FoodsecurityinSouthernAfricaAn interdisciplinaryanalysisof theeffectsof foreigndirect investment intheagriculturalsector

RomeePrijden,10761314BorisKreecke,10784039MarkKapel,10776931Version:3stDate:23thofDecemberTutor:KoenvanderGaastSupervisor:MarcDavidsonWordcount:6141

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0.AbstractThispapercontainsananalysisoftheeffectsofforeigndirectinvestmentintheagriculturalsectoronthefood security in SouthernAfrica. SouthernAfrica is a highly vulnerable region, exposed to risk such asenvironmentalhazards, landdegradation,diseasesand food insecurity.Theoriesandconceptsof threedisciplines,earthscience,businessandeconomy,areusedtocreateatheoreticalframework.Withinthistheoreticalframework,multiplecriteriaarecreated.Threedifferentcaseswillbestudiedandthecriteriawillbeassessed.ThefirstcaseofZambiaandthesecondcaseofMozambiqueshowthenegativeeffectsofforeigndirectinvestmentonfoodsecurity.ThethirdcaseofSouthAfricashowsthepossibleeffectsonfoodsecurity. Inconclusion,foreigndirect investmentcouldbebeneficial forboththe investorandthehostcountryifstrictregulationsandlawsareimplementedandcontrolledbythegovernment.

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Tableofcontent0.Abstract......................................................................................................................................................21.Introduction...............................................................................................................................................4

1.1Introduction..........................................................................................................................................41.2Studyarea............................................................................................................................................4

2.Methodsandinterdisciplinarity.................................................................................................................52.1Methods...............................................................................................................................................52.2Creatingcommonground....................................................................................................................5

2.2.1Aninterdisciplinaryapproach.......................................................................................................52.2.2Integrationtechniques:Organizationandtheoryexpansion........................................................5

3.Theoreticalframework...............................................................................................................................63.1Definitionofmainconcepts.................................................................................................................63.2Relationsbetweenconcepts................................................................................................................63.3Criteria..................................................................................................................................................9

4.Casestudies................................................................................................................................................94.1ChineseFDIinZambia........................................................................................................................104.2FavourableregulationsinMozambique.............................................................................................114.3TransnationalcooperationinSouthAfrica.........................................................................................12

5.Discussion.................................................................................................................................................136.Conclusion................................................................................................................................................13

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1.Introduction

1.1IntroductionIn2000,theUNestablishedalistofmillenniumgoalsfortheyear2015.Oneoftheaimswasto

reduce thepeople living in food insecuritywith 50percent. In SouthernAfrica, this goal has not beenachieved(Amelia,etal.,2014).SouthernAfrica,nottobeconfusedwiththecountrySouthAfrica,isthemost southern region of the African continent. It includesmultiple countries, some of them listed asdevelopmentcountries.Onlyfewofthesecountriesareabletoproduceenoughfoodtofulfiltheirownneeds. To meet their needs, countries also rely on import and food aid (ibid.). The region is highlyexposedtopovertyandHIV/AIDSinfections.Besidesthat,theregionishighlysensitivetoenvironmentalhazardssuchasdroughtsandfloods(FoodandAgriculturalOrganization,2009).Inaddition,arablesoilsareexperiencingdegradationasaresultofold-fashionedconventionalfarmingpractices.Thisresults inyieldlossandanincreasedrunoffofimportantnutrients(Baudronetal.,2007;Thierfelderetal.,2013).

However, this highly vulnerable area is attractive for foreign companies. This is mainly duebecauseofavailableunoccupiedarablelandandlowcostlabour.ThisresultedinanincreaseofForeignDirectInvestment(FDI)(Grant,2013).FDIisconsideredtobeamajorchannelfordevelopingcountriestoadapttoandimplementnewtechnologies(Borenszteinetal.,1998).However,untilnowtherehasnotbeenmuchresearchonthepotentialeffectsofforeigndirectinvestmentonfoodsecurity.However,FDIis stillbeingpromotedby intergovernmentalorganizationse.g. theWorldBank,asa tool toeffectuatedevelopment.

In this research the effects of foreign direct investment on the food security of countries insouthern Africa will be investigated. To conduct an interdisciplinary research study, the followingresearch question has been formulated: ‘To what extent is food security affected by foreign directinvestmentintheagriculturalsectorinSouthernAfrica?’TheresearchthatisgoingtobeconductedwilllimititsscopetoFDIintheagriculturalsectorofSouthernAfricaDevelopmentCommunitymembers.

1.2StudyareaSouthernAfrica isconsistof themost

southerncountriesofthecontinentAfrica.Theregioncomprise11countriesascanbeenseenin figure1. The vegetationof SouthernAfricaranges from desert, to grassland to forest(Cowling, 2004). The main resources of theSouthern African countries consist of rawresources like platinum, diamonds, gold anduranium. However, the economic growth ispressed by poverty, diseases and decliningarable land. The most countries in SouthernAfricaarefooddependedonforeigncountries,theydonotproduceenoughfoodthemselves.Key factors such as political instability,droughts, population growth and loweconomic growth affect the food security ofthesecountries(Misselhorn,2005).IntermsofGDPthemostdevelopedcountryistheregionisbyfarSouthAfrica.

