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World Bank and IMF keep on keeping on at fall meetings… but is more needed for Africa?
The annual fall meetings of the World Bank and IMF in Istanbul this week focused on the “road to recovery” from the global economic crisis. While we didn’t see major new initiatives emerge from the meetings, the Bank and the Fund reaffirmed important commitments to help emerging market and developing countries cope with the impacts of the financial crisis. These include commitments to ensure the Bank and the Fund have adequate resources to respond to the crisis and timetables for governance reforms that would give greater voice and representation to emerging market and developing countries.
They echoed calls to: protect core spending on health, education, infrastructure, agriculture and social safety nets; revive global trade and investment; and establish a multilateral trust fund at the World Bank for the food security initiative. The World Bank and African Development Bank also announced this week that they would invest $215 million to bring high-speed, low-cost internet access to central African countries.
While important progress is being made at the institutions, some say it’s not going fast enough or deep enough. Nancy Birdsall, at the Center for Global Development, says the newly inclusive G20 is more progressive than the modest changes in governance being proposed at the World Bank and IMF. Several African finance ministers also issued a statement during the annual World Bank and IMF meetings calling for their countries to have a voice in the G-20, and another self-styled “group of 30” financial figures called for much more dramatic reforms at the IMF including ending the U.S. veto power and cutting the number of European board chairs.
We’ll be watching to see how these financial mechanisms and new governance proposals will benefit sub-Saharan African countries.
ONE’s Reaction to the Pittsburgh G20 Communique
Overall, the Pittsburgh G20 Summit appears to have made some progress towards reshaping global power structures to make them more representative, but it still has some way to go before it becomes a truly representative global decision making body.
I spent the summit with our US Government Relations Director Tom Hart, who said:
“Moving from the G8 to the G20 is a seismic shift: it brings many more of the world’s people to the table, but the new expanded world body must now start addressing the needs of the poorest countries, especially in Africa. For nearly a decade now, Africa has been squarely on the G8’s agenda, even if delivery on their commitments has been mixed. During this transition time, African development must not fall through the cracks. One way to show the world will not forget Africa would be to hold an upcoming G20 summit on the African continent.”
As I posted earlier here, we passed our petition, in which 75,000 ONE members worldwide call for a G20 Summit to be held in Africa, to the US delegation at the summit.
Below are some key points in the summit’s communique that are relevant to Africa:
- Agriculture - The G20 called on the World Bank to develop a new trust fund, as a way to implement the G8’s food security initiative announced at the L’Aquila Summit in Italy in July. This multilateral fund will support the set of principles championed by the White House to make aid for agriculture more effective, coordinated and geared towards the strategies developed by poor countries themselves.
- Climate change – The G20 failed to call for resources to help the poorest countries adapt to the harmful impacts of climate change, and tackle its causes. It was disappointing that there was no mention of the urgency of addressing these needs.
- African Development Bank – The G20 have reaffirmed the commitment to make sure the multilateral development banks have enough finance, especially the World soft loan arm, the International Development Association (IDA) and the African Development Bank (AfDB). The African bank has increased its lending to respond to the financial crisis by as much as US$4bn and now needs support to replenish its coffers. ONE welcomes Canada’s announcement of an extra US$2.8bn in loan guarantees for the Bank.
- World Bank and IMF- Both International Financial Institutions took steps towards increasing representation of developing countries.
Rwanda becomes top global reformer for making business easier
In the IFC-World Bank Doing Business 2010 report released yesterday, for the first time a sub-Saharan African country—Rwanda—was named the world’s top reformer of business regulations, based on the number and impact of reforms implemented. Doing Business is an annual report that ranks economies based on 10 indicators of business regulation that record the time and cost to meet government requirements for starting and operating a business, trading across borders, paying taxes, and closing a business.
In Rwanda, it now takes an entrepreneur just two procedures and three days to start a business. Imports and exports are more efficient, and transferring property takes less time thanks to a reorganized registry and time limits. Investors have more protection, insolvency reorganization has been streamlined, and a wider range of assets can be used as collateral to access credit.
Mauritius, ranked 17 globally, is the top sub-Saharan economy for the second year in a row in terms of the overall regulatory ease of doing business.
However, despite these advances, more reforms are needed in Africa. The average rank for sub-Saharan African countries remain the lowest of any region.
Globally, the report shows that despite the financial and economic crisis, a record 131 economies reformed business regulations between June 2008 and April 2009. Singapore is the top-ranked economy on the ease of doing business for the fourth year in a row, but most of the action occurred in developing economies. Two-thirds of the reforms recorded in the report were in low- and lower-middle-income economies.
