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October 17, 2011

Are land leases to foreign interests a good thing?

by Fred Oluch

African land experts and policymakers have finally woken up to the adverse effects of the upscale acquisition of arable land on the continent by foreigners.

For the last decade, multinational corporations and foreign governments have acquired huge chunks of rich farmlands in Africa to grow food and bio-fuels solely for export, but those in authority across the continent have remained largely ambivalent to this phenomenon commonly known as “new colonisation” or “land grabs.”

Most of these long-term leases or sales of large chunks of land have been done clandestinely by a clique of people in governments across the continent in collusion with foreign entities who are more interested in quick profits. Yet such deals are likely to increase the continents food deficit.

The worry is that investors are not looking for unused land but fertile land near water sources, and that Africa could be losing arable and agriculturally potential land to outsiders and thus threatening food security.

But now, politicians and academics and civil society and the private sector are looking at the trend from a fresh perspective and asking questions and evaluating what impact these agreements have on food security.

A recent two-day high-level meeting in Nairobi concluded that foreign direct investments in land in Africa must become transparent, inclusive and must be preceded by evaluations on the benefits and dangers.

The meeting was organised by the Coalition for Dialogue on Africa (CODA), with the support of the African Union (AU), the UN Economic Commission for Africa (UNECA) and the African Development Bank (AfDB).

According to Dr Mike Taylor, of International Land Coalition, direct foreign investments in land in Africa is not a new phenomenon because it started during the colonial time, but it has assumed alarming proportions in the last three years.

“It is a phenomenon that may well change the face of Africa and decisions made today may determine whether Africa will benefit from these investments or lose,” said Dr Taylor.

There is consensus that Africa’s agricultural sector needs need capital injection and technology transfers. Besides, these investments have the potential of creating employment. Some African governments are actually overtly encouraging these acquisitions.

Some governments are even lobby aggressively for them because they hope that heavy injection of foreign capital will enhance agricultural technology, boost local employment and revitalise sagging agricultural sectors. Some are also drawn to the new roads, bridges and ports that some land investors plan to build.

Kenya’s Minister for Land, James Orengo, regretted that Africa’s agricultural exports to the world market had remarkably declined in the last 10 years, mainly due to protectionist policies adopted by the industrialised countries.

“This is the crux of the scramble for Africa’s arable land. It is now apparent that industrialised countries are willing to receive agricultural exports from Africa only when such products are produced by their own multinationals.”

The Kenya government has had to step in to stop leasing of large tracts of land to investors before exhaustive consultations with the local people while his ministry is busy trying to harmonise land laws with the National Land Policy and the Constitution.

In Kenya, the Tana River Delta and the Coast in general has been the main target, raising questions where the local communities will get alternative land for agricultural activities and become self-sufficient in food.

In the Tana River Delta, 40,000 hectares has been leased out to the Qatari government, and 50,000 hectares more to foreign firms for bio-fuels. In Nyanza province of Kenya, over 17,500 hectares around Yala Swamp has been leased to a US firm, Dominion Farms Limited, to produce rice.

In Tanzania, over 500,000 hectare have been leased out to a foreign firm to produce rice, wheat, coffee, flowers, Aloe Vera and bio-fuels.

Uganda has leased 840,127 hectares to Egypt to grow rice, wheat and produce organic beef. Ethiopia on the other hand has given out 600,000 hectares to foreign entities, a acreage which FAO estimates to be 4 percent of the country’s fertile land.

But the flip side of it is that these acquisitions are likely to result into local people losing access to their land-based resources, massive displacement, environmental degradation and social conflict.

In Tana River for instance, the development has brought increased tension between the local communities—the pastoralist Orma and the settled Pokomo—due to reduced gracing and watering areas.

According to a study by the International Institute for Environment and Development (IIED) and the International Fund for Agricultural Development (IFAD), nearly 2.5 million hectares have been approved for allocations in just five African countries: Ethiopia, Ghana, Madagascar, Mali and Sudan.

Sudan has leased 1.5 million hectares of prime farmland to the Gulf States, Egypt and South Korea for 99 years. The Ethiopian government stated that 2.7 million hectares were now available to investors from the Middle East and Asia One of the largest recent deals that ultimately collapsed would have given the South Korean firm, Daewoo, a 99-year lease to grow maize and other crops on a 1.3 million hectares farmland in Madagascar.

Gaetan Rimwanguiya, the Executive Director of the Coalition for Dialogue on Africa (CODA), argued that while the intention might be good, the clandestine deals are what is raising suspicions and that these agreements should be transparent and inclusive.

“We cannot compel governments to be transparent but we are advising and lobbying so that the leadership does not turn around later and say they did not know the risks involved,” he said.

Trends reveal that most of these agreements are concentrated in countries that are poor, at war or embroiled in internal political unrest.

Robert Ladu Luki, the chairman of the Land Commission of South Sudan, revealed the new republic has three phases of land acquisition that are being reviewed. They include land given to foreigners during the 21-year civil war, especially in Upper Nile State and sanctioned by Khartoum, land acquired by foreign investors after the 2005 peace agreement, and the new agreements currently under negotiations by the new government.
Most of these agreements have either been cancelled or are being revisited.

It is a global phenomenon that started in 2005 reached its peak in 2009 following the previous year’s global financial and food crisis. Three quarters of investors in Africa are coming from outside the continent, while those investors from Africa are mainly from South Africa and Libya.

In an effort to prevent food price hikes and public unrest at home, some food exporting countries like India imposed in 2008 bans on food exports. Such bans that took large amounts of grain supplies off the global market exacerbated food insecurity.

And in a further effort to avoid costs and supply shortages, some wealthy food importing countries tried to bypass world food markets by acquiring land overseas to use for agricultural food production and supply their own markets.

Another key factor for these acquisitions was the need for energy security with many countries seeking land overseas to use for bio-fuel production. The third factor was that private sector financiers recognised land as a safe investment in the current shaky financial climate, and hoped to capitalise financially on the growing food security and energy security-driven demand for agricultural land.

Africa Review

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