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The growing case against the G8’s ‘responsible investors’

The growing case against the G8’s ‘responsible investors’

The multibillion-dollar New Alliance initiative which promises to transform the continent’s food systems is facing rising opposition from African farmers. 

Based in the Morogoro region of Tanzania, Kilombero Plantations Limited (KPL) operates a 5,800 hectare rice plantation and buys produce from local farmers. It has recently become East Africa’s primary rice producer.

But when it comes to Africa’s farming sector, KPL’s significance doesn’t end there. It is one of a series of flagship corporate projects that investors hope will help transform Africa’s food system far beyond the farm gates.

KPL is at the forefront of a series of initiatives backed by African and G8 governments, charged with attracting corporate investment in to Africa’s food system. Bought by KPL in 2008, the plantation lies within the controversial Southern Agricultural Corridor of Tanzania (SAGCOT), a government initiative to help agribusiness access 350,000 hectares of prime farming land and establish industrial farming projects.

KPL’s project, majority owned by UK-based multinational Agrica, forms part of Tanzania’s deal with the G8’s New Alliance for Food Security and Nutrition. The multibillion-dollar initiative is using aid and corporate investment to leverage policy reforms that will help big business access land, seeds, and markets in 10 African countries. KPL has been financed by the UK and Norwegian governments, as well as the aid-backed Africa Enterprise Challenge Fund.

Two years ago, the World Bank declared that “Africa represents the ‘last frontier’ in food and agricultural markets”. With the revolution in industrial, export-orientated agriculture well under way across other continents, 70% of Africa’s food is still grown by small-scale farmers. With the backing of initiatives such as the New Alliance − as well as the powerful notion that corporate investment will bring prosperity for Africa’s poor − global agribusiness could be set to change Africa’s food systems forever.

Yet for KPL, things aren’t going so well. A new report published by Global Justice Now, Oakland Institute and Greenpeace Africa suggests that farmers working for KPL have been left in despair. Farmers displaced by the project complain of receiving inadequate compensation. KPL’s outgrower farmers, who were required to buy seeds and fertilisers from the company and sell their produce back, reported falling into dangerous levels of debt − which was made worse when KPL offered lower prices than expected.

Locals also reported low wages for casual labour with KPL, and claimed that many of the promised jobs for farmers have not materialised. “Life now is very bad as compared to before,” said one farmer. “Previously I was able to earn money from my own farm, but now I have to earn money by doing various small jobs for cash. Before, I was able to cultivate my own food. Now I need to buy the food with the small income I have.”

Business as usual

This is a story that KPL, and the New Alliance, were hoping to avoid. With multinationals in Africa receiving negative publicity regarding communities being displaced from land investments, governments and corporations at the heart of the New Alliance have been keen to note that the initiative isn’t business as usual. All partners, it insists, are signed up to principles of responsible investment and are asked to report on their local impact. But KPL is not the first New Alliance company to receive bad press.

In January, a report co-published by Global Justice Now exposed how farmers in Nigeria’s Taraba State are resisting a land grab by US company Dominion Farms, a New Alliance partner. Whilst the company is planning to establish a 30,000 hectare rice plantation that will displace farmers who have worked the land for generations, the community has yet to receive any proposals for compensation or resettlement.

Meanwhile, in March, Action Aid released a report detailing how farmers working for a New Alliance-backed investment by EcoEnergy in Bagamoyo, Tanzania, are being pushed into debt. Additionally, farmers who have been displaced by the scheme are getting little choice in where they are resettled.  

What’s more, the New Alliance and the companies it is backing have struggled to demonstrate their positive impact. The programme was criticised last year when its latest progress report didn’t indicate any impact on poverty or food security, and highlighted that many corporations were failing to report on their benefits for local communities.

In May, the UK’s Independent Commission for Aid Impact claimed that programmes including the New Alliance “can serve as little more than a means of promotion for the companies involved and a chance to increase their influence in policy debates”. In the light of this, the UK government has come under pressure to justify why £600m ($930m) of aid money is being spent on the New Alliance.

Resistance to the New Alliance, and the model of agriculture it is facilitating, is mounting. As G8 governments and corporate partners met in Cape Town for the initiative’s leadership council in June this year, a coalition of 100 farmer organisations declared that New Alliance policies “facilitate the grabbing of land, further marginalise small-scale producers, and undermine the right to adequate food and nutrition”.

These groups are calling on governments to put small-scale farmers at the heart of a sustainable, productive food system for Africa. With the New Alliance on shaky grounds, G8 and African governments are now under pressure to answer calls for a growing movement for food sovereignty. International movements such as La Via Campesina and the Alliance for Food Sovereignty in Africa are mobilising small-scale farmers to demand a central place in strategies for a better food system and keep farming resources in the hands of those who most rely on them. With the New Alliance on shaky grounds, these demands will grow ever stronger. 

Chris Walker is a campaigns and policy officer working on Global Justice Now’s food sovereignty campaign. 

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Written by African Business Magazine

African Business and its award-winning team is widely respected for its editorial excellence. We provide the all important tools enabling you to maintain a critical edge in a continent that is changing the world. Our special reports profile a wide range of sectors and industries including Energy, Oil and Gas, Aviation, Agriculture to name but a few.

  • Ralph Green

    Good article and G8 must investigate and address can be resolved if the political will is there. Make the multinationals work for us not us for them.

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