Committee for the Abolition of Illegitimate Debt

This week, the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

published the 2016 edition of the Doing Business report. Since 2002, this publication has annually ranked 189 countries’ business climate through 11 indicators [1] such as corporate taxation and access to credit. This edition concluded a series of methodological changes that were taken on after extensive criticism of the report from the Bank’s own Independent Evaluation Group, an Independent Panel appointed by the Bank, and civil society organisations.

Critiques of the changes made to the 2015 report did not prevent the Bank from implementing new changes that will not improve a report which is fundamentally flawed. This year, new sub-indicators were added to the following indicators: registering property, dealing with construction permits, getting electricity and enforcing contracts.

The registering property indicator usually gets less attention compared with other indicators such as ‘paying taxes’, ‘getting credit’ or ‘labour market regulation’. This indicator, which examines the steps, time and cost involved in registering property, translates the intention of the World Bank to modernise land management in developing countries to make investor’s access to land easier despite the costs for local communities’ access to land. Until this year, this indicator only covered land that had already been registered, leaving space for customary land management. However, the 2016 reform brought a new ‘quality of land administration’ that includes the coverage of registered land [2].

This reform translates the World Bank’s vision of agriculture, as it was outlined in the 2008 World Development Report titled Agriculture for Development. In this report, the Bank states that “well-functioning land markets are needed to transfer lands to the most productive users”. The World Bank hopes that foreign investors will increase agricultural productivity in the developing world. This is why land reform is so important. The World Bank’s private sector branch, the International Financial Corporation (IFC) and the Foreign Investments Advisory Group (FIAS), have already provided developing countries with technical assistance advisory services to facilitate the access of investors to these countries. This policy has been undertaken despite the Bank’s own recognition that big agriculture investments have a negative impact on land access for local communities.

Registering a property is a complex process for which foreign investors are better equipped than local smallholder farmers, especially if the government supports the former over the latter. Research in Tanzania concludes that “formalisation can further spur the dispossession of land by both increasing the spread of land markets which can disfavour the rural poor as well as supporting efforts by the state to carve land out of existing villages for reallocation to investors.” In response, the Bank supports the idea that land reform is associated with greater access to credit as land certificates will allow small-scale farmers to invest using their land as a bank guarantee to access credit. However, in most developing countries, where policies supporting agriculture have been suppressed or considerably reduced, small-scale farmers are vulnerable to environmental changes or price volatility, and are therefore often forced to sell their land, increasing poverty and inequality in rural areas.

The link between the World Bank’s inspired business climate reforms adopted in developing countries and land grabbing is already evident in some countries. The Philippines has improved its Doing Business ranking spectacularly in recent years to attract more foreign investors. As a result, foreign investors have developed monoculture plantations at the expense of local communities that were evicted from their ancestral lands.

To pursue its twin goals of eradicating poverty and boosting shared prosperity, the World Bank should consider supporting small-scale farmers that produce 80% of the food consumed in Sub-Saharan Africa and Asia and that represent 80% of agriculture exploitation in the world.

Source: Eurodad