A New Code Of Conduct for Land Buyers In Africa?

Courtesy of The Guardian, a report that new guidelines are under development that could limit aggressive moves by China, South Korea and Gulf states who have been buying vast tracts of agricultural land.  As the article notes:

“…A scramble for African farmland has in recent years seen the equivalent of Italy’s entire arable land hoovered up by businesses from emerging economies.

The Food and Agriculture Organisation, the UN Conference on Trade and Development (UNCTAD) and the World Bank are now discussing a new code of conduct for land buyers in Africa. Amid increasing concerns over food security, it could include ensuring consent is given prior to selling land from local people as well as ensuring smallholders do not lose out. A first draft is expected to be released next spring.

Alex Wijeratna, Action Aid’s food rights campaign officer, said: “There’s a new scramble for land in Africa. It’s growing at an incredible rate. There’s massive secrecy, poor communities can’t get information and they’re not being consulted. There’s an argument for a moratorium on sales until there’s a proper framework to assess them. We are concerned that an agreement will not come fast enough.”

Earlier this year, legendary hedge fund speculator George Soros highlighted a new farmland buying frenzy caused by growing population, scarce water supplies and climate change. South Korea bought huge areas of Madagasca recently while Chinese interests bought up large swathes of Senegal to supply it with sesame.

He said: “I’m convinced that farmland is going to be one of the best investments of our time. Eventually, of course, food prices will get high enough that the market probably will be flooded with supply through development of new land or technology or both, and the bull market will end. But that’s a long ways away yet.”

However, Dr Kanayo Nwanze, president of the International Fund for Agricultural Development, said the issue of land deals had been “overexaggerated”.

As investors pile into African land, today saw further appetite for business opportunities in the continent with the launch of a new $400m (£245m) sub-Saharan private equity fund focusing on small to mid-market companies. Aureos Capital’s Africa Fund has already raised $322.8m, a quarter of which has come from financial institutions including European pension funds. It is expected to close fundraising at the end of the year.

The fund is the largest private equity vehicle targeting smaller African businesses. Investors, it claims, will receive returns in excess of 20%. Management fees are 0.25% higher than the industry standard 2% because of the large number of investment professionals it is deploying in Africa to identify suitable opportunities.

Sev Vettivetpillai, chief executive of Aureos Advisers, said: “It’s 18 months since we started the fund and it’s not easy to raise over $300m for Africa as most investors were pulling out of financial markets. It posed a challenge to Aureos. But Africa is the next frontier market that is going to benefit from emerging market flows.”

The fund has already spent $106m on nine businesses in financial services, building products, real estate development and agriculture

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.