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November-December 2011

Vol. 36, No. 6


Africa: World Bank Group facilitates land grabs

When the global food and financial crises hit in 2008, with food prices increasing an average of 43 percent, African countries were among the most devastated. The Food and Agriculture Organization (FAO) estimates that at least 20 African countries remain in protracted food crises. African countries account for 39 of the 70 low-income food-deficit countries in 2011, while food prices are above those seen during 2008 peaks. In Ethiopia alone more than 13 million people are in need of food aid.

The "official" response by development agencies like the World Bank Group (WBG) to the crises has been a model of increased humanitarian aid and increased investment in African development. Concurrently, many African countries increased their openness to foreign direct investment (FDI) in an attempt to regain economic capacity. Ostensibly, this combination is a win-win situation. It should result in increased economic growth, development, jobs, and food security for struggling African countries, while providing investors a return on their investment and access to increasingly rare farmland. But there is another side to this investment model, one that proponents of the model tend to leave out.

Part of African countries' increased openness to FDI is the practice of offering fertile land to foreign investors (see NewsNotes, March-April 2009), often at extremely low prices—one lease, for example, had terms of 99 years at $1.00 per hectare. According to the Oakland Institute report, "(Mis)investment in Agriculture," this has "ignited a global rush for the world's farmland by investors in what has become known as the global 'land grab' phenomenon." Land grabs are not new in Africa, but the rate and scale at which they are occurring is without precedent in post-colonial Africa.

The Oakland Institute report focuses exclusively on the WBG role in facilitating these land grabs, and sheds light on how land grabbing is not simply an organic phenomenon resulting from the mutual interests of foreign investors and African countries. Rather the WBG, through its Global Food Crisis Response Program (GFRP), and more specifically through its private sector arm -- the International Finance Corporation (IFC) -- is working through multilateral initiatives to directly facilitate this rush of land grabs.

The IFC is known for its private sector financing of international development projects, in which it first and foremost expects to make sufficient returns. But it also provides, along with its partner organization the Foreign Investment Advisory Service (FIAS), advisory services and technical assistance to developing country governments. "IFC thus advises governments from the perspective of an investor and with the objective of increasing and strengthening not only FDI in general, but also its own investments and development agenda." This is a conflict of interest for the IFC and FIAS, which both clear the way for land grabs in African countries as well as offer advice and financing to investors.

Through advisory services and technical assistance to poor countries, IFC and FIAS spur land grabs in three general ways. First, they work closely with governments to rewrite investment and industry specific laws and regulations, which allow investors easier access and less constraints and oversight once operating within countries. Second, they work with governments to carry out land policy reform. In many African countries most land is traditionally unestablished or unregistered and controlled by local communities. By encouraging governments to create land registries, IFC and FIAS help consolidate land into land banks of central governments and, to a lesser extent, regional governments, which they can then make available to potential investors. In either case local communities are stripped of sovereignty over the land on which they live and often displaced as a result of these deals. Third, IFC seeks to establish Investment Promotion Agencies to promote a pro-FDI climate from within African countries, which can continue to facilitate land grabs long after IFC and FIAS stop their direct services.

Despite the purported benefits of these land grabs – jobs, rising income, increased food security – clearly the IFC and FIAS prioritize investor access to land above the serious problems of poverty, food security, and land sovereignty. In doing so they have directed policy and legislative agendas of African countries down a road that is leading to increased instability, less food security, and more internal conflict. (See NewsNotes July-August 2011)

It is right to focus on and hold the foreign governments and private investors participating in these land grabs accountable, but it is equally important to understand the role that the WBG plays in facilitating them. If the global North does not begin to recognize and address the serious disconnect between its "benevolent" development approach to poverty and hunger alleviation in Africa and the reality of actual African communities on the ground, the only service provided will be to perpetuate the shape of that relationship for the past half-millennium: Exploiting the global South for the benefit of the global north.

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