World Bank recommendations favour multinational over local businesses in the developing world
The World Bank’s World Development Report 2005, due to be published this September, makes recommendations that jeopardise the future of small local businesses in favour of large multinationals.
The report argues that the root to capitalist development in Africa, Asia and Latin America lies in formalising property ownership through the distribution of land titles. If everyone owns the title to the land they live on – the argument goes – they will be able to use it as collateral for a business loan, or sell it to finance an enterprise.
Yet urban development consultant Geoffrey Payne argues that Bank’s report ignores a wealth of independent research. “The link between the provision of titles and poverty reduction remains unproven,” says Payne; illustrating his point by explaining how in Munich only 17 percent of the population own their own home, whilst in Jakarta and Delhi homeownership is over 50 percent.
Payne worries that the Bank’s report does more than ignore credible research, he also sees the Bank’s favouring of titling programmes in the developing world as risky. “The risk,” says Payne, “is that formal land titles attract property speculation, raising land prices beyond the means of local businesses and individuals.”
Writing in his commentary for id21 Payne explains how in much of the developing world, the usage, sale and inheritance of land is governed by a variety of forms tenure, from renting through to traditional communal rights. Titling programmes which aim to replace these arrangements with a ‘one size fits all’ Western form of land tenure often undermine local governmental or community attempts to safeguard the poor by imposing restrictions on how land may be sold or used.
“The sub-title to the Bank’s report is ‘Improving the investment climate for everyone,'” comments Payne, “but the titling programmes it favours only improve the climate for big businesses, who buy-up cheap land for development and squeeze-out small local entrepreneurs and residents.”
The alternative, Payne suggests, is to work with existing forms of tenure to strengthen people’s rights to use land in a way that stimulates local businesses and improves welfare – by providing amenities such as electricity and water supplies – rather than making way for a new phase of commercial colonisation and impoverishment.