Corporate land grabs in Africa

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Fight Racism! Fight Imperialism! 222 August/September 2011

The number of people suffering from hunger worldwide is currently estimated to be 1.02 billion: it is a criminal fact that the countries that are the most food insecure are selling off land in order to secure food for other countries, in what has been dubbed ‘the great land grab’. Sudan has agreed that investors can export 70% of the produce that will be created through land grab deals – yet Sudan is the recipient of the largest food-aid operation in the world. In Kenya, the Qatari government has agreed to fund the building of a coastal port in exchange for a lease of 40,000 hectares of land – despite the fact that an estimated 30% of Kenyans currently suffer food shortages.

In fact, the Oakland Institute, a US-based policy think-tank, found that in 2009 alone almost 60 million hectares of land were leased or bought – that is an area the size of France.

The great land grab began after the global economic crisis broke out in 2007: massive tracts of rural land in underdeveloped countries, particularly in Sub-Saharan Africa,1 are being bought up, largely by governments looking to avoid political uprisings in the wake of the crisis by securing their country’s food and energy supplies. Other purchasers are investors in the form of hedge funds and private equity houses, such as UK Emergent, which has invested in 14 different African countries through its Agriland Fund.

There are a number of other motives behind this land grabbing. Private investors, which include institutions like Harvard and other US universities acting through European speculators and British hedge funds, are buying up great stretches of land and engaging in speculative activity in order to make a profit: the soft commodities market (commodities that are renewable in nature) has provided a return that since 2007 has, together with the appreciation in the price of the land bought, begun to outstrip that of hard commodities.

The demand for land is also being driven by the growing biofuel industry, as well as other manufacturing requirements. Countries such as Britain and the US, which consume vast quantities of oil to meet their energy needs, are increasingly looking to biofuels to secure their energy supply for the future. For example, the EU intends to increase the proportion of biofuels used in land transport to 10% by 2020.2

But the majority of the perpetrators are foreign governments, often investing through sovereign wealth funds. Since the onset of the crisis, the price of food on the world market has shot up; in a protectionist measure, countries relying heavily on food imports are seeking to side-step the volatility of the global food markets by buying land and producing food directly. There are some countries, such as the oil-rich Arab countries, that have another problem: whilst they can afford food at almost any price, they cannot risk food-producing nations imposing export bans to protect domestic supply – as India did when it banned the export of wheat in 2007. Owning the food-producing land removes such risks.

The World Bank: central to exploitation

In previous decades, the buying up of foreign land was considered a risky and unstable investment due to problems with access and security and, in several countries, the presence of domestic laws prohibiting the ownership of land by foreign investors. Enter the World Bank (WB).

The International Finance Corporation (IFC) is a private – ie profit-making – agency of the WB. The IFC and the Foreign Investment Advisory Service (FIAS), which is managed by the IFC, have been central to the opening up of underdeveloped countries to international capital by selling ‘products’ to governments that comprise a programme of technical assistance and advisory services.

One such product is called ‘Access to Land’, which focuses on three key areas:

1 Accessing land: ensuring that serviced land is available for purchase and use by investors.

2 Securing land: the FIAS works with the client government to develop systems of land registration and methods for the acquisition and securing of rights over land.

3 Developing land: amending investment policy and simplifying the regulatory requirements for investors.3

The FIAS also works with governments to create ‘Special Economic Zones’ (SEZs); these are geographic areas that offer incentives such as duty-free importing to businesses that situate themselves there. In the 2009 financial year, for example, the FIAS developed SEZs in Democratic Republic of Congo and Liberia.

The FIAS advises governments on the amendment of national law and regulatory reform which increases what the IFC terms the ‘Business Enabling Environment’. Many of the land grab contracts, which in Sub-Saharan Africa are usually for a duration of 99 years, come with unlimited water rights and rent-free periods that last for several years. In January 2010, Indian company Karuturi signed a 90-year lease of 300,000 hectares of land in the Gambella region of Ethiopia, with a 6-year rent-free period – and very cheap rent thereafter.

Unsurprisingly, the IFC is also an investment body; it lends or invests capital, with a view to obtaining a return. It has a global portfolio of projects. Thus, as the Oakland Institute’s report states, the IFC ‘advises governments from the perspective of an investor and with the objective of increasing and strengthening not only FDI in general, but its own investments and development agenda’. 4

Robbery and resistance

Contrary to corporate rhetoric, the players behind these deals are not interested in socially responsible investment, but instead are betting on civil war and political unrest. Philippe Heilberg, CEO of US investment fund Jarch Capital, is cited in the Oakland Institute’s report as someone who has professed that in making investment decisions, he relies on what he views as the inevitable breaking up of several African states in the coming years.

However these deals are not going down as smoothly as the ruling classes would like. In 2008 South Korean company Daewoo Logistics agreed to lease half of all arable land in Madagascar. This would have forced massive numbers of people off of their land, as 70% of Malagasy people live in rural areas; the news of this deal caused an uprising of the people that overthrew the government, and in January 2009 the corporation had to abandon its plans.  The Pakistani government is one that knows that resistance is inevitable (it has agreed that none of the national labour laws will apply to people employed by foreign investors and that 100% of the produce can be exported) and so is offering to Abraaj Capital, Qatar Livestock and other UAE investors a 100,000-strong security force spread across four provinces to protect their investment.

The WB and other investors claim that this land grabbing is a win-win deal, where the host country benefits from increased employment, improved infrastructure, the introduction of new technologies and seeds and the expansion of livelihood options for people. But turning a country into a monocrop producer (as large-scale commercial farming tends to do) makes it over-reliant on one crop, exposing it to market fluctuations – not to mention potential environmental havoc.

The majority of the world’s poor survive off the produce of small farms, but these deals will force small farmers out of work and into the exploitative employ of the corporations that will farm the land. The land grabs will also displace local populations – through manipulation or brutal force – and rob the world’s poorest of the ability to live and survive off their own land; those who already contend with the highest levels of food insecurity in the world are being pushed down on even harder.

Neeva Shanti

1 Massive deals have also taken place in the Philippines, Pakistan, Indonesia and many other countries.

2 Shepard Daniel with Anuradha Mittal, The Great Land Grab: Rush for the World’s Farmland Threatens Food Security for the Poor, The Oakland Institute, p4.

3 (Mis)Investment in Agriculture: the role of the International Finance Corporation in global land grabs, The Oakland Institute, p13.

4 Ibid, p10, their emphasis.

 

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