Kenya — Foreign acquisitions: some opportunities, but many see threats
An apparent surge in the purchase of African land by foreign companies and governments to grow food and other crops for export has set alarm bells ringing on and off the continent. The headlines have been strident: "The Second Scramble for Africa Starts," "Quest for Food Security Breeds Neo-Colonists," "Food Security or Economic Slavery?"
The outcries reflect the continuing impact of the continent's history, when as recently as the last century colonial powers and foreign settler populations arbitrarily seized African land and displaced those who lived on it, lending considerable emotion to the current volatile issue. Some agricultural experts have wondered whether such land deals could lead to a form of "neo-colonialism". But immediate, practical concerns are also prominent. "This is a worrisome trend," noted Akinwumi Adesina, the then vice president of the advocacy group Alliance for a Green Revolution in Africa (AGRA). Such foreign land acquisitions, he argued, have the potential to hurt domestic efforts to raise food production and could limit broad-based economic growth. Many deals have little oversight, transparency or regulation, have no environmental safeguards and fail to protect smallholder farmers from losing their customary rights to use land, added Mr. Adesina, now Nigeria's minister for agriculture.
The sheer size of some of the land agreements has added to the alarm. A deal to allow South Korea's Daewoo Corporation to lease 1.3 million hectares was a key factor in building support for the ouster of Madagascar's President Marc Ravalomanana in March 2009. In Kenya the government struggled to overcome local opposition to a proposal to give Qatar and others rights over some 40,000 hectares in the Tana River Valley in return for building a deep-sea port.
A number of international organizations reacted to this development. The Food and Agriculture Organization (FAO) and the World Bank commissioned studies into so-called "land grabs." At the 2009 summit of the Group of Eight (G-8) industrialized countries in Italy, Japan pushed for a code of conduct to govern such schemes. Any code of conduct is going to be difficult to negotiate, and it will be even more difficult for industrialized countries to apply to deals that are primarily worked out between countries in the South, the UN's Special Rapporteur on the Right to Food, Olivier De Schutter, told Africa Renewal.
In a report titled "Large-scale Land Acquisitions and Leases", Mr. De Schutter wrote that while such investments provide certain development opportunities, they also represent a threat to food security and other core human rights. "The stakes are huge," he told Africa Renewal. Unfortunately, "the deals as they have been concluded up to now are very meagre as far as the obligations of the investors are concerned." He also noted that agreements concerning thousands of hectares of farmland are sometimes just three or four pages long.
Yet for African countries agreeing to such deals, the possible advantages are also attractive. While African agriculture rarely attracts significant investments or external aid -- and the current global economic downturn has made external financing even more scarce -- leasing unused land to foreign governments and companies for large-scale cultivation can seem like a way to boost an underdeveloped sector and create new job opportunities.
A study by the International Institute for Environment and Development (IIED), a research group based in the UK, estimated that nearly 2.5 mn hectares of African farmland had been allocated to foreign-owned entities between 2004 and 2009 in just five countries (Ethiopia, Ghana, Madagascar, Mali and Sudan) it studied in depth. The sheer scale of many leases is unprecedented, said the IIED report, Land Grab or Development Opportunity?, which was prepared for the FAO and the UN's International Fund for Agricultural Development.
The surge in interest in African land has been driven by a number of factors. On the side of investors, those include a desire for food security back home and to a lesser extent rising demand for biofuels. Behind both is the expectation of rising costs of land and water as world demand for food and other crops continues to expand.
Many of the government-to-government deals are aimed at meeting food needs, especially in the states of the Arab Gulf and in South Korea. Indian companies, backed in part by their government, have invested millions of dollars in Ethiopia to meet rising domestic food and animal feed demand. Commercial enterprises, many of them European, as well as Chinese companies, have been in the lead in cultivating jatropha, sorghum and other biofuels in countries such as Madagascar, Mozambique and Tanzania.
Africa is a particular focus for this investment explosion because of the perception that there is plenty of cheap land and labour available, as well as a favourable climate, Mr. De Schutter points out. In Mozambique, Tanzania and Zambia, for example, only some 12% of arable land is actually cultivated.
