The Mad Dash for Land

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The World Bank’s own misgivings over these transactions and their consequences, however, appear to have done little to lessen the bank’s support for them.

While its research on major land deals warns of dire consequences for the poor in countries lacking strong protections for landholders, the bank also advises countries, and rates them for investors, based on government success in easing regulatory barriers to direct foreign investment wherever possible.

The bank’s “Doing Business” ranking is crucial to attracting direct foreign investment, which cash-strapped governments in Africa look to for modernizing roads and infrastructure. Its Technical Assistance and Advisory Services advises governments on steps to improve investor satisfaction.

At the same time, its Multi-lateral Guaranty Agency insures companies against political risk, effectively lowering the cost of borrowing and throwing the weight of the World Bank behind them. Gary Vaughan-Smith, chief investment officer for SilverStreet, a U.K. based hedge fund, described such insurance as essential for giving investors the confidence to go ahead with farmland investments. Speaking to Business Day, a South African daily, he said that in the event of difficulties, “You’ll have the World Bank on your side.”

And a report last year by the Oakland Institute details involvement of the World Bank’s various advisory and investment programs in some 57 “land grabs” in 24 developing countries, involving the transfer of rights over millions of acres.

The Bretton Woods Project, a not-for-profit that monitors the World Bank, has criticized it for what it calls a bias against strong labor laws and other government regulation, regardless of whether the absence of such laws stems from greater efficiency in protecting citizens or a government failure to do so. The organization also argues that the bank faces an inherent conflict of interest: it advises countries on creating climates friendly to foreign investors, but is then also a party to those investments.

“It is highly problematic for a multilateral institution to position itself as an objective source of policy advice on matters where they have a direct financial stake in the outcome, particularly in low-income countries that may not have the resources to procure advice from other sources, or in countries where weak democratic processes do not provide adequate checks and balances relative to external donors,” the organization said in a recent report.

Deniz Baharoglu, who oversees environmental and social standards for the World Bank’s Multi-lateral Guaranty Agency, defended her agency’s record, saying it only insured projects that met the agency’s criteria for fairly compensating small landholders and limiting environmental damage.

De Schutter, the UN expert, said that while large scale land deals seemed appealing as a dramatic way to modernize farming, they were counterproductive when it came to improving nutrition on the ground. Rather, he said, these land deals increase poverty by pushing small farmers away from the most fertile land, and lessening their access to water and other resources.

“We will not solve the question of hunger,” de Schutter said, “by impoverishing those who are already poor.”

Diana Jean Schemo

Diana Jean Schemo

Diana Jean Schemo is co-founding executive editor of 100Reporters and an award-winning former foreign, national and cultural correspondent for The New York Times and the Baltimore Sun.
Diana Jean Schemo

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1 COMMENT

  1. what is the position of the various ruling bodies within the government of the country.  I smell rats of collusion. One can understand the need to provide for the people yet the resources aftermath will leave the country with little or no oversight in place and a quasi-independent form of government allowed to do whatever for years to come.

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