Friday, November 30, 2012

Whatever Happened to These Chinese Agricultural Investments?

I'm at the 2012 African Studies Association Annual Meetings in Philadelphia, where I'm going to present a work-in-progress on Chinese "land grabs" (or not) in Africa, on Saturday. Leaving aside the importance of the issue for African smallholders and subsistence farmers, it's a fascinating project for a researcher. It's also very hard to get good, up-to-date information. This summer I hope to do additional fieldwork on this issue. But summer is a long time away. I thought it might be helpful to see if any readers are already "in the field" or recently returned, and if the blog could post updates from the field. Feel free to email me with information. Here are a few of the projects and puzzles that are still unsolved.

(1) Malibya investment in Mali. This project hit the headlines in 2008 or so, when it was revealed that the government of Mali had offered 100,000 ha in the Office du Niger to a subsidiary of the Libyan sovereign wealth fund, Libyan African Investment Portfolio. Here's a link to the "Convention" signed between Mali and Libya. Subsequently, the project, Malibya, contracted with a Chinese construction company, China, China Geo-engineering Construction Company Group (CGCOC).  CGCOC mainly does construction, but it does some construction under a BOO or BOT model (CGCOC calls this "investment and operation"; others would say "Build, Own, Operate" or "Build, Operate, Transfer").

There is no hint I could see that CGCOC is an investor in the Malibya project. But another Chinese company, the agribusiness firm Yuan Longping High Tech (HLHT), was also involved in the project. Most reports said that YLHT was supplying expertise and seeds. Yet a Chinese language report, on another of China Geo-engineering's websites, said that YLHT had set up a joint venture with 30% ownership:


So far, I haven't found anything else. The project is clearly underway. But who are the investors, Libyans? Chinese and Libyans? If Chinese, which firm(s)? Does Mali have any equity, given their huge contribution of land? If you have information on this project, please share it.

[updates to come]


Anonymous said...


Deborah Brautigam said...

Thanks for the link Dan. But it doesn't answer the investment question. Yes, a Chinese company has the contract to implement this project; another is providing seeds. But are they providing capital? Are they owners? Maybe, but if not, this should be seen as a Libyan project.

Ward Warmerdam said...

Hi Deborah, the last sentence of the Chinese extract states that according to the company's articles of association (章程) the Libyans will provide all the funds and hold 70% of the shares, and the Chinese will provide the technology and coordination and hold 30% of the shares. It doesn't mention anything about Mali's equity. The longer article you linked also does not. So it seems that the Chinese are not providing the capital, but the Libyans are.
One of the benefits to Mali that the longer article describes is that the population with have better access to "fine varieties of food" and that this kind of project could expand to service Western Africa. I haven't read through the article in detail yet just a quick scan to see if I could answer your questions.

Deborah Brautigam said...

Hi Ward, Thanks for this. I also have my little team of research assistants working on this. We know that this project is underway. We know that the initial agreement was between the Mali government and the Libyan government. We know that a Libyan investment company set up a subsidiary to implement it. We know that one Chinese company got the contract to do the construction of the irrigation system, and another got a contract to supply seeds and expertise. We know that there was an agreement to set up a registered company, Malibya-China Hybrid Rice, Ltd. with a 70-30% share distribution, but that Libya would provide all the funding. It's this last element that puzzles me. Why would the Libyans agree to provide all the funding and take only 70% of the shares? Did this agreement get approved by the board of the Libyan investment company? Does the company of which they speak control the entire 100,000 ha development, or is is something else? It's only the Chinese article that speaks of a joint venture; other reports still describe it as a Libyan investment. It would be great if someone could actually check this out in Bamako with Malibya, or even better, in Tripoli with the Libyan sovereign wealth fund, or in China with Yuan Longping High Tech, or China Geoengineering.

Anonymous said...

All I know is they signed a MOU - that is, memorandum of understanding, not contract.

I do need to get in touch with my contacts in China to find out more.

Anonymous said...

Hey Deborah, i am not sure if I understand your puzzle rightly. Normally in the formation of a corporation, techs and expertise could be regarded as a kind of capital, and its percentage in the whole share needs to be discussed among holders. That's why so many young graduates could get a percentage in a company with their own products or innovation. Or you think the 30 and 70 percent share is too disproportionate? I am journalist on China-African relations, so would love to follow this. Cheers.

PS, any possibility to know your email address?


Deborah Brautigam said...

Hi Leo -- That's an interesting thought -- and there is an intellectual property angle and expertise here (for Yuan Longping Hightech). But I do wonder if that angle is worth 30% of the shares for a company that where the "hardware" costs of development, and annual costs of production, will be fairly high and where the product is undifferentiated (i.e. you can't charge a premium for hybrid rice to the consumer). Another question is whether this agreement was actually finalized as a contract (c.f. the point made by @Anonymous above).

Anonymous said...

The Libyan government sponsored project was to run for 50 years, 30 years of it tax-free. The project had the aim of developing 100 thousand hectares in the Niger river basin area of Mali for rice planting.

The deal was to begin in 2007.

Here's the clincher - the deal was supposed to be financed by the Libyan government, and back in 2007, Muammar Gaddafi was still ruling Libya.

Now that Muammar Gaddafi is dead, and Libya is in chaos, who is going to fund the project - assuming the project is still on-going?

Anonymous said...

Deborah, if you do some research on the hybrid rice you would notice that in Thailand, Indonesia and Malaysia which hybrid rice from China was trial planted, the yield was almost triple.

Anonymous said...

Hey Deborah, it's Leo again. brilliant to see your story on the founding issue of China Daily Africa Weekly--I am actually its africa correspondent based in Nairobi! Great to see that! Hope we could have more collaboration in the future!