Edition 122 - June 2011

Africa affected by university investment choices

A recent report from the US-based Oakland Institute claims that a number of US higher education institutions – including Harvard, Vanderbilt and Spelman – have invested significant endowment monies in a company that manages a fund focused on industrial agriculture investments in Africa. The report charges that the company in question, Emergent Asset Management (Emergent), is using questionable tactics to take “control of large tracts of land in Africa” which is contributing “to a system where the production, distribution, and the price of food is increasingly dictated by speculative private equity firms from the North”.

According to the Oakland Institute’s research, which has been covered in the press by various news outlets such as the Guardian and University World News, the land deals aim to yield up to 25% return on investment, and are in no way designed to support local development. Indeed, the Oakland Institute asserts that some of the effects of Emergent’s investment activities include the displacement of large numbers of local people living on the lands that the fund controls through long-term lease and development agreements. Critics also assert that the scaling up of industrial agriculture in Africa is detrimental to the environment.

The scale of these developments may be considerable. The Oakland Institute estimates that Emergent has invested close to USD 540 million (around EUR 377 million) in African land acquisitions, while a recent Guardian article references World Bank research indicating that “nearly 60 million hectares – an area the size of France – has been bought or leased by foreign companies in Africa in the past three years”.

Harvard University has declined to comment publicly on its investment activities, while the press reports that Emergent has strenuously denied accusations of inappropriate behaviour. As higher education institutions the world over look to new sources of funding in the face of falling public budgets, the Emergent situation brings to mind some of the key challenges that come with managing complex financial portfolios in ways that make good financial – and public relations – sense.

Oakland Institute

The Guardian

University World News

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