On April 2, the G20 Summit convenes in London in a collective search for ways to restore stability, confidence, and economic growth in the global system.
We all recognize the tremendous multiple challenges the world faces, but action on poverty in Africa cannot be delayed until the financial system has been fixed.
At a time such as this when the domestic agenda of wealthy nations is full - jobs and homes are being lost, unemployment is rising - the temptation to “come to the issues of Africa and global poverty once we have sorted out the domestic issues” is high. This would be self-defeating. We will not stimulate global growth by marginalising 900 million Africans. A prospering Africa is part of the solution.
When this financial crisis began the theory of “decoupled” emerging markets was quickly shown to be a fiction. It was accompanied by an even bigger fiction – that low-income countries would not be affected because they are not as integrated in the global system.
Now we know: the indirect blow for the poorest countries is even more painful. The economic crisis is hitting Africa’s poor hard and countries who benefited so little from the process now stand to suffer the worst of its excesses – with the risks of wiping away recent development achievements.
Ironically, the crisis found our Continent in good shape - its best in 30 years. For the last decade, growth in Africa consistently exceeded four per cent above the increase in population. The success story was not celebrated enough: buried by reporting of conflict, mayhem and bad governance. But now it is threatened: economic growth in 2009, projected at 3.5 per cent, will barely tally with demographic increase. In other words, growth in real per capita incomes will be zero or marginal.
As businesses close, export earnings and remittances fall, finance dries up and governments juggle with declining resources, the inability to create jobs for the young and fund infrastructure and social programs will exacerbate social tensions. Yet it doesn’t have to be. Two decades of economic reforms were beginning to bear fruit. It is true poverty remained massive and governance challenges not fully resolved; but overall Africa had demonstrated its ability to do the right thing. Now the people are asking: “Is this what globalisation was meant to offer us”?
As a member of the global family of nations, Africa must be part of the search for global solutions. Taking into account interests of all countries, including those not posing systemic risks, is only fair since they are perhaps even more affected by the failure of international systems.
The G20 summit must send a clear message that action to deal with poverty in Africa, hit by a crisis none of its making, cannot be delayed until the global financial problems are fixed. There should be no going back on promises made in Gleneagles in 2005.
We welcome steps being taken by wealthy countries to stimulate their economies, but we also recognise that few – if any - African countries faced with the re-emergence of twin deficits can afford such fiscal stimulus.
Yet Africa can be part of the stimulus for the world economy, as we saw in recent years when oil and raw materials were fuelling global growth. Hence, beyond respecting commitments already made, there should be additional new resources.
This is the reason that we, the leaders of Multilateral Banks, endorse Robert Zoellick’s proposal for a Vulnerability Fund for poor countries equal to 0.7 per cent of G20 fiscal stimulus packages.
The international development agency, Oxfam, estimates that contributions at this rate would amount to $12.8bn in total. This would not be nearly enough given the considerable needs already emerging. Oxfam says that somewhere between $24-41bn is the bare minimum needed immediately.
Alongside sister International Institutions, the African Development Bank is already taking exceptional action to respond.
Demand on our facilities including grant resources has increased tremendously. Our member countries’ economies are under pressure and we are prepared to do more – with the support of our shareholders.
We are keen to protect Africa’s achievements and ensure basic infrastructures essential for the Continent’s integration and growth prospects.
As we provide such exceptional responses our facilities will be under pressure. Such a fund or similar instruments would strengthen the ability of the multilateral system and other channels to respond more effectively during this crisis.
The challenges we face are exceptional. They call for exceptional responses, not only resources, but the way we do business, the way we respond, the way we anchor governance, business climate and confidence in our countries. The G20 Summit offers a historic opportunity for a new departure, together rebuilding global confidence, renewing our commitments to fight poverty and a special effort in partnering Africa.