Why is sub‐Saharan Africa an attractive destination to foreign land grabbers? Evidence from country characteristics

Abstract

AbstractInvestments in large‐scale land acquisition by foreigners, also referred to as land grabbing, are crucial to sub‐Saharan Africa's development. Land acquisition investments have attracted considerable attention in global development circles due to their potential positive (e.g., technology transfer, employment creation, infrastructure improvement, and global market integration) and negative (e.g., environmental degradation, food insecurity, displacement, and loss of livelihoods) impacts. The factors making land investments attractive to foreign investors are unclear. This paper examines country characteristics associated with land acquisitions in 20 sub‐Saharan African countries to provoke evidence‐based discussion. The paper estimates regression models of land acquisitions using country‐level data from 2010 to 2019 on demographic and economic conditions, natural resources, business practices and governance. The results reveal that the availability of land and water, corruption, days required to start a business, government effectiveness, cost of business startup and political stability are critical determinants of land acquisition investments in sub‐Saharan Africa. The paper recommends that African governments should: (1) strengthen regulatory frameworks on foreign direct investment in land; (2) scrutinize investors' business models, technical experience and knowledge of local culture; (3) undertake rigorous environmental and social impact assessments (ESIA) to weigh the long‐term cost‐benefits of LASLA projects; and (4) conduct transparent contract negotiations, taking political and economic power imbalances between parties into consideration.