Download Investment flows to sub-Saharan Africa

Large-scale land acquisitions for agricultural investment
in Africa:
Trends and issues
Lorenzo Cotula
(and Sonja Vermeulen, James Keeley, Rebeca Leonard,
Berhanu Adenew and Moussa Djiré)
International Institute for Environment and Development (IIED)
Setting the scene
 Spate of media reports worldwide yet little systematic
empirical data
 FAO/IFAD/IIED study; IIED involvement in World Bank-led
study
 “What”: trends and drivers; and “how”: characteristics
of land deals, land access impacts – focusing on
government-partnered investment and on sub-Saharan
Africa
 Ongoing literature review, qualitative interviews,
quantitative inventories in 6 countries (Ethiopia, Mali in)
 Limitations
Outline
1.
“What”: Trends and drivers
2.
“How”: Characteristics of land deals
1.
“What”: Trends and drivers
2.
“How”: Characteristics of land deals
FDI flows
FDI stock as % GDP
40
esp extractives, and policy
reform
45
40
30
35
25
30
20
25
20
15
% GDP
 Driven by commodity demand,
50
35
$ billion

A fast evolving context:
Investment flows to sub-Saharan Africa
Major increase since 2000
15
10
10
 Highly uneven distribution
5
0
factors likely to stay
1990
1980
2007
1990
2005
35
30
$Billion (nominal)
 But, longer term, stuctural
0
1980
 Likely to slow with economic
downturn
5
25
20
15
10
5
0
Uganda
Tanzania
Senegal
Nigeria
Namibia
Mozambique
Mali
Kenya
Ghana
Chad
Cameroon
Burkina Faso
Source: UNCTAD
Agricultural investment - drivers
Food vs fuel, Ethiopia

Biofuels – energy demand (transport),
government targets, oil prices (though
decline after summer 2008)

Agrifood - long term projections re: global
food demand; food price hikes 2008

Host country policy reforms to encourage
investment
Food produce
Biofuel
BITs by 12 African countries
200


Land acquisitions as policy and market
reaction
Why Africa? Investors: “inexpensive land”,
“favourable climates”, “labour available”
150
100
50
0
1960-69 1970-79 1980-89 1990-99 2000-on
by decade
cumulative
Agricultural investment - Key players
 Some governments promote
acquisitions overseas - food
importing, official reserves (oil
revenues, trade surpluses)
 E.g. Gulf states in Sudan
Ethiopia - classification submitted projects
by investor type
Wholly Domestic Co
8%
Foreign Stake Domestic Co
5%
Foreign private company
87%
 Private investors (agribusiness,
finance) - expect significant
returns and/or land value
increases
 E.g. Lonrho, Daewoo, Hadco
deals; private fund activity
in parts of Africa
Mali - classification of submitted projects
by investor type
Wholly Domestic Co
Foreign Stake Domestic Co
42%
17%
Domestic state-owned
company
Foreign company
8%
Foreign company, partly
foreign government owned
8%
8%
17%
Foreign company, majority
government owned
Ethiopia (2004-2008)
Number of projects
By year
Allocated land (ha)
Cumulative
Allocated land (ha) - by year
200
Allocated land (ha) - cumulative
500000
150
Hectares
400000
100
50
300000
200000
100000
0
0
2004
2005
2006
2007
2008
Investment commitments
By year
90000000
80000000
70000000
60000000
50000000
40000000
30000000
20000000
10000000
0
2005
2006
2007
2008
2005
2006
2007
2008
Investor origin
Africa
Cumulative
100000000
2004
2004
Central Asia
China
Middle East
Europe
N. America
1.
“What”: Trends and drivers
2.
“How”: Characteristics of land deals
Acquirer 
Provider 
Government
Private
Government
Private
 QIA deals in Sudan,
Indonesia, Vietnam
 UAE deals in Sudan,
incl Abu Dhabi Fund
for Development
 …
 Daewoo-Madagascar;
 Hadco-Sudan
 …
 Jarch Capital deal in Sudan
 …
Type of land rights





Mainly govt leases (cf legal
constraints): qualitative (Lonrho,
Sudan) and quantitative (eg 100%
Ethiopia)
Land fees not main govt benefit
(Sudan); reported prices (Mali,
Ethiopia) 0-12 USD/ha/yr, possible 5yr exemptions
Investment and empoyment
commitments – but what legal
value?
Plantations seem predominant but
some contract farming esp in biofuels
Provisions on produce export – 100%
guaranteed?
100%
Lease <50yrs
Sale
Lease >50yrs
N/A
80%
60%
40%
20%
0%
Ethiopia
Mali
Land acquired from
100%
Government, but
with some use or
land claims
80%
60%
40%
Government,
with no other
land claims
20%
0%
Ethiopia
Mali
Local land rights
 Land commonly state-owned,
protection of use rights varies
 “Wasteland” – but what is it?


100% of land allocations in
Ethiopia (now triangulating);
Mali: farming, herding
No or little local involvement in
decisions (but Ethiopia, 3/6
projects: agreement with local
leaders)
Compensation tends to be
limited to improvements if
state-owned land,
compensation rates an issue
Final remarks
1960





2000
Major risks: loss of land access, esp
where growing scarcity; food insecurity,
economic marginalisation...
But also opportunities: harnessing
capital, know-how, market access...
Terms and conditions key – What
business models? What benefit sharing?
Who decides and how?
Properly negotiated investor-state deal,
but also triangle with local resource
users (decisions, benefits)
Secure land rights key to minimise
arbitrary dispossession and maximise
local benefit
Population density (UNEP, 2004)
[Lenders, insurers]
Host state agencies
Investor(s)
NGOs
NGOs
Local resource users