As rich nations try to solve the financial crisis, it'sestimated that the global recession will cost developing countries 750 billiondollars this year in lost income. The G20 summit in London next week (April 2)will address the global crisis, but there's concern the problems of poorcountries may not be high on the agenda. The G20 represents the world's richnations, as well as emerging economies, such as China and India.
The London-Based Overseas Development Institute has published a"Development Charter for the G20." ODI Director Simon Maxwell says the aim isto convince developed nations that the financial crisis is hitting poorcountries very hard.
"When we suffered the financial crisis before Christmas, therewas a view amongst the political leadership that this was a crisis made indeveloped countries, that would be solved in developed countries, and all wehad to do was to maintain aid flows and perhaps agree a DOHA (trade) deal, andeverything would be fine for the developing world. What we now see just a fewmonths later is that that was absolutely not true," he says.
Maxwell says that the effects are "real, rapid and severe." Withthe right leadership, policies and money, Maxwell sees a recovery in 2010. But rightnow, the financial crisis is taking its toll.
"We're seeing, for example, 25 percent of the mining workers inZambia have lost their jobs. We're seeing remittances down by well over 20percent in Kenya. We're seeing stock markets down by 40 or 50 percent in manycountries. And we're beginning to see poverty rates rise. The estimate is that90 million people will fall below the poverty line in 2009," he says.
The ODI estimates that sub-Saharan Africa alone will lose $50billion dollars in income this year. Maxwell likens that to two weeks pay forevery man, woman and child on the continent.
"What would happen if of the hundreds of billions of dollarsthat we're spending on our economies we were to compensate Africa for that andput $50 billion either into consumption or into building infrastructure inAfrica? Well, it would benefit Africa, of course, in the short run. But, youknow what? It would be good for exports from the developed countries, as well.Because when Africa grows, what it does is import more commodities and moreservices, more tourists, for example. Our research shows that if we were tospend $50 billion in Africa, about half of that would come back straight awayto the rich countries in the form of additional imports," he says.
The Development Charter for the G20 calls for a Global PovertyAlert System to better monitor the effects of economic ups and downs. Forexample, the full effects of the 1980s recession on Africa were not known untilyears later.
Maxwell says, "One of the points we want to make is that we needto be watching the human impact of the crisis, not in three years time, not infive years time, but right now. Because every child who suffers from havingfewer meals, who becomes clinically undernourished, is damaged for life. Thatchild will not grow so well, will not learn so well, will not work so well asan adult, will suffer long-term diseases."
The Overseas Development Institute also warns against imposingprotectionist practices in both trade and labor.
"When countries are faced by a crisis, their temptation is to closetheir borders, to raise the tariffs or to start investing their money inprotecting their own industries. We've seen it with the car industry, with thesteel industry in Europe quite a lot in recent weeks," he says.
He says that would mean fewer trade opportunities for developingcountries. Instead, the ODI charter calls upon the World Trade Organization tomonitor protectionism and try to stop it and for world leaders to announce thatprotectionism is harmful to the world economy.
British Prime Minister Gordon Brown has called for fulfillingcommitments made to poor countries, such as those made at the G8 summit inGleneagles, Scotland, in 2005. But G20 leaders may not be so eager to do so.
"It will be very easy for the leaders of these big globaleconomies, even if some of them are nominally developing countries like Chinaand India?to turn their back and to focus entirely on what looks like a veryurgent agenda ? fixing the international bank regulation, making sure thefiscal stimulus is coordinated. But if we do that then the chances are that, asit's happened so often before, Africa will be left behind," says Maxwell.
The G20 summit will be held in London on April 2.Organizers say the goals include stabilizing financial markets and enablefamilies and businesses to get through the recession.