A global hunt for water profit risks draining cities dry

Bloomberg | 14 November 2023

While taps in coastal Dakar barely trickle, an investment company uses Senegal’s only lake to irrigate crops it plans to send to Saudi Arabia.

 

By Peter Waldman, Momar Niang and Katarina Hoije

Photographs and video by Annika Hammerschlag for Bloomberg Green

The Senegal River in West Africa musters its force from 200 centimeters (80 inches) of rain a year in the highlands of central Guinea. The river flows north through Mali, meanders west over a vast, dry savanna and finally empties into the Atlantic Ocean at the Senegalese city of Saint-Louis, the old colonial capital of French West Africa. For centuries, European traders plied the river from there as they procured gold and ivory, animal hides and human bodies.

 

Now foreign merchants are back, this time for the river itself.

 

African Agriculture Inc., an investment company based in a ninth-floor Regus co-working space on Park Avenue in New York, is growing 300 hectares (740 acres) of emerald-green alfalfa east of Saint-Louis inside a desert nature preserve called the Ndiael. The farm draws its water from nearby Lake Guiers, which is fed by a canal from the river. The only freshwater reserve in Senegal, the lake supplies half the water for Dakar, Senegal’s capital.

 

The water isn’t nearly enough. In the wee hours of every night, more than 1 million residents in greater Dakar await what feels like a miracle: a running tap. Nighttime is when water returns to kitchen sinks, if at all. Otherwise, without the money to buy jerrycans or bottles of water from vendors in the street, people have to fill jugs with heavily polluted groundwater from public wells.

 

On a recent sweltering afternoon, African Agriculture’s irrigation pivots slowly rotated over the glistening alfalfa like the hands of a giant clock, spraying unending streams of water. For now, the high-protein fodder feeds Senegal’s skeletal cows, which could help bolster the nation’s food security. But African Agriculture’s chairman and chief executive officer, Alan Kessler, says its business plan calls for exporting 70% of the crop from the 20,000 hectares it plans to ultimately cultivate to feed more valuable livestock in the Persian Gulf. The alfalfa, at that scale, will consume about twice as much water daily from Lake Guiers as the pumps and pipelines now convey to Dakar.

 

“And for what? So a foreign company can sell alfalfa to feed cows and racehorses in Saudi Arabia?” asks Ousmane Aly Pame, an English literature professor at Dakar’s Cheikh Anta Diop University, who runs an anti-desertification nonprofit he founded on the Senegal River. “Extracting resources and leaving Africans with no food and no future is exactly what happened in colonial times.”

 

To finance its foray into forage, African Agriculture is in the process of going public via a merger with a so-called blank-check company on the Nasdaq, in a deal that pegs its value at $450 million, according to filings with the US Securities and Exchange Commission. African Agriculture’s founder and majority shareholder is Frank Timis, a Romanian-Swiss entrepreneur who lives in Switzerland. Over three decades, he’s landed elusive resource concessions, mostly in West Africa, in oil, diamonds, gold and other minerals. His publicly listed companies, many scattered in offshore tax havens, were embroiled for years in controversies over environmental practices, respect for human rights, the accuracy of disclosures and allegations of corruption. Now, Timis has grabbed hold of the aquatic lifeline of one of the driest regions on the planet and is getting ready to test American investors’ appetite for speculating on the project’s development potential.

 

It’s a parable of the global hunt for profits from climate change. In the past two decades, large food and investment companies have acquired more than 12 million hectares of African farmland. The land-buying spree, stoked by rising demand for food among the world’s growing middle class, has spurred a run on an even more precious resource: water.

 

The competition for water between cities and farms is intensifying everywhere, as urban areas grow and weather patterns shift on the warming planet. As in war, where the spoils go to the victor, fights over water favor those with capital and connections. The conflict is particularly stark in developing nations that are resource-rich, cash-poor, weak in governance and vulnerable to exploitation. In Senegal, the precarity is alarming. Demand for water in greater Dakar is expected to increase around 300% in the next 25 years, according to a World Bank report last year that concluded the country is moving “dangerously close” to having insufficient water to meet its basic needs in 2050. Twenty-thousand hectares of thirsty animal feed for export can only make matters worse.

