cash grants in Kenya
If you have ever wondered what good remittances do for poverty reduction, a study done by the researching nonprofit Innovations for Poverty Action (IPA) could help put things in perspective. Researchers at IPA evaluated the economic progress of Kenyan villages from 2014 to 2017 after families were given unconditional cash transfers or UCTs. The cash grants in Kenya were provided by a charity organization called GiveDirectly.

The results of the study highlight the potential UCTs have to financially elevate communities around the world. However, when dispersed without careful consideration, some aspects of cash transfers can be detrimental. Let’s discuss GiveDirectly’s trial and why it was successful in initiating great economic stimulation in Kenya.

The Logistics of the Study

The study took place in villages surrounding Lake Victoria in Siaya County, Kenya. To avoid a concentration of funds, researchers categorized villages by two groups: villages with high saturation and low saturation status. Random assignment appointed two-thirds of high saturation villages and one-third of low saturation villages to the trial. As an extra measure to confirm financial need, GiveDirectly only chose families residing in homes with a thatched roof; about one-third of households qualified.

GiveDirectly provided money transfers in intervals to a family member, totaling 87,000 KES, or 1,000 USD. Data was recorded through baseline and closing surveys taken by the participating families and local business owners. The surveys covered topics such as “household financial, physical, and mental well-being, business performance, changes in market prices, and the provision of local public goods.”

Cash Grants in Kenya: The Results

The increase of income stimulated a surge in spending from recipient families. For the most part, these expenditures occurred in the region. Business disclosed that 86% of their clientele were from local or neighboring villages.

The increased consumption had a spillover effect, as non-participant households also saw an influx of income. According to their report, GiveDirectly claims that having higher local enterprise revenues, “in turn, appears to increase the income of local untreated households, leading to higher spending on their part.” The grants created a pattern of earning and consuming that resulted in overall higher cash flow in the area.

Furthermore, participant households across the board showed “higher levels of psychological well-being, food security, education, and security.” Increasing their financial security had an overall positive impact on many other aspects of their lives.

Why it Worked

Before the 2014 study, UCTs previously given by GiveDirectly were also proven to generate economic stimulation in Kenya due to rising consumption and investments. To fully understand the results of this study, it is important to note a few specific factors.

First, GiveDirectly provided UCTs rather than conditional cash transfers, or CTTs. The World Bank defines CCTs as being “contingent on behaviors like school attendance and visits to health clinics.” These requirements do not come as easily to some families as others, especially those living remotely. In contrast, UCTs provide financial support to families without burdening them with specific requirements that they may be unable to meet.

The location also played a big role in the success of this trial. GiveDirectly chose families from an area containing a major national road that IPA determines may be one of the reasons for economic overspill. The IPA report also depicts Kenya’s traditional “harambees,” gatherings meant for community fundraising, as another cause for the balanced wealth distribution.

Moving Forward

The economic stimulation in Kenya proves the efficiency of tactful cash grants. GiveDirectly’s accomplishments in poverty alleviation are just a fraction of what is possible. Moving forward, if more funds are devoted to foreign poverty aid, it is possible for such results to be seen on a global scale.

Lizt Garcia
Photo: Flickr

Entrepreneurship in Africa
Africa stands as a continent of nearly 1.3 billion people, with 27 nations having a poverty rate of over 30%. As COVID-19 spreads through the region, falling demand and break down of supply chains threaten to further slow already-sluggish growth rates. Ever the land of great resilience and innovation, hundreds of enterprising individuals have excelled in Africa, enriching themselves and their countries. Increasingly more Africans are seeking out entrepreneurial and small business opportunities to combat poverty. One such businessman helping in this effort, multimillionaire Tony Elumelu, is using his wealth to fuel entrepreneurship in Africa and transform the continent into a booming commercial hub and providing hope for the future.

Roadblocks to Economic Growth in Africa

Africa’s economy has long suffered stubborn development setbacks. Government inaction, fragile infrastructure and widespread instability have hindered the region’s industrialization and economic growth. Many countries grapple with deficient infrastructure, including inadequate means of transportation, limited access to electricity and water and poor telecommunications systems. The World Bank estimates that the resolution of these structural shortcomings would increase the region’s productivity by as much as 40%.

