Togo is 370 miles south to north, but only has 35 miles of coast on the Gulf of Guinea. It is no surprise then that the coastal region, like many in West Africa, is densely populated, and hosts many villages largely dependent on artisanal coastal fishing.
In this context, IFC led a consortium financing Lome Container Terminal S.A. (LCT), a foreign-owned company that developed a modern container terminal and pier next to Lome’s existing 1960s-era port. LCT has been profitable as it provides services not only for Togo but for neighboring countries, including landlocked countries to the north.
Since the building of the port, and especially since the addition of LCT, Togo’s coastal communities have suffered from serious erosion. Homes, businesses, houses of worship, and even graveyards have been lost to the sea. Fishing has been more difficult as fishing grounds that were once close to shore are now more distant and in rougher surf. Although a part of this certainly reflects sea level rise due to climate change, the coast to the east of the port and LCT has lost territory while the coast on the west has gained, so it’s clear the port and LCT have blocked the natural west to east current and flow of sediment along the coast. Exact apportionment of the share of responsibility for the coastal erosion has been a subject of debate, and studies have been conducted — but not released.
Affected communities from 13 coastal villages formed the Collective of Victims of Coastal Erosion to seek redress from LCT and its financial backers. In March 2015, the Collective filed a complaint with IFC’s Compliance Advisor Ombudsman (CAO) citing concerns not only about loss of land, but also lack of consultation or information about the project, and shortcomings in the project’s Environmental and Social Impact Assessment (ESIA).
These concerns persisted, as reflected in CAO’s findings in successive monitoring reports, the most recent in April 2024, saying that “IFC has not assured itself that the client is responding ‘to community concerns about the project’ or engaging in consultation ‘on an ongoing basis as risks and impacts arise’, as per the requirements of PS1. Further, IFC has not provided advice which would bring [LCT] back into compliance as per the Sustainability Policy.” Key gaps in disclosure remain since the published version of an environmental audit of LCT omitted a component on coastal erosion, and since LCT refused to publish a study on the contribution of different infrastructure projects to coastal erosion.
The World Bank in 2021 undertook the West Africa Coastal Areas Resilience project in part to address the erosion, but even if effective, this will mostly limit future damage. There is little prospect that lost territory will be restored.
IFC agreed in June 2011 to provide LCT €82.5 million in loans and mobilized €142.5 million from other lenders, notably FMO and DEG, the Dutch and German Development Banks.This covered close to two-thirds of LCT’s estimated cost of €350 million. LCT started construction in 2012, and the terminal has been operational since October 2014. In 2015, IFC provided LCT with additional financing of €10 million. LCT fully repaid IFC’s loans on December 15, 2023, ending the financial relationship.
In May 2020, LCT completed the required environmental audit, which was disclosed on IFC’s website, but it did not assess the relationship between the LCT project and coastal erosion. LCT also initiated a study on coastal erosion in early 2019, finalized in April 2020. However, both LCT and IFC questioned the study’s methodology and findings, leaving unresolved whether LCT’s construction had contributed to coastal erosion.
In August 2021, CAO released its third monitoring report. CAO noted that the Port of Lomé, in which LCT is the largest operator, had historically been, and continued to be, a contributing factor to coastal erosion east of the port. CAO noted that erosion impacts associated with the project due to its reliance on the Port of Lomé infrastructure continued to affect complainants.
In April 2024, CAO released its fourth monitoring report, covering IFC actions between August 2021 and December 2023. CAO reported that the coastal erosion study finalized in 2022 included an estimate of the contribution of the LCT project (among other sources) to coastal erosion.
CAO acknowledged that IFC actively supported its client in commissioning and finalizing the coastal erosion study and had made efforts to encourage disclosure of the study in accordance with PS1 requirements. However, these efforts had been unsuccessful, and the study has still not been disclosed more than two years after its completion. This lack of disclosure remains in non-compliance with PS1.
In addition, delayed disclosure of the study’s findings has been used by IFC as an excuse to not demand that LCT take mitigating and remedial actions to address coastal erosion impacts related to the LCT project’s construction. Based on the coastal erosion study and additional expert advice received, CAO stated that the link between the IFC-financed project and erosion impacts has been demonstrated. CAO found that IFC should have worked with LCT and other relevant stakeholders, consistent with the Sustainability Policy and PS1, to assess project-related erosion impacts on coastal communities. Finally, CAO’s report noted allegations of intimidation of the complainants during the monitoring period and the related low-trust environment between the client, the complainants, and other coastal community members.
Given that this monitoring report was published after IFC’s loan to LCT had been fully repaid, CAO recommended that IFC promptly implement the following actions to address the remaining non-compliances:
While these recommendations and the CAO report itself are welcome, the fact that it was issued only after IFC’s financial relationship with LCT was concluded undermines its impact and the likelihood that IFC will be effective, even if it does follow through.
The fact is that, over nine years after filing the Collective’s original complaint, IFC has failed to induce LCT to effectively address or remedy the losses resulting from the coastal erosion east of the port, and disclosed only limited information about its causes. Even that information has mostly come through CAO, rather than directly from IFC or its client, as it should have. This begs the question as to whether the compliance process itself is effective.
For IFC: Follow through on and fulfill all CAO recommendations from the fourth monitoring report. This will demonstrate that IFC can and does contribute to positive development outcomes, beyond the direct benefit to clients of financing projects. Failure to do so will leave questions on whether IFC provides any additionality or is committed to “responsible exit.”
For CAO: Continue monitoring and engagement with IFC, as promised by the fourth monitoring report. If IFC does follow through on CAO recommendations, that should be recognized, and will also demonstrate CAO’s added value.
Additionally, CAO should work to see that any memorandum of understanding that LCT proposes, negotiates, or signs with communities that have been impacted by its operations is based, at a minimum, on informed consultation and participation of all affected communities, including all of those in the Collective.
For IFC’s Board/Executive Directors: In no way should IFC’s Board accept that the most impoverished people are asked to bear the burden of environmental and social impacts of projects IFC has financed, as has been the case for Togo’s coastal communities impacted by LCT. If the prospective IFC remedy framework does not offer reasonable assurance that communities such as these will be made whole for the losses suffered, the Board should demand that it be re-designed so that there is such assurance, setting up a provision for each loan or investment based on its risk.