 

CEO Kessler says African Agriculture uses water sustainably and rejects the notion that its expansion threatens Senegal’s water security. “We sit at the end of the Senegal River. The alternative is the water goes out to the ocean,” he says. The company’s public listing could help establish the credibility it needs to access much larger pools of capital to help finance desalination plants in Senegal, among other projects, he adds. Kessler calls Timis “an operational legend” for his projects in Africa and notes that African Agriculture will have to abide by SEC requirements for independent audits, public disclosure and transparency.

 

In the short term, additional capital will fund African Agriculture’s planned second alfalfa farm on up to 400,000 hectares across the river in Mauritania, he says, and help it fulfill an agreement to plant 1 million trees to generate carbon credits in Niger, using groundwater for irrigation.

 

“We’re on the runway of opportunity,” Kessler says, from a cafe on New York’s Upper East Side.

 

Bales of alfalfa are loaded onto trucks at African Agriculture’s Les Fermes de la Teranga. The crop currently feeds Senegal’s skeletal cows, but the company’s business plan calls for exporting 70% of the fodder to more valuable livestock in the Persian Gulf.

 

•••

 

Until 40 years ago, the alluvial plain near the town of Richard Toll would flood from opposite directions on the Senegal River at different times of the year. In the rainy season, August through October, runoff from upstream filled Lake Guiers and turned a wide swath of land nearby into a marshy oasis. During the long dry season, the Atlantic tide rolled inland across the flat river delta, inundating low-lying areas with saltwater. Migratory birds loved it. In 1965, Senegal set aside almost 47,000 hectares to create the Ndiael Special Wildlife Reserve, which was later designated a Wetland of International Importance under the 170-nation Ramsar Convention to protect marshlands.

 

Today dams and levees hold back the ocean and keep the river in its banks. With little floodwater, the wetlands and birds are diminishing. Most of the Ndiael (pronounced en-JIY-el) is dust year-round. Still, the 470-square-kilometer expanse of sand, scrubland, cow dung and the occasional acacia grove is home to about 35 villages. Most of the 20,000 inhabitants are from the Fulani ethnic group, West Africa’s largest nomadic people. They live in thatch-and-cinder-block huts alongside pens for their livestock.

 

The wetlands shrank from 3,100 hectares in 2003 to only 450 hectares a decade later. Now young women in bright green, yellow and purple leg wraps walk kilometers, sometimes twice a day, to irrigation ditches fed by the lake to wash clothes and fill water jugs they carry home on their heads. Meanwhile, men tending sheep and cows must take their animals much farther for water and forage, often for days at a time, because much of their traditional rangeland is off-limits.

 

In 2012, President Macky Sall declassified parts of the nature reserve and reallocated the Ndiael—along with its priceless access to Lake Guiers water—to an Italian company, Tampieri Financial Group SpA, which planned to grow sunflowers for export to Europe as feedstock for biofuel. The decree justified the decision on the grounds of “public utility”: expanding industrial agriculture “with a view to sustainable development.” But the Italian-Senegalese sunflower venture, called Senhuile SA, enraged many Ndiael villagers, as it enclosed the reserve inside barbed-wire coils and blocked herders from grazing and watering their animals and growing food. The Ndiael was split between bitter opponents of Senhuile and its supporters, many of whom received free farm plots and access to irrigation from the company.

 

When the Italians decided to sell, African Agriculture’s Timis moved in. The now-59-year-old investor is far from a household name in this pocket of Senegal. But his ability to unlock natural resources in West Africa is legendary among those who have dabbled in such deals over the past 20 years.

