Information and news about economic crisis

poverty relief in haitiPlagued by historical political oppression and a series of recent natural disasters, Haiti is among the poorest nations in the Western Hemisphere today. An estimated 8.5 million Haitians live below the poverty line, 2.5 million of whom survive on $1.12 a day. Thus, it is not surprising to see an influx of immigrants from the country. According to the activist organization RAICES, Haitian immigrants make up nearly half of families detained in U.S. Immigration and Customs Enforcement (ICE) facilities. Immigration policy must consider the origin countries of migrant families and why they chose to migrate in the first place. Though the U.S. has prioritized harsh security measures at the border, investing poverty relief in Haiti may improve the situation.

Haiti’s History of Poverty

Haiti’s ongoing economic crisis stems from a long history of political unrest. From national corruption to human rights violations and the damaging effects of colonialism, Haiti’s economy has never fully recovered. After regaining independence from France, the small country owed 150 million francs to the European nation. Haiti finally finished paying off this debt in 1922.

A World Bank report estimated that 6.3 million Haitian citizens could not afford certain consumer goods in 2012, while another 2.5 million struggled just to buy food. Additionally, despite some poverty relief in Haiti, about half of the population cannot access public services. From 2001 to 2012, Haiti saw improvements in tap water, energy and sanitation accessibility, but coverage rates remain well below 50%. Furthermore, recent statistics from the World Bank claim that Haiti’s GDP per capita was only $756 in 2019. This poverty, along with a particular susceptibility to natural disasters, creates incentives for mass migration from Haiti.

The Price of Immigration Enforcement

When it comes to immigration enforcement, the U.S. spares no expense. The American Immigration Council found that, since 2003, the federal government has spent approximately $381 billion on immigration control. The U.S. Customs and Border Protection (CBP) and ICE  have grown, with nearly triple their original budgets today. In 2020, federal spending was $8.4 billion for ICE and $16.9 billion for CBP.

Despite the generous contributions to these enforcement agencies, immigration issues have not necessarily disappeared. Instead, this tough approach at the border has created a new set of problems. Claims of trafficking, abuse of power by enforcement officials and poor conditions in holding facilities have surrounded the departments. Specifically, RAICES found that Haitian and other Black immigrants face discrimination and mistreatment while under ICE custody.

With an estimated 40,000 Haitians making up a large portion of border detainees, some government officials are proposing investing in poverty relief in Haiti. Politicians, such as Rep. Frederica S. Wilson (D-FL), are fighting to restore stability in Haiti during the pandemic. Wilson and some of her colleagues believe that this will have a slowing effect on migration.

Poverty Relief in Haiti Shows Promise

The World Bank has demonstrated the benefits of investing in poverty relief in Haiti. From 2000 to 2012, extreme poverty decreased by 7.4% largely due to economic progress in Haiti’s big cities. Similarly, poverty rates in rural areas reached 74.9%, while the country’s capital, Port-au-Prince, only had a rate of 29.2%. By increasing and distributing aid, the rest of the country can achieve poverty reduction rates similar to those in urban regions.

The same report details how, with the help of the Heavily Indebted Poor Countries Initiative, Haiti eliminated a large part of its public debt. This in turn increased the economy by 2.3% annually from 2005 to 2009. The financial help also “contributed to the generation of optimism in the country and among the country’s partners.”

Researchers urge U.S. policymakers to begin looking at remittances as having investment returns. For example, temporary work visas significantly bolster Haiti’s economy and raise the quality of life for Haitian households. This lessens the need for migration. If the U.S. changes its perspective on immigration, it could begin developing a mutually beneficial relationship with Haiti while decreasing emigration.

Lizt Garcia
Photo: Flickr

DouyinWhen the novel coronavirus (COVID-19) first emerged in Wuhan, a metropolitan city located in China’s Hubei province, the Chinese government took strict measures to contain the infection. Less than two weeks after the first recorded death linked to COVID-19 occurred, Chinese authorities declared the entire city under lockdown with the rest of the province following suit in just a matter of days. This caused a severe economic downturn, but the Douyin app presents an unlikely solution.

Despite Chinese health officials now deeming the country fit to reopen, many small and medium-sized businesses worry that they cannot resume business as usual after suffering from the unexpected closures. Considering that these small and medium-sized businesses make up more than 60% of the country’s overall gross domestic product (GDP), their potential failure sets China’s economy at a severe decline.

ByteDance, a Chinese multinational technology company, devised a method to assist small-business owners affected by the COVID-19 outbreak. Using the popularity of ByteDance’s most well-known app, Douyin, to their advantage, small and medium-sized business owners will be allowed to reopen their markets to a broader audience. And in turn, Douyin can help reignite China’s economy.

