They Should Not Be Called Public Development Banks

From 9-12 November 2020, 450 finance institutions from around the world will gather(link is external) for the first international meeting of public development banks, dubbed the “Finance in Common” summit, hosted by the French government. The institutions, which range from the World Bank to the China Development Bank, collectively spend $2 trillion a year on so-called development projects — roads, power plants, agribusiness plantations and more. Much of this spending is financed by the public — us — which is why they called themselves "public development banks". But our partners on the ground and our experience teach us they are not public and what they fund is not development.

For the most part, these institutions get their money from public coffers, fuelled by people's labour and taxes. As state-owned institutions, they have the obligation to respect and protect human rights in their policies and operations. And they are supposed to be accountable to the public, through government oversight bodies. But that accountability hardly exists. From Proparco in France, to BIO in Belgium, to DFC in the US, few people have heard of these development banks much less know what they are up to.

In contrast to development cooperation bodies, which provide grants and loans to governments of the global south, development banks invest in the private sector for a financial return. They argue that companies drive growth and jobs, and, for this to happen, financiers have to take risk, for example through debt and private equity(link is external). A few million dollars from a development bank gives companies a form of guarantee that they can then use to raise more millions from private lenders or other development banks, often at a cheaper rate. This is how the development banks play such a critical role in enabling corporations operating in the global south to expand further into markets and territories — from polluting coal plants in Bangladesh(link is external), to controversial hydroelectric dams in Honduras(link is external), to hazardous soybean plantations in Paraguay(link is external) — in ways they could not otherwise.

As civil society organisations working closely with partners and communities in the global south, we are most familiar with these institutions’ involvement in agriculture. What they contribute to can hardly be called development. We have witnessed how they invest primarily in agribusiness companies and an industrial model of agriculture that is a main driver of both pandemics and the climate crisis. Development banks have little track record for supporting locally-controlled food systems or peasant-led agroecological farming, which are the real solutions to these two problems.

Over the past five years, for instance, a number of groups have worked together to support communities in the Democratic Republic of the Congo badly affected by a Canadian oil palm plantation company(link is external) that received more than $140 million in financing from numerous development banks, including approximately $88 million from the UK development bank CDC Group. The company, Feronia Inc, was majority-owned by the development banks until it went bankrupt this year and was handed over to a private equity fund based in the tax haven of Mauritius. Feronia, which never made a profit but paid its expat staff handsomely, would have collapsed years ago had it not been for the intervention of the development banks.

It was argued that the involvement of these institutions would provide leverage for the local communities living in and around the plantations to address their long-standing grievances that have existed ever since the lands were stolen from them at gunpoint over a 100 years ago by the then Anglo-Dutch giant Unilever and colonial Belgium’s King Leopold. They have suffered immensely over the past century, and any sincere commitment to “development” could only be possible if it began by addressing the theft of their lands and forests and led to land restitution and reparations. But the development banks have resisted any meaningful movement down this path. In fact, it’s been quite the opposite(link is external).

They have taken no action to address the historic conflicts over the nearly 100,000 hectares of land concessions or the allegations of corruption plaguing the project. Their environmental, social and governance (ESG) plans did nothing to alleviate poverty in the communities. And the involvement of the various banks did not reduce rampant human rights violations against villagers or workers. What’s worse, the banks have acted to undermine the community efforts to use the grievance mechanisms that they themselves established.

The reality is that no matter the ESG guidelines or codes of conduct against land grabbing, there is no way that development bank investments in industrial plantations can contribute to “sustainable development”. These plantations are colonial relics, designed purely to extract profits for their owners and to produce commodities for foreign buyers. They require stolen lands, exploited labour and armed violence to keep distraught villagers and workers from rising up. The creation of "jobs” and social projects, like poorly equipped schools and health clinics, that the development banks use to justify their presence is merely the theft and destruction of lands and resources that the villagers once had to sustain themselves.