-Mikiko Imai
Global economic crisis: A development emergency
Last week I attended the launch of the World Bank’s Global Monitoring Report 2009 in Brussels. The report’s subtitle is ‘A Development Emergency’. A couple of key facts coming out of the report which, although not necessarily new statistics, serve to highlight the ‘development emergency’ as the World Bank calls it:
- In 2009, growth in developing countries will be 1.7%, just a quarter of pre-crisis levels; in sub-Saharan Africa it will be 1.6%
- The number of poor people will rise in over half of developing countries and in three quarters of countries in sub-Saharan Africa
- At the global level, access to sanitation is the most off-track Millennium Development Goal (MDG) after MDG1 on hunger
The report picks out 6 priorities for action: 1) adequate fiscal response 2) improve climate for private investment 3) redouble efforts on human development goals 4) scale up aid 5) open trade system 6) ensure multilateral system has the mandate, resources, and instruments to respond adequately.
Within the report’s main findings, infrastructure investment is presented as a win-win-win, in the sense that it has the highest multiplier effect, it removes bottlenecks to future growth, and contributes to a green recovery.
However, the report states that the infrastructure financing gap for sub-Saharan Africa (SSA) is $40bn annually. The World Bank contends that this amount could be reduced by 45% through improved management, efficiency and cost.
In March of this year, ONE undertook some research with ODI and NIESR to show the positive impact that investing $50bn in SSA could have on the world economy- invested in the right way, that development aid could ‘pay for itself’ within 16 years given the positive impact it would have on the global economy.
There was time for some discussion after the presentation of the report during which someone from the UN made a very interesting point. He said that just like with global warming, we need a kind of ‘polluter pays’ principle for this economic crisis. I don’t think we’ve had anything like this kind of ’speculating countries pay’ idea muted before. The general debate that followed the report underlined the urgency of the whole situation much more. It was suggested that the civil society push is too weak, especially considering we know that there will be 200m more people pushed into poverty (that’s equivalent to around half the population of Europe) and that at least 200,000 children will die per year up to 2015 (that’s 1.2million lives in total). The figures are almost too much to comprehend, statistics which struggle to convey the human suffering they mask. It’s averting those crises that spurs us all on as campaigners.
You can check out the full report here.
-Eloise Todd
Reflections on the IMF, World Bank Spring Meetings
On Sunday, we headed to the final portion of the IMF and World Bank Spring meetings. Unlike the International Monetary and Financial Committee (IMFC) on Saturday, where little was discussed on what the IMF can do for the poor, yesterday, the World Bank and the International Monetary Fund Joint Development Committee gathered to discuss how the global economic crisis is impacting developing countries specifically.
The Development Committee and the IMFC released communiqués laying out their recommendations for action. Generally, a few positive recommendations were made, but we have yet to see a comprehensive, grand plan to protect the world’s poorest people from the fallout of the financial crisis.
The good news first: ONE, along with others in the development community, requested that the Bank “frontload” funding to low income countries. Yesterday’s Development Committee communiqué indicates that this may happen. Frontloading International Development Association (IDA) funding commitments means that the World Bank will have the resources to provide funding to low income countries now in larger bundles over smaller periods of time, rather than spanning it out until 2011. This is critical in order to ensure that development projects already underway can be completed and new projects that help the poor can be implemented.
The not-so-good news: The IMFC Communique recommended that the IMF increase its lending capacity for poor countries, and agreed to explore the idea of giving better terms for low income countries on their lending, but did not specify how far the IMF will go with this. IMF loans also frequently come with burdening economic conditions and has the potential to lead to a new debt crisis.
Also, little progress has been made to reform the IMF and World Bank governance. We are asking that African countries be given strong representation because, after all, institutions like the World Bank and IMF have a very large impact on their development and it’s only right that these nations have a say.
The weekend was productive, but we still have a lot of work to do. Even with the petitions of ONE members, the IMF did not budge on the gold sale issue. We’ll now need to take that up with participating countries to ask them to help us move on this issue. We also continue to ask that funds be made available to poor countries through grants and debt relief, rather than in loans. Additionally, the IMF and World Bank must move forward quickly on reform.
Stay tuned for ways you can help.
-Chandler Smith
Liberia Slashes its Debt with Historic Buyback Deal!
Liberia bought back $1.2 billion in debt today at a 97% discount, “the steepest ever negotiated on developing country commercial debt.”
