Africa Union Commission

FDI, Agriculture and Land
Conference on Feeding the World 2014: Sustainable solutions for a global crisis

Statement

H.E. Tumusiime Rhoda Peace
Commissioner, Rural Economy and Agriculture

13 February, 2014
London, UK

Statement
Thank you Emma Duncan, Deputy Editor, The Economist, for your kind introduction.
The African Union Commission, which I represent here, welcomes and appreciates this opportunity to discuss with you the critical issue of ‘Feeding the World.’ Indeed, the AU considers food and nutrition security among its top priorities given its positive multiplier effects on socio-economic development, politics and peace. As you are aware, the African leaders declared and launched 2014 as the year of agriculture and food security in Africa. So, this conference is extremely timely and pertinent, and we thank the Economist for organizing it and inviting us.
Let me say that in spite of the central role of Agriculture, and the vast potential that Africa is endowed with, the continent continues to face challenges of hunger, malnutrition and the high import bill. Africa’s natural resources including its minerals, oil and forests have not benefited its people, with Africa getting only a fraction of the proceeds from the wealth generated by these resources. Challenges which have already been highlighted by previous speakers have also prevented Africa from realizing its enormous potential from its land and water resources in the agricultural sector.
African leaders and citizens have now resolved that it is high time that these challenges were addressed head on. We are determined to promote the transformation of Africa’s agriculture, especially smallholder producers, through interventions that lead to increased mechanization, rural electrification, infrastructural development and irrigation, among others.
I know that this morning, my sister, Lindiwe Majele Sibanda, CEO of FANRPAN, talked about the importance of technology. The Comprehensive Africa Agriculture Development Programme (CAADP) is the continent’s overarching framework for ensuring these interventions are made systematically, and I am delighted to report that 40 countries have signed CAADP ‘compacts,’ with many having credible National Food Security and Investment Plans (NSFSIPs). This is a positive sign of political will and commitment to transform agriculture, yet challenges remain with regard to meeting the investment target set by the Maputo Declaration –i.e. 10% allocation of the public budget to agriculture. And even more work is needed to attract high levels of private sector involvement and Foreign Direct Investment (FDI) needed to transform Africa’s agriculture.

Ladies and Gentlemen, Africa has very low levels of foreign direct investments (FDI) when compared to other parts of the developing world. In 2010, FDI in Africa was about 39 billion for Africa, compared to 442 billion for developing countries in Asia, and 133 billion for Latin America and the Caribbean. The positive correlation between high levels of agricultural investments and poverty reduction is well established, yet unlike the ‘green revolution’ in Asia and parts of Latin America-- which saw massive increases in seed and fertilizer use, accompanied by investments in irrigation, rural roads, marketing infrastructure and financial markets-- Africa has experienced slower growth in these important ingredients for dynamic agricultural markets and, indeed, agricultural transformation

The demand for agricultural land by domestic and foreign investors following the 2008 food and energy crisis was welcomed by some African governments as an opportunity to increase investments and FDI in the sector. As you are aware, the majority of currently available agriculture land (60%) is in Africa. An assessment of land transactions between 2000 and 2013 by the African Union’s Land Policy Initiative (LPI)—conducted as part of the implementation of the Nairobi Action Plan on Large scale land based investments-- shows a record of 685 cases of large scale land based investments ---those involving over 200 ha. These investments covered over 40 million acres and constitute 45% of all such cases globally. There is, therefore, no doubt that there has been a lot of activity related to large scale land acquisitions in Africa, the majority of which are by domestic investors.
The concern is that most of these land deals have not really succeeded in generating the investment that was envisaged. In some cases, even when deals are signed and land is transferred to the investor, minimal land is brought under production and hence the benefits do not materialize as expected or stipulated in the contracts. For instance, only 42% of the 474 LSLBI deals signed in Africa since 2000 are operational, covering 29% of the total cases, and only 19% of the land area is under investment. Furthermore, only 8.6% of the land area under contract in Africa is productive (under cultivation). In other words, in spite of the interest in Africa’s agriculture land and the efforts by governments to engage investors, the evidence indicates that little is achieved in reality.
The assessment report by the LPI documents well, the risks of engagement in large scale land based investments. They include weak land governance and administration which fails to protect land rights of communities, including women; poor land use maps; records and information systems which do not adequately document land, land rights and claims; weak capacities of institutions --leading to a lack of transparency and accountability; and marginalization of smallholder producers in favor of large scale investors who receive better protection in the context of fiscal and trade regimes that favor globalization/liberalization.
What we have learned is that most investment models that have involved the transfer of land have led to the least favorable outcomes as they have deprived local communities of their livelihoods without due compensation; they have also failed to generate meaningful employment, infrastructure and other expected benefits. And, from the perspective of investors--the difficulty of doing business, volatility of institutional arrangements, high transaction and settling costs, are some of the reasons that have led to the failure of these investments.
In implementing the AU Declaration on Land Issues and Challenges, and drawing on the Framework and Guidelines on Land Policy in Africa, the tripartite initiative of the African Union Commission, the United Nations Economic Commission for Africa and the African Development Bank--have recently drafted guiding principles on large scale land based investments. We believe that this is a useful tool and reference for AU Member States as well as investors in negotiating sustainable investments in land.
The guiding principles note the importance of contextualizing these investments within the existing strategy for agricultural development, recognizing the centrality of smallholder producers to ensure their interests are safeguarded by investment models that minimize land transfers and lead to shared prosperity at local and national levels.

