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.


  • Lee-Roy Chetty holds a Master's degree in Media studies from the University of Cape Town and the University of Massachusetts, Amherst. A two-time recipient of the National Research Fund Scholarship, he is currently completing his PhD at UCT and is the author of a book titled – Imagining Web 3.0 Follow him on Twitter @leeroy_chetty. He can also be contacted via e-mail at [email protected]


Lee-Roy Chetty

Lee-Roy Chetty holds a Master's degree in Media studies from the University of Cape Town and the University of Massachusetts, Amherst. A two-time recipient of the National Research Fund Scholarship, he...

Leave a comment