We are finally starting to see some positive news around the East Asia and Pacific region, but it is too soon to begin to speak of "green shoots" of economic activity or reaching the bottom of the economic downturn in Asia. Although the Swine flu (one disease originating from animals that did not come from Asia!) and the nervousness about the condition of U.S. banks had a slightly negative impact on financial markets in Asia this past week, the stock markets are still up by about 12% for the year – led by Indonesia (21.6%), Korea (11.8%), and China (9.4%).
At a recent press conference, three African finance chiefs chastised international credit rating agencies for failing to forecast the global financial crisis and challenged international financial institutions to do a better job of monitoring the global economy and of holding rich and developing countries accountable in the same way.
The Ministers from Zambia, Cote d’Ivoire and Tanzania spoke about the crisis and its effect on Africa. Mustafa Mkulo, Tanzania’s Minister for Finance and Economic Affairs, said:
"This crisis has come when African governments have taken broad based measures to reform their economies, followed by significant achievements. It is now threatening to wipe out our gains of the past ten years and disrupt all our plans for further progress."
- Press Release: African Ministers Outline Impact of Crisis on their Countries
- Website: The Financial Crisis in Africa
- Blog: Africa Can End Poverty
“We are here to listen—tell us how we can better assist you. And please, be frank,” said Obiageli Ezekwesili, World Bank Africa Region Vice President.
Ezekwesili asked the ministers from Liberia, Rwanda and the Democratic Republic of Congo (DRC) to discuss capacity development efforts in their countries, and to identify what has and has not worked, and how donors can provide more effective support for human development, infrastructure, and public sector reforms.
Several common themes emerged from the ministers’ interventions, including:
- Donors prioritizing support for primary and secondary education, and not higher education
- Donors pressing a “one size fits all” approach on countries, trying to replicate programs that were successful elsewhere
- The failure by expatriate advisors in civil service posts to transfer their knowledge and skills to local counterparts
- Tension among returning members of the Diaspora and local populations that stayed behind, partly around incentive structures for civil service
- An urgent need to deliver skills-training and create job opportunities for young ex-combatants
Augustine Ngafaun, Minister of Finance for Liberia, outlined the enormity of the challenges facing his country, which has “75 percent of the educational facilities destroyed” combined with a “massive brain drain” as a result of professionals fleeing during Liberia’s recent conflict.
“We have very few doctors, teachers and hardly any engineers,” said Ngafaun, Liberia's Minister of Finance.
He also noted that, despite the importance of the mining sector for Liberia’s growth, there are not even five geologists in the entire country.
Rwanda’s Finance Minister James Musoni noted that even though the reconstruction challenges were daunting, his country has made significant progress since the 1994 genocide. He said it is crucial for the donor community to understand the context in which each country operates, as in some cases the political leadership may not be ready.
Ezekwesili stressed the need to build confidence in all sectors, pointing out that “development solutions work only to the extent that the capacities of the nation-state, the private sector, and civil society are strong.”
“The lack of capacity is magnified by the stress of the post conflict environment,” Ezekwesili said.
Flanked by the finance and development ministers of France and Germany, World Bank Group President Robert B. Zoellick launched two initiatives today that together are expected to mobilize more than $55 billion in financing for infrastructure projects over the next three years.
The multibillion dollar initiatives—the Infrastructure Recovery and Assets (INFRA) platform and Infrastructure Crisis Facility—were created to address the falloff in funding for the construction of roads, water systems, power generation and distribution, and other critical infrastructure.
There is no doubt infrastructure plays a huge role in economic growth and development, Zoellick said.
“In this crisis, we will need more and more to identify creative ways to mobilize additional financing. This facility sends an important market signal,” encouraging the private sector to continue infrastructure investment and development.
France and Germany became the first to sign on to the Infrastructure Crisis Facility with commitments of about $660 million through German development bank KfW and roughly $1.3 billion through French development bank Proparco.
INFRA is designed to help countries offset the negative effects of the financial crisis on their infrastructure services and investment programs, with up to $45 billion available over the next three years. Assistance will be global, but Africa is expected to see a large share of the funding.
The Infrastructure Crisis Facility, administered by IFC, a private sector branch of the Bank Group, is expected to attract more than $10 billion to help bridge the infrastructure financing gap.
At today’s signing, German Development Minister Heidemarie Wieczorek-Zeul appealed to industrialized countries to support the initiative and take into account the situation in developing countries. “They’re not responsible for the crisis. We have a special responsibility to be at their side.”
French Finance Minister Christine Lagarde added: This is a time “when we can put our money where our mouth is and commit to deliver…I think the World Bank has done an outstanding job dealing with issues that are difficult. This is a good illustration of how projects should be conducted. They should be focused where they can actually make a difference.”
On a related note, I caught up earlier today with the Bank’s director for energy, transport and water, Jamal Saghir, who said the Bank’s Board has approved $9 billion in infrastructure projects already this fiscal year. That puts the Bank 47 percent ahead of the amount of infrastructure funding approved this time last year.
Saghir gave a shout-out to staff, who he credited with working hard to speed up project implementation to respond to the crisis.
For more information
- Press release: World Bank Group Launches Multi-Billion Infrastructure Initiatives to Help Developing Countries Weather Crisis
- Website: Infrastructure Recovery and Assets Platform
- Website: Infrastructure Crisis Facility
- Feature story: Infrastructure Financing Gap Endangers Development Goals
Yesterday, the IMF and the World Bank released the 2009 Global Monitoring Report, saying that the global financial crisis is imperiling attainment of the 2015 Millennium Development Goals (MDGs) and creating an emergency for development.
