The New Year has brought a host of new possibilities, and in particular, for Africa. The African Continental Free Trade Area (AfCFTA) agreement went into effect on January 1, 2021. The expectations are high for the continent.
AfCFTA is the largest free trade conglomerate in the world; 55 countries signed on to AfCFTA, consisting of 1.3 billion people and a gross domestic product of $3.4 trillion. Moreover, expectations have determined that 30 million Africans will be able to improve their income, leaving poverty behind. The move could remake Africa as a new power for trade, both internally and externally. However, the agreement is contingent on some key workings to reach the full potential of AfCFTA’s reach.
China and AfCFTA
The contingencies are large and focus on infrastructure, policy and eliminating tariff and non-tariff obstacles to improve and enhance continental trade. Some of these contingencies require funding beyond continental borders.
China, the burgeoning world power, is making its presence known in Africa, folding the continent into its monolithic project, The Belt and Road Initiative (BRI). The initiative would give incentives for Chinese investors to support infrastructure, trade and industrialization in Africa.
The BRI pivots on the ancient “Silk Road,” which were the trade routes that flowed in and out of China to the West and beyond. The Han Dynasty established the road in the year 220 B.C.E. It was over 4,000 miles long, connecting the Middle East to Central Asia and eventually, Europe.
The updated Silk Road Economic Belt and the Maritime Silk Road combine to make the BRI. The initiative invests in railways, highways, energy pipelines and benefits from streamlined border crossings. Folding in over a billion African workers and consumers is tantamount to its success. Through the initiative, China and AfCFTA have a great interest in working with each other.
Infrastructure
Africa is receiving funding for infrastructure already. In fact, China is the top investor in the African infrastructure of any foreign country. This is a much-needed economic boost for the continent.
The United Nations Economic Commission for Africa’s chief for energy and infrastructure, Dr. Robert Lising, placed a price estimate on what would allow AfCFTA work. He pointed to estimates the African Development Bank put forth amounting to $130-$170 billion per year.
He stated that “This is a huge amount of money so China’s involvement is definitely welcome… In addition, we all know that there is available capital and equipment linked to China’s involvement in Africa’s infrastructural development.” He also pointed out that China’s competitive involvement would lower prices, benefitting Africa. Additionally, he mentioned that while Western involvement is welcome as well, Western forces often come with conditions, whereas China does not.
He said that “If you want to reap the full benefits of the AfCFTA, you need regional infrastructure development… If you want to close the gap in infrastructure development in Africa, you need to bring in all the partners including China through the BRI.” He reminded others that Chinese involvement in African infrastructure is not a new thing, happening for the last five decades. Citing the completion of Nairobi to Mombasa rail lines and the Addis Ababa to Djibouti line to support his claim.
A Partnership of Need
A round table discussion that the Center for China & Globalization organized and held in December 2019 further supports Dr. Lising’s thoughts. Isabel Domingos, ambassador from Sao Tome and Principe at the conference lays out a plan for mutual benefit. She stated that “China has needs and Africa also has needs; China has potentialities and Africa also has potentialities. We have the African Continental Free Trade Area that can be one place to promote both sides, and find a place to deepen the cooperation between China and Africa.”
While there remain anxieties over the confluence of Chinese involvement in AfCFTA, the consensus is clear; the involvement of foreign capital in AfCFTA is crucial. China stands to gain from its involvement and has the capital available that the African continent needs.
China and AfCFTA are a strong match. As Africa continues on its current trends of globalization, China can heed the call. The entire world will watch the results as a blueprint for international involvement.
– Christopher Millard
Photo: Flickr
5 Nonprofit Organizations Fighting Human Trafficking
5 Nonprofits Working To Stop Human Trafficking
While human trafficking still persists, nonprofits are putting in the effort to eradicate this unjust practice. With organizations like Agape International Mission, Destiny Rescue, Coalition to Abolish Slavery and Trafficking, Crisis Aid International and Free the Slaves, fighting human trafficking is a group effort. These, along with many other organizations, will continue to fight for a future where people will no longer worry about forced labor, sex trafficking, forced marriage or any other cruel form of exploitation.
