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Bank’s palm oil cop-out thwarts its goals


Published: 2010/09/30 07:19:05 AM

THE World Bank’s mission and that of its International Finance Corporation (IFC) is simple: alleviate poverty and help people help themselves. The IFC dispenses about $4bn- $5bn a year in loans in the developing world, including sub-Saharan Africa.

Unfortunately, the World Bank has been captured by environmental
extremists who are far removed from the realities in poor countries.
The World Bank is now adopting policies that conflict directly with its development goals. Last year, its president, Robert Zoellick, announced the IFC was suspending its $132m investment in the palm oil industry, a major growth area for Africa’s economy. The move threatens to undercut a high- growth industry that employs almost 2- million people in Nigeria alone.

Many African countries have stepped up production to meet global demand, and to seek alternatives to dependence on oil for long-term revenue.

Nigeria is the world’s third- largest palm oil producer. The freezing of
support to palm oil producers will have a major effect on smallholder
farmers, who in countries such as Nigeria and Ghana control more than 90% of palm oil production.

Palm oil is a major agricultural commodity used in an array of foods and nonfood products, including biofuels and cosmetics. Global demand for vegetable oils is expected to increase by more than a third between now and 2017. With 90% of palm oil ending up in food, it will play a vital role in enhancing global food security, as the world’s population grows to an estimated 9-billion by 2050.

As the Bank itself acknowledges in its framework, “the palm oil sector has
played a significant role in advancing development and accelerating
poverty reduction in the many tropical countries in which it grows”. Its decision to starve it of funds makes no sense.

This is not the first time the Bank has been pressured by environmental groups to the detriment of poor countries. In 2000, the Bank tried to make a loan for malaria control to the government of Eritrea contingent on that country halting the use of DDT, a public-health insecticide approved by the World Health Organisation. Indeed, the Bank’s Global Environment Facility continues to undermine malaria control by opposing the targeted
use of insecticides in malaria control.

The timing of the Bank’s decision could not be worse. Africa continues to deal with the after effects of the global recession. And it faces a mounting protectionist threat from the European Union in the form of its renewable energy directive, which seeks to keep out African palm oil to benefit European rape seed oil producers.

Africa must be given the opportunity to trade freely with the West. To do this, it needs to develop its industries and natural resources, in the same way European nations were able to over the past 500 years.

Domestic reforms, such as increasing economic freedom and getting the dead hand of government off the backs of entrepreneurs, traders, and farmers in Africa, is essential. However, by shutting out opportunities to small - scale farmers, closing trade opportunities and pushing people further into poverty, these essential reforms could easily be snuffed out.

Zoellick and his executive board must act decisively in favour of
investing in Africa’s future and its people. Support for mandated
certification standards, as supported by environmental nongovernmental organisations, could end up halting agricultural development, killing off smallholders, and strangling the food supply. If implemented, such measures would directly undermine the Bank’s own Global Food Crisis Response Programme, designed to head off the prospect of dwindling food supplies in poorer countries.

Ultimately, the surest way of guaranteeing the protection of Africa’s
spectacular environment is by fostering economic growth, freedom and prosperity. By helping give African farmers and entrepreneurs a stake in their future, the World Bank can raise living standards, improve food security and preserve the environment for future generations. It’s time for African leaders to take a stand.

Ayodele is director of the Initiative for Public Policy Analysis in Lagos, Nigeria.

Tren is director of Africa Fighting Malaria in Washington DC





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