Africa: A Continent for Sale

The massive and insatiable land grab in Africa by multinationals, including from India, marks an inevitable catastrophe

Anuradha Mittal and Nickolas Johnson Oakland/California (US) 

Land investments — the purchase or lease of vast tracts of land from mostly poor, developing countries by wealthier food-insecure nations and private investors for the production and export of agrofuel crops — a trend popularly known as ‘land grabs’, are underway with acquisitions advancing at a terrific pace. In 2009 alone, nearly 60 hectares (ha) of arable land — an area the size of France — was purchased or leased, with over 70 per cent of it in Africa.

In many ways, the global land grab was spurred by events surrounding the 2008 food crisis. Following the steep hike in food prices, rich countries with limited land and water resources, such as the Gulf States, have eyed resources in developing countries to ensure their food supplies. Similarly, agribusinesses from China, South Korea, the US, Europe, Malaysia, India, Sweden, and Brazil, seeking land to grow food for export markets, are purchasing/leasing land overseas.

The 2009 collapse of international markets precipitated a rush to invest in the comfortingly tangible asset of farmland. Private equity and hedge funds have teamed up with agribusinesses to grow what pays on the global market. Sovereign wealth funds, multinational companies, pension funds, university endowments and domestic capital are also in the game.

For the first time, ‘South-South’ deals involving regional powerhouses like Brazil, India, and South Africa are seeking land from poorer countries. Governments are signing deals that cede control over food, land, and trade for decades to come. Contracts rarely, legally, require investors to sell to domestic markets, ensure livelihoods, conduct environmental assessments, or conserve water resources.

Starting 2011, a California-based policy think tank, the Oakland Institute (OI), started releasing its findings, based on extensive field research on the impact of land investments, painted as a development opportunity for developing countries to generate income and employment and draw on private sector initiative to help in transfer of technology and know-how, and investment in infrastructure. OI’s research, however, proved that by taking advantage of the lack of government oversight and transparency, large foreign agro-businesses acquired land with multi-decade leases at giveaway prices while providing little or no economic benefit to local communities.

Oppressive government policies are forcibly removing hundreds of thousands off their land to make way for large, mechanized farms. Hiding behind government approval of these deals, corporations are breaking national and international laws under the guise of development. These large-scale investments in land in Africa are resulting in food insecurity, the displacement of small farmers, further marginalizing the pastoralists and the indigenous, fueling conflict, environmental devastation, water loss, and further impoverishment and political instability of African nations.

Who is investing?

News coverage to date has emphasized the role of countries like China and Gulf States in the acceleration of land acquisitions in Africa. Our research showed that Indian firms are extremely active in countries like Ethiopia; it highlighted the major role of western firms, wealthy US and European individuals, and investment funds with ties to major banks such as Goldman Sachs and JP Morgan.

Investors include not only investment firms like the London-based Emergent Asset Management (now through EmVest), who work to attract speculators, including US universities such as Harvard and Vanderbilt — with a primary motivation of economic access to agricultural land that will have high returns for the endowment. Knowledge of such investments has mobilized students who are demanding responsible and ethically managed endowments.

The largest land deal in Tanzania involved the Iowa agribusiness entrepreneur and Republican Party stalwart, Bruce Rastetter, and an important donor to the Iowa State University. Once exposed by the Oakland Institute, the university withdrew from the deal

Several Texas-based interests were associated with a major 600,000 ha South Sudan deal which involved Kinyeti Development, LLC, an Austin-based ‘global business development partnership and holding company,’ managed by Howard Eugene Douglas, a former US Ambassador at Large and Coordinator for Refugee Affairs. The land in question is home to nearly 90,000 people. Revelations that the land was signed away by a ‘fictitious co-op’ put together by ‘influential natives’ alerted communities who managed to stall the deal.

The largest land deal in Tanzania involved the Iowa agribusiness entrepreneur and Republican Party stalwart, Bruce Rastetter, who served as CEO of Pharos Ag, co-founder and Managing Director of AgriSol Energy, CEO of Summit Farms, and an important donor to the Iowa State University. Rastetter was appointed to the Iowa Board of Regents and until early 2012, Iowa State University provided ‘private’ research services that benefitted Rastetter’s investments in Tanzania. Once exposed by the Oakland Institute, the university withdrew from the deal.

Many European companies are also involved, often with support provided by their governments and embassies in African countries. For instance, Swedish and German firms have strong interests in the production of biofuels in Tanzania.