– Jose Ahumada
Photo: Flickr
The World Bank’s Crisis Response to the COVID-19 Pandemic
In early October 2020, the president of the World Bank Group (WBG) gave a speech to address the COVID-19 pandemic and the World Bank’s crisis response. In his speech, WBG president David Malpass discussed the enormous toll that the COVID-19 pandemic has had on developing countries. He also stated that the World Bank’s response would focus on alleviating poverty, inequality and debt burdens, and support educational and health opportunities.
Disparities
Dramatically uneven access to Personal Protective Equipment (PPE) across the globe is one indication of global disparities in economic well-being, which in turn have affected pandemic response capabilities. Lowering the transmission of COVID-19 requires the coordination of a globalized response. However, localized country-wide challenges in securing PPE, the most basic of pandemic safety necessities, prevent this possibility.
Illustrating this challenge is the fact that low-income countries have little economic agency to act during the global pandemic. Developed countries may face shortages in supplies of PPE. Those countries may even opt to reduce the supply of outgoing PPE sales in order to remediate domestic shortages. However, restrictive budgets, few local manufacturers and no way to import PPE exacerbate shortages in developing countries.
A 2020 National Institute of Health study estimated that if countries tightened up sales of PPEs, “export restrictions could initially increase prices of medical masks by 20.5%, Venturi masks by 9.1%, and protective equipment, such as aprons and gloves by 1% and 2% respectively” around the globe. Illustrating the problem, a recent survey of seven low-income developing countries across the world showed that on average, clinics and health centers were only able to supply two of four necessary PPE items to medical staff. The challenges presented by PPE distribution demonstrate the importance of the World Bank Group’s aid programs around the world.
Dual Challenges
Lockdown guidelines that have successfully “flattened the curve” in developed nations are not always a viable option for developing economies. For example, in India, nearly 90% of the workforce is in the informal employment sector. In sub-Saharan Africa, 86% of workers have informal employment. The nature of informal work requires workers to leave the house for work and as a consequence, choose between keeping their families fed or respecting lockdowns. Countries that struggle to lower transmission rates or offset the financial damage of lockdowns see dual challenges. Implementing measures that “flatten the curve” and lower transmission rates cause economic harm. On the other hand, failing to reduce hospitalizations inflicts strain on medical systems, leading to high infection rates and death tolls.
“A Fire That Must Be Put Out”
In the World Bank Group’s June 2020 COVID-19 Crisis Response Approach Paper, the ongoing COVID-19 crisis is described as “a fire that must be put out.” As a direct result of the pandemic, for the first time in 60 years, the World Bank projected that Emerging Markets and Developing Economies (EMDEs) will see economic contraction. The global economy will likely shrink by 5.2% in 2020, the deepest recession since World War II. For comparison, the global economy shrank less than 2% during the 2009 financial crisis. A number of traits cause EMDEs to be especially vulnerable to the pandemic’s negative economic impacts. Traits such as weaker health systems, dependence on global trade and tourism exacerbate financial instability. For the first time in decades, global poverty will rise.
The World Bank Group’s Response
Despite challenges, international financial institutions, including the WBG, are moving quickly to prevent the loss of hard-won development growth in EMDEs. The WBG has recognized the new paradigm of the pandemic and as an organization, has shifted its focus to a crisis response agenda. In April of 2020, the WBG announced the first projects directly related to COVID-19 and prepared to deploy up to $160 billion over a period of 15 months to address COVID-19.
Like other international organizations, the World Bank’s crisis response to COVID-19 aims to focus on issues directly related to the pandemic. However, the WBG ensures a continuation of its broader development objectives by placing its COVID-19 crisis response agenda within its own Twin Goals. Adopted in 2013, its Twin Goals are to bring extreme poverty down and to promote prosperity among the bottom sector of every country. The WBG’s massive $160 billion project rollout focuses on direct response to COVID-19, and on protecting past economic development gains. This includes maintaining steady progress towards the Twin Goals.