Africa so far has been able to mobilize only limited financing to develop its arable land. Despite persistent calls for increased domestic investment, agriculture has lagged well behind other sectors. The African Union has urged governments to devote 10% of their spending to agriculture, but not many have actually met that target. Donor countries and institutions have also failed to play their part, with agriculture's share of aid tending to fall.
With land apparently in abundance, but money not, the offer by foreign investors to develop agricultural land appears very attractive. But with much of the land not as unused as it might seem and with actual returns on agricultural investment far lower than presented in initial feasibility studies, the political and economic reality for African governments can be very sobering.
"Governments are sitting on a box of dynamite," Namanga Ngongi, former president of AGRA, initiated by former UN Secretary-General Kofi Annan, told the media.
Towards a strategic approach
Recent assessments by IIED, FAO, the World Bank and the Washington-based International Food Policy Research Institute (IFPRI) all confirm the shortcomings and potential dangers. These include the risks of undermining domestic efforts to increase food production, the danger that agricultural projects aimed exclusively at foreign markets may do little to stimulate domestic economic activities, and the potential loss of land rights for local farmers.
Many of the studies also point to possible benefits for a sector strapped for cash. These include the creation of jobs, the introduction of new technologies, improvements in the quality of agricultural production and opportunities to develop higher-value agricultural processing activities. There might even be "an increase in food supplies for the domestic market and for export," the FAO says.
To reap the benefits of this new trend, says an IFPRI study, "Land Grabbing" by Foreign Investors in Developing Countries: Risks and Opportunities, governments need to develop the capacity to negotiate sound contracts and to exercise oversight. This can help create "a win-win scenario for both local communities and foreign investors." The studies advise African governments to be strategic in their approach. In his report, Mr. De Schutter puts forward a number of recommendations to guide such land deals. These include: the free, prior and full participation and agreement of all local communities concerned -- not just their leaders the protection of the environment, based on thorough impact assessments that demonstrate a project's sustainability full transparency, with clear and enforceable obligations for investors, backed by specified sanctions and legislation, as necessary and measures to protect human rights, labour rights, land rights and the right to food and development. Such comprehensive deals would be in the long-term interest of investors and local communities alike, IFPRI notes, pointing out that land disputes can become violent, and governments may quickly find themselves with no alternative but to change or rescind contractual arrangements.
Land ownership is a core issue. Only a relatively small portion of land in Africa is subject to individual titling. Much land is community-owned, and in some countries state-owned. Even land that is officially categorized as un- or under-utilized may in fact be subject to complex patterns of "customary" usage. "Better systems to recognize land rights are urgently needed," the FAO argues in a policy brief, From Land Grab to Win-Win.
The World Bank points to the importance of international bodies helping African governments develop land registry systems. The IIED study stresses that such schemes must allow for collective registration of community lands that protect "customary" land rights.
Mr. De Schutter argues that internationally agreed-upon human rights instruments can be used to protect such rights, including those of livestock herders and indigenous forest dwellers.
According to the IIED study, the bulk of recent large-scale land acquisitions in Africa have been based on the leasing of land to foreign entities with the intent of using labour to work the land. The study argues the need for governments to include clauses ensuring the use of local labour in contracts for such schemes. "Agreements to lease or cede large areas of land in no circumstance should be allowed to trump the human rights obligations of the states concerned," Mr. De Schutter argues.
Proposals for such ideal agreements, backed by necessary national legislation and enforcement principles, are being put forward. But, as the IIED study points out, there is already a large gulf between contractual provisions and their enforcement. The gap between the statute books and the reality on the ground may entail serious costs for local communities.
A code of conduct for host governments and foreign investors could help ensure that land deals are a "win-win" arrangement for investor and local communities alike, IFPRI suggests. It cites the Extractive Industries Transparency Initiative, which binds participating governments and companies to certain standards in mining and oil activities, as one possible model for large-scale land deals.
Mr. De Schutter is sceptical that such a code can be negotiated or enforced. He instead emphasizes the existing body of human rights laws, which can be applied to large-scale land acquisitions and used to get governments to meet their obligations to citizens.
Either way, experts agree that African governments must have the will and the ability to apply laws. "Strengthening the negotiation capacity is vital," Mr. De Schutter argues. And that capacity cannot be of governments alone, he says. Local communities must also be empowered and national parliaments must be involved. Achieving that, many fear, may be the most difficult gap to bridge.