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Land acquisitions: Investment opportunity or hydro-colonialism?

16th July 2012

By: In On Africa IOA

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Today we live in a ‘post-surplus world’ with a tense situation in global food markets, while at the same time facing increasing food demand. By 2050 the world will need 50% more food than it currently does, and transformation and partnerships with Africa will be essential to these global food needs.(2) In order to secure food security, land acquisitions have increased. Recipient countries sell or lease out land to Government or private sector investors. What is new to this process are its scale (3) and its possible implications. GRAIN, a non-government organisation that backs smallholder farmers, recently highlighted the risk of water scarcity connected to the process of land acquisition.(4)

This CAI paper examines the controversial act of land acquisitions. The implications of the ‘investment perspective’ and the ‘water and land scramble perspective’ are discussed, with a focus on Saudi Arabia’s debated land deals in Ethiopia.

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Land acquisitions: Two sides of the coin

The process whereby foreign entities buy land from its occupiers, or ‘the hidden revolution,’ as Fred Pearce, writer of The Land Grabbers calls it, has received increasing global attention.(5) Countries that are ‘finance-rich, resource-poor’ look to ‘finance-poor, resource-rich’ countries to ensure their own food and energy security.(6) Concern over food security spiked when grain prices reached an all-time high in 2007/2008. To secure the future of their populations, countries such as South Korea and Saudi Arabia began to invest in overseas land.(7) Numerous other countries are involved in this agricultural investment process, including India and China. Nevertheless the business also includes African intra-regional land investments.(8)

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On one side, supporters of land acquisitions argue that the investments contribute to new techniques, seeds and money for the agriculture sector.(9) These investments address the food crisis, create employment and earn foreign exchange.(10) Its opponents, on the other side, argue that farmlands are separated from their host countries and force farmers off their land.(11) The procedure has therefore been nick-named ‘land grabbing’, a term that implies an act in which someone deliberately and illegally takes away someone’s land rights. Media has raised concern of a land grab of neo-colonial character, which is risking food security and affecting smallholder farmers.(12)

A European Report on Development 2011-2012 focusing on food, water and energy, stressed the need for effective natural resources management for sustainable and inclusive growth.(13) In addition, at the Rio+20 Summit 2012 ‘the landscape approach’ was introduced. This is an initiative with the aim to include local stakeholders to ensure sustainable development.(14)

The concept of land investment is based on the assumption that investment can contribute to development. Governments can use foreign exchange earnings gained from agricultural exports to attain food security by trade and in the end finance technological imports to increase industrialisation.(15) The principles for this process include keeping it African-led and African-owned, multi-stakeholder, market-based, sustainable, transparent, agile and non-bureaucratic.(16)

Hydro issues

On the African continent water scarcity is a reality that affects one in three people.(17) A recent report by GRAIN, underscores the effect of land grabbing on Africa’s fresh water systems. "If these land grabs are allowed to continue, Africa is heading for a hydrological suicide," said co-ordinator of GRAIN, Henk Hobbelink.(18) The report implies that the scramble for land is a struggle for control over water. Countries such as India and Saudi Arabia do not lack land for food production, they lack water.(19)

The idea that water is abundant in Africa and that African water resources are under-utilised is a popular one.(20) However, the land deals in Africa contain large-scale industrial agricultural businesses that consume vast amounts of water. If this development continues, it risks exhausting Africa’s water sources, which means that millions of people could lose access to water.(21) History tells us that industrial agriculture is not sustainable: during India’s Green Revolution, water was pumped from deeply dug boreholes for irrigation and India’s groundwater consumption consequently reached an unsustainable height. Today Indian farmers have to drill deeper every year, an unsustainable situation.(22)

Another territory at risk of over-consuming its water resource is the Nile river basin. Ethiopia, South Sudan, Sudan and Egypt are dependent on its water for agriculture and have irrigation infrastructures for 5.4 million hectares (13 million acres) of land. However, 8.6 million hectares of land have been leased out.(23) In Ethiopia 85% of the population relies on agriculture. The Ethiopian Government has therefore recognised the need for rapid agricultural growth. The Government has urged for increased commercialisation including foreign and domestic investments. The 2005 Government’s Poverty Reduction Strategy Paper (PRSP) identified a dual approach that represented both political and economic priorities.(24) The approach emphasises the importance of the politically sensitive smallholder sector and envisions a new role for foreign and domestic investments through supporting large-scale commercial agriculture.(25)

A Saudi Arabian investment perspective

For 30 years the Saudi Arabian Government promoted a self-sufficiency programme and subsidised its domestic food production to feed its 25 million inhabitants. However, after exhausting its scarce water supplies and consuming 60% of its country’s fossil water,(26) and as the 2007-2008 food prices spike hit the Government, a long-term strategy was established. The ‘King Abdullah initiative’, as it was called, included investments in foreign land, including that in Ethiopia.(27)