The World Bank’s current crisis response agenda can be divided into near, medium and long-term agendas. These agendas are termed relief, restructuring and resilient recovery. Relief relates to dealing with the most direct impacts of COVID-19. Its restructuring plans include strengthening health systems, restoring human capital and restructuring social and economic sectors. Resilient recovery is about building a future in recognition of a changed post-pandemic world. In pursuing these plans, the WBG ultimately aims to assist at least one billion people affected by the pandemic.
– Marshall Wu
Photo: Flickr
Poverty in the Fashion Industry is a Feminist Issue
The Feminist Movement
The feminist movement means supporting women all over the globe. The fashion industry is part of the feminist movement because it is a female-dominated industry. According to Labour Behind the Label, 80% of garment workers worldwide are women. They produce the t-shirts with feminist quotes found in stores all over the globe. However, in 2019, Oxfam reported that 1% of Vietnamese garment workers and 0% of Bangladeshi garment workers earned a living wage. In 2019, the Spice Girls’ #IWannaBeASpiceGirl t-shirts sold for Comic Relief’s “gender justice” campaign were made by underpaid female Bangladeshi garment workers. These workers earned 35p an hour during 54-hour workweeks amounting to 8,800 takas — well below the living wage estimate of 16,000 takas. Furthermore, the workers were exposed to harassment and abuse. The business practices of fast fashion brands highlight the imbalance between the feminist movement, consumer actions and the grim reality of garment workers.
The Feminist Movement and Fast Fashion
Fashion brands are a powerful force in ending cycles of poverty. But, fast fashion prioritizes the fast production of cheap clothing made by overworked and underpaid garment workers. According to the Clean Clothes Campaign, it is typical for a garment worker to work 96-hour workweeks for seven days a week, ranging from 10-18 hours a day. On average, the wages paid are two to five times less than what is needed for a worker and her family to live above the poverty line. The Juniper Research study predicts that online shopping fueled by COVID-19 will increase fashion sales to $4.4 trillion by 2025. Top fashion CEOs earn in four days what garment workers spend their whole life trying to make. The unfortunate truth is that fast fashion has made the richest men in the world at the expense of the most vulnerable women.
Poverty in the Fashion Industry
In 2017, the Deloitte Access Economics report for Oxfam Australia reported that paying garment workers a living wage would only increase the retail price of clothing by 1%. In other words, a living wage and fair working conditions are reasonable consumer expectations. Researchers from the University of New South Wales and the University of Queensland also reported that increasing the cost of clothing by 20 cents would allow Indian garment workers to earn a living wage. By investing more in clothing production, brands and consumers can support the global development of garment workers. This will allow workers and their families to invest in education, healthcare and their local community.
Ethical Fashion
Garment workers employed at ethical brands are paid a living wage, have safe working conditions and are treated fairly. On the other hand, fast fashion workers face gender discrimination through mandatory pregnancy tests, abuse and sexual harassment. Fashion as a feminist movement has the power to address the main human rights abuse in the industry — the non-payment of a living wage.
Female empowerment is a catalyst for prosperity. The United Nations reports that investing in the education of girls and women helps global transformation. It contributes to economic growth, reduces poverty through increased productivity and improves health outcomes. Studies have shown that providing basic education to girls until adulthood enables them to better manage their family size, provide better care to their family and send their children to school.
However, poverty is an important factor in whether girls and women obtain an education. Without a living wage, poverty-stricken workers cannot afford to send their children to school and the cycle of poverty continues. Education has the power to help improve the lives of women and reduce maternal and child mortality rates. Therefore, education for girls fosters the development and empowerment of women.
Moving Forward
Poverty in the fashion industry is a feminist issue. Brands that invest in the talented and skilled female workforce acknowledge that living wages empower women and their local communities. Garment workers need to be placed at the forefront of the industry to negotiate better pay and working conditions. Being in leadership roles ensures that fashion as a feminist movement represents the most vulnerable around the world. The fashion industry and consumers have the power to help end global poverty, improve access to education and empower women through conscious consumerism.
