To many people around the world, Fiji and its hundreds of islands are known as a peaceful Pacific vacation getaway. While Fiji certainly profits from its lively tourism industry, life for the more than 900,000 citizens of the island nation is much more complex. Read further to learn more about credit access in Fiji.

Fiji gained independence from the U.K. in 1970 and has gone through intermittent periods of political strife since then. Despite this, Fiji’s natural resources and tourism potential have helped make Fiji become one of the most developed Pacific island nations. Not every Fijian enjoys the benefits of this development, though. Nearly a third of Fiji’s citizens live in poverty. Part of the reason for this high number is the ongoing struggle to achieve credit access in Fiji.

Managing Credit in Fiji

Developed and developing economies alike rely on banking and credit to drive innovation, investments, infrastructure and purchasing power. Fiji’s is no exception.

Fiji’s banking system is overseen by the Reserve Bank of Fiji (RBF). The RBF provides services to the government as well as licenses to the six banks that do business in Fiji. It also regulates how much those banks can dip into their deposits which enables the RBF to maintain the delicate balance between not allowing enough credit and letting it go unchecked.

While the infrastructure for banking exists, credit access in Fiji is simply nonexistent for many citizens. This stifles chances for the country’s economy to grow and for Fijians to lift themselves out of poverty. The government recently started taking steps to address this problem.

Tapping into Fiji’s Wealth

The government is partnering with the Asian Development Bank (ADB) to implement secured transaction reform. Such reforms would allow Fijians to use their non-monetary wealth (such as vehicles, goods or crops) as collateral for loans.

In a country where accessing loans is difficult for many people and businesses, the ability to access non-monetary wealth opens up new avenues for credit access. While these collateral loans could be risky for some individuals, it will increase the lenders’ confidence and help stabilize the growth of the Fijian economy.

Fiji’s Financial Literacy and Innovation

The national government is also taking internal steps to pursue the goal of widespread credit access in Fiji. In 2010, it formed the National Financial Inclusion Taskforce (NFIT). Its purpose is to encourage long-term economic growth and help lift Fijians out of poverty by providing better access to banking.

NFIT has had an uphill climb right from the start. Even after four years of progress, there were still 150,000 unbanked Fijians in 2014 and a full third of Fijians are underserved by banks.

A significant part of NFIT’s efforts have been aimed at improving citizens’ financial literacy. Especially in rural areas, many Fijians lack the basic knowledge they need to engage in the banking system. The same year it was formed, NFIT launched a nationwide campaign to ensure that the broader access to banking achieved would not go to waste. The campaign even has a mascot—a turtle named Vuli the Vonu.

One of the more encouraging developments in the process of spreading credit access has been the rise of digital financial services which Fiji launched in 2010. For the first time, Fijians could digitally bank, pay bills and even transfer money to businesses and families across islands. Digital banking covers 80 percent of Fijians’ financial needs and provides access to financial services even on remote islands where there aren’t any physical banks.

There is room for improvement in Fiji’s credit system, but it’s certainly encouraging to see that steps are already being taken to stimulate growth and provide tens of thousands of poor Fijians with access to banking.

– Josh Henreckson
Photo: Flickr

Trade embargoes are government-imposed barriers to international trade. Countries often justify these restrictions using political reasons, such as violations of national security or human rights.