Figure1:CountriesinSouthernAfrica.(Source:ArcGISonline,2016)

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AccordingtoDrimie,etal(2011),SouthernAfricawillfacesomeenvironmentalchallengesinthefuture.Overthenextdecades,theclimatewillbedrierandwarmer;anincreaseof2-5degreesCelsiusislikely.Besidesthat,therewillbeashiftofthewetseason,resultinginmorerainfallinshorterperiodsoftimewithshortertimebetweenwetperiods.Althoughrainfallisexpectedtoincrease,wateravailabilitywill continue tobeaproblem.At thismoment, there areplentyof undergroundwater reservoirs, buttheyarenot suitable as a source fordrinkingwater. Landdegradationwill bea great challenge in thefuturebecauseofdisturbancessuchaswronglandusemanagementandalsobecauseofincreasingriskofwildfires.Althoughthereisappropriatenaturalresourcemanagementimplemented,therateoflanddegradationisgoingfasterthanthetechnologyadoption.Therefore,landdegradationwillbeachallengeforrisingfooddemandandfoodsecurity(Drimie,2011).

2.Methodsandinterdisciplinarity

2.1MethodsThe purpose of this research is to explain the effects of FDI on the food security in Southern

Africa.Theresearchproblemandhypothesiswillmainlybebasedonexplanatoryqualitativeresearch.Alldatausedbyeachdisciplinewillbesecondaryresearchofscientific literature.Atheoretical frameworkwasmadeandwithinthis framework,commongroundbetweenthedisciplineshasbeencreated.Withthe given concepts and theories in the theoretical framework, an analysis will bemadewithmultipleexamplesandcasesbasedonthecriteria.

2.2Creatingcommonground2.2.1AninterdisciplinaryapproachAn interdisciplinary approachwas conductedbecause of the different perspectives of the researchers:Earth science, business and economy. The discipline of earth science is focused on the factors thatinfluence the sustainable production of food. How are the environment of the countries in Africainfluenced by FDI and what are the effects on current and future food production. The economydiscipline gives explanation of why andwhere FDI occurs. The economic theories provide elaborationwhatthedriversaretoinvestmentinFDI.TheconceptofbusinesszoomsinatthefirmsthatoperateinFDI.Whataretherelationsbetweenfirmandcommunityanddothesecontributetofoodsecurityordothey have negative effects? These three disciplines are equally important in order to investigate theeffectsofFDIonthefoodsecurity.Aninterdisciplinaryapproachisusedforcomplexproblemswithmorethantwodisciplinesareinvolved.

2.2.2 Integration techniques: OrganizationandtheoryexpansionTo integrate the different insights of all thedisciplines,amodelwasmadeusingtheorganizationtechnique. This technique clarifies the relationsbetween the concept and provides a broaderperspective to the subject. Organization identifiescommonality in concepts or assumptions, thenredefinesthem,andthenorganizes,arrangesormapsthe causal links between them. These causal linkswerethenusedtoexpandthetheory.

Figure2:Amodelcreatedusingintegrationtechniquessuchasorganizationandtheoryexpansion.

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Thefigure2aboveshowstherelationsbetweenthedifferenttheoriesandconcepts.ThemainquestionofthisresearchisbasedupontherelationbetweenfoodsecurityandFDI.Therelationsinthemodelwillbeexplainedinthetheoreticalframework.

3.TheoreticalframeworkThispartof the researchaims toexplain the concepts and clarify the relationsbetween these

concepts.Importanttheoriesandtheirrelatedconceptswillbediscussed.Nexttothat,therelevanceofthese concepts for this research is explained. On the basis of these concepts some criteria aremadewhichcontributetoansweringthemainquestion.

3.1DefinitionofmainconceptsThetwomainconceptsofthisresearchareFDIandfoodsecurity.Thereforetheseconceptswill

beexplainedfirstly.FDI isdefinedasbuildingoracquiringproductiveassets inanothercountry (Grant,2013).Morespecifically,FDIoccurswhenabusiness inonecountryestablishesabusinessoperation inanother country. This could either be realised through setting up a new wholly owned affiliate, oracquiringalocalcompany,orformingajointventureinthehosteconomy(Moran,2012).FirmscanuseFDI to enter new markets, acquire access to resources and capabilities in foreign countries or takeadvantageof foreign legislation (Grant, 2013). FDI alsoplays a common role in the agricultural sector.Thisoccurswhenforeigncompaniesbuyorlendlandinahostcountry(DeSchutter,2011).

