After joining the European Union in 2004, Hungary seemed to be on the path toward a more prosperous future. However, once Hungary’s Prime Minister Viktor Orbán touted the idea of Hungary becoming an illiberal state, tensions between Brussels and Budapest reached new highs, threatening to destabilize the European Union with an autocratic member and potentially increase poverty in Hungary.
Orbán Erodes Democracy in Hungary
After first holding office from 1998 to 2002, Prime Minister Orbán returned as head of government in 2010, wanting to redesign governmental institutions. Orbán, a member of the Fidesz political party, subverted democratic norms and cemented one-party rule to ensure his assignment as prime minister and the supermajority of his party Fidesz.
In more than a decade since Orbán returned to the premiership, the Prime Minister and Fidesz have completely undermined Hungary’s democracy, erasing governmental integrity through the following methods:
- Rewriting Hungary’s Constitution
- Undermining the independence of the judiciary
- Controlling media, including the Internet, television channels and even school textbooks
- Gerrymandering to guarantee a Fidesz majority
- Suspending civil society organizations
As a result of Orbán’s reforms, the think tank Freedom House demoted Hungary to the status of partly free, indicating that Hungary’s democracy is at the cusp of autocracy, according to E-International Relations.
Poverty in Hungary
Despite Hungary’s descent from a protected democracy, poverty under Orbán’s leadership is reaching new lows.
From 2015 to 2019, there was a 2.2% drop in poverty rates, leaving only 12.3% of Hungarians below the national poverty line. The COVID-19 pandemic interrupted this trend of alleviating poverty rates, but official numbers are not yet available, as per the World Bank.
Hungary Depends on EU Funds
As Brussels and Budapest continue to clash, Hungary may become subject to financial repercussions. As one of the largest recipients of EU funds, the landlocked nation may find itself in tough times if cut off from much-needed aid.
From the 2014-2020 budget, Hungary received €40 billion ($40.8 billion). In just 2018, Hungary received €6.3 billion ($6.43 billion) from the EU, almost 5% of the country’s GDP. Without EU funding, the nation’s economic growth and ability to counter domestic poverty may stagnate or suffer.
Confrontations Between the EU and Hungary
Hungary’s turn against democratic norms puts it at odds with the European Union, prompting concerns about whether the EU should continue funding the nation as it refutes the multinational organization’s liberal democratic values.
Hungary’s violations of rule-of-law principles by undermining the country’s judiciary, education system and electoral integrity have prompted the EU to assess the best path forward to divert Hungary from autocracy, according to E-International Relations. In addition, the EU has accused Hungary of mishandling its funds, citing a lack of transparency and corruption (including 52 probes into misuse of funds) in how the nation utilizes EU funds.
In the past, the European Union has explored two main tools to handle Hungary’s disobedience: Article 7 of the Treaty of Lisbon and infringement procedures.
Under Article 7 of the Treaty of Lisbon, the EU can suspend certain rights of member states if a nation violates liberal democratic values, according to E-International Relations. However, this procedure requires a unanimous vote by all EU member states, rendering this feat impossible due to Orbán’s staunch ally in Poland.
The other main tactic the EU has tried is infringements procedures, which, simply put, is a legal action against an EU country that does not uphold EU law. In the past, infringement procedures in Hungary totaled €100,000 a day, according to E-International Relations. However, taking Hungary to court is time-consuming and potentially too ineffective to curb the nation from authoritarianism.
Brussels has resorted to withholding funds from Hungary within the past two years. The EU prevented Hungary from accessing more than €7.2 billion ($7.34 billion) from the bloc’s coronavirus response fund, citing ongoing breaches of EU law.
Now, as tensions rise, Brussels can leverage its conditionality regulation. This tool, which came into effect in January 2021, allows the EU to withhold money from its general fund from member nations for rule-of-law breaches. The European Union can prevent Hungary from accessing €40 billion ($40.8 billion) from its 2021-2027 budget if Orbán does not abide by the EU’s rules. This robust measure, which could push Orbán farther away from autocracy, may ultimately be detrimental to poverty in Hungary.
A Path Forward
As Brussels and Budapest continue clashing over democratic principles and funding, the future of poor Hungarians is in limbo. Financial penalties could prevent infrastructural development, welfare assistance and other critical programs that combat poverty, impeding the progress made under Orbán’s regime.