Justin Lin, World Bank Chief Economist, spoke about the crisis at the launch of the report:
"Worldwide, we have an enormous loss of wealth and financial stability. Millions more people will lose their jobs in 2009, and urgent funding must be provided for social safety nets, infrastructure, and small businesses in poor countries, for a sustainable recovery."
For more information:
BBC World yesterday hosted a debate at World Bank headquarters in Washingtonon on how the world's poorest are being affected by the global economic downturn and what can be done to avert a major international human disaster. While the rich world pours billions of dollars into banks and companies, why can’t it spare more for the poorest nations now suffering the effects of the downturn, asked BBC Host Zeinab Badawi.
The five-person panel–including World Bank President Robert Zoellick, German Development Minister Heidemarie Wieczorek-Zeul, Mozambique Prime Minister Luisa Dias Diogo, Indian economic planner Montek Singh Ahluwalia, and activist Bob Geldof—agreed that a solution to the crisis can’t be business as usual and needs to come now.
Unlike the tsunami of 2004, the victims of the financial crisis aren’t so easy to visualize, said Wieczorek-Zeul, making it harder for governments to commit aid money. But there are victims. An estimated 200,000 to 400,000 children will die annually as a result of the crisis, she noted.
Zoellick stressed that for those in the developing world, the crisis isn’t a matter of losing your financial cushion—it’s a matter of eating, of going to school. And the impact won’t end when the crisis ends; it will be felt over a generation.
Responding to the crisis with economic isolationism and protectionism will only hurt everyone, especially the world’s poorest, Zoellick added.
Prime Minister Diogo warned that if we don’t act, there is a potential for instability. “Instability increases nervousness… poverty increases conflict,” said Geldof.
A number of panelists noted that the G20 meeting in London last month was the beginning of the basis for a new global architecture.
“We’re living through an historic period,” said Geldof. “It could all still collapse. There must be new rules for a new world. We must include the most vulnerable on this planet. If not, the 21st Century is up for grabs.”
“We all agree that a global problem requires a global solution with global ownership,” said Ahluwalia.
The debate airs on BBC World on Saturday, April 25.
This past Wednesday, leading development banks joined efforts to provide as much as US$90 billion during the next two years in a joint effort to spur economic growth in the Latin America and Caribbean region.
The Inter-American Development Bank and the Inter-American Investment Corporation, the World Bank Group (IBRD, IFC and MIGA), Corporacion Andina de Fomento, the Caribbean Development Bank and the Central American Bank for Economic Integration are all working together to explore new opportunities to protect the economic and social gains achieved in the region during the last five years.
World Bank President Robert Zoellick spoke about the importance of this joint effort:
"Latin America and the Caribbean have achieved substantial economic and social progress over the last five years and we must ensure that this is not lost because of the external shock of the global crisis. We need to avoid a social and human crisis."
For more information:
- Press Release: Development Banks Join Efforts to Provide US$90 Billion For Latin America & The Caribbean
- Upcoming Event: Latin America and the Global Crisis, Towards a Rapid Regional Recovery
- VOICES Video Interview: Augusto de la Torre, Chief Economist for Latin America and the Caribbean at the World Bank
Speaking at a news conference this morning ahead of the start of the World Bank/IMF Spring Meetings, Bank President Robert B. Zoellick hit on the need to address the second and third waves of economic fallout being felt in developing countries.
“First and foremost we need to ensure that we don’t repeat the mistakes of the past. When financial crises hit Latin America in the 1980s and in Asia in the 1990s…basic health, nutrition and education budgets were cut back severely. This time we must ensure that governments can protect targeted social expenditures and finance effective safety nets,” Zoellick said.
Nor can infrastructure be neglected, he said, citing the long-term negative consequences of slashing infrastructure investment during past crises. To help promote investment in roads, electricity, telecommunications, etc.--as a means of creating jobs and spurring economic growth--Zoellick said the Bank is planning a massive infrastructure initiative, to be formally launched on Saturday.
Zoellick also highlighted the Bank’s plans to boost support for agriculture—increasing lending from $4 billion in 2008 to $12 billion over the next two years to help ensure food security.
- Statement: Investments in safety nets, infrastructure needed to support poor in crisis
- Release: Bank to Invest $45bn in Infrastructure
- Story: Food Crisis Not Over for Many Poor People
- Webcast: IMF Webcast of Press Conference
Watch President Zoellick's opening remarks at the news conference below:
You can listen to the interview using the player below:
How is the financial crisis impacting youth around the world? Youthink!, the Bank’s website dedicated to kids and young adults, asked its cadre of youth bloggers from around the world to answer that question.
"Even if the situation ahead of us is really bad, what good would it do to stress about it? It’s more productive to focus on the good things and keep on working towards our goals as a society…" said contributing blogger María Rodríguez of Colombia.
Bringing together seven young bloggers from across the world, the Youthink! blog features posts about topics as wide-reaching but impactful as climate change to health in the developing world. Since launching in January 2009, Youthink! bloggers have managed to spark lively debates and discussions among the site’s audience.
The first batch of Youthink! bloggers are:
- Stacy Alcantara, Philippines – Youth Coordinator; Active Citizenship Research
- Christine Cassar, Malta – Director, People for Change Foundation
- Nicholas Lembo, USA – MA Candidate; International Development
- Nate Miller, Benin – World traveler and public health professional
- Saptarshi Pal, India – World Bank International Essay Winner, 2008
- María Rodríguez, Colombia – Director; Red de Generación de Oportunidades Sociales (Social Opportunities Generating Network)
- Joao Felipe Scarpelini, Brazil – Youth Activist; Peace Child
- Saadia Iqbal, USA – Youthink! Editor
A 2006 Webby Award winner, Youthink! aims to inform youth on development issues and inspire them to get involved. The site contains a section for educators, and most of the content is now available in French, Spanish, and Chinese.