African Countries Need Sustainable Agricultural Investments

on Jun 21, 2012

In a recent article, the Financial Times reported that African countries have been enjoying increased attentionfrom foreign agricultural investments lately. The continent is rich in fertile, but underdeveloped land and has gained the interest of oil-rich Gulf Arab states in particular, with these countries particularly heavily dependent on agricultural imports.

The FT reminded that back in 2008, many commodity producer countries placed restrictions on their exports, causing a hike in prices and a spur of agricultural investments in Africa. But as cash flow into these countries soared, so did concerns about the risks and sustainability associated with large-scale foreign investments in the land of often impoverished, undeveloped African states that are often challenged in meeting the nutritional needs of their own people.

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The FT said that “land grabbing” is one practice that has posed serious challenges in those areas.To illustrate the magnitude of the problem, FT quoted data by Land Matrix, an online database of land agreements worldwide. According to the database, which has tracked 986 deals in over a decade, of 57.3 million hectares of land acquired, 41 percent occurred in Africa. Among the top 10 targeted countries were Ethiopia, Sudan, Zambia, the Democratic Republic of Congo and Madagascar. One influential reason for such massive land acquisition can be attributed to the fact that much of the land in Africa is owned by the state and is sold relatively cheaply.

Michael Taylor of the International Land Coalition told the FT: “It is of serious concern that the investment model that has been used up to now, that of acquiring land, is seemingly the dominant one, so there’s a need for regulation. There’s a need for governments to be making firm decisions in light of a broader strategy on rural development.”

!m[](/uploads/story/78/thumbs/pic1_inline.png)“We talk to many stakeholders and the one thing we hear right across the board is that we need investment, but it has to be the right kind,” Taylor added.
To help deal with the problem, the UN earlier this year proposed that countries set limits on the size of agriculture land sales to regulate the growing trend. The FT further noted that although investors are becoming increasingly aware of the political risks and huge logistic difficulties that agricultural investments face, experts predict that the trend of foreign investor interest in Africa’s soils is likely to continue.

According to Paul Mathieu, a senior land officer at the UN’s Food and Agriculture Organization (FAO), investors may become more careful and may turn to types of investments that do not necessarily involve land acquisition. He also said that investors could consider employing local people as contract farmers instead of displacing them.
Additionally, Mathieu asserted that investors aren’t the only ones facing challenges. Local governments are dealing with issues of their own. A major culprit, for example, is the limited amount of human resources and technology that isvital for monitoring and regulatingagricultural investments.
The FT cited experts who are warning that if both sides –governments and investors — become too cautious, it could hinder the flow of investments altogether.
Chris Isaac, director of business development at AgDevCo, a non-profit organisationworking on sub-Saharan Africa agricultural projects, said: “Unless you bring in private investment, technology and skills, it’s going to be very difficult for the agriculture sector to move beyond where it is today.”


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