However, chances for a compromise remain hopeful. In June, Orbán stated, “Everything is ready for an agreement to be struck between the union and Hungary, which I think both sides need.”
With the two sides approaching an agreement and potentially unlocking withheld funds, Hungary could hopefully be on a path away from both autocracy and poverty.
In the meantime, non-government organizations are working to combat poverty in Hungary, with Habitat for Humanity Hungary being a notable example. Habitat for Humanity began its work in Hungary in 1996 and it helps supply homes for the impoverished. In 2019, Habitat for Humanity has helped more than 230 Hungarians, trying to minimize the number of people in poor living conditions.
Although the political situation remains precarious, there is still hope for the poorest Hungarians. Brussels and Budapest are inching closer toward an agreement, hopefully bringing more assistance to the poorest Hungarians shortly.
– Michael Cardamone
Photo: Flickr
Increase in Orphans in Peru Following COVID-19
Influx of Orphanages
Reportedly one out of 100 of Peru’s children’s population lost at least one parent to COVID-19. This large statistic only added to the grand total of 550,000 children who grow up parentless. Many children have lost their grandparents to COVID-19, which leaves devastating results for children in a country where it is common for grandparents to be the primary caregiver of their grandchildren.
Child poverty increased as a result of the pandemic as well, with around 39% of Peruvian children living underneath the poverty line, according to UNICEF. There are even some parents who are choosing to move to orphanages so that their children will have access to food and water.
This rising influx of Peruvian orphans poses a determinant to the mental, physical and economical health of Peru’s future generation. In addition, at least 1,000 Peruvian children have died as a result of COVID-19, The Guardian reports.
Solutions
As a result of the massive uptake of orphans, the Peruvian government introduced the “orphan pension.” Introduced in March 2021, the orphan pension pays $55 monthly to children under 18 who lost a parent as a result of COVID 19. These cash transfer programs intend to address childhood poverty by fostering human capital investments in children. Evidence suggests that children who receive cash transfers receive positive benefits such as reduced poverty, increased food consumption, and increased access to mental health services, according to The World Bank report.
This increase in orphans in Peru is a serious matter. However, spreading awareness and bringing effective sources to the matter is a great stepping stone to fixing the problem at hand.
–Luke Sherrill
Photo: Flickr
Argentina’s Economy Minister Resigns
Guzmán’s Career
On December 6, 2019, Argentine President (then-president-elect) Alberto Fernández designated Guzmán as Argentina’s economy minister. At the start of this career, the newly appointed Brown graduate had his first bill approved by the Senate just 11 days after his first day in office. The bill imposed tax increases in specific areas of the middle and upper class while providing tax benefits to the impoverished.
In early August 2020, the Argentine economy minister struck a deal to restructure $65 billion in foreign bonds. Most notably, the former minister engineered a $45 billion debt deal with the International Monetary Fund (IMF). The agreement aims to “promote growth and protect social programs” to tackle Argentina’s economic crisis.
Before resigning, Guzmán planned to head to France to discuss a $2 billion debt deal with the Paris Club of sovereign lenders.
Argentina’s Economic Crisis
Argentina’s economy has been suffering for decades. In July 2022, many Argentine sovereign bonds were worth as low as 20 cents on the dollar — a stark difference from higher rates in October 2020. Inflation in Argentina is staggeringly high, moving toward 70% by the end of 2022. As of July 2022, one United States dollar is worth about 126 Argentine pesos and this exchange rate is still increasing.
An economic disruptor includes truck drivers’ strikes, which have halted delivery of grain, “one of Argentina’s main imports,” to ports. In addition to the COVID-19 pandemic, the devaluation of the peso and a sizeable foreign debt of more than $323 billion by 2020 have sent Argentina into further economic turmoil.
Alongside these struggles, Argentina’s poverty levels are sharply increasing. Due to the severe inflation, the poverty rate in urban centers stood at 37% in the latter half of 2021 and is expected to increase to 39% after the first six months of 2022. This would equate to 500,000 more impoverished people.
The Economy’s Future
Guzmán’s resignation has raised concerns over the economy’s trajectory, most fearing it will head in an even worse direction. Other concerns regard Guzmán’s IMF deal and whether Argentina can meet these needs without the architect of the deal.
