2.5 billion people around the world, many of whom live in extreme poverty, are excluded from the formal financial system. Consequently, this exclusion results in the use of risky and expensive financial alternatives that slow individual and macro-level economic development. In the past, microcredit schemes have been used to solve the problem. Recently, a more holistic understanding of financial inclusion is emerging that focuses on savings, credit, financial literacy, and access to services. However, as these new systems take root, debate can be heard in regards to how the systems should be implemented, who the stakeholders will be, and how to ensure that this new financial ecosystem will function in the long-term.
These issues were addressed in early April at a Guardian conference where Banking on Change outlined the future of the financial ecosystem in developing countries. Banking on Change is a partnership between Plan UK, CARE International UK and Barclays that hopes to help around 400,000 people in 11 countries by developing access to basic financial services. The organization has used savings-led community finance groups in poor communities to help people save, build up assets, access loans from the community “pot”, develop financial literacy and eventually link into formal services. The scheme showed that due to erratic incomes, poor people have a high demand for savings accounts and products in contrast to credit lines and accounts.
Living conditions and finances aside, Ashok Vaswani, Barclays’ CEO for retail and business banking in the UK, Europe and Africa, believes that all people are the same. “People’s hopes and aspirations don’t vary too much,” he said. “We all have them, and people who live in much worse conditions than us have hopes and aspirations that are not very different to ours. They want to send their children to school. They want more for their children, just like we do. People with limited means still have the desire to move up, to put something away.” The difference is that people living in poverty do not have sufficient means to even start a savings account. Vaswani also believes that the money that potential customers save annually, about $58 multiplied by the 2.5 billion people living in financial exclusion, could be much more powerful if linked into the formal financial system rather than stashed under people’s beds.
Aside from defining the customer’s needs, financial literacy is important to the development of the financial ecosystem as well. Governments should do more in educating citizens, especially the youth, about their finances, commented Michaela Kelly, head of Plan’s Programme Delivery Unit.
As the demand for personal banking increases, the needs of potential customers will need to be assessed accordingly. While many view various forms of credit building important, savings accounts and related programs are just as important to the beginning of a financial ecosystem in developing countries. With the implementation of a financial system, both individual and macro-level, economic development will flourish and raise billions of people out of poverty.
– Kira Maixner
Source: The Guardian
Photo: Business Fights Poverty
Are U.S. Farmers Hurt by Food Aid Reform?
Are US farmers hurt by food aid reform? The short answer: No.
President Obama’s proposal to allow the food aid supplied by the United States to be purchased more locally has obvious benefits: less travel time and expense to feed those in the greatest danger, bolstering local economies, investing in local agriculture to create a sustainable supply, and the potential of feeding 2-4 million more people.
These are obvious benefits unless you are an American farmer, packer or shipper, the three main interested parties (other than the millions of hungry around the world). These minders are not without questions of their own.
For example, one might wonder how purchasing a larger percentage of the food aid from non-US farmers is reconciled with USAID’s mission of expanding external markets for US goods?
The food crises require immediate response. According to the World Food Program, hunger kills more people than AIDs, Malaria, and TB combined. Preventable deaths per year due to malnutrition are measured in the millions. A shipment from the United States can take many weeks — time the vulnerable simply do not have. Purchasing local produce reduces the time from farm to mouth by 11-14 weeks and feeds an extra 2-4 million people.
Preventing deaths by malnutrition and all the suffering, humiliation, and diseases that go along with it allows for medium and long-term development. Medium to long-term development expands peace and US markets of goods, services, travel and tourism.
How, one may also wonder, do American farmers benefit when their jobs are outsourced and market share displaced?
US farm exports are worth around $145 billion. The US government spends $1 billion on food aid programs—a “drop in the market” compared to the enormous figure of US farm exports. Even an economist from the American Farm Bureau Federation admits, “Our concern is less about decreasing an important revenue stream for U.S. agriculture. It’s more about the loss of a sense of pride.” Despite the minimal impact, the reform proposal includes $25 million to ease the transition of US farmers affected.
Are US farmers hurt by food aid reform? With no significant job losses and no significant market share loss, US farmers’ pride cannot justify denying food to 4 million hungry people deserving of the same dignity and opportunities as them.
– Katherine Zobre
Sources: USAID, The Economist, World Food Program, Reuters
Personal Banking to End Poverty
2.5 billion people around the world, many of whom live in extreme poverty, are excluded from the formal financial system. Consequently, this exclusion results in the use of risky and expensive financial alternatives that slow individual and macro-level economic development. In the past, microcredit schemes have been used to solve the problem. Recently, a more holistic understanding of financial inclusion is emerging that focuses on savings, credit, financial literacy, and access to services. However, as these new systems take root, debate can be heard in regards to how the systems should be implemented, who the stakeholders will be, and how to ensure that this new financial ecosystem will function in the long-term.
