10:59 GMT 28th September 2011
At a time when African countries are turning yet again to the international community to help abate the famine in the Horn of Africa, critics say that it is wrong for some African governments to be leasing land to foreign interests that are not interested in developing the continent's agricultural potential.
Foreign companies have been snooping around Africa since 2008, leasing land to further their own business in terests. It is only now that the full effects of the new scramble for Africa are being exposed. In 2009 alone, according to the US-based Oakland Institute, nearly 60 million hectares - an area the size of France - were bought or leased as opposed to an average annual expansion of global agricultural land, which was less than four million hectares before 2008.
The Oakland Institute has carried out considerable research into foreign investment in land in Africa and its findings have been alarming, highlighting the massive scale and negative effect land grabbing is having on the continent's development. It said that such investments were 'resulting in food insecurity, the displacement of small farmers, conflict, environmental devastation, water loss, and the further impoverishment and political instability of African nations'.
The governments of the countries that have been investigated by the Oakland Institute - Sierra Leone, Ethiopia, Tanzania, South Sudan and Mali - argue that they need investment in an era of economic uncertainty. But the deals have been shown to be detrimental to them. For instance, according to the Oakland Institute, there is an extreme lack of transparency surrounding these deals. 'At the country level, the absence of democratic debate and lack of information in the public domain is the rule, the Institute found. 'Most often, international investors who are involved in these deals are not accountable to anyone.'
Indeed, high-profile personalities such as former UN Secretary-General Kofi Annan and the director general of the Food and Agriculture Organisation, Jacques Diouf, have expressed concern about these land deals. 'It is neither just nor sustainable for farm lands to be taken away from communities in this way nor for food to be exported when there is hunger on the doorstep. Local people will not stand for this abuse and neither should we,' Annan said.
Diouf had warned in 2008, at the height of the global food crisis: 'The risk is of creating a neo-colonial pact for the provision of non-value added raw materials in the producing countries and unacceptable work conditions for agricultural workers.'
The secrecy surrounding the deals ensures that they are weighted in favour of the foreign interests while excluding local farmers.
'If this was a negotiation between equals, it could be a good thing. It could bring investment, stable prices and predictability to the market,' said Duncan Green, head of research at Oxfam. 'But the problem is [in] this scramble for soil I don't see any place for the small farmers.'
The suspect land leases grant the speculators incentives that are threatening the economic stability and independence of local communities. For instance, Sierra Leone, where land is granted very cheaply, allows 100 per cent foreign ownership and there are no restrictions on foreign exchange. The speculators are also allowed full repatriation of profits, dividends and royalties and there are no limits on expatriate employees.
Officially, the Sierra Leonean government has set land lease figures of $5 per acre or $12 per ha a year. But two foreign companies, Sierra Leone Agriculture and Quifel Agribusiness (SL), pay $2 per ha a year and $5 per ha annually, according to the Oakland Institute.
In Ethiopia, where land is also obtained for a song, one company, Karutiri, initially paid $1.25 per ha a year and later $6.75, the Oakland Institute found. In comparison, rates for Brazil or Argentina are between $5,000 and $6,000 per ha. So the prices that the foreign investors pay in Africa are a real bargain and they hardly provide any additional incomes for the host countries.
According to the International Monetary Fund, tax incentives that are provided as a way of attracting foreign investors to developing countries merely reduce much needed tax revenues for governments without promoting growth. Oakland Institute's research shows many instances where investors took over land from active businesses and production units. It pointed to the case of female farmers in Mali who lost the vegetable gardens they needed to cultivate fresh food for capital markets.
Indeed, Oakland's research discovered a number of cases where small farmers, viewed as 'squatters', are forcibly removed from their ancestral land with no compensation in order to make room for export commodities, including biofuels. It said that in Ethiopia, the government's 'villagisation process of nearly 700,000 indigenous people is taking place in the very same areas targeted for land investment by large scale investors'. The policy think-tank said that overall, when farmers were not simply removed from their land, the land leased to investors was either fallow or forests.
'The idea that land deals bring much needed employment opportunities to poor countries has served as a way for international development institutions and other leaders to justify large-scale land investment as a potential "win-win" scenario for both investors and developing countries,' the Oakland Institute pointed out. 'However, first-hand evidence from [our] field research in multiple African nations reveals that promises of job creation are often overstated, if not completely false.'
But the foreign interests appear to be having their way. 'The "tacit" pressure placed on Africans to open their countries up to agro-investors in biofuels, food and other agricultural commodities is creating new relationships," note the editors of a new book, Biofuels, Land Grabbing and Food Security in Africa.
