World Bank Push for Agribusiness in Africa

October 14, 2013
Source
Bretton Woods Project

SUMMARY

  • A July World Bank and AFD report on land governance in Africa was criticised by NGOs
  • Communities in Uganda affected by a land grab by IFC-supported New Forest Company signed an agreement with the company
  • A March Bank report called for  incorporation of smallholder farmers in markets to support agribusiness
  • The Bank’s Benchmarking the Business of Agriculture has been criticised by NGOs, including for a lack of gender focus

 

Following World Bank president Jim Yong Kim’s April statement that the Bank should make “additional effort … to build capacity and safeguards related to land rights” (see Update 86), the Bank and French development agency Agence Française de Développement (AFD) released the report Securing Africa’s land for shared prosperity in July.  The report noted that “unless communal and individual land rights are registered and land governance is improved, the recent surge in foreign direct investment in Sub-Saharan Africa will not generate shared and sustained growth, as disruptions will likely arise from the dispossession of local communities, and investors’ deals will face severe uncertainty or collapse”. It suggested a 10 point programme to improve land governance, including improved tenure security over communal lands and increased land access for the poor and vulnerable, for an estimated cost of $4.5 billion over 10 years.

However, according to US-based NGO Oakland Institute the programme “is nothing more than World Bank’s old paradigm of enhancing efficiency by ‘transferring land from less to more productive users at low cost.’ ” International NGO Oxfam criticised the report’s “often-repeated statements about large tracts of unused or underutilised land … as they feed into the misconception of land simply being available, whereas in reality it is difficult to find any land that someone does not have some use or other right over”. Furthermore, the report “missed a crucial opportunity to push for stronger rights for women, align national policy debates with the Voluntary Guidelines [on the Responsible Governance of Tenure], uphold human rights – and to set its own house in order.”

Also in July, communities in Uganda affected by a land grab by UK-based New Forest Company (NFC, see Update 7978) signed an agreement with the company, after the conclusion of a mediation process initiated by the Compliance/Advisor Ombudsman, the accountability mechanism of the International Finance Corporation (IFC, the Bank’s private sector arm). The process followed a late 2011 complaint by the communities, facilitated by Oxfam and the Uganda Land Alliance. IFC supports Agri-Vie Agribusiness Fund, a private equity fund that invested in NFC. Eight members of theaffected community wrote “this agreement we have signed with [NFC] is an achievement although we still have a long way to go to improve our lives as a community”.

Agribusiness for Africa

The Bank’s March report Growing Africa: Unlocking the potential of agribusiness (see Update 85), which aimed to “galvanise public and private initiatives that will empower Africa to realise its huge, largely untapped agriculture potential”, also emphasised the perceived abundance of land in Africa. According to the report “Africa has more than half of the world’s agriculturally suitable yet unused land, and its impressive water resources have scarcely been tapped”, and argued that: “Better access to land and tenure security will require a concerted effort over the long term to improve how African land markets function.”

It elaborated on the role of smallholder farmers: “Given the dominance of smallholders in all African countries, broad-based economic growth will depend on connecting smallholders to markets”, with “opportunities for agribusiness to enter into contractual and other types of partnerships with smallholders to source raw materials.” However, “while a smallholder model has a proven track record in promoting equitable development, in some situations access to significant tracts of land must accompany agribusiness investments.” Furthermore: “Where smallholder production is not efficient, agribusiness investments can create good jobs”, noting that “the growth of vibrant agro-industries is essential to offer employment for the large number of smallholder farmers who are unlikely to farm their way out of poverty”. Recommendations included “policy reforms that are important for reducing costs and risks of doing business”.

This is in line with the development of the Bank’s Benchmarking the Business of Agriculture (BBA, see Update 8583), which according to the Bank will “leverage positive policy change to better enable the emergence of a commercial agricultural and agribusiness sector around the world”. BBA has two main parts: “agriculture deep dives [to] examine factors that affect agricultural productivity, market access, and the policy environment” and Doing Business in Agriculture, building on the Bank’s controversial Doing Businessrankings (see Update 868583), to provide “new benchmarks of laws and regulations affecting the business of agriculture that are comparable across countries”. In 2013 BBA initiated pilots in 10 countries to collect data and develop indicators on agricultural inputs, land, rural finance, water, markets, trade, rural energy and rural transport. It aims to scale up to 80 countries by 2015. BBA forms a part of the Agricultural Transformation Index (ATI), a 2012 G8 initiative coordinated by the US and Danish development agencies, USAID and Danida.

In an August briefing, the international NGO network the African Smallholder Farmers Group (ASFG) welcomed that BBA includes a focus on smallholder farmers, but noted that the indicators lack attention to producer organisations and gender issues, and that promised work on sustainability and on-farm activity in other parts of ATI has been slow to get off the ground. It asked for clarification when these issues will be addressed, including funding commitments from donors. Furthermore, ASFG called on the Bank to consider a number of recommendations as it develops the index. This included for “the process for designing the BBA … to be opened up more widely for consultation with, and input from, civil society including, importantly small-scale farmers themselves”, which should also inform the methodology, and for the index to measure “the gender sensitivity of government policies and interventions to support commercial agricultural transformation”.  Also in August UK-based international NGO Progressio welcomed the commitment to develop water indicators, but cautioned that it needs to address a number of issues to be robust, including that policies, laws and regulations exist to ensure equitable access to water and the sustainable management of water resources, with a particular focus on smallholder farmers.

World Bank and the food crisis: Missing the most vulnerable people?

A June 2013 report by the World Bank’s Independent Evaluation Group (IEG) assessed the Bank’s response to the 2007-08 food crisis, focusing in particular on the Bank’s Global Food Crisis Response Program (GFRP), which was launched to fast-track loans and grants, primarily to low-income countries. The report included a caution that “further evolution of the food crisis is still unclear” and that the Bank “may need to respond urgently to severe price shocks in the poorest countries in the future”. It concluded that while it was positive that the Bank had a detailed strategic framework for crisis response in place, it was not sufficient, noting “a disconnect between the intent of policy prescriptions in that paper and what was actually implemented”. This included discrepancies in ambition versus resources, “with adverse consequences for the quality of operations … at the risk that other country priorities would be neglected.” It also noted that while the Bank’s support did reach the most vulnerable countries, it was “less clear whether it reached the most vulnerable people within countries”.

Furthermore, the IEG argued that the Bank’s response to the global food crisis “was restricted by pre-existing social safety net programs and systems”, and since the Bank’s primary focus had been on middle-income countries “most low-income countries were not prepared”.  It also called for a “cautious approach to tariff and tax reductions as part of crisis response”, noting that: “In many cases, tariffs and taxes on staple foods were low to begin with, and rate reductions did little to help vulnerable groups in alleviating hardships of the food crisis, while aggravating the fiscal situation and threatening other government programmes.”  While the Bank agreed with many of the recommendations, it pointed out that the report did “not take into account the less tangible aspects of GFRP implementation”, including “the externally funded Bank-supervised GFRP projects, worth nearly $350 million and adding additional 14 countries to the response efforts.”