AGLOBAL CONSENSUS about the strategic importance of Africa to the future of the world seems to be crystalising. From “The hopeless continent” in the infamous verdict of The Economist magazine in May 2000, to “Africa Rising,” a landmark narrative championed a decade after by McKinsey, a consulting firm, Africa has seen the bad and the unpleasant times and can only hope for the better.
Many things have been identified, are currently receiving emphasis and are treated as bases for recognising Africa as the continent of the future. Chief among them are Africa’s projected population, urbanisation and the preponderance of a youthful population on one hand and the natural resources on the other. Although The Economist saw the cloud of wars and related undesirable consequences, McKinsey saw the silver lining of future prospects.
In a June 2010 report, known as ‘Lions on the move: the progress and potentials of African economies,’ McKinsey noted thus: “Today the rate of return on foreign investment in Africa is higher than in any other developing region. Early entry into African economies provides opportunities to create markets, establish brands, shape industry structures, influence customer preferences, and establish long-term relationships. Business can help build the Africa of the future.”
McKinsey noted then that “Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies. Consumer-facing industries, resources, agriculture, and infrastructure together could generate as much as $2.6 trillion in revenue annually by 2020, or $1 trillion more than today.” The report acknowledged that there has been a big push by governments and the private sector to close infrastructure gaps.
It added that “there is a continued resource abundance in agriculture, mining, and oil and gas, with innovation and investment in these sectors unlocking new production on the continent,” indicating further that “the rapid adoption of mobile and digital technologies could leapfrog Africa past many obstacles to growth.” The report revealed that “there is a trillion-dollar opportunity to industrialise Africa, to meet rising domestic demand and create a bridgehead in global export markets. These, however, constitute the upside, which – today – largely remains a hope. Notwithstanding these tantalising narratives, McKinsey pointed out that “less known are” Africa’s wealth “sources and likely staying power.”
“Although Africa has a fast-growing, rapidly urbanising population with big unmet needs, the continent’s collective GDP, at $1.6 trillion in 2008,” has subsequently been estimated as now roughly equal to Brazil’s or Russia’s. How Africa hopes to sustain its increased economic momentum is an important issue. This also has much to do with continental leadership, governance, technology and economy in a delicate web.
The fulcrum of the future global food balance sheet straddles Africa and Asia, combining to have 95 per cent of the world’s remaining yet-to-be utilised arable land. Africa has around 600 million hectares of uncultivated arable land, roughly 60 per cent of the global reserve. This presents dilemma and opportunities for Africa at the same time. According to the Food and Agriculture Organisation, “about 70 per cent of people in Africa and roughly 80 per cent of the continent’s poor live in rural areas. These have implications for the future of the yet-to-be-cultivated arable land in Africa. They also have significance for continental future food security.
Huge investments would be needed to unlock the hidden potential within Africa. From agricultural land to extractive industries involving minerals, Africa’s land is central to the continent’s food and energy security. But the prevalent forms of Foreign Direct Investments are not so much to Africa’s benefits. An apparent surge in the purchase of African land by foreign companies and investors should be a reason for deep concern. Same goes for the increased mining activities officially and illegally.
Land grab – or large scale acquisition of land – is becoming an unsettling phenomenon in Africa. Research on the land grab has unveiled competing visions for African agriculture, invoking the debates of large- versus small-scale farmers as well as whether or not the land deals in Africa are both for its people and for world agriculture and food security. It is too early to correctly characterise land grabs in Africa as either beneficial for the continent or inimical to it as swathes of land are now being sought by international investors to the tune of hundreds of thousands of hectares.
Extensive land appropriation currently across Africa “signals the most radical shift in the distribution and tenure status of land since colonial times,” noted a research paper. The global food crisis a little more than a decade ago, undoubtedly, was a trigger for desperate and frantic search for and purchase of Africa’s agricultural land by foreigners, driven by concerns about rising food prices as most of the acquired land is used for the cultivation of food crops, biofuels, and flex crops through contract farming or out-grower schemes.. This, however, has raised alarms by advocacy groups since then as land speculation has increased, following the discoveries of prospects of profits from very low prices of land and the rising demand for those key crops.
The outmoded land policies, lack of reforms and poor institutions to enforce rules and statutes provide conducive environment for land grab. According to the International Food Policy Research institute (IFPRI), at least 2.5 million hectares were transferred in five African countries alone. Within the array of diverse international participants involved in these land transactions are some of the biggest investors from Middle Eastern countries, like Saudi Arabia, Qatar, Kuwait and Abu Dhabi. A study by the Wilson Center has been quoted as affirming that these nations and East Asia were estimated to be controlling over 7.6 million cultivable hectares overseas by the end of 2008.
IFPRI, in a 2009 study listed Ethiopia, Kenya, Malawi, Mali, Mozambique, Sudan, Tanzania and Zambia as all being involved in allotting foreign land leases or purchase agreements. Add these to the report from the UN Special Rapporteur on food security listing the main target countries in Africa as Cameroon, Ethiopia, the Democratic Republic of Congo, Madagascar, Mali, Somalia, Sudan, Tanzania and Zambia. The Brookings Institution also made reference to a March 2010 article by the U.K. Guardian stating that more than 20 African countries are part of such transnational land transactions.
The interests of the land speculators and buyers are not limited to agriculture as foreign investors venture into minerals, oil and timber. The livelihoods of millions of small-scale operators are gradually heading for jeopardy as many of them will be squeezed out. The Brookings Institution amplified the concern that the land leased by African governments to foreign interests was previously occupied by poor local and indigenous populations who have little control over such land transfers.
Africa is home to most of the world’s mineral deposits, but Africans seem to be at a disadvantage in tapping into the benefits of these resources. African minerals are top-rated. Examples are bauxite, cobalt, diamond, phosphate rock, platinum group metals, vermiculite and zirconium. Benefits of these minerals have gone mostly to importing countries as Africa exports them in raw forms, thus attracting insignificant revenues from their exports. Niger Republic, for instance, has the world’s largest uranium underground mine, yet it is one of the poorest countries in Africa. Although Namibia is the world’s fourth largest uranium supplier, the Chinese largest investment is arguably their uranium mining company based in Namibia.
Similar cases of abundance in other mineral deposits have been made for DRC, Zambia, South Africa, Mozambique, Guinea, Ghana, Botswana, and Tanzania. Tanzania, in particular, is among a growing band of mineral-rich African nations tightening regulations on foreign companies. At the initiative of John Magufuli, the country’s president, a new mining law has been passed which, in future, will require foreign companies to pay higher taxes. Their operations in the country henceforth must be 16 per cent locally owned while existing agreements with the government will be allowed to be renegotiated.
Without deliberate and concerted reforms and interventions, Africans remain vulnerable on their land. The vast natural resources on and beneath this vast continental land will drive a significant part of the future global food and energy security. But how much Africans will benefit from this will depend on leadership, governance and reforms that properly position Africans for the future. Sales, leases, transfer and swapping of land for debts will not serve the future Africans well. Those who have thought well ahead are those already positioning themselves for the benefits they foresee. These should not be only foreigners and foreign interests. Africans must also benefit from the resources from their lands.