– Giselle Magana
Photo: Flickr
4 Sustainable Fashion Brands Fighting Poverty
ARMEDANGELS
ARMEDANGELS is a fair fashion brand that prioritizes producing contemporary and modern collections with fairly produced, eco-friendly and high-quality products. The company ensures high standards and fair working conditions by working with PETA, the Fair Wear Foundation and the Fairtrade Organization. Since 2011, the brand has been Global Organic Textile Certified (GOTS) and only works with regenerative and sustainable materials, which include organic linen, organic wool, recycled cotton, organic cotton and more.
In April 2018, the company founded ARMEDANGELS Organic Farmers Association to help small farmers transition from conventional cotton to organic cotton. The brand also strives in pushing for social change by engaging in political and environmental activism. Within its Greener Deal, donations were provided to organizations actively involved in climate protection in Europe and Germany. ARMEDANGELS also achieved climate neutrality and its CO2 emissions are two-thirds lower in intensity than classic fashion companies.
SOKO
SOKO is a certified women-led B-corp ethical jewelry brand that employs Kenyan artisans who produce collections for conscious consumers. This company believes that economic sovereignty and financial inclusion provide lasting impacts and actively works to reduce poverty and inequality. The brand works toward this goal with its virtual manufacturing platform. The platform connects 2,300 independent artisans with a global marketplace through mobile technology. The SOKO platform allows artists to receive orders and payments to hand-make products from upcycled and ethically sourced materials. Because of this network, workers can improve and preserve their cultural techniques at scale. They can also earn five times more than those employed in an average artisan workplace.
SOKO employees only work 50% or less of their total capacity. This helps them to avoid sole reliance on this particular sustainable fashion brand, to guarantee their freedom and to encourage sustainable, long-term economic sovereignty. Because of policies like this, the United Nations, USAID and the World Bank have endorsed SOKO for its social impact.
Nudie Jeans
Nudie Jeans is a Swedish denim brand founded in 2001 that produces 100% organic cotton denim collections for more than 50 countries. The company prioritizes environmental and social sustainability through its free repair services, resale of secondhand trade-in jeans and by paying its garment workers a living wage. Since 2016, Nudie Jeans’ stakeholders have verified that 3,400 workers have been provided additional payments to ensure a living wage. These payments expanded in 2019 to include workers employed in the spinning mills, knitting and processing units. This has the effect of creating a fair trade system throughout its supply chain.
Akola
Akola is a jewelry brand that uplifts Ugandan women by providing empowering job opportunities in Jinja, Uganda. Akola employs nearly 200 Ugandan women. By handcrafting each piece, female workers break free from poverty through fair-paying jobs that help them achieve economic independence. Because of this policy, positive economic impacts reverberate through families and communities.
The women are also provided with a holistic curriculum of programs. The brand offers training programs on leadership, financial literacy and skills to become self-reliant. This brand uses cultural techniques and local and sustainable materials such as upcycled palm leaves, cow horns and agave plants. The impact of Akola is shown by the fact that 66% of Akola-employed women own land or a home, almost 80% of Akola children are enrolled in school and almost 30% of Akola women are in community leadership positions.
These sustainable fashion brands fighting poverty help create solutions in the fashion industry. Supporting fair fashion can help garment workers escape the cycle of poverty.
– Giselle Magana
Photo: Flickr
COVID-19 in Mexico
Vaccine Inequality
Vaccine inequality is prominent among those living in poverty. Vaccines are not currently reaching the rural areas of Mexico where there are thousands of people who are now geographically isolated from vaccine centers. Additionally, those who live in rural areas would require technology to stay informed about these vaccine centers, but poverty inhibits people from accessing technology and therefore the necessary education and information about vaccination.
