The World Bank - a major player in land grabbing

While many African farmers do not have enough land to feed their family, millions of hectares of good African agricultural land have been transferred from farmers to corporations in the last few years. Each day new investors join the rush for land grabbing. Arable land that supposedly available for cultivation should first and foremost be allocated to local farmers. In most African countries the rush for land has been well prepared by the World Bank Group (WB-G), through its investment promotion agencies that focus on helping investors. They have played an essential role in facilitating land grabbing in developing countries.

 

Many governments, donors and investors claim that there is abundant “empty” land available in Africa. Governments justify their promotion of land because the land for sale or lease is “idle” or “under-utilised” claiming that access to land for locals will not be jeopardized. They even present Foreign Direct Investment (FDI) as benefiting the country and the production on what was previously “unproductive” land. Yet land, particularly productive land, but even arid land, is rarely empty or unused in Africa. It fulfils a purpose and helps to feed its inhabitants. Local people use it for pasture, hunting, fishing, picking firewood, harvesting its fruits, vegetables, medicines, mushrooms and honey, and it may even provide access to scarce water sources; it also provides fallow space for soil regeneration, as well as for “sacred ceremonies”. Pastoralists depend on large amounts of land as they move their herds according to the availability of pastures and of water.

Land in Africa has always had “traditional owners and users”. Each community looks after its own territory and the rivers and farmlands within it. The problem is who has the title deeds, as traditional users do not hold property documents. In most cases the land belongs to the government which believes it has the right to lease or sell it to investors. Land laws often are lacking, do not reflect ground realities or are not implemented.

 

Since the end of the nineties, agencies of the World Bank Group, mainly the International Finance Corporation (IFC), the private sector branch of the WB-G, and the Foreign Investment Advisory Service (FIAS) have been preparing the ground through technical assistance and advisory services to governments of developing countries with the aim of facilitating the access of investors to these countries. FIAS advised in the drafting of bills that would allow investors greater investment mobility. With these benefits provided to foreign investors, it is no surprise that interest in African land markets has increased in recent years. They have promoted policies to facilitate the ability of foreign investors to acquire land for agriculture in developing countries.

The result of this strategy has been increased investor access into land markets thus undermining the well-being of local communities, both in terms of land rights as well as access to food. This is a “perverse” trend as it threatens global food security and livelihoods of small-scale and family farmers.

These agencies have worked as advisors to African governments imposing their strategies to “facilitate investment”. African governments have accepted these conditionalities as part of receiving aid from the WB and different donors.

 

The way WB-G Agencies have worked

 

IFC ’s Advisory Services have been involved for years with different African countries. FIAS ’s work in the country starts by a review of the country’s investment climate, identifying administrative barriers to investment and formulating a plan of action to remove these barriers. In some countries, FIAS implements the Removing Administrative Barriers to Investment (RABI) project to approve legislative changes that reduce the time, number of steps and costs required to set up a business. In Sierra Leone the new legislation cut the cost of registering a business by nearly 97 percent, from $1,500 to $50 and investors were granted work and residence permits. In most countries new legislation is passed to facilitate export-oriented Foreign Direct Investment (FDI), together with the creation or strengthening of the National Investment Agency to which FIAS provides training to strengthen its capacity for “investment promotion” in order to address growing worldwide demand.

 

While IFC’s primary work is private sector financing, in recent years its work in administering Technical Assistance and Advisory Services (TAAS) has taken on an increasingly important role. TAAS comprises specific projects and initiatives designed to improve client governments’ investment climates. This involves creating the conditions necessary to attract foreign investment and facilitating the investment process for investors. Such activities include investment legislation reforms, the reduction of administrative and institutional barriers to investment, the development of investment promotion agencies (IPAs) in these countries and provision of policy assistance to governments regarding tax, customs, and land laws. Technical assistance and advisory activities may be linked to a specific investment project, or, increasingly, to broader goals such as improving the “legislative environment” for a specific industry.

Investment and Export Promotion Agencies are created as “one-stop shops” to assist investors starting a business. Investor protection with flexible tax rates and new investment incentives are also put in place. The Tanzania Investment Centre (TIC) was mandated with identifying available land and offering it to investors, as well as helping investors obtain all necessary permits. In many cases a “Land Bank” has been created to identify million of hectares of “idle” land suitable for investment projects.

 

Throughout Africa, the WB established National Access Leasing Companies to encourage investors to take advantage of opportunities to acquire “idle”, “available” land. The first of such national companies in Africa was the Ethiopia Access Leasing Company, but since then many others have been established. These agencies provide potential investors with information about the “availability” of land in African countries, outlining the strengths and weaknesses of their investment climates and the relative ease of accessing land to establish export production in the country. At the same time IFC works to develop the country’s leasing sector through joint investment and advisory services projects. The creation of the Country’s Leasing Company and helping the national government to draft a new legal framework for leasing in the country is the culmination of IFC ’s work.

IFC ’s current strategy in Ethiopia focuses, for example, on proactively developing new investment projects, supporting public-private partnerships that promote economic growth and mobilizing direct investments to key sectors of the economy. The result is a huge leasing of arable land in the different African countries to investors that will use the land to produce crops for their own country’s food security or to grow agrofuels.