What is Douyin?

Douyin is a Chinese social media app that allows its users to create and share brief clips that often include people lip-syncing, playing practical jokes, or participating in viral challenges. The app was developed by ByteDance, the aforementioned Chinese multinational technology company, and released into the Chinese market in September 2016. The app rapidly gained popularity and now has more than 1 billion downloads worldwide, with 500 million monthly active users. In 2017, ByteDance released TikTok, another social media app with a similar function to Douyin but for global markets.

How Does Douyin Differ From TikTok?

Despite having similar logos and content, Douyin and TikTok are indeed two different applications geared towards different audiences. On the one hand, TikTok was intended for global markets, while Douyin was only aimed at Chinese markets. This is why Tiktok is not available for download within Chinese app stores in the same way that Douyin is not available on app stores outside of China, such as the Google Play Store or Apple’s App Store. Additionally, the apps have different policies regarding censorship on specific topics. While you may find countless parodies mocking U.S. political leaders on TikTok, no such mockery exists within Douyin. Instead, propaganda that promotes the overall message of the Chinese Communist Party (CCP) and attempts to rally nationalistic sentiment populates Douyin.

How Can Watching Short Videos Rebuild an Entire Market?

As mentioned previously, Douyin has a massive fanbase with more than 500 million monthly active users. Of these 500 million people, 52.8% are less than 24 years of age. Often, these millennials will share ideas and products that they think others will find appealing. Thus, when merchants have a platform integrated within Douyin that allows them to advertise and sell their products quickly, they will be able to reignite their businesses. As a result, Douyin can help China’s economy by allowing these small and medium-sized businesses to promptly resume their operations.

Why Douyin Instead of Conventional E-Commerce Platforms?

Popular e-commerce platforms are notorious for their high commission rates. Hence, when ByteDance first established its online group buying function, it aimed to create a “zero threshold” environment for the small and medium-sized online business platforms. This meant that ByteDance’s technical service commission would be as low as 1%, a significantly lower rate than the usual 20% charge traditional e-commerce platforms would require. This way, the businesses will be able to restore themselves quickly.

Despite the hardships China had to endure in the wake of the initial COVID-19 outbreak, companies like ByteDance continue to use their influence in order to help those who have suffered the most. As a result, the Chinese economy continues to steadily improve, showing the world how powerful social media can be.

Heather Law
Photo: Flickr

Nigeria's Economy
Nigeria, home to Africa’s largest economy, is facing consequences from the surge of COVID-19. After experiencing a recession in 2014, the country was finally seeing progress in its oil exports, resulting in overall financial recovery. That is until the pandemic hit. Nigeria is struggling to reignite its economy as the damages of the novel coronavirus persist. The country’s dependency on oil exports, along with the inevitable effects of a country-wide lockdown, are two reasons for Nigeria’s economic downturn. However, steps are being taken to boost Nigeria’s economy. This article articulates both the economic impact of COVID-19 in Nigeria and recent motions toward recovery.

COVID-19: The Numbers in Nigeria

According to the World Health Organization, Nigeria has seen over 38,000 cases of the coronavirus and over 800 deaths. In a country of around 214 million, the fatality rate is about 2% or 418,000 Nigerians. What does this mean for their economy?

Despite a recession from 2014 to 2016, The World Bank asserts that Nigeria’s economy may be headed toward the worst financial state the country has seen in four decades. Nigeria is extremely dependent on oil, which represents more than 80% of the country’s exports. With international travel halted due to COVID-19, the country has recorded an 18-year low on fuel prices, at $22 per barrel. According to economics experts, the Nigerian revenue flow will decrease to 1.1 trillion Naira (about $3 billion). That is about a 4.4 trillion Naira decline from the beginning of 2020.

The National Bureau of Statistics states that 42% of almost 2,000 citizens interviewed were out of work as a result of the pandemic. Out of all households interviewed, the poorest households saw the highest share of unemployment, at a jarring 45%. Moreover, 79% of reported households saw a decrease in their income as of March 2020.

Oil exports are not the only thing hurting Nigeria’s economy. Prices of common goods, like bread and water, increased shortly after a lockdown was enforced on March 30. A single loaf of bread increased from N350 to N450 (around ¢90 to $1.16). Pure, clean household water in Nigeria normally costs about N100, but since the pandemic, the price has doubled. As the consumption of goods, investments and net exports decrease, Nigeria’s economy is facing a harmful downturn.

