Scarce water supplies and limited agricultural land across the Arab world means food security is a major issue, especially for the governments of the Gulf Co-operation Council. Yet the GCC states are changing tack in their multi-billion-dollar search for food security, as they look to Africa to meet their agricultural needs. Although their land acquisitions across Africa have aroused local hostility in some African countries – indeed non-governmental organisations have expressed deep concerns about what they label as 'land grabbing' – this economic partnership between the GCC and African governments has been a boon for a region that still mostly has an underdeveloped agricultural sector.
Africa’s agricultural sector – beset with low productivity – attracts scant investment. The United Nations Conference on Trade and Development estimates that inward FDI into Africa’s agriculture sector represents just 7% of the total FDI stock in developing countries’ agricultural industries. The developmental impact of attracting FDI into Africa’s agricultural sector is clear. Some 80% of the poorest people in developing countries are farmers, who would benefit from the sector’s growth. Additionally, the demand from the Arab world is arguably at its peak. The 2008 financial crisis, which led international food prices to significantly rise, lay bare to the GCC states their need to secure their food supplies. Often supported by their cash-rich sovereign wealth funds, investments from the GCC have made significant inroads across Africa.
United Arab Emirates-based investment firm Jenaan has, since 2007, accumulated more than 67,200 hectares of arable land in Egypt, with the intention to grow fodder to feed the UAE's livestock. Hassad Food – the agricultural investment arm of Qatar's sovereign wealth fund – has invested $1bn in a joint venture with Sudan’s government to grow wheat, corn and soya for export back to Qatar. And keen to tackle its looming food scarcity, Saudi Arabia, under the King Abdullah Initiative, has committed $2.5bn in FDI into Ethiopia in order to develop a rice farming project.
Yet ensuring that these partnerships are equitable has become a focus of international institutions such as International Monetary Fund and the World Trade Organisation, which have pushed for a more transparent legal framework in new FDI deals across Africa. As a result, both regions’ governments are co-operating to develop an international legal framework which also protects the livelihood of local smallholder farmers, and time will determine if this will lead to a win-win outcome for both regions.
Mazdak Rafaty is managing partner of Ludwar International Consultancy and SME advisor to joint Emirati-German Chamber of Commerce.