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Opinions of Thursday, 2 December 2010

Columnist: Ayodele, Thompson

What the World Bank should know about Ghana’s Success Stories

By Thompson Ayodele*

Two decades ago, the rest of the world saw Africa as a hopeless continent.
Today Ghana is one of Africa's success stories. Its economy, spurred by a
thriving private sector, has grown on average by over 6 percent a year for
the past five years. A significant part of this growth has been fueled by
the success of the country's palm oil industry, with over 300,000 hectares
of land currently under cultivation.

Palm oil provides a major source of employment and revenue for Ghanaian
smallholders, with 27,000 farmers engaged in the industry. The Ghanaian
government recognizes the huge role palm oil plays in the economy, investing
more than $3 million in the industry so far, and recently announcing a
"master plan" to support expanded production.

Ghanaian ex-president John Kufuor left an important legacy for the country's
palm oil community. President Kufuor selected an additional 300,000
hectares of land for oil palm expansion which will be developed over the
next few years. This will meet both domestic and international demand, as
the Economic Community Of West African States (ECOWAS) has noted a shortfall
in supply up to a million tons for the economic sub-region.

But Ghana's efforts are now being undercut by the World Bank, which under
its current president Robert Zoellick has suspended loans for palm oil and
will impose new sustainability standards for lending. This development has
serious consequences for the industry as well as poverty alleviation in

The World Bank has for decades supported the growth of palm oil in African
countries. Since the 1970s it has invested more than $43 million in Ghana,
including $12.5 million in 2007 alone. Recently however, the Bank's
International Finance Corporation (IFC) suspended its $132 million annual
investment in palm oil, after sustained pressure from environmental groups
in the West

This move will be extremely damaging not only to the palm oil sector in West
Africa, but also to poverty alleviation in developing countries such as
Ghana, where jobs are scarce in rural areas. In Nigeria alone, nearly two
million people are employed in the palm oil business.

In addition, palm oil is a valuable food source for millions of Africans, at
a time of increasing global food insecurity. Uganda has made recent strides
to capitalize on local

palm oil production to feed local families and boost job booth. The
International Fund for Agricultural Development (IFAD) has announced a
continuation of Ugandan palm oil investment of $52 million in partnership
with the Vegetable Oil Development Project Phase 2. This loan provides
direct benefits to more than 136,000 Ugandan families and local businesses
such as BIDCO. The IFAD rightly sees palm oil investment as crucial for
economic development and the World Bank would be well-served to follow this
agency's example.

Moreover, the World Bank's unwise decision runs completely counter to the
IFC's stated aim, which is to reduce poverty and help people help
themselves. As the Bank itself acknowledged in its Framework for Engagement,
"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."

Instead of helping entrepreneurs in developing nations, the Bank is
increasingly in thrall to environmental extremists whose anti-business
agenda threatens the livelihoods of millions of people in the world's
poorest continent. Where is the logic in pandering to the demands of
Western-based NGOs while undermining the very people you are supposed to be
helping in the developing world?

While wealthy NGOs in the West pour vast sums into lobbying international
institutions to advance their radical agendas, small farmers and landholders
in Africa and Asia suffer. And the timing could not be worse, in the
aftermath of a major global recession, and while the European Union erects
further protectionist barriers to international trade through its Renewable
Energy Directive, which will make it even harder for African farmers to
export products such as palm oil to Europe.

President Zoellick and the Bank's executive board should stand up to the
powerful environmental lobby, and reject the mandated environmental
certification standards which they demand. These so-called "standards" are
in reality job killers in developing countries, and a hammer blow against
African farmers.

A wealthier society with a clear stake in its economy is far more likely to
protect the environment and natural wildlife than an impoverished one. It
behooves on the World Bank to reinstate its backing for palm oil, and act
decisively in favor of raising living standards and combating poverty in
developing nations. The Bank should live up to its core mission, and free
itself from the nefarious grip of environmental groups who are far-removed
from the daily realities of the people in countries like Ghana.

*Thompson Ayodele is the Director of the Initiative for Public Policy
Analysis, a Nigeria-based public policy think tank and associate of and IMANI Ghana.*