| JOHANNESBURG, March 20
JOHANNESBURG, March 20 A move by Madagascar's
army-backed leader to nix a huge South Korean farming deal has
exposed the risks of such ventures in Africa, where land remains
an emotive issue prone to populist or nationalist opposition.
Although the rich Middle Eastern and populous Asian
countries that have turned to the continent in search of cheap,
long-term food supplies are unlikely to scrap their plans, they
may have to rethink them.
"The greatest political risk in investing in Africa comes
from commercial agriculture because of the emotional attachment
to the land," said Martyn Davies, head of Johannesburg-based
consultancy Frontier Advisory.
"With the trend of rising populism in many countries,
foreign investors could quickly fall victim," he said.
Land use, particularly South Korean firm Daewoo Logistics'
plans in Madagascar to lease a million hectares -- equivalent to
an area the size of Qatar -- to grow food, played a big part in
the turmoil that led to this week's removal of President Marc
The day after Ravalomanana's exit, his populist successor,
34-year-old former disc jockey Andry Rajoelina, said the Daewoo
deal was off, telling reporters: "Madagascar's land is neither
for sale nor for rent".
Daewoo planned to grow half of South Korea's corn
requirements on the Indian Ocean island, reducing the dependence
of the world's third-largest corn buyer on U.S. or South
The firm, formerly part of the now-defunct Daewoo Group, had
promised to spend $6 billion over 25 years building roads,
railways, a port and schools in exchange for huge swathes of
But, as with similar deals elsewhere, critics such as
Rajoelina piled in, saying Africans were being deprived of land
needed for themselves in favour of crops being grown for export
to wealthier people in Asia or the Middle East.
Daewoo bosses, quoted by Korea's Yonhap news agency, denied
ordinary people would lose out.
"The project is on deserted land and will create jobs for
local residents and new housing, hospitals and schools will be
built. That will be a big boost for the national economy,"
executive Roh Jong-ho said.
Africa is no stranger to outside investment in farming, but
since last year's spikes in the price of staple foods,
governments, rather than the private sector, have been driving
the deals, making them much bigger, and much more sensitive.
That is only compounded by the secrecy that can shroud
projects financed either wholly or in part by investor
governments not noted for their openness.
Last week, state media in Angola reported that Beijing had
granted Luanda a $1 billion agriculture loan, and in February
Chinese President Hu Jintao went on a four-nation African tour
to cement ties beyond merely the oil and mining sectors.
In the same month, a Saudi Arabian firm announced a $45
million land deal in Sudan in response to a push by Riyadh to
lock in long-term food supplies.
"There are a number of transactions taking place but most,
generally, not in a transparent manner," said Madiodio Niasse,
director of the International Land Coalition, a Rome-based group
pushing for a code of conduct regulating such investments.
"The receiving country can perceive it as a loss of its own
sovereignty for the benefit of another country," he added. "That
is not in the interests of anybody."
Only by being open and transparent can both investor and
host country avoid the sort of suspicion and upset that
ultimately cost Madagascar's elected leader his job, and Daewoo
millions of dollars in wasted planning, he said.