By 2013, more than 1.5 million Ethiopians will be displaced from their homes by the orders of their own government. Some will have to relocate to areas that lack stable access to food and water, and still more may find they can no longer support themselves financially. The land of these local residents no longer belongs to them because the Ethiopian government has sold much of it without their consent. Between 2008 and 2011, Ethiopia leased 3.6 million hectares of land to foreign investors, and more than two million hectares remain available for lease or purchase.
What is happening to these 1.5 million Ethiopians is not an anomaly within Africa. In fact, it is an increasingly common occurrence, given the quantity of land that foreign investors have purchased on the continent following a spike in food prices in 2008. As governments and financial organizations searched for solutions to rising food prices, investors also knew to act quickly. The agricultural crisis was a telltale sign of a new era in which demand for staple crops and natural resources would soar as supply decreased. Acknowledging the unsustainability of global consumption habits, major financial players identified the opportunity and then swiftly secured food and other resources. To be prepared for the next major resource shortage, investors began acquiring large tracts of land that could be used for the production and extraction of resources.
The practice of acquiring land on a massive scale in the name of resource security has a name: land grabbing. While no set rules define what is and what is not land grabbing, the process typically involves the sale of a plot of land that is larger than 10,000 hectares. Today’s land grab deals often involve even larger plots of land – many are larger than 200,000 hectares, and some purchases exceed one million hectares. The buyers are usually wealthy governments and private investors purchasing tracts of land from developing nations. Most of the land sold to foreign investors in this way is in eastern Sub-Saharan Africa. The deals are concentrated in five countries: Ethiopia, Tanzania, Sudan, the Democratic Republic of Congo, and Madagascar, according to a 2012 report from Oxfam International. The intended uses of the acquired land are diverse, but biofuel extraction and food crop production are usually the primary objectives.
Land grabbing yields benefits for both buyers and sellers, but the practice comes with consequences for which no one is currently taking responsibility. After a deal has taken place, investors’ plans for the land usually call for environmentally unfriendly practices and the forcible relocation of its residents. The displaced must then find new jobs and homes, all while dealing with increasingly limited access to food and water.
Current guidelines for foreign land purchases do not effectively ensure that investors handle the land and the people living on it fairly and responsibly. Financial institutions have the power to regulate the terms of trade, but they enable, rather than restrict, the rampant deals.
Land grabbing was an established practice even before the 2008 food crisis. Droughts and a hike in oil prices in 2006 led to dramatic increases in the price of food in developing nations, but within the past few years, the number of foreign land acquisition deals has exploded. Research by Columbia sociology professor Saskia Sassen shows that land grab deals between 2006 and 2011 exceeded a total of 200 million hectares. According to public reports, 134 million hectares of land in Africa now belong to foreign investors. This means approximately five percent of the African continent is entangled in a land grab. Additionally, the proliferation of legal-yet-clandestine land acquisition deals means that the true quantity of foreign-owned land in Africa is likely even greater.
While the sheer size of African land acquisition can be shocking, the treatment of the land is even more frightening. Twenty years of sustained heavy mining or industrial plantation procedures will strip land of its resources. As Sassen notes, a twenty-year land grab lease can leave land barren. Speculators have realized that foreign investors’ use of land-grabbed territories is unsustainable and could cause massive food and water crises in Africa. Some, including Henk Hobbelink, a coordinator of GRAIN, an organization supporting small farmers, have even called the problem of water abuse in land-grabbed territories “hydrological suicide” for the African continent. If foreign investors were to use green procedures, sustainable farming techniques, or other methods to protect the longevity of the land, perhaps the land could be returned to Africans in a manageable state. But when investors are only looking out for their own interests and lack external pressure from national and international regulators, they will not question the ethics of their practices.
Due to flimsy or non-existent property rights, most Africans in heavily land-grabbed territories do not have any legal claim to their land. Another concern is that, despite playing no role in the official land grab agreements, local residents face forcible displacement and financial problems when the land is transferred to foreign investors. The deals incite resistance among some affected Africans, but most are at a loss as to how, exactly, to resist the deals. When a Saudi investor purchased 700,000 hectares for the rice production, local farmers in Mali responded with court action. Unfortunately, locals who protest land grabs will find little support for their grievances within the very governments that sold the land in the first place. With nowhere to appeal, locals often suffer the consequences of land grabs without any attention or help from their own governments.
When looking for solutions to the problems associated with land grab deals, it helps to first understand the origins of the issue. In the 1980s, the World Bank and the International Monetary Fund (IMF) supported restructuring programs that introduced African land to the global market. Investors who had previously considered purchasing African property too complicated now reconsidered, knowing that reputable financial institutions would support their decision to invest in African territory. In fact, within the past decade, the World Bank has loaned over $8 billion to investors for land grab deals.
