10 August 2009
Civil society groups remain skeptical that either is in a position to ensure the environmental and social sustainability of their investments.
Reuters reports that the International Finance Corporation (IFC) is planning closer cooperation with China to fund increased spending in Sub-Saharan Africa's growing oil and gas industry. IFC sees great potential in the continent as it is fast becoming an important source of oil and gas and is attracting interest from Europe, Russia and Asia.
Africa is a focus region for IFC - 20 percent of the institution's $2 billion global oil and gas portfolio is in Sub-Saharan Africa - with the institution eyeing significant future investment opportunities in Uganda and Tanzania. According to Kamal Dorabawila, IFC's top investment official for the oil and gas sector in Africa, China is a valuable partner to IFC because of the country's willingness to take on the risks associated with investing in Africa. China has invested billions of dollars in Africa, surpassing many western countries as its major investor.
At the same time, this amounts to yet another pronouncement on the World Bank Group's intentions to collaborate with China. In June 2007, IFC and China's export credit agency China Exim signed a high-profile agreement to co-finance investments in Africa, which was seen by many as a move by IFC to avoid competition with its Chinese counterparts. Despite the much-touted announcements, however, it remains unclear whether any joint operations have gone forward.
The questionable track records of both IFC and China regarding the impacts of their investments on people and the environment raises many concerns about their partnership. Civil society groups are skeptical that either is in a position to ensure the environmental and social sustainability of their investments.
IFC, which ironically considers itself the leader in sustainable banking, has failed to ensure the environmental and social sustainability of its own projects. In February 2009, IFC approved $215 million in loans to Kosmos Energy and Tullow Oil for the exploitation of oil and gas reserves in Ghana's Jubilee field, despite objections from civil society groups who requested that consideration be delayed until major environmental and governance issues were addressed. Among the outstanding environmental concerns are the lack of an environmental and social impact assessment, plans to dump drilling waste into the sea, and inadequate assessments of the potential impacts of an oil spill; the chances of which are exacerbated by the use of antiquated equipment.
read more:
- World Bank Arm Sees China as Africa Energy Partner by Wendell Roelf, Reuters, July 29, 2009
- IFC Plans More Spending on Oil in Sub-Saharan Africa by Ron Derby, Bloomberg, July 29, 2009
- IFC Approves Offshore Oil Projects in Ghana Despite Serious Outstanding Concerns, Bank Information Center, February 20, 2009
- IFC and China Exim to Co-Finance Investments in Africa, Bank Information Center, June 18, 2007