Last year Madagascar was in negotiations with Daewoo for a large land lease to South Korea. It all fell through with the recent coup, and was actually one of the factors in the ousting of president Ravalomanana. Madagascar’s land deal is not the only one on the cards however – it is one of a series of large leases between African nations and richer countries, in what is being described either as a ‘land grab’, or the next wave in outsourcing. But how does it work, and is it a good deal for the African countries, or colonialism with a new hat on?
What is a land lease?
Corporations and businesses already grow cash crops for the international market in farms all across Africa. What makes these land deals different is that they are vast areas of land. The failed deal in Madagascar was for 1.3 million hectares of prime land.
The other distinctive factor is that they are agreements made between governments, through state-owned corporations or on behalf of business conglomerates. African countries essentially rent the land, and a richer nation gets itself a giant overseas allotment. Depending on the arrangement, the host nation may cede control of the land to foreign workers and foreign control. In some cases no taxes are paid, and 100% of what is grown on the land can be exported. Each deal is a little different.
Who is involved?
The trend seems to have begun in the Middle East, with rich but small countries like Qatar, Kuwait and the United Arab Emirates. As desert countries with growing populations, it makes sense to secure some extra farmland. China and Korea are also pursuing multiple deals. South Korea has negotiated the use of 690,000 hectares in Sudan, which has separate deals with Egypt and UAE. Saudi Arabia has a deal with Ethiopia, growing wheat and rice. China is growing biofuels in the Congo and Zambia. Libya has leased part of Mali. Areas of Russia have also been leased to American, Scandinavian, and Middle Eastern interests.
What are land leases for?
Where most globalised agribusiness is cash crops, these deals are for staples – food and biofuels. It follows the turmoil of 2008, when oil prices soared, taking food prices with them. This isn’t about profits, but security. Rather than trust the international market to provide essential commodities, particularly vulnerable countries are choosing to guarantee their supplies.
In a crisis, the global markets fail, as governments restrict or ban exports in order to protect local people – nobody wants to go hungry while their own rice crop gets exported to a richer country. The Middle Eastern oil nations have plenty of money, but if nobody is selling, they would suffer food shortages. Leasing some land and growing your own is a good solution.
What’s in it for Africa?
On the face of it, land leases are a good deal for the host country. First of all there’s rent money, which is considerable, but this is not the primary benefit. The big advantage is investment money. A big land deal will see a flood of money into the country. Roads, railways and ports will need to be improved in order to streamline the transportation of exports. Jobs will be created both in building that infrastructure, and working the farms and plantations.
Further promises are made to deliver schools and clinics both within and beyond the leased land. Another big advantage is the agricultural expertise, in seeds and techniques and fertilisers that were previously unavailable.
What are the problems?
There a number of problems with land lease deals in Africa. The first is very obvious when you read the list of countries involved – just how likely is it that the ordinary people of Sudan will benefit from their deals with external partners? Hastily arranged with corrupt leaders, the deals may sign away huge areas of land and deliver very little in return.
Land rights is another difficulty. Governments don’t own countries. What happens to people who own land or houses within the leased area? Are they allowed to stay, or are they moved on? How will they be compensated?
One has to consider the needs of the country too. Ethiopia has 4.6 million malnourished citizens, and depends entirely on food aid to provide for them. At the same time, thousands of tonnes of Ethiopian wheat and rice are exported to Saudi Arabia every year. There is bound to be local resentment over this kind of deal.
Political instability could turn out to be a big risk. If people are moved off their land, or feel like their own needs are coming second, there could be all kinds of difficulties. What happens if local people occupy the land? What if a deal breaks down? A deal that runs for decades might make sense now, but become politically unsustainable. Madagascar’s deal was so unpopular with the people that it led to a coup. The new president overturned the Korean agreement on his first day in office. It was a major factor in undermining democracy.
There are also environmental concerns, particularly around water. Many of the deals are not so much land leases as water leases. If African aquifers, lakes and rivers are drained to grow biofuels and food for the rich world, land leasing could perpetrate another great injustice on the continent.
What can be done about them?
The jury is still out on whether or not long term land deals are a good idea. In theory, they could work very well for the host nations. They could just as easily turn into a political nightmare, especially years down the line. There needs to be some international discussion and some agreed standards and legal frameworks. At the moment, promises are often vague, with no mechanisms for policing the agreement. Countries need to be aware of what they are getting into – the current debt crisis in African countries is largely the result of corrupt leaders being sold debt they didn’t need, with the consequences falling on future generations. With deals running for up to 99 years, future generations could be similarly burdenened.
At Japan’s suggestion, the G8 will discuss the whole issue of land leasing in July, which could be a turning point in the rush for African farmland.
- FAO report – Land grab or development opportunity?
- The Economist – Outsourcing’s third wave
- International Food Policy Institute – “Land Grabbing” – risks and opportunities