 

Timis, who didn’t respond to interview requests, was 14 when he fled the Ceausescu dictatorship in Romania in 1978. He went into business in the 1980s in Western Australia providing heavy equipment to the mining industry. He was convicted of selling heroin in Perth in 1990 and 1994. Timis told a London newspaper in 2012 that he’d used heroin but hadn’t sold it. He returned to Romania in the mid-’90s. In 1997 he sold the rights he’d obtained to operate what would have been Europe’s largest open-pit gold mine, the Rosia Montana in central Romania, to Gabriel Resources Ltd., a company listed on the Toronto Stock Exchange that Timis controlled. In 2003 he resigned as chairman and CEO of Gabriel after the exchange found he was “unsuitable” to be a corporate director after failing to disclose his heroin convictions. The mine’s expansion met fierce resistance and was ultimately nixed by the Romanian government.

 

In 1996, Timis founded an oil exploration company called Regal Petroleum Plc in London. Beginning in 2003, Regal’s shares rose more than 500% in response to positive statements the company made about striking oil in the Aegean Sea. The share gains were wiped out two years later, when Regal, led by Timis as executive chairman, disclosed that the prospect hadn’t panned out—three weeks after Regal had raised £45 million ($56 million) from investors.

 

Timis resigned shortly before the public learned that he’d agreed to sell Regal’s profitable gas assets in Ukraine without telling the company’s board. After a four-year probe, the London Stock Exchange fined Regal £600,000 for what it called “a pattern of conduct evidencing a reckless disregard” for the bourse’s disclosure rules. Timis wasn’t named in the exchange’s penalty assessment. He told a London newspaper that he would have fought the fine, but the company chose to settle.

 

By then, Timis was deep into Africa. In Sierra Leone he prospected for diamonds and other minerals as executive chairman of African Minerals Ltd., another London company. In 2014, when the company was ramping up production of its massive Tonkolili iron mine, ore prices plunged 50%. Chinese creditors foreclosed on the $2.5 billion mine the next year. African Minerals, worth about $3 billion at its 2011 peak, entered into administration.

 

Struggling to stay afloat in Africa, an Australian-listed company associated with Timis, International Petroleum Ltd., fell behind on more than $1 million in exploration fees owed to the government of Niger in 2014. Niger officials demanded the money, but IPL’s newly appointed CEO, Alex Osipov, disapproved of paying them in the manner to which they had evidently grown accustomed: in $50,000 wire transfers to a mysterious law firm in the island tax haven of Jersey and $10,000 wads of cash, hand-dropped at the Official Journal of the Niger Republic gazette, ostensibly to pay for publishing public notices, according to evidentiary documents that were filed in the UK Employment Tribunal in London.

 

To restore the company’s relationship with Niger officials, Timis enlisted a longtime Russian adviser in West Africa, Sergey Matveev. According to emails produced as evidence at the tribunal, Matveev helped orchestrate Osipov’s ouster after the director general of Niger’s oil ministry said he no longer wanted to work with him. In 2015, Osipov filed a whistleblower suit, claiming Timis had fired him for trying to stop illegal activity, including bribery. The tribunal judges ordered Timis and another executive to pay Osipov more than £1.7 million. Timis’ lawyer in the case argued that Osipov’s statements didn’t constitute legally protected whistleblower disclosures. Matveev declined to be interviewed. Osipov, through his lawyer, declined to comment.

 

By 2011, Timis was dabbling in Senegal, through a new Cayman Islands-based entity called Petro-Tim Ltd. That year a Petro-Tim executive in Hong Kong wrote a letter to the son of Senegal’s then-president, Abdoulaye Wade, expressing interest in developing two of Senegal’s most promising offshore natural gas blocks. The son, Karim Wade, Senegal’s minister in charge of aviation, infrastructure and energy, instructed the national oil company, Petrosen, to contact Petro-Tim about research permits. Three months later, Petrosen signed two production-sharing contracts with Timis’ company, countersigned by the president and his son. After voters swept the Wades from power the next month, an investigation President Sall ordered found irregularities with the deal, including a lack of due diligence. Ultimately, Timis went into business with the new president’s younger brother, Aliou, and was allowed to retain the new offshore energy projects. He sold them off in 2014 and 2017 for $650 million, plus royalties, according to Reuters and the British Broadcasting Corp.

