Information and news about economic crisis

Indian Business Model Can Minimize Food Insecurity in Africa

The US Agency for International Development is attempting to replicate the success of an Indian business in Africa. The effort is part of a three-year program called Africa Lead, which is associated with the US government’s Feed the Future initiative. Africa Lead aims to train Africans in innovative ways to tackle food security issues in their communities. USAID is sending Africans to Fazilka, a border city of Punjab in Northern India, to train with Zamindara Farm Solutions (ZFS). The company attempts to serve as an all-needs agricultural supply company, and its business model is unique and groundbreaking.

ZFS leases farm equipment with trained operators. This allows the owners of smaller farms, which are extremely prevalent in both India and Africa, to avoid taking out loans to make unnecessary investments inexpensive equipment. As a banker from Uganda who took part in the training program, Nicholas Abenda, observed, “Owning machines in not mandatory” for smaller farmers in Africa. The company also sells new farm equipment and provides maintenance and parts. It also offers education on the most efficient farming methods and on farm economics. It currently has operations in roughly 500 villages in India.

The ZFS business model has multiple advantages. It allows small farmers to avoid going into debt to purchase expensive equipment. Many farmers who make these types of investments are ultimately unable to repay their loans and become overwhelmed by debt. The ability to have access to the equipment without going into debt improves farmers’ financial stability. This allows agricultural production to become cheaper, which can increase farmers’ profit margins and decrease the price of food. Additionally, this business model encourages more farmers to use yield-boosting technologies that they otherwise may not have access to. USAID sees this business model as an innovative way to minimize food insecurity in underfed African communities.

– Katie Fullerton

Sources: The Hindu, The Times of India, Africa Lead
Photo: The Hindu

Sequestration

Se·ques·tra·tion (n) /ˌsēkwiˈstrāSHən/: a four-syllable word that hasn’t been part of average American vocabulary for long. Now the term is ubiquitous, even blamed for a vast number of completely unrelated problems. High gas prices? Must be sequestration. Long wait time on a business license? Probably the sequester. Got a flat tire? That darned sequester is to blame.

So what is sequestration? Etymologically speaking, the verb “sequester” itself derives from the Latin sequester which meant “trustee” or “mediator.” It has links to the root sequi (“to follow”), but by the early 16th century the word “sequester” meant “to seize by authority, confiscate.” Today “sequester” also carries a similar meaning to “isolate” or “withdraw.” In budget contexts, sequestration implies withholding funds normally disbursed.

For the United States government, the Sequester was a massive set of budget cuts enacted by The Budget Control Act of 2011. This Act contained provisions that if the United States Congress could not formulate and pass a federal budget by a certain date, these massive budget cuts would occur across most departments and agencies (about 50/50 between defense and domestic spending). Other countries have proposed and enacted similarly drastic spending cuts to balance their budgets, but have typically called those measures “austerity policies.”

Congress’s threat of sequestration was supposed to incentivize compromise on reducing the deficit in the federal budget. After all, those who support a large defense budget would hopefully work harder to come up with a budget to keep this funding intact; those who support high amounts of domestic spending would fight tooth and nail to pass a budget to avoid those cuts.

Multiple attempts to compromise were made on both sides of the aisle, but in the end, Congress was unable to agree, and the government plunged over what many called “the fiscal cliff.” Many saw this as the point of no return for Congressional compromise — or, rather, the lack thereof; others winced at the blunt nature of the cuts but expressed support for the step towards a balanced federal budget. For invaluable foreign aid programs, however, the sudden budget cuts threaten to hurt many more people than just Americans.

– Naomi Doraisamy

Source: CNN,Online Etymology Dictionary,USA.gov
Photo: Esibytes

Macklemore & Lewis Address Global Poverty
Macklemore & Ryan Lewis are a fairly new artist/producer group that has quickly risen to fame through their popular song, “Thrift Shop.” Criticizing mainstream media, consumerism, and popular culture, this hip-hop group has a lot in common with the work being done at The Borgen Project. Raising these questions is essential to understanding not only the condition of the United States but also the state of the world.

