The South Africa-Congo concession: Exploitation or salvation?
2010-01-07, Issue 464
It has been called the 'new Great Trek' by South Africans who remember their history.
Presently, over 30 million hectares in almost 30 African countries have been auctioned to a host of corporations and governments, from China – housing one fifth of the world's population on 8 per cent of the world's arable land – to oil-rich, water-poor Gulf nations. The deals involving these concessions are often cloaked in secrecy but African Business has learnt that they are usually characterised by allowing free access to water, repatriation of profits, tax exemptions and the ability for investors to acquire land at no cost whatsoever, with little or no restriction on the volume of food exported or its intended use, in return for a loose promise to develop infrastructure and markets. However, the terms of the concessions vary from country to country and deal from deal. In some instances, the host country drives a hard bargain and in other cases, the investors call the shots.
As the debate over the whole question continues to rage on, the much-discussed Congo land-lease, granting 200,000 hectares to South African farmers with a further 10 million hectares in the balance, appears to mark a departure from the usual terms underpinning foreign acquisition of fertile land by multinationals. Not only has commercial agriculture on these concessions chiefly been earmarked for domestic use, thus generating food security, but good crop yields possess the potential to reduce outstanding debt in the Republic of the Congo from 70 per cent to 40 per cent of GDP within a year.
Describing the South African farmers, an official from ABSA AgriBusiness, a leader in the financing of the agricultural sector, stated, ‘They are capable of farming without government support, can compete against the best in the world and even with our scarce resources, they produce profitably.’
‘There are three main reasons we are in the Congo,’ stated Andre Botha, president of Agri Gauteng, a division of Agri SA. ‘The first is, of course, to diversify our businesses; the second is to assist local farmers to commercially develop their own land; the third reason is to assist the government of South Africa to fulfil the expectations of the world in stabilising the African continent through the exchange of skills and technology.’
Agri SA, a commercial farmers' association, was initially contacted by the Congolese government in January 2009, with the latter seeking a strategic non-governmental organisation in the form of a professional farmers' union, rather than a political state controlled entity.
The union, a federal organisation formed in 1904, is composed of 70,000 large and smallscale commercial farmers in South Africa. It actively assists members in farm development, corporate liaison, information technology development and transfer, trade, industry, water, land, economic and environmental affairs, as well as labour and training.
‘Our own government and that of the Congo have already established bilateral agreements in 2003, and again in 2005. This was ratified in parliament,’ said Botha.
HEAVEN FOR SOUTH AFRICAN FARMERS
The land has been packaged as 'under-utilised' by Agri SA and the Congolese government, with the latter stating that no Congolese subsistence farmers occupy the land. The Congo's numerous state-owned farms, neglected for 12 years, are situated between two mountain ranges in the fertile Nyari Valley. Despite neglect and the dilapidation of some homes and infrastructure, the bulk of the property, states Agri SA deputy president Dr Theo de Jager, ‘remains in good condition’.
‘For us, it is heaven,’ says De Jager. ‘There is 1,400mm of rainfall per year, with two rainy seasons, the first from October to March, receiving two thirds of the rain. The farmers will move into the houses on the property; the type and size of property allocated depends on the individual business plan (and the commodities) negotiated between farmers and the Congolese government. Chicken farms will require much less space than cassava farms, for example.’
A single dry-land hectare in the Congo, for example, is capable of yielding 10 tonnes of maize as opposed to South Africa's three tonnes. While contracts have already been signed, individual agreements between farmers and the Congolese government will determine selection criteria of allocated land, administrative design, sustained yields and other factors. The final detailed agreements were expected to be signed before the New Year. ‘Initially, during the first tranche, farmers will be required to self-finance projects, however,’ says De Jager, ‘farmers would pay no import duties or tax on equipment, unlike in SA where we are heavily taxed in many ways’. In addition, farmers would be able to repatriate profit to any part of the world, and receive a five-year tax holiday. Over 25 million hectares of land in the Congo remain uncultivated.
‘Many farmers involved in virgin land development for crops such as avocados, bananas and macadamia nuts are very keen because of the Congo's rich soils,’ De Jager says.