In one section dealing with land loss in Ghana as a result of the activities of a Norwegian biofuel company, Bakari Nyari, a member of the African Biodiversity Network Steering Committee, explains how foreign biofuel companies worm their way into leasing land in Africa. 'The imaginations of a few influential leaders in the community are captured,' he said. 'They are told of the prospects for the community by the project, and are swayed with promises of positions in the company or monetary inducements. The idea is that these people do the necessary footwork in the villages, where they spread the word about job opportunities.
'A document is then prepared, essentially a contract to lease the land to the company. In the event of problems, the developer can press its claim by enforcing the "contract" or agreement. When the legality of the process is not adequately scrutinised, the developers have their way; but if proper scrutiny takes place, it emerges that these contracts are not legally binding, as they have not gone through the correct legal channels.'
The disconcerting aspect of the current large-scale land investments in Africa is the lack of transparency of the deals. Financial backers - including US universities and pension funds - are lured by high returns and turn a blind eye to theft of land and displacement of people in Africa, the Oakland Institute said in a series of recent reports on the activities of hedge funds and other foreign speculators.
Such speculators were increasing price volatility and supply insecurity in the global food system. The Understanding Land Investment Deals in Africa reports also reveal that these largely unregulated land purchases are resulting in virtually none of the promised benefits for local populations, but instead are forcing millions of small farmers off ancestral lands in order to make room for export commodities, including biofuels and cut flowers.
'The same financial firms that drove us into a global recession by inflating the real estate bubble through risky financial manoeuvres are now doing the same with the world's food supply,' said Anuradha Mittal, executive director of the Oakland Institute. 'In Africa this is resulting in the displacement of small farmers, environmental devastation, water loss and further political instability such as the food riots that preceded the Tunisian and Egyptian revolutions.'
Mittal added that for people living in developed countries, the conversion of African small farms and forests into a natural-as set-based, high-return investment strategy can drive up food prices and increase the risks of climate change. 'The research exposed investors who said it's easy to make a land deal- that they could usually get what they want in exchange for giving a poor, tribal chief a bottle of Johnny Walker,' Mittal said. 'When these investors promise progress and jobs to local chiefs, it sounds great - but they don't deliver, which means no progress and relocating people from their homes.'
New reports and materials on these deals examine on-the-ground implications and expose contracts that connect land grabs back to institutional investors in these nations and others. In addition to publicly sharing - for the first time - the paperwork behind these deals, the reports demonstrate how common land grabs are and how quickly this phenomenon is taking place. Investors in these deals include not only alternative investment firms like Emergent Asset Management - that works to attract speculators, but also universities, including Harvard, Spellman and Vanderbilt.
Contracts also reveal a bonanza of incentives for speculators ranging from unlimited water rights to tax waivers. 'No one should believe that these investors are there to feed starving Africans, create jobs or improve food security,' Obang Metho of Solidarity Movement for New Ethiopia said. 'These land grab agreements - many of which could be in place for 99 years - do not mean progress for local people and will not lead to food in their stomachs. These deals lead only to dollars in the pockets of corrupt leaders and foreign investors.'
'We have seen cases of speculators taking over agricultural land while small farmers, viewed as "squatters" are forcibly removed with no compensation,' said Frederic Mousseau, policy director at the Oakland Institute. 'This is creating insecurity in the global food system that could be a much bigger threat to global security than terrorism. More than one billion people around the world are living with hunger. The majority of the world's poor still depend on small farms for their livelihoods, and speculators are taking these away while promising progress that never happens.'
Even the World Bank has privately expressed scepticism about the land deals although its publicly held position on investment in agricultural lands in Africa has been that it is a way of generating jobs and improving infrastructure. Last year, a leaked draft report from the Bank, The Global Land Rush: Can it Yield Sustainable and Equitable Benefits, challenged its public stance.
It stated, 'Investors are targeting countries with weak laws, buying arable land on the cheap, and failing to deliver on promises of jobs and investments.' It added that in some cases the deals were inflicting serious damage on the local resource base.
Reacting to the report, Mittal said its conclusions 'pose a challenge to the World Bank whose policy prescriptions, up to now, have contended that the land deals reflect a potential win-win situation for both investors and developing countries'.
She added: 'This calls for heightened scrutiny of the Bank's activities in promoting investor-friendly policies that spur foreign direct investment in agriculture in poor countries, and holding it accountable instead of allowing it to sweep the damning findings under the rug.'
