2002, International Finance Corporation (IFC)
As the member the World Bank Group that promotes private investment throughout the developing world, the International Finance Corporation (IFC) is committed to financing environmentally and socially sound projects that improve the lives of people in its member countries. As part of IFC’s overall environmental and social review procedures, its specialists appraise proposed projects for their potential positive development effects and to ensure that adverse effects are properly mitigated.
A project that involves involuntary resettlement—the economic and/or physical displacement of people—represents a significant challenge for IFC. Without proper planning and management, involuntary resettlement may result in long-term hardship for affected people and environmental damage to the locations in which they are resettled. Such potentially negative consequences diminish the developmental impact of the project, tarnish the reputation of the project sponsor, and are contrary to IFC’s mission to improve the lives of people through private sector investment. Conversely, through proper resettlement planning, a sponsor can enhance the development impact of a project and thereby improve the living standards of affected people. Investment in local economic and social development pays dividends to the sponsor in the form of enhanced good will within the host community, an enhanced national and international corporate reputation, and a well-founded partnership with IFC for future investment opportunities.
It is the responsibility of a project sponsor to provide IFC with accurate information regarding the potential social effects of the project as early in the project development cycle as possible. IFC, in turn, considers this information in evaluating and approving the project. IFC recognizes that host governments will often take responsibility for the resettlement of affected peoples, which may make the sponsor’s role in the process difficult to define. Nevertheless, regardless of which entity takes responsibility for resettlement, IFC requires the outcome of that resettlement to be consistent with the involuntary resettlement policy.
IFC urges sponsors to avoid involuntary resettlement wherever feasible or to minimize it by exploring alternative project designs and sites. Where involuntary resettlement is unavoidable, IFC sponsors must engage affected people in the planning, implementation, and monitoring of the resettlement process. IFC encourages project sponsors to plan and execute involuntary resettlement as a development initiative to ensure that the livelihoods and living standards of affected people prevailing before their displacement are improved.
A Resettlement Action Plan (RAP) is a document drafted by the sponsor or other parties responsible for resettlement (such as government agencies), specifying the procedures it will follow and the actions it will take to properly resettle and compensate affected people and communities. The RAP is the sponsor’s commitment to IFC and to the affected people that it will meet its obligations arising from involuntary resettlement.
The RAP must identify the full range of people affected by the project and justify their displacement after consideration of alternatives that would minimize or avoid displacement. The RAP outlines eligibility criteria for affected parties, establishes rates of compensation for lost assets, and describes levels of assistance for relocation and reconstruction of affected households. The RAP’s planning protects the sponsor against unanticipated or exaggerated claims from individuals who have spurious eligibility for resettlement benefits. The mediation of such claims can cause significant delays in project implementation, which can result in cost overruns for the sponsor.
The purpose of this handbook is to provide guidance to project sponsors in complying with World Bank Group’s policy on Involuntary Resettlement (OD 4.30, attached as annex A) and in the preparation of a RAP. This handbook represents the “good practice” that has emerged from the application of the policy across the IFC portfolio by IFC’s social development specialists. The handbook is organized into four sections with supporting annexes.
- Part I outlines the scope of OD 4.30’s application and identifies situations that require specific and detailed consultation between project sponsors and IFC’s social development specialists.
- Part II describes fundamental principles, procedures, and requirements of RAP preparation and provides examples of survey instruments and summary data tables. These examples illustrate both the logic and the approach of RAP preparation as well as output from data collection that is needed for RAP planning.
- Part III is a checklist that identifies the sequence of actions that IFC’s specialists follow in reviewing the preparation, implementation, and evaluation of a RAP.
- Part IV provides a detailed outline of a RAP that can be adapted to meet the requirements of specific projects.
The annexes of this handbook contain a copy of OD 4.30, a sample terms of reference for the preparation of a RAP, and a sample RAP budget.
This handbook has been prepared as a guide to addressing larger-scale economic and physical displacement. As such, it describes a level of planning and implementation that may apply to only a small percentage of IFC investment projects. Although the level of planning and the difficulty of implementation may vary based on the number of people resettled or the size of the land area acquired, the approach outlined in this guide will apply in all cases of resettlement, large or small.