 

Senegal erupted in protest after Timis’ relationship with the president’s brother was profiled in a 2019 BBC documentary. In response, Timis issued a statement saying there was “no wrongdoing whatsoever.” A subsequent judicial investigation in Senegal was dismissed for lack of evidence. Aliou denied wrongdoing and resigned as head of a state financial institution. President Sall’s spokesman at the time, El Hadj Kasse, told the French channel TV5 that Aliou did receive a $250,000 payment from Timis after the offshore concessions were sold, but it was for a purpose unrelated to oil. The money, said the president’s spokesman, was paid to an Aliou company called Agritrans for something else: agriculture.

 

Timis turned to the Ndiael. In 2018 one of his companies based in the Cayman Islands bought out the Italians’ 50-year rights to 26,000 hectares of the nature reserve for $8 million. Three years later, African Agriculture was incorporated in Delaware, and it now oversees the project. Timis renamed it Teranga Farms, adopting a Wolof word that describes unstinting hospitality, a core Senegalese value.

 

Timis brought in Matveev as a small investor in the company and an administrator of African Agriculture’s subsidiary in Niger. For development and fundraising help, Timis recruited Kessler, a native of South Africa who early in his career worked on Wall Street and helped several investment companies raise more than $1 billion for oil and gas projects in Africa. The company hired advisers from the US and Europe on desert cultivation and signed consulting contracts with Louisiana State University and Michigan State University to develop local agricultural extension programs. And African Agriculture paid to produce a 27-minute documentary that aired on CNBC Africa extolling Timis’ vision for the Senegal project.

 

Still, Timis planted in the Ndiael before residents and even key government officials had any clue his company was there. Adama Gaye, the government’s chief environmental regulator for Lake Guiers, learned about Timis’ alfalfa plantation only when Bloomberg Green recently asked him about it. Same with Mamadou Balde, Senegal’s chief of environmental assessments, who says the company should have notified the environment ministry of the change of ownership and purpose and applied for a certificate of environmental compliance but never did.

 

“It was very murky,” says Mbaye Cisse, a human-rights lawyer who spent years trying to confirm the Ndiael’s buyer for a land-grab complaint he filed with Senegal’s anti-corruption office, which remains pending.

 

The alfalfa farm “is in good standing with the environmental ministry according to local rules,” wrote Kessler in an email, citing Senhuile’s 2013 environmental impact assessment for its original sunflower plan.

 

Many of the herders whose forebears have roamed the Ndiael for centuries were also flummoxed. The barbed wire around the privatized parts of the nature reserve has been mostly replaced by trenches to keep out the animals. But herders now have to contend with African Agriculture guards who hold trespassing livestock for ransom. “We are in a state of powerlessness to face these people,” says Amadou Ba, 68, chief of the small settlement across the road from the alfalfa fields that’s had several goats impounded this year.

 

Teranga Farms is plowing ahead. Its pilot plots are producing alfalfa with almost 25% protein, three points higher than what’s considered high-grade. From the early success selling the forage in Senegal, Kessler says he’s looking at a West African feed market that reaches from Morocco to Ivory Coast. He’s also talking to the agriculture minister of Eswatini about boosting cotton production there while fielding inquiries from across Africa for other “precision” farming projects to improve agricultural efficiency, he says. As it stands, the productivity of Africa’s farms is less than 10% of that of Europe and North America, a big reason the continent has relied so heavily on fertilizer and grain from eastern Europe. “If we can get that to 20%, Ukraine and Russia won’t matter to global food security,” Kessler says.

 

Africa is only the beginning. The bigger prize is Wall Street. African Agriculture’s planned listing is a deliberate play on water scarcity. In the merger prospectus it filed in May with the SEC, the company’s blank-check merger partner, also known as a special-purpose acquisition company, or SPAC, points to two related trends: the megadrought in the American Southwest, which has crimped alfalfa output in the US, the world’s largest supplier; and Americans’ increasing worries about using diminishing resources to irrigate water-intensive crops for export.

