Plowing Money Into Southern Sudan via A Warlord’s Family

Via The Financial Times, several interesting articles about investment in southern Sudan.  The first deals with a US businessman backed by former CIA and state department officials says he has secured a vast tract of fertile land in south Sudan from the family of a notorious warlord, in post-colonial Africa’s biggest private land deal.  The second details the overall interest in southern Sudan as a potentially rich agricultural area – albeit one known more for AK-47s than anything else at present.  As the first notes:

“…Philippe Heilberg, a former Wall Street banker and chairman of New York-based Jarch Capital, told the Financial Times he had gained leasehold rights to 400,000 hectares of land – an area the size of Dubai – by taking a majority stake in a company controlled by the son of Paulino Matip.

Mr Matip fought on both sides in Sudan’s lengthy civil war but became deputy commander of the army in the autonomous southern region after a 2005 peace agreement.

The deal, between Mr Heilberg’s affiliate company in the Virgin Islands and Gabriel Matip, is a striking example of how the recent spike in global commodity food prices has encouraged foreign investors and governments to scramble for control of arable land in Africa, even in its remotest parts.

In contrast to land deals between foreign investors and governments, Mr Heilberg is gambling on a warlord’s continuing control of a region where his militia operated in the civil war between Khartoum and south Sudan.

“You have to go to the guns, this is Africa,” Mr Heilberg said by phone from New York. He refused to disclose how much he had paid for the lease.

Jarch Management Group is linked to Jarch Capital, a US investment company that counts on its board former US state department and intelligence officials, including Joseph Wilson, a former ambassador and expert on Africa, who acts as vice-chairman; and Gwyneth Todd, who was an adviser on Middle Eastern and North African affairs at the Pentagon and under former president Bill Clinton at the White House.

Laws on land ownership in south Sudan remain vague, and have yet to be clarified in a planned land act. For this reason, some foreign experts on Sudan as well as officials in the regional government, speaking on condition of anonymity, doubted Mr Heilberg could assert legal rights over such a vast tract of land. The deal is second only in size to the recent lease of 1.3m hectares by South Korea’s Daewoo from the government of Madagascar.

Mr Heilberg is unconcerned. He believes that several African states, Sudan included, but possibly also Nigeria, Ethiopia and Somalia, are likely to break apart in the next few years, and that the political and legal risks he is taking will be amply rewarded.

“If you bet right on the shifting of sovereignty then you are on the ground floor. I am constantly looking at the map and looking if there is any value,” he said, adding that he was also in contact with rebels in Sudan’s western region of Darfur, dissidents in Ethiopia and the government of the breakaway state of Somaliland, among others.

The company was embroiled in a dispute with the south Sudan government over its claims to exploration rights for oil.

Mr Heilberg said Jarch had no expertise in agricultural development but would be seeking joint venture partners to cultivate the land, which is in one of the remotest parts of Sudan, in a region bordering the Nile river but with no tarred roads.”

Sudan farmland map pic and data

“….There are few regions in Africa as remote and undeveloped as southern Sudan. Unity state, where Philippe Heilberg, a US businessman, says he has secured a huge tract of arable land, is inaccessible even by south Sudan’s standards.

Apart from AK-47 assault rifles, it was deprived of most of the trappings of the modern world. Even a road network that has been under construction since 2005, when a peace agreement ended the long civil war between the predominately Muslim north and the Christian and animist south of the country, has yet to reach it.

But Unity state does border the White Nile and its flat, arable land could, with billions of dollars of investment in irrigation and roads, be transformed into a world-class bread basket.

As commodity prices spiked last year and food riots erupted across the developing world, Gulf countries poured hundreds of millions of dollars into securing land in the fertile Nile valley farther north to grow food crops for exporting home. Saudi Arabian investors, for example, acquired 25,000 hectares of land north of Khartoum for $95m (€70m, £63m) last year.

Mr Heilberg is convinced that demand for land is now gravitating south. Other experts say investors are scouting out opportunities in the south, albeit on a far less ambitious scale. That is despite imprecise land laws and the risk of a new civil war should the oil-rich south vote for independence in a planned referendum in 2011.

Mr Heilberg has experience in commodities markets on Wall Street and in Asia. To help him as he looks for opportunities in Africa, he has pulled together a board at Jarch Capital, his US-based investment vehicle, which includes Middle East, Africa and security experts with years of experience at the Pentagon, CIA, White House and state department.

He is of a resurgent class of western businessman drawn to the potential of Africa’s remaining frontiers, who have been energised by Asia’s, and in particular China’s, appetite for the continent’s natural resources.

Sudan experts familiar with his business strategy liken him to buccaneering capitalists such as Sweden’s late Adolph Lundin, who acquired mining and oil concessions in Congo and Sudan when civil wars were still raging and turned huge profits when they sold them on.

In both countries, however, legal wrangling has often prevented mineral concessions from becoming productive. Mr Heilberg has experience of this problem after being embroiled in a dispute with the south Sudan government over oil exploration rights also claimed by other companies.

Some experts on Sudan believe his 400,000 hectares will face a similar fate and that his ultimate strategy is to trade whatever claim he can sustain over the land to investors with a greater capacity to develop it. He says the land has great potential for biofuels and food crops and is looking for joint venture partners with the expertise to help him develop it.

He insists the law is less important to his deal than the clout he has bought into by associating the venture with a former warlord, Paulino Matip, whose family says it owns some of the land in Mayom county, in Unity state.

“I never understood why the oil industry could spend $1bn drilling dry holes but they do not want to take a single dollar in legal risks,” Mr Heilberg told the Financial Times by phone from New York.

Mr Matip fought with the Sudan People’s Liberation Movement against the northern army before gaining notoriety during one of the bloodiest episodes in Sudan’s civil war, when he switched sides to form his own militia, with backing from parts of his Nuer tribe and the Khartoum regime.

“I am sure Paulino has killed many, but I am sure he did it in protection of his people,” Mr Heilberg says in his defence.

Following the 2005 peace agreement, his forces were appeased when he was brought in as deputy commander in the army of the autonomous south.

Mr Matip’s son Gabriel, who controls the company in which Jarch has bought a majority stake, told the Financial Times that he had negotiated with tribal leaders to secure access to more land.

He said the company also had written agreement for the agricultural development of the land, and other land it may secure in the south of the country, from the ministry of agriculture and forestry in south Sudan.”

This entry was posted on Sunday, January 11th, 2009 at 5:58 am and is filed under Sudan.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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