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 Press release - Developing Countries Poorly-prepared To Combat Millennium (y2k) Bug In 2000 (WB)

 Press release date: 25.01.1999

PRESS RELEASE
Y2k Countdown
1999
2000
 
News Release No. 99/2078/S

Contacts: Phil Hay (202) 473-1796
Phay@worldbank.org
Craig Mauro (202) 473-0177
Cmauro@worldbank.org
TV/Radio:
David Theis (202) 473-1955
Dtheis@worldbank.org

DEVELOPING COUNTRIES POORLY-PREPARED TO COMBAT
MILLENNIUM (Y2K) BUG IN 2000

World Bank says developing countries are aware of problem but remedial action lags

WASHINGTON, January 26, 1999. With less than 12 months before the start of the year 2000, much of the media attention and public concern about the Y2K problem has focused on Western computer operations, but many developing countries are even more unprepared for the risks posed to national life by the Millennium or Y2K Bug, and few have taken the remedial actions needed to safeguard their computer systems, according to a World Bank assessment of the Y2K problem. Crisis countries in East Asia, Latin America, and the former Soviet Union could also be hard hit.

The problem has been overlooked because many observers assume developing countries are less dependent on computers in everyday national life. But the majority of developing countries, even the poorest, have computerized essential services such as power generation, telecommunications, food and fuel distribution, and the provision of medical care. The Bank says that a general failure of such systems could endanger the health, security, and economic well-being of people in the developing world. Accordingly, the Bank recommends that these governments should use the remaining months of 1999 to make contingency plans to safeguard their most important computer systems from failure.

This is a global problem affecting not only industrial countries which are highly dependent on computers but developing countries as well, says James Bond, Director of the World Banks Energy, Mining & Telecommunications Department and coordinator of Y2K compliance in the Banks existing loan portfolio and Y2K grants to developing countries. While wealthy countries and large companies have the money and skilled technicians needed to immunize computers and their operating software from the Millennium Bug, many of our developing country clients cannot muster the resources to tackle a problem that most see as a vague and distant threat.

Bond says that in a recent Bank survey of Y2K preparedness in 139 developing countries, only 54 had initiated national Y2K policies; just 21 were taking concrete remedial steps to safeguard their computing systems; and 33 reported high-to-medium awareness of the problem but were not currently taking action (for a complete list of countries, see attached regional table of country Y2K status). However the Bank warns that the mere existence of a national Y2K action plan should not be taken to imply that countries will be fully Y2K compliant by the end of 1999.

Regional impact of Y2K problem

Failure on the part of developing countries to repair their key computer systems in time could also have serious implications for regional economic cooperation. During a series of international Y2K seminars held by the Bank throughout last year, politicians and computer experts discussed the vulnerability of key sectors such as: electricity sharing arrangements; air traffic control management and safety; customs clearing links; transport networks (railways, ports, etc); telecommunications systems; and regional payments clearing facilities.

You dont have to look too far to see how closely inter-woven regional economies have become, says Bobak Rezaian, the World Banks Y2K Coordinator for its Africa region, who attended several of the seminars in Africa. Take the case of Nigeria, which supplies much of the power for its northern neighbor, Niger. If Nigerias power facilities are not Y2K compliant, you can appreciate how this would quickly affect Nigers economy and its living conditions. The same could be said for Rwanda, Burundi, and other countries in Eastern and Southern Africa that buy much of their electricity from neighboring producers. These interdependencies can also be found in Asia, Eastern Europe, and most other regions.

The Y2K Problem in a Nutshell

Origin

To save computer space and enhance speed of processing, programmers traditionally used two digits (98) to represent the year instead of four (1998). Thus the year 2000 will be written as 00 and date-dependent systems may mistake this as 1900 when they are making calculations using the date.

Consequences

The error is simple, its consequences are large and far reaching. If not addressed, problems may develop in everyday life ranging from problems with telephone systems and credit cards, to more life-threatening situations such as malfunctioning traffic lights, air traffic control, and hospital equipment. The economic and social consequences of such problems could be substantial.

Solutions

While it may not be possible to fix every instance of the Y2K bug in every single system, it is possible to identify the most critical sectors of the economy and put into action fast-track plans to manage a program in order to alleviate the most serious problems that might occur.

Priorities for compliance

Given that few developing countries have so far adopted national Y2K compliance plans, the World Bank recommends that governments without remedial plans should act quickly to devise contingency plans to protect national systems that provide essential goods and services to people. Once these priority concerns have been identified and protected, developing countries could eventually move to repair less-critical systems.