Despite South Africa being self-sufficient and a net exporter of food – with agriculture composing 15 per cent of GDP – 90 per cent of the country can be described as arid and semi-arid with very low average rainfall and high variability within seasons, rendering crops vulnerable to drought. Agriculture, possessing strong forward and backward linkages, provides 9 per cent of the nation's employment; the dairy industry, for example, employs 60,000 workers.
THE SOUTH AFRICAN ANGLE
However, in South Africa itself, it is not the physical climate that has started tongues wagging but rather South Africa's political climate under President Jacob Zuma, and the government's agenda to transfer 30 per cent of South African arable land to the previously disadvantaged majority by 2014.
Presently, just 4 per cent of land has been redistributed since the end of apartheid in 1994, when 90 per cent of arable was possessed by 10 per cent of the population, more specifically white minorities. Is the Congo deal the start of a new wave of emigration by white farmers, mainly Afrikaners, threatened by a possible loss of property rights in the future?
Although the 1,700 interested parties hail from all over South Africa, the flow predominately stems from the Northern and Eastern Cape regions, where land restitution fears have sparked uncertainty about the farmers' future.
‘We are moving into the eleventh year of land restitution. None of the restituted farms have been commercially profitable. My own farm, with 26,000 mango trees, was restituted – today, four trees remain. Some farmers hesitate about investing long term as in the banana industry, renewed every 12 years, because of this fear,’ one farmer claims.
Although South Africa's Department of Land Affairs and Agriculture issued the tough directive of 'use it or lose it' earlier in the year, the Department itself has not accepted the offer of assistance from South Africa's farmers' associations, perhaps lacking the political will to recognise the capacity of the organised commercial farmers union – and their valuable skills.
‘Simply transferring the land – even commanding that the land be made use of – is not enough. Of 103 projects we are working on, 76 are commercially profitable. We have much to contribute and are very willing, but the department has not taken an interest,’ said De Jager.
‘Redistribution is not a threat,’ adds Botha, ‘but a reality that acknowledges disparities in land ownership; redistributed land will remain in the commercial sector to protect our food security.
‘We are a non-racial commercial farmers' association,’ he says. ‘We have no problem with the Zuma government. In fact, it was Zuma who told the country before being elected president that Afrikaners were true South Africans.’
Crucially, the Congo ventures are not core businesses to be based in the Congo but instead, extensions of businesses located in South Africa. Of the 70 farmers that have already embarked on the 'trek', none has sold their SA-based farms.
FOOD SECURITY IS THE GOAL
But if the South African government has not yet awoken to the potential of engaging with Agri SA and similar farmers' associations, many African nations certainly have: Over 20 offers, most recently from Libya and Mozambique, have been extended to South African farmers.
The issue of food security gained critical momentum during 2008, when inflation produced a massive 140 per cent increase in food prices, especially in grains such as wheat, corn and maize, forcing an extra 100 million people below the poverty line. According to a leaked confidential report written by Don Mitchell, a senior analyst at the World Bank, 75 per cent of the inflation was caused by the conversion of arable land to growing crops for biofuels.
For South Africa, food inflation (16 per cent, mid-2009) remains one of the key drivers behind overall inflation, according to the Consumer Price Index for Food (CPIF), allegedly caused by increasingly unproductive restituted land.
But few countries are more food insecure and dependent on imports than the Congo, situated in Central Africa and bordered by Gabon, Angola's Cabinda province, the Democratic Republic of Congo, the Central African Republic, the Gulf of Guinea and Cameroon. Over 50 per cent of Congolese citizens are undernourished and living on US$1.25 per day, while healthcare composes just 1.7-3 per cent of public expenditure. Oil accounts for almost 90 per cent of export earnings while food, in addition to equipment, constitutes the bulk of imports, estimated at US$2.7 billion (2008).
‘We receive the land for free. There are no restrictions on exports, but given the prices of food in the Congo, you'd have to be crazy to export anything. Tomatoes imported from France retail for about £10 a kilo in the country,’ says Agri SA's De Jager.