On July 3, 2022, one day after Guzmán’s resignation, President Fernández named Silvina Batakis Argentina’s new economy minister. Batakis previously served as the Secretary of Provinces in the Ministry of the Interior and as economy minister of the Buenos Aires province from 2011 to 2015. This week, she stated her belief in “fiscal balance” and her intention to follow President Fernández’s economic program.
In June 2022, the deal with the IMF that former minister Guzmán crafted underwent its first review. This is a sign that the deal may indeed make progress and ultimately come to fruition. A press release regarding this step stated that the program’s policies “will be critical to support Argentina’s economic recovery.”
There are other solutions and aids to Argentina’s economic crisis besides the appointment of a new economy minister — foreign aid. Amid this instability, at least 48 NGO projects in Argentina aim to improve the lives of the country’s poor. A notable organization is Fundación Integrar (Integrate Foundation). The foundation helps young Buenos Aires and La Pampa citizens living in poverty complete their higher education by providing financial aid and guidance to students. With the help of donations, the foundation has given higher education scholarships to 140 students to date.
In office, Argentina’s new economy minister Batakis will need to address the nation’s high inflation rate and foreign debt along with an increasing poverty rate. Yet, she is not alone in this fight — a deal with the IMF is underway and tens of organizations are serving the country’s poor.
– Sophie Buibas
Photo: Flickr
Migrant Workers in Qatar and the 2022 World Cup
Migrant Labor in Qatar
About 30,000 migrant workers have undertaken the task of erecting these state-of-the-art stadiums, most of whom traveled from Asia and Africa in search of greater economic opportunity. Even after the stadiums are complete, migrant workers will be responsible for the day-to-day service operations and hospitality provided to guests of the World Cup. The long-awaited thrill of the soccer games themselves and the economic output that the events will provide for Qatar would not be possible without the hard work and sacrifice of these impoverished migrant workers in Qatar.
However, Amnesty International reports that these workers endure exploitation despite their vulnerability and necessity to the project. Individuals are subjected to high debt procured while trying to cover illegal recruitment fees. For example, about one-third of the Qatari foreign labor force consists of Nepali and Bangladeshi migrants whose typical recruitment fees amount to around $4,000 each — a debt that takes a minimum of 12 months to pay off.
Another practice that has received increased scrutiny as World Cup preparations are underway is the protracted non-payment of wages. This is a particularly distressing issue considering that workers must make payments on the loans they took out to cover recruitment fees. Many workers are also responsible for family members back home, who rely on them financially. Amnesty International found that thousands of workers have endured underpayment or no payment at all for months and sometimes years.
In 2019, hundreds of migrant workers in Qatar took part in protests over these practices and the generally poor working conditions.
The Kafala Labor System
Key to this exploitation is the “kafala” legal system of labor, in which private companies and employers can sponsor migrant workers, providing housing in dormitories and covering foreign relocation expenses. These migrant laborers are bound to their sponsoring employers and cannot quit, change employers or leave the host country without their employer’s permission. Workers cannot join trade unions either.
The good news is that in 2017, Qatar signed a treaty with the United Nation’s International Labour Organization, promising reform. Qatar lived up to that promise through the passing of several pieces of legislation. In 2018, the country ended the requirement that migrant workers obtain permission from their employers to leave the nation, and in 2020, Qatar undertook further reform to allow all migrant workers to change jobs without their sponsors’ permission and introduced a minimum wage.
In March 2018, Qatar also established Committees for the Settlement of Labour Disputes to stand in place of the country’s “ineffective [labor] courts.” These Committees guaranteed that workers would receive their judgments from the court within six weeks. Qatar also established a “workers’ support and insurance fund” for exploited workers who do not receive payment from their employers.
The Story of Bijoy
However, the promise of these reforms has not quite panned out as desired as courts are overwhelmed with cases and processing times are backed up. Amnesty International’s reporting on Bijoy’s story captures the human toll of this bureaucratic backlog.
Bijoy is a migrant worker from India who worked for three years at a Qatari construction company. Bijoy had more than $3,500 of unpaid wages owed to him by the company. He waited three months to have his claim processed by the labor committee, living in conditions of squalor with no money. Finally, after seven months of non-payment, Bijoy accepted just $275 and ticket fare for a flight to India as compensation as he had a sick father to return to in India. Stories like Bijoy’s are unfortunately all too common.