The investments should ideally be informed by holistic cost-benefit analysis of economic, financial, social and environmental benefits throughout the entire period of the land allocation to minimize the likelihood of failure which has plagued previous acquisitions.

It is crucial that these deals respect, protect and fulfill human rights recognized by national constitutions and relevant continental and national conventions and instruments. Rights pertaining to women and small scale producers are especially important as noted by Dr, Kanyao Nwanze, President of IFAD, said this morning.

It is clear that some investments have failed. The Land Policy Initiative is in advanced stages of developing a monitoring framework with clear benchmarks and indicators for tracking progress to allow for collective learning and sharing of best practices.

As the African Union Commission, we encourage African governments, stakeholders, investors and investor governments to commit to upholding high standards of cooperation, collaboration and mutual responsibility and accountability to ensure the success of these investments.

Ladies and Gentlemen, all is not lost. The good news is that there are positive lessons to draw from moving forward, to ensure that large scale investments are more successful and equitable. Certain countries in Africa have conducted reforms to guard against arbitrary appropriation of land and to facilitate more inclusive development—an example is Tanzania where land acquisition requires approval and consent from the villagers all the way to the President. This is the idea behind the Grow Africa Programme, referred to by Jorgen Haselstad, President and CEO of Yara International.

There are also examples of inclusive investment and development models that go beyond rethoric in efforts to include local populations. For instance, Mozambique, through its Pro-Parcerias project developed procedures for land-based investments based on partnerships among central and local government, communities, civil society and investors and initiated at village level.

There is also evidence of more favorable negotiations of investment agreements and bilateral treaties, which better reconcile investment protection with a wider range of policy goals. These agreements now have more restrictive clauses on fair and equitable treatment, include provisions on adherence to international standards of corporate social responsibility, and recognize the need for transparency and public scrutiny.

We are also fortunate, ladies and Gentlemen, that we have continental and international guidance for future investments in agriculture. These include the AU Framework and Guidelines on Land Policy and the forthcoming AU Guiding Principles on large scale agricultural investments—to be published this year. In partnership with FAO, IFAD, EU and other development partners, we will promote the application of the AU guidelines alongside the Voluntary Guidelines on Responsible Governance of Tenure of Land.’

As I conclude, I would like to thank The Economist, our convener, and my fellow panelists as well as other participants for the attention you accord to issues of strategic importance to Africa including agriculture and land, food and nutrition. I look forward to our productive discussions and continued collaboration especially in this 2014 year of agriculture and food security in Africa and the international year of Family Farming.

Thank you.

Could add the following somewhere:
Smallholder Agriculture:
Ladies and Gentlemen, smallholder agriculture is and will remain the foundation of Africa’s agriculture for a long time. However, ladies and gentlemen, the challenges of smallholder agriculture must be addressed in efforts to seek sustainable solutions for feeding Africa and the world. Let us keep in mind that there is no contradiction between smallholder agriculture and commercialization of Agriculture. Smallholder farmers, pastoralists and many others need to be respect and supported in order to improve productivity per hectare; and facilitate access to markets.
Women and Agriculture:
Ladies and Gentlemen, recent data shows that improving land and property rights for women would greatly increase agricultural production (by as high as 6% in Burkina Faso). In addition, equal access to agricultural inputs by men and women would increase maize yields by 1/6th in Malawi and Ghana, and indeed most of Africa, given that the female share of agriculture labor force is higher than 55% in countries like the Democratic Republic of Congo, Gabon, Gambia, Mozambique and Rwanda. This is why the African Union, through the Land Policy Initiative (LPI), has generated knowledge for advocacy and further guidance to its member states on how to facilitate access to land and secure the land rights of African women.