W’Bank: Capital Flow To Nigeria, Others Drop By $17bn

By Kunle Aderinokun, Abuja
About 43 low-income countries across the world, including Nigeria, will by the end of the year see a drastic reduction in net capital inflow to their economies from $17 billion to $13 billion, the World Bank has said.

The amount was $30 billion as at 2007, and reduced to $8 billion from $21 billion in 2008, said the bank.

This was made known in a paper prepared by the institution for the G-20 leaders' meeting scheduled for September 24-25, 2009, in Pittsburgh, United States.

The paper titled “Protecting Progress: The Challenge Facing Low-Income Countries in the Global Recession”, also warned that the global recession had put at risk $11.6 billion of core spending in areas such as education, health, infrastructure and social protection in the most vulnerable countries in the world.

Consequently, 89 million more people will be living in extreme poverty, on less than $1.25 a day, by the end of 2010, the bank stated. It further noted these are some of the several economic shocks resulting from the financial crisis.

In addition, the bank pointed out that low-income countries had been hit hard by the downturn in global trade, with export market demand estimated to have dropped by between 5 and 10 per cent in 2009.

Besides, the bank said the sharp deterioration in economic conditions had led to significant declines in workers' remittances to low-income countries, which is anticipated to fall by between 5 and 7 per cent in 2009, recovering only modestly in 2010.

Realizing the enormity of the effect on low income and poorest countries, the World Bank said it was rising to the occasion by stepping up its financial assistance to help developing countries mitigate the impact of the crisis over its past fiscal year.

Accordingly, it disclosed, “for the World Bank Group as a whole, the result has been record levels of activity - with $58.8 billion committed in financial year 2009 to support countries hit by the global crisis, a 54 per cent increase over the previous year and a record high.”

World Bank Group President, Mr. Robert B. Zoellick, said: “The poor and most vulnerable are at greatest risk from economic shocks - families are pushed into poverty, health conditions deteriorate, school attendance declines, and progress in other critical areas is stalled or reversed. The poorest countries may not be well represented on the G-20, but we cannot ignore the long-term costs of the global downturn on their people's health and education.”

In his own remarks, President and CEO of InterAction (the largest coalition of U.S.-based non-governmental organizations focused on the world's poor), Mr. Samuel A. Worthington said: “InterAction is pleased that the World Bank continues to insert the needs of the world's poorest nations into the G-20 conversation.”

Originating at burningpot.com