In spite of negative reactions from France, the country's former colonial landlord and primary 'rentier' via trade and the extractive industries, the deal marks one of the first land concessions negotiated between a commercial farmers' union and a state in Africa.
The agreement provides farmers with a 30-year lease, tax exemptions and a further renewable 30 years, subject to committee assessments. The committee is composed of six officials – three representatives from Agri SA and three from the Congolese government.
‘The government offered to provide state security,’ said Botha, ‘but there is no hostility or crime. We were humbled by the welcome of the local people.’
Concerning safeguards in the agreements protecting the investment of South African farmers, Botha revealed the existence of formal government-to-government agreements, ‘in the event that our land is moved or expropriated for any reason, such as the creation of a nature reserve, farmers will be compensated for land, infrastructure and loss of production, the level of compensation depending on the scale of production.’ The jurisdiction for dispute settlements is the International Court of Justice in the Hague.
CREEPING TAKEOVER OF LAND?
But what about compensation for the 'squatters' already occupying and farming the banks of the Congo River, where land has been earmarked for the new 'trekkers'?
How will local farmers be affected by the decision to 'export ownership' of fertile land to foreign private hands? Pakistan has already approved the use of the army in securing concessions, while the Congolese government has no qualms lending farmers the same support.
The Congo deal has come under considerable criticism from some quarters. ‘These types of deals merely provide a politically accepted platform to establish the marketing channels for the private sector to monopolise agriculture and push out small farmers. This is happening all over Africa,’ stated Elfrieda Pschorn-Strauss of GRAIN, an NGO promoting sustainable management of agricultural land.
‘Initially, it will be on state farms next to the river, but the trend with other similar deals in Africa is that investors want good infrastructure, access to irrigation - and those are usually the areas that local farmers also prefer. So, displacement is a feature of these deals,’ claims Pschorn-Strauss.
According to the FAO, ‘Many land deals seem to have been settled between the investor and the government in host countries with little concern for whether benefits would trickle down to the local population, insufficient documentation of smallholders' rights prevented them from making any claims… “Surplus” land does not mean that it is unused or unoccupied. Better systems to recognise land rights are thus urgently needed.’
Unfortunately for farmers in Africa, leaders, and provincial and national governments have been all too willing to sell land already inhabited by citizens lacking land titles – often the product of communal customs – with the best land and water resources going free of charge to multinationals, often via secretive development agreements.
This is of special concern for Africa, which remains the world's hungriest continent. With increasingly erratic rainfall affecting 70 per cent of African nations, including countries such as Sudan and Ethiopia, the concept of massive 'land grabs' generates further anxiety.
In Africa, crop and pastureland constitutes the bulk of 'wealth' – estimated at 70 per cent – positioning its economies on the front line of global warming. Tax exemptions granted to multinationals also erode development finance bases, preventing redistribution of revenues into intangible capital – the primary source of wealth for developed nations.
To this end, the UN is in the process of creating a 'code of conduct' regulating terms of agreement and reducing the level of secrecy. ‘In the worst cases, it's fair to say we are looking at neocolonialism,’ said David Hallam of the FAO's trade and market division.
Yet unlike many African nations, the Congo is increasingly urbanised, with some 70 per cent of the country's sparse population residing in the capital Brazzaville and cities such as Pointe-Noire and Dolisie, or along the railway lines connecting urban hubs.
Though the focus of most land concessions is to export the food crops, South Africa's farmers, said Botha, intend to turn the Congo into a net exporter of food to other African nations. ‘This is part of the agreement and it will have a huge impact on the rural areas, generating income through production and employment,’ he says.
But only time will tell whether South Africa's highly skilled white farmers will realise the trapped potential of the Congo and elsewhere, helping to free the continent from food insecurity. If done correctly, this move would signify a break from the legacy of apartheid, toward that of Ubuntu – survival and prosperity through shared resources – and humanity.
BROUGHT TO YOU BY PAMBAZUKA NEWS
* This article first appeared in African Business magazine.
* Khadija Sharife is a journalist and visiting scholar at the Centre for Civil Society (CCS). She is based in South Africa.
* Please send comments to [email protected] or comment online at Pambazuka News
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