Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
38
3. General Investment Climate Assessment and Potential
for Attracting FDI in Agriculture in the COMCEC
Member Countries
In the previous chapter an assessment of the direct and indirect benefits, costs and risks of
agricultural FDI has been presented. This chapter presents agricultural investment trends and
links FDI to investment strategies to unlock the full potential of the agricultural sector in the
COMCEC Region. These empirical observations are supported by several case studies from
different COMCEC and non-COMCEC Member Countries. It illustrates some of the opportunities
and challenges faced, not only by countries seeking to attract FDI in the agricultural sector but
also by those seeking opportunities for outward FDI. These cases also help illuminate some of
the potential positive and negative impacts of FDI in the agricultural sector in the COMCEC
Countries, as well as factors that investors take into account when making a location selection
decision. These factors are then translated in an overview of challenges and weaknesses of the
business environment of the COMCEC Member Countries.
3.1 Agricultural FDI Trends
To better understand the current agricultural FDI trends in the COMCEC Region, there are
several factors which are triggering the growth in interest. Some of them are ‘push factors’ while
others are ‘pull factors’.
The ‘push factors’ include:
 Increasing demand for food and feed in major importing countries;
 Continuous need to seek opportunities to secure adequate food supplies overseas;
 Growing demand for bio fuel feed stock; and,
 Continuing concerns about potential vulnerability to substantial volatility in global food
markets.
The ‘pull factors’ include:
 Agro-ecological suitability of the FDI recipient countries;
 Relocating food production in regions where land is relatively cheaper and the
 Scope for agricultural productivity growth is comparatively higher;
 Projections of secure returns from land-based investments; and
 Increasing expansion in large scale agro-processing and agro-industrial operations with
forward and backward linkages 66
66 Arezki et al 2011, Deininger et al 2011, UNCTAD 2009