Lee-Roy Chetty
Lee-Roy Chetty

Understanding the growing trend of large-scale land acquisitions in Africa

The exponential international interest in investing in African farmland has attracted considerable attention recently. A 2011 Africa Development Bank study notes that 29 million of the 56 million hectares of land – approximately 51.8 percent – sought after by foreign investors globally is located in sub-Saharan Africa. Though countries with abundant uncultivated land attracted the most interest, additionally countries with poor records of rural land tenure, lack of institutions protecting vulnerable groups, and the absence of a culture of disclosure have also been targeted for large land acquisitions from foreign entities.

Added to this trend, large-scale land acquisitions have not been limited to investors from middle- or high-income countries. Large-scale acquisitions by domestic investors are also on the rise. In addition, cross-country investments in Africa have also been prevalent. Libyan investments in Mali, Mauritian investments in Mozambique and Egypt’s investment in Ethiopia are just a few cases in point.

Much of the information regarding these investments still remains anecdotal. Media reports remain the primary tool for gathering data on the status of land deals, the size of the purchases or leases, and the amount of the investments. Based on available data, the key features of these large scale investments include the following variables:

  • Most documented cases of land leases are granted by African governments. The most striking case is that of the Democratic Republic of Congo where almost 50 percent of the arable land is either leased to foreign companies or under negotiation for leasing.
  • The flow of land investments in Africa is mainly driven by land fees that are either minuscule or missing altogether. The land fees are in the range of USD 4.8- 7.1/ ha in Sudan, USD 6-12/ha in Mali, and USD 6.5-10 /ha in Ethiopia while the comparable figure in Peru (situated in Western South America) is USD 300/ha.
  • In some instances, the boundaries between private and public investors are not clear-cut. Cases in Sudan and Mali are cited where the signatories are government ministries, but implementation is driven by private entities in Sudan and land rights are transferred to a third party (private) in Mali.
  • Although the pattern is becoming more diffuse, patterns of bilateral investment flows are observed.These differ from the traditional pattern of foreign direct investment in that they are resource-seeking (land and water) rather than market-seeking; emphasis is put on production of foods and crops for biofuel production for export back to the investing country rather than for domestic consumption or wider commercial export.
  • They involve acquisition of land and actual production rather than looser forms of joint venture (for instance contract farming). The involvement of sovereign wealth funds, investment funds and institutional investors is limited but the magnitude of the funds at their disposal make them potentially important sources of investment funds in the future.

The recent interest in large-scale land acquisitions by foreign investors in Africa is not attributed to a single factor. However, the few studies in this area, so far, have narrowed down the set of proximate factors. Within this context, two complementary causes have been identified. These include food security and energy prices in investor countries, and investment opportunities in agriculture.

The first factor is a cumulative effect of limited availability of water and land in investor countries, bottlenecks in storage and distribution, expansion in biofuel production, and increasing urbanisation and changing diets.

Conversely, the second factor points towards expectations of rising returns in agriculture and land value, and generally positive policy reforms in African countries that have improved the investment climate in Africa.

In contrast, the global food price crisis in 2007-2008 may have increased competition for fertile land resources. In addition, the housing and stock market crisis in 2008 created an investment vacuum that eventually led to increased interest in agricultural commodities and competition for land.

Thus, these investments are not only aimed at securing land rights for higher food demand in the future, but also the production of commodities with consistent demand and inelastic supply.

Therefore, it is imperative to evaluate opportunities and risks associated with the relatively new phenomenon of large-scale land acquisitions in the light of this broad set of factors. Moreover, it is useful to consider the implications of these investments in the context of the arable potential of each country of interest in lieu of arable land per capita. Thus, policy prescriptions regarding the maximisation of benefits from these investments should be tailored to fit country contexts.

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    • http://none Lyndall Beddy

      The Brits put the tribal lands into communal land areas to stop the Tribal Chiefs selling the land, as the Griqua had sold their land to Rhodes.

      As soon as the new African Tribal Chiefs got control – they started selling the land.

      And that includes the ANC. There not only has been no audit of who owns land in the whole period of ANC rule, but there has also been no audit of what state,municipal, parastatal and even donated land they have SOLD!

    • http://www.sane.org.za Yaj

      This another effect of Peak Oil driving up the demand for biofuels, driving up the price of grains and food.

      In reality it is peak everything -peak debt, peak coal. peak topsoil, peak fresh water, peak fish stocks -all the result of an endless growth paradigm caused by debt-based economics and compund interest.

      Please read “The End of Growth” or “The Party is Over” by Richard Heinberg to un derstand what I keep banging on about.

    • Foom

      Lyndal, you’re hilarious. The Brits were safeguarding native lands? My amusement at this staggering distortion of history is unbounded.

    • Enough Said

      The new scramble for Africa is very worrying. Pushing millions off their land to satisfy foreign markets. Growing biofuel crops to feed cars in Europe while Africans starve. Not good. The large land grabbers also have no vested interest in the environment or ecology, just rape the land for as long as its profitable.