Looking Forward
As the November 21 World Cup 2022 kick-off date approaches, excitement is building around the world as audiences prepare to experience the culmination of years of planning and effort. However, Amnesty International is advocating that FIFA and the Qatari government refund recruitment fees and compensate individuals for abuses before the footballing celebrations move forward. Amnesty International recommends that FIFA set aside $400 million out of the $6 billion in expected revenue, almost equivalent to the total prize fund for the World Cup, for these purposes. Amnesty International continues to push for a commitment to compensation from Qatar and FIFA, hopeful that Qatar will, as it has done in the past, implement the reforms and restorative justice necessary to uphold the rights of migrant workers in Qatar.
– Grace Ramsey
Photo: Flickr
Bukavu’s Elderly Produce Sustainable Energy in Congo
Producing Sustainable Fuel Pellets
With plenty of energy and enthusiasm to spare, Mubake provided the spark to change his community for the better. The process begins with collecting waste such as leaves, maize stalks and cardboard. This mixture is soaked, dried and ground into a powder, which is then combined with sawdust to mold into energy-giving briquettes that communities can rely on for fuel.
“This work helps me to educate my children, to have food on the table and also to have enough to buy clothes and other things,” Mubake explains in an interview with Reuters.
Mubake’s work presents a lifeline for those in communities that have limited or no access to energy. According to Our World in Data, as of 2020, access to electricity sat at 19.1% across Congo. A lack of access to energy contributes to poverty in the nation. According to the International Monetary Fund (IMF), in 2018, 73% of the population in Congo experienced extreme poverty.
Mubake and other retirees like him create the sustainable fuel pellets at Bukavu’s Rehabilitation Center for the Elderly. Three months into operation, the center produces an average number of 2,000 briquettes on a weekly basis. The sale of the briquettes produced by Mubake and the other retirees provides a source of income for the group.
Protecting Congo’s At-Risk Environment
The briquettes look to provide a sustainable alternative to the more traditional means of energy usage in Bukavu — locals cut down trees in the national park to use as charcoal. With the considerably low price of the sustainable briquettes made from waste standing at just $0.05, there is hope that efforts such as these, spearheaded by locals within the community, will help to reduce the dependency on Congo’s natural abundance of forest.
Dependence and depreciation of Congo’s natural forests are also fuelled by the abundance of high-value resources. According to World Wildlife Fund, “The Congo Basin is abundant in natural resources such as timber, diamonds and petroleum, but current methods and rates of extracting these resources are unsustainable and threaten the future of this vast wilderness area.”
Mubake’s innovation presents a solution to a much more significant problem that Congo faces, as the preservation and security of the Congo Basin are constantly under threat. On top of the ever-growing demand for natural resources across the Congo Basin, mass agricultural projects particularly in the region of South Kivu, home to Bukavu, present a genuine threat to wildlife due to deforestation.
According to data provided by Global Forest Watch, in a 20-year-period from 2001 to 2021, Congo lost “34% of its total tree cover loss.” Tree cover across the Congo Basin not only helps to deal with the absorption of harmful emissions but provides a home to countless unique and endangered animals such as the eastern lowland gorilla.
Ensuring protection for endangered species such as the eastern lowland gorilla is vital to annual tourism as thousands of tourists every year travel to Congo to experience one of the nation’s greatest spectacles. Not only do attractions such as the eastern lowland gorilla help to further Congo’s economy but they also help to provide employment for impoverished people within the community.
Through the efforts of Bukavu’s elderly, access to energy in Bukavu, while not universal as yet, is heading toward a promising goal. Hope remains that such actions will set a precedent for how communities can produce sustainable energy in Congo through initiative.
– James Garwood
Photo: Flickr
Nuclear Energy In Developing Countries
4 Facts About Nuclear Energy in Developing Countries
Looking Forward
While nuclear energy may have a slow start in many developing countries, it certainly has a promising future. For instance, in March 2022, Nigeria committed itself to construct a power plant, which could provide energy to millions of impoverished Nigerians.
Along with that, in 2021, Bangladesh began construction of the Rooppur Nuclear Power Plant with the primary purpose of solving Bangladesh’s longstanding energy problem.