These issues were addressed in early April at a Guardian conference where Banking on Change outlined the future of the financial ecosystem in developing countries. Banking on Change is a partnership between Plan UK, CARE International UK and Barclays that hopes to help around 400,000 people in 11 countries by developing access to basic financial services. The organization has used savings-led community finance groups in poor communities to help people save, build up assets, access loans from the community “pot”, develop financial literacy and eventually link into formal services. The scheme showed that due to erratic incomes, poor people have a high demand for savings accounts and products in contrast to credit lines and accounts.
Living conditions and finances aside, Ashok Vaswani, Barclays’ CEO for retail and business banking in the UK, Europe and Africa, believes that all people are the same. “People’s hopes and aspirations don’t vary too much,” he said. “We all have them, and people who live in much worse conditions than us have hopes and aspirations that are not very different to ours. They want to send their children to school. They want more for their children, just like we do. People with limited means still have the desire to move up, to put something away.” The difference is that people living in poverty do not have sufficient means to even start a savings account. Vaswani also believes that the money that potential customers save annually, about $58 multiplied by the 2.5 billion people living in financial exclusion, could be much more powerful if linked into the formal financial system rather than stashed under people’s beds.
Aside from defining the customer’s needs, financial literacy is important to the development of the financial ecosystem as well. Governments should do more in educating citizens, especially the youth, about their finances, commented Michaela Kelly, head of Plan’s Programme Delivery Unit.
As the demand for personal banking increases, the needs of potential customers will need to be assessed accordingly. While many view various forms of credit building important, savings accounts and related programs are just as important to the beginning of a financial ecosystem in developing countries. With the implementation of a financial system, both individual and macro-level, economic development will flourish and raise billions of people out of poverty.
– Kira Maixner
Source: The Guardian
Photo: Business Fights Poverty
Truman National Security Project
The Truman National Security Project is a national security leadership institute. They have developed a recruitment and training program to create a new generation of progressives to lead America’s future national security strategy. They hope to implement their objectives through advocacy initiatives, media appearances, and public service in elected and appointed offices. Their program leaders are in place as congressional and presidential advisers, legislation drafters, and advocates for progressive national security policy objectives.
The Truman National Security Project aims to make belligerent unilateralism and isolationism minority fringe positions in the United States policy. They would like to use all available tools to create a stable national security strategy including: development aid, military and allies, our reputation and diplomacy. They project the idea that where there is a great deal of insecurity, the freedoms of economic growth and individual rights cannot coexist. The Truman National Security Project believes the United States has a responsibility to maintain global stability and promote civil and human rights and equality of opportunity and tolerance.
Importantly, the Truman National Security Project has focused on promoting development abroad as a fundamental method of protecting American national security. Their mission and goals indicate that the protection of American national security requires the US to address state weakness, poverty, corruption, and social breakdown abroad. The Truman Project projects an agenda of strategic development aid coordinated with trade, diplomacy and military assistance in order to reduce poverty and build international security.
The Truman National Security Project has a large variety of programs focusing on communication methods, leadership tactics and educational programs to teach participants the values and methods of their program. The Truman Project has been praised for its effectiveness- training its participants and preparing them with an incredibly successful skill set and creating instantly useful leaders in the political and diplomatic arenas.
The Truman Project offers many different fellowships, scholarships and internships available to help train and inform progressively minded participants on national security problems, conflicts, solutions, and policy prescriptions.
– Caitlin Zusy
Source Truman Project
Photo Center for National Policy
Tracking Chinese Aid to Africa
Amidst a flurry of excitement and criticism, AidData released their latest project: a dataset tracking Chinese aid to Africa. This user-friendly free dataset has sparked debate among policy, practitioner, and academic circles.
The data compiles China’s official and unofficial projects between 2000-2011. During this time-period, China committed to 1,673 projects amounting to US$ 75.4 billion. For reference, the US committed US$ 90 billion over the same time-period.
In policy, critics point to the definitions of aid used by AidData in tracking Chinese aid to Africa. Under the OECD classification of aid, China has only invested US$ 1.1 billion over the decade. Academics and practitioners share concerns over the validity of the data and media analysis data collection method. Among the critics are Professor of international development at Johns Hopkins University, Deborah Brautigam, Duncan Green of Oxfam, and Andy Norton of Overseas Development Institute. Brautigam cites her research as having vastly different numbers resulting in reordering of the top recipients.
AidData responded to the critiques by stating that the dataset is a public good and practitioners should make their own conclusions about the policy implications. To the criticism that the data is incorrect and controversial method too risky, AidData responded that “media reports, though imperfect, are often the best means available to track Chinese development finance” citing Brautigam’s own critique as evidence. AidData stresses that the data is a work in progress relying on efforts from many organizations, individuals and experts to find and correct mistakes.