Major investors in Sierra Leone include Addax Bioenergy from Switzerland, and Quifel International Holdings (QIH) from Portugal was involved in Sierra Leone and Mozambique. Sierra Leone Agriculture (SLA) is actually a subsidiary of the UK-based CAPARO Renewable Agriculture Developments Ltd, associated with the Tony Blair African Governance Initiative. SOCFIN Agricultural Company Sierra Leone Ltd is a subsidiary of the Belgo-Luxembourg company, SOCFIN, whose main shareholder is Bolloré Group, owned by prominent French entrepreneur Vincent Bolloré.

Indian firms, including Karuturi Globa and Ruchi Soya, among others, claim to have acquired over 600,000 ha of fertile land to grow edible oils, crops and cotton for export in Ethiopia, the fifth ‘hungriest’ nation in the world.

Your land is my land

Those promoting land investments as the new development paradigm claim that their initiatives target unused and unproductive land while providing employment and growth opportunities to local populations. In Ethiopia, the current ‘villagization’ process, impacting nearly 1.5 million indigenous people, is taking place in the very same areas targeted for land investment by large-scale investors.

In Samana Dugu in Mali in 2010, when bulldozers moved in to clear the land, men, women and youth from the community protested the cutting of their trees but were met by police forces, who beat them up and arrested them.

In Tanzania, the Memorandum of Understanding (MoU) between AgriSol Energy and the local government stipulates that the two main locations — Katumba and Mishamo — are refugee settlements that will have to be closed before the project can start. Yet, the 162,000 refugees living there since 1972 have been farming this land for 40 years.

Major African rivers — the Nile, Zambezi and Niger — are tapped by these land grabs. As an investor said, ‘Internally, we call our land fund — water fund’

OI’s research showed that farmers are not simply removed from their land, the so-called ‘unused’ land leased to investors in Africa is either fallow land or forests, generally used for a wide range of purposes (collection of timber, wild food, firewood, medicinal plants, protection of watersheds, protection against erosion, and so on).

Instead of using marginal or infertile land, as often claimed, most deals are actually taking place in the vicinity of water resources, offering irrigation potential, near other infrastructure (railways, roads), and fertile soil. Major African rivers — the Nile, Zambezi and Niger — are tapped by these land grabs, which provide control not only over land, but also over water. As an investor told the Oakland Institute team, “Internally, we call our land fund — water fund.”

Water and food — unlimited buffet

Foreign corporations are treating Africa’s water like an all-you-can-eat buffet. Many of the deals give developers free rein to take as much water as they want, dams and irrigation schemes are built, and groundwater is used with no analysis of the devastating impacts this will cause. As a result, local residents, especially women, have to travel much farther than before to find water, try to get into plantations to access their old water sources, or purchase it at inflated prices.

African rivers are lifelines for the people who depend on them for water and irrigation, but, now, major rivers are being drained so fast that they could be facing extinction. For example, the Niger river is decreasing by 10 per cent every decade and the problem is getting worse as more and more water-intensive agrofuel plantations emerge. In Ethiopia, the construction of a large dam on the Omo River and the irrigation of adjacent sugar plantations will result in Kenya’s Lake Turkana, the world’s largest desert lake, to drop by two metres in the first year, increasing salinity levels, adversely impacting fish stocks and invaluable grazing areas on the banks and condemning the lake to a not-so-slow death.

The Oakland Institute research found little assurance that large-scale agricultural investments can improve food security, despite claims made by governments and investors. In many cases, local food farms are sold off in order to make room for export commodities, including biofuels and export crops. Chayton Atlas, a fund operating in Zambia, boasts of its investment protection agreement with the government, allowing it to export 80 per cent of its food crops grown and stored in the country, even in times of shortages.

The idea that land deals bring much-needed employment opportunities to poor countries has been used to justify large-scale land investments as a potential ‘win-win’ scenario for both investors and developing countries. However, first-hand evidence from our field research in multiple African nations and the analysis of over 100 land deals reveal that promises of job creation are often overstated, if not completely false.

‘Modern’ agricultural schemes are highly mechanized and provide relatively few jobs, which are often short-term or seasonal. There is no indication that investors are seeking to maximize local employment or that governments are prioritizing job creation. On the contrary, investors often find scalable, mechanized agriculture to be more manageable, and governments lure these investors by placing few or no limits on expatriate workers.

