Angola launches $6bn agriculture expansion

Financial Times | October 4 2008

By Tom Burgis in Johannesburg

Angola, one of the world's fastest-growing economies, has launched an ambitious plan to exploit both its fertile soils and high global food prices to attract $6bn (€4.3bn, £3.4bn) in agriculture investments over the next five years.

As it emerges from one of Africa's most protracted civil wars, Angola's abundant oil and diamonds have attracted febrile interest from foreign investors. Yet the talks under way with several private-sector farming giants are subject to a host of obstacles, ranging from clogged ports and red tape to corruption fears and competing claims to land rights.

With arable land of 35m hectares - an area the size of Germany - Angola used to feed its own people as well as satisfy world demand for coffee, sisal, bananas and sugar before the outbreak of a conflict that raged for nearly three decades.

Today it imports more than half its food and only 10 per cent of productive land is cultivated. Keen to diversify the economy away from the oil that has brought rollercoaster expansion since a 2002 peace accord and reduce dependence on foreign food, the government is in the early stages of discussions with leading agriculture investors from Brazil, Spain, Canada, the US, Argentina and its former colonial power Portugal, Joaquím Duarte Gomes, head of planning at the agriculture ministry, told the Financial Times.

"World food prices have jumped," he said in a recent interview. "Angola can make food for the region and the world."

Lonrho, the London-listed Africa conglomerate, is seeking finance for a 20,000 ha agriculture project in Angola as part of an "aggressive" strategy to acquire 10 times that area of productive land across the continent, said Dave Lenigas, executive chairman.

Chiquita Brands, the Ohio-based banana giant, arrived in March, confirming a growing trend by western food companies to switch operations to Africa to circumvent European Union tariffs on imports from elsewhere. In August, the Angolan state news agency quoted Beijing's ambassador to Luanda saying China was considering ways to boost rice production in the southern African country where it has already signed a multi-billion dollar oil-forinfrastructure deal.

Some two-thirds of Angolans eke out a living from the land. But agriculture accounts for only 9 per cent of gross domestic product.

The $6bn target by 2013 - compared with total non-oil foreign direct investment of $924m last year - is ambitious. Business people in Luanda complain of graft and labyrinthine bureaucracy. It takes 119 days to set up a company, according to the World Bank, more than double the regional average.

The agricultural investment drive faces controversy, after a warning from the United Nations of the risk of "neo-colonialism" as food importers scramble to secure farmland overseas. Incidents of forced expropriations in diamond areas highlight the perils of a programme that will seek to secure - for outside investors - vast tracts of land to which the state, tribal leaders and Angolans displaced in the war all claim rights.

Original source: Financial Times

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