Politicians have been reluctant to bolster manufacturing despite an international consensus on Africa’s need for industrialization. Such apprehension can be partially attributed to Africa’s unique position in the world economy: a pre-industrial continent already aspiring to post-industrialism. This misguided ambition has discouraged lawmakers from implementing protectionist policies. Without tariffs that benefit domestic manufacturing industries, larger international corporations choke out Africa’s budding factories and discourage entrepreneurship in Africa.

Ongoing fiscal and political instability serves to magnify these already difficult issues. Mounting debt levels divert money from investment to reimbursement and waste significant capital on unproductive endeavors. For example, sub-Saharan Africa’s aggregate debt-to-GDP ratio doubled from 2008 to 2017. Additionally, frequent leadership turnover has deterred international companies from entering African countries.

Working to mitigate these hurdles is Tony Elumelu, the founder of Heirs Holdings Ltd, a private investment corporation that operates in the energy sector. Beyond oil and gas, Elumelu is investing in a far more valuable asset: Africa’s future innovators. His nonprofit organization, the Tony Elumelu Foundation (TEF), empowers young entrepreneurs with the resources they need to build meaningful businesses.

How The Tony Elumelu Foundation Advances Entrepreneurship in Africa

The Tony Elumelu Foundation fosters entrepreneurship in Africa to alleviate poverty and spark economic gains. The TEF Entrepreneurship Programme offers grants and mentorship to innovative African businesspeople, allowing them to transform their ideas into profitable corporations. Endowed with a generous $100 million, the program has already assisted 9,000 individuals in creating businesses that invigorate their entire communities.

The broad scope of TEF’s investments cultivates economic diversification, a key tenet of development and stability. Some of the organization’s recent beneficiaries include:

  • Stars From All Nations (SFAN): Headed by Tom-Chris Emewulu, SFAN nourishes young minds through informative programs and workshops. Aimed at augmenting and supplementing children’s schooling, the company is helping to resolve Africa’s undereducation crisis.
  • Doctoora: Jubril Odulana, a Nigerian doctor, created Doctoora as a solution to Africa’s limited healthcare access. The platform collaborates with medical professionals to open private practices and ensures patients receive the care they need. In the face of COVID-19, Doctoora plays an essential role in promoting public health across the region.
  • Ufinix.com: The brainchild of Nnodim Uchenna, Ufinix.com offers aspiring developers comprehensive coding courses and guidance, preparing them for future careers in computer science. By equipping students with technological knowledge, the website is propelling Africa into the digital age.
  • Light Salone: Light Salone founder Mohammed Akamara aims to redress Sierra Leone’s severe energy shortage. In pursuit of this goal, Akamara engineered affordable hybrid solar-wind power sources to electrify rural areas and boost development. Manufactured using recycled supplies, these Sowind Technologies provide a mindful solution to Sierra Leone’s electrical desert.

By supporting young visionaries, the Tony Elumelu Foundation is generating hope, ambition and entrepreneurship in Africa. Its passionate beneficiaries are launching innovative and impactful companies that not only empower their creators but also their communities. The foundation has employed the continent’s most creative, altruistic minds, initiating a cycle of philanthropy that portends Africa’s future prosperity.

Rosalind Coats
Photo: Flickr

Multinational Corporations in Developing Countries
Multinational corporations (MNCs) have a global presence, even in developing countries. There are over 80,000 companies that drive the 21st-century economy. For example, Coca-Cola sells its product in nearly every country and has established over 900 bottling facilities worldwide. MNCs have propelled the GDP of their parent countries, most notably the United States, Japan, China and Western Europe, but how do their international operations affect developing countries?

It is difficult to say whether multinational corporations in developing countries are decidedly ‘good’ or ‘bad.’ One must consider many perspectives before making that judgment. However, researchers have identified a variety of positive and negative impacts applicable to most MNCs.

Individual Wellbeing

Multinational corporations in developing countries employ millions of people, but the quality of these jobs is often low. When Coca-Cola instituted a bottling facility in El Salvador, its supply chain hired sugar cane harvesters. El Salvador needed this hiring surge, as its poverty rate is 25.70%. However, an Oxfam study discovered that many workers receive less than the minimum wage. Additionally, harvesters face physical risks (burns, lacerations, exhaustion). This is because their work entails cutting cane stalks with a machete in chemically treated agricultural fields.

Perhaps the most notorious examples of worker exploitation in developing countries are sweatshops. These facilities in MNC supply chains provide employment with long hours, low wages and unsafe working conditions. An estimated 250 million children work in sweatshops worldwide, working over 16 hours a day to provide products for the clothing and toy consumer base.

