Dr. George Owusu: "The biggest challenge of land grabbing is that there is really no legal framework in most African countries dictating how much land that can be bought by foreign investors."
‘Work with local experts to avoid land grabbing practices’
Interview with Dr. George Owusu from Ghana
By Gary Al-Smith in Accra, Ghana
This month SNS Impact Investing published a paper (PDF) about land grabbing in Africa. That is why we approached Dr. George Owusu from the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana in Accra. “Foreign investors should always work with local experts to avoid being part of land grabbing practices.”
Can you describe what the term ‘land grabbing’ means?
“I would describe land grabbing as the new land rush that arises from the scarcity of food and other land-based resources. The ‘grabbing’ is usually done by industrialized nations in less industrialized ones. The main players are from the West: multinational corporations with interest in agri-business. The World Bank says the land involved is about 56 million hectares, with most of it in Africa. But more recent reports say that it is far more than that. We don’t have independent figures as yet but it is indeed a big issue.
From a business point of view large-scale agriculture can be good, but the sad thing is that this is done sometimes without the knowledge of local people. This means they are forcefully evicted from places they have lived in for hundreds of years and suddenly find themselves homeless.”
When did the debate about ‘land grabbing’ in Africa start?
“The debate started long ago. During colonial times European governments came to Africa to get more resources for their own people. This resulted in governments making deals with locals to give them large tracts of land – which was plentiful at the time – in exchange for cheap goods. The contracts, if they were signed at all, mostly favored the educated colonialists. Over time, the locals became more educated and realized they had mostly sold their ‘birthright’, as it were.
In more recent times, the industrialized parts of the world have been experiencing food shortages and other resource scarcities that led to agitations in many places. In other parts of the world, this grabbing started due to harvest failures after severe droughts. In the US in particular, companies who had moved out of property market in the wake of the credit crunch in 2007 and 2008 suddenly saw speculation in African lands as a good business case.
Also, the pressures on large agro-business companies and governments to provide for the increase in demand meant they had to find a way to provide these resources at an economically viable price. For many of them, Africa was the key. They came to Africa and realized that they could make cheap deals on large tracts of land in the hinterlands.
In Africa some local companies who have the money to go into these investments have suddenly found stiff opposition from multinationals who are lobbying for the same land with more money. Naturally, local landowners are giving the land to those with more cash and it is putting pressure on governments to give their own people good land for business so that some of the investments circulate locally.
The debate has also arisen due to the fact some foreign investors are, rightly, feeling that deals they struck with previous governments have now been cancelled by existing governments who they believe are in to make money out of them again. These companies are being forced to pay for land and resources that they have already paid for legally many years ago.”
What is the role of foreign investors concerning land grabbing versus the role of the African governments and local organizations?
“Investors provide the financial backbone for these land grabbing ventures. Most of the time they are foreign investors but there also have been cases where local firms themselves buy the tracts of land on behalf of foreign partners. African governments dictate policy on how the land is bought. In some examples investors are given a raw deal because of the political party systems in most African countries.
When leaders from a political party are in power and do business with one company, another party may get power in a few years and totally annul the deal despite it being legal. It is up to investors to make sure that they deal with the correct people on the ground. This is very important because although it may take time, in the long run the transparency in making deals is for the benefit of all concerned.
African governments have the job of providing policy frameworks. The issue is that these policies are subject to change by successive governments in certain countries. There are many examples of smooth transitions of government policy from one political party to the other. However, it is important for investors to open their eyes to the changing political landscape in Africa, because like everywhere else in the world, politics determines how business is done and regulated.
In some areas, African governments, local organizations and foreign companies have forged successful partnerships to make sure that the issue of land grabbing, and indeed, business investments are dealt with properly. There are increasingly reports of local organizations putting measures in place to make sure that the problems leading to land grabbing are minimized as much as possible because it affects everyone involved in the long run.”
What are the biggest challenges concerning ‘land grabbing’?
“The biggest challenge of land grabbing is that there is really no legal framework in most African countries dictating how much land that can be bought by foreign investors. The question is: how much land is too much when foreign companies want to buy land that is being used by small scale farmers and workers for their subsistence needs?
From the investor point of view, they only want to do business and you cannot fault them for that. It is now up to African governments and all stakeholders that land is a precious resource that can be distributed fairly and equitably among small-scale users and large companies, foreign or local. All that is needed are rules to govern these things. Failure to comply by them would lead to sanctions and for the companies always looking for shortcuts; they eventually lose in the long run.”
What are your recommendations to foreign investors who are active in the agriculture sector in Africa to avoid being part of this?
“Businesses should look out for independent evaluation bodies that have done research and know the terrain well. Consulting agencies like these makes market penetration into these countries so much easier because these agencies usually have the requisite knowhow and genuine contacts to make things more transparent and hassle-free. Some foreign companies are given this advice and do not take it due to the little consultation fees they have to pay. But they forget that in any new or emerging business markets anywhere in the world, it is standard practice to seek local expertise, for their own sake. Some of these include chambers of commerce that are available in many African countries as well as agro-business consultancies.
For the most part, foreign companies do due diligence, but I think they still need more education of the realities of doing business in Africa. The embassies of Western nations are trying their best to give their citizens the required help in setting up businesses in Africa, but the job is huge and there are many areas that embassies cannot cover for logistical reasons. There are experts in Africa who know these things. Foreign companies are advised to put a little effort in contacting these people because it pays off well in the long run.”
Dr. George Owusu is part of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana.