 

Saudi Arabia was the third-largest market for US alfalfa hay last year. After decades of lavish government subsidies, the Saudis had succeeded in tapping enough groundwater beneath their own desert to turn the beige sands green with alfalfa fields. They cultivated enough meat, milk and eggs not just for domestic consumption but for export as well.

 

About a decade ago, realizing they were spending petrodollars to blow through fossil aquifers that had taken millions of years to fill up, Saudi Arabia started banning the cultivation of water-heavy crops such as alfalfa. In a domino effect, starting in 2014, food companies from Saudi Arabia and the UAE set up alfalfa farms in California and Arizona to tap US groundwater and the Colorado River. In the past decade, US alfalfa hay exports to Saudi Arabia have soared more than 1,500%, to about 300,000 metric tons last year. 

 

Kessler says African Agriculture, at full production, will ship 350,000 tons of Senegalese alfalfa to Saudi Arabia and the UAE, supplanting much of what the two countries now buy from the US. A lot of those US exports come from the drought-ravaged Southwest, where, as part of the seven-state Colorado River agreement in May, the Biden administration has set a lofty new price for water buybacks from farmers.

 

African Agriculture is offering a shrewd hedge: Use Senegal’s water. In the prospectus, the company says the water from Lake Guiers costs only 5% of what water in Europe and the US does. Also, the shipping distance from Senegal to the Persian Gulf is half of what it is from California. Cheap water is a huge advantage. “African Agriculture believes that access to abundant and inexpensive water will remain an uncompromising barrier to entry for its competitors,” its prospectus claims.

 

In fact, African Agriculture was extracting water from Lake Guiers at an unbeatable cost. According to Amadou Silly Ba, accounts director for the Organization for the Development of the Senegal River, the intergovernmental organization that manages the river for its four riparian states, the farm responded to the agency’s repeated letters requesting payment only in August, after Bloomberg Green contacted him. That means African Agriculture took water for two years before paying for it, Ba says.

 

In an email, Kessler said, “We are in good standing with the water company and are current on our payments” as of the agency’s latest invoice.

 

Only 35 kilometers long, 11 kilometers wide, and 2 meters deep, Lake Guiers is merely a shallow depression in the river’s seasonal flood zone. Local fishermen set their nets from canoes. Most of the few dozen villages on the lake are poor, and life feels languid in the steamy heat, except on the southwest shore, where big concrete treatment plants and pump houses whir the water to Dakar.

 

The canal that feeds the lake branches south from the Senegal River at Richard Toll, crossing a wide flood plain planted with sugar cane that’s owned by the French-Swiss billionaire Jean-Claude Mimran. It drains into Lake Guiers, though you’d never know it. The shoreline is so overrun with vegetation, the water disappears.

 

The source of the lake’s sclerosis lies in plain sight. Wastewater from the cane fields is pumped by the Mimran Group’s Senegalese Sugar Co. directly into the lake, which exceeds water-quality standards for pesticides, heavy metals and bacteria, the World Bank found in last year’s report, which named the sugar company as “one of the major sources of pollution.” The water is so laden with nitrates and other fertilizers that invasive plants now cover 30% of the lake. Schisto worms thrive in the overgrowth, making Lake Guiers an epicenter of the disease schistosomiasis, which infects humans’ kidneys, bladder and rectum with parasitic worms. Senegalese Sugar complies with national regulations, says spokesman Khassim Faye.

 

At completion, African Agriculture’s alfalfa farm will be twice as large as the sugar cane plantation.

 

Although alfalfa doesn’t require nitrogen fertilizer, it does need plenty of phosphorus, a nutrient that plagues Lake Guiers at about twice the US Environmental Protection Agency’s recommended limit. For now, the company’s irrigation pivots and sprinklers minimize water use and runoff, and alfalfa is known to filter some contaminants in irrigation water, leaving runoff cleaner. Still, drainage from the alfalfa fields could increase substantially if seasonal rains become more torrential, as climate experts predict.

