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Bank’s palm oil cop-out thwarts its goals
TOMPSON AYODELE and RICHARD TREN
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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