Does Foreign Land Acquisition Deprive Per Capita Income in Africa?

Adeyemi Adefioye Ogundipe,Samuel O Egbetokun

doi:10.2139/ssrn.2472468

Abstract

This study investigates the implications of foreign land deals in Africa with regards to per capita income. It employs data from World Development Indicators, World Governance Indicators and World Trade Indicators on key variables such as arable land per person, agricultural land as percentage of land area, net food import, regulatory quality, among others (1995-2012) on selected African countries where instances of foreign land deals have been reported. The study formulates empirical models that draw from institutional development theory, which was estimated using Fixed Effects (FE) and Generalised Method of Moments (GMM) techniques in order to handle the issues of country-specific effects and endogeneity. The results from the empirical analysis show that agricultural land influences per capita income significantly. It hereby implies that as more agricultural land are cultivated; the wellbeing of the populace is likely to be enhanced primary through increased income for farmers, increase in real money income for non-farmers, drastic reduction in food inflation and foreign exchange gains for the government. The results of the study suggest the need for controlling the issue of massive foreign land deals through viable institutional framework, though there is need for foreign investment in Africa’s agricultural sector but sound institution is pertinent in order to avoid rent seeking behaviour among stalk holders.

Highlights

The study is motivated essentially by large scale foreign land deals in African countries and other developing countries that have been reported in recent years
Potential adverse effects on the environment may occur due to large-scale fertilizer and chemical applications, which has risk of reducing agricultural production and, by extension, agricultural export in the host countries. It is this recognition that the seven Principles for Responsible Agricultural Investments was initiated by the World Bank, Food and Agricultural Organization (FAO), United Nations Conference on Trade and Development (UNCTAD), and International Fund for Agricultural Development (IFAD), which was backed by the 2010 G8 Summit in Ontario
The study examines the incidence of large scale foreign land deals in Africa, considering majorly the 16 countries where cases of massive land acquisitions have been reported

Summary

Introduction

The study is motivated essentially by large scale foreign land deals in African countries and other developing countries that have been reported in recent years. One of the driving forces has been attributed to the presumed availability of land in these regions. This, among other factors, has made Africa the most targeted region, which has recorded more than half of the foreign land deals in the world. There have been incidences of large scale foreign acquisitions of land across African countries. Over 2,492,684 hectares of land has been acquired in Ethiopia, Ghana, Madagascar, Mali and Sudan. This represents almost half of the arable land in United Kingdom and thrice the arable land of Norway. In Sudan and Ethiopia alone, the figures are about 3.9 million and 1.2 million hectares, respectively (Cotula, Vermeulen, Leonard and Keeley, 2009)

Methods

Findings

Discussion

Conclusion