Lessons from the East: New report from Seventythree launched in London

February 8, 2015
Dominic Elson

industrial_oil_palmAt a launch event at the Royal Society in London on 4th February, the Rights and Resources Initiative launched a new report by Matthias Rhein (co-founder of Seventythree) as part of the RRI annual review meeting.

The purpose of this report is to contribute to Liberia’s debate on economic policy, specifically, recent efforts around industrial-scale palm oil development against the context of the wider role of the rural sector in economic development. Lack of safeguards for indigenous land rights opened the door for accelerated deforestation and palm oil plantations across Indonesia; and as Ebola recedes, Liberia faces the same threats. By learning from the experience of rapid corporatisation of landscapes in Indonesia, organisations and policy makers in Liberia can pause for breath and consider how the temptation of wide-scale industrial landscape development is most unlikely to lead to human flourishing in Liberia. Indeed, the effect of such development in west Africa may be even less effective at alleviating rural poverty than it has been in Indonesia.

“For centuries, governments have been handing out Indigenous Peoples’ forests to supply the next commodity boom—whether rubber, oil palm, cattle or soy,” said Andy White, coordinator of the Rights and Resources Initiative. Yet the benefits and costs of such investments have rarely been analysed in the context of economic development over time. Instead, the sheer volume of the investment that such booms attract has been presumed to be beneficial for economic growth, and thus benefits are likely to trickle down to marginalised rural communities. Challenging the conventional assumptions about large-scale industrialisation of landscapes is not to take a stand for or against palm oil, or any other commodity. Instead, it should start by looking at economic development as if it were intended to bring improved welfare and resilience to all members of society.

Matthias Rhein wrote the paper because he believes that “the biggest part of economics is just common sense made complicated.” Seventythree’s work in Indonesia and Liberia has been based on the insight that economic principles can provide a useful framework for thinking through public policy issues without excessive detail or complicated tools. Once these principles are understood and the facts are presented, citizens can make robust judgments on economic policies that affect their lives and livelihoods, and challenge the experts.

What is Liberia’s Path to Sustained Economic Development and Shared Prosperity?

The report explores how palm oil developments altered the economic trajectories of Indonesia and Liberia. The World Bank invested more than $2 billion in the palm oil commodity without ensuring the implementation of strong safeguards, and as a result, Indonesia, one of the countries participating in the World Bank’s carbon market, has seen its forests decimated by palm oil plantations. Liberia has now staked its economic development to palm oil production even though the price of the commodity has declined 40 percent since its 2011 peak.

“Liberia’s focus on palm oil and other raw commodities devastated its rural communities and their ancestral forests, and then Ebola hit,” said Silas Kpanan’Ayoung Siakor, the founder of Sustainable Development Institute in Liberia, who spoke at the panel discussion on the state of global land rights where both reports were released. “Now that Ebola is receding, oil palm companies are already accelerating the land-grabbing again. We need to protect our forests and rebuild our country, with a focus on our people first. Our land can provide the foundation for this recovery, but only if we have the rights to it.”

The Palm oil industry has long been criticized for its role in deforestation, abuse of local land rights, and lax production standards. This report from Seventythree explores how the business model of the industry also does not share its economic gains with the countries or the people hosting its plantations. For example, Indonesia is the world’s largest producer of palm oil, yet the commodity contributes less than 2 percent to the country’s GDP. Since 1990, the number of jobs in the rural sector, where palm oil plantations are located, has remained stagnant.

“When it comes to palm oil, there are no positive outcomes for our communities so far,” said Mina Setra, deputy secretary general of the Indonesia’s Indigenous Peoples’ Alliance of the Archipelago (AMAN). “Oil palm plantations have been major issues for indigenous communities. Companies violate our rights, break the laws, pollute the environment, and never share any of the profits. Criminalisation of community members and violence still happens today. This is not an economic model that any other country should adopt.”

Yet despite the evidence and its new commitments to stop deforestation, the Liberian government continues to embrace palm oil as a commodity that can fuel its economy, and it has not insisted on stronger safeguards for rural communities. The report makes clear that a continued reliance on exporting raw commodities like palm oil will never build the local manufacturing and infrastructure that can support the modern economy envisioned by the government.

“We’ve got to learn this lesson: you can’t get democracy or development, and you can’t stop deforestation, without respecting citizens’ human rights, including local peoples’ rights to their land and forests,” said RRI’s White in conclusion. “Without rights you get the resource curse—whether you are talking about oil palm, forests, mining or carbon.”

Details of publication:

Rhein, Matthias. 2014. Industrial Oil Palm Development : Liberia’s Path to Sustained Economic Development and Shared Prosperity? Lessons from the East. Washington, DC : Rights and Resources Initiative

Download the report
Rights and Resources Initiative (RRI) is a global coalition of 14 Partners and over 150 international, regional and community organizations advancing forest tenure, policy and market reforms. RRI leverages the strategic collaboration and investment of its Partners and Collaborators around the world by working together on research, advocacy, and convening strategic actors to catalyze change on the ground. RRI is coordinated by the Rights and Resources Group, a non-profit organization based in Washington, DC. For more information, visit www.rightsandresources.org.