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

A fast evolving context: Investment flows to sub-Saharan Africa

Major increase since 2000

Driven by commodity demand, esp extractives, and policy reform

Highly uneven distribution

Likely to slow with economic downturn

But, longer term, stuctural factors likely to stay

Source: UNCTAD

0

5

10

15

20

25

30

35

Burk

ina F

aso

Cam

ero

on

Ch

ad

Gh

an

a

Ken

ya

Mali

Mo

zambiq

ue

Nam

ibia

Nig

eria

Sen

eg

al

Tan

zan

ia

Ug

an

da

$B

illion

(no

min

al)

1980 1990 2005

0

5

10

15

20

25

30

35

40

1980 1990 2007

$ b

illio

n

0

5

10

15

20

25

30

35

40

45

50

% G

DP

FDI flowsFDI stock as % GDP

Agricultural investment - drivers

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

Land acquisitions as policy and market reaction

Why Africa? Investors: “inexpensive land”, “favourable climates”, “labour available”

Food produce Biofuel

Food vs fuel, Ethiopia

BITs by 12 African countries

0

50

100

150

200

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

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

Ethiopia - classification submitted projects by investor type

87%

5%

8%

Wholly Domestic Co

Foreign Stake Domestic Co

Foreign private company

Mali - classification of submitted projects by investor type

42%

8%

17%

8%

8%

17%

Wholly Domestic Co

Foreign Stake Domestic Co

Domestic state- ownedcompany

Foreign company

Foreign company, partlyforeign government owned

Foreign company, majoritygovernment owned

Ethiopia (2004-2008)

0

50

100

150

200

2004 2005 2006 2007 2008

By year Cumulative

0

100000

200000

300000

400000

500000

2004 2005 2006 2007 2008

Hec

tare

s

Allocated land (ha) - by year

Allocated land (ha) - cumulative

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

100000000

2004 2005 2006 2007 2008

By year Cumulative

Number of projects Allocated land (ha)

Investment commitments Investor originAfrica Central Asia China Middle East Europe N. America

1. “What”: Trends and drivers

2. “How”: Characteristics of land deals

Acquirer Provider

Government Private

Government QIA deals in Sudan, Indonesia, Vietnam

UAE deals in Sudan, incl Abu Dhabi Fund for Development

…

Daewoo-Madagascar; Hadco-Sudan …

Private Jarch Capital deal in Sudan …

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 5-yr 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?

0%

20%

40%

60%

80%

100%

Ethiopia Mali

Lease <50yrs Lease >50yrsSale N/A

0%

20%

40%

60%

80%

100%

Ethiopia Mali

Government, butwith some use orland claims

Government,with no otherland claims

Type of land rights

Land acquired from

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

Host state agencies

Investor(s)

Local resource users

[Lenders, insurers]

NGOs

NGOs

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

1960 2000

Population density (UNEP, 2004)