There are certainly hurdles to developing nuclear energy in developing countries. However, as seen in Nigeria and Bangladesh, it is definitely possible to establish nuclear energy within developing countries. As these countries transition away from fossil fuels and into renewables such as nuclear energy, they could be providing a stable source of energy to tens of millions of impoverished people that could live a life with energy without the threat of global disruptions.
– Humzah Ahmad
Photo: Flickr
Orbán Might Increase Poverty in Hungary
Orbán Erodes Democracy in Hungary
After first holding office from 1998 to 2002, Prime Minister Orbán returned as head of government in 2010, wanting to redesign governmental institutions. Orbán, a member of the Fidesz political party, subverted democratic norms and cemented one-party rule to ensure his assignment as prime minister and the supermajority of his party Fidesz.
In more than a decade since Orbán returned to the premiership, the Prime Minister and Fidesz have completely undermined Hungary’s democracy, erasing governmental integrity through the following methods:
As a result of Orbán’s reforms, the think tank Freedom House demoted Hungary to the status of partly free, indicating that Hungary’s democracy is at the cusp of autocracy, according to E-International Relations.
Poverty in Hungary
Despite Hungary’s descent from a protected democracy, poverty under Orbán’s leadership is reaching new lows.
From 2015 to 2019, there was a 2.2% drop in poverty rates, leaving only 12.3% of Hungarians below the national poverty line. The COVID-19 pandemic interrupted this trend of alleviating poverty rates, but official numbers are not yet available, as per the World Bank.
Hungary Depends on EU Funds
As Brussels and Budapest continue to clash, Hungary may become subject to financial repercussions. As one of the largest recipients of EU funds, the landlocked nation may find itself in tough times if cut off from much-needed aid.
From the 2014-2020 budget, Hungary received €40 billion ($40.8 billion). In just 2018, Hungary received €6.3 billion ($6.43 billion) from the EU, almost 5% of the country’s GDP. Without EU funding, the nation’s economic growth and ability to counter domestic poverty may stagnate or suffer.
Confrontations Between the EU and Hungary
Hungary’s turn against democratic norms puts it at odds with the European Union, prompting concerns about whether the EU should continue funding the nation as it refutes the multinational organization’s liberal democratic values.
Hungary’s violations of rule-of-law principles by undermining the country’s judiciary, education system and electoral integrity have prompted the EU to assess the best path forward to divert Hungary from autocracy, according to E-International Relations. In addition, the EU has accused Hungary of mishandling its funds, citing a lack of transparency and corruption (including 52 probes into misuse of funds) in how the nation utilizes EU funds.
In the past, the European Union has explored two main tools to handle Hungary’s disobedience: Article 7 of the Treaty of Lisbon and infringement procedures.
Under Article 7 of the Treaty of Lisbon, the EU can suspend certain rights of member states if a nation violates liberal democratic values, according to E-International Relations. However, this procedure requires a unanimous vote by all EU member states, rendering this feat impossible due to Orbán’s staunch ally in Poland.
The other main tactic the EU has tried is infringements procedures, which, simply put, is a legal action against an EU country that does not uphold EU law. In the past, infringement procedures in Hungary totaled €100,000 a day, according to E-International Relations. However, taking Hungary to court is time-consuming and potentially too ineffective to curb the nation from authoritarianism.
Brussels has resorted to withholding funds from Hungary within the past two years. The EU prevented Hungary from accessing more than €7.2 billion ($7.34 billion) from the bloc’s coronavirus response fund, citing ongoing breaches of EU law.
Now, as tensions rise, Brussels can leverage its conditionality regulation. This tool, which came into effect in January 2021, allows the EU to withhold money from its general fund from member nations for rule-of-law breaches. The European Union can prevent Hungary from accessing €40 billion ($40.8 billion) from its 2021-2027 budget if Orbán does not abide by the EU’s rules. This robust measure, which could push Orbán farther away from autocracy, may ultimately be detrimental to poverty in Hungary.
A Path Forward
As Brussels and Budapest continue clashing over democratic principles and funding, the future of poor Hungarians is in limbo. Financial penalties could prevent infrastructural development, welfare assistance and other critical programs that combat poverty, impeding the progress made under Orbán’s regime.
However, chances for a compromise remain hopeful. In June, Orbán stated, “Everything is ready for an agreement to be struck between the union and Hungary, which I think both sides need.”
