By Tom Burgis in Johannesburg
Lonrho, the pan-African conglomerate listed in London, has secured leasehold rights to 25,000 hectares of rice paddies in Angola and is negotiating two bigger land deals in Mali and Malawi, in another sign of investor appetite for African land.
David Lenigas, Lonrho’s executive chairman, said the group has agreed to a 50-year lease of the rice fields in the Uige province of Angola, which were abandoned during the country’s long civil war that ended in 2002.
The deal would use up the bulk of $6m planned spending on agricultural projects this year, and would be leveraged with Angolan financing. The company would re-develop the land in collaboration with state agencies and pay royalties on food produced.
Mr Lenigas said the two further deals under negotiation – one on the inland delta on the Malian stretch of the Niger river, another on the shores of lake Malawi – would bring total land in Africa under development by Lonrho’s agricultural subsidiary to 150,000 hectares.
This is small compared to Daewoo’s troubled initiative to farm 1.3m ha in Madagascar to meet demand for food in South Korea, or a former Wall Street banker’s deal with a warlord in south Sudan for control of a 400,000 ha site.
But it still represents one of the most ambitious land buy ups yet on the continent and in contrast to many recent deals designed to serve export markets, will focus initially on domestic African consumption.
“We are focusing on domestic production for domestic consumption,” Mr Lenigas said, adding that the conglomerate would work closely with state agencies.
The Angolan government is striving to diversify its oil dependent economy and is seeking $6bn in agriculture investment over the coming five years.
To date the country has relied mainly on state coffers to drive rural development.
Mr Lenigas hopes that by selling initially into local markets Lonrho will avoid some of the outcry associated with other deals on a continent still unable to feed itself.
The Malian government, for instance, has informed him that it has a 400,000 tonne shortfall on its food needs each year; Angola imports all its rice.
“This is just the start,” he said of his plans to rebuild the pan-African assets divested at the start of the decade by the conglomerate that was once known as the London and Rhodesian Mining Company.
“We want Lonrho to become one of the biggest agricultural groups in Africa again as soon as possible.”
That will not be easy. “There are no good examples of this happening on a large commercial-scale in Africa,” said Carl Atkin, head of agri-business research at Bidwells, a UK consultancy.
In Angola’s diamond fields, campaigners have documented forced removals. Mr Lenigas acknowledged that the Angolan and Malian projects would require small-scale farmers to be relocated, though he said the company would seek to keep this to a minimum.