Information and stories about economic growth.

Partnership for Central AmericaCentral America, particularly Central America’s Northern Triangle — El Salvador, Guatemala and Honduras — has been experiencing a major evacuation of migrants precipitated by the multifaceted economic, political and humanitarian crises in the region. Since 2019, over 2 million migrants have fled. 

The region is among the poorest and most dangerous in the Western Hemisphere, and all three countries ranked near the bottom for gross domestic product (GDP) per capita among Latin American and Caribbean countries. The region lacks skilled workers, access to education and economic security. A significant push factor is the high rate of informality, which is approximately 77%. Furthermore, according to the World Food Program, more than 6 million inhabitants were food insecure.

Nearly Half the Population Wants to Emigrate

The region’s problems are rooted in its brutal history of violence stemming from decades of civil war, instability and gang violence. Thus, many Central Americans are willing to make the long and treacherous journey to the United States in the hope of a better life. The governments of Central America and the United States have been trying to work together to solve these issues. 

To address this immense migration, the Biden Administration has created the Partnership for Central America, which will combat the problems of migration by creating economic opportunity in the region. 

The Partnership for Central America

Vice President Kamala Harris announced that the private sector, thanks to the Partnership for Central America, has agreed to commit more than $950 million as a part of the Call to Action for Northern Central America. Under this public-private partnership, around 47 companies and organizations are cooperating across financial services, agriculture, textiles, technology, telecommunications and nonprofit sectors to build the nation’s economic security.

These investments are creating jobs, expanding access to financing for small businesses, expanding opportunities for training and education for youth and workers and improving livelihoods for inhabitants of the region. As part of the plan, Vice President Harris has called on businesses and organizations to contribute to advancing the economies of the region. 

A few of the commitments made by major companies:

  • Target has agreed to increase its funding by $300 million in the region and attempt to grow vendor relationships that operate in all three countries. 
  • Nestle will support more than 7,500 coffee producers in adopting regenerative agriculture practices which will enhance their production thus strengthening their coffee supply chains. 
  • Root Capital will be lending $1.4 million to small businesses in Guatemala as well as educating these businesses on how to grow and access capital. Additionally, it has committed $80 million in loans to agricultural businesses. 

Central America Forward 

Following the investments in Central America’s private sectors, Vice President Harris’s Central America Forward plan will focus on advancing good governance and labor rights. Furthermore, a U.S. government Northern Central American Investment Facilitation Team will support USAID workforce development, clean energy infrastructure, connection to the digital economy and work to empower women in the region. 

Through these measures, Central America can obtain significant economic growth that is stable as well as sustainable. Furthermore, these investments can pave the way for American companies to gain access to new overseas markets which will continue to spur growth. International experience shows that when the international community works together, it can make significant economic and social advances.

Following the massive migration from Northern Central America, the U.S. government and leaders of Central America have committed to addressing the root causes by supporting the region’s long-term development. This plan will work to foster economic opportunity, expand access to education, improve governance, combat corruption and strengthen security. These efforts will work to provide the region not only with new opportunities, but a new vision of hope for Central America. 

– Cameron Alcocer
Photo: Wikimedia Commons

Poverty Reduction in Kenya
In the fight against global poverty, there is a lot of talk about problems and less about progress and good news. Kenya is one nation that has been making progress in improving the health and well-being of its society, something in which it takes great pride. One can attribute the progress on poverty reduction in Kenya to the adoption of the 2030 Agenda for Sustainable Development in 2015. The work towards achieving the goals of this agenda, combined with other strategies, has resulted in a significant decrease in poverty.

What is the 2030 Agenda for Sustainable Development?

The 2030 Agenda for Sustainable Development is an initiative that began in 2015 and was agreed upon by all member states that make up the United Nations. The project serves as a roadmap of what needs to be accomplished in order for all people to have the opportunity for peace and prosperity in the future. There are 17 Sustainable Development Goals (SDGs), representing challenges and opportunities for all member states of the U.N. to act on, including issues that cause poverty, food insecurity and low wages. The goal is to recognize that economic growth goes hand-in-hand with reducing poverty, hunger and income inequality.

What Steps Has Kenya Made Towards Achieving Progress?