Some experts argue that sweatshops are helpful to local populations because they provide job opportunities that would otherwise not be there. This defense, the “Non Worseness claim,” essentially states that sweatshops are better than nothing and that even if there were regulations on improved wages and working conditions, the jobs would be outsourced to a place where those restrictions do not exist. Defenders of MNC sweatshops often cite this controversial idea.

Economics

At first glance, it may be easy to claim that MNCs are unequivocally good for developing countries’ economies. After all, they provide jobs that were not present before, even if they are dangerous and pay low wages. Additionally, MNCs bring in capital flow to developing countries by building factories, which require construction workers and surrounding infrastructure, thereby stimulating economic development in host countries.

However, beyond the short-term benefits, the economic value of multinational corporations in developing countries becomes rather hazy. Most of the profit produced by an MNC subsidiary in a developing country goes to the company’s parent country. In the case of El Salvador, most profits generated by cane harvesters return to Coca-Cola’s executives in the U.S.

When multinational countries flood the economic landscape of developing countries, small businesses and local entrepreneurs find it difficult to compete. Thus, host countries develop a kind of dependency where they cannot break off from the MNCs’ influence in fear of rising unemployment. They also cannot compete with MNCs because of their established production methods.

Solutions

The Human Rights Watch and other humanitarian nonprofits have called for supply chain transparency in MNCs, particularly clothing and footwear industries, to publicize and improve working conditions in sweatshops across the globe. These corporations would have to provide specifics about factories manufacturing their products beyond the general tag: “Made in China.”

Additionally, the social inequities surrounding MNCs appear to be a result of their intentions. Paying low wages, building factories with unsafe working conditions, and outsourcing production relate to a key goal of MNCs: the corporate mantra, “maximize shareholder value.”

But MNCs do not need to operate according to this objective. At the very least, maximizing profits is not the only objective that they can strive for. Many MNCs, such as Ben and Jerry’s and Patagonia, have altered their practices to become benefit corporations. This role includes adding the goal of benefiting the public good to their company mission. Through this method, MNCs have a chance to reverse social injustices by redirecting their profits into improving the social, environmental and economic processes in developing countries.

Christopher Orion Bresnahan
Photo: Flickr

American ExportsThroughout the past several decades, nations in Southeast Asia have seen significant declines in extreme poverty rates. As poverty has fallen and these nations have developed economically, the Association of Southeast Asian Nations has become the United States’ fourth-largest trading partner. While the United States does rely heavily on this region for imports, trade with ASEAN also supports American exports and bolsters nearly 346,000 American jobs. The following five countries in Southeast Asia are critical trading partners and demonstrate the economic benefits that can coincide with a decrease in extreme poverty:

1. Malaysia

Malaysia has been extremely successful in reducing poverty throughout the past several decades. According to the United Nations, “… in 1970, 49.3% of Malaysian households were below the poverty line.” As of 2015, the figure had fallen to 0.4%. As poverty has fallen, Malaysia has also grown economically, developing profitable manufacturing, petroleum and natural gas industries.

As the country has reduced poverty and developed economically, it has become an important trading partner to the United States. The United States imports electrical machinery, tropical oils and rubber from Malaysia. It also exports soybeans, cotton and aircraft to the nation. In total, the trade between the two nations totals around $57.8 billion each year and supports nearly 73,000 American jobs.

2. Thailand

Thailand is another country that has seen impressive levels of poverty reduction in recent decades. According to The World Bank, poverty rates fell from around 65% in 1988 to under 10% in 2018. The nation has also evolved economically, developing large automotive and tourism industries as poverty rates have fallen.

Trade between the United States and Thailand has steadily grown, totaling $48.9 billion in 2018. When analyzing imports, the United States relied on Thailand for machinery, rice and precious metals. In terms of exports, the United States provided the nation with electrical machinery, mineral fuels and soybeans. In total, the exports to the nation supported nearly 72,000 American jobs. Additionally, exports to Thailand have been increasing in recent years, growing nearly 14.5% from 2017 to 2018.

3. Vietnam

Vietnam is perhaps one of the most astounding examples of poverty reduction and economic development. The World Bank reports that “the poverty headcount in Vietnam fell from nearly 60% to 20.7% in the past 20 years.” As it has done so, the nation developed one of the most rapidly growing middle classes in Southeast Asia, became a center for foreign investment and developed key industries in electronics, footwear and textiles.

