The World Bank will provide rapid and flexible help to African countries being buffeted by the shockwaves of the global recession, World Bank president Robert Zoellick has assured the continent’s leaders. He also reiterated his call for developed countries to put aside 0,7% of their respective economic 
stimulus packages to create a Vulnerability Fund which would assist developing countries that are unable to afford bail-outs or deficits.

“The financial crisis that grew into an economic crisis is now 
becoming an employment crisis, and in the coming months, for some, it will be a human crisis 
. . . Far from being insulated from these events, developing countries are feeling the effects – and Africa is no exception,” he warned in his speech to the twelfth ordinary session of the Assembly of the African Union, recently held in Addis Ababa.

The first effects will be noticed in those sectors of the African economy that are most integrated with the world economy. African exports in 2008 are expected to be 2% lower than those of 2007, with some countries faring much worse – Angolan exports dropped 30% last year. The overall growth rate for sub-Saharan Africa in 2008 was 5,4%, a drop of about 1,4% in relation to 2007, and it is likely to decline further this year.

Remittances sent back to the continent from Africans living and working abroad are shrinking fast. Kenya saw the growth rate in remittances it receives cut by 50% in 2008, and expects a zero remittance growth rate this year. Foreign direct investment flows into all developing countries fell from 2,1% of gross domestic product (GDP) in 2007 to 1,5% last year, with the decline especially severe in Africa. The World Bank also expects a fall in tourism this year, which will hit some African countries particularly hard. The Seychelles, for example, relies on tourism for 2% of its GDP, some 30% of its employment, and more than 70% of its earnings in hard currency. And foreign aid flows to Africa will probably stagnate this year.

“The World Bank group wants to partner with you and African regional organisations to deal with these critical challenges,” assured Zoellick. “We are committed – and I am committed personally – to working with you so that Africa can best cushion the downswing.” Thus, the group is increasing its International Bank for Reconstruction and Development (IBRD) lending to developing countries by $100-billion over three years. The bank is going to also triple its lending this year, to some $35-billion. For 
example, it is preparing a $2-billion IBRD loan for South Africa to support the reform of the country’s power sector.

In addition, World Bank affiliate International Development Association (IDA) is to fast-track $42-billion in no-interest loans and grants. So, the Democratic Republic of Congo is to get an 
accelerated $100-million IDA loan for infrastructure maintenance and to pay teachers’ salaries, 
and plans are in preparation to rapidly increase financial support to the Comoros, Ghana, Kenya and Zambia.

Further, the World Bank group’s private-sector arm, the International Finance Corpora-tion (IFC), has created an Infra-structure Crisis Facility, and $300-million of this is being made available to supply top-up financing for viable privately funded infrastructure projects in Africa that may be in financial difficulties owing to the international crisis. IFC private-sector invest-
ments will probably come to some 
$30-billion over the next three years.

“But, together, we need to do more . . . a Vulnerability Fund can 
support investment in infrastructure projects that can create jobs while building a foundation for future productivity and growth. With better infrastructure – electricity, water, transport – Africa could increase growth by at least 
2% and raise productivity by 40%.”