Nigeria in 'high exposure' category over global financial crisis
From Laolu Akande, New York
NIGERIA has been placed by the World Bank under "high exposure" level regarding the current global financial and economic crisis.
A chart released over the weekend at the United Nations (UN) headquarters in New York by the World Bank showed that several developing countries have been hard-hit by the turbulence.
The chart, which has three categories, classified countries into decelerating growth, high exposure and high poverty levels. Nigeria falls under the category of countries with high exposure to the global crunch.
A World Bank statement accompanying the chart was issued in the run-up to the Group of Seven (G-7) Finance Ministers meeting in Rome on Saturday.
According to the statement, the spreading global crisis is "trapping up to 53 million more people in poverty in developing countries."
It quoted World Bank President Robert B. Zoellick, who was at the meeting, as saying that "the global economic crisis threatens to become a human crisis in many developing countries unless they can take targeted measures to protect vulnerable people in their communities."
The World Bank in its policy note entitled: "The global economic crisis - Assessing vulnerability with a poverty lens," said almost 40 per cent of the 107 developing countries such as Nigeria were highly exposed to the poverty effects of the crisis and the others were moderately exposed with less than 10 per cent facing little risk.
High exposure countries, according to the Bretton Woods institution, need to finance job creation, delivery of essential services and infrastructure and safety net programmes to take care of their vulnerable people. It also called for financial support for such nations in form of grants and low or zero interest loans.
Already, Zoellick has called for the setting up of a Vulnerability Fund where each developed country with little risk will devote 0.7 per cent of its stimulus package.
To assuage the crisis, the World Bank said it had put in place other initiatives to assist developing countries including a substantial increase in lending by the International Bank for Reconstruction and Development (IBRD), adding that "IBRD could make new commitments of up to $100 billion over the next three years," such that this year's lending alone could triple to $35 billion.
There will also be a fast-tracking of funds from the International Development Association (IDA). For instance, there is now in place a mechanism to help the poorest countries with $2 billion to deal with the global crisis.
Similarly, such countries may now qualify for new funding programmes from the International Finance Capital (IFC), that focuses on the private sector totaling around $30 billion over the next three years.
One of the schemes is an IFC facility to double its existing Global Trade Finance Programme to $3 billion over a three-year period with plans to mobilise more funds from other sources.
The statement also disclosed that the World Bank Group would also put in place through the IFC, a global equity fund "to recapitalise distressed banks," with plans to invest $1billion over three years with an additional move by Japan to invest another $2 billion to the fund, bringing it to $3 billion.
The $3 billion fund to be managed by the IFC is "a global equity and subordinated debt fund which aims to help recapitalise banks in smaller emerging markets."
On infrastructure, the World Bank Group plans to invest at least $300 million over three years and mobilise at least $1.5 billion to provide rollover financing and recapitalise viable private infrastructure projects in financial distress.
The statement added: "Germany has earmarked 100 million Euros for the facility and with additional funds still being expected the amount could rise to half a billion Euros."
