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Nigeria vs. The World Bank: The Palm Oil Debate

This is, perhaps strangely, not the first piece I’ve written on the topic of palm oil lately. But a recent NYT op-ed  called “The World Bank’s Palm Oil Mistake” caught my attention.  The article calls out the World Bank’s IFC for freezing its funding on palm oil projects while reevaluating its strategy for the environmental and social impacts of palm oil production, specifically due to the freeze’s negative effects on Nigerian producers.  And while I agree with the author on certain points, his attacks fall short.

Oil palms outside of Kuala Lumpur, Malaysia

Why do we care about palm oil anyways?

In a nutshell, it has a variety of uses and nutritional properties from biodiesel to  food products.  Its production can be used to diversify and strengthen developing economies.  On the darker side, palm oil production has been implicated in severe environmental degradation via deforestation as well as the exploitation of socially marginalized groups.

What’s the World Bank’s mistake?

Because the majority of palm oil production occurs in Asia, specifically Malaysia and Indonesia, the environmental issues arising from palm oil are often Asia-centric and may fail to take the specificity of other nations into account.  After all, the funding freeze occurred after complaints from “smallholder and indigenous groups in Indonesia” –a far cry from the Nigerian context.  By freezing investment in all countries, producers in Nigeria are put in a difficult economic bind.

But the article’s reasoning lost me right about here:

“According to the bank itself, since its inception, life expectancy in developing countries has risen by more than 20 years. Adult illiteracy in poor nations has been cut in half since 1980. And over the past two decades, the number of people living on less than $1 a day, while unacceptably high, has dropped for the first time.”

An interesting observation that of course tells us nothing whatsoever about causal impacts.  The piece then goes on to advocate that, because of this success, the World Bank should focus more on poverty reduction and less on issues such as environmental sustainability.  Ignoring this question for the time being, I looked a bit deeper into the research behind these claims.  A survey of Nigerian palm oil producers in recommendations to the World Bank revealed the following:

“With respect to a potential environmental harm (widespread clearance of forests, massive CO2 emissions and the theft of indigenous peoples’ lands) three-quarter of palm oil producers surveyed (75 percent) have never noticed any potential environmental harm caused by the palm oil production. In addition, they are not convinced that palm oil production can be a potential threat to the environment.”

Well, unfortunately, just because I don’t notice my CO2 emissions from flying in a plane doesn’t mean they don’t exist.  I’m being a bit harsh (note that the Nigerian method of production is generally less wasteful than others) but only to illustrate the point that there seems to be an inherent bias in a methodology that  surveys palm oil producers.  So, while I’m sympathetic to the argument that it’s unfair to lump Nigeria in with Indonesia on the basis of social marginalization, the existing research doesn’t hold much water.  Just like advocates can be accused of greenwashing and blackwashing to lobby for environmental causes, facts shouldn’t be exaggerated to make the opposite case either.

Prioritizing the issues

This brings us back to the question of whether poverty reduction should come before environmental sustainability or vice versa?  The author lambasts the World Bank for pandering to lobbyists and becoming “captured by environmental extremists” who put the needs of the environment before those of the poor. Yet both poverty and environmental concerns should go hand in hand to avoid creating negative consequences on one another.  I think this is the strategy the bank is attempting to adopt by reevaluating its investment policies altogether.   Is it a little drastic to freeze all investments completely?  Perhaps.  Should they take more regional specificities into account?  Definitely.   And should they keep funding Nigerian producers?  Sure, contingent on increased clarity about the environmental effects of doing so.  Palm oil has been a great engine for growth in Malaysia and Indonesia and, if given the chance to be farmed sustainably, it could provide the same opportunities for Nigeria and others in the region.

[Photo credit: the author]

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