Many citizens in Mexico did not originally believe in the severity of the novel coronavirus; face masks did not start being worn as soon as recommended. Health authorities reported not only that many people were not using face masks but also a large number of people were unable to afford one. As a result, patients who were living in extreme poverty are less likely to survive COVID-19 in Mexico. This is largely due to the fact that the impoverished are more exposed to the virus compared to those who are able to afford to quarantine and avoid exposure.
Demographics
The Mexican government is struggling to give the necessary attention to many who need it most. According to the National Council for the Evaluation of Social Development Policy, or CONEVAL, COVID-19 in Mexico caused a 63% drop in household income. The pandemic has proven that staying home is a privilege that many impoverished citizens do not have. Statistically speaking, 27% of people living in poverty contracted the novel coronavirus, while only 5% of the upper-class contracted COVID-19. This demonstrates the clear relationship between high rates of infection and socioeconomic status in Mexico.
Looking Forward
COVID-19 in Mexico has caused thousands of deaths, and the lack of infrastructure and government initiatives has caused delays in the vaccination process. However, Mexico has received more than 2.7 million COVID-19 vaccines on behalf of the United States. The White House has made what is considered a positive diplomatic step forward in providing Mexico with these doses of the vaccine, and the hope is that even more vaccines will be sent by the U.S.
The NGO Direct Relief has donated 330,000 masks to help relieve the crisis. As well, Direct Relief assisted in importing the 100,000 KN95 masks donated by Academy Award-winning film director Alfonso Cuarón. Many people are benefiting from the action, and the vaccination process is slowly improving in Mexico.
COVID-19 in Mexico has demonstrated how socioeconomic status affects access to healthcare and the ability to protect oneself from the pandemic. However, vaccination has begun and donations of personal protective equipment, or PPE, are steps in the right direction for Mexico’s handling of the novel coronavirus.
– Ainara Ruano Cervantes
Photo: Flickr
Organizations Supporting the Matamoros Refugee Camp
The Matamoros Refugee Camp
The influx of immigrants to the U.S. border can be attributed to root causes of “economic problems, ongoing violence, worsening corruption, challenges to democracy as well as the devastating impact of the coronavirus.” In 2017, the majority of immigrants from Central America were from El Salvador (39.7%), Guatemala (27.2%) and Honduras (18.6%).
An asylum seeker is defined as “a person who has left their country and is seeking protection from persecution and serious human rights violations in another country.” Since the implementation of the MPP, roughly 70,000 people made the difficult choice to leave their country of origin to seek asylum in the U.S. and about 70,000 were returned to Mexico. A refugee camp thus formed in Matamoros, Mexico, located on the southern bank of Rio Grande, directly across the border from Brownsville, Texas. At this camp, hundreds, and at times, thousands of people wait for the duration of their immigration proceedings.
The conditions of living at the camp posed serious health risks. Furthermore, as of December 2020, there were more than 1,000 reports of “rape, kidnapping, torture and other violent attacks” against asylum seekers at the U.S. border. In addition to the risks posed at dangerous border towns, the camp faced deteriorating conditions, including a lack of access to water and sanitation. In juxtaposition to the peril faced in a crowded refugee camp, there were celebrations within the community of residents. People formed church groups and tent schools. They celebrated quinceaneras and fell in love. The refugees at the Matamoros camp showed resolve to find some level of normalcy within a period of uncertainty and fear.
Organizations Supporting the Camp
Resource Center Matamoros (RCM) is a humanitarian organization that has become a staple of social support for immigrants at the border. Gaby Zavana, the organization’s co-founder, told The Borgen Project that there were no medical resources and no infrastructure in the early days of the camp.”We initially provided food, tents and blankets, but that shifted to providing an office building for the refugees to have access to legal teams, medical teams and social support services.” The work that Zavana does within the RCM is multi-faceted. She explained that as the organization expanded, RCM started to take on the role of camp management.
Zavana says that RCM prioritized public health issues by setting up temporary camp showers so that people would not have to bathe in the river. Additionally, RCM targeted camp infrastructure, paving walkways and helping people construct better home structures and kitchens. The work of RCM extends to lobbying the Mexican and U.S. government and advocating on behalf of the asylum seekers at the U.S. border.
