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September 19, 2012

Herakles' palm oil plantation in Cameroon: progress or a disaster waiting to happen?

by Chido Makunike

Cameroon's location in the heart of the central African tropics makes it ideal for palm oil cultivation. Not surprisingly, the new rush by foreign investors for African agricultural land has not left fertile, lush Cameroon unaffected.

An excellent July 18 Reuters special report  highlights some, but far from all, of the reasons the new wave of foreign investments in African farm land are so controversial.

World demand for palm oil has doubled since 2000, we are told, and farming it in the traditional Asian growing countries (Indonesia, Malaysia) has increased challenges and costs. So investors are increasingly looking to central Africa.

Herakles Farms, owned by New York venture-finance firm Herakles Capital, is one of many investors with plans for huge palm oil holdings in Cameroon. As with all such investments, they promise Cameroonians 'steady work, roads and health care.'  

But not everyone is jumping up with joy at the Herakles investment. The concerns expressed are now familiar to anyone who has kept up with the land investment rush in recent years. There are allegations of traditional and government leaders doing shady deals behind the backs of the people they lead, fears of displacement and loss of livelihood; and there is also scepticism about the various benefits promised. Will the jobs and other social benefits promised be equal to or exceed the resource-mining, the permanent changes to the society? Without details (and monitoring) of the promised 'steady work, roads and healthcare,' it is impossible to say. 

Herakles is also accused of being under-handed in various ways in how it solicited local community input about its investment plans.

The article depressingly shows that despite years of heated debate about the pros and cons of these large-scale farming investments, very few of the main reasons for conflict have been dealt with by governments or investors.

For the investors, doing business with strong-arm governments that have little regard for the opinions of their people buys them a sort of 'stability' in often socio-politically volatile investing environments. Yet the times have changed to a more open, informed era in which it is no longer quite as easy as before to repress people with complete impunity. Even where government guns can keep a sullen, unhappy population under control, for investors there is now a considerable potential financial and reputational cost to being seen to be in bed with governments that neither respect nor represent their people well.

One fear expressed by some of the locals is that the proposed new Herakles palm oil plantation ("over 60,000 hectares of land - 10 times the size of Manhattan") will remove from community use one of the few remaining areas suitable for viable food cropping. Will 20, 30 or 40 years of mostly low-wage 'steady work' compensate for this kind of loss?

Speaking of steady wage-labour, which are the kind of low-range jobs that will be mostly on offer, it is a toss up whether such jobs mean an overall improvement in the livelihoods of the workers concerned, and of the communities. When the workers have these tenuous low-wage jobs as well as access to their traditional farmlands for the rest of their families to continue to work, it could be argued that the long-term security and earnings synergy of the  two income streams does indeed lead to greater security.

The lack of much of a cash economy in remote, poorly developed rural areas often wins the day in the argument over whether to allow/welcome investments such as that proposed by Herakles. The attitude is 'any jobs/steady income is better than subsistence farming.'  But if an extended family is giving up their ancestral land (the source of food security, cultural grounding, 'belonging,' independence, etc) for one or a handful of its members to have wages, the net gain is highly debatable.

But a huge investment such as that proposed by Herakles will act as an anchor for other kinds of investment in the area, won't it, increasing job opportunities and general economic prospects, won't it? Not necessarily, and certainly not automatically. In the absence of a dedicated plan to lure accompanying services to the area, those 'new opportunities' that will spring up on their own are likely to be brothels, bars and so forth. Single large agricultural or mining investors that come to dominate an area have proven this general rule all over Africa, and many places elsewhere.

When the large extractive investor pulls out for whatever reason, even  after a decades-long presence, there is often pitifully no long term 'development' left behind. Where there hasn't been a long-term plan between the area-dominant investor and the government, not only does the 'steady work' evaporate, so do the means/resources to keep the local school and clinic running. In addition, the environmental mess and the social and cultural dislocation is often such that the community can no longer simply resort to their previous subsistence agricultural existence. 

This is the reality of many similar investments all over Africa. One would have hoped that all these previous experiences would inform the discussion between Herakles and the Cameroonian government, but there is little indication that this is in fact the case, at least from reading the Reuters article.

The main investment driver's stated motivations are fascinating to hear.   
Bruce Wrobel, chief executive of Herakles Farms, is not the stereotypical culturally deaf and blind foreign investor who cares about nothing else as long as he has the minister or president's signature/protection.   

Reuters tell us that, "Since a 1999 visit to West Africa during the civil wars of Sierra Leone and Liberia, Wrobel's aim has been to mix business with philanthropy in order to assist the continent." 

Wrobel's do-gooder credentials are further bolstered by how he 'helped cut telephone costs for millions of East Africans, he says, via his fiber-optic cable joint venture Seacom. A hydro plant run by his Sithe Global Power company in Uganda has reduced power blackouts there.'

But all this impressive 'helping' that he has done was in the course of doing business for profit, which is fine, even good; certainly much better than the unsustainable, unsuccessful brand of aid-based do-goodism that has been inflicted on Africa for decades now. Where governments are alert and responsive to their people's needs, for-profit investment certainly has much more potential to be harnessed into long-term development than aid-based 'projects.'

Strangely, Wrobel out seems to be conflicted about whether he wants to do ethical for-profit business in Cameroon, or whether he is primarily going there is a Peace Corp worker.    

Listen to this mushy mumbo jumbo from Wrobel: "Our big concern is that over a relatively short period of time there will be no way for the African consumer to compete with the Chinese and the Indian buyer. That could lead to some of the types of instability and food riots that we saw a few years back."

Wrobel may well be a genuinely good guy who is sincere in his do-gooder rhetoric. But part of the history of the foreign exploitation of Africa over the last 100 years or so is that very often, the exploiters have claimed to be motivated by pity for Africans. It is tired, it is old, and it is increasingly met with suspicion.

If Wrobel really wants to show a new model of ethical farming investment at a time of growing scepticism, the best way he can do so is by practically showing that his Cameroonian palm oil venture has thought about and is addressing the many doubts and worries about such enterprises.  

 African Agriculture


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