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Global credit crisis threatens the poorest

© Mikkel Østergaard

Willingness to donate decreases with financial crisis, ACT officials fear this will affect the poorest. Photo: DCA Parish Collection

Mr Nduna’s remarks come on the eve of
World Food Day, 16 October 2008.

"A significant part of our funding comes from individuals
through churches in Europe and North America. They are hit by the
financial crises and that will affect their private budgets. Many
struggle with loans, risk losing their jobs and small businesses
might close down. Our contributors will have less to offer and
our emergency work will be affected," Mr Nduna says. The
financial meltdown will then dramatically affect those who are in
chronic food crises, like Ethiopia, Zimbabwe, the Democratic
Republic of Congo, India and Afghanistan.

Enough money

"The irony is that the European and American governments are now
pumping in hundreds of billion dollars to help their banks and
financial institutions, so they still can service the market. We
ask for little. Just 30 percent of our funding comes from
governments, but they seem to make their first cuts on aid. Where
are their priorities?” Mr Nduna asks.

The reactions from the ACT director is in line with
international senior analysts on development. Jeffrey Sachs,
special advisor to the UN secretary-general, told Reuters that
the financial crises "distract world leaders from the fight
against hunger, even as it proves they can mobilize massive funds
to tackle emergencies." Sach also added: “The truth about
poverty is that the poor don’t need very much.”

The World Bank president Robert Zoellick characterized the
financial crises as "a man made catastrophe". The poorest and
most vulnerable groups risk the most serious – and in some
cases permanent – damage.

More people are starving

The harsh consequences for the poorest comes on top of the last
year’s dramatic rise of food price. According to the UN Food
and Agriculture Organisation, the rise of food prices added 75
more million people to the ranks of the hungry in 2007. They will
need help from others, but those “others” are now hit
themselves by a financial crises affecting their ability to
share.

ACT members speak out

The credit crisis has been an important issue on the minds of
leaders of ACT members working across the world. While the
long-term consequences of the crisis are not entirely known, ACT
leaders report that the implications for poor people are likely
to be dramatic in the coming years.

Words from ACT leaders around the globe:

"The image painted by the media is that the greatest world
crisis today is the financial crisis on Wall Street. The real
crisis is that there are 2.5 billion people on our planet who
survive on less than two dollars per day.

"The poor countries see it as extremely serious that the West
refuses to take their situation seriously. USD 500 billion has
been loaned out irresponsibly to dictators. Congo, for example,
which at this time is struggling to deal with the greatest
humanitarian emergency there is, is being forced to repay
billions of dollars that Mobutu loaned when he was in power."
- Atle Sommerfelt, General Secretary, Norwegian Church Aid

"The price rise of some food commodities have reached up to 300
percent -- and are still increasing. The official number of
people in need of emergency assistance has grown from 4.6 million
in May 2008 to a current 6.4 million. Moreover, as most
humanitarian interventions are supported by partners overseas,
there is concern that the worldwide financial crises will have
direct implication on resources that can be available for people
in acute need of emeregency assistance."
- Deed Jaldessa, Director of Development and Social Services
Commission, Ethiopian Evangelical Church Mekane Yesus

"The economic crisis, I suspect, will naturally see the US
having a ‘home first focus’ which then has automatic
implications for the amount of fiscal support allocated for
foreign assistance and support of international social programs.
Ultimately, this would conceivably result in at least short-term
negative impacts particularly for developing countries and the
vulnerable populations in those countries."
- Donna Derr, Director - Emergency Response Program, Church
World Service, USA

"People are totally focused on economic growth, as if economic
growth by itself can solve all the problems of the world. People
have to understand that unless we have a very balanced view of
social, economic and political emancipation of everyone -- which
should be positively biased towards the poor - then society will
never be transformed. And the gap between the rich and the poor
will only continue to grow.

"On the macro level, the credit crisis will not affect Indonesia
too significantly. The government has taken good decisions on the
financial situation and can still survive four or five more years
into the future. But on the micro level, poor people will be
affected very much -- unemployment could rise and there will be
an increase in the number of poor people who will not be able to
fulfill their own needs."
- Lucy Montolalu, Executive Director, Yayasan Tanggul Bencana di
Indonesia

"The lifestyle and the economy in the western countries is too
much burden for the ecological system of our planet and it is
producing more and more hungry people in poor countries. We have
to come from an economy of excessiveness to an economy of having
enough. Eighty percent of the food production in the world is
done by small farmers. And it is an irony that most of the people
suffering from hunger are living in the countryside working as
small farmers and daily laborers."
- Cornelia Füllkrug-Weitzel, Director, Diakonie
Katastrophenhilfe / Brot für die Welt, Germany

"If you look back 25 years, people were more engaged in
producing millet, sorghum and other staple food grains. But now
there is a total shift from producing staple foods to cash crops
and biofuels, which is making the poor even more vulnerable
because they lose their power and control over their livelihood.
Justice, peace and dignity are missing from the agendas of the
food and economic crises."
- Sushant Agrawal, Director, Church’s Auxiliary for Social
Action, India