By Patrick Kagenda
Economic growth drops to 2.4%, 700,000 could die
Africa may have been an innocent bystander when the global financial crisis was hatched in the developed nations but they stand to suffer most according to the latest World Bank forecasts.
The queen of African economic gloom, Obiageli K. Ezekwesili the World Bank Vice President for the Africa region, told journalist last week that the continent would be hit on three fronts: Via reduced foreign capital inflows, a drop in remittances from Africans abroad, and a drop in commodity prices.
She said capital in flows, which had exceeded US$530 million and remittances, which were in excess of US$20 billion annually were now all nose diving.
According to World Bank figures 77 percent of money remitters live in Europe and the US where the global financial meltdown originated.
Ezekwesili warned that the reduction in money inflow to Africa could result in instability as 25 out of the 35 fragile states in the world are in Africa.
She singled out Angola which is a major oil exporter on the continent and said it could be hit like the US.
Ezekwesili said African economies are already grappling with balance of payments challenges. Africa”™s growth levels had reached 5.7 % annually while in 2008 growth was projected at 6.4%. This was revised to 2.9%. Currently the continent is headed for a 2.4 % growth in 2009 representing a drop of over 2- 3%.
Ezekwesili said countries like Ghana and Tanzania that were on track of achieving the Number one Millennium Development Goal of health are now off track.
The decline in primary health services could result in a death of 700,000 infants in Africa before they reach their first anniversary. In Africa only 1% of primary health care reaches the rural poor according to the bank. Ezekwesili said the bank will provide additional resources to Africa to deal with the crisis as other donors have become domestically oriented.
In its planned additional resources is an increase of 20 % frontload on its operation budget to Africa which it has increased from $ 6.8 billion to $ 7 billion for the Africa region through IDA and IFC interest free.
The bank will also help countries in Africa with debt reduction activities.
It also plans to increase its support to agricultural development on the continent by almost doubling its budget from $430 million to over $1.5 billion.
The bank is doing a lot in safety nets to protect the poor and is encouraging Africans to develop alternative strategies in case their economies are hit.
She said the World Bank is also focusing on debt relief.
She said the bank had developed monitoring programmes, tools, and projects at a multi-level in countries to ensure adherence to policy.
She said it also has integrated the governance and anti-corruption strategy into the way the bank delivers programmes in the respective countries to avoid situations such as Uganda where teachers spend 17% of their time out of class.
“This is why the bank is looking at the prospect of systematizing civil society involvement in the banks project delivery,” she said.
Ezekwesili was addressing journalist ahead of the 2009 Spring Meetings of the World Bank and IMF in Washington DC. Central bank governors and finance ministers attend the meetings to hash over the global economy.