Large Scale Agricultural Investment in Africa: Why Governance Matters

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Large Scale Agricultural Investment in Africa: Why Governance Matters



In the early decades of development (1960s), some developing country had already initiated large scale agricultural projects to produce food and cash crops. This approach soon faced criticisms on the ground that it would marginalize smallholder producers. Attention then shifted to preaching the small scale rural development approach which was nothing more than encouraging farmers to do things in traditional ways: organic farming, agro-forestry, small irrigation schemes, etc. As time progressed and the world population grew, the demand for food, energy and other necessities increased. During the recent global food crisis, many admitted that smallholder farmers were too poor to feed themselves let alone producing enough to feed the growing population in the world. Hence, we started to talk about the idea of large scale agricultural production.

Africa, with a population less than that of India, is always regarded as a continent with abundant land resources, most of which not yet utilized for various reasons, such as environmental constraints and lack of technology, infrastructure and government policy support. In the 1980s and 1990s, the World Bank and IMF attempted to encourage African governments to support investment initiatives in agriculture and other resource sectors in order to promote commodity exports and enable Africa to participation in the global economy.

Today international organizations like FAO have taken active steps to encourage investments in African agriculture with the aim of increasing the production of food, biofuel and industrial raw materials. More importantly, the steep rise in food prices, and its political consequences, drove many countries to enter Africa in search of agricultural lands. According to a report by University of Copenhagen (Denmark) - based Global Land Project (2010), there were 177 investment agreements with foreign and domestic firms in 27 African countries. Ethiopia, Madagascar and Sudan ranked the top three countries (26, 23 and 20 agreements, respectively). Saudi Arabia and India are the major stakeholders, but there is a long list of countries around the world including the Gulf States, UK, Italy, France, China, Norway, Germany, Malaysia, South Korea and USA. It is believed that such investments will bring benefits to African countries including the introduction of modern production methods, building of infrastructures, local employment and foreign currency earnings.

However, critics argue that the idea of large scale agricultural investment is nothing more than another rural development fallacy that could once again end up marginalizing small producers and degrading the environment. There is no impact on food security. The potential for technology transfer is exaggerated and contributions to foreign currency earnings are limited (for example, profits are repatriated to investor countries). Governments show no respect for customary land rights and so they expropriate land to pave way for large scale projects, often without proper compensation and designing alternative settlements. In short, the business of investment in the African agriculture in recent times has become referred as “land grab”, “agrarian colonialism”, “land rush”, etc.

Whether these criticisms are genuine or not depend how each one of us approaches the issues, yet it is also clear that some of them are theoretical. For example, technological replication at local level takes time. There have been studies on developing countries hosting multinational corporations and, to my knowledge, profit repatriation does not affect overall macro economic performance including foreign currency reserves (win-win situation).

The argument that large scale agricultural investments do not promote food security is wrong. Under conducive environments (good policies), investment projects create wage employment. And people who have cash in their pockets do not go hungry – according to the renowned economist Amartya Sen. Furthermore, the argument that large scale projects displace local peasants should be approached on case-by-case basis.

I am familiar with Shinfa River valley in Lower Quara, South-West Gondar (now maybe part of the Benshangul –Gumuz region?), known for wildlife, human eating lions, malaria and poisonous snakes, and inhospitable for human settlement. It is now a site of large scale agricultural development. Unless there have been a new development (human settlements), aaccusing the Ethiopian government of evicting peasants in this area is baseless. I had a chance to visit a floriculture production site located south of Addis Ababa and the atmosphere was filled with an expression of success and pride. I have read somewhere that former land owners wanted more compensation, which is legitimate given that those corporations are making a lot of money from flower sales, and above all, the value of land increases over time.

Ethiopia is one of the countries that have attracted the attention of critics of large scale agricultural investment projects. To my understanding, the Ethiopian government’s key message has been that large projects are not located in areas densely populated by the peasant population. An example is the Humera-Metema-Benshangul-Gambella corridor. Still, one can find pockets of settlements within the projects’ radius. It is important that the government takes measures to protect the livelihoods and safety of the communities affected. The Prime Minister, Minister of Agriculture and federal authorities should tour project areas regularly to hear the voices of citizens and address the issues, including proper compensations for land lost and the long-term sustainability of local economies and natural environments.

Desalegn Rahmato, formerly a professor of Addis Ababa University and one of the most experienced agrarian experts in Africa, recently wrote a paper that is critical of the way the Ethiopian government has handled large scale agricultural projects including lack of environmental assessments, overriding local concerns and lack of governance (land allocation and oversight, for example). I have read an account by a journalist who saw the forest in Shinfa/Metema area set on fire with wild animals running confused to escape danger. Things could be done better.

These governance issues by no means undermine practical development considerations that have a direct impact on remote rural areas. The story of the indigenous communities in Africa is actually the story of isolation and exploitation. The Canadian Association for Studies in International Development had an elderly key note speaker representing the Bushmen of Botswana during its annual conference this last June. This elder spoke of youth migration to urban areas, poverty and political marginalization, and the need for development assistance (the chair of this event expressed a regret that an organization called Survival International has not been publicizing the issues affecting the Bushmen properly).

If properly directed, booming agricultural sectors in indigenous areas would allow the people to earn good wages and use the income to improve their standard of living and educate their children. Economic development is a trade-off (depleting natural resources to motor growth, for example) and there are losers and winners in the process. The role of governments is to ensure that everybody makes an equal relative claim of economic opportunities. Consultation in planning processes, active participation in project area demarcations and openness and accountability in decision-making processes are examples of good governance practices that ensure equitable and sustainable development in these remote areas.

A former classmate of mine was once passionate about environmental issues, thanks to his experience in Brazil as a young intern. Later he got interested in the bitter political and ideological battle between industrial loggers and environmentalists in his native province of British Colombia, Western Canada. He accused environmental activists of arrogant middle class folks who wanted to deny local people their livelihoods. The morale of this story is that the issue of “land grab” or “agrarian colonialism” would have been articulated and understood differently if the sons and daughters of Africa’s indigenous peoples were speaking, instead of outsider. Wouldn’t a cash economy (as a result of wage employment and sales of goods and services generated by projects) enable the extension of public services and facilities to remote areas of South-West Ethiopia, for example, so that women can give safe birth or households can get access to all weather roads, electricity, clean water and justice?

In North America and Europe, college educated children return to rural farms with enthusiasm to carry on family traditions. They do so because income earning opportunities are good and they have also access to modern services and facilities including electricity, clean water, TV, cars and government benefits. Many of us joined the urban society, instead of returning to rural areas, because we did not want to live the way our parents lived. All of us can contribute to the creation of governance mechanism that promotes equitable and sustainable development in indigenous areas. The suggestion that governments stop economic development activities in these areas altogether is unrealistic and even unethical.

Getachew Mequanent Ottawa, Canada
Nov 2011


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