Africa for Sale?
The Global Surge for Farmland
Martin Keulertz-London 11 February 2012
Investors from both the developed and developing world have leased more than 200 million hectares of land, 130 million alone in Africa, that’s according to the International Land Coalition. This diverse community consists of international private equity firms, expat African communities in the Western world, the Middle East, India and China to name a few. Pundits have dubbed the recent global surge for farmland as the ‘land rush’ which sees Africa as the ‘the last frontier’ in agriculture, the future ‘breadbasket’. Reports indicate that the ‘land rush’, which has gained momentum has been triggered by "the worldwide food shortages which followed the sharp oil price rises in 2008, growing water shortages and the European Union's insistence that 10% of all transport fuel must come from plant-based biofuels by 2015. In many areas (in Africa) the deals have led to evictions, civil unrest and complaints of ‘land grabbing’". There is now growing concern by development agencies and human rights activists that perhaps Africa is being exploited, it’s dubbed, “21st Century Colonialism”.
A HECTARE FOR A DOLLAR
Sub-Saharan Africa is comparably cheaply available with hectare prices ranging from 1 to 10 USD. Notoriously low priced deals have been reported from South Sudan, where an American investor leased 600,000 hectares for 25,000 USD. In most cases, the land has been leased for 99 years. Ethiopia, Mali and Mozambique are slightly more expensive target countries. In Zimbabwe, an investor has roughly leased half of available arable land to grow sugar cane, a much-desired crop for ethanol production. Similar cropping patterns have been reported across Sub-Saharan Africa as a means to grow biofuels. Given the rocketing food prices, other targeted markets are that of rice, wheat, fodder crops and flowers. The price spikes of 2007/08 and 2010/11 has prompted the World Bank to release a report, Rising Interest in Global Farmland, which sheds light on this new ‘hot potato’ in development.
THE INVESTMENT ENIGMA
African governments hope to attract much required foreign direct investment into their economies through land sales. Whether it is wishful thinking that investors will provide desperately needed technology and expertise to increase the levels of agricultural production and decrease the levels of poverty has been questioned by a number of development experts. Despite acknowledging Africa’s need for investment and more food supply, the agricultural sector is still poorly developed. There’s still a prevalence of traditional smallholder farmers who are cultivating small sizes of land. The future existence of Pastoralist farmers with their distinct culture are potentially threatened when ‘big capital’ moves in, to turn Africa ‘green’. Another reason for investing into Africa is the cheap availability of labour. The estimated returns on investments are up to 100% for rice schemes in Sierra Leone alone. Venture capital has therefore found a new haven for high returns usually then spent in the capitalist centres of the world.
RESOURCE VALUE
Agriculture production requires fertile soils, sun and water (and fertilisers). While soil, sun and fertilisers are widely available in regions like the Middle East, water is not. Sub-Saharan Africa, however, enjoys abundant rainfall and access to some of the most water-rich rivers and lakes in the world. Moreover, groundwater resources are largely untapped. Large-scale farming can therefore notionally rely on water resources, which is a freebie hence an added value. However, river systems such as the Nile are already deeply politicised as riparians would like to utilise it for their energy needs. Apart from this, tropical soils are notoriously difficult territory as they are rich in clay and sand. Without adequate fertilisers, such soils easily turn into ‘dust bowls’, a predicament of biblical consequences for local dwellers. Fertilisers require oil, potash or other natural resources, which cannot be captured in most parts of Africa.
AFRICA’S REALITY
It is without doubt that investment into African land should be welcomed. By 2050, Sub Saharan Africa will have 1 billion people – the largest population growth worldwide. The reality is a delicate balancing act of feeding Africa’s children of today and tomorrow with that of gaining much needed investment on the continent. Since the buzzword in the 21 century is corporate social responsibility, could this alleviate the detractors who argue that, Africa is being exploited?
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