TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

SENEGAL
Trends and impacts of foreign investment in
developing country agriculture
with the aim of illustrating selected FDI related
economic, social and environmental effects.
Foreign direct investment inflows to Senegal
have helped ease various structural imbalances,
including the state of food insecurity in the
country, while, however, raising new areas of
concern: the risks of seeing more and more small
land users dispossessed of the land vital to their
livelihoods, and the gradual exposing to more
climate change effects. Though encouraging,
the FDI results obtained so far are well below
expectations in many other areas, viz. persistent
agricultural yield gaps due to insufficient
technology transfer, and the overall technical
inefficiencies affecting the food sector.
The review suggests joint-venturing as the
preferred mode of entry on the part of foreign
investors to penetrate the agribusiness sector
(57 percent of the registered FDI projects with
APIX). Findings suggest the tomato sector as
one of most profitable agribusiness activities,
were good public policy, coupled with good
corporate governance, would make a big
difference in reducing poverty and food insecurity.
Furthermore, the review of the SOCAS business
model also suggests that there is still room for
288
foreign investors to invest responsibly in profitable
wealth-creating opportunities in Senegal while
keeping in check their expected economic, social
and ethical commitments. There exists a winwin
solution to maximize companies’ economic
bottom lines while at the same time reducing the
risks for all involved, including the smallholders.
The findings also suggest the need to go beyond
established or traditional agribusiness models
(outgrowers and contract farming schemes),
experienced so far, to include more inventive
arrangements such as farmer ownership models
whereby smallholders would be given a chance
to use the lands they farm in equity swapping
arrangements. This would help them to keep a
greater share of the value additions created along
the various food supply chains in which they are
involved.
Finally, the benefits derived from FDI can be
maximized in countries like Senegal and the
risks attached can be minimized, but this would
require taking appropriate institutional and policy
measures in a timely and transparent fashion to
match local working conditions with opportunities
arising in the global energy, food, financial and
carbon markets.