6th ANNUAL TRADE CONFERENCE
24 -25 NOVEMBER 2011
Theme: "Foreign Land Acquisitions in Africa: Implications for Trade, Investment and Development Policies"
Over the past five years, large-scale acquisitions of land in Africa and other parts of the developing world have made headlines across the world. Lands that only a short time ago seemed of little outside interest are now being sought by international investors to the tune of hundreds of thousands of hectares. However, deals reported in the international press constitute the tip of the iceberg. Yet, the issue of large-scale foreign land acquisitions is rightly a hot issue because land, especially in Africa, is extremely central to identity, livelihoods and food security.
A cursory analysis of the press reports provides some insights on trends and players. Certain East Asian (China, South Korea) and Gulf (Saudi Arabia, Qatar, United Arab Emirates) states emerge as key sources of investment. Notwithstanding the spate of media reports and some published research, international land deals and their impacts remain still little understood. The implications are particularly crucial for food security, poverty reduction and the future of general land use in the economies of sub-Saharan Africa. Apart from the extensive media coverage, there is little empirical data on the nature, characteristics, drivers, benefits and risks, as well as long term agricultural, trade and investment policy implications of the large scale land acquisitions in Africa by foreign investors.
Against this background of uncertainty, the 2011 trapca Trade Conference will look at the phenomenon branded by some as “land grabs” and by others as an “investment boom”; the key trends and drivers in land acquisitions and foreign investments in agriculture in Africa; the contractual arrangements underpinning them and the way these are negotiated, as well as the early impacts not only on the general development issues such as access to land, rural livelihoods food security etc but more specifically, the implications of these land acquisition transactions on international trade and investments.
2. The Context of Increasing Natural Resource –Focused FDI flows to Africa
Trends in large-scale land acquisitions for agricultural investments must be placed within the broader context of expanding economic relations between Africa and the rest of the world. Over the past decade, economic liberalization, the globalization of transport and communications, and global demand for food, energy and commodities have fostered foreign investment in many parts of Africa – particularly in natural resource extraction and in agriculture for food and fuel.
Given Africa’s resource endowments, natural resources are at the heart of FDI flows to the continent. Increases in investment flows are directly linked to global demand for energy and commodities such as oil, gold, copper, aluminum and nickel. Growing interest in Africa’s petroleum and minerals, exemplified by recent large-scale projects like the Chad- Cameroon oil development and pipeline project, is linked to fluctuations in global commodity prices and Western efforts to diversify supplies. The perceived availability of land in Africa has attracted the attention of governments eager to ensure security of food and fuel supplies, and of investors eager to tap into global demand for food and fuel.
3. The Drivers of the Land Acquisitions
On the surface, the major private land acquisitions deals that have actually reached conclusion have understood involve both agri-food companies and bio-fuels developers, as well as governments through Sovereign Wealth Funds (SWFs). Examples of the former include:
- A consortium of Saudi agricultural firms called Jenat recently announced plans to invest US$ 400 million into food production in Sudan and Ethiopia, following investments in 10,000 hectares of barley, wheat and livestock in Egypt according to company sources.
- Another private Saudi consortium recently announced a lease of unspecified size in Ethiopia.
- The pan-African conglomerate Lonrho acquired 25,000 hectares of land in Angola, and is negotiating major land deals in Mali and Malawi.
As for biofuels, GEM Biofuels plc gained exclusive rights for 50 years over 452,500 hectares in Southern Madagascar to plant jatropha for biodiesel production. In addition, UK energy company CAMS Group announced in September 2008 that they had acquired a lease over 45,000 hectares of land in Tanzania for investments in sweet sorghum production for biofuels, through equity financing and lending from a commercial bank in London.
Interestingly, private operators include not only agribusiness firms, but also investment funds, for example in a reported land acquisition in Southern Sudan by US-based Jarch Capital. Recent announcements of new specialized investment vehicles suggest that the number of investment fund land deals may increase in future.
Media reports also provide examples of government backing for privately led deals. It has been reported for example that Saudi Arabia’s “King Abdullah Initiative for Saudi Agricultural Investment Abroad” supports agricultural investments by Saudi companies in countries with high agricultural potential, with a view to promoting national and international food security. Strategic crops include rice, wheat, barley, corn, sugar and green fodders, in addition to animal and fish resources.
