• West Africa Rising is a weekly look at business, investment, and development trends.
West Africa’s abundant natural resources have been a magnet for foreign investors ever since the Portuguese discovered gold in what’s now Mauritania back in the 1400s.
Today, a new set of visitors is hoping to make a mint off the region’s natural wealth. But they’re looking for treasure above ground, not below it.
Palm oil is what they’re after.
Global demand for the red-hued edible oil – a key ingredient in everything from Ben & Jerry’s ice cream to Dial soap to biofuels – is expected to double by 2020. Here in West Africa, the war-battered and achingly poor nation of Liberia is leading the charge in luring palm oil investors to its fertile soils.
By any measure, the country has succeeded. In the past three years, four major companies have promised a total of $2.6 billion in palm oil investment, and more could be coming soon.
The biggest pledge has come from Golden VerOleum, a subsidiary of the New-York based private equity fund Verdant Fund LP, which announced an investment of $1.6 billion last year, the single biggest agriculture outlay the country has ever seen.
Taken together, Liberia’s foreign investors have secured access to more than 1.5 million acres for palm oil production, or about 5.6 percent of the country’s total land area.
All of that land acquisition has caused some concern among environmental groups, who fear the companies will knock down species-rich tropical forests to make way for acre upon acre of tidy rows of oil palms. Others worry about the social impact of forcing villagers off of land they have inhabited for generations.
But productive oil palm plantations promise to pump a lot of money into Liberia, and there’s no disputing the fact that the country needs the revenue.
Crippled by two grisly civil wars and a long legacy of corruption, Liberia remains one of Africa’s poorest countries, despite recent gains.
Under President Ellen Johnson-Sirleaf, total government revenue jumped from an anemic $80 million in 2006 to $360 million last year. Still, the more recent figure represents about 15 percent of the operating budget of the city of Boston, which has one-sixth the population of Liberia.
And it’s not clear that the production of palm oil will necessarily lead to deforestation, as the investors claim that the land they’re planning to cultivate has already been cleared of trees. All of the companies active here are already members of the Roundtable on Sustainable Palm Oil (RSPO), an international certification scheme headquartered in Malaysia.
Despite such assurances, the potential downsides of palm oil production are being carefully considered. A working group whose members represent NGOs, the government, and the private sector is working to set up sustainability standards under the RSPO that are specific to Liberia.
The group – which is considering the social impacts of palm oil production as well as the environmental ones – is doing its best to keep pace with the new investments.
“I don’t think it’s going to be very easy to stop it,” says A.H. Barrie, who works for the World Conservation Union in Liberia and is a member of the working group. “But it needs to be looked at very, very carefully.”