Let me suggest a specific answer: $20 billion.

TO BE NOTED: From Africa Can...End Poverty:

"Buddy, can you spare $20 billion?

Submitted by Shanta on Mon, 03/30/2009 - 08:48.

How much additional foreign aid will it take to prevent the global financial crisis from becoming an economic, social, political and human crisis in Africa?
As my co-authors and I tried to point out in an earlier study of the additional aid needed to reach the Millennium Development Goals, this is not the most important question. Much more important are: (i) what developing country governments can do, and (ii) how the additional resources will be spent. Nevertheless, as world leaders gather for the G-20 summit outside London, the magnitude of additional resources to the world’s poorest continent will be discussed.

Let me suggest a specific answer: $20 billion. As with the earlier study on the costs of reaching the MDGs, we can arrive at this estimate using different methods. Such an approach avoids the accusation of double-counting. First, the IMF estimates that the balance of payments needs of low-income countries will be about $25 billion this year. Inasmuch as most of those countries are in Africa, $20 billion for Africa would seem a reasonable number. Second, if we put aside balance of payments considerations and look just at Africa’s infrastructure needs, a recent estimate puts these at $20 billion additional also, taking into account the gap that can be filled by better pricing and efficiency gains. Third, $20 billion is the shortfall in the commitments made at Gleneagles in 2005 by the G-8 to double aid to Africa by 2010. In other words, this is not a new need: it is what the world leaders in 2005 thought would be needed for Africa to have a reasonable chance of reaching the MDGs. And if there ever was a time when those additional resources are needed, it is now."

lowering user fees will, in fact, lead to better access and quality services.

TO BE NOTED: From Africa Can...End Poverty:

"Do user fees increase or decrease access to basic services?

Submitted by Shanta on Tue, 03/10/2009 - 09:59.

In a recent paper, Alaka Holla and Michael Kremer appear to resolve this controversial issue by surveying findings of a series of randomized evaluations. They conclude that user fees in health and education do reduce access. On page 33 of their 45-page paper, they mention that they have not looked at the impact of user fees on provider incentives. Yet this may be the crux of the debate. Everyone would be in favor of lowering or eliminating user fees if we could be sure that poor people would receive the services. But for various reasons having to do with government failures, the subsidies needed to ensure that these services are provided either don’t arrive or don’t provide sufficient incentives for providers to even show up for work. Poor people, desperate to get their children educated or treated in clinics, pay user fees out of necessity. We should be working on overcoming these government failures so that lowering user fees will, in fact, lead to better access and quality services."

Poor countries, especially those in Sub-Saharan Africa, are facing an unprecedented crisis.

From Africa Can... End poverty:

"Responsible aid in a time of crisis

Submitted by Shanta on Thu, 01/29/2009 - 00:05.

My friend, former colleague and one-time co-author Bill Easterly, in his inaugural blog post, takes issue with Bob Zoellick’s Op-Eds in the New York Times and the Financial Times on the need for more aid to poor countries in the wake of the global financial and economic crisis. Bill’s argument is that Bob is calling for more aid without specifying what results that additional aid will achieve, so that the World Bank is not being held accountable for anything.

I agree with Bill that, in normal times, aid and, more generally, public spending is insufficiently linked to outcomes. When people are not accountable for outcomes, much of the aid or spending is wasted. We have made this point separately (see here and here) and jointly.

But these are not normal times we are living in. Poor countries, especially those in Sub-Saharan Africa, are facing an unprecedented crisis. Private capital flows, which had been rising faster in Africa than any other region, are drying up or reversing. Remittances, estimated at $20 billion a year to the continent, are also slowing because, for the first time, the crisis started in the sending countries (77 percent of remittances to Africa come from the U.S. and Western Europe). And the fall in commodity prices is sending many commodity exporters into a recession. Previous growth decelerations in Africa have been associated with increases in poverty, infant and child mortality and out-of-school children. Worst of all, just when economic reforms were beginning to take effect in Africa (growth had been sustained for ten years and accelerating over the last three), people are being asked to tighten their belts—for a crisis that is not even remotely their fault.