    • Peter Joffe

      Oil, Gold Diamonds and Minerals will not be what future wars are fought over. It will be land, or more precisely what that land can produce. As more and more African countries rely on food aid the time will come when the donors can no longer provide such food. Zimbabwe has destroyed their agriculture for political reasons and South Africa is following suit. Land will become a vital resource that will have to be farmed by the most effective farmers in order to feed the people. The ANC wants land but when they get that land, they don’t know what to do with it and it lies fallow. So if the ANC or whoever can lease that land off to people (not white of course) who can make the land productive they may be happy to take a share of the food. Any idiot can and usually does become a politician but the same does not apply to agriculture. Agriculture is a science, an art and plenty of hard work. Water too is being destroyed through the foolishness of the ANC. Like Zimbabwe and other African countries, “They are free but they are starving”. Nobody should exchange democracy for hunger but that is what is happening and people from over our borders use the opportunity to use arable land in tin pot dictatorships to fill their stores with food grown on much needed land. Countries with the least ability to produce food, produce the most children. It is a calamity that is going to happen and quite soon I am afraid.

    • http://none Lyndall Beddy

      Foom

      The Brits were very sentimental about leaving existing rulers/customs in place in both India and Africa – even if they were corrupt or thousands of years out of date or sexist.

      The Brits are the snobs of modern History, the Americans are the racists.

      After their honeymoon Prince Charles and Camilla went to stay with one of the old Inidan Majarahs in their palace (now a hotel); and they both recently visited the Zulu King.

    • http://none Lyndall Beddy

      Peter Joffe

      The only reason that Mugabe is still there s that Mandela himself protected him.

      Both De Klerk and Tony Leon wrote in their autobiographies how Mandela’s praise of the Mugabe/Nkomo “Unity Government” accord puzzled them.

    • Rich Brauer

      In addition to the countries you’ve named (Egypt, Libya, Mauritius), my understanding is that the Gulf States are also major agricultural investors. Largely in an effort to ensure cheap food security in places where agriculture is expensive and very water intensive — not unlike the three mentioned, where arable land is at a premium.

    • Brian B

      If we all followed Lyndall’s logic the UN would become redundant and the world would implode .

    • bernpm

      @Yaj#.. I tend to agree with you. The general scarcity of vital resources is creating a new form of colonising Africa. Many newly established African governments seem to fall for it.
      Capable farmers are in demand. SA farmers moving North, producing food or biofuel?? Can SA blame them?

      ANC and followers want land but “one cannot eat land” (See Peter Joffe’s comment).

      Out of curiosity. May I ask the author a question?? You are currently completing a PhD in economics…….is the regular stream of your articles on economic issues related to this PhD? Are you asking us -without saying so- to comment on some of your theories on African econolmics?? Do you include a study of new economics (NEF) in your thesis? who is your promotor?

      You do not have to answer, just interested! :-)

    • Richard

      @Foom, one of the interesting things in the experience of colonialism was the relative liberalism of the cosmopolitan power compared with the conservative and expansionist colonials. Perhaps this can be understood as the difference between imperialism and colonialism, actually different concepts. In South Africa, for example, Dutch white settlers kept moving eastward and westward, against the wishes of the British power structure. Then all people were subject to the same common law. The resulting clash between the two power-holders was expressed in Slachtersnek. The experience in the North American colonies was the same, with the local British subjects having no interest in the native Americans, apart from how they might usurp them. Britain was always aware of the indigenous peoples in its colonies as it ruled them indirectly, and so was chary of introducing too many changes. This was one of the complaints levelled against it during independence movements. In the South African context, the atmosphere has been poisoned by the National Party and its trashing of any strands of history other than its own. Be careful not to buy into it too deeply.

    • Enough Said

      @bernpm – Unfortunately the white SA farmers that go into Africa take their destructive agricultural practices with them, exacerbating climate change and planting crops that need large amounts of water, as well as artificial fertilizers, and chemical pesticides, and wait for it, GM seeds. Agriculture needs to transform if we are going to feed the world and African farmers need to stay on the land and be taught high producing ecological agricultural farming, which provides jobs, sustainable livelihoods, and preserves the environment.

    • bernpm

      @Enough Said: “Unfortunately the white SA farmers………”. I feel lucky to have met some “white farmers” who farm ecologically more responsible than many a citizen.
      Please do not generalise! Cuts the bottom out of your statements.

    • http://none Lyndall Beddy

      Enough Said

      You are confusing white African farmers who are totally eco-conscious, with American farmers who are not, nor are the European bureaucrats of the EU.

      How do you think the Dust Bowl formed in the USA; and why are the EU bureaucrats making farmers in the Med pull out olice trees and plant tobacco?