While the United States has come to heavily rely on Vietnamese imports, Vietnam is also a rapidly growing market for American exports. In fact, American exports of goods to Vietnam increased by 246.9%, and American exports of services to the nation increased 110% since 2008. According to the Office of the United States Trade Representative, “U.S. exports of Goods and Services to Vietnam supported an estimated 54,000 American jobs in 2015.”

4. Indonesia

Though the nation still has significant progress to make, Indonesia is another nation that has seen a reduction in extreme poverty rates. Since 1990, the nation has managed to half its poverty rate and make significant economic advancements. Currently the largest economy in Southeast Asia, the nation has developed notable industries in petroleum, natural gas, textiles and mining.

Trade with the nation totaled around $32.9 billion in 2019. While the United States imported apparel and footwear from the nation, it also exported soybeans, aircraft and fuels to Indonesia. In total, American exports to Indonesia are growing, increasing 19.1% from 2017 to 2018 and supporting nearly 56,000 American jobs.

5. Philippines

While poverty is still an issue in the Philippines, it has seen significant declines in recent years. According to the World Bank, poverty fell from 26.6% to 21.6% from 2006 to 2015. The nation has also made significant improvements in developing industries outside of agriculture. While agriculture composed nearly one-third of the nation’s GDP in the 1970s, it currently represents 9.3%, split between an emerging industrial and service sector.

Trade with the nation currently provides $29.6 billion each year, and exports to the Philippines grew 3% from 2017 to 2018. Mainly, the Philippines relies on American exports for electrical machinery, soybean meal, and wheat. Overall, exports to the Philippines support an estimated 58,000 American jobs.

Affecting nearly one in five American jobs, international trade is a critical part of the American economy. As demonstrated by Southeast Asia, a reduction in global poverty rates not only contributes to global economic development but also supports the export industry and American jobs.

– Michael Messina
Photo: Pexels

Poverty Eradication in Egypt
Innovations in poverty eradication in Egypt have taken a sustainable and decentralized form in the last four years. Through local initiatives and collaboration with the United Nations Development Programme (UNDP), Egypt has incorporated social welfare and development programs aimed at improving the standard of living in its poorest governorates and providing a permanent path out of poverty for future generations.

With Egypt’s poverty rate rising to 5% in 2019, how exactly does Egypt plan to have a “competitive, balanced, diversified, and knowledge based economy” that would eliminate poverty by 2030?

UNDP Sustainable Development Strategies

One significant innovation in poverty eradication in Egypt is the UNDP’s adoption of a social entrepreneurial and minority centralized model. Through partnerships with Egypt’s public sector, private companies and civil society, the UNDP not only helped prioritize economic development but also made women, children and disabled people a focal point.

  1. The GSER Program: The GSER program under the Misr El-Kheir Foundation, a nonprofit development institution in Egypt, organizes social innovation camps with UNDP’s support. Youth from all parts of Egypt co-scheme solutions to improve the livelihoods in Fayoum’s fishing community, one of Egypt’s poorest governorates. Accomplishments include a redesigned shrimp peeling table for fishermen’s wives, which advanced hygiene and shell quality in Fayoum.
  2. The IBM Academic Initiative: The IBM Academic Initiative invested $70 million with the objective of providing over 25 million Africans free digital skills training and launching one of its regional offices in Egypt. UNDP’s contributions will help Egypt cultivate a STEM-oriented workforce through access to IBM’s cutting edge tools and course material.
  3. The Game Changer Fellowship: The Game Changer Fellowship is a one-year program that provides incubation support to aspiring Egyptian game designers through a partnership between UNDP Egypt and the Engagement Lab at Emerson College in Boston, U.S.A. This has enabled Egypt’s youth to uniquely approach development challenges by stimulating behavior change. Given that 84% of Egypt’s unemployment rate comprises young men and women, such initiatives are imperative in enhancing human capital in order to prevent an underdeveloped workforce.
  4. The Mobile Ramp App: The Mobile Ramp App helps Egypt’s disabled community lead easier, more integrated lives. UNDP partnered with Fab Lab Egypt and the Misr El-Kheir Foundation to launch a media campaign that promotes and teaches sign language as well as maps out locations with available ramps.