With the two sides approaching an agreement and potentially unlocking withheld funds, Hungary could hopefully be on a path away from both autocracy and poverty.
In the meantime, non-government organizations are working to combat poverty in Hungary, with Habitat for Humanity Hungary being a notable example. Habitat for Humanity began its work in Hungary in 1996 and it helps supply homes for the impoverished. In 2019, Habitat for Humanity has helped more than 230 Hungarians, trying to minimize the number of people in poor living conditions.
Although the political situation remains precarious, there is still hope for the poorest Hungarians. Brussels and Budapest are inching closer toward an agreement, hopefully bringing more assistance to the poorest Hungarians shortly.
– Michael Cardamone
Photo: Flickr
Young Innovators in Accra
Accra is rapidly becoming one of the leading tech hubs in the world. As a center for innovation, talent from around West Africa are starting companies in Ghana. Rising regional innovators will soon arrive at MEST’s offices to fine-tune their projects into successful enterprises.
The Impact
The 20-week accelerator program began on July 28, 2022. Each startup receives $5,000 at the start of the program to develop its projects. Then, top-performing participants obtain $20,000 in equity-free funding for further business growth. Young innovators in Accra are getting the capital they need to build their emerging companies.
Along with funding, MEST supports entrepreneurs through mentorship and networking. The incubator’s team of experienced consultants gives a new perspective to growth stage projects. Sector experts help participants develop marketing strategies and identify target audiences. Furthermore, the MEST Express accelerator program connects young innovators in Accra with a transnational entrepreneurial community and investors.
Finally, the MEST curriculum develops business soft skills. The model prepares entrepreneurs for the professional world through leadership, communication, critical thinking and team-building development. Each startup must present its project at the end of the program. Program alumni gain valuable experience for future opportunities in the field. MEST is producing the next generation of young innovators in Accra.
Bottom-up investment is impactful on a local level and benefits macro-economic health. Startup entrepreneurs tend to be more in touch with community issues. Innovators’ products often reflect the environments they grow up in. It is essential to finance local entrepreneurs with the lived experience to properly address societal issues. MEST’s focus on social impact is funding community-driven transformation.
Through the MEST Express accelerator program, participants are empowered to become change-makers. The funding provides opportunities and creates new wealth for young innovators in Accra. MESTS’s bottom-up investment strategy encourages a thriving middle-class in Ghana and supports domestic, as well as global economic expansion.
Startup Highlight
Codetrain is one of MEST’s many successful alumni companies. The group provides training, guidance and professional opportunities to young coders in Ghana. The company develops students with little experience into world-class software programmers and sets them up to succeed with local and international tech companies.
The program trained more than 500 students in Accra and Kumasi since it opened in 2017. Roughly 90% of these coders found employment after graduating from Codetrain. Business accelerators expand the impact and economic growth exponentially.
Future of Innovation in Ghana
While Ghana is developing into a regional tech startup powerhouse, there are still challenges facing entrepreneurs in West Africa. It is crucial that opportunities for entrepreneurial development are extended to young innovators outside of urban centers. Greater investment in Ghanian incubator infrastructure is necessary to reach talent throughout the country.
Accelerators such as MEST generate global innovation, address social issues with sustainable solutions and maintain economic health. Identifying productive business incubators and funding the expansion of these initiatives should be foundational to the United States’ foreign strategy.
Furthermore, the COVID-19 pandemic is stunting the growth of start-ups in West Africa. Combating global vaccine inequality must be a policy priority to save lives and encourage economic growth.
MEST is gathering the top young innovators in Accra for the 2022 Express accelerator program. Social impact and gender equity in the tech sector are priorities for the initiative. Startups will receive funding to advance projects. Furthermore, participants will gain valuable soft skills, professional insight and networking opportunities.
While Ghana is becoming a rising hub for entrepreneurial activity, there are still roadblocks facing young innovators. Talent in rural areas is lost due to the limited reach of opportunity. Funding is needed to expand the business incubator infrastructure throughout Ghana. The COVID-19 pandemic continues to disturb economic growth in West Africa. Global health care equity and investment in bottom-up strategies should be central to Washington’s foreign policy.
Despite these barriers, the future of Ghana’s tech sector is exciting. Many successful companies rose through MEST’s accelerator initiative. This year’s Express program in Accra is developing the next generation of entrepreneurs.
