Africa’s Land Deals

In November 2008, South Korean company Daewoo Logistics made a deal with Madagascar’s government to lease roughly half of the nation’s agricultural land for the production of corn and palm oil. For the people of poverty-stricken Madagascar, it was intolerable that a foreign company would buy up tracts of their country’s farmland while they remained hungry. Two months later, the government was overthrown, partly due to of popular opposition to the land deal.

This land deal is part of a broader development in which governments and individuals—especially from the Middle East—have been investing in Africa’s farmland in order to feed their own populations. In 2009, for example, global farmland deals involved 110 million acres. Seventy percent of them were in Africa, according to the World Bank.

“The Madagascar case set an immediate negative precedent for these sorts of investments,” Andrew Rice, who authored an article about land deals in the Worldwatch Institute’s “2011 State of the World” report, told DBJ. “After this deal was announced, the government began to wobble and then fell.”

Yet stigmatizing all such land “grabs” is inherently problematic for two reasons. First, the absence of public access to contractual agreements between investors and African governments means that nobody really knows the terms of the deals. Second, Africa is urgently in need of investment in agriculture, given that the continent has suffered from years of neglect by the international community. The 1960s Green Revolution, which boosted crop yields in Asia and in Latin America, never reached Africa, in part because Africa lacked the irrigation essential for the use of high-yielding crop varieties. The result has been Africa’s dependence on foreign food aid and imports, a precarious situation particularly during times of global food crises. In 2008, for example, rising food prices led many countries to impose export bans aimed at ensuring food security for their domestic populations—a contributing factor to why millions more Africans were thrust into poverty. Thus, the new wave of private investment in Africa’s agricultural land presents an opportunity to strengthen the continent’s food security, as long as it’s done responsibly and equitably.

“A lot of the debate thus far has been driven by ideology and assumptions on the part of ideological organizations that these deals must be unfair to Africa,” Rice said. “The danger is lumping together legitimate private investment with exploitation. That’s a very delicate dance that World Bank and other international organizations are trying to do right now. They want to encourage private investment.”

Given legitimate concerns that outside investors may ship all crops to their own countries, the burden is on African governments to ensure that the land deals don’t undermine local food security. According to World Bank economist Klaus Deininger, African governments should connect outside investment with a national agenda that prioritizes food security. Governments could solidify such an approach by setting criteria for outside investments and permitting only those investments that guarantee that a certain amount of the food they produce will be devoted to local consumption.

Such emphasis on production for the local population is particularly important as a buffer against a global food crisis. According to the UN Special Rapporteur on the Right to Food Olivier De Schutter, the contractual agreements between investors and African governments should stipulate that investors sell a higher percentage of their crops to the local market during periods when high global food prices might otherwise render food unaffordable for many Africans.

This private investment is by no means a substitute for African governments’ own investment in the agricultural sector. The perils of government absence from agriculture are painfully evident in the famine that struck Ethiopia in 2003, as Roger Thurow and Scott Kilman write in Enough: Why the World’s Poorest Starve in an Age of Plenty. The World Bank had insisted that African governments remove their investments in agriculture, insisting that such a task was the job of the private sector. Yet in Ethiopia, the private sector was underdeveloped; despite the huge crop yields experienced by Ethiopian farmers in 2002, the country was missing an efficient market to absorb those yields. For example, the lack of storage facilities meant that farmers’ surplus yields flooded the market, driving down prices so low that farmers curtailed their farming operations because they would have had to sell their crops well below the cost of production. Furthermore, no network was in place to transfer crops from highly productive agricultural regions to less arable areas.

International institutions, while unable to actually regulate land deals, can certainly play a role in influencing their implementation. The best example so far is the concept of the voluntary “Principles for Responsible Agricultural Investment,” developed by groups including the World Bank and the UN Food and Agriculture Organization. The key principles include regard for local people’s land rights, food security, and environmental sustainability. These principles don’t necessarily try to suggest that outside investment is the only option for African agriculture; rather, they should be viewed as an attempt to guide a land deals trend that cannot actually be prevented.

Indeed, an effort to guide investor behavior is not the only way that international institutions can contribute to a fair implementation of land deals. Rice said that the World Bank and UN, given their global influence, can encourage African governments to negotiate favorable deals for their countries. They can inform the governments that not all crops should be produced for export and that the deals can achieve food security for both the investor’s country and the African country.

Overall, it is most useful for policymakers and academics concerned about land deals to position themselves in ways that allow them to constructively influence the debate. But to completely demonize the land deals is to eliminate one’s ability to contribute to the dialogue on an inevitable phenomenon.