J-PAL’s (Abdul Latif Jamil Poverty Action Lab) Innovative Research

Despite these innovations in poverty eradication in Egypt, reports determined that there were 32.5% of Egyptian citizens living below the poverty line in 2019. According to J-PAL, a global research center aiming to reduce poverty, this extreme poverty figure of 32.5% indicates that the policies and programs designed to alleviate Egypt’s poverty are not as effective as they could be.

In order to achieve successful innovations in poverty eradication in Egypt, J-PAL’s MIT branch is launching a research center at the American University in Cairo. Through research and professional training to inform evidence-based policies and engage governments and relevant NGOs, Egypt will establish a culture of empirical policy making so that it can adequately evaluate the efficacy of its plans. 

Institutionalizing Social Innovation and Sustainable Development

While international efforts facilitate innovations in poverty eradication in Egypt, government and grassroots organizations in Egypt have adopted technological and sustainable based solutions to economic problems through their own localized projects and findings.

  1. The Egyptian Government: The Egyptian government is investing EGP 47bn ($3 billion) to Upper Egypt governorates in its 2020-2021 fiscal year. This is a 50% increase from 2019, representing 25% of total government investments.
  2. The Takaful and Karama Program: The Takaful and Karama program provides income support to the poor through a conditional and unconditional cash transfer program that aims to increase food consumption and necessary healthcare. Nevin al Qabbaj, the Social Solidarity Minister, reported that by 2020 around 2.5 million Egyptian families have benefited from the program.
  3. SEKEM: SEKEM, an Egyptian sustainable development organization, is working with the Egyptian government to implement Egypt Vision 2030. The plan includes 12 “pillars” targeting economic development, social justice, innovative research, education, health and the environment. Additionally, along with local NGOs, SEKEM has revitalized Egypt’s desert land and developed its agricultural businesses using biodynamic methods.

Egypt’s ability to mitigate poverty across all demographics using sustainable, innovative and ethical practices is testimony to its economic and cultural prosperity. Egypt’s innovations in poverty eradication are unique in that they exemplify the duality of individual, entrepreneurial growth in the private sphere and collective, righteous leadership in the public sphere.

– Joy Arkeh
Photo: Flickr

Women-Owned BusinessesNonprofit organization Mary’s Pence is working towards a world of empowered women making changes in their communities. To get there, Mary’s Pence partners with grassroots organizations in Canada, the U.S. and Central America to provide funding and development programs for women-owned businesses.

Executive director Katherine Wojtan believes Mary’s Pence is different from other nonprofits because the organization not only cares for the individual women, but also oversees the sustainment of their small businesses. Mary’s Pence also values the idea of “accompaniment,” explained by Wojtan as utilizing the abilities of everyone to accomplish a long-term shared vision. This concept is applied to the organization’s execution of both the programs in the states and in Central America, focusing on improving the whole rather than the individual.

ESPERA

The program in Central America called ESPERA, or Economical Systems Providing Equitable Resources for All, was created almost 12 years ago. “Espera” is the Spanish word for hope, a fitting name for the life-changing program working with women in Mexico, Guatemala, Honduras, Nicaragua and El Salvador.

“This is very intentional, it is not about making individual women rich, but about ensuring all women have access to resources and skills to make their way in the world and earn what they need for a good life,” Wojtan said.

ESPERA aids women who were victims of domestic or gang violence or are single mothers struggling to make ends meet. By giving grants to grassroots organizations in struggling communities, Mary’s Pence creates community-lending pools which women can take loans from to start local women-owned businesses that generate income. To ensure success, the staff of Mary’s Pence teach the community loan management and help elect leaders to track the lending.

Gilda Larios, ESPERA team lead, grew up in Guadalajara, Mexico and worked with Central American refugees before starting work with Mary’s Pence. ESPERA funding gives back to the whole community, not just the women receiving aid. Instead of focusing on building credit, women realize the importance of circulating money and products.

“Their confidence grew – first they asked for a very small loan, and over time they asked for larger loans and grew their businesses,” Larios told The Borgen Project. “With their strength, they are role models for new leadership in the community.”

ESPERA and COVID-19

ESPERA has helped develop many small women-owned businesses that create jobs for their communities and generate income for struggling women. Unfortunately, the COVID-19 pandemic put many of these businesses at risk as workers feared for their lives, but the ESPERA team responded fast, changing their focus from long-term development to responding immediately to the needs of the women.

