World Bank Blundering through Burma

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A Burmese farmer ploughs his field to prepare for rice cultivation in Waw, Irrawaddy delta. (PHOTO: AP)

The World Bank must not repeat its past mistakes in new agriculture investments, writes US Campaign for Burma’s policy director Rachel Wagley in the Democratic Voice of Burma.

World Bank Blundering through Burma

How is the World Bank achieving its goal to alleviate poverty in Burma? The April 2014 World Bank Spring Meetings in Washington revealed the answer: nobody knows.

At the Spring Meetings, World Bank representatives touted the success of projects like the Community Driven Development (CDD) and Telecom Sector Reform projects. But Bank representatives clearly have no knowledge of how these projects are being implemented on the ground. If they knew, they might not be so keen to mention them.

Take the CDD, which is intended to empower local villagers to design their own infrastructure projects. Hyped as a model program, the CDD has been a remarkable failure. The Bank and government delayed the project for months, failed to hire and train competent project facilitators, crammed the months-long project consultation and selection process into mere hours due to cost and convenience, and didn’t provide communities with any basic information—unless you count a single poster stuck onto a community bulletin board.

As a result, many facilitators hastily submitted improvised project proposals that villagers had never even approved. Now, villagers are being pressured to implement these projects in a matter of several weeks over the labor-intensive harvest season. This has led to a lack of community participation and a major breach of trust in the World Bank.

World Bank representatives, who have not monitored CDD implementation, expressed surprise when civil society representatives presented these flaws at the Spring Meetings. But these flaws are not surprising; to people following the Bank’s activities in Burma, incompetence is the status quo.

Burma is universally recognized as one of the most corrupt and unstable political and economic contexts in the world, yet the World Bank irresponsibly forgoes comprehensive risk assessments, due diligence, and safeguards. At the Spring Meetings, Bank representatives tactlessly stated that they are not considering Burma through a conflict or fragility lens. To compound matters, the World Bank’s lazy approach to civil society consultations in Burma violates the Bank’s own guidelines. The Bank habitually announces civil society consultations mere days in advance, doesn’t take notes at the consultations or integrate civil society recommendations into project plans, and even lies about the frequency and outcomes of these consultations.

Now the World Bank and International Finance Corporation (IFC), the Bank’s private lending arm, are taking their bumbling, oblivious “development support” to Burma’s agriculture sector. It is of utmost importance that this support does not exacerbate widespread land, social, and environmental problems by intensifying inequality between smallholder farms and government-connected agribusiness.

But the starry-eyed IFC eagerly looks to invest in agribusiness in Burma. It has already contracted with Yoma Strategic Holdings Ltd – a Burmese company that US officials have recommended for sanctions – to be involved in high-risk plantation agriculture. Globally, IFC agriculture investments are notorious for contributing to impoverishment, land confiscation, forced displacement, and other human rights abuses.

In Burma, military regime-imposed agricultural restrictions almost guarantee that agribusiness and plantation-style investments will exacerbate poverty and lead to human rights violations. These restrictions deny farmers production rights and access to credit, forcing them into the hands of moneylenders at soaring interest rates. Restrictions on internal trade and the country’s export licensing regime limit farmers’ sale options and artificially keep prices down. On top of this, Burma’s horrendous new land laws were seemingly drafted with the express purpose of enabling large-scale land expropriations.

In this environment, empowering smallholder farmers over agribusiness is not only ethical, it’s also good economics. Agriculture employs more than 70 percent of Burma’s population and is the largest contributor to GDP by sector. Building up the production of smallholder farmers is the key to lifting the rural population out of poverty and stimulating economic growth. Economists—like former Chief Economist of the World Bank Justin Lin and renowned Burmese economist Hla Myint—widely confirm this development approach.

But the World Bank is revealing how little it knows—or is willing to admit—about Burma’s agricultural sector. During the Spring Meetings, Bank representatives highlighted how its global agriculture strategy focuses on microfinance and women entrepreneurs. These are important factors, but they are merely supplemental to the alleviation of poverty among farmers.

Perhaps the main barrier to poverty alleviation in Burma is the government-constructed credit crisis. The Ministry of Agriculture and Irrigation staunchly resists establishing a formal financial system and access to credit in rural areas, and also effectively inhibits access to affordable fertilizer and seeds, hard infrastructure and market information. Despised by reformers, Minister of Agriculture Myint Hlaing keeps smallholder farmers impoverished while he and cronies control the means of production. Burma civil society groups question how the Bank, which has already begun working with the Ministry, plans to exact reforms from the Ministry’s crooked leadership.

The World Bank has a role to play in agriculture only if it builds up smallholder farmers and uses its financial leverage to attain meaningful reforms, including allowing commercial banks to lend to farmers and radically reforming the Myanmar Agricultural Development Bank. The Bank must also undertake serious sector analyses that address Burma’s horrific land and conflict problems. Even allegedly low-risk investments like the Bank’s upcoming irrigation project have the potential to increase land value and thereby lead to land confiscation.

The Bank’s financial commitment to Burma has so far outpaced its commitment to caution and poverty alleviation. Bank headquarters has no clue what happens on the ground; Bank staff on the ground have displayed negligible interest in Burma’s political, legal and economic situation. This is a recipe for disaster for any investments in Burma’s agricultural sector, which could exacerbate socioeconomic inequality in ways not easily reparable.

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