Food security is defined by the Food and Agriculture Organization (FAO) as access to enoughfoodtoliveahealthyandproductivelifeforallpeople.OntheWorldFoodSummitin1996isthat‘foodsecurity existswhen all people, at all times, have physical and economic access to sufficient safe andnutritiousfoodtomeettheirdietaryneedsandfoodpreferencesforahealthyandactivelife’.Inscientificresearch the term is often used to describe the access a country has to enough food tomeet dietaryenergyrequirements(Andersen,2009)

3.2RelationsbetweenconceptsThe relationbetweenFDIand foodsecurity is verycomplex,because therearea lotof factors

involved. Therefore the relation can be approached frommany different perspectives. Businesses caneither applymarket seekingor non-market seeking FDI.Market seeking FDI iswhenproducts that areproduced in thehost countryarealso sold in thehost country.Non-market seekingFDI iswhen theseproducts are sold in the home country (Aseidu, 2002). Market seeking FDI could improve the foodsecurityinacountry,whenforeigncompaniesaremoreefficientandabletoproducehigheryieldsthanlocal companies. However, this relation only holdswhen the foreign companies sell their products forpricescomparabletolocalmarketprices.However,whenFDIisnon-marketseeking,thehostcountrycanactually lose agreeable land to businesses that produce for their home country. This type of FDI isdescribedas landgrabbing,whichcanbeveryharmfultothehostcountry.Thereason is thatthehostcountrymight lose control over theway food is produced and distributed,which canmake it hard todecreasepoverty(DeSchutter,2011).Thiscanresultinadecreaseinfoodsecurity.ThiseitherpositiveornegativeimpactonfoodsecurityisthemostdirectrelationbetweenFDIandfoodsecurity.However, businesses often havemany other reasons to invest in foreign countries then only tomakeprofits from local markets. Other reasons are available freshwater resources, arable soils, favourableweatherconditionsorlow-costlabour(Rulli,etal.,2013).Businessescansearchforthecheapestoptionwhen investing abroad and try to take advantage of (the lack of) local labour and environmentallegislation(Harrison,1994).Thepollutionhavenhypothesis isthetheorythatdescribeshowbusinesses

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internationalizewiththegoaltoavoidenvironmentallegislationintheirhomecountries,whichresultsinmorepollutioninthehostcountries(Harrison,1994).Howeversomenuancesmustbemade.Somearguethatthepollutionhavenhypothesisisoutdated.Thisisbecausethetheoryassumesthatthetransactioncosts to internationalizeare lowerthanthecostsofadjustingtoenvironmental legislation inthehomecountry(Harrison,1994).Thisassumptionseemsinmanycasesnottohold,becausetransactioncostsofinternationalizationareoftenmuchhigher.Nexttothat,itisshownthatbusinessesinmanycasesapplycleanertechnologiesthandomesticfirmsinhostcountries(Harrison,1994).Neverthelessenvironmentaleffectsandpollutionhaveanegativeimpactonfoodsecurity(Gregory,etal.,2005).Thisisbecausetheavailablearablelandcandecreasethroughlanddegradation(Holden&Shiferaw,2004).Becauseoftheconventionalfarmingpracticessuchasintensivetillageandresidueburning,manyarablesoilshavealackofsoilcover.Becauseofdeeptillagemethods,thesoilhasnotimetocreatea layeroforganicmatter,whichresultsinrunoffofpreciousnutrientsandaweaksoilstructure(Baudron,2007;Thierfelder,2013).These factors are important for crop growth, strength and therefore the crop yield. Besides that,pollution ofwater is a threat for food security. This is because,water availability limits themaximumamount of crops produced (Hanjra&Qureshi, 2010). The environmental effects of an investment aredependentontheoriginoftheinvestment.Takingintoaccountthataninvestmentisaimedatproducingfood,severalenvironmentaleffectsarepossible.Forexample,foodproductioninthehostcountryoftenleads to overexploitation of important freshwater resources. This has a negative impact on the localcommunity, who rely on those resources as drinking source and for agriculture (ibid.). Besides that,intensification of agriculture by using chemical pesticides and/or fertilizers and mono-cultures willcontributetothedecreaseofthequalityofthesoil(Sangwan,2013).

