The Hindu Business Line : The new face of colonisation

Countries such as the UAE, China and India have been acquiring vast tracts of land in Africa But the motivation behind this new wave of acquisition varies from country to country.

Alok Ray

The world is now going through a new phase of globalisation. Diverse countries such as oil-rich Saudi Arabia and the UAE, natural resource poor South Korea and overpopulated China and India are all acquiring huge tracts of land, mostly from poor countries in Africa, to grow food and other agricultural products using cheap land and labour.

Then they are shipping the agricultural products to their own countries or trading them in the world markets.

Acquiring land across countries is not a new game. Many western colonial powers did that for centuries in the Third World countries and developed plantation crops such as tea, coffee, rubber, banana, cotton and oilseeds.

So, what is new?

First, the players. This time, the new “colonisers” of land are mostly from the so-called South or the developing countries which were at one time the colonies of the western world.

Second, the scale. The amount of land acquired in Africa by other countries is more than the entire land mass of Germany or France. Sudan (the largest country in Africa and known as the “bread basket of the Arab world”) has reportedly kept 20 per cent of its cultivable land for Arab governments.

Third, the mode of acquisition. Along with private companies (including investment banking companies) buying land from private parties or governments, many governments (or their sovereign wealth funds) are involved in buying or leasing land directly from other governments.

The motivation behind this new wave of global land acquisition vary. Oil-rich Arab countries have been trying for some time to grow food on their desert lands by reclaiming land from sea and extracting water for irrigation by various new technologies.

But this was proving increasingly costly and was dangerously pushing down the water table under the sandy lands. So, they had to look for imports of food as a water-saving device. The rising food prices in 2007-08, following crop failures in several countries and diversion of food crops to bio-fuel, was not a big issue for the Arab countries with bulging foreign exchange reserves, thanks to sharply rising petroleum prices.

But they became deeply disturbed when some of the food exporting countries restricted exports during the last bout of ‘agflation’. The Arab countries were now afraid of not being able to buy food at any price in the global market if a global food shortage developed.

Food security threat

So, food security became an overriding concern for these countries and they looked to producing their own food but on other countries’ captive land at lower cost. They have invested in acquiring land in countries such as Sudan, Pakistan and several South-East Asian countries.

For China, the major drivers are the adverse land-labour ratio (getting worse by rapid industrialisation eating into agricultural land and severe water shortage) and gaining control over the natural resources which are increasingly becoming scarce globally. They are also interested in developing additional sources of bio-fuel as a buffer against oil price increases. Similar considerations are important for Japan and South Korea.

For India, the land acquisition in Africa (and also in Asian countries such as Burma and Indonesia and Latin American nations such as Paraguay and Uruguay) is by private agri-business companies that are not directly interested in food security for India or acquiring national control over vital natural resources.

Guided by private profit motive, their major concerns are developing a more efficient and bigger scale agricultural production and distribution system abroad than what they are able to do in India. Though the Indian Government denies it, some analysts find evidence of the Government providing incentives (soft loans to African countries and aid to the military junta in Burma, to name a few) so that the Indian companies can grow pulses, oilseeds, sugarcane and maize (for animal feed) in those countries and export these to India at concessional duties to help achieve the national food security objective.

Winners vs losers

Though the gains for the governments and the private firms acquiring land by outright purchase or long lease are fairly obvious, the gains for the poor African nations are being fiercely debated.

The supporters basically cite the benefits that are usually associated with any foreign direct investment coming to a country. In addition, they promise to build more schools and health clinics for the locals. To the extent productivity of land improves, the net availability of food may go up — despite more exports — in those food-starved poor countries such as Ethiopia, Sudan or Somalia. In addition, there will be more employment opportunities for the local people and more tax revenues for the local governments.

The critics point to the forcible purchase of land from small farmers by corrupt government officials in league with musclemen at much below fair prices. Many nomadic people and locals using communal land for generations in Africa have no documented legal rights on land and hence they are often deprived of any fair compensation.

In some cases, even additional employment generation for local people is suspect as, for example, some Chinese firms are reportedly bringing Chinese workers to work in foreign farms (to bypass local trade unions). The truth, as usual, is subject to the rider: “It depends.”

A lot hinges on the power and good intentions of the local governments vis-À-vis the foreign companies and governments. Here also lies the problem.

Many African governments are insecure non-democratic regimes that can give away valuable resources for exploitation by powerful foreign countries and companies at throwaway pries, provided they and their cronies get sufficient private compensation. Their actions are not usually subject to legislative or judicial scrutiny, till they are overthrown by another ruler.

code of conduct

The problem underlines the need for an international code of conduct over acquiring big chunks of land in other countries, to ensure transparency in contracts, to protect the customary rights of locals and sharing of benefits with the local people and communities.

There should also be an international body to which the aggrieved parties can bring cases of possible violation of such international codes. Else, the ongoing land deals which are being described by some critics as “land piracy” or “neo-colonialism” may lead to violent protests in a region familiar with famines and bloody civil wars. In times of food riots, it is easy to find scapegoats in foreigners to divert the wrath of hungry people away from the inefficient and corrupt local government officials.

(The author is a former Professor of Economics, IIM, Calcutta. blfeedback@thehindu.co.in)

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