The Bank's private sector branch, the International finance Corporation (IFC) had earlier come in for criticism by the Oakland Institute for funding controversial land investments in Africa. 'The Bank's report is certainly a surprising turn of events given that the [IFC] has not only legitimised the land grab trend but effectively facilitated and promoted it,' said Shepard Daniel, Fellow at the Oakland Institute. 'The report's conclusions that land deals are dangerous, lack transparency, and rarely seek to incorporate the host countries' overall investment strategies reflect our findings. The key question is how this acknowledgment will be integrated into the work of the Bank's agencies like the IFC, which have increased the ability of foreign investors to acquire land in developing country markets,' she continued.
'Land grabs - the purchase or lease of vast tracts of land from poor, developing countries by wealthier, food-insecure nations and private investors - has led to the acquisition of nearly 50 million hectares of farmland,' said Daniel. 'While rising food prices, demand for biofuels, and investors seeking quick returns have been emphasised as the principal drivers of this trend, the role of the World Bank has gone virtually unnoticed. (Mis)advice from IFC's Technical Assistance and Advisory Services (TAAS) and Foreign Investment Advisory Services (FIAS) to developing country governments to spur foreign direct investment in agriculture has fuelled the dangerous trend of vast land deals in some of the world's most vulnerable countries,' she continued.
'Following the 2008 food and financial crises, World Bank was to playa central role in what was intended to be a massive overhaul in international food policy and a vast improvement to food security in the developing world,' said Mittal. 'Evidence, however, reveals that World Bank Group policies and efforts are doing just the opposite. IFC has actually increased the ability of foreign investors to acquire land in developing country markets. It is promoting "products" - such as the Access to Land and the Land Market for Investment whose purpose is to open land access to investors.
'Furthermore the creation of "investment promotion agencies" and rewriting of national laws has provided the institutional back up for such investments. In doing so, it has overlooked the urgent problem of hunger that persists in client countries, and lost sight of its principal mission, which is to alleviate poverty,' she continued.
For instance, in Ethiopia, the IFC's recommended changes to policy and legislature have completely transformed the landscape of the Ethiopian investment climate. Accordingly, huge investments in land market have followed.
'Ethiopia is one of the hungriest countries in the world with more than 13 million people in need of food aid,' said Daniel. 'But the government has already offered at least 7.5 million acres of its most fertile land to rich countries and some of the world's most wealthy individuals to export food back to their own countries.'
Despite the influence of foreign investors, there have been success stories in halting land deals. One example is in South Sudan, which became independent in July. The combined force of the Oakland Institute and democratic activists in South Sudan has effectively stalled plans for the largest land deal in the area. Mittal, after visiting South Sudan, announced a major win for those opposed to the unfair and exploitive land investment deal of the Texasbased Nile Trading & Development (NTD). 'This is a rare example of a community viewed by investors as near-squatters and essentially dispensable who are getting their voices heard by the highest officials in government. It is an important democratic action in South Sudan and we are happy to have played a role,' she said.
The Institute exposed NTD's land investment deal, which involved a 49-year lease of 600,000 hectares for $25,000 include unencumbered rights to exploit all natural resources on the leased land. Following the revelations, the community of Mukaya Payam in Lainya County, Central Equatoria State (CES), launched a protest in July, and early last month travelled to Juba to voice their concerns to the state governor and President Salva Kiir.
But as the debate rages on the authors of Biofuels, Land Grabbing and Food Security in Africa are calling for further enquiry into land grabbing 'because awareness of the full impact is in its infancy.' They go on, 'At the same time there is a need to develop a questioning voice from within Africa so that the deals secure sustainable benefits for the broader African societies.
'The issue is about identifying what works and then sealing it up in such a way that it works better for the people of Africa. This requires knowledge about the impact of land grabbing to be pooled and shared as packages of options for Africa's smallholder development.
'Africa will need to identify actions to spread the benefits as wide as possible, particularly among the poor and marginalised. Supporting change, therefore, requires more targeted approaches to research, focusing on learning from successful experiments and experiences on the ground particularly in relation to critical success factors, including institutional innovations.'
Turning to the issue of biofuels, the book notes, 'The combination of higher and more volatile commodity and oil prices, population growth and urbanisation, globalisation and climate change is likely to imply that biofuel demand and investments will be of even greater importance in the future.
'In seeking a more level playing field, much will depend on the pace and direction of technological progress in agricultural production of food, biofuels and industrial crops.
Biofllels, Land Grabbing and Food Security in Africa, edited by Prosper B Matondi, Kjell Havnevik and Ataklite Beyena and published by Zed Books, London, price £21.99
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