A newborn in Afghanistan, which has the 6th highest rate of babies dying on their first day of life. Photo: Getty.
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Why are one million babies a year dying in their first day of life?

The first 24 hours in a baby's life are the most dangerous, but newborn deaths have been under-researched and neonatal care is under-funded.

The first day of a baby’s life is the most dangerous. According to a report published by Save the Children today, one million newborns a year die in their first day of life. Another 2.9 million annually die within their first 28 days. And 1.2 million newborns die during labour. The charity believes that two million of these deaths are preventable, and if healthcare services were more equally distributed, this would reduce newborn mortality by 38 per cent.

These statistics make for depressing reading, but they are very significant. Traditionally, international aid agencies and charities have focussed on reducing infant mortality, which is usually defined as cutting down the number of deaths in children under five. Reducing infant mortality was one of the Millennium Development Goals pledged by the UN and signatory states in 2000, and since 1990 the number of children who do not make it to their fifth birthday has halved – although 18,000 children under five die each day from preventable illnesses.

Save the Children’s research however focuses specifically on the first month of life, and so highlights the important role that midwives can play in infant survival. Conventional statistics on infant mortality don’t count the 1.2 million babies that die during labour  - but these deaths are too numerous to ignore.

The best way of preventing the death of newborns is to ensure that women are looked after by skilled birth professionals – especially if they are trained in basic techniques like neonatal resuscitation and can advise on basic newborn care –  but each year 40 million women give birth without one, and two million of these will give birth completely alone. In Guinea, Nigeria, Somalia and Sierra Leone there are fewer than 2 doctors, nurses or other medical professionals per 10,000 people – but the critical threshold is considered to be 23. It’s no surprise then that together with Pakistan (which tops the list) these are the five countries where babies are most likely to die in childbirth or on their first day of life.

The positive from Save the Children’s report – if you can consider it that – is that the charity estimates that increasing health expenditure by $5 per person could prevent 32 million stillbirths, and save the lives of 147 million children and 5 million women by 2035. The biggest barrier isn’t financial: it’s finding the political will and commitment. 

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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