The Good News

There remain reasons to be hopeful for Nigeria’s economy. Early in the pandemic, the National Orientation Agency (NOA) performed contact tracing calls to prevent the spread of COVID-19. These calls were made to people deemed “passengers of interest,” or those who had been traveling in recent weeks. Not only did these calls help slow the spread of the virus by enforcing self-isolation, but they also created a sense of comfort. The calls aided monitoring symptoms and provided psychological encouragement during an unprecedented time.

Nigeria’s government has also worked to help people financially impacted by COVID-19. The Central Bank of Nigeria (CBN) set out a 50 billion Naira ($139 million) stimulus package for Nigerian households and small to medium-sized businesses. Moreover, interest rates on CBN interventions decreased from 9% to 5% in an effort to aid Nigeria’s Economy.

UNICEF has also contributed to helping Nigeria throughout the COVID-19 pandemic. In collaboration with the Nigeria Center for Disease Control (NCDC), UNICEF is ensuring that all mothers with children under the age of two are able to safely breastfeed their babies, making sure they follow health guidelines.

With children out of school due to the pandemic, the National Agency for Food and Drug Administration and Control (NAFDAC) has provided training to mothers to screen their children for malnutrition. Many students depend on school lunches and considering the rate of job loss in Nigeria, this is a necessary step to ensure that all children are taken care of.

The pandemic has affected Nigeria’s economy and citizens to a grave extent. With oil exports reported at an 18-year low and job losses mounting, COVID-19 has destroyed whatever sense of progress Nigeria experienced since its last recession. With the support of the U.S International Affairs Budget, and with further foreign aid, Nigeria can hope for drastic changes in their job rates and oil exports.

Anna Hoban
Photo: Flickr

Hyperinflation In ZimbabweThe southern African country of Zimbabwe has one of the most horrendous track records regarding hyperinflation. Hyperinflation, which is when the prices of goods and services rise uncontrollably, usually occurs when a government prints more money into the money supply than what can be supported by the country’s economic activity. Hyperinflation in Zimbabwe has had the effect of lowering GDP per capita by 38% and increasing the unemployment rate to more than 70%, which in turn has increased poverty. Zimbabwe has tried many different solutions to stabilize its inflation rate, but it still struggles with high inflation rate volatility. In May 2020, the inflation rate was at 785.55%, well over the defined amount of 50% to be considered hyperinflation. This article explains Zimbabwe’s political and economic situation that led to its hyperinflation, and possible tactics to combat it.

Rampant Corruption and Mugabe’s Regime

Robert Mugabe governed Zimbabwe in 1980 to 2017 after the country had gained independence from Great Britain. Mugabe had been a Socialist revolutionary icon who was elected as president after the revolution but later regressed into an oppressive dictator. Mugabe’s tight grip on power, rampant corruption and monetary policies of his regime are some of the principal causes of Zimbabwe’s economic problems. After almost four decades in power, Mugabe was usurped from power. He was replaced by his longtime vice president, Emmerson Mnangagwa in 2017. Mnangagawa’s presidency has maintained power for the country’s ruling party: the Zimbabwe African National Union-Patriotic Front (ZANU-PF). Throughout both administrations, corruption has been embedded throughout all levels of society, including much of Zimbabwe’s political institutions. Bribes and facilitation payments are commonplace among the police, private companies, local councils and public officials. These kinds of payments are responsible for the $1 billion dollars of public money that Zimbabwe loses every year.

The 2009 Hyperinflation Crisis

During the worldwide recession of 2008, Zimbabwe’s own financial crisis made the country’s inflation rate skyrocket astronomically. Mugabe’s policies regarding land redistribution from white commercial farmers to the majority black population had the undesired effect of widespread food shortages and economic sanctions from the U.S. and E.U. Hyperinflation then reached incomprehensible rates of 79.6 billion percent. While these events are claimed by the ZANU-PF to be the initial causes of Zimbabwe’s hyperinflation, every effort Zimbabwe has taken to control hyperinflation is held back by the status-quo of corruption that the ZANU-PF upholds.

The root economic causes of Zimbabwe’s hyperinflation lies within monetary policies that make the Reserve Bank of Zimbabwe (RBZ) print too much money. Some ways the government has tried to curb inflation have included demonetizing the Zimbabwean dollar in 2009 and adopting many different currencies, including the US dollar, South African Rand, Euro, Chinese Yuan and more. This allowed for higher transparency, which led to deflation. Over the next decade, the U.S. dollar became more scarce. This led to the reintroduction of the Zimbabwean dollar in 2019, bringing back high levels of hyperinflation. Some experts say that a radical change in the financial system as a whole is needed to properly address this trend. In particular, changing the system from having a dissatisfactory central bank to a currency board or free banking system could allow for better monetary policy.

