When he looks at the dry river-bed where he used to bring animals to drink as a young boy, Mark Ole Tunkoi doesn’t just blame climate change. The Maasai leader, who lives near a geothermal power plant in Kenya’s Great Rift Valley, also sees the dark side of development. “This is out of control. Currently none of us graze animals here because there’s a poisonous plant here and brine water”, he says. “We lose animals and our economy is totally in decay to the extent that our children fail to go to school”. The latest project in the area is Olkaria 4, a geothermal electricity-generating plant partly backed by the European Investment Bank (EIB). It has resulted in the resettlement of families and led to complaints about access to water. It has also deeply divided the Maasai themselves.
EIB loans for development projects have left locals unhappy in several African countries. While development finance institutions often put guidelines in place to ensure borrowers respect environmental and social standards, these sometimes fail to deal with complex realities on the ground. The EIB is no exception in this regard.
For the first time, a small team of data and financial journalists has dug deep into the data and financial mechanisms of EIB investments in Sub-Saharan countries, analyzing a mix of public data and internal data provided by the bank. Journalists from Kenya, Cameroon and Madagascar conducted interviews with dozens of witnesses who’ve been affected by EIB-funded projects. Our findings show that in several cases, large infrastructure projects such as power plants and mines have had an adverse effect on people living near them.
Many of these projects require resettlement, a complex process which not only involves moving people’s homes physically but also changing living standards and inevitably interfering with their cultural heritage. Although compensation, most often financial or in the form of new settlements, makes up part of the project, things like land valuation, property deeds, or new settlements often lead to disputes.
After reviewing public registry documents for projects that have been financially supported by the bank over the last decade in ACP countries (African, Caribbean and Pacific Group of States), we found that at least a quarter of projects that received direct loans had required people to be resettled. Some of these projects have displaced or disrupted the livelihood of thousands of people. Teams of local journalists found that resettlement and damage to the environment top the complaints of local populations.
That shouldn’t be happening. The EIB says it follows strict rules of monitoring for the projects it helps to finance. “An institution like ours, with its checks and balances and requirements in terms of social and environmental standards, brings added value in the way a project is done ultimately”, says Heike Rüttgers, the EIB’s Head of Division for Mandate Management, Development and Impact Finance. Still, the EIB is not subject to a lot of scrutiny from EU institutions. And this results in only a partial overview of the bank’s activities and a lack of transparency around projects.
This is why we asked: What is the EIB and what is it doing in Africa?