Arab Investors Eye African Agriculture

0

HONOLULU, Hawaii — Since 2008, a phenomenon involving Arab investment in the agricultural industries of a handful of African countries has taken off. Conversely, some of these investments stirred problems, such as the overpowering of African land; they have also led to an unequal distribution of food supply.

Recently, however, certain countries are addressing these problems are confident that this time around the arrangement will be mutually beneficial and successful.

Former investments mostly involved Sudan, Ethiopia and Namibia. Arab countries capitalized on the land in these countries that can be used for farming and invested in crops such as rice, corn and wheat.

The primary reason the investment indentures did not work smoothly in the past is that the agreement aroused hostility between the traders involved, mainly in regards to the distribution of food production. Some Africans were also being driven off their own land, according to Oxfam, which is a fear for prospective countries looking for investors.

Specifically in Ethiopia, land was invested by Saudi Arabia; this resulted in the deaths of five people due to an attack in April 2012. Human Rights Watch, a non-profit organization, followed up and investigated the attack, finding that it was linked to Saudi government action to uproot occupants of the land and clear more area for farming.

Saudi Arabia denied these motives, and contested that people unaffiliated with Saudi government committed the attacks. This allowed them to continue with the investment project in Ethiopia.

Previous foreign investment also at times seemed to take advantage of the bountiful resources many African countries have to offer. Arab investors would refer to them as ‘land-grabs,’ taking so much that it actually disrupted the food supply for the citizens of these African countries. These quandaries remain in the forefront of the minds of those contemplating investment; however, at least for Zambia and Ghana, the positive outcomes outweigh the negative possibilities.

Despite these aforementioned issues, these countries are hopeful in the prospective idea of reaching a mutually advantageous agreement with Arab investors. Representatives from Zambia have stated that land-lease terms need strengthening and more regulation in order to protect local civilians and the hard-working farmers, but that is something they are willing to arrange and implement. The necessity for resources overpowers the chance they take on being attacked or driven off of their land.

Zambia has 1.5 million farmers, yet only 500 commercial farms, according to the Zambian Agriculture Minister, Robert Sichinga. The country is also only farming about 14 percent of its farmable land. This is inconceivably low, especially since the land is self-sufficient. Zambia needs ample investment and funding, which would then comfortably feed the country and could also easily be exported to Gulf states.

In order to protect itself, Zambia has declared it would want to give a lease for no more than 25 years and then would be ready to remove the investors from their land if they felt they were being misused or mislead.

Recently, a forum was held in Abu Dhabi, United Arab Emirates, that focused on investment in agriculture. Sichinga publicly stated, “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.”

Agents from both Zambia and Ghana offered leasing agreements and food production bargains during the forum as well.

In regards to Ghana, the government is ardent on the idea of investors, as they are the world’s second largest cocoa producer and want to continue increasing exportation. They are rumored to have offered tax-free provisions for investors in the northern part of the country. In return, food production would be split so that citizens of Ghana could consume half and the rest could be exported.

Not only would this increase profit from exportation, but would also more aptly feed the people of Ghana, and benefit the small-scale farmers.

The benefits for Gulf States are apparent as well. These countries are forced to rely on imports for food security for between 80 percent to 90 percent of their food supply due to the lack of fertile land. This could amount to a multi-billion dollar investment. African countries with plenty of bucolic farmland therefore appeals largely to the Gulf States, as their land is predominantly desert and they can hardly grow any food of their own.

Even the Arab nations that do produce food face problems with bad weather for the growing of crops. Although Arab countries have not committed yet to Zambia and Ghana’s recent offers, their proposals have started a buzz within the Gulf States.

A Chairman of Al Dahra, an agricultural firm from Abu Dhabi, Khadim Al-darei, has said, “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.”

If executed properly, both parties could benefit from this sort of investment. With regulations that ensure production is split between exporting and food supply for the domestic markets, both Arab and African nations can thrive in regards to profit and food production.

The possibility of people being driven off their lands could lead to an increase in poverty and refugees within Zambia and Ghana, however, if the investment agreement works out, the contrary outcome would help alleviate poverty and increase food supply. It will be interesting to see if Arab investors comply with recent propositions, and hopefully both Arab and African countries will accomplish what they intended to from this venture.

Danielle Warren

Sources: Arabian Business, Reuters
Photo: Africa Green Media

Share.

About Author

Staff Reports

BORGEN Magazine is an initiative of The Borgen Project.

Comments are closed.