That's the question Aman Sethi asks in one of the surprisingly few articles that asks how the wave of farmland investors from India into countries like Ethiopia have fared.
Most of what usually comes to light are the public relations-type announcements of the millions of dollars one or another company is said to be investing into a country. There is usually little or no explanatory detail behind the numbers meant to impress. In the following years there is often even less information about the inevitable challlenges of establishing a project from scratch in a new environment.
As an example of what he calls the 'bitter harvest' being reaped by some Indian farmland investors, Sethi cites Emami Biotech, which withdrew from a 40,000-hectare biofuel plantation in Ethiopia just a year after it started in 2009.
The best known and biggest Indian investment in Ethiopia is Karuturi Global's rose and food crop operation. It is cited as both an example of Ethiopia's success at attracting large scale investment, as well as an example of a new type of 'land grabbing' colonialism. Seth says questions are being asked about the capacity of companies like Karuturi to manage a landholding as large as its reported 100,000 scattered hectares.
Although biofuel projects have been failing in many countries over an as yet unviable business model, Emami
cited as among its reasons for its pull-out lack of full cooperation from the Ethiopian government, insufficient water access and land disputes with resentful local communities who had not been consulted. An Ethiopian government official is reported to have laid the blame on Emani's failing to do its homework adequately.
An analyst quoted for Sethi's story speculates that when Emani found that jatropha biofuel wasn't going to be the next liquid gold just yet, it then sought land more suitable for food crops. Apparently the Ethiopian government was not impressed and was in no hurry to cooperate to save Emani's hide. In any case, that would have been a very different business plan than the one for which Emani originally raised investment funds, so at that point (the realization of the unviability of the jatropha project) the company was already in deep trouble.
Sethi's article (Indian firms reap bitter harvest in Africa) should be required reading for the many aspiring, inquiring would-be-investors who seem to think that normal due diligence, research and preparation do not apply to tapping into Africa's business opportunities.
Chido Makunike
African Agriculture
November 04, 2012
Have Indian farm investors bitten off more than they can chew in Africa?
Categories India, investment, land deals