In these circumstances, the role of foreign aid is different from its usual role. It is to substitute for the private capital and transfers that had been flowing into the continent, but are slowing because of the financial crisis in the U.S. and Europe. It is analogous to President Obama’s fiscal stimulus in the U.S., which will use public spending to replace the shortfall in private consumption and investment to keep output from falling too fast. The purpose of aid is to reduce the size of the growth deceleration that African countries will experience. This is the result we are seeking to achieve with additional aid. Such results are hard to measure precisely—we would need to know the size of the growth deceleration in the absence of additional aid—which is why Bob Zoellick suggested possible activities that the money could be spent on. Of course, each country will have to tailor its spending according to its particular needs and circumstances. When they do, we will, as we increasingly do now, develop monitorable indicators of performance to hold them and us accountable."

Me:

"Funding for your proposal

Submitted by Don the libertarian Democrat (not verified) on Thu, 01/29/2009 - 21:06.

"The purpose of aid is to reduce the size of the growth deceleration that African countries will experience. This is the result we are seeking to achieve with additional aid. Such results are hard to measure precisely—we would need to know the size of the growth deceleration in the absence of additional aid—which is why Bob Zoellick suggested possible activities that the money could be spent on. Of course, each country will have to tailor its spending according to its particular needs and circumstances. When they do, we will, as we increasingly do now, develop monitorable indicators of performance to hold them and us accountable."This seems like a sensible proposal. Where do you expect the money to come from? Simply the World Bank? Other ideas?"

Someone appeals for bolder regional action, saying: "Please SADC take our problems seriously, don't neglect us."

From Africa Can...End Poverty:

"Letter from Zimbabwe

Submitted by Shanta on Fri, 01/09/2009 - 13:16.

I received this missive from a friend:

December 11, 2008

Harare, 1.00am

It is just after midnight in Harare. I have just returned from a midnight tour of the ATMs in Harare with a cousin. There are queues of people still waiting to get their weekly cash withdrawal limit of $100,000,000,000 (US$2.50). I saw the queues this morning when I went for my first meeting at 7.45am. I did not know then that I would be seeing them throughout the day. Most of the ATMs had run out of money. Rather than go home, people saved their precious place in the lines by lying down where they stood and taking a nap. Covering themselves with sacks, newspapers and whatever warming clothing they had. Those ATMs that were still paying out cash had queues of policemen and soldiers. I dared not pull out my camera then( YIKES ). When I did pull out my camera, it was of people too tired to care. Needless to say, picture quality from a moving car using a micro camera is not the best. This is not a normal interpretation of 24-hour banking; seven days a week.

Three hours earlier, I had gone to one of the cholera infected areas where my aunt lives. I had not intended to stay long. It is a way out of town and I did not want her worrying about my safety getting back into the city. There was a power outage from 6 p.m. and it had taken us two hours to find a house I last visited 20 years ago as a boy. But I did ask how she was coping in Harare; and to her nephew she poured her heart out. No clean water for weeks on end, no food in the shops and constant power cuts. She drives an hour and half across the township in search of clean drinking water, which she brings back in plastic containers. When the city council water does run through the taps in the house, the water is discolored with sewer water. The shops in the neighborhood are empty of basic necessities including mealie meal. Her husband now lives at their farm in another town so that he can plant, guard and harvest the maize that they will live on next year. There are groceries in some shops in the city, but they are sold in US$ and priced beyond her means. I am glad I brought her a suitcase of groceries. Groceries that, 20 years ago, my parents once drove from Lusaka to Harare to buy when Zambia was going through similar madness in the 1980s.( UNREAL )

December 12, 2008

Today the Reserve Bank increased the cash withdrawal limit from $100,000,000 to $200,000,000 (US$4). It also introduced two higher-denomination notes, $200,000,000 and $500,000,000. As expected there was a mad rush to withdraw and spend the cash before it loses value( A RUN OF ANY KIND IS SERIOUS. HERE, IT CAN BE LIFE OR DEATH. ). It is widely expected that retailers will increase their prices in line with the higher withdrawal limits. There were long (and I mean l…l…o…o…n…n…g…g) queues at every single working ATM. Offices were abandoned. I took pictures of the lines outside Barclays bank by walking to the first floor offices of government labor department. In a large pool office with at least 20 desks there was a lone clerk who looked up at me for all of two seconds. As I walked across the room to the window facing the bank, the files lay unattended on people’s desks…probably untouched for weeks. With civil service wages eroded by hyperinflation, people necessarily spend more time in the parallel economy trying to make ends meet. Interestingly, there are no runs on banks. The value of the withdrawals is so meaningless that the banks will be able to meet depositor demands with ease.( I GUESS THIS IS A WAY TO END RUNS. )

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• Economic Policy & Debt
• Financial Crisis
• Poverty
• Public Sector Governance
• Zimbabwe

More from the Zimbabwean:

"The Media Monitoring Project of Zimbabwe (MMPZ) is an independent Trust that works to promote freedom of expression and responsible journalism in Zimbabwe.

