Published On: Tue, Jun 14th, 2011

Top US universities in Africa ‘land grab’

Harvard and other major American universities are working through British hedge funds and European financial speculators to buy or lease vast areas of African farmland in deals, some of which may force many thousands of people off their land, according to a new study.

Researchers say foreign investors are profiting from “land grabs” that often fail to deliver the promised benefits of jobs and economic development, and can lead to environmental and social problems in the poorest countries in the world.

The new report on land acquisitions in seven African countries suggests that Harvard, Vanderbilt and many other US colleges with large endowment funds have invested heavily in African land in the past few years. Much of the money is said to be channelled through London-based Emergent asset management, which runs one of Africa‘s largest land acquisition funds, run by former JP Morgan and Goldman Sachs currency dealers.

Researchers at the California-based Oakland Institute think that Emergent’s clients in the US may have invested up to $500m in some of the most fertile land in the expectation of making 25% returns.

Emergent said the deals were handled responsibly. “Yes, university endowment funds and pension funds are long-term investors,” a spokesman said. “We are investing in African agriculture and setting up businesses and employing people. We are doing it in a responsible way … The amounts are large. They can be hundreds of millions of dollars. This is not landgrabbing. We want to make the land more valuable. Being big makes an impact, economies of scale can be more productive.”

Chinese and Middle Eastern firms have previously been identified as “grabbing” large tracts of land in developing countries to grow cheapfood for home populations, but western funds are behind many of the biggest deals, says the Oakland institute, an advocacy research group.

The company that manages Harvard’s investment funds declined to comment. “It is Harvard management company policy not to discuss investments or investment strategy and therefore I cannot confirm the report,” said a spokesman. Vanderbilt also declined to comment.

Oakland said investors overstated the benefits of the deals for the communities involved. “Companies have been able to create complex layers of companies and subsidiaries to avert the gaze of weak regulatory authorities. Analysis of the contracts reveal that many of the deals will provide few jobs and will force many thousands of people off the land,” said Anuradha Mittal, Oakland’s director.

In Tanzania, the memorandum of understanding between the local government and US-based farm development corporation AgriSol Energy, which is working with Iowa University, stipulates that the two main locations – Katumba and Mishamo – for their project are refugee settlements holding as many as 162,000 people that will have to be closed before the $700m project can start. The refugees have beenfarming this land for 40 years.

In Ethiopia, a process of “villagisation” by the government is moving tens of thousands of people from traditional lands into new centres while big land deals are being struck with international companies.

The largest land deal in South Sudan, where as much as 9% of the land is said by Norwegian analysts to have been bought in the last few years, was negotiated between a Texas-based firm, Nile Trading and Development and a local co-operative run by absent chiefs. The 49-year lease of 400,000 hectares of central Equatoria for around $25,000 (£15,000) allows the company to exploit all natural resources including oil and timber. The company, headed by former US Ambassador Howard Eugene Douglas, says it intends to apply for UN-backed carbon credits that could provide it with millions of pounds a year in revenues.

In Mozambique, where up to 7m hectares of land is potentially available for investors, western hedge funds are said in the report to be working with South Africans businesses to buy vast tracts of forest and farmland for investors in Europe and the US. The contracts show the government will waive taxes for up to 25 years, but few jobs will be created.

“No one should believe that these investors are there to feed starving Africans, create jobs or improve food security,” said Obang Metho of Solidarity Movement for New Ethiopia. “These agreements – many of which could be in place for 99 years – do not mean progress for local people and will not lead to food in their stomachs. These deals lead only to dollars in the pockets of corrupt leaders and foreign investors.”

“The scale of the land deals being struck is shocking”, said Mittal. “The conversion of African small farms and forests into a natural-asset-based, high-return investment strategy can drive up food prices and increase the risks of climate change.

Research by the World Bank and others suggests that nearly 60m hectares – an area the size of France – has been bought or leased by foreign companies in Africa in the past three years.

“Most of these deals are characterised by a lack of transparency, despite the profound implications posed by the consolidation of control over global food markets and agricultural resources by financial firms,” says the report.

“We have seen cases of speculators taking over agricultural land while small farmers, viewed as squatters, are forcibly removed with no compensation,” said Frederic Mousseau, policy director at Oakland, said: “This is creating insecurity in the global food system that could be a much bigger threat to global security than terrorism. More than one billion people around the world are living with hunger. The majority of the world’s poor still depend on small farms for their livelihoods, and speculators are taking these away while promising progress that never happens.”

Source: The Guardian and Oakland Institute

About the Author

- Mohamed Gulaid is freelance media producer currently based in Oakland, CA. He works as an editor and contributor for Somalilandpress in area of international affairs and Somali related issues. Mohamed Gulaid has contributed to media and analysis to Link TV, KTSF TV, KPOO radio in San Francisco area. Beside journalism, Gulaid is passionate photographer and filmmaker.

  • Ahmad

    Welcome to Africa!

    An Africa chief said during the colonization age, 'Before the white man came we had all the land. When he left, we had the bible and he had all the land.'

    Whereas today, African people died to liberate their lands from the Europeans. They learnt to govern themselves. But now, African peoples are left with the worst land and their leaders have sold of the best land.

    Welcome to Africa!

  • Hargeisawi-in-London

    @Ahmed,

    I could be wrong, but I think it was Chief Dan George, a chief of the Tsleil-Waututh Canadian Indians, who said: "When the White man came we had the land and they had the Bibles, now they have the land and we have the Bibles.." or something along the line: "First we had the land and they had the Bibles, now we have the Bibles and they have the land".

    In the early 90's Desmond Tutu modified it a bit and said: "When the white man came he had the Bible and we had the land; he told us to close our eyes to pray. When we opened our eyes, he had the land and we had the Bible."

  • Maax

    Africans usually blame other people when their leaders are part of the problems. No body is forcing Africans to invest where and what is good for their people but many Africans are lack of vision and grab the first opportunity they see US dollars even if that mean future problems. They borrowed world banks, misused the funds and then become beggars for more cash. It's the time African think very careful before making decision behind the doors without disclosing what they are up to.

    White or black, people are willing to make business by investing even flowers in African soil and shifted to overseas. People who own these lands sleep hunger while individuals become millionaires. Where corn was supposedly invested. Now who to blame, not the white but African leaders who are blindly care for making money. There is African saying, I care while I live, not when I die. That means they don't care tomorrow. Don't forget Somali leaders had deal with big companies wast to dump inside Red Sea and Indian Ocean for the sake of few dollars although that has to be officials proving.

  • Abraham

    Somalilanders should learn from the failures of the other African nations.

  • Judith

    It is good to see this issue getting press coverage. Anuradha Mittal was also interviewed on Democracy Now! this morning, where she spoke a lot about the displacement of local farmers who don't even receive the compensation they've been promised.
    Here is the link: http://www.democracynow.org/2011/6/20/harvard_van

  • middlepath

    Lol, as Abraham andMaax said, we should not become like other africans always complaining,we should be wiser and stronger and if anything goes wrong, it is our fault.

    None of that blame the White man or the Yellow or the Arab or the Whatever.

    There is a Hadith where the Prophet once said :

    ''The Believer is not fooled twice''

    So, fool me once shame on you,fool me twice shame on ME.

  • http://www.insidermonkey.com/hedge-fund/oaktree+capital+management/133/ Howard Marks

    There are Huge variety of hedge fund investment styles – many uncorrelated with each other – provides investors with a wide choice of hedge fund strategies to meet their investment objectives

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