On the surface, foreign investment in African agriculture would seem to be a great idea, helping countries to learn new techniques and to generate more jobs.
But a new report by the aid group Oxfam finds that much foreign investment actually hurts developing economies, taking fertile land out of production, weakening a country’s ability to feed itself, and displacing tens of thousands of citizens with no recourse or compensation.
In one deal alone, in the highlands of Uganda, more than 20,000 villagers were forced to move out, the report details.
“Our food supply system is broken, and it needs a radical fix,” says Ray Offenheiser, president of Oxfam America, in a recent interview in Boston. “After riots broke out in the capitals of 35 countries in Africa, we started tracking the land issue. We tracked 110 million hectares of land, leased or purchased, in 1,200 transactions, which is an area equal in size to all of Western Europe.”
What Oxfam found was a pattern of “land grabs,” in which land was sold or leased in private deals to foreign investors at preferential terms, with local citizens paying a heavy price in terms of livelihoods and food security.
“Seventy five percent of the deals happened in Africa, a lot of them involved displacement, there was not a lot of transparency, government policies seemed to favor the investors,” says Mr. Offenheiser. “Our interest is not to discourage investment in agriculture, but to create a framework for reasonably ethical practices for foreign investors.”
The Oxfam report comes at a time when food stocks are falling and food prices are rising, when bio-fuels production removes much of the global food crop from consumption as food, and when famine has taken hold in the Horn of Africa. Higher food costs disproportionately affect the world’s poorest citizens, the majority of whom live in Africa. According to the Cereal Price Index, released by the UN's Food and Agriculture Organization in early September, overall cereal prices are up 36 percent from where they were in August 2010, and up 2.2 percent from where they were in July.
Demand for food and competition for arable land is only likely to increase, as global population levels are expected to rise to 9 billion by 2050. The global economy is likely to triple over the same period.
In a public statement, Oxfam International’s Executive Director Jeremy Hobbs said: "The unprecedented pace of land deals and the increased competition for land is leaving many of the world’s poorest people worse off. In the scramble for more land, investors are ignoring the people who currently live on the land and depend on it to survive."
The Oxfam report provides several case studies, from Uganda to Guatemala. In the Uganda case study, a $47 million, 9,300-hectare forestry project in Uganda has been leased for 10 years by the London-based New Forests Company.
New Forests Company employs 1,500 people, and has planted 12 million pine trees, just the sort of green investment that a country like Uganda would be expected to approve. But to complete the project, New Forests Company needed to evict some 22,500 people, Oxfam says. (New Forests has said these people were illegal squatters, without title, and were only 15,191 in number.)
Ugandan government forestry officials, contacted by the Monitor, say that attracting investors like the New Forests Company to the country was vital for both the country's economy and its environment.
"In this country we are losing a lot of forest cover – around 80,000 hectares – each year and this deforestation is starting to affect the country so badly," Moses Watasa, a spokesman for Uganda's National Forestry Authority, says, citing increased flooding and landslides as examples.
Mr. Watasa says that currently an estimated 400,000 people are living illegally in areas designated as forests and that despite its vast potential, Uganda is forced to import timber from abroad.
"These sorts of investments are very important, and we should be doing all we can to attract them and to make things as smooth as possible for them when they get here," Watasa says.
He denied that the evictions carried out by authorities had been violent and said that most people moved out voluntarily.
But analysts warned that while attracting investment to the country is key to Uganda's development, the government needs to take into account the demands of the local population.
"We need investment, but it is also important that if an investor is being given land that people are helped to resettle and given an alternative form of livelihood," Lawrence Bategeka, principal research fellow at the Economic Policy Research Centre in Kampala, says.
Given Uganda's booming and still predominantly rural population that lives off subsistence farming, Mr. Bategeka says that unless the government works out plans such as urban development there will be more conflict over land in the future.
"With the growing population and without a clear development strategy there is going to be more pressure on the land and more people thrown off their land," Bategeka says.
Oxfam’s Offenheiser says that changing the system to boost food production will require compromises from all sides. Business advocates will need to change their attachment to large agricultural projects. “We hear that large is good, large is beautiful, and that small holder farms are not productive,” Offenheiser says. “But we’re bringing our fossil fuel industrial model to developing economies which may not be sustainable anyway.”
The aid community will have to change too, he adds, to accept the positive role that the private sector can play in development.
“Foreign aid as a percentage of foreign direct investment has been going down; it’s under 10 percent now, and it’s likely to go down further,” Offenheiser says. “So we have to focus on the other 90 percent that comes from the private sector. Can they be more pro-poor and pro-development? At times we’ll be adversarial, but we will encourage companies to do the right thing.”