Before Western institutions could complete the process of integrating Africa into the global market, the problem of political instability needed to first be addressed. After all, in some parts of the continent, it is difficult for Africans – let alone foreign investors – to determine who is in charge of the land. For foreign investors looking to purchase hundreds of thousands of hectares, it is impractical to communicate with individuals or local leaders. To make their deals secure, investors instead negotiate with national-level political leaders endorsed by international organizations like the IMF and the World Bank, even if these leaders do not have the support of local residents. Unfortunately for the displaced and their land, the IMF and World Bank generally back leaders who show promise to prioritize their countries’ financial concerns, particularly those related to international debt. A leader backed by international financing organizations would be predisposed to accept lucrative land-grab agreements, especially considering that large foreign investors are relatively reliable with payments. However, these leaders are often unmoved by the fact that the terms of most deals threaten the rights of Africans and the long-term health of the land. Given that the power to accept or reject the sale of land lies with these leaders, those who would oppose the deals are usually powerless to stop them.
African leaders agree to land grab deals because they benefit from the payment received from foreign investors. However, the leaders ignore the negative (and often permanent) impacts of the deal, such as displacement, unemployment, and environmental degradation. Investors seem to understand that the local and long-term problems caused by their land-use practices will be issues they can ignore – it is only the people on the land that will have to face the consequences. The deals are rapidly taking place, despite the fact that the consequences devastate vast amounts of land and millions of people, especially small farmers. As the deals take place today, neither the buyers nor the sellers are watching out for the consequences, especially the long-term ones, that East Africa will have to endure.
No single organization, government, or other group of individuals is entirely responsible for ensuring that human rights and long-term environmental concerns are taken into consideration when these deals are made. Current organizations can offer guidelines that the deals should follow, but these bodies lack the power to enforce any of their suggested rules. On an international level, the United Nations has developed global guidelines that call for transparency in land grab deals and consultations with locals, but these guidelines are not enforceable. African-led programs currently in place for small farmers, such as the Comprehensive Africa Agriculture Development Program (CAADP), outline basic protections that all African countries should honor, but when land grab deals deny these basic protections, they lack the regulatory and enforcement power to insist that small farmers’ rights be respected by the terms of the trade. If buyers or sellers do not want to follow international or national guidelines, no one says they have to.
Dangerous deals continue to happen because the current political institutions are too weak to intervene. Because buyers and sellers do not pay enough attention to long-term environmental or human rights concerns in their agreements, land grab deals need to be checked by an external party that ensures important interests are not neglected. Given that current policy-based organizations lack the power to enforce healthier terms of trade, it is up to organizations with real power over land grab deals to demand better terms.
Land grab deals require the support of financial loaning institutions because foreign investors usually need to withdraw major loans to purchase extensive tracts of land. By contrast, land grab deals do not require the support of policymaking organizations, such as the UN or CAADP. Because institutions that financially support land grabs ultimately determine whether or not a deal can take place, they have the most leverage to demand that land grab take environmental interests, human rights, and other long-term concerns into consideration. By comparison, policy institutions, which do not determine whether the deals will take place, do not have leverage over the deals.
Historically, governments and international policymaking institutions have been expected to regulate international terms of trade. They still do, but deregulation has allowed for high-speed, high-volume financial transactions to take place with less oversight than in the past. The power of regulation has shifted from the hands of governments and political institutions to financial organizations themselves. Whether a transaction will occur depends more on financial needs than on any given set of policy aims. This means the institutions that finance land grab deals serve as the last and sometimes only checkpoints before a deal can go through – but most are not exercising their power responsibly.
Even though financial lending or regulating institutions have the most power to enforce social responsibility in investments, they often lack incentives to do so. Socially responsible investing often correlates with weaker returns on investment. For example, if land grab investors were required to provide housing and work for the displaced, use sustainable farming or extraction methods instead of cheaper but more harmful ones, and leave the land arable at the end of their lease, they would have to spend more money. Simply put, when investors opt for expensive, albeit socially responsible plans in place of cheaper yet damaging ones, they do not receive as much profit.
However, if financial institutions look at the long term, they should understand the need to demand fair and sustainable land grab deals – even if it means taking a short-term hit. The resource crisis that inspired land grabbing will only worsen in twenty years if abusive farming and resource-extraction dry out over 200 million hectares of land. Sustainable practices need to be enforced, but buyers and sellers without regulation are agreeing to non-sustainable terms of trade.
Land grab deals cannot be halted, but they can be handled responsibly. Many continue to believe that governments and policy institutions should be in charge of enforcing social responsibility in investments, but these organizations are too weak to intervene in the deregulated, fast-paced world of modern finance. The strongest check on financial trade comes from within the financial sector. The protection of human rights and the environment is possible if demanded by the World Bank and other financial institutions. Doing so is of the utmost importance for the future of the African continent and its people.