Key systems that should be immunized from the Y2K bug include:

  • power generation and transmission
  • national financial sector
  • national communications
  • transport links (ports, airports, railways, etc)
  • healthcare and education
  • food and fuel distribution

With less than a year left before January 1st, 2000, its just not possible to fix all the worlds Y2K problems in time, says Mohamed Muhsin, the World Banks Chief Information Officer responsible for the institutions own internal Y2K preparations. Because of all the information systems and the billions of programmable devices around the globe that need to be checked, and, if need be, repaired, developing countries must focus their limited resources on those sectors that are crucial for keeping the state and the national economy working.

Mindful of how Y2K systems failures could disrupt national life for many developing countries, World Bank Group President James D. Wolfensohn has written to a number of government leaders in Africa, Eastern Europe and Central Asia, and other regions, urging them to make contingency plans for dealing with potential Y2K-related problems.

Because of the short time remaining, the magnitude of the Year 2000 problem and its seriousness, I would strongly suggest, if you have not already done so, to designate a high level official, preferably at the cabinet level, to coordinate national efforts, identify national issues and ensure resources are available, wrote Wolfensohn. Based on how far along you are in the process of solving the Year 2000 problem in your critical systems, it may be necessary to use alternative methods for providing critical services (e.g., revert to manual systems or use stand alone systems). In addition, I would encourage you to put in place contingency plans for the inevitable disruptions as soon as possible.

Mr. Wolfensohn adds that the World Bank stands ready to help its client countries in their assessment and repair efforts, either with funds from on-going operations, special technical assistance loans, or special grants. A $16 million donation from the United Kingdom to apply to Year 2000 efforts under the Banks InfoDev departmenta Bank program administering Trust Funds for information technologies which has developed assessment tools and basic information on Y2K best practiceswas the first step.

Furthermore, Wolfensohn added, I have written to the heads of government of other major donor countries asking for further assistance. Additional commitments have been made from the governments of Canada and the United States.

The World Bank and the Y2K problem

The World Banks campaign to help developing countries prepare for the Y2K problem embraces three priorities, namely: (1) raising borrower awareness through InfoDev seminars and the disbursement of small grants, as well as Y2K loans to client countries; (2) securing the Banks existing loan portfolio from the Millennium Bug in conjunction with borrower governments; and, (3) ensuring that the Banks internal computer systems are Y2K-compliant and can allow the institution to work without disruption.

InfoDev and Y2K loans

The Bank has now approved two loans for specific Y2K preparations, and others are being prepared. A US$30 million loan was approved for Argentina on December 17, 1998; followed last week by a US$29 million loan to Sri Lanka on January 19; a substantial Y2K loan of US$100 million for Malaysia is being prepared for discussion by the Banks Executive Directors in March; and Y2K components have been added to loans being processed for Turkey and Ukraine.

On top of this, InfoDev? under its country outreach program? has held 18 regional and national seminars in Latin America and the Caribbean, sub-Saharan Africa, Middle East and North Africa, Europe and Central Asia, and South and East Asia, with the participation of over 1,500 individuals from some 120 countries. Audiences consisted of high level government ministers and senior Information Technology managers. In partnership with the OECD and other sponsors, InfoDev organized the Global Year 2000 Summit in London last October, which focused on the need for international cooperation to address year 2000 problems.

Infodev has also received requests from 62 countries for grants totaling US$9.6 million for help in devising Y2K bug solutions. Of those requests, 45 have now been approved for a total of US$6.9 million.

New commitments to Infodevs Y2K initiative are being formalized, with the United States contributing US$12 million, Canada US$650,000, and Italy US$350,000.

Infodev has also developed a Year 2000 toolkit (How to Develop a National Plan for the Year 2000 Problem for Developing Countries) for use by national governments and has recently made it available to the general public on the Banks website.

The International Finance Corporation? the private sector arm of the World Bank Group? has also been surveying its investee companies to assess their Millennium readiness and offers Y2K outreach services to its clients.

Y2K risk assessment for Bank loans portfolio

As of January 1999, more than three quarters of an active portfolio of 1,690 World Bank projects? with a total value of US$113 billion? had been surveyed for year 2000 risks. Of these, 48 percent were considered low-risk; 19 percent were medium-risk, and 33 percent were classified high-risk. The Bank is working together with its borrower governments to ensure Y2K compliance for the institutions loans portfolio. Furthermore, Bank procurement rules now require that all computers and other programmable devices such as medical equipment, and their supporting software, funded by Bank projects must be Y2K compliant.

Internal Bank Y2K preparations

As of last month, all the Banks applications and database systems have been assessed for Y2K vulnerabilities. Systems found to be non-compliant are being either replaced or repaired, and the Banks internal Y2K taskforce reports that all internal systems will be fully operational and ready for the year 2000.

For more information about the World Banks Y2K-related work, please contact one of the Media Relations Officers listed at the top right of page one, or access us on-line at www.worldbank.org/y2k

 



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