From the World Bank:
“The deal was concluded with the payment of $38 million to retire 25 outstanding commercial claims. The World Bank contributed half of this money through the International Development Association (IDA) Debt Reduction Facility, and Germany, Norway, the United Kingdom, and the United States contributed the other half.
“The successful resolution of this inherited debt, which had ballooned through interest and penalty charges during a period when my country was wracked by civil war, is an important step on our road to recovery,” said Liberian President Ellen Johnson Sirleaf. “This puts us on a firmer footing to attract investment and accelerate economic growth.”
Expect more from ONE soon on this amazing update.
-Virginia Simmons
G20 Summit- Day After ReCap
Overall, yesterday’s G20 Summit communique has left ONE very hopeful, but as always, with a lot of work on our plates. Below, I’ll quote the very succinct recap by our Global Campaigns Director Roxane Philson, and then I’ll include 3 very short flip camera interviews with some incredible G20 Voice bloggers: Nigerian blogger Sokari Ekine, Richard Murphy of the UK (who was able to ask a question about tax havens to Gordon Brown at his internationally-covered G20 press conference), and Kenyan blogger Daudi Were.
Roxy’s Summary:
“Yesterday’s G20 Summit looks like it made some real progress for the world’s poorest. Caution tells me that some of the vague language will take hard work to clarify, but this morning, as I re-read statements and news from yesterday, I am filled with a sense of hope and optimism.
Highlights include:
Resources: The G20 announced US $50 billion for low-income countries - although we are concerned this includes existing funding - and a further US $100 billion in lending for development banks.
Reform: Developing countries will have greater representation in the international financial institutions and that election to World Bank/IMF leadership will be based on merit.
Regulation: The G20 announced regulation of illicit tax havens.
As with all summits like the G20, we’re left with just as much work coming out of the summit as we had going in. We need to work to ensure that money going to developing countries is given as grants, not loans that trigger another debt crisis. Also, much more needs to be done on the green agenda in the interests of developing countries at the UN Climate Change Conference in Copenhagen later this year.”
And below, short interviews with 3 great global bloggers:
Nigerian Sokari Ekine of the blog Black Looks on attending the 2009 London G20 Summit:
UK Richard Murphy of The Tax Research Blog on asking a question on tax haven reform to British Prime Minister Gordon Brown at the internationally-covered G20 press conference:
Daudi Were, who lives in Nairobi, Kenya, and blogs at Mental Acrobatics blog, on the outcomes of the G20 Summit.
Attending the 2009 London G20 Summit as an accredited member of the media was absolutely the opportunity of a lifetime. I just want to publicly thank Karina Brisby, Shane McCracken, Samantha Bronnar, and everyone who put the G20 Voice project together and made it possible for 50 bloggers from around the world to attend this historic global summit. I hope it’s only the beginning for allowing new independent voices, particularly those from from the developing world, into these critical global discussions. I also want to thank our own Weldon Kennedy for handling all of ONE’s G20 Voice project work from the UK.
-Virginia Simmons
G20 Summit- Day After ReCap
Overall, yesterday’s G20 Summit communique has left ONE very hopeful, but as always, with a lot of work on our plates. Below, I’ll quote the very succinct recap by our Global Campaigns Director Roxane Philson, and then I’ll include 3 very short flip camera interviews with some incredible G20 Voice bloggers: Nigerian blogger Sokari Ekine, Richard Murphy of the UK (who was able to ask a question about tax havens to Gordon Brown at his internationally-covered G20 press conference), and Kenyan blogger Daudi Were.
Roxy’s Summary:
“Yesterday’s G20 Summit looks like it made some real progress for the world’s poorest. Caution tells me that some of the vague language will take hard work to clarify, but this morning, as I re-read statements and news from yesterday, I am filled with a sense of hope and optimism.
Highlights include:
Resources: The G20 announced US $50 billion for low-income countries - although we are concerned this includes existing funding - and a further US $100 billion in lending for development banks.
Reform: Developing countries will have greater representation in the international financial institutions and that election to World Bank/IMF leadership will be based on merit.
Regulation: The G20 announced regulation of illicit tax havens.
As with all summits like the G20, we’re left with just as much work coming out of the summit as we had going in. We need to work to ensure that money going to developing countries is given as grants, not loans that trigger another debt crisis. Also, much more needs to be done on the green agenda in the interests of developing countries at the UN Climate Change Conference in Copenhagen later this year.”