Non-Governmental Institutions Helping the Situation

Certain NGO’s are working to combat Zimbabwe’s corruption and financial issues. Two are Transparency International Zimbabwe and Zambuko Trust.

Transparency International was established in 1993 and currently works in more than 100 countries. They research and advocate for policies and laws to end systemic corruption. They provide statistical data such as the corruption perceptions index and the global corruption barometer and also provide information on the state of corruption and their activities through their own blog, magazine and academic publications. Transparency International and other civil society groups across the continent have become serious actors in the fight against corruption and the loss of public money from it.

Zambuko Trust is a microfinance institution that has given financial opportunities to many, especially those who work in the informal sector. It was established in 1990 by Christian businessmen who set out to provide financial services for the poor. They provide small business loans, horticulture funding and agricultural jobs, business management training, advisory services and loan insurance. Zambuko Trust provided services to 16,000 people before the hyperinflation crisis of 2009. After the country demonetized the Zimbabwean dollar and introduced multiple currencies, the institution was able to revive itself. These services have allowed businesses to sustain themselves and people to buy a house or afford schooling during such periods of economic strife.

While Zimbabwe’s financial institutions are scrambling to bring this recent wave of hyperinflation under control, NGO’s are able to combat the effects economic turmoil has on small businesses and the poor and advocate for a society free of corruption.

– Tirza Morales
Photo: Flickr

Poverty in Venezuela
Venezuela was once a rich and stable country. Over the last few decades, Venezuela has fallen into financial and governmental trouble. In 1989, when rioting and looting polluted the streets due to increased petroleum prices, Venezuela began a spiral into debt. When Hugo Chávez became president in 1998, citizens became optimistic as he funded money into programs to assist the poor. Unfortunately, mismanagement allowed problems to persist. Within the last decade, poverty rates have risen dramatically. Here are 10 facts about poverty in Venezuela.

10 Facts About Poverty in Venezuela

  1. The economy has created a nationwide crisis. As Venezuela’s economy collapses many programs are collapsing with it. The country is experiencing hyperinflation. Over the past three years, the annual inflation rate is 10,398%. Hyperinflation in Venezuela has increased the number of people living in severe poverty and barely surviving from day to day. A national survey in 2017 found that 87% of families live below the poverty line.
  2. The government retains full control of the economy. Since 1989, the Venezuelan government has retained full control of the economy. In 2003, the government introduced price and currency controls and it became the sole provider of bolivars. As a result, funds denied businesses access and banks could only assist specific organizations. Additionally, companies had to sell products below production costs and close stores, which caused a supply shortage and negatively affected the economy.
  3. Government information is experiencing censorship. Journalists, lawyers and medical professionals experienced detainment and imprisonment for exposing the poor conditions of their country. Although the poverty Venezuelans face is no secret, censorship hides the depths of the governmental and economic corruption, thus reducing the level of support that other countries offer. Venezuela ranked 173 out of 180 countries that Transparency International’s 2019 Corruption Perceptions Index assessed for corruption. The lower the ranking, the more corruption in the government.
  4. Venezuela is experiencing a split government. In May 2018, Nicolás Maduro, the incumbent president of Venezuela, “won” a disputed re-election against Juan Guaidó, leader of the National Assembly. By the following June, the Organization of American States recognized Guaidó as President; Guaidó subsequently declared himself president on January 23, 2019. Blame for the free-fall of the economy lands on Maduro, but he holds all the military and refuses to relinquish power. Recognized by 50 other countries, Guaidó does not hold much authority on his own. As more becomes clear about the corruption that Venezuela experiences, Guaidó receives more assistance from other countries to help his people.
  5. Food and water shortages are at an all-time high. Since 2017, nearly two-thirds of Venezuelans reported losing an average of 25 pounds in the previous year; they refer to this as the “Maduro-diet” due to food and water shortages. These shortages have peaked with the COVID-19 emergency. Venezuela has 4,187 confirmed COVID-19 cases and 35 confirmed COVID-19 deaths. PAHO and UNICEF have provided relief by supplying medical equipment and COVID-19 tests and the U.N. has since stepped in to provide funds. When the global pandemic began, hospitals quickly found it difficult to care for patients while lacking running water. Additionally, sanctions that the U.S. put into place made access to food more difficult.
  6. Venezuela is experiencing medical shortages. Fernando Gomez is a 54-year-old man living in Venezuela. In an interview with The New Humanitarian Gomez said, “The government says wear masks, wash your hands often, and stay inside… but we don’t have water, we often don’t have electricity, and there are no masks.” Even before the pandemic, diseases such as measles, diphtheria and malaria rose. While there are proven vaccines and antibiotics for these diseases, shortages have led to high mortality rates from these illnesses. In the last five years, there also have been significant shortages of medical personnel and supplies, leaving Venezuela’s population at greater risk. PAHO, UNICEF and the U.N. are doing what they can to assist.
  7. Venezuela’s oil industry is collapsing. Petroleum was once a significant part of the Venezuelan economy; now it suffers from oil shortages at great cost to its people. Marcia Briggs, a reporter for Pulitzercenter.org, spent a day at a local Venezuelan gas station. The line stretched for miles and people would wait a day or more for fuel. Spending time in line means not working and earning wages. In 1998, the country produced 3.5 million barrels of oil a day but in 2002, when Petróleos De Venezuela went on strike against Chávez, he fired 19,000 workers. Since 2007, production has decreased dramatically and reached an all-time low in 2019.
  8. Although the minimum wage in Venezuela increased in 2020, it remains below a survivable level. In January 2020, Maduro increased the minimum wage from 300,000 bolivars an hour to 450,000 per hour; the equivalent of $5.45. In April of 2020, Maduro decided to increase the wage again by 77.7%. The minimum wage currently sits at 800,000 bolivars ($4.60). It is “only enough to buy just over a kilo of beef.” As the minimum wage continues increasing, there is hope that it will soon reach a survivable level.
  9. Venezuela experiences a lack of education. The education system has lost thousands of teachers due to underfunding. Some children are so malnourished that they lack the necessary energy to attend school. Other families lack the funds to pay for transportation to classes. U.N. experts say that an uneducated future will do nothing but perpetuate the crisis the country faces. Education is free, although finding enough people to direct the students’ education is a problem with no current solution.
  10. Venezuelans continue to flee their country. All of these problems have led to Venezuelans fleeing the country in hopes of a better future. There have been roughly 5 million migrants from Venezuela. Fleeing the country gives the migrants a better chance at survival but worsens the situation in their home country. Essential jobs that lack workers now have even fewer available people. Citizens who remain in Venezuela say they no longer feel safe in their country and they have lost all hope and trust in officials to fix the crisis.