Saudi Arabia sees potential in African soil. “Africa…has the highest potential for increasing food production globally,” Dr Fahad bin Abdulrahman Balghunaim, Minister of Agriculture of Saudi Arabia declared.(28) From a Saudi Arabian perspective Africa has the potential to both become self-sufficient and a global exporter of food.(29) However, it is not just the soil that is attractive. Saudi Arabia is so thirsty for water that it has given priority to water over food.(30) “Food you can import, but water is very difficult. The Government has taken – in my opinion a courageous – decision to give water priority over the food sector. We decided to lower our reliance on locally produced wheat [to be phased out by 2016].”(31)

Saudi Arabia considers its engagement in Ethiopia as a collaborative approach rather than a zero-sum game.(32) By building partnerships around agriculture, Saudi Arabia both contributes to development and ensures its food security.(33) The Ethiopian Government considers the investments a possibility to allow foreign currency to come into the economy and add to long-term food security by transferring technology to small-scale farmers.(34) The Saudi Star, owned by the Ethiopian born Saudi oil billionaire Sheikh Mohammed Hussein Ali Al Amoudi, has been granted a 60-year concession on 10,000 hectares in the poor Gambella province.(35) The project aims to create around 5,000 new jobs on the farm in south-western Gambella. Investments include infrastructure, such as roads, and professional education for future employees.(36)

Saudi scramble for water and its implications

Few land deal contracts have become public. Most are covered by a secrecy clause, and only a few include water rights. In some cases there has been an ambiguous reference to respecting water laws and regulations.(37) Some of the contracts between the Ethiopian Government and the Saudi Star, regarding the Gambela province, included a small user fee for the water but without restrictions on the amount of water that can be withdrawn. In occasional cases minimal restrictions are imposed for dry seasons when the water is critical for the local villages. The foreign investors usually have strong rights from international trade and investments treaties making it difficult for the governments to negotiate the conditions.(38)

Despite foreign investors’ view of the African potential as a food producer, Ethiopia is incapable of feeding its own people and is dependent on food aid from the World Food Programme (WFP). Leasing out land to foreign investors has led to food shortages for Ethiopia’s own people.(39)

The human rights violation most often perpetrated by land deals is that thousands of people have been forced off their land, as a part of the Ethiopian Government’s ‘villagisation’ programme. The Ethiopian constitution protects indigenous people’s rights (40) and Ethiopia signed the United Nations Declaration on the Rights of Indigenous Peoples in 2007.(41) However, neither consultations nor compensation has been provided to the affected people.(42) The Government was to provide basic resources and infrastructure but instead the villages suffer from inadequate food supply, agricultural support, and health and education access.(43) According to Human Rights Watch, investors have a responsibility to ensure that they are not supporting forced displacement or violating human rights in the name of development.(44) However, in Gambela province local people are forced off their land. The Ethiopian Government is aiming to relocate 1.5 million people from their homelands by 2013.(45)

Concluding remarks

Due to increasing rates of urbanisation and growing food demand there is a need for advanced, more sustainable and efficient agriculture production. In order to reach these goals, advanced technology and investments are necessary. Land acquisition with large-scale farming is one way to reach these goals.

It is evident looking at the above discussion, that in order to be sustainable recipient nations of land deals must be able to negotiate contracts in accordance with its national constitution and international human rights treaties. The investment countries must consult the locals and offer compensation if necessary. In addition, the recipient country needs to broaden its revenues from the macro level, to also become beneficial on a micro level.

Written by Christine Petré (1)

NOTES:

