Danchurchaid | 23.03.2015
WHAT IS YOUR PENSION DOING IN AFRICA?
A new study shows that Danish pension funds will invest more than 760 million DKK in African agriculture. But in the race for Africa’s land the investors risk stealing the basis of their existence from the poor. Much greater transparency and compliance with UN standards is needed, the three Danish development organisations say.
On paper it is a win-win situation: Danish pension customers get money on their accounts for their old age, and at the same time they contribute to helping in Africa.
Pension companies investing in Africa can at worst harm the small farmers and only benefit a few large enterprises.
A new study shows that Danish pension funds will invest millions in African agriculture. The three Danish pension funds, PKA, Pension Danmark and Danica have between them decided to invest 762 million kr.
At the same time, African land becomes and a better and better business.
In the race for Africa's land the investors risk stealing the basis of their existence from the poor.
That is what is known as land-grabbing, and the Danish pension funds have made it clear that they will not get involved in that.
The problem is however, that it is impossible to verify whether they do what they promise.
Investment fund blackout
Investments in land and agriculture in Africa have become profitable, but very few would get involved in an African investment venture alone.
The Danish pension funds that invest in African agriculture that were investigated use agricultural investment funds as intermediaries.
Investment in Africa's agriculture is needed in order to boost economic development, but investments must benefit all and not just few large enterprises.
The report shows that the pension funds make use of the Silverland Fund which is located in the tax haven of Luxembourg. Danish money constitutes about half of Silverland’s turnover.
It is impossible to see what Silverland’s investment leads to. A visit to the fund’s web-site doesn’t reveal very much. It contains information about precipitation in the countries where the fund makes investments, but there is no information about the actual projects.
Control of the ethical investments
PKA is the only one of the pension funds that provides information publically about which enterprises and areas Silverland has invested in. The others refer to confidentiality clauses with Silverland.
The question is why Danish pension funds chose to send money to a covert fund that then makes investments for them?
The report finds that the most important reason is trust. That trust is based on Silverland’s long-running dialogue with the Danish Investment Fund for Developing Countries and PKA about their rule for responsible investments.
The pension funds trust Silverland, but the question remains whether that is true of the many Danes who invest their pension contributions through Silverland.
Pension companies will according to them self not contribute to a negative impact on human rights, but it is impenetrable for consumers to see, whether it happens or not.
Their trust can not be based on support for the projects, because project information is closed country.
The only way to create trust would be if Silverland and the pension funds have the proper documentation and systems for ethical investments.
At our request, Danwatch has investigated that, and the result is not encouraging.
The pension funds support selected principles for responsible investment, but they do not consider those that provide the best protection for human rights.
Only PKA takes samples
The Danwatch report shows that Danica and Pension Danmark leave it entirely up to Silverland to follow up on whether the rules are complied with.
Only PKA takes samples to check the investments.
DanChurchAid, CARE Denmark and MS calls for more transparency of pension investments in African agriculture.
It is an unmanageable job to find out if one’s pension contributions are used responsibly.
That is why we urge the pension funds to shed light on the effect of the investments in developing countries and to comply with the UN guidelines on Human Rights and Business.
With such an enormous Danish footprint on Silverland’s turnover, the pension funds can demand that Silverland does the same.
Raise the standard, Denmark
In the light of the affair about the Danish pension funds in Syngenta that trap Indian peasants in a debt trap, it is time to cast some light on what the Danish pension funds are doing in Africa.
The Trade and Development Minister, Mogens Jensen (S) emphasised, in a hearing on the matter that he is not responsible for what the pension funds do.
In large parts of Africa the population live primarily of what they can get out of their land.
We acknowledge that the primary responsibility lies with the investors, but the state also has an obligation.
Before long the Minister will launch a Danish Agricultural Investment Fund, and then the Minister himself will have a similar responsibility.
The Minister must ensure that all Danes can find information about what our money is doing in Africa.
At the same time the Minister ought to ensure that the Agricultural Investment Fund lives up to the UN Guidelines on Business and Human Rights and thus set a standard.
The article was published in the newspaper 'Boersen' on March 16th 2015 under the heading 'Your pension is astray in Africa'.