Angry Tias and Abuelas, the recipient of the Robert F. Kennedy Human Rights Award in 2019, is an organization based in the Rio Grande Valley, Texas. The organization has engaged in efforts to provide food to the hungry, visit the imprisoned and comfort people stranded at the border. It also set up stores in the Matamoros camp to supply essential items like diapers and cooking utensils to the migrants, free of charge.
Fixing Immigration Policy
The Biden administration announced in late February 2021 its plans to close the Matamoros refugee camp, terminate the MPP and dedicate $4 billion to address the underlying causes of migration from Central America. The administration has started processing migrants and all of the residents of the camp have now moved to await their hearings in the U.S. When asked about the environment of the camp upon hearing the news of its impending closure, Zavana told The Borgen Project that the residents were unusually quiet. The quietness could signify a deep, silent reflection of their experiences at the camp and futures in the United States.
The number of people coming to the border has increased dramatically since the termination of the MPP. Zavana says that “a big portion of RCM’s work has gone to the camp so the closure of the camp can free up resources to focus on new arrivals.” RCM is currently working on an interim shelter to house new arrivals until more shelter facilities open up.
The Road Ahead
The tides are shifting for asylum seekers at the U.S. border. The Matamoros refugee camp provided some level of security for thousands of people fleeing persecution, violence and poverty in hopes of receiving asylum in the United States. The efforts of organizations like the Resource Center Matamoros allowed camp residents to live with more dignity and humanity. The Biden administration’s upheaval of Trump-era immigration policy is promising for the past residents of the Matamoros refugee camp.
– Brittany Granquist
Photo: Flickr
Evidence-based Policymaking Meets Foreign Aid
Evidence-based Policymaking in Congress
There is no single body today which defines or guides evidence-based policymaking. Implementations of evidence can be unique but tend to share similar goals and core principles.
Its proponents are numerous. Many organizations have recently launched their own initiatives to begin major pushes for evidence-based policymaking. In Washington alone, the Bipartisan Policy Center, Pew Charitable Trusts, Urban Institute and Brookings Institute are key examples.
When the Urban Institute introduced its Evidence-Based Policymaking Collaborative, it heralded the increasing momentum behind the use of evidence in policymaking — even suggesting the potential for a “golden era” of evidence-based policymaking. In its own words, evidence-based policymaking is about “[using] what we already know from program evaluation to make policy decisions and to build more knowledge to better inform future decisions.”
Evidence Proponents
A number of recent factors have made this change possible today. For instance, in order for policymaking backed by evidence to be possible in the first place, institutions must begin by using high-quality data which enables further analysis. Some contributing changes are computerization and digitalization, which have improved the availability of evidence. Increased investments in rigorous research have made analyzing evidence more fruitful to ultimately enable the evidence process.
The Bipartisan Policy Center launched its own Evidence-Based Policymaking Initiative in 2017 to continue providing policymakers with recommendations. It bases its definition of evidence-based policymaking on three principles: data collection, data analysis and evidence use.
In its suggestions to policymakers, the Evidence-Based Policymaking Initiative recommended that “for the evidence-based policymaking process to become more routine, policymakers must recognize that evidence is an essential and necessary input into the policymaking process.”
Evidence in Federal Agencies
USAID is a strong example of a United States government institution that has made significant strides in implementing evidence into its policies. The agency has implemented evaluative processes to assess and cement the use of evidence.
In October of 2019, Results for America released a press statement highlighting USAID, among nine other federal agencies, for its progress in its use of evidence.
USAID’s 10-year-old Development Investment Ventures (DIV) is a strong example of successful inclusions of evidence in policymaking. The Center for Global Development (CGD), a think tank and research institution, described DIV as comparable to venture capital funds. Both of them aggressively try new and untested approaches. DIV scales up the impacts of programs that are proven to work. However, DIV is unlike venture capital funds in that it seeks social returns rather than monetary gain.
