A report released earlier this week by the Oakland Institute investigates the role that hedge funds are playing in land grabs in Africa. Hedge funds are investing in large scale industrial agricultural projects in Africa.
The result, according to the Oakland Institute is, “food insecurity, the displacement of small farmers, conflict, environmental devastation, water loss, and the further impoverishment and political instability of African nations”.
The Oakland Institute’s researchers looked at land deals in Ethiopia, Mali, Sierra Leone, Mozambique, Tanzania and South Sudan. The areas involved are vast. In 2009 alone, an area of 60 million hectares was bought or leased – that’s an area the size of France or the Central African Republic.
The reports by the Oakland Institute are available here: “Special Investigation: Understanding Land Investment Deals in Africa”. The reports have been reported by the Guardian and BBC News. A sentence in the Guardian article about one of the land deals caught REDD-Monitor’s eye:
The company, headed by former US Ambassador Howard Eugene Douglas, says it intends to apply for UN-backed carbon credits that could provide it with millions of pounds a year in revenues.
The company is Nile Trading and Development Inc (NTD), based in Dallas, Texas. The land deal is the largest in South Sudan. NTD has leased an area of 600,000 hectares for 49 years for the bargain price of US$25,000. It has an option for a further 400,000 hectares. The contract, which is available on the Oakland Institute’s website, allows the company the right to do just about anything with the land and forest covered by the deal, including:
(i) The development, production and/or exploitation of timber/forestry resources, including without limitation, the harvesting of current tree growth, the planting and harvesting of megafolia-paulownia, palm oil trees and other hardwood trees and the development of wood-based industries; and
(ii) Agriculture, including the cultivation of the jetropha [sic] plant and palm oil trees (and the exploitation of any resulting carbon credits).
When the trees are logged, the contract allows the land to be “subject to a reforestation or agricultural cultivation programme”. A briefing paper by the Oakland Institute explains that NTD also has the right “to explore, develop, mine, produce and/or exploit petroleum, natural gas, and other hydrocarbon resources for both local and export markets, as well as other minerals, and may also engage in power generation activities on the leased land.”
The land was leased by the Mukaya Payam Cooperative, which is described by Sudan’s Agency for Independent Media as a “fictitious cooperative”, made up of “a group of influential natives”, who “leased out the land behind the backs of the entire community”.
A UK citizen, Leonard Henry Thatcher, was “principally responsible” for negotiating the deal. Thatcher is a co-founder and director of Kinyeti Development, which describes itself as “a global business development partnership and holding company founded by professionals with decades of experience in international business, finance and diplomacy.” Kinyeti Development’s website explains that,
Mr. Thatcher was principally responsible for negotiating the major land lease contract in Southern Sudan that forms the basis of several Kinyeti projects conducted in conjunction with its strategic partner, Nile Trading & Development, Inc.
Thatcher is an investment banker who has worked in London and Hong Kong. Howard Eugene Douglas is the other co-founder of Kinyeti Development and is Managing Director of the firm. In the early 1980s, Douglas was U.S. Ambassador at Large and Coordinator for Refugee Affairs.
The Oakland Institute’s briefing paper states that Kinyeti Development and a company called the American Exotic Timber Group started their project to harvest timber from South Sudan in 2009. American Exotic Timber Group advertises the timber as follows:
We are focused on providing our customers in United States, China, Mid Eastern Region and around the world the best timber available from Northeastern African Tropic Jungle. The area is rich in old-growth timber that never been commercially harvested.
We have strong management and legally commercial harvested in sustainably managed forest and this is the high quality of product that we can offer our customers in a variety of value-added forms. Specialized African Species Iroko; African Walnut; Mahogany; Teak; Isoberlina DoKa.
The Oakland Institute notes that the vast area of this project “suggests that speculation is involved”.
While the Nile Trading and Development Inc project in South Sudan is not a REDD project (at least not yet), it is relevant to REDD in two ways. First, there is nothing on the agenda for REDD at the UN meetings currently underway in Bonn that is likely to do anything to stop hedge funds and speculators from investing in large areas of land and forest, such as this project in South Sudan. If anything, by offering the potential reward of carbon credits, UNFCCC is likely to encourage them.
Second, the Executive Secretary of the UNFCCC, Christiana Figueres, is rabidly in favour of carbon markets as the way of addressing climate change. In a speech to the Carbon Expo in Barcelona at the beginning of this month, she urged the gathered carbon traders “to keep the faith”, despite the “current lull in the carbon markets”. Of course she did not mention the fact that carbon markets are failing to address climate change.
Handing over control of the climate to financial firms through a carbon market is a recipe for disaster. As Anuradha Mittal, executive director of the Oakland Institute, said in a statement, “The same financial firms that drove us into a global recession by inflating the real estate bubble through risky financial maneuvers are now doing the same with the world’s food supply.” Now try replacing the words “food supply” with the word “climate”.