When The World Bank Does More Harm Than Good

Apr 17, 2015
Originally published on April 17, 2015 8:17 am

The World Bank's goal is to end extreme poverty and to grow income for the poorest people on the planet.

The bank does this by lending money and giving grants to governments and private corporations in some of the least developed places on the planet. For example, money goes to preserving land, building dams and creating health care systems.

But a lot of poor people actually end up worse off because of those projects, a report from The International Consortium of Investigative Journalists found.

People are often displaced, or their livelihoods are ruined. Over the past decade an estimated 3.4 million people have been displaced by bank-funded projects, says Michael Hudson, a senior editor at ICIJ, who worked on the report. In one instance, hundreds of families had their homes burned down.

"The World Bank has promised 'do no harm,' but our reporting has found that the World Bank has broken this promise," Hudson says.

In response, the World Bank says the vast majority of its projects don't involve the resettlement of people. But the bank says it has identified shortcomings in its resettlement policies. And it plans to improve those policies to protect people and businesses affected by bank-funded projects.

ICIJ's Hudson spoke to NPR's Steve Inskeep on Morning Edition about the new report, which he and his team worked on with The Huffington Post and other outlets.

A lot of these projects seem beneficial. But you found that something is going wrong. What is it?

What is often going wrong is what happens to people on the ground when you do these big projects. When you build a big dam, that can have huge consequences for the people living along the banks of the river and people who make their living via subsistence fishing or farming along the river bank. A mega-dam can affect 50,000, even a 100,000 people.

What happens to the people displaced?

In some cases they may have to move. Or they may lose part of their land. In other cases, they may not be physically displaced but rather economically displaced because their livelihoods have been destroyed, or at least partly impacted.

If you make your living fishing from the river or along the coast, and a power plant or dam affects the ecosystem, there's fewer fish, and you're not catching as many. Then your livelihood and your ability to feed your family has been impacted.

The problem is that even resettlements that are done well and fairly often leave poor people even poorer. There's a lot of research that shows that people who are forced to move suffer higher rates of hunger, illness and early death. It causes really serious consequences for people.

You write about a land conservation project in Kenya. What went wrong there?

The land conservation project funneled money to the Kenyan forest service with the idea of preserving a forest in western Kenya. The problem is with the thousands of indigenous people — the Sengwer — living in the forest. Our reporting on the ground shows that hundreds, and perhaps as many as a thousand, homes have been burned by the Kenyan forest service as they try to evict people from the forest.

When you brought these cases to the World Bank's attention, how did they react?

Around the first of March, we told the bank that our reporting had found systemic gaps in its protection for displaced families. Days later, the bank announced that it had found major problems with how it handles resettlement and released an action plan to fix the problem.

The bank has also released internal reports going back several years, which show the bank often had violated its own rules, has failed to protect people, has failed to monitor what happens to them and hasn't held its part as accountable for their actions.

Is it inevitable, on some level, that people may be harmed when you replace a low-level economy with a corner of the global economy via these projects?

There's always a price tag for development. But the question is: Who should pay the price? Should poor people be the ones who sacrifice when the government tries to do a big project? Even the World Bank says the budget for a project should include money to cover people's losses, that you can't just show up at someone's house and tell them to leave — that there has to be a process and that people have to be made whole.

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DAVID GREENE, HOST:

The World Bank's goals are to end extreme poverty and grow income for the poorest people on the planet. It does this in part by lending money and giving grants for projects in some of the least developed places. But a new report says a lot of poor people end up worse off because of those projects. They're often displaced or find their livelihoods ruined. Michael Hudson is with the International Consortium of Investigative Journalists. His team worked with the Huffington Post and other outlets on this project. And he spoke with my colleague, Steve Inskeep.

STEVE INSKEEP, HOST:

So you write about a number of projects that the World Bank has been involved in - conservation projects, preserving land - which hardly seems controversial at all - building dams, which can be controversial but has certain benefits. But you write that something's going wrong. What is it?

MICHAEL HUDSON: What is often going wrong is the question of, what happens to people on the ground when you do these big projects? You know, when you build a big dam, that can have huge consequences for the people living along the banks of the river, people who make their living doing subsistence fishing or farming along the riverbank. A mega-dam can affect 50,000, even 100,000 people.

INSKEEP: These are people who will just have to move because the water's going to be rising?

HUDSON: In some cases, they may have to move. In other cases, they may lose part of their land. In other cases, they may simply be not physically displaced but economically displaced because their livelihoods have been destroyed or at least partly impacted. If, you know, if you make your living fishing from the river or fishing along the coast and a power plant or a dam affects the ecosystem, and there's fewer fish, and you're not catching as many fish, then your livelihood, your ability to feed your family, has been impacted.

INSKEEP: You write about a land conservation project in Kenya. What could sound more wholesome than that - land conservation? What went wrong?

HUDSON: The land conservation project funneled money to the Kenya Forest Service with the idea of preserving a forest in western Kenya. The problem is there were thousands of indigenous people, the Sengwer, living in this forest. Our reporting on the ground shows that hundreds, and perhaps as many as a thousand, homes have been burned by the Kenya Forest Service as they try to evict people from the forest.

INSKEEP: I'd like to know if the kinds of conflicts you describe are, on some level, inevitable. You're talking mostly about very poor people in very rural areas. You describe people for whom a couple of farm animals or a few sacks of grain might be their entire household wealth. And it's tragic, of course, when that is destroyed in these home evictions. But that very low-level economy is being replaced by a corner of the global economy, which will make a lot more money. Is it inevitable that people are going to be harmed when the economy changes so radically?

HUDSON: There's always a price tag for development. But the question is, who should pay the price? Should poor people be the ones who sacrifice when the government tries to do a big project? Even the World Bank says that the budget for a project should include money to cover people's losses, that you can't just show up at, you know, someone's house and tell them you have to leave, that there has to be a process. People have to be made whole. The problem is that even resettlements that are well done and done fairly often leave poor people even poorer. There's a lot of research that shows that people who are forcibly resettled, forced to move, suffer higher rates of hunger, higher rates of illness, higher rates of early death. It causes really serious consequences for people. It's not just economic. It's really social and sort of universal in people's lives. You know, the World Bank's promise is do no harm, but our reporting has found that the World Bank has broken this promise.

INSKEEP: Michael Hudson of the International Consortium of Investigative Journalists. Thanks very much.

HUDSON: Thanks, Steve.

GREENE: And we should say we reached out to the World Bank. They told us the vast majority of World Bank projects do not involve resettlement. But the Bank says it has identified shortcomings in its resettlement policies, and it has a plan to improve those policies to protect people and businesses that might be affected by Bank-funded projects. Transcript provided by NPR, Copyright NPR.