Swedish aid risks deepening conflict between rich and poor

A global clash of interests between ensuring the energy and food security of the rich and the livelihoods and food production of the poor is emerging more and more clearly. During the past decade more than 200 million hectares of agricultural land for the production of bio-fuel and food for export, mainly in Africa, have been transferred to foreign investors. 

The Swedish International Development Cooperation Agency, Sida, is processing a preliminary application for loan guarantees for hundreds of millions of Swedish crowns for a major bio-fuel and forestry plantation project in Tanzania. This would most likely contribute to strengthening the conflict between the rich world and poor peasant farmers in Africa.

However, this venture fits in with the change of direction within Swedish aid policy where the role of private business is increasingly promoted. Sida is under considerable pressure to implement this new policy. In Sida’s 2012 budget, 650 million SEK has been reserved for this purpose.

The municipally owned (70%) company SEKAB in 2009 applied for loan guarantees from Sida for a similar projectThat application concerned bio-fuel production in the Bagamoyo and Rufiji districts of Tanzania. The company wanted to cultivate sugar cane for processing into ethanol for export to Europe as fuel for vehicles. 

Sida declined the application as harmful both for the environment and for Tanzania’s peasant farmers. For example, the project endangers local water supplies as cultivation of sugar cane requires large amounts of water. Also, the plantations would be in existing forest reserves and on village land, which is used for food cultivation and grazing areas etc. The current application is more elaborate concerning, for example, the way environmental risks are dealt with, yet many serious questions remain. 

The same people are behind the new project as the SEKAB one. They bought the plans and investment licence in which SEKAB had invested SEK 160 million for only SEK 400 – four hundred kronor(!). The municipalities in northern Sweden that owned SEKAB thus lost lots of money. The new application was made through a new company, Ecodevelopment in Europe. It also includes the Rufiji project, which is much larger than the Bagamoyo project. Rufiji has 90 villages, an agricultural system dependent on river water and large areas of mangrove forests and high biological diversity.

If Sida is to fulfil the main aims of Swedish development assistance  – to reduce poverty, support women and improve the environment, it has strong reasons to decline also the new application:

• From the environmental point of view the new application is just as questionable as the previous one. No description of the environment impact based on a project design has been produced. 
• There is no evidence from Africa that large-scale commercial agricultural projects can be environmentally sustainable and further smallholders’ livelihoods.
• International organisations widely fear that ‘land grabbing’ seriously damages food security in poor countries.  For example, an FAO report from July 2001 found that large-scale foreign investments in land as a rule “damage food security, incomes, living conditions and the environment for the local population”.

The global emphasis on private business in development is evident by enormous foreign direct investments in large-scale agriculture in Africa for energy and food production for export. The latest overview produced by Oxfam  shows that 227 million hectares of agricultural land in developing countries, mainly in Africa, have, since 2001, been taken over by foreign investors through, often secret, agreements. This exceeds by far the estimate of 56 million hectares over the same period that the World Bank produced as recently as 2010. The available data indicate the magnitude of, and particularly in Africa an acceleration of, the land grabbing process.

However, there is also a need to be cautious about the data as to whether it actually reflects investments on the ground. Here further research is needed.

The results of this new direction in aid policy can be devastating:

• Smallholder farmers or villages can lose access to the land they cultivate to international companies.
• The agreements which are concluded between foreign companies and local societies often give no or little compensation for the land which is lost or for future production which will not materialise.
• Large-scale agricultural investments in many cases entail felling of woodlands resulting in an increase in the release of greenhouse gases.  This was the case with SEKAB’s plans in Rufiji district in 2009 which were acquired by Ecodevelopment in Europe.
• Large-scale agriculture often involves cultivation of one single crop and needs large amounts of artificial fertilisers and chemical additives.  These monocultures degrade the soil, divert water from ecological systems and other users, and lower the level of the groundwater.
  The production of bio-fuel, and in particular sugar cane, which requires irrigation, and which according to FAO’s study is the most important factor for increasing large-scale agricultural production, can bring about drastic reductions in food production. The increased demand for and production of bio-fuels from agricultural foodstuffs has resulted in increased global food prices during recent years. Different analyses exist, but a conservative estimate is that increased production of bio-fuels accounted for 30% of the global food price increases during the period 2008-2009.
  Large-scale agricultural production also provides relatively few job opportunities, since it is often partly or fully mechanised.

In today’s global economic system it is not strange that international companies want to increase their profits. But if Bagamoyo Ecoenergy Limited (BEE), with links to Sweden, and other badly planned large-scale projects are granted support through Swedish assistance, Sida and the development cooperation minister, Gunilla Carlsson, need to explain why the interests of Swedish companies go before concern for the poorest and weakest groups in the African countries we claim to want to help most of all. Private sector projects must adhere to the principles for Environmental and Social Impact Assessments and Corporate Social Responsibility, CSR, which Swedish development cooperation supports.

International organisations, aid donors and African states promised after the financial crisis of 2008, that poverty in Africa would be fought through increased attention to agriculture. But if this entails rich countries taking control over land in African and other developing countries for their own purposes and benefit this can instead worsen poor countries’ possibilities to feed themselves.

The support from aid and other sources to international companies and African leaders who cooperate with them will necessarily take resources from the difficult and important work which is needed to improve production conditions for the smallholder farmers. There is a major need to ensure their access to land, to markets through improvements in infrastructure, and to increased health services and education in the rural areas. 

There is a great potential for support to African smallholder agriculture, which is for the most part carried out by women, and which will lead to a decrease in poverty and reduction of environmental strains. Supporting African smallholders is also the best strategy for preventing deforestation, thereby strengthening Africa’s contribution to the struggle for a better global climate.

But support to African smallholder agriculture requires insights into local conditions and how small-scale agriculture can be locally embedded and linked to national and global levels in a productive and fair manner. There are no large-scale short cuts to enhance African agricultural development.

International finance institutions, development aid and African states have thus far failed to support smallholder agriculture. The local, Swedish and international private business sector can and must contribute to a development which leads to a reduction of poverty and an environmentally sustainable development in Africa. But in order for this to come about the principles and guidelines which the international community has formulated for how the private business sector should behave in Africa and other developing countries must be followed. This does not happen today.