Why the World Bank is wrong (so far) on large land deals

Hannah Stoddart

Blog post by Hannah Stoddart

Oxfam Great Britain, Head of Economic Justice Policy Team
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Oxfam’s land grabs campaign, launched on 4th October, highlights the alarming increase in the speed and scale of large land deals in the past decade. It calls on the World Bank – as an investor in land deals, as a global standard setter and as an adviser to developing countries on their land policies – to freeze those of its agricultural investments that involve large land deals for 6 months while it reviews its policies and practices to ensure land grabs are prevented.

The World Bank has responded to Oxfam’s campaign raising a number of challenges, through official statements, blogs and through interventions on panels. Here’s Oxfam’s response to some of the main challenges:

Extent of World Bank involvement in land-grabbing

Some at the World Bank have suggested that it is not the right target - it is only involved in a ‘few cases’ that could potentially constitute land grabs and at any rate it is not as bad as most other investors. Oxfam stands by its focus on the Bank for a number of reasons. First, given the Bank’s mandate for poverty alleviation, even one land-grab case is a case too many.

Secondly, in reality we know that there are very likely more than a few controversial cases relating to land. 21 cases involving land disputes have been brought by communities since 2008 (Oxfam is involved as a complainant in a number of them).

We also know that between 2000 – 2012, 56% of the complaints to the Compliance Adviser Ombudsman (CAO) have been in relation to land. The CAO also confirms that in the past 4 years there has been a growing number of complaints in relation to agri-business. Lastly, while the World Bank may not the worst culprit when it comes to land-grabbing, it IS the only global bank with a mandate for poverty alleviation and it is a crucial institution for setting the bar high in this area.

In other words, we believe that if Oxfam can’t convince the World Bank to raise its standards, we have no hope of getting other financing institutions to do so. If the Bank takes leadership, we hope we can leverage change in other institutions as a result, from regional development banks to private investors.

World Bank’s role in agriculture

In reaction to our call for an investment freeze, the World Bank contends that it has increased its agricultural investments precisely in response to calls from organizations such as Oxfam for it to focus on a sector that has been neglected for too long. Therefore it suggests that to suspend its agricultural investments – which overwhelmingly benefit smallholders - will only end up harming the very people that Oxfam seeks to support. In response, we have never argued – and never will – that the World Bank should not be investing in agriculture.

We welcome increased investment in agriculture by the Bank that genuinely benefits smallholders. This is why we are not arguing that the Bank should get out of agriculture altogether. And this is also why we are not calling for a freeze of all agricultural investments. On the contrary we are calling for a temporary 6 month freeze on agricultural investments that involve large-scale land acquisition - which the Bank acknowledges is not the majority of its investment portfolio.

To put it another way, we’re invoking the precautionary principle - something the Bank has done itself in the past when it froze lending to the palm oil sector as a result of a controversial case in Indonesia.

As the World Bank’s investment in agriculture has increased from $2.5 billion in 2002 to $6-8 billion in 2012, the risk of some of these investments involving problematic land acquisition is heightened (for the record, this figure was misquoted by some media as being up to $8 billion in land investments, Oxfam has always been clear that the overall figure is for agriculture more broadly, some of which will involve land acquisition).

We welcome models of agricultural investment - both large-scale and small - that benefit communities and genuinely lead to shared benefits based on consultation and consent. We have recently published a paper outlining models of positive agricultural investment, and Oxfam GB CEO Barbara Stocking reiterated this message recently in the Financial Times (you have to register to view).

What we oppose is a model of agricultural investment that involves the mass transfer of land rights away from poor farmers and communities, a model which frequently leads to conflict and for which there is very little evidence of pro-poor outcomes.

Transparency

The Bank has suggested that it is a leader in the area of transparency. Whilst Oxfam agrees that it has made great advances over the years, we feel that there are still some real areas of concern.

First, we can’t even tell the full extent of the Bank’s investment in this area: there is no clarity on the overall size of its land portfolio. For an institution that rightly prides itself on the huge advances it has made in allowing its data to be accessible to all, this is disappointing.

Second, we know that 17 of the 21 complaints involving land raise issues relating to inadequate transparency.

Third we know that over 50% of lending through the International Finance Corporation (the private sector lending arm of the World Bank) is channeled through financial intermediaries: these investments are far more opaque, and these bodies are also not subject to the same standards as the World Bank. And it makes it almost impossible for Oxfam to judge whether the Bank’s claim is true that ‘only 2% of IFC agribusiness loans in the past financial year involved land acquisition’. Furthermore, the trend towards new lending instruments and technical assistance makes it far more difficult to hold the World Bank accountable for cases where it might not have directly funded a project that results in controversy, but has provided the advice that made it possible.

So if the Bank wants to know #whatwillittake to end poverty, Oxfam thinks taking leadership on stopping land grabs is a great place to start.

Get involved: sign the petition to get the World Bank to freeze their large land deals.

Originally posted on the From Poverty to Power blog.