DIV has managed to make remarkable impacts through its programs. Five of its innovations have yielded at least $17 in social impact per dollar invested.
CGD pointed out that the DIV programs that showed the strongest scalability were ones that “had a low cost per person reached; were based on established evidence; included an academic researcher in the design process to help test, iterate, and improve the innovation over time…” While organizations such as CGD continue to see room for improvement in evidence implementations, current evidence-based implementations at USAID are examples of the positive impact.
– Marshall Wu
Photo: Flickr
China and AfCFTA: Mutual Aid Realized
AfCFTA is the largest free trade conglomerate in the world; 55 countries signed on to AfCFTA, consisting of 1.3 billion people and a gross domestic product of $3.4 trillion. Moreover, expectations have determined that 30 million Africans will be able to improve their income, leaving poverty behind. The move could remake Africa as a new power for trade, both internally and externally. However, the agreement is contingent on some key workings to reach the full potential of AfCFTA’s reach.
China and AfCFTA
The contingencies are large and focus on infrastructure, policy and eliminating tariff and non-tariff obstacles to improve and enhance continental trade. Some of these contingencies require funding beyond continental borders.
China, the burgeoning world power, is making its presence known in Africa, folding the continent into its monolithic project, The Belt and Road Initiative (BRI). The initiative would give incentives for Chinese investors to support infrastructure, trade and industrialization in Africa.
The BRI pivots on the ancient “Silk Road,” which were the trade routes that flowed in and out of China to the West and beyond. The Han Dynasty established the road in the year 220 B.C.E. It was over 4,000 miles long, connecting the Middle East to Central Asia and eventually, Europe.
The updated Silk Road Economic Belt and the Maritime Silk Road combine to make the BRI. The initiative invests in railways, highways, energy pipelines and benefits from streamlined border crossings. Folding in over a billion African workers and consumers is tantamount to its success. Through the initiative, China and AfCFTA have a great interest in working with each other.
Infrastructure
Africa is receiving funding for infrastructure already. In fact, China is the top investor in the African infrastructure of any foreign country. This is a much-needed economic boost for the continent.
The United Nations Economic Commission for Africa’s chief for energy and infrastructure, Dr. Robert Lising, placed a price estimate on what would allow AfCFTA work. He pointed to estimates the African Development Bank put forth amounting to $130-$170 billion per year.
He stated that “This is a huge amount of money so China’s involvement is definitely welcome… In addition, we all know that there is available capital and equipment linked to China’s involvement in Africa’s infrastructural development.” He also pointed out that China’s competitive involvement would lower prices, benefitting Africa. Additionally, he mentioned that while Western involvement is welcome as well, Western forces often come with conditions, whereas China does not.
He said that “If you want to reap the full benefits of the AfCFTA, you need regional infrastructure development… If you want to close the gap in infrastructure development in Africa, you need to bring in all the partners including China through the BRI.” He reminded others that Chinese involvement in African infrastructure is not a new thing, happening for the last five decades. Citing the completion of Nairobi to Mombasa rail lines and the Addis Ababa to Djibouti line to support his claim.
A Partnership of Need
A round table discussion that the Center for China & Globalization organized and held in December 2019 further supports Dr. Lising’s thoughts. Isabel Domingos, ambassador from Sao Tome and Principe at the conference lays out a plan for mutual benefit. She stated that “China has needs and Africa also has needs; China has potentialities and Africa also has potentialities. We have the African Continental Free Trade Area that can be one place to promote both sides, and find a place to deepen the cooperation between China and Africa.”
While there remain anxieties over the confluence of Chinese involvement in AfCFTA, the consensus is clear; the involvement of foreign capital in AfCFTA is crucial. China stands to gain from its involvement and has the capital available that the African continent needs.
China and AfCFTA are a strong match. As Africa continues on its current trends of globalization, China can heed the call. The entire world will watch the results as a blueprint for international involvement.