MMPZ notes with disappointment the punitive US-dollar-denominated fees to be paid by foreign correspondents and news agencies operating in Zimbabwe for applications, accreditation and registration to practice their profession, as reported in the January 6 issue of The Herald. This new fees structure, published pursuant to the provisions of the draconian Access to Information and Protection of Privacy Act, clearly represents an intensification of the Zimbabwean authorities’ sustained campaign to block access to the foreign media seeking to cover the Zimbabwean story, thus depriving Zimbabweans (and the world community) of a variety of alternative sources of information to the output of the government-controlled media( THIS MUST BE PUBLICIZED. ). In fact, MMPZ believes that all such registration and licensing regulations that exist under the Act constitute a clear violation of regionally and internationally recognised guarantees safeguarding freedom of expression and of the media and should be condemned( YES ). Such regulation of the media and prohibitive fees structures also contravene the spirit of the global political agreement signed on 15th September 2008. ( YES )
MMPZ therefore calls on the Zimbabwean authorities to immediately revise any fees charged for the registration of any journalist or media organisation to no more than a token administrative cost.
Most importantly, MMPZ urges any new government to commit itself to the following:
• Ensure that any media activity is not rendered dependent upon any form of statutory registration or admission and that mechanisms promoting media self-regulation are created and strengthened;

• Encourage a diverse and independent print and electronic media, including foreign media;

• Repeal of the Access to Information and Protection of Privacy Act as a matter of urgency, and remove all those clauses in the Broadcasting Services Act, Public Order and Security Act, and all other pieces of legislation that hinder the right to seek, receive and impart information and ideas without hindrance, as guaranteed under Zimbabwe’s Constitution and the Universal Declaration of Human Rights. Such repressive laws have no legitimate purpose and are not necessary in a democratic society."( ABSOLUTELY )

And here:

"HARARE, Zimbabwe - Opposition members accused of being involved in a bomb plot in Zimbabwe told a court Thursday that they were tortured into making false confessions( THIS IS HOW TORTURE REALLY WORKS ). The allegations were made a day after the seven were formally charged with terrorism, banditry and insurgency. All pleaded not guilty. They face the death penalty if convicted.( UNREAL )

The seven are among a number of rights activists and opposition party members detained in recent weeks in what the opposition calls a crackdown on dissent.( IT HAPPENS EVERY TIME )

In a separate case, another group of detainees has been accused - but so far not formally charged - of attempting to recruit fighters to train in neighboring Botswana to overthrow President Robert Mugabe.( EVERY TIME )

The arrests have raised tensions in Zimbabwe, where Mugabe and the opposition are locked in a long dispute over allocation of cabinet posts under the power-sharing agreement, seen as the best chance of easing a deep economic crisis.

Morgan Tsvangirai has threatened to pull his Movement for Democratic Change party out of negotiations over the issue. Many of the activists in custody are MDC members and the party has said they were abducted.

Tsvangirai won the first round of voting in March elections, but fell short of the majority needed to become president, triggering a run-off which Mugabe won after the MDC leader pulled out, citing violent attacks on his supporters. - msnbc.msn.com"

And here:

"CIVIL society organisations in SA are to press the government and the Southern African Development Community (SADC) to hasten resolution of the crisis in Zimbabwe.( PLEASE )

Helping to co-ordinate the campaign, expected to start in the next 10 days, is Kumi Naidoo, honorary president of the global alliance for citizen participation, Civicus.

Naidoo said Archbishop Emeritus Desmond Tutu had committed himself to a weekly fast, together with Bishop Paul Verryn of the Central Methodist Church. Tutu is a member of the Elders, whose delegation was denied entry into Zimbabwe late last year.( A GREAT MAN )

"We need to up the ante a bit in terms of the types of activities that put pressure on the government," said Naidoo, who is also co-chair of the Global Call to Action Against Poverty.

