Geographies in Depth

How African palm oil can boost livelihoods and protect forests

Bujumbura, Burundi - November 29, 2013: Local people in Burundi carry a big load of  palm nuts on their bicycle  to a palm oil production in Burundi.

A sustainable palm oil trade is possible Image: Getty Images

Jonathan Walter
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  • Palm oil is the most widely consumed, efficient and versatile vegetable oil on Earth.
  • Palm oil is also a major cause of deforestation and, while Malaysia and Indonesia account for most global production, over 20 African countries grow oil palm on almost 6 million hectares of land.
  • Discover how African nations are joining together to create a sustainable palm oil and forest products industry to combat deforestation and boost reforestation.

Imagine you’re getting ready for a night out at an Italian restaurant. You may shower and wash your hair, roll on deodorant and pop on some lipstick. You share a lovely evening over pizza and chocolate cake. Back home, you brush your teeth and head to bed.

Every product you used or ate that night contains palm oil. It would be the same if you’d feasted on Nigerian jollof rice or Ivorian sticky alloco plantains because palm oil is the most widely consumed, efficient and versatile vegetable oil on Earth. It stops chocolate melting and it makes fried food crispier. It conditions your hair and smooths makeup. Oil palms provide nearly five times more oil per hectare than sunflowers or rapeseed. They supply 40% of the world’s vegetable oil on less than 6% of the land used to produce all vegetable oils.

But, palm oil is a major cause of deforestation, especially in Asia's carbon-rich and biodiverse tropical forests. The conversion of swamp forests in Malaysia and Indonesia to palm oil plantations is responsible for up to 0.8% of all greenhouse gas emissions – equivalent to almost half the global aviation industry. While these two countries account for most global production, over 20 African countries now grow oil palm on almost 6 million hectares of land. This is heightening concerns around potential deforestation and exploitation of indigenous peoples and local communities in the tropical forests of the Congo Basin and West Africa.

And, despite nearly two decades of trying to tackle the problem by organizations such as the Roundtable on Sustainable Palm Oil (RSPO), the battle continues. According to WWF, which surveyed 227 global palm oil buyers in 2021, only 67% of total palm oil reported by respondents is certified sustainable – a figure that drops to 23% for palm oil bought by companies in Africa and Asia.


What’s the World Economic Forum doing about deforestation?

Making palm oil sustainable

Six years ago, Greenpeace warned: “Africa has become the new battleground of oil palm and rubber tree companies.” That year, seven African nations came together at COP22 to sign the Africa Palm Oil Initiative (APOI). This public-private-community partnership of governments, rural people and businesses has a shared vision of “a prosperous palm oil industry that brings jobs and wealth to local communities in a way that is environmentally and socially sustainable and protects the rich tropical forests of the region.”

So, what is APOI doing differently? It’s getting the right government policies in place, building local capacity and engaging the stakeholders who matter when it comes to understanding the underlying processes behind deforestation, according to Abraham Baffoe, Africa Regional Director for Proforest, the NGO leading on the implementation of APOI. “Most importantly, the initiative realised that local farmers and indigenous people depend on forests for their livelihoods – but they’re often left behind,” he says. “The people living with the resources understand why deforestation is happening – so they need to be at the centre, in terms of identifying the issues and agreeing on the solutions.”

As well as uniting these stakeholders under national platforms, APOI has brokered regional guiding principles addressing deforestation, community rights, labour conditions, smallholder development and biodiversity protection. The message is clear: Africa is open for investment in the palm oil sector, but will only welcome investments that comply with these principles.

These apply as much to local producers as to international investors. One of Africa’s challenges is that it consumes around 15% of global palm oil production, far more than it produces. Imports of palm oil topped nearly 8 million tonnes in 2020, putting pressure on local producers to grow more. In 2019, for example, the Nigerian government created a policy to provide 100% of national demand through domestic production by 2027. As food prices soar, due to the Ukraine war, this has proved a prescient move.

To avoid imports, domestic production must scale up significantly to meet the demand of rapidly growing populations across West and Central Africa. APOI is determined that growth in the domestic palm oil sector enhances the livelihoods of smallholders while preserving pristine forests and engaging with local communities.

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Avoiding deforestation

Although 85% of the world’s palm oil comes from Malaysia and Indonesia, the palm oil plant is native to West Africa. It thrives in the same warm, damp equatorial climate as some of the planet’s most biodiverse and carbon-rich tropical forests. The challenge for Africa is to avoid the mistakes made in South-East Asia where the palm oil industry was responsible for at least 39% of tropical forest loss (2.4 million hectares) on the island of Borneo from 2000 to 2018.