– Christopher Millard
Photo: Flickr
Education in Chile Slowly Overcomes Pinochet-Era Divisions
Expanding Financial Access in Mexico
The Problem
Mexico is a nation burdened by inequalities. With a Gini coefficient hovering around 0.5, Mexico is one of the most unequal upper-middle-income countries in the world. Contributing to the high income and wealth inequality are the massive gaps in access to financial services.
There is an undeniable correlation between financial access and inequality. For example, countries with extensive access to financial services broaden the economic opportunities for both individuals and firms. The World Bank’s Systematic Country Diagnostic for Mexico in 2019 found that expanding financial inclusion can significantly increase income for low-income individuals and populations.
The report also found that low financial inclusion negatively impacts economic inequality, productivity, growth and employment of micro, small and medium enterprises (MSMEs). Mexico is a stark example of a country with low financial inclusion. Only 37% of Mexican adults have bank accounts, which is a much lower number than the average percentage for upper-middle-income countries.
The poor level of financial access in Mexico sinks even lower for rural citizens. Although more than 20% of Mexico’s population live in rural areas, only 7% of rural residents borrowed from a financial institution in 2016. Another demographic hindered by financial access inequality is MSMEs, which provide about 70% of the employment in Mexico. Just 11% of these enterprises use bank credit due to the cost and access issues.
The Programs
To address the troubling lack of financial access in Mexico, the nation’s authorities have introduced several reform programs in the past five years. The Expanding Rural Finance Project received supplemental support from the World Bank. This allowed for greater oversight and more available resources. The Expanding Rural Finance Project authorized 192 participating financial intermediaries to supply 174,000 credits to 140,000 rural producers and MSMEs between 2016 and 2020. The average loans of $1,850 have helped ease rural poverty by providing funds for workers and employers in the area. Furthermore, more than 80% of these credit recipients were women, exceeding the set target of 60%.
In addition, the Financial Inclusion DPF, supports a comprehensive legal and regulatory framework for Fintech in Mexico. Financial institutions that adopt Fintech use technology to enhance financial services and make banking more accessible and effortless. Automated transfers, mobile payments and flexible loan management are some of the many benefits offered by Fintech-associated institutions. The newly implemented framework in Mexico is groundbreaking in the global picture and will increase financial inclusion by expanding convenient financial services.
The Results
Mexico’s programs addressing inequality in financial access have shown several signs of progress. Between 2016 and 2020, the Expanding Rural Finance Project widened financial access in Mexico for impoverished citizens, rural populations, MSMEs, women and youth. It provided hundreds of thousands of credits extending to participating producers. The project particularly helped Mexican workers on the disadvantaged end of income inequality. Of people who received credits, 17% live in communities classified as marginalized by the National Council for Population. The program distributed approximately 76% of all sub-loans in the Mexican states with the highest levels of poverty. About 12% of credit recipients had never borrowed from formal financial institutions. As gender inequality permeates income inequality, 81% of credit recipients from the project were women.
The Mexico Financial Inclusion DPF program also contributed to the expansion of financial access in Mexico. Only slightly more than a year after the program’s initiation, 93 businesses have already requested authorization to operate as Fintech institutions. About 59 of the businesses are electronic payment fund institutions and 34 are crowdfunding institutions. The quick adjustment to Fintech suggests an overarching trend for Mexican enterprises. Many want to benefit from the ease of access and innovation promoted by the Fintech model. The transition will benefit non-financial enterprises and average citizens as well. This is because the Fintech framework provides for faster payment transfers, easier loan processes and more convenient services available for remote residents.
Looking Ahead
Mexico’s glaring discrepancies in financial inclusion have supported ongoing economic inequalities for decades. However, programs administered by the government in the past several years have made strides in the right direction as financial access is widening for disenfranchised groups all over the country. If Mexico continues to expand financial access through credit programs and Fintech innovation, the country will likely see a decrease in economic inequality and reap the benefits of a more egalitarian society.
– Calvin Melloh
Photo: Flickr