Although poverty, corruption and violence have been the narrative of Venezuela for the last few decades, there is still hope that the tide will turn. In the time of a government battle, citizens now have more than two options. It used to be Maduro leaves or they do, but now there is a third option which is change with President Guaidó.

Fortunately, there are many groups assisting with child security, food and water relief, education and poverty in Venezuela. These continued efforts will hopefully impact poverty in Venezuela significantly.

Marlee Ingram
Photo: Flickr

Viral Video Game Employing Venezuelans
Hundreds of people in Venezuela are playing RuneScape. RuneScape is an online open-world game with multiple themes to choose from. RuneScape involves a world of ancient magic, pirates and medieval castles. This game provides an escape from the daily lives of Venezuelans. This viral video game is also employing Venezuelans during the country’s economic crisis to give them the income they desperately need.

The Economic Crisis in Venezuela

Venezuela is facing hyperinflation due to its plummeting economy and increasing political turmoil. Citizens are leaving their jobs and protesting on the streets instead. The country is in massive debt and corruption is rampant with violence on the streets in addition to food and medicine shortages. As a result, Venezuelans are fighting for survival as they earn only $6.70 a month.

Venezuela remains highly dependent on oil reserves, which accounts for almost all export earnings and nearly half of the government’s revenue. However, the falling oil prices due to the economic crisis has caused U.S. multinational firms to shut down their Venezuelan operations, aggravating the issue even more. The access to dollars has become insufficient with inflation on the rise and price controls as well as rigid labor regulations causing even more shutdowns. Because the government is so in debt, there are food and medicine shortages leading to health issues rising across the country. Malnourished children and citizens without access to proper health care is an ongoing crisis. Some Venezuelans are even migrating from their home country. Citizens are escaping to neighboring places such as Columbia and Peru in the hope of finding a better life. According to worldvision.org, the number of displaced people may increase to 5.4 million.

The Bolivar is worth $9.90 compared to the U.S. dollar. Meanwhile, Venezuela’s unemployment rate is 17%. The country is suffering from an inflation rate of 482% according to IMF figures. As the country is rationing food, angry and hungry mobs are attacking supermarkets and civil unrest is threatening the government.