Vital to APOI's success is its engagement with governments – the only entities capable of determining and enforcing which land should be protected and which can be leased for food production. The Nigerian state of Edo, whose local government joined APOI in 2018, is a good example. It is one of the top five palm oil-producing states in the country. The state government’s first step towards sustainable and equitable land-use practices was to commission GIS maps of all forest areas. It found that 80% of Edo’s 625,000 hectares of forest reserves had been encroached on, while just 200,000 hectares could be called 'real forest.'

This prompted Edo to frame a new forestry law permitting agricultural production only on degraded land. Furthermore, all private companies engaged in palm oil or any other food production will be required to provide the resources to restore an area of degraded forest equivalent to 25% of their land holding. “We’re not going to cut down forests to grow palm oil,” said state governor Godwin Nogheghase Obaseki. “We will grow palm oil and encourage the growers to invest to grow back our forests.”

Edo has set up a forestry commission to manage forests and enforce the new law. The same is happening in the Republic of Congo, another APOI member, where the government has passed a law decreeing that palm oil production must move from forests to savanna regions.


Engaging with local communities

For Governor Obaseki, it’s also as important to ensure that indigenous people and local communities grant permission for any agricultural development on their ancestral lands, through a process known as free, prior and informed consent (FPIC).

This has long been ignored in the region. Take Liberia, for example. Following the country’s civil war from 1989-2003, government officials in the capital Monrovia signed away a quarter of Liberia’s total land mass in concessions to foreign companies farming rubber, palm oil and lumber. Their scant regard for the consent of local communities, whose livelihoods were sustained by the land, led to riots and legal challenges that froze the country’s palm oil production in the mid-2010s. It also pushed communities off their customary land into forest areas, further aggravating deforestation.

In a landmark legal process culminating in 2018, Liberia’s President George Weah signed the Land Rights Act into law. It asserts that customary land can be claimed through oral testimony and community agreement. It also makes FPIC a legal requirement for all land allocations. Although critics point out that the law is not retroactive, contracts already signed by the state will be honoured.

Working with the private sector to boost productivity

While framing and enforcing the right forest laws and seeking the consent of local people is vital to the sustainable production of palm oil, the battle against commodity-driven deforestation needs economics on its side too. Farmers must be able to generate meaningful livelihoods and this requires investing in higher productivity to deliver higher returns on less land.

APOI's key competitive advantage is that its members include the private sector companies driving palm oil production. While a typical company expects palm oil yields of 20 tonnes per hectare, local smallholders struggle to generate more than a tenth of this. The pattern is the same across the region. In Ghana, smallholders farm eight times more land for palm oil than large companies, but account for less than a quarter of production.

In Nigeria’s Edo state, the government requires companies to help smallholders improve their productivity by providing training in best agronomic and management practices. A similar programme in Ghana helped smallholders double their productivity in 18 months. Direct financial support is also vital for smallholders. The Nigerian government subsidises inputs, such as seeds and fertilisers, while the Central Bank has made $500 million of low-interest loans available to Nigerian palm oil producers.

APOI's strength is its ability to build alliances between farmers, government and agribusiness to ensure that socioeconomic development and forest conservation become mutually reinforcing. And if it can make this work for palm oil, then why not for other commodities too?

Broadening out to other commodities

APOI now has 10 members, accounting for 75% of Africa’s forests – Cameroon, Central African Republic, Côte d’Ivoire, Democratic Republic of Congo, Edo State (Nigeria), Gabon, Ghana, Liberia, Republic of Congo and Sierra Leone. Critically, membership includes the countries of the Congo Basin, one of the world’s most biodiverse ecosystems that stores an estimated 25-30% of the world’s tropical forest carbon stocks.

To further protect these stocks, APOI has the consent of its members to expand its mandate into other commodities, including rubber and cocoa, which face similar issues in similar ecosystems. “Governments realised that sustainable principles for a single commodity won’t deliver impact on the ground,” says Baffoe. “The principles have to be applied across the landscape for all commodities.”

So, the coalition is transforming from APOI into the Africa Sustainable Commodities Initiative (ASCI). This cross-commodity approach will build on the work that the coalition has done – around issues such as deforestation parameters and public-private partnerships – and leverage that capacity to enhance the sustainability of other forest products.

This is an important strategic step for the coalition, according to Felipe Carazo, head of public sector engagement at the Tropical Forest Alliance, who says: “Instead of each commodity sector coming up with its own separate metrics and working relationship with the government, ASCI will drive alignment and integration across all forest-risk commodities in the West Africa region.”

There are other advantages to this cross-commodity approach as well, points out Carazo. It positions members to respond more effectively to demand-side measures, such as the European Union’s impending new regulation to outlaw the import of any commodities linked to deforestation. It also helps build the case for government investment in tackling bottlenecks that affect the sustainability of all forest-based commodities, such as transport and public health infrastructure. Carazo says: “This, in turn, would create a more enabling environment for foreign direct investment.”

This article is a part of the TFA Perspectives, which features many similar stories from the commodities supply chains. You can read more such stories here.

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