In the Global South, the demand for fertile land has resulted in international investors making large-scale land acquisitions (LSLAs). Africa is by far the most targeted continent in this respect. According to the Land Matrix, 37% of the global number of deals and 34% of the globally acquired land for agricultural purposes is located in Africa. The study reviewed scientific literature on the microeconomic and social effects of large-scale land acquisitions in Sub-Saharan Africa.

Microeconomic indicators

Operation of land deals: roughly half of the deals concluded are operational (54% of 399 deals), but only 11% of the area under contract in these deals are being farmed (Land Matrix dataset from July 2019). Land and water speculation explains part of this phenomenon. Further reasons for low realisation by investors include a lack of prior reliable information on the production potential of the acquired land, border conflicts with neighbouring LSLA farms or smallholders, difficulties with the import of production inputs, investors’ capital restrictions, and insecurity about the long-term validity of the land deal.

Food production: a large proportion of crops produced on LSLA farms is for non-food purposes. Thus, the shift from smallholder farms to LSLAs often results in an effective loss of food production relative to the food-non-food production ratios of smallholder farms. Claims that LSLAs are a means to improve food security in the host countries should therefore be taken with caution.

Yields: despite the common argument that LSLA farms could help to close the yield gap, the evidence available does not support the assumption that LSLA farms are generally able to obtain higher yields per area than smallholder farms even though they usually apply higher amounts of external inputs. Some studies even showed that under the same agro-ecological conditions, larger farms generally achieve lower productivity per hectare than smaller farms.

Productivity: smallholders commonly achieve high yields per hectare due to highly labour-intensive production and crop diversification. In contrast, large farms achieve higher capital and labour efficiency at the cost of lower yields per hectare. Smallholder farms achieve high technical efficiency (when all input factors are taken into account).

Labour intensity: most LSLA farms can be expected to have between 0.1 and 1 employee per hectare depending on the crop. In contrast, smallholder farms are consistently reported to work with labour intensities of more than 1 worker/ha (up to 3.77 workers/ha). Moreover, under smallholder conditions, the risk of facing unemployment is rather low.

Social Indicators

Access to land: the loss of access to land and natural resources is found to be the most important negative effect of LSLAs on local people. Legal provisions to protect the customary land rights of small- scale farmers or pastoralists tend to be ineffective due to widespread deficiencies in implementation and enforcement of the respective laws. Free, prior, informed consent is lacking. Customary land is often permanently converted, leading to definitive land loss for small-scale farmers, pastoralists, and local communities including common land.

Loss of commons: LSLAs target commons or so-called public land to a significant degree. Poor and marginalised groups (such as pastoralists, indigenous people, women, and immigrants) are often disproportionately affected by the loss of commons, because of their greater dependence on communal assets. Land loss has a severe negative impact on livelihoods leading to a loss of agricultural production and thus reduced food security and reduction of productive assets such as livestock undermining the rural households’ resilience to crises. While social differentiation is common among rural households, a case study in Ethiopia found that the incidence of food insecurity among household affected by LSLAs was higher compared to non-affected households (32% versus 12% of households). Conflicts seem to be more likely and more pronounced with regard to the appropriation of commons. Conflicts seem to increase if LSLAs reinforce existing inequalities within local communities and also between and within socio-ethnic groups.

Discharge of labour: in a study modelling LSLA impacts in five African countries, a net employment effect of between -22 and -74% from the acquired and was calculated. According to this study, the discharge of labour is, therefore, high in the immediate vicinity of the LSLA, but comparably small in relation to total national employment in agriculture.

Employment creation: although employment creation clearly benefits some, its scope, its merely seasonal character (2–5 months of employment per year), and its low remuneration are mostly insufficient to compensate for the loss of livelihoods from small-scale farming. As most employment is created in the labour-intensive establishment phase of the farm, long-term benefits are projected to be rather low. Depending on the specific set-up, employment creation by LSLA farms enlarges social divides in rural societies and might also create social dynamics between locals and migrants. Outgrower schemes and contract farming related to LSLA farms tend to be positively assessed for creating access to cash-crop markets, loans and “modern” farm technology. The only comparative study, however, between outgrowers and independent small-scale tobacco farmers did not find any difference in net-incomes between the two. However, compared to independent farming, outgrower schemes and contract farming create dependencies on partner farms and organisations that may lead to higher risks in terms of property rights and cash flows.

Infrastructure creation clearly benefits locals. However, the extent to which communities benefit can vary considerably depending on location and the type of infrastructure created. There are reports that investors understand the creation of infrastructure and social services as a replacement for lost livelihoods. This leads to negative follow-up effects as the local population does not receive any effective compensation for lost livelihoods. Furthermore, in some cases, infrastructure creation is promised but not undertaken.

Spillovers of agricultural knowledge and technology are observed, but to a lesser extent than expected. They are more likely if labour-intensive methods are used and less likely in case of mechanised crop cultivation. The co-existence of LSLAs and small-scale farms cultivating the same crop may result in synergies or competition on product markets.