Economic and Institutional Determinants of Foreign Land Acquisition in Africa: An Empirical Analysis

Abstract

Over the past decade, Africa has experienced unprecedented demand for large scale agricultural land. Africa accounts for more than half of the volume of land acquired and close to two-thirds of the total deals globally. Yet, there is dearth of empirical evidence on demand for arable land in Africa. This paper provides some econometric analysis of the key determinants of large scale land acquisition in Africa. Evidences from bivariate and multi-variate analyses show that both economic and institutional factors play some critical role in explaining demand for large scale arable land in Africa. Key determinants include high yield gap, low per capita income, abundant inland water resources, low property rights and prevalence of corruption. To make the recent surge in land demand beneficial in terms of agricultural transformation, improved livelihoods for the rural people and reduce poverty, it is important to ensure both economic and institutional factors create positive incentives to the local economy, rural farmers and the poor. This includes making fertilizer available, increasing local farmers' access to agricultural infrastructures (e.g. irrigation, tractors and storage facilities), investing in land registration and certification, and improving land governance and procedures.