In 2015, the oil price reduced by half and access to basic necessities like groceries cost 22 times the minimum salary. With the economy in turmoil, Venezuelans are searching elsewhere for employment and are looking anywhere to earn money.

RuneScape

RuneScape is a multiplayer online roleplaying game that can help the economic crisis in Venezuela. For some Venezuelans, this virtual video game is their only source of income. By farming gold on the game in exchange for in-game weapons and armor, Venezuelan’s can trade their virtual currency that is worth more than their actual currency online to other gamers across the world. Players are killing the green dragons in the game and selling the objects that they drop on the virtual marketplace. Additionally, Venezuelans can sell this gold to third party sites for money like cryptocurrency sites such as Bitcoin.

While the monthly minimum wage is only $6.70 a month, RuneScape players can earn that amount in only two days for eight-hour shifts by selling 500,000 units gold per hour. Since the economy is unstable in Venezuela, RuneScape offers a safety valve for Venezuelans across the country for the future. Estimates determine that 50% of the younger population and 20% of the older generation now farms RuneScape gold. In addition, 1.8 million Venezuelans depend on the green dragons in the game. A gold farmer can earn $40 a month, triple the average minimum monthly wage. This viral video game employing Venezuelans allows citizens to sell the gold for real money in the virtual marketplace that is not as volatile as their own economy.

The amount of RuneScape players may increase as the economy becomes more unstable. Additionally, for some Venezuelans, playing this viral video game will be the only way to feed their families and put food on the table in the foreseeable future.

Venezuela Crisis Relief

Although there are no organizations working to facilitate this money-making opportunity, multiple organizations are reaching out to help improve the economic crisis in Venezuela. Many children and adults suffer from malnourishment due to shortages of food. Global Giving imports medical supplies to dying patients and provides daily meals for starving patients. Each day, this project feeds 400 patients.

Humanitarian activities that the U.N. has supported have raised $155 million to support the Venezuelan people. The U.N. also donated food and provided agricultural support to 50,000 people. In addition, it has provided educational support to over 160,000 students.

While this viral video game is employing Venezuelans, Venezuela’s economy is still in collapse. With employment at an all-time low, RuneScape provides an opportunity for Venezuelans to escape from their poverty-stricken world and embark on new quests. One simple game online provides a solution by employing Venezuelans and allowing them to escape not only the economic burden of their country but also their daily lives. In the future, as online players increase, this money-making opportunity may even shape the world in which all Venezuelans are living.

Joelle Shusterman
Photo: Flickr

Economic Crisis in Lebanon
Lebanon is a small country in the Middle East that Syria and Israel borders. Once known as a prosperous leading regional center for finance and trade, the nation’s civil war crippled the economy. This traumatic event in Lebanese history eventually led to an economic crisis in Lebanon.

Economic Crisis in Lebanon

In 1975, civil war, Syrian occupation and clashes between Israel and Hezbollah destabilized Lebanon. Although Lebanon remains steady in economic freedom, it has encountered rough patches regarding politics. The economic crisis in Lebanon eerily compares to the current Syrian crisis. Both Lebanon and Syria have endured hardships of civil war and faced a surge in refugee intake.

Nearly 1.5 million Syrians have taken refuge in Lebanon as a result of the nation’s own civil war. The refugee intake has negatively impacted Lebanon’s finances, service industry and environment. The crisis has also driven 200,000 people into poverty and left nearly 300,000 unemployed. The environmental effects have slowed down the GDP (Gross Domestic Product) to nearly nothing, worsening the economic crisis in Lebanon. In 2018, the Lebanese growth rate was just 0.2 percent. As of 2020, Lebanon carries a $90 billion debt, which is about 170 percent of the nation’s GDP.

The second leading age group in Lebanon is the youth group. This makes it difficult for those in impoverished families to maintain a steady income or complete their education due to the demand in the workforce. The demand has also forced women who would normally take on household responsibilities to work low wage jobs for additional income. Due to the enormous refugee intake, Lebanese workers face much higher competition for jobs. The 1975 Civil War severely damaged the nation’s economy. Because of the war, Lebanon’s national output reduced by half and the nation lost recognition as a Middle Eastern banking hub.

The Fight Against the Crisis

In the fight for better living conditions for those living in poverty, Lebanon’s government launched the National Poverty Targeting Program (NPTP) in October 2011, implemented by the Ministry of Social Affairs and the Presidency of the Council of Ministers. The goal is to establish a national targeting system for the government. The system aims to improve the living conditions of the people, particularly those struggling in extreme poverty. The total cost of the NPTP was $9.34 million.

