|
Joy Phumaphi, The World Bank’s Vice President for Human Development. 2009 Hunger Report—Bread For the World, National Press Club, Monday, November 24, 2008. Good morning. 2008 is proving to be the most momentous year for the global economy since the Great Depression. At the start of the year, the world’s economy was already in the grip of a serious man-made food crisis. High fuel costs added to rising farming costs and falling food supplies. This was made worse when farmers took their fields out of food production and grew crops for bio-fuels instead. As food prices soared earlier this year, agricultural markets started to break down under political pressures. Some 40 countries imposed bans or restrictions on food exports. Others imposed price controls and stopped trading. The UN tried mightily to get countries to double their food contributions to help those people most in need. But poverty, hunger, and malnutrition went up. The World Bank estimates that at least 100 million more people were driven into poverty by theses crises, and another 44 million suffered malnutrition, figures which we hear amplified again independently in Bread for the World’s excellent new report this morning.
The second half of this year has seen a financial crisis which has added further aggravated the unfolding human crisis. For people living on the margins of life and vulnerable to every twist and volatile turn in the global economy, the grim trinity of crises in food, fuel and fertilizer threatens to have lasting repercussions on the nutrition, health, and schooling of children and mothers in poor families. All countries are in harm’s way and many are moving into a new danger zone with heightened risks to exports and investment in critical industries, credit, banking systems, budgets, and balance of payments. In fact, the World Bank Group has lowered its growth forecast for developing country economies from 6.4 percent to 4.5 percent for 2009.
Global trade is projected to fall in 2009 for the first time since 1982. Remittances are also drying up in many parts of the world, creating a real threat to rural economies and livelihoods. More significantly, the global financial crisis could significantly set back the fight against poverty - we estimate that a one percentage point reduction in growth could trap 20 million more people into poverty.
Some 28 countries were already highly exposed to the twin shocks of food and fuel. These countries are unlikely to recover substantially without increases in development assistance, and their ability to fund their 2015 MDGs, which was already in peril, is also threatened. Sharply tighter credit conditions and weaker growth threatens to cut back government spending in education and health. World Bank research shows the urgency of putting in place social safety net programs and other forms of social protection for those people most in need.
Experience with past crises in East Asia and other regions shows us that the crises may harm human development in four ways, namely: by increasing poverty; worsening nutrition; reducing the quality and supply of education and health services; and wiping out the meager savings and wages of poor people.
Arguably the most devastating effect is felt in early childhood malnutrition, which results in poorer health, lower cognitive abilities, less learning, and lower lifetime earnings. Children pulled out of school in times of hardship rarely return to the classroom. Evidence shows us that the impact of crises can be made tempered if governments can provide a positive policy response—in the human development sectors, primarily through direct income transfers targeted to the poor, by reinforcing basic nutrition and health services, and maintaining high-quality and accessible education services. In line with this the Bank developed a three pronged attack. Finance Policy advise and support Partnering with and supporting Global Stakeholders
Financial Support: Earlier in the year, the Bank set up a rapid response facility of US $ 1.2 Billion for countries in dire need The Bank will substantially increase financial support for developing countries. The Bank’s middle-income lending arm, IBRD, could make new commitments of up to $100 billion over the next three years. This year, lending could almost triple to more than US$35 billion compared to US$13.5 billion last year. Donors to the World Bank’s concessional leanding arm, IDA, have committed US$42 billion for the next 3 years which can be frontloaded to meet country needs. WBG will launch/expand four facilities for the crisis-hit private sector. Expanded trade finance program, Bank Recapitalization Fund, Infrastructure Crisis Facility, IFC Advisory Services. Other responses include: MIGA’s Risk Insurance, Energy for the Poor, Food crisis response (Nearly US$900 million is approved or in the pipeline), technical analysis and advice.
Policy advice and technical support We have learnt some important lessons from past crises. The most important lesson is that delaying action to protect the world’s poor, or doing the wrong thing, will not only increase the level and number of poor; but will also lower growth, thereby further entrenching the poverty. Programs for seed and fertilizer distribution during the planting season were complemented by Bank staff, with agricultural research, agri-business, and the development of innovative risk management tools as well as crop insurance to protect the vulnerable farmers and increase food security. At the same time we have called for an end to subsidies, and tariffs, as well as the removal of export bans. The experience of successful Conditional Cash Transfers (CCTs) in developing countries indicates that the targeting and design, including the engagement of communities and sharing of responsibilities and monitoring are key. With an impact on current poverty similar to CCTs, labor-intensive public works programs can contribute to long term poverty reduction by giving people regular wages while communities acquire valuable infrastructure.
Partnering with and supporting global stakeholders
World Bank President Bob Zoellick has called for global solutions to the global challenges that currently plague the global community. This entails the modernization of multilateral systems to bring in important developing country voices, and to connect to issues as diverse as finance, trade, energy, development, and climate change. It would require a flexible network that: 1) includes other key players (the BRICs and beyond); 2) links up various organizations (IMF, FSF, WBG, UN); and 3) works on issues beyond trade and finance to include development, climate change, and fragile states – all crisis issues for the future. He envisions a flexible multilateral group that expands and contracts as necessary to address certain issues. We should note that volumes of foreign aid pale in comparison to financial rescue. At some US$ 100 billion a year, aid flows are modest in comparison to the sums spent on addressing the financial crisis in rich countries. At only $22 billion in the United States and $56 billion for Europe (less than 0.2 and 0.3 percent of their respective GDPs), the amount spent on overseas aid is a drop in the ocean compared to the trillions of dollars that are now being spent on financial rescues in the developed world. Does this mean that we can be optimistic about aid levels being at least sustained at current rates? Let me say that we welcome the recent reaffirmation by the Heads of Government of the importance of the Millennium Development Goals at the MDGs Review Summit and their commitment to honor their pledges of overseas aid. However, if we are going to avert a human crisis, we will have to do more. This is the greatest challenge of our time. Everything that we have worked for, the development gains of the last decade – maybe decades; are at risk. We must chart a new course; of hope, and prosperity for future generations. Thank you
|
RSS