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Re-scrambling for Africa

May 23, 2009

There’s a growing trend that Africans ought to be wary about. Capital rich countries and companies are buying farmlands in Africa to grow crops and export them – a lingering fuel, feed and food crisis is driving the search for alternatives.

Africa is blessed with jatropha (the cheapest and most efficient biofuel). Jatropha is a non-food, plant that can be intercropped. It’s indigenous to the Southern Hemisphere. Corn-based ethanol, a biofuel, is costly and exerts pressure on food prices. Besides, there’s the blend wall palaver – there’s a limit to the amount of ethanol a car can take. Beyond that limit it damages cars.

The whole business smacks of neo-colonialism. Yet it’s good and not so good news. Good because farmers get a decent return for their efforts. Not so good because it’s all shrouded in secrecy – particularly in notorious countries. Then again, this is one short fall of protectionism. Subsidies to farmers in Japan – their rice farmers are the most cosseted of the lot – America and the EU (France) aren’t helping matters. Neither are protracted WTO discussions.

China and Lonrho, a UK-based company, have bought thousands of hectares in Africa. Next week’s edition of The Economist has two articles on this trend. Curiously, The Economist’s article is silent about Lonrho’s investment in Angola. Coincidentally, a correspondent of newspaper joined the board of Lonrho on a – on a jet-setting-business-as-usual-tour of Africa last November.

Rather rich. The map accompanying the story suggests the investors in Angola are unknown. The IFPRI link, also provided with the story, mentions Lonrho as the investor. Now this smacks of either innocent oversight or fishy business.

So far, from my research online, the Nigerian deal looks legitimate. Trans4mation Agric-tech signed a 25-year public-private partnership (PPP) contract with some South-south states. I found nothing on China’s purchase of Nigeria farmlands.

The other company that has interests in Nigeria is a private equity fund Agri-Vie. According to a March 20th 2009 report by Reuters, Agri-Vie “is raising up to $100 million to invest in agricultural projects in South Africa, Kenya, Tanzania, Uganda, Ghana and Nigeria.

Agri-Vie’s backers include South Africa’s Development Bank of Southern Africa and Industrial Development Corp, and private entities such as the W.K. Kellogg Foundation, started in 1930 by the breakfast cereal pioneer.”

Swathes of foreign capital are grabbing lands in Africa in exchange for food to feed Arabs and Chinese, and feed to fuel cars in Europe. Alas, African countries are dogged by either weak democratic institutions or autocratic governments. Rent-seeking and survival of the fattest enshrines dodgy deals. For instance, legislative foot-dragging on the reform of  Nigeria’s Land Use Act may be putting Nigerians at a disadvantage.

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