As some women panicked about their businesses and the effects of the pandemic, the ESPERA team responded with a 12-week emotional wellness series, delivered via WhatsApp, and supported stores so they could keep reasonable prices for the communities. For women in the midst of paying back loans to the community-lending pool, their status is put on hold until they have the income to continue their payment.

Despite the support network ESPERA provides, the pandemic revealed some gaps in the system. It was challenging to ensure the safety of women experiencing domestic violence. The lack of access to phones and the internet made communication between communities and ESPERA leaders challenging. However, this time of crisis also brought the communities closer and proved the importance of working together through local businesses.

In her interview with The Borgen Project, Larios told of a woman named Aminta, who is in the ESPERA program in San Salvador, El Salvador. She transitioned from working in a “maquila,” or factory, to starting her own business sewing uniforms for local sports teams. During COVID-19, she also began sewing masks to help keep her community healthy. Success stories of women-owned businesses like this one propel communities into further financial security and empower other women to do the same.

Confidence and Creating Futures

Above all, ESPERA and Mary’s Pence hope to give women confidence in their own abilities to create the future they want for themselves and for their families. For Larios, the most rewarding part of working with ESPERA women is the “feeling of satisfaction and joy to see them embrace their possibilities and capacities that before they thought they didn’t have.”

Through ESPERA and their role in the creation of women-owned businesses, Mary’s Pence continues to change women’s lives by showing them the power they already had within themselves.

– Kiyomi Kishaba
Photo: Google Images

Coffee Farmers in Ethiopia
Coffee production in Ethiopia accounts for about 3 percent of the global market with around 20 million people relying on it for livelihood in the region. These 20 million workers only see about 15 percent of the profits from the purchase of a bag of beans. Bext360, as well as several other companies, are using blockchain and AI technology to empower farmers through fair and immediate pay, awareness of the market value and direct communication with buyers. By simplifying the coffee production industry and creating transparency through a traceable digital footprint, coffee farmers in Ethiopia can reap the benefits of their harvest in a more efficient and innovative way.

Bext360

Daniel Jones launched Bext360 in Denver in 2017. Bext360 is a Software-as-a-Service platform that allows consumers to trace products from the point of origin, providing a measurable means of accountability.

This provides transparency and efficiency, ensuring fairness to all sides. Through the use of blockchain and AI, Bext360 is revolutionizing traceability in the coffee industry, doing away with the middle-man that takes most of the gains that rightly belong to the farmers.

The Solution

Stellar is a financial tech startup that can handle a high volume of micropayments across borders that allows Bext360—in partnership with Moyee Coffee Company (that sources and roasts its beans in Ethiopia)—to produce crypto tokens that immediately and directly transfers to farmers. Moyee also adds a 20 percent premium payment to all small-holder farmers.

Coffee berry harvesters take the cherries they pick and load them into a special bin (the bextmachine) that appraises the haul while simultaneously sifting and sorting the crop. Farmers have the power to accept or deny the offer for their coffee crop through the use of mobile devices, allowing them to have more freedom and bargaining power.

Bext360 has also created a platform where photos of the coffee bean farmers are available online. This profile also shows how much they are receiving for pay and what the current market value price is. Consumers can view this online profile by scanning a QR code that pulls up the exact location of the farm, and traces the journey and price of the bean to their cup.

How Does this Help Farmers?

The machine that Bext360 created allows farmers to know the value of their crop, and avoid exploitation from coffee companies. It also gives them the knowledge and incentive to take control of the market and harvest at the right time, maximizing return profit.

Coffee farmers in Ethiopia can also have a more direct relationship with buyers. Estimates determine that farmers can have about a 40 percent increase in revenue by using the bextmachine as opposed to other typical washing stations.

Going Forward — Other Companies Involved

Other companies such as IOHK are going beyond supply chain transparency. It is pursuing development in a blockchain training course for local developers who, once graduated, will go on to create their own projects in cryptocurrency in Africa using Cardano technology. This should create even more potential for improvements in all economic sectors, not just the coffee industry.

Through the innovation and scope that blockchain allows, Moyee Coffee Company is able to leave over 300 percent more value in Ethiopia compared to other coffee companies. In May 2018, Moyee also hosted a One Million Cups Campaign in Ireland that sent over $63,448 to Ethiopia. In the future, Moyee hopes to be able to use its blockchain tech to crowd-fund upgrading equipment or building new infrastructure to ultimately improve yields and sever Ethiopia’s reliance on foreign aid in the region.