Furthermore, businesses are often blamed for disrupting localmarkets, because they look forlow-cost labour.However, theyoftenpayhigherwages than local firms,which result inan increase inaveragewages(Harrison1994).Employmenthasapositiveimpactonfoodsecurity,becauseitcangivelocalsaccesstothemarket(Gregory,etal.,2005).Besidesthat,FDIemploymentcontributestoeconomicgrowth, through the diffusion of technology and knowledge (Borensztein et al., 1998). These newtechnologiesandknowledgecouldspillovertothelocalmarketwhenlocalemployeesstopworkingfortheforeignbusinessorwhentheforeignbusinesscollaborateswithlocalenterprises,whichisdefinedasbackwardlinkages(Alfaroetal.,2004).BorenszteinhasshownthataonedollarincreaseinFDIingeneralresults inan increase in total investmentsofmorethanonedollar.However, therelationbetweenFDIandeconomicdevelopmentismorecomplicated.FDIwillonlyleadtoeconomicdevelopmentifthelocalpopulationisabletounderstandnewtechnologiesandknowledgeandapplythisoutsideoftheforeignbusinessactivities.Thisrequiresacertainlevelofeducationofthelocalcommunity(Borensztein,1998).Besidesthat it isclaimedthatawell-developedfinancialsystemisnecessaryto letFDIcauseeconomicdevelopment.Thisisbecauseitisgenerallyshownthateconomicdevelopmentisbarelypossiblewithoutdecent financial management (Alfaro, et al.,, 2004). However, FDI can also crowd out local businessactivities. The reason for this is that domestic firms might not be able to compete with foreignbusinesses, because foreign businesses have competitive advantages (Borensztein et al, 1998). So, FDIcan lead to economic decline or development. This is relevant because economic development has apositive impacton foodsecurity.The reason for this isamongother things, lesspovertyand increasedaccesstomarkets(Gregory,etal.,2005).

SothedriversofthebusinesseshavegreatimpactontherelationbetweenFDIandfoodsecurity.The attitude of a business towards society could be based on the principles of the ‘Corporate SocialResponsibility’(CSR)concept.Abroaddefinitionofthisconceptreferstothebusinesspracticesinvolvinginitiativesthatbenefitssociety; insocial,economicandenvironmentalcontributions(Carrol,1979).Theconceptonitsownseemstobeslightlyvagueanddifficulttoconnectinspecificsituations.ThefollowingtheorieswillhelptogiveabetterillustrationoftheconceptofCSR,thestrengthsandthethreats,andbytheevaluationofthesituation inSouthernAfrica.Thefirstconcept isaimedatthepositiveeffectsCSRcould create for the recipient countries, the concept of shared value. The concept of shared value is

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based on the principle: “creating economic value in a way that also creates value for society byaddressing itsneedsandchallenges”(Porter&Kramer,2011).Theconceptofsharedvalue isaimingatcreatingbothenhancedcompetitivenessofafirmandimprovingthesocialandeconomicconditionsofsociety. However, thetheorystatean importantconditionthat isnecessarytobemetforasuccessfulimplementation: governmental involvement. Governments should set guidelines, through regulations,thatbusinessstimulatetocontributetosharedvalue(Porter&Kramer,2011). AccordingtoDentchev,Balen andHaezondonck (2015), governments can support CSR in twoways:mandatory and voluntary.The mandatory approach is appropriate in cases when objectives are clear, expected outcomes aremeasurableandwhentherearedifferentstakeholderswithdifferentinterest.Thevoluntaryapproachisappropriate when: the cases need collaboration of multiple stakeholders to resolve social andenvironmentalchallenges.ByapplyingCSRandcreatingsharedvaluebusinessescanavoidenvironmentaldamage and create economic benefits. Therefore, when these concepts are applied, this will have apositive impact on food security. However, businesses can also communicate that they apply CSR orcreate shared value,when in fact they are not. This is described by the greenwashing concept that isbasedon the communicationbetweenbusinesses and community about the environmental and socialbenefitsof the firm.Theconceptdefinestwosinsofgreenwashes: ‘thesinofnoproof’and ‘thesinofvagueness’.Thefirstonecanbedescribedasenvironmentalorsocialclaimsthatcannotbebackedupbyeasily accessible information or by certification of third parties. The second, claims that are vaguelydefined and thereby easily misunderstood (Bazillier & Vauday, 2013). Since CSR is often related toreputationofthefirm,thereisahighincentiveforfirmstoselectivelycommunicateinformationoftheiroperations(Bazillier&Vauday,2013).

AgoodexampleofhowCSRcanbeappliedintheagriculturalsectorfollowingtheapproachofConservationAgriculture,which ismore sustainable than conservative agriculture. It has the followingdefinition:“Aconceptforresource-savingagriculturalcropproductionthatstrivestoachieveacceptableprofits together with high and sustained production levels while concurrently conserving theenvironment” (Food and Agricultural Organization, 2015). Conservation Agriculture, referred to as CA,wantstoachievethisbyapplyingthreeprinciples.Theseare:minimalsoildisturbance,apermanentsoilcover and crop rotations or intercropping (FAO, 2015). The first objective is to minimize the soildisturbanceand to restore the soil fertilityby reducing tillageand/or improving the tillagemethods.Aformofreducedtillageisripping,whichisperformedbyamanualdevice:theMagoyeripper.Thedevicecreates narrow grooves in the soil where the seeds are planted. The advantage of ripping is a moreefficientuseofrainwaterreducedtillagedoesmean lessworkinghours (Mafongoya,2015;Thierfelder,2013).Thesecondobjectiveisretentionofcropresidue,knownasmulch.AccordingtoBaudron(2007)andThierfelder (2013), retentionofat least30percentof thecropresidue isnecessary forasufficientsoil cover. The crop residue attracts insects that contribute to the decomposition of the crop residue,whichisanimportantstepinthenitrogencyclethusthenaturalfertilizationofthesoil(Baudron,2007).The study of Thierfelder (2013) adds that the soil moisture content after reduced tillage of mulch ishigherincomparisontoconventionaltillage,whichisbeneficialforcropgrowthandsoilstructure.Thisisimportantforthestrengthofthesoilandforreducingthevulnerabilitytorunoffafterperiodsofrainfall.Thethirdobjectiveisintercropping.Thisismostimportantforstoringsoilorganiccarbon.Italsoservesasanaturalpestanddiseasedefence(Baudron,2007;Thierfelder,2013).Applyingthisapproachwillhaveapositiveimpactonfoodsecuritybecauseofthereducedeffectsonlanddegradationandthereforefoodproduction.