Habitat for Humanity has also been working to improve and provide housing for those in poverty in Lebanon since 2001. Habitat for Humanity builds, rebuilds, renovates and rehabilitates houses through partnership models to reach families in need of housing services across Lebanon.

The World Bank called for the formation of a new cabinet and said that it expected Lebanon to hit a recession by 2019. The World Bank comprises of many foreign donors who have pledged billions of dollars towards the aid that Lebanon desperately needs.

Lebanon has one of the world’s highest debts at 170 percent of GDP. Political conflict in the nation, as well as regional disputes, have impacted economic growth. With aid in place, it is hopeful that the economy can reboot despite the high poverty and unemployment rates that plague the nation. For now, thanks to the organizations that offer aid to the nation, the Lebanese people are maintaining a good and steady quality of life.

Sarah Mobarak
Photo: Flickr

El Salvador is a small country in Central America that, for several years, has been going through an economic crisis. Due to the persistent levels of gang violence and extreme levels of poverty, it has been challenging for El Salvador to overcome its economic instability. Although economic freedom is insecure, attempts have been made to aid the fight against violence and poverty.

Background

In the 1980s, El Salvador was in the midst of a civil war, and once they prevailed, they set out to become a democracy. The country was praised for its seamless transition into a neoliberal order. However, the levels of gang violence began to rise. Additionally, the government’s lack of acknowledgment was feeding into the political silence.

Gang violence in El Salvador is still a predominant problem because it has led to national security issues. El Salvador currently holds the title for the highest murder and violence rate against children under the age of 19. The NCG, or the National Crisis Group, believes that in order to effectively mitigate these issues, specific police, justice reforms and legal frameworks for rehabilitating former gang members are key for a pacification process.

Gang Violence and Poverty

The severe incline in gang violence has a direct impact on the economic crisis in El Salvador. Nearly 40 percent of the population lives in poverty as both a result of and companion to gang violence. Because of gang violence, the country’s government spends a massive amount of money to relocate individuals to communities across the United States. Moreover, gang violence started with poverty. Poverty in El Salvador was already significant before gang violence became a norm. Additionally, poverty actually fed the rate of gang violence because of the lack of a suitable education system. This led children and teens to grow up on the streets. Gangs would later come full circle and feed into the rising poverty rates.

7 Funds

Amidst all of this political and economic turmoil, David Beckham started a fund to aid those in need in El Salvador. This project is known as the “7 funds.” Beckham started this project by teaming up with UNICEF. Moreover, the focus of the project is to fight violence so that children can grow up free from fear and realize their potential in El Salvador. Furthermore, the 7 funds set up a hotline for children who are in danger or affected by violence.

This project also trains teachers to support children who may be at risk. They have set up committees that help keep schools safe. 7 funds encourage students, teachers and parents to work together and work with the authorities to make a safe place for children to play sports.

Looking Forward

El Salvador has certainly seen better days and will likely see them again. With the work done by David Beckham and UNICEF, the economy is taking a turn for the better. Poverty rates are still high and so is gang violence. However, the rates in childhood violence have gone down, delivering a promising future for prospective generations in El Salvador.

Sarah Mobarak
Photo: Flickr
El Salvador Economic Crisis
El Salvador is a small country in Central America that has been experiencing an economic crisis for several years. The root of the El Salvador economic crisis is the persistent levels of gang violence and extreme levels of poverty. In the face of the country’s instability, some have made attempts to aid the fight against violence and poverty.

Perpetual Violence

During the 1980s, El Salvador was in the heart of a civil war; once the nation prevailed, the government and the people set out to become a democracy. The country received praise for its smooth transition into democracy, however, in recent years the levels of gang violence have begun to rise. The issue has persisted for about 15 years where there has been minimal acknowledgment, thus feeding political silence and a lack of reform.

The perpetual violence in El Salvador is a predominant problem. The nation currently holds the title for the highest rates of murder and violence against children under the age of 19. The National Crisis Group (NCG) believes that a proper response to this issue includes “specific police and justice reforms, as well as a legal framework for rehabilitating former gang members.” Many believe that such steps essential towards the pacification of violence, which will ultimately improve El Salvador’s economic crisis.

Gang Activity

The severe incline in gang violence has directly impacted the El Salvador economic crisis. Estimates determined that nearly 40 percent of the population lives in poverty because of various factors involved with gang violence. The nation’s government has spent a massive amount of money to relocate individuals to communities across the United States in an attempt to curb violence. However, extreme poverty initiated gang violence in El Salvador. Extreme poverty fuels high levels of violence because of the lack of a sustainable educational system, therefore resulting in students eventually ending up on the streets. Gang members’ recruitment of young individuals to support violent activities with a promise of financial stability preserves this cycle.