The benefits of more transparency are twofold: creating greater awareness and participation in consumers, as well as improving living conditions. Living conditions may improve through more equal pay for farmers and ultimately allowing the hard-working growers to reap the benefits of their work and be able to support themselves. It gives coffee farmers in Ethiopia more empowerment over their craft, all the way to the cup of coffee that one buys at the store.

– Laurel Sonneby
Photo: Flickr

Poverty Reduction Strategy of Tanzania
Recently, the World Bank released its list of nations that most successfully reduced domestic poverty from 2000-2015. The top five countries reduced poverty between 3.2 percent and 2.6 percent between 2000 and 2015, with Tanzania reducing the highest percentage. The top fifteen countries lifted 802.1 million individuals out of poverty. This article outlines the successful poverty reduction strategy of Tanzania and international support that caused the most drastic reductions in poverty around the world.

History of Tanzanian Poverty

Historically, Tanzania has been one of the most impoverished countries in the world. In 2000, 86 percent of Tanzanians were impoverished, but this number dropped to 28 percent in 2018.

Tanzania reduced poverty by 3.2 percent in 11 years, making it the country that reduced poverty the most in the last 15 years. The poverty reduction strategy of Tanzania is due to three elements: reducing income poverty, increasing access to basic necessities and improving government infrastructure.

Economic Growth

The first strategy focuses on sustainable economic growth, which includes decreasing inflation and focusing on growing parts of the economy that have the largest poor population. The employment and empowerment programs utilized in these strategies focus on agriculture, manufacturing, mining and tourism in addition to macroeconomic growth in exports and imports. Between 2000 and 2015, Tanzania’s export volume grew from 120 to 272, making it the world’s 130th largest exporter. This successfully increased Tanzania’s GDP from $13.3 billion to $47.3 billion.

Tanzania’s unemployment rate dropped from 12.9 percent in 2001 to 10.3 percent in 2014, because of the liquid capital that injected into Tanzania’s economy, a focus on job creation and an industrial transition that opened new jobs. The economic focus of the Tanzanian government lifted thousands of individuals out of poverty and made it the seventh-largest economy in Africa.

The Impoverished Individual

The second strategy focuses on the personal needs of those in poverty. Poverty reduction efforts seek to increase the quality of life and ensure that those in poverty have access to social welfare. Efforts concentrated on education, clean water, sanitation and health services. Because of these efforts, Tanzania increased the number of individuals who had access to clean water by 9 percent between 1990 and 2009. In the same period of time, Tanzania’s health care became more accessible. As a result, child mortality rates dropped from 162 to 108, infant mortality rates dropped from 99 to 68 and the rate of malaria contraction dropped from 40.9 percent to 40.1 percent.

Another poverty reduction strategy focused on education. Tanzania made education more accessible by increasing funding for education, bettering its transportation mechanisms (including roads) and emphasizing vocational education and education for girls. This focus on education increased school enrollment from 68.8 percent in 2000 to 84.6 percent in 2015.

Tanzania’s Commitment to its People

The third strategy is one of the governmental commitments to the impoverished Tanzanian people. This included ensuring the enforcement of the law, the accountability of the government for its people and the prioritizing of stability in order to avoid poverty. The IMF reported that Tanzania has become more accountable to its people, less corrupt and has increased citizen participation in governance, thus ensuring an effective political framework.

International Participation in Tanzania’s Poverty Reduction Strategies

The international community was critical to Tanzania’s successful poverty reduction. The United States, Tanzania’s largest source of aid, began giving Tanzania foreign aid in 2006. In that year, the U.S. gave $151.29 million. This number increased every year, with the U.S. giving Tanzania $633.5 million in aid in 2015. This aid has consistently gone towards the very areas in which Tanzania has seen the most improvement: humanitarian aid, governance, education, economic development and health.

While Tanzania still has a long way to go until it completely eliminates poverty, it has made significant progress since the beginning of the millennium. The poverty reduction strategies of Tanzania, including economic growth, investment in individuals and infrastructure and governance development, have been successful to a great extent. International aid has consistently been a contributing factor to Tanzania’s ability to reduce poverty and has successfully targeted the areas in which Tanzania required the most improvement.

–  Denise Sprimont
Photo: Flickr