African Boots

A few years back I did some research work for a consultancy looking to advise a Middle Eastern state how to invest in Sudanese agriculture, without running into the kind of political backlash that ruined the South Korean company Daewoo’s investment in Madagascan agriculture (details here and here). The deal ended up dying of its own accord, but these types of “food security” deals have since become a major facet of Asian and Middle Eastern investment in Africa, and have become accepted to the extent that African countries are making similar investments in other African countries:

The Egyptian government is hoping to cultivate wheat and other cereals on fertile land in African countries to feed its growing population of over 80 million.

In early September it signed a deal with the Sudanese government to give Egyptian companies access to Sudanese farmland.

… Egyptian officials say African and Nile basin countries, such as Uganda, Rwanda, Kenya, and Ethiopia, are high on a government list as potential places in which to make agricultural investments. They add that, apart from strengthening links with these African countries, the move would help Egypt avoid depending on its limited water resources.

So have we finally put to bed the spectre of neo-colonialism over these deals? Well perhaps not. The article goes on to describe how these other countries might become a bit testy about leasing their limited water resources to already thirsty Egypt. And let’s not forget that the main reason why Egypt needs to look South for more farmland is colossal mismanagement of their land resources under a pretty much planned economy.

We really should put these concerns to bed though, because in many cases selling land for foreign agricultural development increases the quantity of food sold on the domestic market. Part of this obviously depends on profit and product sharing agreements, but these agreements allow for a quick transition from subsistance farming to industrial farming, which can increase yields substantially, as well as providing other benefits.

Of course food output isn’t the only problem. There’s also the problem of relocations, which, though we’re quite used to them in China, is hardly something you’d wish on people elsewhere. The issue is made more complicated by poorly demarcated land rights in Africa, which can significantly add to the pool of people looking for a kickback in relocation schemes. But this is a governance issue, not an issue with foreign investment in farming. And the move of people out of subsistance agriculture is essentially the definition of poverty alleviation.

With peak oil approaching agricultural substitutes will get more valuable, and Africa’s extensive amount of arable land will be increasingly seen as a sustainable revenue source. Industrialization has to happen sooner or later, and this sort of foreign investment speeds the process up. I don’t expect it to be uncontroversial. But lets just say its better that Africa have this sort of problem, than this sort.