– Katherine Zobre
Sources: China AidData , Japan Times , Devex Impact , AidData Rejoinder to Rubbery Numbers,
Photo: The ChinAfrica Project
Groundbreaking Antimalarial Drug
Jay Keasling a professor of chemical engineering at UC Berkeley will finally see his breakthrough mass-produced. On April 10 the pharmaceutical company Sanofi will produce a partially synthetic version of artemisinin, a chemical critical to making today’s front-line antimalarial drug based on the scientist’s discovery. This new synthetic artemisinin is the first of its kind and could potentially save the lives of the hundreds of millions of people in developing countries who contract malaria each year. Already, 650,000 people, most of them children, die of the disease annually.
Over the centuries, sweet wormwood can be traced back to Ancient Chinese time as a treatment for malaria. The active ingredient in sweet wormwood, artemisinin, was rediscovered in the 1970’s and used commercially to treat malaria. Since then, a combination of chemicals and drugs have been used to treat malaria called ACT (Artemisinin Combination Therapy). In 2005 the World Health Organization declared ACT as the most effective malaria treatment available. Consequentially, demand for artemisinin has increased dramatically.
Today sweet wormwood is grown in Southeast Asia, China and Africa, and the quality, supply and cost of the extract varies greatly. By synthetically creating the chemical, Keasling hopes to reduce the use of such a resource as well as stabilize the quality and quantities of artemisinin in anti-malaria drugs in circulation today. Keasling also hopes that synthetic artemisinin will result in lowering costs to help get the life saving medicine to the people that need it the most.
-Kira Maixner
SourceUC Berkeley News Center
PhotoReuters
Your Old Clothes Could Be Hurting Africa
How is it possible that your old clothes could be hurting Africa and its economy and you may not even know about it? The answer is not so simple.
Often times when Western countries have used, unwanted clothes they cannot get rid of, they end up a landfill. More recently though, charities that collect used clothes in North American and European nations can sell them to wholesalers who package and re-sell them to other countries, particularly those in Africa. Instead of decaying in a landfill, these clothes are desirable and affordable for people in lower-income countries.
“What’s the problem with that?” you may be asking yourself.
In the short-term it could be a win-win situation. People can donate their old clothes to charities, charities can sell them to earn revenue, third-party wholesalers can re-sell them to other countries, people in Africa have access to affordable, well-made clothing, and everyone’s happy. In the long-term, though, the African clothing manufacturers may not be so happy. If African countries continue to rely on Westerners giving away their old clothes, they may not be able to support their own clothing businesses within their borders. In fact, several Africa clothing industries have already gone out of business because of the cheap clothing coming in from other countries, which cuts jobs, decreases revenue, and increases reliance on Western nations.
So what can be done about this problem?
Some African countries are banning imported second-hand clothing to try to rebuild their own clothing businesses. But even with the ban on Western clothing, there is still access to hand-me-downs from other areas of the world – particularly China and the Far East, where clothing is even cheaper. Sylvia Owori, a clothing designer in Uganda, realizes the problem but is forced to accept reality. “As much as I don’t like second-hand clothes to be in the market, I don’t have an alternative,” she says. “I cannot make enough clothes to support a population of 33 million.”
– Katie Brockman
Source CNN
Urbanization to Curb Poverty
According to a study done by the World Bank, urbanization has proven to be a key factor in eradicating poverty. The bank’s Global Monitoring Report 2013 offers statics that positively reflect urbanization in developing countries and in countries that have made the most progress in reaching the 2013 Millennium Development Goals.
The Global Monitoring Report says that countries with large population centers such as Southeast Asia or China have made large strides in reducing poverty in comparison to sub-Saharan Africa, where 70% of the population lives in rural areas. Infant mortality rates are also up to nine percentage points lower in urbanized areas than in rural cities and villages.
Urbanized areas create jobs and are generally better at service delivery such as access to sanitation, health care, education and electricity. Access to sanitation varies as much as thirty percent, 80 percent in urban areas to 50 percent in rural areas. Poverty is also significantly lower in urban areas at 11.5 percent versus the 29.5 percent in rural areas. In Africa, poverty in urban areas stands at 33 percent in urban areas to 47 percent in rural areas.
The next step to urbanizing is to ensure resources are available and to move forward at a steady pace to avoid slum areas. Some people favor state support and the finance of health and education systems while others support a combination of public and private financing. The World Bank encourages countries with oil and mineral resources to use the revenues to finance urbanization and health care systems. However, countries such as Uganda, that do not have an abundance of natural resources, prefer to use those revenues to improve the infrastructure in rural areas. According to Maria Kiwanuka, Uganda’s Minister of Finance, there are trade-offs. When the government uses the oil revenue to strengthen the infrastructure in rural areas, it allows the people living there to make more money to eventually contribute to the health care system.