The Emvest Matuba investment project summary and staff at Emergent and EmVest promised job creation with majority employment from the local community. A head count provided in 2011 by Emergent revealed that only 17 permanent positions in the agricultural field were created with 85 seasonal jobs. The largest permanent positions were in security.

The average farm size in Mali is just 4.7 ha and one third of the 805,000 farm households cultivate less than 1 hectare. The 2011 study showed that the area covered by large land deals could easily sustain 112,537 farm families, well over half-a-million people. Instead, that land was concentrated in the hands of 22 investors, and would create at best a few thousand jobs.

In Western Equatoria, South Sudan, Equatoria Teak promised that it would create 6,000 jobs. It initially hired about 600 people from the local community and paid just seven Sudanese pounds per day (a little more than $2). By the time it stopped project operations in October 2010, Equatoria Teak was employing approximately 250 people.

Not only are these foreign corporations failing to follow through on promises of jobs, in some cases they are actually taking jobs away from local workers by importing more easily exploitable immigrant labourers. Countries like Uganda and Kenya have been pressured into granting exemptions from local labour laws and this has created a race to the bottom for desperate workers.

Indeed, it’s a bleak situation. And time for the world to decisively shift the paradigm. Or else, this will lead to an inevitable catastrophe and mass social unrest in the days to come.
  
This article is based on research carried out by the staff and researchers of the Oakland Institute, Oakland, California, US. For more information, see  www.oaklandinstitute.org.

TALK DEVELOPMENT, GRAB AFRICA

Herakles Farms — Expanding Palm Oil Production in Africa

In one of the most egregious examples of land grabbing in Africa, a 73,000 ha palm oil project developed in Southwest Cameroon by Herakles Farms (US), is in violation of Cameroonian law. Prior to submitting an Environmental and Social Impact Assessment, Herakles’ local subsidiary began clearing forests and planting seedlings. The project, which could disrupt food supplies and livelihoods for as many as 45,000 area residents, is resisted by local activists. It will result in massive destruction of rainforest in an area of exceptional ecological richness and diversity. In August 2012, the firm decided to withdraw from the Roundtable for Sustainable Palm Oil, the body that promotes global social and environmental standards for palm oil production, because of the difficulties in complying with its standards and grievance mechanisms. However, the project is still moving ahead.

Agrisol Energy LLC – Tanzania

In the largest land deal in Tanzania, the Iowa-based AgriSol Energy LLC and Iowa State University College of Agriculture and Life Sciences was planning on developing a large agricultural enterprise across three ‘abandoned refugee camps’ totalling 325,117 ha. Far from being abandoned, the Katumba and Mishamo settlements are thriving communities that are home to more than 160,000 people, and the land AgriSol seeks in Katumba is part of a protected forest reserve. Once secret negotiations between US investors, the Tanzanian prime minister, and other political elites as well as the Iowa State University were exposed, pressure from inside and outside Tanzania began to build. AgriSol had hoped to break ground in 2011, but the plans were stalled as international controversy around the investment grew. In February 2012, Iowa State University pulled out from the deal.

SOCFIN — Sierra Leone

In 2011, Socfin Agricultural Company Sierra Leone Ltd secured 6,500 ha of prime farmland for rubber and palm oil plantations in the south of Sierra Leone. Despite political backing, the Socfin SL investment faces significant resistance from the local population. In October 2011, 40 protesters were arrested after criticizing the company’s lack of transparency, proper consultation, and information regarding potential resettlement. Protesters raised issues of inadequate compensation, corruption, and pressure on land owners and town chiefs to sign agreements. Calling for outside support for their struggle, locals have continued their movement to ‘peacefully resist the Company’s operation, proclaiming that they will no longer allow the company’s personnel or their machines to enter upon and operate on (their) land’.

Ethiopia — Rape, Torture, Jail

Saudi Star’s 60-year, 10,000-ha lease came free of land rent. This cost incentive fueled the company’s planned acquisition of 500,000 ha of land in Gambella and other states to grow a projected one million tons of rice, as well as maize, teff, sugarcane and oilseed. Marred in conflict and human rights abuses after documented cases of arbitrary arrests, beatings, rape and torture, Saudi Star remains one of the most watched land deals. As locals tell of no prior consent about the land deal as well as of being forced off their land by the government, conflict has escalated and a shooting took place on the Saudi Star compound which left five Saudi Star employees dead in June 2012. In retaliation, the Ethiopian government has been indulging in arbitrary arrests, beatings, rape and torture. 

This story is from the print issue of Hardnews: APRIL 2013