Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
2
Countries have been attracting FDI flows throughout the 2000s, from a low of less than 2% of
global FDI inflows in 2000, to about 10% of global flows in 2012.3
It is also observed that FDI flows into COMCEC Member Countries are still concentrated in a few
of them. For example, in 2011, only five countries (Indonesia, Saudi Arabia, Turkey, Kazakhstan,
and Malaysia) accounted for 52% of the total FDI flows to all COMCEC Member Countries. And,
together with Nigeria, United Arab Emirates, Iran, Lebanon and Turkmenistan, these 10
countries accounted for 71% of total FDI flows to all COMCEC Member Countries4 .
The current market conditions present sufficient investment opportunities to the COMCEC
Member Countries with potential in the agricultural sector. Such investments would not only
address the issue of food security, but could prove to be a growth stimulus. Vice versa, other
COMCEC Member Countries notably Gulf Cooperation Council (GCC) States are seeking to secure
food supplies by undertaking investments in the agricultural sector. These anticipated
investments were widely publicized in the international media, and raised investment
expectations among Least Developed Member Countries (LDMC) who are seeking FDI. This
study further examines the FDI flows and more particular the agricultural FDI projects in
COMCEC Member Countries with underlying facts and figures and assessments of the regional
potential with anecdotal evidence based on case study materials.
It is important that any international investment brings development benefits to the receiving
country in terms of technology transfer, employment creation, upstream and downstream
linkages. These beneficial flows are not for granted. Care must be taken in the formulation of
investment contracts and selection of business model. In other words, for a country to attract
inclusive and sustainable FDI in agriculture it must invest significant resources in optimizing its
business climate translated in a stable administrative, institutional and legal framework.
The first chapter of this study assesses and elaborates on the current state of the agricultural
sector in the COMCEC Region by focusing mainly on agricultural production, productivity and
food security indicators.
The second chapter portrays the importance of FDI in relation to agricultural sector, shows
inward FDI statistics and elaborates on its impact on the sector. Besides the positive aspects of
FDI, possible negative aspects of (agricultural) FDI are considered.
The third chapter examines the agricultural FDI trends in the COMCEC Region and explores for
the potential of COMCEC Member Countries to attract higher levels of agricultural FDI. In
addition, a location evaluation assessment based on important location criteria is presented,
which explains the location decision making process of agricultural investors.
The fourth chapter illustrates different case studies to describe the extent, nature and impacts of
agricultural FDI and examines the effectiveness of policy and legal frameworks in a number of
COMCEC Member Countries. Obviously, generalizations are difficult both on the impacts of
foreign investments and on the best regulatory approaches in a region as diverse as the COMCEC
3 UNCTAD, 2013. Strengthening the links between intra-oic fdi and regional integration. Special Edition No. 14
4 UNCTAD, 2009. World Investment Report; UNCTAD, 2013. World Investment Report; SESTRIC, 2013., BASEIND.