While there are many different ways to fund health and social services and contribute to urbanization and the ultimate end of poverty, the assurance of resources to create the change is most important, says Joe Verbeek, the lead economist for the Global Monitoring Report. By improving the health and education services for people living in rural areas, it will make the transition easier and improve their job skills if they choose to migrate to a city.
– Kira Maixner
Source Voice of America
Photo World Bank
The Open Borders Theory and Ending Global Poverty
Immigration has always been a hot button issue, especially considering the comprehensive reform laws currently being debated by U.S. congressional leaders. However, what effect would the opening of the nation’s borders have on global poverty? According to several developmental thinkers, quite a bit, as adopting many of the mass migration policies called for in the open borders theory could hypothetically eliminate global poverty forever.
The researchers responsible for the open borders theory, drawn from such disparate fields as Mathematics, Economics, and Philosophy, argue that through the enforcement of a closed border policy, individuals are stripped of their basic human right of self-determination. Furthermore, by allowing migrants to move freely between nations, the net loss of labor productivity could theoretically double the world’s GDP through the mitigation of capital flow inefficiencies.
In regards to the open borders theory, developmental economist Michael Clemens noted that, “Immigration is very, very far from being a zero-sum game of their poverty or ours. Within ranges that even slightly resemble current migration levels, it is rather simply ‘their poverty or their prosperity,’ while we remain prosperous.”
Additionally, supporters of the open borders theory debunked the notion that a huge influx of migrants would depress the wages of developed countries based upon the net employment gains of the managerial sector. And by enabling efficient use of migrant skill sets underutilized by the inadequate facilities of the global south, developed economies would reap huge financial dividends.
Although the open borders theory is still in its infancy and years away from being considered as a realistic solution to global poverty, innovative ideas such as these help to encourage further debate involving current developmental policy. Michael Clemens remarked that, “Development is about people, not places.”
– Brian Turner
Source: The Atlantic
Photo: Women On The Border
Business and Africa: A Continent on the Move
May 1, 2013 was the kick-off of the two-day Africa Global Business Forum in Dubai. Africa, a continent on the move, has been showing promising signs of economic growth and development. The Africa Global Business Forum is just one more step in the right direction for a continent on the move.
The Africa Global Business Forum, as announced by the UAE Prime Minister, is set to become an annual event. The forum brings together leaders from Africa and the UAE to promote business investment, development, and collaboration between the nations of Africa and Dubai. More than 3,500 delegates are in attendance. The Prime Minister of Uganda gave the keynote address and stressed the importance of the forum as a signal of the interest in African business and investment opportunities. He also discussed the importance of the private and public sectors working together as has been done in Dubai.
Dubai serves as a center of 150 different shipping lines and could be a very key logistics hub for Africa to export goods. The young population and growing middle class in Africa are indicators of the potential for increased growth within Africa. Consumer spending is set to hit US $1.4 trillion by 2020. The forum will seek to strengthen alliances between Africa and outside investors with the goal of reducing poverty in Africa and increasing economic growth and self-sufficiency.
Other topics of note at the forum are looking at boosting Africa’s trade through the role of free trade areas and private equity. Already major telecom companies are looking to invest in Africa and the prospects for future growth and development are exciting.
– Amanda Kloeppel
Source: CPI Financial
UNICEF Criticizes Facebook Slacktivism
In the wake of the END IT Movement and Human Rights Campaign, more attention is being paid to what (if any) tangible benefits are derived from the social media form of activism commonly referred to as slacktivism. In an effort to highlight the financial shortcomings of social media activism, UNICEF Sweden has launched a new advertisement criticizing Facebook slacktivism and calling for greater monetary support.
The advertisement (pictured above) shows the ubiquitous UNICEF (United Nations Children’s Fund) logo eclipsed by the sobering phrase, “Like us on Facebook, and we will vaccinate zero children against polio.” The ad goes on to critique the efficacy of Facebook slacktivism is by asking for donations as opposed to “likes” to help purchase polio vaccines for children.
In regards to the advertisement criticizing Facebook slacktivism, UNICEF Sweden Director of Communications Petra Hallebrant remarked that, “We like likes, and social media could be a good first step to get involved, but it cannot stop there.”
UNICEF Sweden’s critique of social media activism marks a turning point in what was previously full-fledged support of outreach via Facebook slacktivism. Is their criticism warranted? Researchers from Georgetown University recently published a study showing that social-media promoters were just likely as non-promoters to donate money, however, the promoters did in fact volunteer 15% more of their time than non-supporters.
The challenges facing NGOs in increasing donations has never been more difficult given the current economic climate and high unemployment figures. However, for those activists who lack the capital necessary for frequent donations, participation in Facebook slacktivism is a means of raising awareness when the requisite finances are lacking.
– Brian Turner
Source: The Atlantic