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International investments in Agriculture in Arab Countries: an overview and implications for policy

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Abstract

International investments in agriculture in the Arab region have increased considerably in recent years. This paper reviews foreign direct investment (FDI) in agriculture in the Arab region with an emphasis on Sudan, Egypt, and Morocco. The paper aims to (i) review past and current investment trends in the context of the unique characteristics of the region, including its food security challenges and resource constraints, and (ii) highlight some important policy issues to be addressed. Agriculture has traditionally received a very small share of international investments in the region (1–2% of total FDI), which largely focused on sectors other than primary agriculture. In the past few years, investments in agriculture have grown remarkably; particularly for resource-seeking investments, but information is incomplete as the changes are very rapid. Sudan is the primary destination for resource-seeking investments; Morocco and Egypt for market-seeking investments, mostly in food processing and fruit and vegetable production. Given the paucity of data, it is difficult to develop concrete policy recommendations. However, the analysis presented in this paper may be useful in guiding the development of FDI policies in the region, aimed at maximizing sustainable outcomes for both investors and host countries, with an emphasis on food security.

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Notes

  1. Arab countries for the purpose of this paper comprise: Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Syria, Saudi Arabia, Sudan, Tunisia, United Arab Emirates, Yemen.

  2. In this paper, the terms ‘international investment’ and ‘foreign direct investment (FDI)’ are used interchangeably.

  3. Three exploratory studies in Egypt, Morocco and Sudan were conducted by the FAO in 2009 to understand the structure of FDI, including past and present investments in agriculture, and to explore the policy environment related to international investments. These countries were chosen as they represent a diverse spectrum of investments and different country characteristics. Information on Saudi Arabia is also added to represent the Gulf region; and because Saudi Arabia is the largest investor in the other three countries.

  4. These countries include, inter alia, Kazakhstan, Ukraine and Indonesia. For a review of recent land deals see Cotula et al. 2009.

  5. World Bank definitions for high, upper and lower middle income and low-income are adopted for the following average per capita GNI for 2007 $US PPP: low income ($2,152), lower middle income ($5,343), upper middle income ($14,045) and high income ($27,934)

  6. These averages do not include countries in protracted conflict (Iraq, Palestine and Somalia) for which data are unavailable.

  7. Agricultural trade deficit figures include oil exporting countries. If these countries were left out, estimates would be much higher.

  8. Land improvements include: land clearing, flood protection, drainage, land grading, physical, chemical and organic aids and amendments, reclamation leaching (FAO 1985).

  9. Calculated as agricultural GDP divided by number of agricultural workers.

  10. Algeria, for instance, is Tunisia’s most important partner within the region for both exports and imports. Oman imports the bulk of its regional agricultural products from its neighbors Saudi Arabia and the UAE.

  11. BOT, build-operate-transfer: private investors are allowed to build infrastructure, operate it profitably for a specified period, and them transfer it to the public sector.

  12. Kenana Sugar Company was established in Sudan through joint public-private funding by Arab countries in the 70s. This initiative has greatly increased the productive capacity in the country and expanded sugar production, making Sudan self-sufficient in sugar and even an exporter of sugar. However, other social and economic impacts in the region have been mixed.

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Authors and Affiliations

  1. Regional Office for the Near East, Food and Agriculture Organization, 11 El Eslah Zerai Street, Dokki, Cairo

    Ayşen Tanyeri-Abur

  2. Food and Agriculture Organization of the United Nations, Regional Office for the Near East, 11 El Eslah El Zerai Street, Dokki, Cairo

    Nasredin Hag Elamin

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  1. Ayşen Tanyeri-Abur
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  2. Nasredin Hag Elamin
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Correspondence to Ayşen Tanyeri-Abur.

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The views expressed in this document are those of the authors only and do not reflect the views of their respective organizations.

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Tanyeri-Abur, A., Hag Elamin, N. International investments in Agriculture in Arab Countries: an overview and implications for policy. Food Sec. 3 (Suppl 1), 115–127 (2011). https://doi.org/10.1007/s12571-010-0097-9

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