– Samson Heyer
Photo: Wikimedia Commons
Digitization in India
India has come full swing in embracing the digital age, with Aadhaar – the national biometric digital identity program – covering 99.7% of the nation’s adult population as of December 2021. The COVID-19 pandemic has further strengthened the drive to go online, with an increase in sellers on almost all e-commerce platforms. Digitization in India will help the nation make strides in poverty reduction.
Digitization and Improving the Economy
According to McKinsey, “60 million to 65 million [jobs] could be created through the direct impact of productivity-boosting digital applications” by 2025. Furthermore, with more than 10 million businesses brought to a common digital platform through the 2013 Goods and Services Tax Network, digitization is incentivizing businesses to go online, thus, enhancing cooperation and streamlining India’s fragmented and informal marketplace. Outside the commercial world, digitizing sectors such as agriculture, education and health care can create up to $150 billion of incremental economic value by 2025 as it can raise output and save on costs and time.
Digitization and Improving Government Services
Not only can digitization help boost the economy and provide jobs to millions but it can also improve the government services essential to the positive well-being of citizens. To improve urban service deliveries in Andhra Pradesh, the government and World Bank designed AI platforms to monitor municipal services. By using drones and Geographic Information System mapping, the World Bank updated town plans and geo-tagged citizens’ issues with “online visibility” to enhance transparency and hold municipal engineers accountable for resolving issues within a certain time period.
By linking applications for piped water supply to AI, the project also provided new water connections to more than 200,000 homes in 110 municipalities between 2015 and 2019. In this same time period, “revenue from property taxes and water charges more than doubled,” enabling the government to collect sufficient resources for civil projects.
The Downside of Digitization
Despite its promise for socio-economic transformation, digitization has a long way to go in lifting all classes of Indians out of poverty. As access to digital services is still largely reserved for the upper class, those living in poverty remain excluded from the advantages of e-commerce. Therefore, in some ways, digitization may be entrenching poverty instead of reducing it. This problem proves even more serious for Indian women, only about a third of whom have internet access and rely on education as their primary form of social security in 2022.
Hope for the Future
While many Indians are yet to experience the benefits of digitization, Prime Minister Narendra Modi’s Digital India program, launched in 2015, centers around the internet as a utility for all citizens. The program’s goals include “universal digital literacy” and “easy access to a Common Service Centre” for all.
With more efficient government services and more Indians gaining access to the formal marketplace, digitization in India promises a future of reduced poverty.
– Imogen Scott
Photo: Flickr
2022 Sees a Rise in Public Giving
2022 Fidelity Charitable Donor-Advised Funds (DAFs)
According to Fidelity Charitable, the largest grantmaker in the United States, Americans donated a record-high $4.8 billion to Fidelity Charitable accounts within the first six months of 2022. Approximately $128 million of these donations went to Ukrainian relief efforts, providing aid to alleviate the many crises Russia’s invasion of Ukraine caused. Donations to prominent NGOs such as Jose Andres’s Central World Kitchen and the International Medical Corps also increased significantly when compared to previous years.
Fidelity Charitable’s 11% increase in donations is a significant divergence from the norm, as charitable giving is generally the first thing cut from the budget during times of financial duress. The 2008 financial crisis, for example, caused donation rates to plummet by approximately 12%, according to Fast Company.
Recent changes in America’s charitable activity can be attributed to the emerging prominence of Donor-Advised Funds (DAFs). DAFs allow individuals and corporations alike to deposit assets for donations to charity over time. Donors invest their charitable donations in advance, allowing them to tap into these funds later down the road when a crisis unfolds. DAFs are essentially donation reserves that allow donors to access funds that have been already been set aside, thus enabling a steady rise in public giving despite mounting economic hardship.
DAFs Bolster Americans Capacity to Give
DAFs are quite new and have grown in popularity since the financial crisis of 2008. Because DAFs create a ready supply of donations over time, they bolster donors and charities alike against future economic hardships. Rapid economic expansion in the decade since the 2008 market crash boosted general economic confidence and encouraged expansive investment in DAFs, which is translating into elevated levels of giving during times of crisis, according to Fast Company.
