ABU DHABI, U.A.E. (Reuters) — African countries that missed out on cash from Persian Gulf countries wanting to invest in agricultural projects are trying to entice Arab investors with deals they say are designed to avoid past problems.
An earlier wave of foreign investment in African farmland aroused domestic hostility on some projects, with opponents regarding them as land grabs that ate into local people’s food needs.
However, governments in Zambia and Ghana are arguing that everyone can benefit from such investment, provided it is properly regulated.
Read Also
Agriculture ministers commit to enhancing competitiveness
Canadian ag ministers said they want to ensure farmers, ranchers and processors are competitive through ongoing regulatory reform and business risk management programs that work.
They took their message to a global agricultural forum in the United Arab Emirates, offering land lease and production sharing deals that aim to raise money for helping their own small scale farmers and feeding local people.
“We are here because we want to interest some of these investors to come and invest in Zambia,” said agriculture minister Robert Sichinga. “So far there hasn’t been interest from the Middle East, and yet we are an important destination.”
Desert states of the Gulf, which rely on imports for 80 to 90 percent of their food needs, started investing heavily in farmland overseas around 2008.
The spending spree was prompted by bad weather in large food producing nations, increasing use of land for biofuel crops and curbs on agricultural exports by some governments, which caused grain futures prices to soar.
Investments included land to grow crops in countries such as Sudan, Ethiopia and Namibia, but other African nations have been left out.
Sichinga said land lease deals could provide much-needed money to take Zambia’s agricultural sector to the next level of development.
Ghana, the world’s second largest cocoa producer, was also keen to strike deals for an agricultural sector that accounts for more than half of its gross domestic product.
“The government alone is unable to provide the needs for the sector, so we need to tap foreign direct investment,” said Rashid Pelpou, minister of state for private sector development.
Ghana’s government wants to create a land bank for investors and offer prison-owned land to investors for nothing.
“We are looking to lease lands and we are happy to work with people,” Pelpou said.
The government also offers tax free arrangements for agricultural investments in northern Ghana. In return, the farming projects would typically split their production, with part going to the domestic market and part exported by the investor.
Resources are badly needed to develop small scale farming in Africa. Zambia has only 500 commercial farms compared with 1.5 million small farmers, Sichinga said.
The country is farming only 14 percent of its 170 million acres of arable land, but it is self-sufficient in most crops and exports food to neighbours.
“Foreign direct investment would help us secure more export markets,” Sichinga said.
Still, foreign investments in farmland have entangled some Gulf investors in political and social problems. According to critics, their projects have been difficult to get off the ground.
In Ethiopia, where farmland in the Gambella region was leased to Saudi-based billionaire Mohammed al-Amoudi, five people died in April 2012 when an armed group am-bushed the firm’s employees.
Human Rights Watch, a non-government body, said it thought the attack was linked to government moves to resettle villagers to clear the way for commercial farming.
Saudi Star, Amoudi’s firm, said at the time it thought the violence was propagated by outsiders and has continued with its project.
The attack is one example of how land deals can create more problems than solutions for Africa, but observers believe it all depends on the kinds of agreements that are negotiated.
Roy Steiner, deputy director of agricultural development with the Bill and Melinda Gates Foundation, said projects should benefit the host country by helping small farmers develop their businesses.
“It completely depends on the context and how the investment is done,” he said. “If it is done well with consultation about issues that develop small farmers, then it is good, but if it is done as an outside imposition, then consequences are possibly negative.”
Kate Geary, a land adviser with Oxfam, said ownership of 90 percent of land in sub-Saharan Africa is unregistered, which means people are vulnerable to being driven off their land to make way for big projects.
“Poor people are often left homeless, landless and with no compensation to rebuild their lives, and any food that is grown is flown thousands of miles away,” she said.
“Positive investment in agriculture, which strengthens people’s rights to resources, improves their access to markets and supports women’s rights, is vital.”
Al Dahra, a privately held agricultural firm in Abu Dhabi with farmland across Europe, North and South Americas and Africa, said it has not faced problems because it shares produce equally with the host country and creates jobs where it invests.
“We care about food security in both countries — in our country and in the host country in which we are investing — and we almost always come up with a 50-50 sharing formula,” said vice-chair Cadim Al-darei.
African countries are confident that regulations will prevent problems this time around. Zambia said it plans to give investors leases of no more than 25 years and remove them if they find that investors are misusing land.
“There will be terms for investing, and if there is a local market for the crops that are being produced, then in most cases you will only be allowed to export up to 50 percent,” Sichinga said.