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3.3CriteriaIn order to determine the effects of FDI on food

security in Southern Africa, different criteria will be used.These criteria are based on the relations described in thetheoretical framework. An extensive explanation of theusedmethodswillbeprovidedinthenextchapter.Infigure3,amodelisshowntoexplainthedifferentcriteriaandthesupportivecriteriaofeverydiscipline.Thefollowingcriteriaweredevisedforapositiveeffectonfood security. The FDI should implement CSR, the hostcountry should benefit from the investment and theinvestment should be two-sided. From each perspective,thecriteriaissubstantiated.Foreverycase,thecriteriaareassessed. The same method was used to determinewhether the investment has a negative effect on foodsecurity. Based upon the relations, it can be found thatmarket-seekingFDIintheagriculturalsector,thataremadewithCSRregardingsocialandenvironmentalprotectionwilleitherdirectlyorindirectlyimprovethelocalfoodsecurity.However there are a lot more factors that influence thisrelationbutforthisresearch,thecriteriaareabbreviatedtothecriteriamentionedabove.

4.CasestudiesThetheoreticalpartofthisresearchhasshownthattherearemultipleconceptsinfluencingthe

relationbetweenFDIandfoodsecurity.Theseabstractconceptswillbeappliedonthreecaseexamplesin SouthernAfrica. Through the great diversity in all FDI flows to SouthernAfrica it is hard tomake ageneralizedanalysis.ThereforetheaimofthisanalysisistoshowexamplesofhowdifferentfactorsandactorsinvolvedcaninfluencetheoutcomeofFDIforthelocalfoodsecurity.

WehavechosenthecountriesthatwewillanalysebasedontheinwardflowsofFDI.Ascanbeenseen in figure4, SouthAfrica,MozambiqueandZambia are the top3of inward FDI stock in SouthernAfrica.BecauseFDIissuchaconsiderablepartoftheeconomyofthesecountries,itisplausiblethattherewillbeobservableeffectsthatinfluencethefoodsecurity.

Figure4:ForeignDirectInvestmentinSouthernAfrica.(Source:UnitedNationsConferenceonTradeandDevelopment(UNCTAD),2015)

Figure3:Amodeltovisualizethecreatedcriteriaforthisresearch.Orange=criteria,purple=business,blue=economy,green=earthscience

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4.1ChineseFDIinZambiaAccording to Busse (2012), African countries do in general not optimally benefit fromChinese

investment.Sofar,Chineseinvestmentsareoftenisolatedfromthelocaleconomy.Duetotheisolationof the investments, the localeconomiescouldnotbenefit fromtheeffectsof technological spill-overs,workpotentialetc.Thiscontradictswiththeconceptofthesharedvalue.AccordingtoPorter(2011),FDIshouldcreatevalueforboththeoperatingfirmasforthelocalsocietywhenCSRisapplied.OneofthemajorreasonsthatcausesthisisolationcomessurprisinglynotfromtheChineseinvestors.AccordingtoBusse(2012),AfricadoesnotoptimallybenefitsfromChineseFDI,becausetheAfricangovernmentdoesnotharnessthesepositiveeffects.ThegovernmentshoulddirecttheFDItoimportanteconomicsectorsandhavethemeanstoharvestit.So,thegovernmentshouldplayamoremandatoryroletoharvestthefullpotentialoftheFDI.

However, the lackofAfricangovernmental involvement isnot theonly reason that the sharedvalueofChineseFDIisnotoptimallyharvested.ThemainreasonChinadoesinvestinAfricanagriculturallandisduetotheirdomesticfoodsecurityproblems.However,foodsecurityisnottheonlyreasonsforthese investments. Agricultural investments in Africa are encouraged by the government for thecircumventing of certain World Trade Organization (Alden, 2005). Finally, china has contracted asignificantamountofChineselabourthatworksintheinvestedagriculturalsector.Thisissignificantlossof shared value. If these Chinese labour would be replacedwith local people, shared valuewould becreated(Alden,2005).

