The long-term imbalances between supply and demand and international trade changes that triggered the recent crises in global food markets are also fueling a spike in overseas investments in agricultural land. Africa is a major destination of investment flows because it has the largest reserves of arable land.
While potential benefits can be significant for recipient and investor countries as well as the global economy—as seen in certain countries in Central and Eastern Europe—this type of success requires support. The proper legal and institutional environment will ensure that investments facilitate better access to capital, technology, and markets—and thus to higher productivity and income levels—among poor farmers. In African countries, it will be especially critical to find contractual modalities that balance the need for investment security and the imperative to protect poor farmers’ access to land. Empowering local communities by raising their capacity to comply with contractual arrangements while protecting local rights will be essential as well. National governments should engage in complementary efforts to improve the institutional and infrastructural environment of value chains; value-chain incentives should also be a priority. Rules modeled after international business laws should be adopted at the global level to combat corrupt practices.
To guide future strategies on foreign investment in land, a host of factors still need careful consideration. To contribute to a better understanding of those factors, this series of thematic research notes focuses on trends in investment volumes and flows, lessons from other countries, conditions for beneficial deals, and existing knowledge gaps.