Together with Pastor Raymond Motsi of the Bulawayo Baptist Church, Naidoo has committed himself to a hunger strike.

The planned campaign is expected to impress upon the continent, as well as South African society, including members of the African National Congress, the wider implications of the crisis in Zimbabwe.( PLEASE )

Naidoo was part of a delegation that spent Christmas in Zimbabwe where he met scores of Zimbabweans and compiled some of the testimonies into a film, Time 2 Act . Copies of the film will be given to President Kgalema Motlanthe, to other SADC heads of state and to the African Union .

In the film are descriptions of the humanitarian crisis. For instance, a woman speaks of overcrowding in the mortuaries, which has pushed the cost to $300 a body. Someone appeals for bolder regional action, saying: "Please SADC take our problems seriously, don't neglect us."

Naidoo said many of those interviewed could not understand SA's position on Zimbabwe, especially its stance at the United Nations Security Council, where it voted against tougher action on the authorities in Zimbabwe( IT'S NOT ISRAEL ).( A DISGRACE )

"Overall we were struck by how much worse it (the Zimbabwe situation) actually was in terms of the humanitarian crisis and on the political repression again significantly worse."( EVERY DAY IT GETS WORSE )

The team found a breakdown in the school system. Garbage collection had also come to a standstill in the major centres, further contributing to the cholera outbreak.

Even respect for the dead had gone. "One of the mortuaries was closed while we were there and what it means is that families have to put some sand inside the house, put some water in that sand and put the (deceased) family member there," Naidoo said. - businessday.co.za"

This is another disgrace that we allow to happen through simple indifference.

"The financial crisis aside, DRC is facing a huge humanitarian and security crisis in the east brought on by armed conflict"

A post on the Congo from Africa Can...End Poverty:

"DR Congo Perspectives on the Financial Crisis

Submitted by Emilie Mushobekwa on Sat, 12/27/2008 - 04:19.

The main impact of the global financial crisis on the DRC economy is the slowdown in overall economic growth, which is projected to be 6 percent in 2009. With the crisis going on, the situation is likely to deteriorate. Two of the major sectors expected to drive DRC growth in 2009, i.e. infrastructure and mostly mining, have already been severely affected by the crisis.

The fall in global prices for key DRC commodity exports (including copper which declined by half within a few weeks) is at the foundation of the problem( YES ). As a result, a number of mining companies are scaling down activities until commodity markets stabilize. This also poses a great threat on employment. Most of the investment in infrastructure for the coming years is expected to be financed through the Chinese deal “Infrastructure against Mining”. Given the sharp decline in mineral prices, infrastructure investment at this scale can no longer be achieved or will have to be postponed. Export revenues will decline significantly due to lower commodity prices, and the current account surplus, sustained by booming commodity prices, is projected to turn into a deficit in 2009-10. International reserves are also expected to decrease significantly, and debt service payments are to be delayed. In the domestic financial system, there is risk of bank deposits and credits shrinking. Foreign aid is likely to be affected as well.

The financial crisis aside, DRC is facing a huge humanitarian and security crisis in the east brought on by armed conflict( YES ). These two crises are expected to have a considerable impact not only on the government’s fiscal position (lower revenue and higher security spending), but also on social sectors due to the mass movement of people( YES ). To address the crises issues the government is working to maintain macroeconomic stability and is in discussions with the donor community for emergency financial support and to agree on a PRGF (The Poverty Reduction and Growth Facility (PRGF) is the IMF's low-interest lending facility for low-income countries. PRGF-supported programs are underpinned by comprehensive country-owned poverty reduction strategies.FROM DON) which is expected to lead to HIPC ( September 2006 marked the tenth anniversary of the HIPC Initiative. Started in 1996, the Initiative was enhanced in 1999 as an outcome of a comprehensive review by IDA and the IMF, including public consultations. The Initiative’s debt-burden thresholds were adjusted downward, which enabled a broader group of countries to qualify for larger volumes of debt relief. Moreover, a number of creditors, including the main multilaterals, started to provide earlier assistance to qualifying countries in the form of interim relief at decision point. Finally, the “floating completion point” was introduced, providing incentives to speed up reforms and increase country ownership.FROM DON ) completion point as soon as possible."

This shows how war effects an economy.