Wealthy nations need to take three urgent steps to help the poorest countries weather the global financial crisis, the World Bank said on Monday. "First, 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 to an African Union summit in Ethiopia.
"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 feed programmes." Zoellick said the second step was setting up a vulnerability fund for poorer countries that would support crucial investment in infrastructure projects that would create jobs while laying a foundation for future productivity.
Thirdly, he said, such a fund would also provide finance for small and medium-sized enterprises that often had a hard time securing funding, even during normal times. "In Africa, they supply the majority of jobs," he said. Experts say initial hopes that Africa might avoid the worst of the credit crunch were premature, and that it will be hit hard by falling demand for commodities, reduced remittances, foreign investment, tourism and tax income.
Zoellick's deputy for Africa, Obiageli Ezekwesili, has warned the continent's economic growth would slow to 3.5 percent this year, from an annual average of 5.8 percent over the last decade, and could drop to 2.5 percent in 2010 unless rich nations took action to counter the impact of the crisis.
The World Bank wants rich nations to allocate at least 0.7 percent of any domestic stimulus package to the fund, and will urge G20 leaders meeting in London in April to back the idea. "This money is a drop in the ocean compared to the bailout packages developed countries have passed to revitalise their economies," Zoellick said. "But it could help save a generation from a new poverty trap."