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MENAFN - Arab News - 05/01/2014

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(MENAFN - Arab News) Hardly three months passed since the third Afro-Arab summit concluded in Kuwait and some troubling signals have started to show up.

The convening of the summit on time consolidated the impression that it will be an established practice for Arabs and Africans to meet regularly and build block by block and turn optimism into tangible cooperation between the two regions.

One of the vital areas of cooperation is agriculture seen as of national significance to both: agriculture is the main economic backbone for many African countries for sustaining the livelihood of many of its inhabitants as well as providing jobs for them.

For Arabs, especially in Gulf countries, African cooperation provides one of the best opportunities to achieve food security.

Their investments constitute more than mere FDI as they relate to food security and a chance for technology transfer, better utilization of land, improved production, bringing in more land into use and help improve infrastructure.

Though investment in agriculture is not a new phenomenon, but over the past few years it attracted attention given the growing size of land allocated for the purpose of food security, from 10,000 hectares to even as high as 500,000 hectares.

Also, the life span of such arrangement goes in some cases up to 99 years. Despite that and the feeling that Africa has been saturated, available statistics show that all such plans account only for no more than 25 percent of arable land in the continent.

But the outcome over the past five years does not seem satisfactory to both sides, which indicates a gap between the policy and implementation levels, lack of portraying clearly to the public what has been going on.

As a result, some foreign investors, and out of sheer experience, found out that they are wasting more of their time trying to overcome infrastructure difficulties, support at local level as communities insist on having more say in terms asking for job opportunities, services and a share on the expected production.

That led some investors to look somewhere else mainly into a more mature investment climate, where the rule of law is guaranteed, infrastructure is there as well as policies and needed mechanisms in place to guarantee the investors' rights.

A good example of this trend is the agricultural firm, Al-Dahra of the UAE, who concluded in March a deal that allowed it to buy eight agricultural companies for 400 million in Serbia.

There is also Jenaan of Abu Dhabi with investments in the US and Spain, and Hassad Food, the agricultural arm of Qatar's sovereign wealth fund, who has set up a subsidiary in Australia to focus on growing wheat, barley and animal husbandry.

The deal represents a possibility for potentially similar projects in Europe, North America and Australasia that though they could be more expensive and offer less scope to build vast estates like in Africa, but they also present fewer political problems and less risk.

These are just examples of a growing trend to diversify and get a better and secured investment portfolio.

The Saudi decision to go completely out of wheat by 2016 reflects the importance and the significance of the issue of food security felt in various Gulf countries at different stages.

But that is not enough in itself to provide the needed results for investors and their hosts.

There is a need to address some sensitive issues that so far have not been addressed in a frank and more transparent way.

For instance, the political instability has always been a factor, compounded by poverty. Though that is ultimately is an issue for the host countries to deal with depending on their political choices, investors are having some responsibility to protect their own image. Buying or leasing large tracts of land was seen and portrayed in some cases as 'land grab,' where foreigners are seen exploiting the needs of the host countries.

It goes without saying that for any investment to succeed it needs to operate in a friendly atmosphere. And that is where there is a need to translate the declarations of the Afro-Arab summits into more concrete and tangible policies that make use of the political umbrella provided and engage with concrete issues in a positive way to create the much needed friendly environment and make an impact that benefits both sides.

 






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