 

Down the road from Teranga Farms, the village of Toleu is wedged between the edge of the lake, the sugar cane fields and the alfalfa farm. It abuts the Tocc Tocc Community Nature Reserve, co-founded by Ndiaga Boh, the village chief, to preserve habitat for the Adanson’s mud turtles and threatened West African manatees that inhabit the lake. Boh says he’s worried the lake and his village won’t survive another industrial farm. Fish from the lake, a main source of local protein, are shrinking in size and number, he says. Eight out of 10 kids in the area have contracted schistosomiasis. When a community loses its health, it dies, he says. “If they plant 20,000 hectares of alfalfa, this reserve will disappear.”

 

The specter of drought looms. Climate models predict increasing precipitation in the Senegal River Basin in the near term but a decline of as much as 25% in the second half of the century. People around Lake Guiers vividly describe the shriveled fish and manatee carcasses on the sunbaked lake bed during the extreme drought of the 1970s. Although alfalfa can survive with less water and reduced yields, another extreme drought could drain the lake in only 20 months, according to Djiby Sambou, a native of Richard Toll who wrote his 2017 doctoral dissertation about the impact of climate change on Lake Guiers. “It’s getting much worse than I anticipated,” says Sambou, who works as an environment officer for the United Nations. “This lake cannot support all the new demand.”

 

•••

 

Lake Guiers’ troubles stretch to Greater Dakar, 260km away. There, the struggle for water afflicts as many as 2.5 million people, particularly in the districts on the city’s periphery, where water shut-offs occur almost daily, says Seynabou Cisse Faye, head of the geology department at Cheikh Anta Diop University. These are some of the capital’s most populous neighborhoods, and its poorest. Even when the plumbing works, Dakar’s tap water, composed of both groundwater and water from Lake Guiers, is unhealthy. To avoid diarrhea, which kills 40,000 children a year in Senegal, officials advise giving only mineral water to babies until they’re 6 months old, preferably longer.

 

Behind an outdoor market in the neighborhood of Tivaouane Peulh, goats and scrawny chickens pick through trash while women wash dishes at an open well. The local Thiaroye aquifer supplied almost half of Dakar’s water in the 1980s, largely in the eastern districts. But that’s plunged to only 5% because of nitrate contamination from raw sewage. With help from Japan, Senegal is building a desalination plant in Dakar and discussing another one. But reliance on Lake Guiers and the Senegal River is only increasing. A planned fourth Dakar pipeline would boost the city’s extraction from the lake by more than 50%, raising the stakes for the water body’s health even higher.

 

In the heart of the city, historic Medina, water scarcity is omnipresent. Khadidja Ngom, 24, makes her living washing clothes by the roadside. On a recent day, she squeezed soap from wet shirts and trousers, hanging them to dry along the street. She makes several walks a day to the communal tap where she pays 25 CFA cents (4¢) to fill up a 10-liter bucket. The neighborhood often goes without water for days. “We’re used to water being scarce here,” Ngom says. “It becomes even more evident when you rely on it to make a living.”

 

That scarcity can lead to conflict. Babacar Ndiaye is the 80-year-old chef de quartier in Medina. One of his jobs is to mediate disputes among residents forced to share communal taps, especially when someone hogs buckets of water and leaves the tap dry. In buildings where people share one faucet, residents who don’t contribute to the bill find a padlock on the tap.

 

People in Dakar have learned to be patient. On a recent day in her home, Aissatou Sow recounts how, on the night before her youngest daughter’s wedding, she waited hours for the tap to go on. She had no way of knowing if there’d be enough to make rice for everyone. At 3 a.m. a trickle arrived. Then a splash. Finally a gush. “There was no Plan B,” Sow says.

 

Based on World Health Organization benchmarks, a typical Dakar household of eight needs 12,000 liters of water a month, which costs about $48 at kiosks and private pumps. That’s almost half the monthly minimum wage in Senegal and almost 10% of a typical middle-class monthly income. To many, the price simply isn’t affordable. Money isn’t a problem for the Saudis and Emiratis eager to buy Lake Guiers alfalfa. “They’re calling us all the time,” Kessler says, “asking, ‘What can we do? When can we have it?’ ”