2008 June 08 Sunday
Africa Attracts Farming Investments
The industrialization of China creates growing demand for both energy and food. That demand combined with the limits on oil production create enormous incentives to turn the lands of sub-Saharan Africa to productive uses.
Perhaps the most ambitious plans are those of Susan Payne, founder and chief executive of Emergent Asset Management, based near London.
Emergent is raising $450 million to $750 million to invest in farmland in sub-Saharan Africa, where it plans to consolidate small plots into more productive holdings and introduce better equipment. Emergent also plans to provide clinics and schools for local labor.
One crop and a source of fuel for farming operations will be jatropha, an oil-seed plant useful for biofuels that is grown in sandy soil unsuitable for food production, Ms. Payne said.
“We are getting strong response from institutional investors — pensions, insurance companies, endowments, some sovereign wealth funds,” she said.
The fund chose Africa because “land values are very, very inexpensive, compared to other agriculture-based economies,” she said. “Its microclimates are enticing, allowing a range of different crops. There’s accessible labor. And there’s good logistics — wide open roads, good truck transport, sea transport.”
The high prices of agricultural products and mineral commodities is creating pressures for a new form of imperialism. Capitalists and the Chinese government now have great incentives to create local areas of higher order inside of Africa. Can they manage to pull this off?
Oil money has made Nigeria less stable, not more. Nigerian oil production has been cut by about a quarter by attacks by a Niger Delta secessionist movement.
Port Harcourt, Nigeria - Militants in Africa's top oil producer are marking President Umaru Yar'Adua's first full year in power with fresh pipeline bombings, underscoring the difficulties that civilian rulers have had calming strife linked to Nigeria's notoriously weak and corrupt democratic system.
The Movement for the Emancipation of the Niger Delta's (MEND) latest attack – a nighttime bombing on a Royal Dutch Shell PLC operated pipeline – helped push global oil prices to $133 per barrel.
That explosion, the latest of nearly half a dozen in recent weeks, has raised fears of widening attacks on other oil facilities in Nigeria, the 4th-largest supplier of oil to the United States.
Can outsiders exert enough influence in Africa to make the place more useful for the industrialized and industrializing countries? Security companies, non-governmental organizations (NGOs) that run aid and advice programs, and corporations will all bring management skills and cash for buying influence. But can these more fragmented groups replicate the level of organization that French and British colonial administrators once brought Africa in an earlier era?
"The fund chose Africa because 'land values are very, very inexpensive, compared to other agriculture-based economies,' she said."
Land values are so low because property rights in land are very, very insecure.
Here's a plan that would reverse that and make farmland in Africa valuable:
1) If a citizen of the 1st world buys a piece of property in an African country, they register that property with a national government outside of the African nation. If the African nation attempts to expropriate that land, the military of national government with which the property was registered prevents this through whatever means are necessary. African militaries are laughably weak compared to 1st world militaries. The 1st world nation could even contract out the enforcement to Blackwater or Executive Outcomes both of which are stronger than any African military (with the possible exception of South Africa).
2) For the sake of efficiency, each nation in Africa should have a single external government that guarantees property rights.
3) To pay for this guarantee, the property so protected would be taxed by the external government. If the value of the land is not great enough, the 1st world government has no reason to provide the protection.
4) So the land becomes worth more and taxes on it increase, the 1st world government can finance infrastructure such as roads, clean water and telecommunications.
5) Since this regime is beneficial for all land owners in the country (and everyone benefits from the infrastructure), it could be extended to the native property owners. They also will pay property taxes to the external government and the 1st world government will protect them from expropriation.
6) The local government can evade the prohibition on expropriating land by taxing the products of the land excessively. This would undermine the value of the land. Since the value of the land is the source of taxes to the first world government that provides the property guarantee, they should not be permitted to levy any taxes without the approval of the 1st world government. The same goes for other legislation (can't steal the land, make it legal to murder the owners).
7) Courts of justice would have to be established and run by the first world country to guarantee the physical security of the owners of the land. Without the guarantee of physical safety, land is not worth much.
All of this would greatly help African natives and allow for opportunities for non-Africans to bring 1st world management and husbandry to Africa.
Now all this process needs is a cool name.
"Now all this process needs is a cool name." Colonialism.
This could work as long as there are no actual Africans involved.
The truth is that Africa is a giant continent, far bigger than all of North America. But the traditional map of the world that most of us have studied in high school, happens to be the cylindrical projection invented by the Dutch mathematician Mercator, and this kind of map exaggerates the surface area of the poles and shrinks the surface area of the equatorial regions. Thus in most maps of the world, Africa looks like a much smaller place than it really is.
Here is the traditional cylindrical Mercator map of the world that we are used to. This distorted map makes North America and even Greenland look much larger than Africa (and also South America):
And finally, here is the Equal Area projection map, which projects the sphere onto the flat paper according to surface area. In this map, both Africa and also South America, are bigger than North America. In fact, Africa is bigger than North America and even bigger than Russia. Thus the enormous resources of Africa, both agricultural and mineral, represent the a major incentive to get land from Africa:
Hmmm, so what you are saying is that a country with less than a quarter of the area of Africa has managed to become the strongest in the world ... I wonder how they did that?
England was even 10 times smaller than America, but by the end of the 19th Century, the British Empire controlled more surface area than the Roman Empire. The industrial revolution made the mass production of firearms possible, and at the same time child mortality declined dramatically in England due to better science, and this made it possible for UK to have a very big army.
"...this made it possible for UK to have a very big army."
Ah yes, when the British overwhelmed the Zulus in the battle of Ulundi. 50,000 Brits versus 5,000 fierce Zulu warriors.
Wait, is that backwards?
Wolf-Dog, England's army was never that impressive. I remember this one story about how it lost to France and a bunch of rebellious colonists somewhere or another