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Is Greed Fuelling the Land Grab in Africa?

June 9, 2011
Toronto Star

Debra Black

A U.S. think-tank is calling for a moratorium on the sale of land in Africa to hedge funds, investment firms and bio-energy companies until they begin to use ethical and fair negotiations when dealing with local farmers and villages.

The California-based Oakland Institute says that largely unregulated land purchases by hedge funds and foreign speculators result in virtually none of the “promised benefits” for native populations in a recently released report.

“We are finding these are false promises for Africa,” said Frederic Mousseau, policy director for the think-tank, in an interview with the Star.

Millions of local farmers are being forced off their land to make room for agribusiness, backed by bio-fuel companies, investment firms and hedge funds, Mousseau said. And the deals lack any transparency.

These groups are sometimes paying very little to use the land, paying in some cases in Sierra Leone and Ethiopia as little as $2 per hectare to rent land. And in other cases, the population is being forced off the land without any compensation.

In one land transfer, witnessed by the institute’s executive director Anuradha Mittal, a poor tribal chief was given a bottle of Johnny Walker in exchange for land in Zambia, Mousseau said.

Many of the land contracts run for 99 years, with no clauses specifying when any of the promised benefits like schools or health services will be delivered, he added. “We have many instances where the local population feels misled.”

The institute says that in 2009 alone nearly 60 million hectares of land — an area the size of France — was purchased or leased in what they describe as “land grabs.”

And while promises of new infrastructure, investment dollars, jobs and tax revenues for cash-strapped African nations are made, they often fail to materialize, according to the report.

“We see huge amounts of fiscal incentives for investors, including tax holidays, but very little tax revenues from these investments,” it added.

The Oakland Institute sent researchers to seven African countries — Ethiopia, Mali, Sierra Leone, Mozambique, Tanzania, south Sudan and Zambia.

“We studied what was happening on the ground with communities, investigated what government and investors were doing and the international role of financial institutions,” Mousseau said.

And what they found did not paint a picture of burgeoning wealth, but rather one of continuing poverty for many, he said.

Researchers were told of cases in Mali by farm organizations that valuable land was given away for free to foreign investors. Farm groups said that they believed that the land could have been put to better use if local farmers were left to work the land and get out of poverty.

In Tanzania, 200,000 refugees from Burundi are being forced off their land for a 300,000 hectare bio-fuel project. Many have been farming on the land for 40 years, but now the government is moving them out.

And while many believed that the land was being grabbed by firms from India, China, Saudi Arabia and other emerging countries, Mousseau said the report found that many Western firms from Germany, England and the Netherlands, are buying up land as well.

These include: The London-based Emergent Asset Management; the Swiss-based Addax Bioenergy; Quifel International Holdings based in Portugal; the U.S.-based AgriSol Energy; Pharos Financial Group, a Russian hedge fund, and some prestigious American universities, including Harvard, Spellman and Vanderbilt.

And what’s motivating them is not an effort to reduce hunger in Africa, but rather energy and bio-fuels, Mousseau stresses. “A very important driver of this land grab is the American and European policies around bio-fuels.”

The institute suggests in its report that this land trend will do nothing but create insecurity in the global food system, which may be a much bigger threat to the world than terrorism.

It will also lead to conflict, environmental devastation, water loss and political instability, the report said.