Wall Street is at again. The nation’s financial sector is on a crusade to dominate an irreplaceable African resource that the world increasingly needs: massive tracts of open land available for large scale industrial farming. The pace of land purchases is flying so furiously that it is now commonly referred to as “a land grab.”
It’s the latest phase in Wall Street’s never-ending quest for profits at-any-cost, but this time the focus of finance’s predatory gaze is the world’s poorest region. The reason is simple: There’s an ocean of money to be made by doing so.
The potential riches stem from the fact that the world needs more food. For Wall Street, scarce resources translate into massive profits, and U.S. financial firms are at the head of the pack to make them.
Global population growth, the rise of middle class diets in fast-developing economies, especially China and India, and falling crop yields due to climate change mean that the planet is in a scramble to increase agricultural output. This year’s drought highlights the problem.
Most of the land available to meet this growing demand is in the world’s most distressed regions, especially in Africa and to lesser extent Latin America. Buying, leasing, and selling that land is expected to lead to double-digit returns for investors—the type of returns seen in high-growth, high-tech companies. And financiers all around the world are beating down the door to get their hands on it.
These acquisitions are another example of the way in which the financial system thrives off of inequality, both internationally and here at home.
This should come as no surprise. It’s not the first time that the financial sector has put short-term gains above all else.
Wall Street’s unapologetic avarice during the housing bubble led to the largest erasure of wealth amongst the descendants of Africa and Latin America living in the United States. Due to the housing crisis, the wealth gap between people of color and whites has grown to the widest level ever recorded. The devastating loss in property and prosperity amongst blacks and Latinos is a direct result of Wall Street’s assessment that these communities were ripe for predation.
Now they’re profiting from the mess they created by snapping up distressed properties for profit.
In Africa and around the world, Wall Street banks on inequality.
A Continent for Sale, Yet Again
Oxfam estimates that over the past decade up to 560 million acres of land, equivalent to the size of Western Union, has changed from local control in the developing world to the hands of global investors. The World Bank says that 112 million acres switched ownership in 2009 alone. Seventy percent of those deals were in sub-Saharan Africa. These deals are occurring in such volume that no part of the continent is immune.
The U.S. is the largest investor. Household names such as Goldman Sachs and JP Morgan all have their fingers in the pie, along with others such as Black Rock asset managers.
The size of individual transactions is huge.
According to a detailed report by non-profit GRAIN, close to a million acres was leased by a New York-based private equity firm from the world’s poorest and newest country, South Sudan. The same report says that a fund controlled by George Soros owns 600,000 acres of land in Brazil, Argentina and Uruguay.
The land grab is not accidental. Conferences, organized by firms like High Quest Partners, are held in New York, Singapore, and London to facilitate deal and capital flow to Africa…
