farming and other kinds of innovations, but at the cost of much local suffering and resentment.

Mistreatment and exploitation were rife. Forced dispossession of and relocations from ancestral lands were common, as is increasingly being alleged in today's land deals. The memories of these 'land deals' of old are not in the distant past, and their effects are very much current, influencing such things as what crops a country's economy is dependent on today, for better or for worse.

It is for all these reasons that amongst many Africans, the automatic reaction to a new era of large land deals is one of suspicion.

It is early days yet, but the way the reported Bangladeshi land deals in Uganda and Tanzania are being reported so far do not give one the confidence that the lessons of recent history have been learned, by either the quoted investors or the silent host governments.

Let us wait and see how this latest land saga unfolds.

African Agriculture

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