Taken into account that China is using Zambia’s arable land to produce food, environmentaleffectsarealimitingfactorforthelocalfoodsecurity.Asmentionedbefore,conventionalagricultureandthe intensification of these methods contribute to land degradation. To tackle these effects, Zambiaadopted a more specific form of Conservation Agriculture, which is known as Conservation Farming,referredtoasCF(Arslan,2014).TheoveralleffectofCFisstronglydependentonenvironmentalfactorssuchassoil-typeandweathercircumstances,butonlong-termperspective,CFisefficientlyreducingsoildegradation. It is also convenient for increasing labour and water use efficiency because of theimplementationofmanualrippingdevices(Baudron,2007;Thierfelder,2013).Besidesthat,CFinZambiahascontributed to the livelihood,cropyieldand therefore foodsecurityof thepopulationsince itwasfirstimplemented(Andersson,2014).

InZambia,Chinesecompaniesclaimtoproducefoodforlocalmarketsratherthanforlarge-scaleexport.However,onlytheexportofrawmaterialssuchascotton,skinsandtobaccohasbeenincreasedandnoclearbenefitsforZambiawererecorded(Mwanawina,2008).Al-Aamerietal (2012)claimsthatChinese companies do not have any environmental regulation regarding their investment. AlthoughZambia has already created a legislative framework for environmental protection, the Chinese rapidinvestments have resulted inwater and air pollution in Zambia. In return for the land grabbing, ChinaaimstohelpAfricandevelopmentonpolitical,economicandsocial level.However,noneofthoseplansincludeenvironmentalprotection(Mwanawina,2008).

In conclusion, Chinese companies suggest to stimulate African development through CSR.However, there is no indication that any of the proposed development is either socially orenvironmentallybeneficialforZambia.LinkingbacktothecriteriafromthetheoreticalframeworkitcanbefoundthatinthiscasethereisanegativerelationbetweenFDIandfoodsecurity.Chinesecompaniesmostly apply non-market seeking FDI. They do not create spill-overs and no shared value. This couldindicatethattheChineseCSRreportisanexampleofgreenwashingandinpracticetheywouldbeland-grabbinginZambia.Investmentsofmonetaryvalueandknowledgearerequiredformoreresearchandasasupportforthelocalfarmersandthegovernment.FDI(byChinesecompanies)couldbehelpful ifthemainmotiveistosupportthefoodsecurityoftheZambianpopulationandsustainabilityratherthantoactsolelyoutofself-interest.

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4.2FavourableregulationsinMozambiqueMozambiqueisoneoftheleastdevelopedcountriesintheworldduetotheaftermathofacivil

war.However,sincethe1990’sthecountryhashadastableeconomicgrowth(Theting&Brekke,2010).This is partly due to the changes in the agricultural sector. Agriculture in Mozambique is mostly stilltraditionaland80%ofthepopulationworksintheagriculturalsector(Theting&Brekke,2010).However,theMozambican government havemade some favourable conditions regarding lawand regulations intheagriculturalsectortoattractFDI.Forexample,corporatetaxinMozambiqueisonly10%comparedto32%onaverage.Ontopofthisthereisan80%reductionofcorporatetaxintheagriculturalsector.Nexttothattherearealsootherfiscalbenefits,liketaxfreeimportofequipment(Theting&Brekke,2010).

These conditions were all set to enhance the effects that FDI could have on Mozambique.However,informationthatisconductedoutofinterviewswithlocalcommunitiesstateamixedattitudetowards the foreign projects. In some cases, the villages expected more beneficial effects, but theyacceptedthesituationbecauseitwasbetterasbefore.Inothercases,villageswerenotcontentwiththesituation and would not accepted other foreign projects. Apparently, there were some factors thatpressuredthedevelopment throughFDI.AccordingtoTheting&Brekke (2010), therewerethreemaindeterminantsthatcausedthefailureofdevelopment.

First, the local villages of Mozambique could not benefit from the FDI, due to the localregulations concerning the FDI. The local regulations do not protect the domestic economy or giveopportunitiesofdomesticgrowth.Forexample,therearenorestrictions,suchastaxesonexport(Basu&Srinivasan, 2002). This leads to an outflow of products when there is domestic demand. Overall, theregulatoryframeworksaretoomuchfocusedontheforeigninvestorsandlessondomesticeconomies.Second, in many land acquisition deals to local community had to make their decisions based onasymmetricinformation.Often,thevillagerswerenotfullyinformedaboutwhattheyexactlyconstituted.Contrarytothevillagers,theforeigninvestorswereoftenaidedbythegovernmentandwereinformedofalltheconsandprosofthelandacquisition.Finally,therewerelittleformsofcompensationprovidedbythe investors. Health care, school, electricity and infrastructure were the most common form ofcompensation that the investors shouldestablish,but inmanycases thesepromiseswerenot fulfilled.Therewereoftennowrittencontractsofwhatexactlytheinvestorshouldcompensate.Also,therewaslittleformsofsharedvalue.Communitymemberswerenotcertainofemploymentontheprojects,andthemembers thatwereemployedearned lowwagesanddidnothave furtherdevelopmentpotential.ThiscontradictswiththeAfricanPolicypaperthatChinaprovided.InthepaperChinastatedthatitwouldenhance the localemployment rate in theAfricanarea’s theyoperate (huaxia,2015).Theseeconomic,legalandcommunicationfailureshavegreateffectonthefoodsecurityinAfrica.Besidesthesefactors,thataffectthefoodsecurityinMozambique,FDIalsohasanimpactonthearablelandinMozambique.

