Nothing like a major investment in Central African agriculture to illustrate the mood of the market. PensionDenmark has invested 43-million Euros in a fund (Silverland Fund) that will invest in Africa's agricultural sector and the figure is expected to grow.
The logic behind the investment is that this region has high yields, two harvest seasons a year and significantly lower land prices than some other markets. While many activists are objecting vociferously to international investment in African agriculture (see the land grabs hysteria), this could well be a very good thing for Africa. Over the decades there has been a shift away from seeing agriculture as a driver of development to the idea that manufacturing is the only way to grow. This is based largely on the development of East Asian Economies - a development path that will not work in Africa. Agriculture, on the other hand, has all the hallmarks of a real comparative advantage area for Africa.
Foreign investment in the sector can help to build up African agriculture and set us on a growth path that could be really, really good for the continent. The move by PensionDenmark is particularly encouraging because it is an investment not out of some sense of moral obligation to help the poor, African children but based on the business imperative of return on investment. Agriculture, as a sector, has sufficient potential to guarantee return on investment for foreign funds. Here's hoping the development industry continues to recognise it's potential as a livelihood security sector, too.