The purpose of DAFs is to increase the amount that individuals and corporations are able to give. They are incredibly flexible, allowing individuals to invest cash donations as well as assets such as stocks, bonds, cryptocurrencies, life insurance and retirement funds, according to Nerd Wallet. The versatility of DAFs is part of what makes them so successful, as they provide a plethora of investment options that appeal to everyone from the wealthy elite to the average middle-class American family.
Once an individual invests assets in a DAF, they cannot retrieve their contribution from the fund. This works to prevent individuals or companies from abusing DAFs for their tax-deduction qualities. Sponsoring organization controls DAFs, which controls the assets within DAFs as well as the investment options available to donors, according to Nerd Wallet. Once invested, DAF assets mature or appreciate tax-free until they are donated.
Some sponsor organizations do not have a mandatory distribution date, meaning that a donor can allow their funds to grow as long as they wish before donating. Other sponsor organizations require donors to contribute a portion of their funds to charity regularly in order to avoid fraudulent activity.
DAFs offer various tax benefits, permitting donors to receive tax deductions for their DAF contributions. Tax-related donor benefits contributed to the expansive rise in DAF investment in the past decade, fostering the current rise in public giving despite mounting economic hardship. The tax deductions attributed to DAFs faced criticism in the past as they provide a possible tax shelter for the wealthy. Despite these concerns, DAFs have proven a vital funding source for charities during times of economic volatility by bolstering Americans’ capacity to give.
An Evolution in How Americans Give
Although it is America’s largest DAF sponsor organization, expanding DAF investment is not unique to Fidelity Charitable. The 15th annual DAF report by the National Philanthropic Trust of 2021 analyzes data from 976 charitable DAF sponsor organizations from 2020. The report found that DAF donor grants reached approximately $34.67 billion in 2021, an astonishing 27% increase since 2019.
Additionally, the number of individual DAF accounts within the U.S. reached 1 million for the first time in history. This encouraging increase in charitable investment and DAF donations seems counterintuitive considering the economic austerity imposed by the COVID-19 pandemic. The success of DAFs in 2020 and 2021 reflects the current rise in public giving despite mounting economic hardship.
Experts are confident that donation rates will continue to rise as 2022 persists, surpassing all previous records. Historically, Americans tend to give more during the fourth quarter of the financial year. The President of Fidelity Charitable, Jacob Pruitt, expects this trend to continue, with hopes of surpassing 2021’s year-end record of $10.3 billion, Fast Company reports. These donations will be a pertinent source of aid for low-income nations that are most vulnerable to high inflation rates.
Most DAF sponsor organizations do not have a minimum initial contribution, meaning anyone is welcome to open an account, according to Nerd Wallet. A small initial investment followed by regular deposits will appreciate over time, allowing one to mature their donation reserve at a pace that fits their financial situation. DAFs are an investment, so starting one now will not reap immediate results nor will it provide instant gratification.
If the past few years have taught us anything, it is that the course of life is unpredictable and that there will always be someone, somewhere in need of assistance. DAFs were designed with this reality in mind, enabling charitable individuals to plan ahead and prepare a ready reserve that can be tapped into when the need arises. A small DAF contribution today could translate into a major impact in the future, so there really is no better time to start investing than the present.
– Mollie Lund
Photo: Flickr
3 Facts About Elderly Poverty in Malaysia
3 Facts About Elderly Poverty in Malaysia
Making a Change
As the quote in the beginning suggests, the elderly are especially vulnerable when it comes to financial stability because, after retirement, many must financially rely on their children for income, or in some cases even fund their children’s expenditures.
Thankfully, NGOs such as The National Council of Senior Citizens Organizations Malaysia (NACSCOM) are rallying for the elderly of Malaysia. Established in 1990, NACSCOM has around 20,000 members worldwide and cooperates with the Ministry of Women, Family and Community Development of Malaysia to push government action and legislation in areas such as elderly health care.
The Old Folks Home they established in 2007 currently has 20 residents, and three day centers that were established across Malaysia continuously provide learning programs for the elderly.
As the population ages, elderly poverty in Malaysia may become an even more difficult issue. Coupled with the lack of quality health care, elderly people sometimes have to engage in part-time jobs or self-employment in order to escape elderly poverty. However, with the combined efforts of NGOs and the government, geriatric infrastructure and reforms for accessible health care may not be far from the future. With this in mind, hopefully, senior citizens could soon be able to live without financial vulnerability in Malaysia.
– Emilie Zhang
Photo: Unsplash