 

Examples of WB-G activities

 

FIAS advised Madagascar in 2007 on establishing a new Investment Promotion Agency (IPA) and the country’s new Economic Development Board. In 2009 Daewoo Logistics of South Korea planned to farm maize and palm oil on 1.3m hectares (an area half the size of Belgium) of farmland in Madagascar, around half the country's current arable land. Daewoo intended to obtain the 99 years lease for free and to start maize production on 2,000 hectares from 2010 and gradually expand it to other parts of the leased land. Daewoo has always emphasised that the aim of the investment was to boost Korea's food security and intended to provide about half South Korea's maize imports. Yet Madagascar is an impoverished nation where the World Food Programme needs to provide food relief for about 600,000 people.

The government of Madagascar and the company claimed that the land in question was totally undeveloped. Finally, the deal was cancelled when protest rallies caused a coup d´état that dismissed President Marc Ravalomanana and led to the formation of a new government.

 

In 2009, FIAS created the Mali Investment Climate Reform Program to implement regulatory and institutional reforms in the agribusiness, tourism and mining sectors, in order to stimulate private investment. In the same year the Malian government approved long-term leases for outside investors to help develop more than 160,000 hectares of land. Already approved land deals include a joint 10,000 ha project between Petrotech and AgroMali to produce agro-diesel (biodiesel) feedstock from Jatropha seeds for EU countries, the US and Egypt.

 

In 2001, FIAS reviewed Mozambique's general business environment for FDI with the objective of setting a broader, strategic reform agenda in collaboration with the World Bank. In 2008, Sun Biofuels, a UK company, secured 40,000 ha for Jatropha (for fuel) in Manica province on high quality agricultural land. The contract gives right of use for 99 years. Moreover, it installs unequal competition for water in regions where farmers are short of water and people lack clean water. The same year Sekab, a Swedish company, acquired 100,000 ha for biofuel crops. This necessitated deforestation and consequently caused loss of income for people, loss of biodiversity and damage to the ecosystem and the water cycle. In spite of the fact that customary and village land is protected by law, the local communities had not been consulted and there was lack of transparency around contracts.

 

In 2008, FIAS established the Rwanda Investment Climate Program to improve the regulatory environment, build institutions, and attract private sector investment. In 2009, Rwanda announced a new program to identify “unexploited” arable land for land concessions to foreign investors.

 

Criticism of these policies

 

The promotion of privatisation by the WB-G in general, and the changes to countries’ land laws promoted by IFC and FIAS in particular, threaten to destroy the traditional communal approaches to land ownership in Africa. IFC /FIAS work would have the capacity to promote ‘ease of doing business’ for locals. Yet much of their engagement with developing country governments is directed to enabling business primarily to attract Foreign Direct Investment, before enabling business for locals. Seemingly, IFC and FIAS are concerned with land markets only to the extent that they influence investment climates.

 

Despite the prominent role of the World Bank in responding to the 2008 food and financial crises, the underlying goals of WB-G policies—to encourage foreign direct investment and promote private sector development—are leading to trends that increase instability rather than provide security and opportunity.

The food and financial crises proved to be drivers for the work of IFC and FIAS in the developing world, as governments sought and continue to seek financial and technical assistance. IFC /FIAS have not only encouraged and facilitated land grabs but have deeply influenced the legislation and policy agendas of developing countries, directly shaping social and economic outcomes that affect local livelihoods and food security.

 

On 11 March 2010, nearly 100 civil society organizations from 38 countries demanded that World Bank Group lending to private corporations be much more responsive to environmental and social concerns. They claim that the IFC’s lack of transparency and supervision, failure to recognize human rights, and inadequate climate change policies undermine IFC ’s ability to achieve its poverty alleviation mission. Civil society points to a number of cases in which IFC investments have had devastating impacts on local populations and indicates that human rights standards must be incorporated into the Policy and Performance Standards. The rapid growth of IFC’s Advisory Services over the past seven years has happened in a largely unchecked manner.

 

Encouraged by IFC and FIAS, governments are offering their fertile land to foreign investors, thereby threatening the basic human rights of their own populations. As providers of Technical Assistance and Advisory Services, IFC and FIAS directly shape the legislation and policy agendas of Third World countries and so play a large role in determining the livelihoods of developing country populations. Technical Assistance and Advisory Services (TAAS) only serve to promote IFC’s and FIAS’s own agendas through the restructuring of laws and policies to fit an exceedingly investor-friendly approach to economic development.

 

Conclusions

 

In its advisory role to African governments, the World Bank Group has failed to act in the best interest of the African people. It promoted reforms that made it easier for foreign investors to lease land in Africa, instead of helping local producers to make better use of their land. In the end, the policies promoted by the World Bank Group are highly beneficial to First World investors and perhaps to the governments of host countries, but local populations suffer the consequences of them. Foreign Direct Investment is no panacea for development and certainly does not solve the imminent problems of poverty, hunger and the need for land reform. In the way it is promoted, it even aggravates the tensions over the control of land and increases the likelihood of hunger.