Globalization: the Bad and the Good

Land grabbing in Ethiopia

Last week during her visit to Lusaka, Zambia, U.S. Secretary of State Hillary Clinton warned of a lurking “new colonialism” from foreign investors and governments who are solely looking to “extract the continent’s natural resources to enrich themselves and not the African people”.

A day earlier, Clinton cautioned that the substantial growth in Chinese investments must be monitored carefully, to ensure that Africans are not taken advantage of and left without benefits. This responsibility, Clinton argues, belongs to African leaders and governments. And given the prevalence of corruption in Africa, it is imperative that investments benefit everybody, not just the elite. Clinton makes plain the reality of the situation declaring:

“It is easy, and we saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave, and when you leave, you don’t leave much behind for the people who are there. We don’t want to see a new colonialism in Africa.”

While it’s easy to demonize corporations who engage in this practice, educational institutions are seemingly just as involved.  Harvard, amongst other American Universities is purchasing farmland in Africa via British hedge funds and European financial speculators. According to the Guardian, a recent report on land acquisitions in seven African countries suggests that Harvard and other top US schools have been investing heavily in African lands in the last few years. While some sources say that these land deals may force thousands of locals and farmers off their land; others argue that land acquisition has the potential to increase productivity and develop local economies.

The money is allegedly channeled via London-based Emergent Asset Management, which runs one of Africa’s largest land acquisition funds and is run by former JP Morgan and Goldman Sachs currency dealers. Researchers at the California-based Oakland Institute say that US clients may have invested up to $500 million in some of the most fertile land, hoping to make 25% in returns. Emergent reports:

“Yes, university endowment funds and pension funds are long-term investors, we are investing in African agriculture and setting up businesses and employing people. We are doing it in a responsible way. We want to make the land more valuable. Being big makes an impact; economies of scale can be more productive.”

Although foreign investment in land has received much criticism, one cannot turn a blind eye to the increased benefits.  The benefits for locals are seen with increased employment, research and development of agricultural technology and the construction of schools and health facilities in the area. The International Food Policy Institute (IFRPI) concedes that local government and community benefits are contingent on how foreign investments are designed and implemented. In response to concerns about these lands deals, the IFRPI has “called for a dual approach, involving implementation of a code of conduct and strengthening of the policy environment and the capacity of host governments to negotiate with potential investors”. Said proposed code of conduct involves: transparency in negotiations; respect for existing land rights; sound and sustainable agricultural practices; and revised national trade policies, so that exports are curtailed and domestic food supply is prioritized when food security is at risk.

Take for instance ExAgris Africa, a UK-based company that has invested in land in Malawi. ExAgris allocates 20% of its commercial farmland to associations of small farmers, thus providing training, credit inputs and better prices for produce. Jim Goodman, ExAgris’s Managing Director argues that the term “land grabbing” thwarts positive aspects of land acquisition. He explains:

“In return, we benefit from improved farm security, a growing local economy and a relationship in which the business and the smallholder associations help each other out as need arises. Sustainable and profitable farming requires not only fertile land and plentiful labor, but also substantial long term capital investment and appropriate technical and financial management to realize the available potential.”

Clinton makes clear that the US is in support of foreign investment in Africa, as long as investments give back to the local communities. She continues that the Obama Administration is interested in the welfare of the African people, as their welfare is in the long term interest of both Americans and Africans. During the inaugural meeting of the U.S.-Zambia Chamber of Commerce, Clinton explains the US strategy for aiding Africa:

“We want a relationship of partnership not patronage, of sustainability, not quick fixes. We want to establish a strong foundation to attract new investment; open new businesses … create more paychecks, and do so within the context of a positive ethic of corporate responsibility.”

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