Asian Development Bank – a partner for poverty reduction in PNG?

This action is the result of decades of failed projects funded by the ADB. Many of these projects have created severe hardships for poor people and caused serious environmental problems for developing countries in the Asia-Pacific region. ADB is blamed for funding projects and setting development agenda that profits the private sector rather than fulfilling its stated goal of poverty reduction.

For Papua New Guinea (PNG), the irony of ADB’s approach to poverty reduction can best be examined through its proposed feasibility study into Smallholders Nucleus Estate Agro Enterprises (NE) projects. It is a US$7.4 million project under the ADB’s Technical Assistance Loan scheme. ADB’s rationale for this project is premised on its assertion that the most effective means of poverty reduction is through broad-based economic growth lead by the private sector. “This assertion is flaw in that the private sector is concerned with profit making and not poverty reduction.” Said Damien Ase, Executive Director of CELCOR.

Social and environmental impacts are often overlooked by ADB. In PNG, private sector such as the logging and mining industries are responsible for poverty and conflicts. Foreign logging companies in many remote areas continue to pillage and plunder rich forest resources, putting rural communities at risk of losing their very basis of subsistence. The Panguna Mine in Bougainville has led to a brutal five-year civil war with many deaths and a costly conflict which is still being sorted out today. These are results of private sector seeking quick profits. Even before the commencement of the feasibility study, ADB has already concluded that the best example of NE is oil palm production in PNG. And that oil palm development in the country has been through nucleus estate production supplemented by smallholders who sell their produce directly to the estate for processing. GOPNG’s recent announcement of tax breaks for potential oil palm companies and its plan to expand oil palm plantation has sparked fear amongst civil society groups in PNG that this feasibility study will pave the way for ADB to fund NE oil palm projects. There are already many lessons to be learnt from existing smallholder NE oil palm projects.

• Growers are unhappy with the very low return from oil palm and that they are responsible for repaying the loan provided by the international financial institutions such as the ADB;
• Fertile lands and pristine rainforests which are the basis of subsistence for rural communities have been sacrificed for planting oil palm with unrealistic promises of wealth;
• Pollution of waterways and environmental degradations will undermine long-term food security of rural communities. This is a potential for conflicts as downstream communities are increasingly bearing the blunt of pollution’s from growers upstream.

Of utmost concern is the impact of such project on the customary land tenure system in PNG. Plantation projects, whether they are large-scale plantations or nucleus smallholder plots effectively changed the relationship of land and the community. Damien Ase asserted that, “Lands are communally owned and shared within and between clans in PNG. Once the land is converted into cash crop plantation plots, this relationship and ‘ownership’ will be permanently changed thus undermining the communal ownership structure which has sustain PNG for over 50,000 years.” This concern is so strong that a group of landowners recently put up an advertisement in several newspapers to declare their resistance as follows: “We, the landowners are developing and will continue to develop our land on our own term. We therefore sternly warn all those parties involved in wanting to use our land for oil palm to STAY OUT! Any attempt to bring oil palm on our land will be strongly resisted.”

On environmental concerns, ADB claims that it is formally committed to following its environmental policies including the Environmental Assessment Requirements and Environmental Review Procedures of ADB. However, ADB’s own poor track records from its projects elsewhere leave much to be desired. The Samut Prakarn Waste Treatment Project in Thailand resulted in a full inspection investigation that found the ADB to be in violation of most of its own policies and procedures; the Pakistan Chasma Right Irrigation Project has displaced tens and thousands of rural poor – the very people ADB are supposed to help! This project is currently under investigation by the ADB Inspection Panel. These examples and other complaints from affected communities and civil society elsewhere clearly show weaknesses within the system of governance of ADB. This situation, couples with the notoriously weak institution of governance and widespread corruption’s in PNG will put PNG in great risk of adverse social and environmental consequences from ADB funded projects.

FOR MORE INFORMATION CONTACT IN PAPUA NEW GUINEA:

Damien Ase on +61 417 082 294.