Gaining considerable exposure within the music industry in the past year, Macklemore & Ryan Lewis have released their full-length album The Heist, hitting the number one spot on iTunes.

Macklemore & Ryan Lewis are proud to be from humble beginnings and proud to support the “alternative” lifestyle of anti-consumerism. Deciding not to sign with any record label, the group is completely independent and produces their own music with their own flare.

Thinking under the lens of global poverty, “Thrift Shop”  raises a number of ethical concerns. On one hand, Macklemore & Ryan Lewis are criticizing the United States culture of consumerism. A lyric from the song explains:

“They be like “Oh that Gucci, that’s hella tight”
I’m like “Yo, that’s fifty dollars for a t-shirt”
Limited edition, let’s do some simple addition
…I call that getting tricked by business”

Here, the group brings attention to the arbitrary nature of clothing, calling out branding as a mere print on some cloth, and propose, throughout the rest of the song, that spending 99 cents on an otherwise expensive jacket is a much better option.

Alternatively, we look that the main hook of the song with a somewhat critical eye in relation to global (rather than only domestic) poverty:

“I’m gonna pop some tags
only got 20 dollars in my pocket
I’m, I’m I’m runnin’, looking for a come up”

All humor aside, the group is bringing attention to the fact that $20 for clothes is considered insanely cheap in the United States. However, while American consumers think that they are being frugal, $20 is far more than most people in the world make in one year. That much money, in much of the world, could be used much more effectively to feed a family. However, while the monetary value is relative—what may be cheaper in the U.S. is expensive elsewhere—Macklemore & Ryan Lewis advocate for frugal living no matter what the exchange rate, leaving the quality of their beats far from impoverished.

– Kali Faulwetter

Sources: Rap Genius
Photo: MTV

Immigration. Poverty. Men eating. Free meal from Caritas

With the global recession lasting over two years now, many countries have been highly affected by the current state of the global economy. One of the countries that has been hit the hardest is Italy. Many people do not think of Italy as a poor country by any means. However, the number of people that live in seriously deprived families in Italy has soared up to 8.6 million.

The unemployment rate in Italy for the younger generation has recently hit 40 percent. Italians’ purchasing power fell by 4.8 percent in this last year.

To put the drastic rate at which the poverty level in Italy is increasing into perspective, here are a few figures: The percentage of families that could not afford to eat a protein based meal such as meat every two days, rose to 16.6 percent in 2012. The year before, this percentage was only at 12.4 percent. In 2010 this percentage was at 6.7 percent. In two years, the percentage of families that could not eat a nutritious meal for a period longer than two days rose by 9.9 percent.

While all of this may seem grim, there is still hope for Italy. Prime Minister Enrico Letta stated that he believes Italy can stage an economic recovery without increasing its huge public debt. After meeting with his advisors, he concluded Italy’s economy may get slightly worse before there is improvement, but in the next few years improvements are expected in Italy’s fiscal state.

– Matthew Jackoski

Sources: Huffington Post, Reuters
Photo: Didier Ruef

ACDI/VOCA Eradicates Economic Endangerment

ACDI/ VOCA is an organization dedicated to making financial stability accessible to individuals across the globe, regardless of their socio-economic status. One look at its name doesn’t tell a reader much, but the name of this organization is just as peculiar in appearance as it is rich in meaning.

The name dates back to 1977, referring to the merger of the Agricultural Cooperative Development International (ACDI) and the Volunteers in Overseas Cooperative Assistance (VOCA).

ACDI, as its own entity, sought to develop joint ventures around the world that indicate the values present in sustainable dual ownership, democratic leadership, and economic sustainability. Some of ACDI’s most notable accomplishments include the founding of the Indian Farmers Fertilizer Cooperative (IFFCO), re-institutionalizing collective banking in Poland, contributing to food aid monetization in several countries, and creating business-oriented farming practices in Ethiopia and Malawi.