    • Peter Joffe

      @Lyndall. In the days of Nelson Mandela, Mugabe had only killed off the Ndebele, about 100,000 of them, I believe. Mugabe started his rampage of death and destruction in the reign of Mbeki and now Zuma, both of whom treat him as a god and have done all in their power to see that the killer remains at the head of his army of genocide. Perhaps they are getting their share of blood diamonds? The reports on the elections of 2002 and 2008 that we all know were ‘fixed’ have still not been released . Elections are not needed in Zim because the results are known before the election even takes place and the ANC will validate them! Talking of dictators, where are the ‘secret tapes, that got Zuma off the hook? Of course there are no tapes as they never existed. If they did in fact exist, would not the best way to shut up the critics, like me, be to release those tapes as has been ordered by the court. Zuma disobeys the courts as does the ANC so what is the public to do – take away his driver’s licence, if he has one?? No we will never get to see these fictitious tapes and the march to a idiocracy continues. Hopefully we won’t have to look forward to a ZANU-PF type “democracy” where bullets and panga’s are more powerful than the x on a ballot paper. Violence cannot replace promises and wars have only losers and there is no economics in politics.

      This comment has been edited.

    • http://none Lyndall Beddy

      Peter Joffe

      Mandela is protecting Mugabe – and the whole world listens to him, and his “no opposition parties”, “ubuntu”, “one Pan Africanist tribe”, “Unity Government” theories.

      Mandela is still the King/Chief – Zuma is only the Prime Minister.

    • http://none Lyndall Beddy

      Peter Joffe

      It is Mandela, himself, who is the Pan Africanist Black Racist, and who worked on the White Guilt of the rest of the world, and the Diaspora Black Myths of Africa,

      Apartheid (sepeteness) was not about racism but about seperating CULTURES with the skin colour being the means of identification.

      Skin colour identification was usefull also because it could be justified by “the children of Ham” story from the Bible.

      Which was NOT an Afrikaner idea but copied from white America – who used it to justify slavery, and later to stop blacks getting the vote until 1965. And it was also a story used by the Australians to justify their policies, including their whites only immigration policy, which contined until a decade or so after the war.

      In 1948, when the Afrikaner came into power and started the Apartheid system, both America and Australia had similar racist policies, based on the same Noah story.

      Apartheid started 100 years after the British had set aside Black Homelands – because these Homelands had not developed and had become rural slums, deforested and overgrazed and over populated, with unemployed blacks pouring out of them into South Africa.

      And 18 years after apartheid ended they are STILL rural slums!

    • http://none Lyndall Beddy

      Peter Joffe

      I believe that Mandela and the ANC protect Mugabe and Zanu-PF because they have the dirt on the ANC from their exile days and could break this “glorious struggle” mythology.

      There are also allegations that the Arms Deal profiteers invested their profits in joint ventures in Congo mines with Mugabe, which rumours could have basis in fact.

      What other LOGICAL reason could they have to oppose targetted sanctions?

    • http://none Lyndall Beddy

      Brian B

      The UN is already a total and expensive waste of time – when have they protected a single MINORITY?

    • http://www.alusi-biafra.posterous.com Ernie Okeke

      A very scary topic first highlighted almost 2 years ago. The poor in Africa are still deprived of a lot. Now what remains of their rights to subsistence and only piece of this continent to call their own, will soon be sold off by greedy political class. Mind you, at the moment we are talking of the return of European interests in African land , the Chinese are quickly running out on raw materials to support their industries which churn out fake products most of them headed our way. Add to that the needs and demands of almost 2billion citizens joining in the fray, the fear of China becomes the new beginning of political wisdom!
      Then imagine land grabs, forced evacuation of the powerless and vulnerable by those with power and connections,displacement of entire communities, migration and the list goes on. Alarmist perhaps, anything is possible in Africa, all it requires is a trigger.

    • Enough Said

      @bernpm – OK then – the large majority of white farmers use environmentally destructive agricultural practices. There are very very few farmers in South Africa white or black that practice ecological farming. Very few.

    • http://none Lyndall Beddy

      Enough Said

      Quote your sorces for your claims about South African farmers, and WHAT incorrect practices? I doubt you know anything about farming yourself.

    • Enough Said

      @Lyndall – I have university training in agriculture, and have been involved in farming one way or another for many years. I am not prepared to argue with either you or bernpm any further on this topic. I have stated my case which is well documented by respected agronomists, including a 2500 page report put together by hundreds of agricultural scientists across the world, and which is backed by top international organizations in the field. Look up the information yourself or continue your line of argument if that suits you.

    • http://none Lyndall Beddy

      Enough Said

      I don’t believe you are telling the truth – so prove me wrong. Quote your sources from your agricultural university training about the bad practices of Afrikaner farming and exactly what these practices are.

    • http://none Lyndall Beddy

      Enough Said

      The Afrikaner BOUGHT the land for the state of Oranje post 1994, and it is a farming success.

      Blacks were GIVEN half the agricultural land by the Brits 150 years ago and they are ever increasingly rural slums.

      Can you, with your agricultural training, explain WHY?

    • http://yahoo willard sibanda

      it is white racists who killed more than 1000000 Zimbabwean people in order to control resources of Zimbabwe, now they planted a violent puppet mdc party to protect their interests, Mugabe gave the people their land back, he is just an antithesis of imperialism. note that we Zimbabweans never complain to own land that is not ours.

    • bernpm

      @Enough Said: “I am not prepared to argue with either you or bernpm any further on this topic.”

      enough said :-)