Saturday, July 4, 2009

Will foreign land deals benefit Africa?

By JOHN HARBESON - Posted Saturday, June 20 2009

A new report really caught my eye recently. Issued by the U.N. Food and Agricultural Organisation (FAO), the International Fund for Agricultural Development (IFAD) and the International Institute for Environment and Development (IIED), the report is entitled ‘‘Land Grab or Development Opportunity?: Agricultural Investment and International Land Deals in Africa.’’

Simply stated, the focus of the report is on moves by capital rich/agriculture and water poor countries to increase their food security, in a climate of rising food prices in international markets, by encouraging private sector investment in large blocs of fertile land in Africa presumed to be under-exploited. The study centred on five African countries: Ethiopia, Sudan, Mozambique, Madagascar and Mali.

From 2004 through the early months of 2009, the report documents just under 2.5 million hectares of agricultural land in these five countries claimed by foreign investors, the largest blocs being between 100 thousand hectares (Mali) and 150 thousand hectares ( Ethiopia). And where is this land?

A 2002 FAO study offers what I consider the astonishing estimate that of 807 million hectares of cultivable land in Africa, no more than 227 million hectares, or just over 28 per cent, was actually under cultivation! Angola, DR Congo and Sudan lead the continent in available cultivable land.

Of course, we don’t know what counts as available land, taking into account fallowing, shifting cultivation, pastoralism, and other uses over and above intensive agriculture.

The title may seem alarmist, but the report is balanced in sorting through the large number of important, complex issues involved. Nonetheless, the report’s findings are inescapably worrisome, posing a fundamental question: what’s in this for African countries and their peoples?

Pre-existing claims

The key macro-level dimension of this question is how much will these foreign-held agricultural lands benefit employment and economic growth in these countries? The central micro-level questions are what happens to pre-existing claims on this land by individuals and local communities, and what happens to these people if their claims are superseded by this foreign transaction?

What’s most worrisome is answers to these key questions are in very short supply. Readers doubtless will ask: how have Kenya, or Uganda, or Tanzania already been affected by these trends, or might they be in the foreseeable future? Answer: I don’t know at this point.

From one perspective there’s nothing much new in all this. These land deals are a form of foreign direct investment (FDI). The IMF says FDI exists when a foreign firm or government through an affiliate in, say, an African country holds at least a 10 per cent ownership share in the form of voting shares.

For much of the last 30 years, economic analysts have bemoaned the absence of FDI in Africa notwithstanding the expectations of the World Bank and the IMF that there would be, if only African countries would free up their markets.

So one could argue that, at least potentially, increased external investment in the form of FDI is to be welcomed, provided – and these are huge provisos – a substantial percentage of the capital invested stays in the country, creating multiplier effects, for the whole country, in terms of employment, technological advancement, better infrastructure and ultimately higher standards of living.

For any of this to occur, of course, governments must bargain effectively, be incorruptible, restrain the avarice of individual politicians, and keep a weather eye on the public interest. The difficulties in making all this happen have always been huge, elusive, and well known to everyone, especially after decades of involvement with multinational corporations.

But is land somehow different? Giving Kenya’s history over the last century, I think I’m hearing a loud chorus of “yes!” from my Kenya readers, which citizens in other African countries would be likely to join. Especially in still heavily rural African countries, land is in effect a sovereign patrimony, no matter the actual distribution and terms of legal ownership, is it not?

This creates a very difficult balancing act. On the one hand, I hazard that, 50 years after independence, few would question sales or long leases of plots for individual residences or modestly sized businesses to non-citizens.

On the other hand, at some order of magnitude, it would seem that alienation of huge blocks of rural land, whether by sale or long lease, somehow alienates both a cultural inheritance and a significant venue for future rural agricultural development for individuals and local communities, even if the terms of alienation are generous and fairly upheld.

Is there not something profoundly ironic about these land deals being rationalised as in the interest of food security for foreign capital-rich nations?

What about host African country’s food security that has been the watchword of agricultural policy and humanitarian assistance in Africa for decades?

There would seem to be a need, not really addressed in the FAO report or elsewhere, to avoid the reality and appearance of what game theorists call a zero-sum game: a situation where A’s gain is B’s loss. It would seem there’s a need for much more win-win strategic thinking at local as well as national levels in these land deals than there has been to date.

John Harbeson is a professor political science at City University of New York.