Migrating from an exclusively “co-op” focus, ACDI began to pay greater attention to economic developments in agriculture, food security, enterprise development, poverty alleviation, and inside-out community development.

In VOCA’s circles, before the two organizations merged, the implementation of the USAID-funded Farmer-to-Farmer program was at the cornerstone of their advocacy. Over 11,00 assignments were carried out in 130 countries under this program, providing a short-term experience as building blocks for long-term development.

Once 1977 rolled around, these two international economic organizations saw it fit to join forces.

This new partnership allowed for a unique mix of ACDI’s long-term development initiatives and VOCA’s close attention to individual experience. Together, they cultivated healthy economic communities that valued each citizen—and created a system to last. For the sake of ease (and thankfully), the two organizations decided to shorten their name to an acronym and became ACDI/VOCA (pronounced A-C-D-I- Vōca.)

ACDI/VOCA describes themselves as follows:

“[We blend] business and technical acumen with humanitarian concern. Having worked in 145 countries, [we have] established a reputation for implementing successful, large-scale projects addressing the most pressing and intractable development challenges. [Our] approach does not rely on short-term interventions or supply-driven technology transfer directed at single problems in isolation. Rather it looks at problems holistically and taps an array of resources to provide lasting results.”

Funding for ACDI/VOCA comes mostly from the U.S. Agency for International Development, the U.S. Department of Agriculture, the Bill & Melinda Gates Foundation, and private sector firms, among others.

– Kali Faulwetter

Source: ACDI/VOCA
Photo: ACDI/VOCA

IMF Study Shows Possible Consequences of Economic RecessionThe International Monetary Fund (IMF) released the results of a new study, showing that another global economic recession could throw nearly 900 million people back into poverty.

Although global poverty within the last decade has improved, over 1.2 billion people worldwide still live on $1.25 a day, and the IMF warns that the global economy that initially brought millions out of poverty is still extremely unsteady and at risk of failing.

The report cites global unemployment numbers, which are at a 20-year high, that shows unemployment around the world is now at 40 percent. The report goes on to state that an economic event, such as the recession of 2007-2009, could have significant negative effects on the world’s poorest people. Experts are alarmed with the recent economic woes in Cyprus that caused “eurozone chaos,” and also cite that the U.S. and Europe are close to another economic downturn.

Doubts in the U.S. economy have been exacerbated by the recent sequester, in which spending cuts could lead to hundreds of thousands of job furloughs and losses.

Christina Kindlon

Source: Huffington Post

Record High DOW Highlights Income Disparity

On Tuesday, the DOW-Jones closed at a record high of 14,164.53. This broke the previously-set 2007 record and is being seen by many as a sign of American resurgence and recovery from the fiscal disaster of 2008-09. While the record high DOW is an optimistic sign, American household income is still lower than it was before the financial crisis. Such trends are drawing more attention to the issue of income and wealth disparity in the United States and abroad.

The story that these statistics tell is one of a huge gap, indicating a disparity in income, wealth, and expectations regarding the economy. Wealth disparity between the very rich and the working poor has grown larger. While there are other positive signs for the US economy, such as a decline in the average amount of debt, the gap in income may lead to a government structure that caters more to the wealthiest Americans instead of to the interest of Americans in all income groups.

The GINI coefficient is a measure of income inequality in a society; it works on a scale where the closer the coefficient is to 0, the more equal a society. The highest, most unequal number the scale reaches to is 100. The most recent figures show the United States with a GINI coefficient of 45. At the same time, countries like Swaziland and Zambia have GINI coefficients over 50, signifying an even less balanced distribution of wealth. The GINI coefficient is often closely related to the amount of people living in poverty in a given country, and high GINI coefficients often reflect a situation in which very few are extraordinarily wealthy while millions live in poverty.

Understanding our current situation may help us understand the unbelievable difference in income around the developing world and help us shrink those gaps by supporting efforts to strengthen industry and provide more opportunities for those at the bottom of the economic ladder to escape poverty.

– Kevin Sullivan
Sources: The Atlantic, CIA World Factbook