Why is African agribusiness luring GCC investors?
The UAE – like other Arabian Gulf countries – wants to ramp up overseas food production to tackle resource scarcity at home. Africa, with 60 per cent of the world’s arable land, represents a huge opportunity.
What is agribusiness?
Agribusiness means farming for commercial purposes, or, the business of agricultural production. Activities include crop production, processing and distribution, sale and distribution of farm machinery, livestock breeding, agrichemicals and related marketing, retail and sales operations.
Why is Africa such a huge opportunity?
The continent has the largest amount of uncultivated land in the world. An estimated 201 million hectares of land is potentially available across sub-Saharan Africa, representing 60 per cent of the world’s total, according to Fischer and Shah figures cited by the World Bank. This abundance of uncultivated land is far higher than the estimated 120 million hectares available in Latin America, in second position. Africa therefore remains the last frontier for crop production.
Is the GCC interested?
Yes. Investors from the Middle East have been tempted by African agribusiness for years, and a report yesterday by real estate consultancy Knight Frank suggests demand is growing. GCC agricultural investors are increasingly driven by more than the prospect of reaping returns. “Food security is the primary concern of Gulf states,” the report said. “Given the lack of farmland, this is not a surprise.”
The region’s desert climate, limited arable land and water scarcity have resulted in high dependency on food imports – in the UAE, African imports totalled $21bn in 2017, up 170 per cent since 2010.
Meanwhile, the UAE was the second-largest investor country in Africa across all sectors in 2016, with a capital investment of $11bn, says fDI Intelligence.
How can agribusiness increase food security?
Rising dependency on imports exposes economies to global food price fluctuations. This is a concern when GCC food consumption is set to expand at an annual rate of 4.2 per cent between 2016 and 2021.
By partnering with farmers, acquiring land or otherwise investing in African farmlands, GCC investors can ensure a sustainable food supply, while boosting African economies.