(1) Contact Christine Petré through Consultancy Africa Intelligence's Rights in Focus Unit (rights.focus@consultancyafrica.com).
(2) Sheeran, J., ‘Grow Africa: Transforming African agriculture’, World Economic Forum on Africa 2012 website, http://www.weforum.org.
(3) ‘Buying farmland abroad: Outsourcing’s third wave’, The Economist, 21 May 2009, http://www.economist.com.
(4) ‘Squeezing Africa dry: behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.
(5) Templeton, T., ‘Fred Pearce: Land grabbing has more of an impact on the world’s poor than climate change’, The Guardian, 20 May 2012, http://www.guardian.co.uk.
(6) Borras Jr., S., et al., ‘Towards a broader view of the politics of global land grab: rethinking land issues, reframing resistance’, ICAS working paper series no. 001, May 3010 http://www.tni.org.
(7) Templeton, T., ‘Fred Pearce: Land grabbing has more of an impact on the world’s poor than climate change’, The Guardian, 20 May 2012, http://www.guardian.co.uk.
(8) Hall, R., ‘The next great trek? South Africa commercial farmers move north’, Institute of poverty, Land and agrarian studies, University of the Western Cape, PLAAS working paper series, 2011.
(9) ‘Buying farmland abroad: Outsourcing’s third wave’, The Economist, 21 May 2009, http://www.economist.com.
(10) Lavers, T., 2012. ‘Land grab’ as development strategy? The political economy of agricultural investment in Ethiopia. The Journal of Peasant Studies, 39(1), pp. 105-132.
(11) ‘Buying farmland abroad: Outsourcing’s third wave’, The Economist, 21 May 2009, http://www.economist.com.
(12) Tentena, P., ‘Is land grabbing a reality in Uganda?’ East African Business Week, 28 May 2012, http://allafrica.com.
(13) ‘Confronting scarcity: Managing water, energy and land inclusive and sustainable growth’, European Report on Development website, 2012, http://erd-report.eu.
(14) ‘Rio+20: The “landscape approach”’, IRIN, 18 June 2012, http://www.irinnews.org.
(15) Lavers, T., 2012. ‘Land grab’ as development strategy? The political economy of agricultural investment in Ethiopia. The Journal of Peasant Studies, 39(1), pp. 105-132.
(16) Sheeran, J., ‘Grow Africa: Transforming African agriculture’, World Economic Forum on Africa website, 2012, http://www.weforum.org.
(17) ‘Squeezing Africa dry: Behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.
(18) Tran, M., ‘Africa land deals lead to water giveaway’, The Guardian, 12 June 2012, http://www.guardian.co.uk.
(19) ‘Squeezing Africa dry: Behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.
(20) Ibid.
(21) Tran, M., ‘Africa land deals lead to water giveaway’, The Guardian, 12 June 2012, http://www.guardian.co.uk.
(22) ‘Squeezing Africa dry: behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.
(23) Ibid.
(24) Lavers, T., 2012. Land grab as development strategy? The political economy of agricultural investment in Ethiopia. The Journal of Peasant Studies, 39(1), pp. 105-132.
(25) ‘Ethiopia: Building on progress. A plan for accelerated and sustained development to end poverty’, The World Bank website, September 2006, http://siteresources.worldbank.org.
(26) ‘Squeezing Africa dry: Behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.
(27) Green, A., ‘Saudi agriculture minister enticed by African land’, This is Africa, 8 June 2012, http://www.thisisafricaonline.com.
(28) Ibid.
(29) Ibid.
(30) Balghunaim, F., ‘Grow Africa: Transforming African agriculture’, World Economic Forum on Africa website, 2012, http://www.weforum.org.
(31) Green, A., ‘Saudi agriculture minister enticed by African land’, This is Africa, 8 June 2012, http://www.thisisafricaonline.com.
(32) Ibid.
(33) Balghunaim, F., ‘Grow Africa: Transforming African agriculture’, World Economic Forum on Africa website, 2012, http://www.weforum.org.
(34) ‘Understanding land investment deals in Africa, Country report: Ethiopia’, The Oakland Institute website, 2011, http://www.oaklandinstitute.org.
(35) Pearce, F., ‘Land grabbers: Africa’s hidden revolution’ The Guardian, 20 May 2012, http://www.guardian.co.uk.
(36) Davison, W., ‘Saudi Star offers jobs to overcome Ethiopia criticism’, Bloomberg Business Week, 30 May 2012, http://www.arabianbusiness.com.
(37) ‘Contracts’, food crisis and the global land grab website, http://farmlandgrab.org.
(38) ‘Squeezing Africa dry: Behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.
(39) ‘Buying farmland abroad: Outsourcing’s third wave’, The Economist, 21 May 2009, http://www.economist.com.
(40) ‘Land legislation in Ethiopia’, Ethiopian law-info website, 24 December 2011, http://ethiopianlaw.weebly.com.
(41) ‘United Nations Declaration on the rights of indigenous peoples’, United Nations, http://www.un.org.
(42) ‘Ethiopia: Indigenous people forced from land’, Human Rights Watch, 8 June 2012, http://www.youtube.com.
(43) ‘”Waiting here for death” forced displacement and “villagisation” in Ethiopia’s Gambella region’, Human Rights Watch Report, January 2012, http://www.hrw.org.
(44) ‘Ethiopia: Forced relocations bring hunger, hardship’, Human Rights Watch website, 17 January 2012, http://www.hrw.org.
(45) ‘Squeezing Africa dry: Behind every land grab is a water grab’, GRAIN website, June 2012, http://www.grain.org.

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