The World Bank is urging developed countries to start a fund to ensure that more resources are made available for African countries to develop the infrastructure they need to sustain economic growth.
“Poorer countries need safety net programmes aligned with their ability to put them to good use,” World Bank president Robert Zoellick said in a speech delivered on his behalf at the African Union summit in Addis Ababa, Ethiopia this week.
“We need to fund well-designed, efficient programmes that provide income support to the poorest, such as food-for-work, conditional cash transfers and school feeding programmes.”
Zoellick said that such a fund would also provide finance for small businesses, that often had a hard time securing funding, even during normal times.
Infrastructure has long been identified as a key requirement for any region to realise economic growth, and Africa’s infrastructure needs to be developed to an adequate and efficient standard.
The price tag is high however, with the United Nations estimating that more than US$52-billion a year in public and private investments is needed to close the continent’s infrastructure gap by 2010.
World Bank Africa vice-president Obi Ezekwesili earlier predicted that growth rates in African economies could fall to half of what they have been in the past few years, as the global economic downturn could dry up important private sector investments that have propelled advances in growth.
Ezekwesili pointed out that the African economy had been growing at a rate of 5.8% over the last decade, as compared to negative figures before then.
Shielding poor nations
The World Bank also plans to raise its Innovative Bridge Research and Development lending for developing country borrowers by US$100-billion over the next three years to shield poorer nations from the adverse effects of the global economic downturn.
Of this amount, Zoellick said $42-billion would be channelled to African economies.
He explained that the decision had been necessitated by a sharp drop in demand for African exports, which are expected to slump by a further two percent this year as the continent adjusts to the global crisis.
Decline in foreign investment
In his speech, Zoellick told African leaders to be ready for a continued decline in foreign direct investments, which were expected to fall by 1.5% on top of last year’s 2.1% drop.
“The crisis had raised Africa’s economic challenges to a new height,” he said, adding that the slowdown would affect poverty eradication programmes as well as the Millennium Development Goals of the continent, which were already behind by more than seven years.
“The most at risk are households in the poorest countries, where there is least access to safety nets and the greater danger of falling back into poverty,” he said.
Employment, human crisis
According to Zoellick, the financial crisis that grew into an economic crisis was now becoming an employment crisis, and in the coming months it could turn into a humanitarian crisis.
“Many of you have already seen the danger signs on top of poverty, hunger and malnutrition we saw last year as a result of soaring food and fuel prices,” he said.