The Saudi Arabian company Hadco reportedly acquired 25,000 hectares of cropland in Sudan, with 60% of the project’s cost coming from the governmental Saudi Industrial Development Fund. Similarly, the Abu Dhabi Fund for Development is financing the development of 28,000 hectares of farmland in Sudan to grow alfalfa for use as animal feed and probably maize, beans and potatoes for export to the United Arab Emirates
Dependence on food imports and availability of major official reserves (Sovereign Wealth Funds from oil revenues or trade surpluses) are common characteristics – with the exception of some East Asian countries where import dependency does not seem to be a main driver. Private investors from the European Union (EU) and the United States (US) are also active in land investment, though have featured in fewer headlines in the international press. According to media reports, Sudan, Ethiopia, Madagascar and Mozambique are among the key recipients of FDI in land in Africa. Outside Africa, Pakistan, Kazakhstan, Southeast Asia (Cambodia, Laos, Philippines, Indonesia) and parts of Eastern Europe (e.g. Ukraine) appear to be significant recipient countries.
Involvement of agri-food and bio-fuels developers in land deals have generated the feeling that food insecurity in the investing countries and the increasing demand for bio-fuels could be the major drivers of these land acquisitions. But could there be other drivers, such as, say: increasing rates of returns in agriculture, the emerging carbon markets, host country incentives, available underutilized land in Africa? There is need for empirical studies as well as specific case studies to unravel the rationale for this new investment craze. Of critical importance to the Conference will be studies that relate the foreign land acquisitions in Africa to international trade and investments.
Objectives of the Conference
The objectives of the Conference are to:
- Examine the nature and typology of foreign land acquisition agreements in Africa.
- Establish the key features of foreign investments agreements involving purchase or long-term leases of large tracts of land in Africa.
- Inquire about the drivers of the foray of foreign investors in into Africa to acquire large pieces of land.
- Critically assess the implications of the foreign land acquisition deals on Africa’s general developmental challenges and particularly implications on Africa’s trade and investment policies and priorities.
- Assess the benefits and risks of the increasing growth of large-scale foreign investments in Agriculture in Africa.
- To generate policy options for African countries recipient of the large scale land purchases or lease from foreign investors.
- Explore the policy imperatives that should guide African countries confronted with requests for huge tracts of land either for lease or purchase by foreign investors.
- Examine the legal frameworks that can secure Africa’s trade and investment interests where foreign investments in agricultural land are involved.
4. Key Questions for focus of the Conference Papers
The Conference will offer an opportunity of presentation of in-depth qualitative and quantitative studies on the following, among other questions relevant to the Conference theme:
- What is the nature and typology of large-scale foreign investment agreements involving land acquisition in Africa in the recent past?
- What are the drivers of such acquisitions?
- What benefits do African countries stand to gains from such deals?
- What are the risks associated with such deals and how could those risks be mitigated?
- What legal and policy frameworks need to be in place to safeguard the interests of investment-receiving countries?
- What are the implications of these deals on Africa’s trade and investment policies and priorities?
- What case studies demonstrate successes and failures associated with such deals from trade and investment perspectives?
- What should be the policy position of African countries in respect to such deals?
5. The Sessions
Subject to changes, the Conference will have the following sessions, other than the opening and closing sessions (therefore paper authors should try as much as possible and fit the title and content of their papers along these broad areas):
- Session 1: The Pros and Cons of Foreign Land Acquisitions in Africa: General Developmental Perspectives
- Session 2: The Nature, Typology, Drivers, Motivations, Risks, Benefits of Foreign Land Acquisitions in Africa
- Session 3: Legal and Policy Issues from a Trade and Investment perspective
- Session 4: The Way Forward: How should African countries approach this issue?
Except for the Roundtable/ Panel Discussion, paper presentations will precede plenary discussions in every other session. The summary of the discussions will be captured, and these summaries together with the papers will thereafter be published as Conference Proceedings.
7. Call for Papers
Interested paper presenters are invited to submit abstracts (maximum 500 words) by 31st August 2011 and thereafter, those whose abstracts will have been accepted will be expected to send full papers (maximum 10 000 words in MS-Word Format, single spaced and using Harvard citation style) latest 15th October 2011.
Notifications on acceptance of abstracts will be done on a rolling basis, but latest by 15th September 2011.