ICYMI: Developing countries need huge investment to overcome poverty, says World Bank

The World Bank says developing countries need immense investment to overcome the increasing poverty rate caused by inadequate infrastructure and high climate costs.

David Malpass, president of World Bank, made the submission in his recent speech in Niamey, Niger Republic, ahead of the World Bank Group/ International Monetary Fund (IMF) spring meetings.

Speaking on the theme, ‘growth and stability during crises’, Malpass said developing countries have suffered the most from this onslaught of crises.

He said the COVID 19 pandemic and natural disasters across nations have led to an increase in poverty rate, hence the need for investments, especially in developing countries.

“The global extreme poverty rate rose from 8.4 percent to 9.3 percent and the true death toll remains unknown in many parts of the world,” the Worl Bank president said.

“Now, a growing number of developing countries are facing the prospect of major domestic crises, with economic growth slowing, poverty and hunger on the rise, public debts reaching unsustainable levels amid rising interest rates, ineffective mechanisms for resolving external debt distress, underinvestment, and growing populations.

“Developing countries have immense investment needs, given inadequate infrastructure, rapid urbanisation, and escalating climate costs. Capital inflows from abroad will have a role to play in financing these needs.

“But in these uncertain times, with widespread pressures from debt distress, countries will not be assured of foreign finance.”

Malpass, therefore, said “the stability and efficiency of domestic financial markets should be at the forefront of policymakers’ efforts to meet domestic investment needs.”

The World Bank president added that for countries to attract investors, a premium is placed in an environment that allows domestic savings to flow to productive private sector firms instead of being channelled to public deficits.

“This requires a pool of savings and access to domestic financial markets through an enabling environment that includes: regulations that facilitate the entry and growth of private firms; competition in domestic product and financial markets, including a level-playing field with state-owned enterprises and the government,” he said.

“Also transparent access to international markets; effective mechanisms to allow firms to exit when they fail; and clear policies and practices against corruption.”

He said although these steps are hard, they are achievable and necessary for private-sector development.