by Keith Boyfield
July 11, 2013, 12:31am
GLOBAL food security and the need to save Africa’s poor from starvation have dominated international discussions for decades, and were key themes at the latest G8 summit. Yet the goal has triggered a raft of accusations from campaigning NGOs that business is guilty of “land grabs” across tropical Africa. The Guardian’s George Monbiot, for example, claims that we are about to witness “a new set of agreements that allow foreign companies to grab [Africa’s] land, patent their seeds and monopolise their food markets”.
This is scaremongering of the worst order and symptomatic of an ill-thought out attack on capitalism’s role as a generator of prosperity. Direct foreign investment into Africa offers an opportunity to address its chronic inability to feed its people – even though 70 per cent work on the land. As the African Development Bank points out, the continent faces an annual food import bill of $25bn (£16.7bn), while only $1bn of food comes from other African nations.
My research in Gabon, Nigeria and Togo, as well as in rapidly-developing Malaysia and Sarawak, has convinced me that commercial plantation agriculture represents one of the main potential drivers of wealth creation. In Sarawak, standards of living have been transformed by commercial agri-business. And small-scale farms have cooperated successfully with larger plantations in processing and marketing final products. Farmers associated with SALCRA, a group set up to develop native land rights in Sarawak, have earned $163m in dividend payments since 1985. And things have improved since 1995, with the adoption of a more commercial approach. In 2010, their exports of agricultural products reached $1.87bn.
Africa is on the cusp of repeating this revolution, and realising its longer-term potential as an exporter of food commodities. It is now estimated that agriculture accounts for roughly a third of the continent’s GDP. But with the right investment and know-how, it could fulfil an even more important role.
Half a century ago, Nigeria was the largest exporter of palm oil in the world. Today, it is obliged to import $435m annually. Far East Asia has shown how agri-business can improve rural populations’ standard of living. West Africa, meanwhile, has shown how a neglect of agriculture and overreliance on subsistence farming damages the poor’s prospects and even their life expectancy. Women make up more than half of Africa’s farmers and produce up to 90 per cent of the continent’s food, but they have to tend smaller plots and have far less access to inputs like fertiliser.
But a welcome tide of investment – estimated to total over $6bn into oil palm cultivation in West Africa alone – is set to trigger a renaissance in African agriculture. Similarly, there is tremendous potential to harvest rice, cassava and other key commodities on a commercial basis, thereby reducing food import bills and generating much needed export revenues. But this will only happen if the EU enables African farmers to trade into “fortress Europe”, surrounded as it is by a tall tariff barrier.
It is fanciful to believe that the answer lies in subsistence farming, as NGOs like the International Land Coalition are keen to argue. That route leads to starvation and disputes over land and water. Given the choice, Africans stampede into urban centres rather than scratch a living as a subsistence farmer.
Commercial market-orientated production, incorporating agro-processing plants, and offering well-paid jobs across the value chain, is the crucial way forward. But it requires modern infrastructure, fertiliser and private sector know-how to market the final packaged product. Nigeria, the world’s largest importer of rice, is seeking to enhance domestic annual production. To date, around 230,000 tonnes of new rice capacity – 10 per cent of current annual imports – has been commissioned by private sector investors and the goal is to become self-sufficient by 2015, though this target looks highly ambitious.
New investment is the crucial contribution that major agri-business groups can offer. The world should be welcoming this new chapter in Africa’s development, not condemning it. UK entities like Helios Investment Partners and Eight Miles, the private equity fund chaired by Sir Bob Geldof, are among those with much to bring to the table. We should be actively considering co-funding initiatives like the recently-launched Agvance Africa Fund of Funds, the continent’s first agricultural value-chain fund, managed by Credit Suisse, aimed at scaling up private financing dramatically.
It is only through skilled business investment that Africa will begin to feed itself. And it could also allow the continent to export valuable agricultural products to meet the demands of a fast growing global population.
Keith Boyfield is the author of a forthcoming study for the Institute of Economic Affairs: Commercial Agriculture: Cure or Curse?
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