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SPECIAL REPORT

Africa woos Gulf investors with new farmland deals

Dubai, February 7, 2014

By Maha El Dahan

African countries that missed out on Gulf cash pouring into agricultural projects elsewhere on the continent are trying to entice Arab investors with deals they say are designed to avoid problems of the past.

An earlier wave of foreign investment in African farmland aroused domestic hostility or even unrest on some projects, with opponents regarding them as land-grabs that eat into local people's food needs.

Undeterred, governments of countries including Zambia and Ghana argue that everyone can benefit from such investment provided it is properly regulated.

They took their message this week to a global agricultural forum in the UAE, offering land lease and production sharing deals which aim to raise money for helping their own small scale farmers and to feed local people.

"We are here because we want to interest some of these investors to come and invest in Zambia. So far there hasn't been interest from the Middle East and yet we are an important destination," Zambian Agriculture Minister Robert Sichinga told Reuters on the sidelines of the forum in Abu Dhabi.

In a multi-billion dollar search for food security, desert states of the Gulf - which rely on imports for around 80 to 90 percent of their food needs - started investing heavily in farmland overseas around 2008.

Bad weather in large food producing nations, growing use of land for biofuel crops and curbs on agricultural exports by some governments had sent grain futures prices soaring at that time, prompting the Gulf spending spree to secure access to large scale food production.

Investments included land to grow crops like wheat, rice and maize in countries such as Sudan, Ethiopia and Namibia, but other African nations have so far 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 over 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," Rashid Pelpou, Minister of State for Private Sector Development, told Reuters.

Ghana's government wants to create a land bank for investors. Its efforts also include offering some land owned by the country's prisons for nothing to investors.

"We are looking to lease lands and we are happy to work with people, at the moment we even have free land we can give to people through the prison service as they have vast amounts of land that are not being utilised and investors can partner with them," Pelpou said.

In Accra, Ghana's deputy Information Minister Ibrahim Murtala Muhammed said prisoners sentenced to hard labour often work on prison farms and the crops are used to feed inmates. However, he told Reuters that there was no active policy of offering prison land to investors as far as he was aware.

Ghana also offers tax-free arrangements for agricultural investments in the northern part of the country. In return, the farming projects would typically split their production, with part going to the domestic market for crops which are locally consumed and the investor exporting the rest.

Resources are badly needed to develop small scale farming in Africa. Zambia has only 500 commercial farms compared with around 1.5 million small farmers, Sichinga said.

The country is farming only 14 percent of its 70 million hectares of arable land but 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 and, according to some 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 ambushed 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 some observers believe it all depends on the kinds of agreements negotiated.

Roy Steiner, Deputy Director of Agricultural Development of the Bill and Melinda Gates Foundation, said projects should benefit the host country partly by helping small farmers to develop their businesses.

"It completely depends on the context and how the investment is done. 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," Steiner told Reuters.

Aid and development charity Oxfam said ownership of 90 percent of land in sub-Saharan Africa was unregistered. People were therefore vulnerable to being driven off their land to make way for big projects, said Oxfam's land adviser Kate Geary.

"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 told Reuters. "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 Abu Dhabi agricultural firm with farmland across Europe, the Americas and Africa, says 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," Khadim Al-darei, Vice Chairman of Al Dahra Holding, told Reuters.

African countries are confident that this time around, laws and regulations will prevent problems from arising.

"We will not have these kinds of problems. If foreign investors come they will come to terms with owners of land in what way they want to share and if they want to be given a certain percentage etc," Pelpou said.

Zambia also said that it would start giving investors leases of no more than 25 years and would remove them if they found investors were 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 per cent," Sichinga said.-Reuters




Tags: Africa | GCC | farmland deal |

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