World Bank chief heads to Africa as economies hurt
WASHINGTON Aug 6 (Reuters) - World Bank President Robert Zoellick travels to three countries in Africa next week to see for himself damage inflicted on the region from the global financial crisis and recession.
His visit to the Democratic Republic of Congo, Rwanda and Uganda will focus on encouraging businesses and donors to invest in Africa, as the global crisis seems to be easing in industrialized economies but is still being felt in most of the developing world.
"Funding most urgently needed should help expand Africa's share of global and intra-African trade, foster regional integration, curb armed conflicts, and build the crucial infrastructure in energy, transport and irrigation to promote manufacturing and industrialization on the continent," Zoellick said.
The U.S.-led downturn has disrupted more than a decade of rising economic growth in Africa and there is concern the damage could be permanent if investors withdraw and donors cut their aid budgets.
The crisis has fueled record demand for World Bank lending, which soared 54 percent to $59 billion in the fiscal year ended June 30 as the global turmoil spread.
Before the economic crisis hit Africa, the region had been growing at an average annual rate of 6 percent, inflation was at mid-1990's levels, and private capital was flowing into the region faster than any other continent.
But a collapse in global trade as the United States and European economies contracted has punctured demand for African goods, capital flows have fallen sharply and prices of key commodities have dropped, impacting government revenues.
By going to the three countries in the Great Lakes region, Zoellick wants to highlight the opportunities that exist in countries emerging from conflict, such as the DRC and Rwanda, and more stable ones like Uganda.
Africa is increasingly being eyed for its arable farmland by Middle East and Asian investors seeking to secure future food supplies alongside investments in its minerals and oil.
Last year's record increase in food prices highlighted a need for greater food security and the flow of investment to farms in the region has also raised concerns that Africa's small farmers could get sidelined.
Just last week a group of Saudi-based investors, including the Islamic Development Bank, said they planned to launch a seven-year plan worth $1 billion in Africa to reduce dependency on rice imports and supply the Middle East region.
RAISING FOOD SECURITY
Meanwhile, industrialized countries agreed last month to boost investment in agriculture by $20 billion to help poor countries feed themselves after years of underinvestment in the sector, which has long been the main source of income for millions of rural poor in Africa.
But to develop farming in Africa and to get the goods to market, African countries also need new and improved infrastructure, including roads, railways and energy supplies.
"Some of the biggest gains in fighting poverty in Africa can be made if investors and donors boost support for agriculture, helping Africa achieve food security, while improving rural incomes and facilitating post-harvest marketing, conservation and agricultural processing," Zoellick said.
Zoellick has warned that despite signs of stability in financial markets, 2009 is a dangerous year and no one should presume the world will emerge from the deep recession soon.
As rich countries contemplate scaling back stimulus spending that has shored up their economies, Zoellick has cautioned that for the developing world the crisis was far from over and more resources would be needed to support the poorest countries.
The World Bank has said that a decline in the average gross domestic product rate in developing countries by 1 percentage point can trap as many as 20 million more people in extreme poverty. It forecast that GDP of developing countries except for China and India will decline by 1.6 percent this year.
With some signs of a pick-up in demand in China, many are hoping it will filter through to Africa. Still, the World Bank and the International Monetary Fund warn that coming out of a deep downturn such as the current one will be very slow. (Editing by Leslie Adler)
- Washington, DC city council raises minimum wage to $11.50/hr in 2016
- India trims perks for U.S. staff in row over New York envoy arrest
- China confirms near miss with U.S. ship in South China Sea
- Mega Millions lottery winning tickets sold in California, Georgia |
- UPDATE 5-Mega Millions lottery winning tickets sold in California, Georgia -Officials