First, food and fuel prices skyrocketed, causing serious problems for families in the developing world. Now, the worldwide credit crisis has delivered yet another serious blow to the economic outlook for low and middle-income countries.
At the start of the International Monetary Fund/World Bank annual meeting, World Bank President Robert Zoellick warned that the triple threat is potentially a “tipping point” that would “push poor people to the brink of survival.” World finance and development ministers urged wealthier governments not to ignore aid commitments in the midst of their own economic woes. The World Bank has developed a list of 28 of the countries most vulnerable to the triple threat of increased food and fuel prices and the financial crisis.
Not suprisingly, 13 out the 28 countries on this list are in Africa. But sub-Saharan Africa may avoid the worst of the global financial meltdown. A recent article in the Economist points out that the region has a number of things working in its favor. These include a highly regulated banking sector that is relatively unlinked to the Western financial system and natural resources that are drawing investment from countries like China, India and the United States.
Back in January, two IMF staffers noted that investor confidence in Africa was on the rise. Still, it's hard to argue that Africa can continue to make as much progress without outside help, like the promised $350 million more in agricultural loans from the 185-country-owned World Bank. “The stark reality," Zoellick says, "is that developing countries must prepare for a drop in trade, capital flows, remittances, and domestic investment, as well as a slowdown in growth."