Mozambiquehasaround1.4millionhectaresofarablelandsuitableforproducingmaize(Eash,etal.,2016).Thisareawillbereducedinsizebecauseoftheimpactsofclimatechangesuchasdroughtsorfloods.Besidesthat,erosionofMozambique‘sfertilesoilswill increaseasfoodproductioncontinuesto intensify tomeet the growing demand (ibid.). InMozambique, Conservation Agriculture is popularunder small rural farm families. Especially this group is at risk to be food insecure because they aredependentontheircropyield.ThecomparativestudyofN.Eash(2016)foundthatthenetreturnsofCAinMozambiquewerehigherthanthereturnsoftheconventionalpractices.Besidesthat,inseveralothercases,CAimplementationresulted in increasedyieldondegradedagriculturalfieldsandabetterwateruseefficiency(ibid.).

AlthoughCA is implementedandcontributing to the local foodproduction inMozambique,anongoing JapaneseProject calledProSAVANA, is introducinganotherperspective. Thisproject, aimedatsupportingthefoodsecurityofJapan,isanintensivelarge-scaleproject,mainlyfocusedonmono-culture(Okada,2015).Theproductionisexport-oriented,thusnon-marketseeking.Althoughthispublic-privateprojectclaimstosupporttheliberalizationandmodernizationofMozambiqueandhasthereforeatwo-

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sidedmotivation,theenvironmentaleffectsoftheintensiveproductionmighthaveanegativeimpactonthedevelopmentofCAandthereforethefoodsecurityofthelocalpeopleinMozambique(ibid.).Linking back to the theoretical framework it seems that most FDI in Mozambique is aimed to takeadvantageof lackof local regulationsand lowcost labour.Thereareno spill-oversandalsono sharedvalue. However, it could also be possible that CSR is ineffective. The lack of spill-overs can also beexplainedbyanineffectivefinancialsystemandlackofefficienthumancapital.Toavoidexploitationthegovernmentcanthereforebetterfocusonimprovingthesefactors,ratherthanonregulations.

4.3TransnationalcooperationinSouthAfricaThe SADC member states are actively seeking for FDI to enhance their economic growth. To

determinetheeffectsofFDIinSADCmemberstatesitisimporttofindouttheoriginandtheobjectivesof the FDI.A recent trend in the global economy is the increaseof FDI from companiesof developingcountriesinotherdevelopingcountries.ThistypeofFDIisdefinedassouth-southflows(Mhlanga,2010).These south-south flows create new hope for SADCmember states This is because north-south flowshavehistoricallyacharacterofbeingexploitativeofrawmaterials,whichisexplicitlynon-marketseeking.South-south flows tend to bemoremarket seeking and aremore risk averse through familiarity withgovernmentstructuresindevelopingcountries(Mhlanga,2010).InCooperationwiththeUnitedNationsDevelopment Program (UNDP) multiple transnational summits between African, Asian and SouthAmerican countries have been organized. China, India and Brazil need African natural resources fromAfricatosupporttheirgrowingeconomies.Inreturn,theycanoffertechnologyandexpertiseforAfrica’sdevelopment needs. The goal of organizational structures between these countries is to createcooperationthatismutuallybeneficial.Eventhoughsouth-southcooperationintheagriculturalsectorisoftencreatedforoutsourcingofproduction,thegoalisawin-winsituation.Throughenhancedefficiencythe surplus of the high productivity is also to be shared with the host country (Arkhangelskaya &Khamatshin,2013).

Anexampleof sucha transnationalcooperation is the India-Brazil-SouthAfricadialogue forum(IBSA).TheIBSAcooperatesonmanycommonconcerns,ofwhichoneisagriculture.Eachmemberstatesis involved in south-south capital flows. The countries work together in food processing and safetymeasuresthroughcommoncompliancetomeasurements.Nexttothat,theyworktogether inresearchand development, communication and technology, building and exchange of human capital andpollution. These is all-in attempt to create long term FDI flows between the countries and strengthentheirpositionintheworldmarket(Arkhangelskaya&Khamatshin,2013).ExamplesofgoodpractisesareIndiaprovidingspecializedtechnologyfortropicalfarmingandBraziltraininghumancapitalintheagro-energysector.Inaddition,theIDSAfocusesstrictonfoodsecurityandpovertyreduction.WiththeIBSAtrustfund,whichwasrewardedbytheUNdevelopmentgoals,thecountriesinvestinskilldevelopmentand modern farming. The fund also supports environmental initiatives regarding water management,erosion reduction measures, and soil salinity, and sustainable agricultural growth (Arkhangelskaya &Khamatshin,2013).

