Why the World Bank should declare a freeze on big land deals

October 4, 2012 3 By admin

‘Buy land. They’re not making it any more.’ Around the world, a lot of investors are taking Mark Twain’s advice to heart, and the resulting

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land rush is doing an awful lot of damage. A hard-hitting, killer fact-tastic Oxfam briefing written by my colleague Kate Geary published today summarizes the stats (as far as we know them).

  • In the past decade, an area eight times the size of the UK (203m hectares) has been sold off or leased out globally.
  • The land acquired between 2000 and 2010 has the potential to feed a billion people, equivalent to the number of people who currently go to bed hungry each night (Oxfam calculation, all explained in footnotes).
  • Two-thirds of agricultural land deals by foreign investors are in countries with a serious hunger problem.
  • Two-thirds of foreign land investors in developing countries intend to export everything they produce on the land.
  • According to the IMF, most of the land being sold off is in the poorest countries with the weakest protection of people’s land rights.

Once the land has been given away, it becomes a much harder and potentially nastier battle to take it back. The danger is that when the dust settles on this property rights freezing frenzy, millions of people will have l2ost access to land, countries will be saddled with bad deals, and investors will face a resentful population and a legal quagmire. So Oxfam is arguing that we need a freeze on investments involving large-scale land deals while we sort out the mess.

The organization we want to lead this is the World Bank, whose role its new president Jim Kim is currently reviewing. The Bank is the preeminent global development institution, and is ideally placed to send a big signal to governments and investors.

According to its critics, the Bank is also part of the land deal problem. Its private sector lending arm, the International Finance Corporation (IFC), has an official complaints mechanism known as the Compliance Advisor/Ombudsman (CAO). This has seen its case-load triple in the past two years, while in the decade to 2010 over 60 per cent of cases that it assessed related to land conflicts. Oxfam is a co-signatory to three formal land-related complaints to the Bank, one in Indonesia and two in Uganda – here and here.

Moreover, through its advisory services, the IFC encourages governments to streamline and consolidate investment-related policies and activities – in essence to create a ‘one-stop shop’ for investors. Recently, the Bank’s Investment Climate Advisory Services helped to create or support investment promotion agencies (IPAs) in Sierra Leone, Cape Verde, Senegal, Zambia and Tanzania, among others. In

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Tanzania’s case, its IPA is mandated to identify and provide ‘available’ land to investors and to set up a ‘land bank’ of some 2.5 million hectares considered suitable for investment. That might all make sense in a well-governed land market, but is not helping if it smoothes the path of the current land rush.

But whatever the views on ‘Bank as problem’, it can most definitely be part of the solution. Its influence is huge, not just through its own actions, but its role in setting standards for other donors and investors. So Oxfam is asking it to declare a 6 month freeze, a time out during which it should review the World Bank Group’s investments, publicly support and help implement the catchily-titled ‘Voluntary Guidelines on the Responsible Governance of Land Tenure’ and lobby other investors to follow suit, overhaul its investment procedures and revise the kinds of advice it is giving to developing country governments.

Over to you Jim Kim

P.S. If you’re in Oxford this evening with nothing better to do, come to Blackwells for 7pm, grab a glass of cheap wine and help me launch the second edition of From Poverty to Power. Details here.