Many Asian countries are turning to Africa for agricultural investment opportunities. Chinese deals in Africa go back to the 1990s. Now Bangladesh is following suit, joining other Asian players as an investor in Africa.
Family farming is the backbone of African agriculture
With the increasing pressures of urbanization, population growth and environmental change such as desertification many Asian countries are turning to Africa for agricultural investment opportunities. African deals with some Asian countries, like China go back to the 1990s. But now other Asian countries are also picking up on the trend.
Deals are being drawn up between Bangladesh and Uganda and other African countries for land on which the former will grow rice. The Bangladesh Africa Business Forum was developed to connect Bangladeshi investors with the African continent. Its head, Abdul Matlub Ahmad, who is also chairman of the Nitol-Niloy Group, says land deals in Africa are needed to ensure food security for the growing population of Bangladesh, which is currently at 160 million people. The deal that is now being processed with Uganda is for 10,000 hectares of arable land for 1.5 million US dollars in investment. The deal is expected to create 31 million US dollars worth of rice and create 25,000 jobs, mostly local.
Many Asian countries are now active in Africa
Ahmad praises the opportunity, saying "it is the first time Bangladesh will officially allow Bangladeshis to invest outside the country". And the new trend is not likely to stop any time soon. Ahmad believes it will give way to a new form of business for Bangladesh, possibly in other Asian or South American countries, "because as soon as we finish the rice, we are going to go for cotton security. As you know, the garment industry is a very big industry here - we need a lot of yarn. And then we are going to go for sugar security. We have 160 million people, so we need a lot of sugar."
What sets these new deals between Bangladesh and Uganda apart from other land-grabbing deals in Africa is, according to Ahmad, "we are not going to buy the land or rent the land. We are going to share the crop. And we have proposed 20 percent of the rice to be given to the host country and 80 percent we want to export back to Bangladesh."
The prospect of new jobs is one positive factor for the host countries
A large portion of Africa’s populations is plagued by hunger and structural challenges. So it seems logical that land investors promising local jobs, food and possibly rent might help eradicate these problems. But Roman Heere of the German rights organization on the right to food, FIAN, argues that more often than not these deals only help worsen the host countries’ predicament. Among human rights abuses, such as land expropriation, he sees long-term dangers for host countries. For one, Heere argues is that the deals "are mostly done through private investments and focused on the export." In addition, "it can be assumed that when such large areas of farm land are taken away from the local people, then the danger is that their dependence on food imports will only grow." Being that 43 of the 54 countries in Africa are already heavily dependent upon imports for their food security, such trends threaten to make countries more vulnerable to crises, such as the 2008 food price crisis.
Land and water rights
Land-grabbing not only affects people’s land rights, but also their access to water. As Bettina Rudloff of the German Institute for International and Security Affairs (SWP) points out, "a land grab is simultaneously a water grab." In addition, experts believe many of the land deals are for large-scale mechanized farming, which can lead to environmental problems such as fertilizer runoff and water pollution or diversion. Lorenzo Cotula of the International Institute for Environment and Development (iied) believes that foreign land acquisition can raise wider challenges as well, as family farming, the "backbone for African agriculture," faces becoming marginalized by "changed market conditions created by the growing agribusiness sector," which make it impossible for family farms to keep up in terms of prices and purchasing power.
Many African countries are dependent on food imports
While proponents point out development opportunities for both the host and investment countries, critics fear the investors are only in it for profit. Paul Mathieu of the Food and Agriculture Organization of the United Nations (FAO) says while profit is an "important driving aspect," it does not "preclude the possibility" for well devised and transparent investments which allow for the responsible distribution of wealth. While not all foreign land investment is beneficial to the host countries, Mathieu points out that "investment is absolutely necessary at the moment in Africa," adding, "Just continuing business as usual with underinvestment in agriculture, not changing anything with regard to the trends of the last 20 years would also be a nightmare and catastrophic scenario."
Conditions of the investments are determined predominantly by the host countries, as Rudloff points out. Where some countries get stuck selling off their land for very little profit or leasing it out for up to 100 years or even longer, other countries are now becoming aware of their rights. Publications like the FAO’s "Good governance in land tenure and administration" (2007) , or the current process to prepare "Voluntary Guidelines on Responsible Governance of Tenure" are insisting on the need to make all kind of land transactions as transparent as possible.
Many Asian countries are turning to Africa for rice security
Many of the land deals are done behind closed doors. But Cotula believes that growing public scrutiny is putting pressure on governments and companies to act in a responsible way and may have helped make the process more transparent. He points out that a number of countries have started putting their contracts online. Analysing the contracts is important because they influence "who wins, who loses, and who carries what risks." Experts rely on this kind of information in order to assess the real benefits and drawbacks of land deals, but it is still "too early to name examples" of responsible investor countries and, as Cotula adds, it is often quite difficult to generalize "because two investors from the same country may operate in very different ways."
Due to the pressures of demographic and climatic change, countries will have to think of new ways to ensure food and energy security. But, as Cotula points out, "there is also a risk for the investor countries that the strategy they have devised for dealing with food security concerns in the longer term is not bulletproof, if prices, government renegotiation and tensions around the destination of the food crops arise."
Author: Sarah Berning
Editor: Grahame Lucas