IncontrasttoZambiaandMozambique,CAisnotonlysuccessfully implementedbysmallscalefarmers, but also by large scale commercial farms (FAO, 2010).One of the positive effects IBSA couldhaveontheimplementationofCAinSouthAfricaisthatBrazilforexampleisalreadypracticingCAonalargescaleandisoneoftheleadingCAcountriesintheworldsincethe70s(Kassam,2009).Indiaisalsohighly acquainted with CA but on a smaller scale due to low maintenance crops such as rice (ibid.).Therefore, a cooperationbetween companieswithin IBSA, couldbe efficient if a legislative frameworkregardingenvironmentalprotectionisassessed.

The IBSA is an example of how countries should work together to structure and guide therelationbetweenFDI flowsand food security. IBSA focuseson subjects correspondingwith thecriteriaresultingfromthetheoreticalframework.Theystimulatemarket-seekingFDIwithspill-overstothelocal

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market resulting in fair profits. They also focus on limiting environmental impacts. Even though theorganizationisagovernmentalplatform,theirpracticecouldbetheperfectexampleofCSRwhenappliedbybusinesses.

5.DiscussionInordertoexecutetheanalysis,multiplecriteriawerechosen.However,noteverycriteriaisassessedinthesameextent.Further researchshoulddelvedeeper into thecriteriaandassigningweights to thesecriteria.Theuseofamulti-criteriaanalysismethodwouldbeagreatcontributiontothequalityfurtherresearch.

TherelationbetweenFDIandfoodsecurityisverycomplexandmanyotherfactorsinfluencethisrelationship. This research has only approached this relationship from three disciplines. However, inorder to broaden the research, several other disciplines should be taken into consideration. Addingconcepts from social science, politics, biology and social geography would complement this researchsubject. These disciplines presumably bring different perspectives to this research. If more scientificdisciplineswouldbeinvolved,thanmorecomplexinsightstothiscomplexrelationwouldappear.

Besides that,more cases shouldbe investigated inorder to createa sufficient analysis for thewholeofSouthernAfrica.TherearetoomanyindependentFDIflowstotheregiontodrawconclusionsthat fully cover all FDI flows in the region.More specific data is needed to support relations that areshowninthispaper.ThisincludesexamplesofoperatingfirmsintheSouthernAfricanregion.Thepaperin limited to the example of one operating firm, but for a more objective perspective of corporationrelationships,moreexamplesarerequired.

Fornow, theaimof this researchwas to showsomeof the factors that influence the relationbetweenFDIandfoodsecurityandshowhowtheserelationsappearinpractice.

6.ConclusionCompanies invest in Africa, because they see a lot of potential for growth in the agricultural

sector. Their FDI has viamany factors influence on the food security of African countries. three caseshavebeeninvestigated:thecaseofMozambique,ZambiaandSouthAfrica.

InthecaseofZambia,therewasalowdegreeofbeneficialCSReffects.Therewerenospill-overeffectsor creationof sharedvalue.This contradictswith theguidelines thatweregiven in theChineseCSRreportandcouldindicatetheextentofgreenwashing.TheimplementationofCAandthereforethesustainabledevelopmentofZambia is limitedby theFDI.Besides that, there isnoregulationregardingenvironmentalprotectionbytheChineseinvestments,thuslanddegradationwilldecreaseandcropyieldwillbeatrisk.Altogether,FDIhaveanegativeeffectonfoodsecurityinZambia.

In the second case, Mozambique, the FDI had predominantly negative effects on the localcommunity. Themain cause of this relates the focus of the local government. The regulatory focus ismostlyaimedtoattractforeigninvestors,buttheydoarenotbeneficialtolocalcommunity.Besidesthat,anexample implies that the investmentsarebasedon large-scalemonocultures that canbe seenasadamage to theenvironment anda risk for foodproduction.Overall, the FDI have anegativeeffectonfoodsecurity.

Thelastcase,SouthAfrica,couldbeillustratedastheoptimaluseofsharedvalue.IBSAfocuseson subjects corresponding with the criteria resulting from the theoretical framework. They stimulatemarket-seekingFDIwithspill-overstothelocalmarketresultinginfairprofits.TheyalsofocusonlimitingenvironmentalimpactsandcouldusetheirsharedknowledgetoimplementCAasanagendaintheirCSRtocontributetoasustainabledevelopment.

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Based on the cases, the conclusion can be drawn that the effects of FDI on food security areinfluencedbymanyfactorsandthatvariouseffectscanoccur.Ingeneral,itseemslikeFDIdoesnothaveapositiveeffectonfoodsecurityinSouthernAfrica.Insomespecificcasesitwillevennegativelyaffectthe food security of locals. However, regulatory frameworks and governmental involvement couldcontribute to improve the effects of FDI on food security. In this vulnerable region FDI should bestructuredthroughregulationsthatenforcecompaniestoapplyCSR.

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