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Crisis Impact: Fragile and Conflict-Affected Countries Face Greater Risks

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  • Fragile states are less resilient to external shocks than other countries
  • One billion people live in fragile and conflict-affected states; poverty rates average 54 percent
  • Impact of the financial crisis on fragile and conflict-affected areas is discussed at the Bank-IMF 2009 Annual Meetings

October 2, 2009—Fragile and conflict-affected areas of the world face heightened risks following consecutive crises affecting food, fuel, and the global economy, the World Bank warns.

“Shocks that have occurred within the international financial system also affect countries where there is fragility,” says Alastair McKechnie, director of the World Bank's Fragile and Conflict-Affected Countries Group.

“Those countries, almost by definition, are less able to cope with external shocks and crises. Therefore, there is a risk that social tension and violence could increase in some countries,” says McKechnie.

“The costs of conflict are enormous,” he adds.

Governments in fragile states may have difficulties in paying civil servants, police and security forces, as their main source of revenue—commodity exports—dries up in the economic slowdown.

And money sent home from overseas workers has also declined significantly, threatening a source of income that has functioned as a “social safety net” for millions of people, says McKechnie.

“Fragile states don’t have the same resilience that other countries have to cope with shocks arising from a contracting economy, low government revenues and the possibility that foreign assistance might decline.”

Plight is Annual Meetings Concern

The plight of fragile and conflict-affected areas is the subject of special sessions at the World Bank-IMF Annual Meetings in Istanbul on the impact of the crisis, as well as on the challenge of breaking the cycle of poverty, violence and fragility that has gripped some countries.

Conflict and Fragile States Facts

Fragility and conflict affect 45 countries. 34 are among the world’s poorest countries and 11 are middle-income countries.

Fragile states are least likely to achieve the Millennium Development Goals as they have 50% higher prevalence of malnutrition, 20% higher child mortality, and 18% lower primary completion rates than the average low income country

While fragile states are home to only 19 percent of the population of IDA-eligible countries, they account for over one third of the extreme poor

The annual global cost of conflict is estimated to be around $100 billion.

Recovering and rebuilding takes many years and the efforts don’t always succeed, 40% of post-conflict countries relapse into conflict within 10 years.

Since 2000, the International Development Association (IDA) of the Bank has provided over $5.9 billion in post-conflict reconstruction assistance to fragile and conflict-affected countries.

From July 2008 through March 2009, the Bank committed $964.6 million to fragile and post-conflict countries such as the Democratic Republic of Congo, Cote d’Ivoire, Burundi, Afghanistan, Haiti, and Togo.

The G20, meeting in Pittsburgh in September, recognized in a communiqué the need to strengthen support for the most vulnerable, and to protect low-income countries from future crises.

Fragile- and conflict-affected states are a subset of these low-income countries, though a number of middle and higher-income countries are also affected by sub-national conflict and severe crime-related violence.

Conflict and Fragility: A Cause of Misery for Millions

It’s estimated about a billion people live in fragile and conflict-affected states, where poverty rates average 54 percent, compared with 22 percent for low-income countries as a whole. Their weaker institutions, along with the impact of conflict, have been a protracted development challenge in which results have been difficult to achieve.

“Not only does conflict and fragility cause direct misery for the many millions of people that it affects, but it also retards development and growth,” says Sarah Cliffe, a lead author, along with Nigel Roberts, of the upcoming 2011 World Development Report on conflict and development.

The 2011 report is the first World Development Report to focus on conflict-related issues. It will look at how the problem evolved and its consequences for development, as well as such issues as how to get faster assistance to people and how to build resilient institutions that prevent a country from slipping back into conflict, says Cliffe.

“You need to act fast after a conflict, particularly when there is a new government in place, to help provide things that will make the population feel that they’re actually seeing some hope and seeing some signs of recovery. The WDR will draw lessons on how to try to combine efforts to improve security, give the population a sense that jobs and services are going to become better, and give a sense of hope—as well as how to sustain the progress for the longer term.”

Fragile States Are Under Increasing Pressure

Many fragile states are heavily dependent on commodity exports, remittances, foreign aid and emergency and security assistance. All have come under increasing pressure as a result of the global economic crisis, says a paper prepared for the September G20 meeting in Pittsburgh, Protecting Progress: The Challenge Facing Low-Income Countries in the Global Recession (pdf).

The global recession has put at risk $11.6 billion of core spending in areas such as education, health, infrastructure and social protection in the most vulnerable countries, the paper says.

The World Bank estimates the financial crisis will leave an additional 90 million people in extreme poverty (below $1.25 a day) at the end of 2010 and result in 30,000 to 50,000 additional infant deaths in Sub-Saharan Africa alone in 2009.

World Bank Accelerates Assistance

The World Bank has responded to the food and economic crises by providing rapid, short-term financing and budget support to fragile and non-fragile states alike.

  • The Global Food Crisis Response Program, created in 2008, has disbursed $1.164 billion out of $1.190 billion in 35 countries to help the hardest-hit countries cope with still-volatile food prices.
  • The Financial Crisis Response Fast-Track Facility has committed $1.5 billion to 11 countries for social safety nets, infrastructure, education, and health.
  • The World Bank’s fund for the poorest countries—IDA—accelerated the delivery of grants and concessional loans to more than 30 countries in Africa this year (FY09), providing a total of about $7.8 billion, a 39 percent increase from the previous year.

The State and Peace Building Fund, managed by McKechnie’s group, has an annual Bank commitment of $33 million per year from FY09 to FY11, and contributions of $18.9 million from other donors. The fund has supported efforts to, for example, ease unemployment and poverty in Democratic Republic of the Congo, hard-hit this year by falling commodity prices.

One of the fund’s major goals is to help build the capacity government institutions to the point where they can meet the major needs of the populace.

“The real challenges are about how these countries build institutions that are credible to the population,” says McKechnie. “It’s about getting good relations between the states and the society, so the people see a credible state that is able to deliver services and meet their needs.”

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