10 Examples of Trade Embargoes

1. U.S. Sanctions on Nicaragua: On July 5, 2018, the U.S. imposed sanctions on three Nicaraguan government officials, in response to the Nicaraguan government’s treatment of anti-government protesters, which has led to over 200 people being killed during violent demonstrations. Due to the 2012 Global Magnitsky Act, the U.S. can implement sanctions against those who commit human rights violations and corruption. The LA Times reported that under the sanctions, “any assets the three men have in the United States will be frozen, and U.S. citizens are barred from business transactions with them or any companies in which they have 50 percent or more ownership.”
2. U.S. Sanctions on Russia: In April 2018, the U.S. passed new sanctions against Russia, intending to penalize Russian officials for their alleged involvement in the 2016 U.S. presidential election and their presence in Crimea, Ukraine, and Syria. According to CNN, assets will be frozen for 17 senior Russian officials.
3. European Union (EU) Sanctions on Russia: As of July 5, 2018, the EU unanimously agreed to extend sanctions against Russia for at least another six months. According to PBS, the sanctions’ extension was no surprise and were “imposed after Russia annexed Ukraine’s Crimean Peninsula in 2014 and backed pro-Russia separatists fighting the government in eastern Ukraine.”
4. Canada Sanctions on Venezuela: In September 2017, Canada enforced an asset freeze and dealings ban on Venezuela. Under the Special Economic Measures Act, Canada prohibits citizens and any Canadian residents from providing  “any goods, wherever situated, to a listed [Veneuelan] or to a person acting on behalf of a listed [Veneuelan].” The sanctions are based upon a U.S.-Canada alliance in response to human rights violations in Venezuela. For example, the Venezuelan government arrested thousands of protestors in April 2017, and many civilians were injured or killed during the protests.
5. U.N. Sanctions on North Korea: In 2006, the U.N. Security Council (UNSC) imposed sanctions in response to North Korea’s first nuclear test. The sanction prohibited the supply of heavy weapons and select luxury goods. According to the Council on Foreign Relations, the UNSC announced more restrictions—extending to oil and metal imports, agricultural exports, and labor exports in December 2017. However, the U.N. does allow humanitarian aid to enter North Korea.
6. U.S. Sanctions on China: Most recently, the U.S. and China are in trade wars—each responding with their own tariffs. On April 16, 2018, the U.S. imposed a seven-year ban on exports to ZTE, a Chinese telecom company. The Washington Post explained that ZTE was reprimanded for “illegally exporting U.S. goods to North Korea and Iran.” On June 7, the U.S. ended the ban.
7. U.S. Embargo on Cuba: In 1962, the U.S. placed a full embargo against Cuba when the Kennedy administration announced the ceasing of all trade. However, in March 2016, President Obama and Cuban President Raul Castro agreed to “allow commercial flights between the two countries for the first time in more than fifty years.” In September 2017, President Trump proposed the withdrawal of two-thirds of his embassy staff from Havana, Cuba and announced the return of travel restrictions.
8. EU Sanctions on Sudan: The EU imposed an arms embargo on Sudan in 1994. The embargo was amended in 2011 due to the independence of South Sudan and now applies to both Sudan and South Sudan.
9. U.N. Sanctions on Iran: In 2006, the U.N. authorized an embargo on supplies for uranium production and ballistic missile development, harming Iran’s economy. In April 2015, the U.S. Treasury Secretary Jacob Lew noted that “Iran’s economy was 15 to 20 percent smaller than it would have been had sanctions not been ratcheted up in 2012.”
10. U.S. Embargo on Japan: In 1941, the same year the U.S. entered World War II, the U.S. imposed a comprehensive trade embargo against Japan. The U.S. froze “all Japanese assets in America,” which eventually contributed to Japan’s loss of “access to three-fourths of its overseas trade and 88 percent of its imported oil.”

These 10 examples of trade embargoes demonstrate how countries engage with one another to serve their domestic interests and to punish others for violations of human rights.

– Christine Leung
Photo: Flickr

Despite its rich oil resources, Algeria faces long-term challenges from a lack of diversity in the economy, a relatively high unemployment rate — especially among youth and women — and regional inequalities. These 10 facts about poverty in Algeria will recount the recent ups and downs of the upper middle income country.

Top 10 Facts About Poverty in Algeria

1. According to a World Bank estimation published this year, unemployment rate in Algeria has been on the rise  from 10.5 percent in September 2016 to 11.7 percent in September 2017. Unemployment among women and youth is disproportionately high: the first half of 2016 saw a 16.6 percent female unemployment rate and a 29.9 percent for young people.
2. Even though official data given in 2011 reported a 5.5 percent poverty rate with a 0.5 percent extreme poverty rate, about one tenth of the population are thought to be susceptible to re-entering poverty. Other sources, however, report much higher rates in more recent years. Al Jazeera, the state-funded broadcaster in Doha, Qatar, wrote in April 2014 that the country has a 23 percent poverty rate.
3. Regional differences in poverty are significant in Algeria. The World Bank points out that poverty level is the national average doubled for people residing in Sahara, and tripled for people of the Steppe.
4. Algeria has high economic inequality; the consumption rates of the rich and poor are separated by as much as 27.7 percent.
5. According to the Algerian League for the Defense of Human Rights, the country has 400,000 children drop out of schools annually. Rural areas bear most of these dropouts due to poverty and poor maintenance of local schools.
6. The Algerian currency has been devalued throughout the past five decades, from 4.94 dinars per U.S. dollar in 1970, to 116 dinars per U.S. dollar in May of this year. This discrepancy exists predominantly due to the government’s efforts to artificially lower its budget deficit and keep up oil taxes. At the same time, the government is heavily subsidising imports to make them more affordable, which ultimately increases the country’s dependency on imports as the country should be striving to construct a productive economy to provide employment opportunities.
7. Algeria is extremely dependent on its oil resources for economic growth. The hydrocarbonic sector makes up 95 percent of Algeria’s exports, occupying 60 percent of the governmental budget. This area of production doubled the state’s fiscal deficit in 2015, as oil prices plummeted and affected the already unprivileged.
8. Medical care is limited due to low population density and poverty in rural areas. Thus, some regions in Nigeria still face high maternal and under-five mortality rates.
9. The government of Algeria has been criticized for corruption, especially in areas of infrastructure construction and oil. A national commission was enacted to battle such corruption in 2006, but not until four years later did seven members get appointed. In 2012, 2,000 cases of corruption were under investigation, but rarely resulted in convictions.
10. Algeria faces potential instability if oil prices remain low. People, especially the youth in Algeria, are discontent with the government, believing that the government has no concern for its citizens. Some are also concerned that another “Black Decade,” referring to the country’s civil war in the 1990s, lies ahead.

A New Direction

Algeria is in need of economic transformations, and has to figure out how to address its low domestic productivity effectively. An economic blueprint that is more community-based and under public supervision should be adopted in place of the currently stagnating attempts at adjustment.

– Feng Ye

Photo: Flickr