Let us be clear: public development banks are disconnected from any sense of what “public” means and any argument about what “development” should look like. In food and farming, the backbone of our very existence, they finance corporate agribusiness. They were not set up to support any other model and have no real capacity to do so. As industrial agriculture is responsible for up to 37%(link is external) of the world’s annual greenhouse gas emissions, the case to dismiss development banks is clear. We need a very different approach to international finance that supports communities rather than companies, and food systems free of corporate control.

Signed By

Alliance for Food Soverignity in Africa — Africa

WoMin African Alliance — Africa

Entraide & Fraternité — Belgium

FIAN Belgium — Belgium

CIDSE — Belgium

Friends of the Earth Europe — Belgium

Associação Brasileira de Reforma Agrária — Brazil

SOS Chapada dos Veadeiros — Brazil

Movimento Ciencia Cidadã — Brazil

CAPINA — Cooperação e Apoio a Projetos de Inspiração Alternativa — Brazil

Terra de Direitos — Brazil

Comissão Pastoral da Terra — Brazil

Amigos da Terra Brasil — Brazil

FAOR -  Fórum da Amazônia Oriental — Brazil

FASE — Solidariedade e Educação — Brazil

IPDMS — Instituto de Pesquisa, Direitos e Movimentos Sociais — Brazil

Rede Jubileu Sul — Brazil

Via Campesina — Brazil

Emater — Brazil

Campaign in Defense of the Cerrado — Brazil

Réseau des acteurs du développement durable (RADD) — Cameroon

Synaparcam — Cameroon

REFEB — Côte d'Ivoire

DIOBASS Platform — Democratic Republic of Congo

Réseau d'information et d'appuis aux ONG en République démocratique du Congo (RIAO-RDC) — Democratic Republic of Congo

Acción Ecológica — Ecuador

Confédération paysanne — France

CCFD-Terre Solidaire — France

Les Amis de la Terre — France

Attac France — France

Survie — France

Muyissi Environnement — Gabon

FIAN Germany — Germany

APVVU — India

Indian Social Action Forum — India

Growthwatch — India

Karavali Karnataka Janabhivriddhi Vedike — India

Sahanivasa — India

KRuHA — Indonesia

SNI — Indonesia Fisherfolk Union — Indonesia

Suluh Muda Inspirasi — Indonesia

GERAK LAWAN — Indonesia

Serikat Tani Merdeka (SETAM) — Indonesia

Front Perjuangan Pemuda Indonesia (FPPI) — Indonesia

Indonesia for Global Justice — Indonesia

Koalisi Rakyat Untuk Keadilan Perikanan (KIARA) — Indonesia

Solidaritas Perempuan — Indonesia

Global Legal Action Network — Ireland

Trócaire — Ireland

SONIA for a Just New World — Italy

Africa Rikai Project — Japan

Eriko Yano — Japan

Network between Village and Town — Japan

Japan International Volunteer Center (JVC) — Japan

Friends of the Earth Japan — Japan

Missionary Society of Saint Columban — Japan

WE21 Japan — Japan

Indigenous Strategy & Institution for Development — Kenya

SOS FAIM- Luxembourg

Collectif pour la défense des terres malgaches — TANY — Madagascar/France

Milieudefensie -Netherlands

Kilusang Magbubukid ng Pilipinas — Philippines

Organización Boricuá de Agricultura Ecológica de Puerto Rico, CLOC-LVC — Puerto Rico

Kamara Organic Promoter — Rwanda

Korea Women Peasants' Association — South Korea

Bread for all — Switzerland

Generation Engage Network — Uganda

Corner House — United Kingdom

Global Justice Now — United Kingdom

Friends of the Earth United States — United States

The Oakland Institute — United States

Thousand Currents  — United States

Grassroots International — United States

Family Farm Defenders — United States

National Family Farm Coalition — United States

Association for Women's Rights in Development (AWID) — International

GRAIN — International

Biofuelwatch — International

World Rainforest Movement — International