The 7 Fund

In the face of the El Salvador economic crisis, former professional soccer player David Beckham started a fund to diminish the El Salvador economic crisis. Beckham started the project, known as the 7 Fund, which aims to provide various support to those in need, specifically in Indonesia, Nepal, Uganda and El Salvador.

Launching the project with UNICEF, Beckham focuses on the prevalent violence throughout El Salvador. The former soccer star hopes the “children can grow up free from fear and realize their potential.” One way the 7 Fund tackles this goal is through a hotline for children who are in danger or experience violence. 7 Fund also provides resources for teachers in the form of training programs to develop the skills needed to support the at-risk children. Further, the project has implemented various committees to improve the El Salvador economic crisis by keeping schools safe. Specifically, students, teachers, parents and even authorities provide a space for children to play sports, which allows the students to feel comfortable and safe.

El Salvador has certainly seen better days, but it is likely the nation will see a positive culture again. With David Beckham and UNICEF’s work, the economy has already begun improving. While poverty rates and gang violence are still high, child violence rates have gone down. Through initiatives such as 7 Fund, the El Salvador economic crisis can improve with time.

Sarah Mobarak
Photo: Flickr

Venezuela’s Rum
Extended hyperinflation continues to cripple Venezuela’s economy with prices of basic groceries skyrocketing to five times the monthly minimum wage from 2015 to 2017. Estimates determined that extreme poverty in Venezuela in 2016 was 82 percent. Yet, there is a shimmer of light with potential economic growth through Venezuela’s rum industry.

Fall in Whiskey Sales

For a long time, people have seen Scotch as a status symbol in Venezuela and often only for the upper-class to enjoy at home or for middle-class friends to have on a night out. In 2007, Venezuelans consumed over three million boxes of whiskey, fifth in consumption worldwide and priced at nearly $151 million in imports. In 2009, imported Scotch whiskey outsold Venezuela’s rum sales nearly two to one.

However, with hyperinflation setting in, reaching over 60,000 percent in 2018 and almost 350,000 percent in 2019, imports experienced restriction and the tightening of currency controls, putting whiskey out of reach for many. At the black market rate, a bottle of Chivas Regal 18-Year-Old Whiskey costs $31, more than the country’s monthly minimum wage.

Rise in Rum Sales

The popularity of whiskey began declining in 2013, with a 29 percent drop in sales. At this point, the country had only recently crossed the hyperinflation threshold of 50 percent, while Venezuela’s rum sales increased by 22.6 percent. During that same time period, domestic rum production increased from 15.8 million to 21.8 million liters.

In addition to the rising cost of imports, the government’s recent introduction of relaxed regulations and loosening price controls has bolstered domestic rum production. This has led to Santa Teresa, one of Venezuela’s rum distilleries, to become the first in the country to release a public offering in 11 years, selling one million shares on January 24, 2020. With banks hesitant to lend, public offerings provide alternative forms of capital that can allow businesses to grow and become more competitive in the global market.

Project Alcatraz

Project Alcatraz, a recreational rugby initiative, launched as a means of rehabilitation and to serve as a deterrent for gang violence after gang members broke into the grounds of the Santa Teresa rum distillery. Now, Project Alcatraz includes vocational training, psychological counseling and formal education, reaching roughly 2,000 adolescents and a few hundred inmates.

Additionally, experts believe that the project has led to a drop in the murder rate of the local municipality. In 2003, the year the project originated, there were 114 murders per 100,000 people; as of 2016, that number had dropped to 13 per 100,000 people.

Cocuy

Venezuelan rum has not been the only liquor that has seen recent success in the country. Cocuy is a liquor similar to that of Mexican tequila because it comprises of fermented agave plants. Cocuy has a long history in the country, with indigenous groups originally making it 500 years ago. The country reportedly outlawed the drink prior to 2006 to boost Venezuela’s rum and beer production and sales. Cocuy production companies regained licensure, resulting in the drink gaining popularity throughout the years. This once stigmatized drink meant for the poor and less refined is now one of choice primarily because of its low price point.

While the rise in domestic liquor sales may be seemingly insignificant, the growth of any domestic industry can play a critical role in the reversal of the economic climate of an impoverished nation. Venezuela’s rum revolution in the past decade could turn the country’s economy around.

– Scott Boyce
Photo: Pixabay