And below, short interviews with 3 great global bloggers:
Nigerian Sokari Ekine of the blog Black Looks on attending the 2009 London G20 Summit:
UK Richard Murphy of The Tax Research Blog on asking a question on tax haven reform to British Prime Minister Gordon Brown at the internationally-covered G20 press conference:
Daudi Were, who lives in Nairobi, Kenya, and blogs at Mental Acrobatics blog, on the outcomes of the G20 Summit.
Attending the 2009 London G20 Summit as an accredited member of the media was absolutely the opportunity of a lifetime. I just want to publicly thank Karina Brisby, Shane McCracken, Samantha Bronnar, and everyone who put the G20 Voice project together and made it possible for 50 bloggers from around the world to attend this historic global summit. I hope it’s only the beginning for allowing new independent voices, particularly those from from the developing world, into these critical global discussions. I also want to thank our own Weldon Kennedy for handling all of ONE’s G20 Voice project work from the UK.
-Virginia Simmons
Maternal, Newborn, and Child Health at a Crossroads
The Partnership for Maternal, Newborn, and Child Health (PMNCH) and the World Bank co-hosted a seminar last Wednesday on how to achieve MDGs 4 and 5 through strengthening health systems and increasing international and domestic financing for key maternal and child health interventions. MDG 4 calls for a two-thirds reduction in child mortality, and MDG 5 calls for a three quarters reduction in maternal mortality and increased access to reproductive health services. Countries are off-track to achieve these MDGs, and there has been almost no progress in reducing maternal mortality in Africa. Seminar participants discussed how to jump-start progress through more effective and efficient financing.
Financing for health systems has been dwarfed in recent years by financing for infectious diseases. While some progress has been made in the prevention and control of diseases like HIV, tuberculosis, and malaria, too many women and children in poor countries still die every year of diseases that are no longer issues in the wealthier world. The global community is now increasing its attention on building health systems in developing countries to maximize and sustain investments in infectious diseases and to address the root causes of poor maternal and child health.
The High-Level Task Force on Innovative International Financing for Health Systems is at the center of global efforts to estimate the resource needs to strengthen health systems and define the mechanisms that can accomplish this goal. Launched in September 2008 and co-chaired by World Bank President Robert Zoellick and UK Prime Minister Gordon Brown, the Task Force has among its members high-level policymakers from key donor and recipient country governments. Operating under the premise that more aid is necessary – but better aid is absolutely critical – the Task Force has two working groups estimating the global price tags and country-level costs of achieving the MDGs. A key emphasis of the ongoing work is on the right mix of innovative financing mechanisms to deliver aid more effectively and efficiently. Accountability for funding and the results it achieves is high priority for donors, recipient countries, and civil society. The Task Force will deliver the results of the working groups at the G8 meeting in July, including recommendations on the appropriate mix of financing mechanisms to strengthen health systems and ultimately improve maternal and child health outcomes.
-Lisa Fleisher
Highlights from the G20
I know that you have all been eagerly awaiting ONE’s analysis of the G20 economic summit that took place this past Saturday. To re-cap, in October, President Bush called for a first-ever meeting of the G20 to discuss solutions to the global financial crisis, and mechanisms to prevent future crises. The G20 is a group of finance ministers from the world’s leading economies (the G8, the European Union and Australia), as well as a group of ten emerging economies including Argentina, Brazil, China, India, and South Africa. After the summit, officials issued a communiqué detailing their resolutions. Here are a few highlights:
- Developing Country Representation: The G20 calls for better representation of developing countries – both emerging economies and poor countries - in the Bretton Woods Institutions like the IMF and World Bank, in order to accurately reflect the world economy and increase the legitimacy and effectiveness of these institutions. The G20 calls for these reformed institutions to play a role in identifying future crises and responding to them.
- Trade: The G20 rejects the impulse to turn to protectionist measures to stabilize their economies and promises to refrain from raising new barriers to trade or investment in the next 12 months. The G20 also calls for a successful completion to the World Trade Organization’s Doha Round trade talks.
- Official Development Assistance (ODA): Considering the impact of the financial crisis on developing countries, and particularly on the most vulnerable in those countries, the G20 countries reaffirm the importance of the Millennium Development Goals (MDGs) and their development assistance commitments. They urge all countries to undertake commitments consistent with their capacities, and re-iterate the principles agreed upon at the UN Conference on Financing for Development that took place in Monterrey in 2002 that emphasize country ownership of and mobilizing all sources of financing for development.
- Anti-Corruption: (more…)
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