Kenya has made huge strides in improving the health and well-being of its citizens on multiple fronts. Several accomplishments were made between January 2016 and January 2017 that helped to reduce hunger and poverty. According to InDepthNews, poverty levels decreased from 46.8% in 2007 to 45.2%. The Kenyan government also instituted the Equalization Fund, which provides funding that has resulted in free primary and secondary schooling. In addition, the fund expanded technical and vocational educational training institutions at the grassroots level. The fund also includes provisions that help women, young people and people with disabilities procure preferences and reservations through an affirmative action policy. All these things together serve to help the most vulnerable of society while simultaneously achieving progress on poverty reduction in Kenya and promoting equity.

Further Accomplishments and Progress Made

The Kenyan government has been committed to improving the lives and conditions of its people, as well as promoting economic growth, and there are milestones to show for that effort. According to the 17th edition of the Kenya Economic Update, in 2005 and 2006, the proportion of Kenyans who were living below the international poverty line was 46.8%. Fast forward to 2015/2016, and that number decreased to 36.1%. The economic update also shows that Kenya is performing better than most sub-Saharan African (SSA) countries when it comes to both monetary and non-monetary poverty indicators. If one were to step back and look at the overall picture involving the poverty rate and income levels, one would see that human development indicators for Kenya are high. This means that Kenya performs highly compared to other SSA countries when it comes to the non-monetary aspects of poverty.

Kenya’s Strategies

The Economic Recovery Strategy (ERS) is a Kenyan government program with a number of medium-term objectives. One is strengthening the macroeconomic framework, as well as fully embracing both private sector participation and investment. According to imf.org, in terms of improving equity and poverty reduction, the program seeks to focus on some very specific issues: “…universal primary education, improved access to basic health, expanded productive capacity in agriculture and upgrading the living conditions for urban dwellers that have suffered from poor urban infrastructure and social services mainly due to high urbanization rates.” Also, part of the program involves the Kenyan government working towards meeting Millennium Development Goals (MDGs)

Conclusion

Kenya has made tremendous progress on poverty reduction in Kenya while working to meet the 2030 Agenda for Sustainable Development and Millenium Development Goals. The commitment to working to improve the well-being of citizens while promoting economic growth has produced a number of milestones that fight food insecurity and increase sanitation services and access to education, all of which play a role in reducing poverty. However, this is only the beginning. Kenya still lags behind other lower-middle-income countries. 

The progress made so far is vulnerable to climate disasters such as droughts, which can drive poverty back up. Additionally, though Kenya has made tremendous strides in poverty reduction, it is not on track to eliminate poverty by 2030. To achieve that goal, they will have to accelerate the pace of poverty reduction. This is just a further reminder that the effort and progress towards fighting poverty, hunger and food insecurity in Kenya and around the world is a steady and ongoing process that will not be achieved overnight. It takes constant effort, work and attention.

– Gary Williams
Photo: Flickr

Sustainable Tourism Initiatives in Bulgaria
Nestled in the heart of Europe, Bulgaria is emerging as a beacon of hope, thanks to its sustainable tourism initiatives. Current predictions say that nearly 50% of World Heritage Sites do not have any plans in place in terms of managing the negative environmental and economic impact of tourism. Therefore, sustainable tourism initiatives in Bulgaria are not only contributing to the nation’s economic growth but also playing a pivotal role in the global fight against poverty. This article delves into how Bulgaria harnesses sustainable tourism to invigorate its economy and, in doing so, bolsters international efforts to combat poverty worldwide.

Bulgaria’s National Strategy for Sustainable Tourism Development

Bulgaria has long recognized the potential of tourism as an economic driver. The National Strategy for Sustainable Tourism Development, established in 2014, has been a cornerstone of the country’s sustainable tourism efforts. This strategy is designed to promote responsible tourism practices and ensure the preservation of Bulgaria’s unique natural and cultural heritage.

One of the key aspects of this strategy is the creation of resources and conditions for the social well-being of local communities. By engaging local communities and encouraging their participation in the tourism industry, Bulgaria ensures that the economic benefits are distributed more equitably, ultimately helping to alleviate poverty in remote and underserved regions.

Promoting Responsible Tourism in Bulgaria

Bulgaria is gaining recognition as a champion of responsible tourism, drawing attention for its commitment to ethical and sustainable travel practices. One of the central pillars of sustainable tourism initiatives in Bulgaria is the preservation of unspoiled natural landscapes. This approach prioritizes eco-friendly practices and encourages travelers to experience Bulgaria’s breathtaking natural beauty while minimizing adverse impacts on the environment. This holistic approach not only safeguards Bulgaria’s natural wonders but also fuels sustainable economic growth, showcasing how responsible tourism can be a win-win for both the environment and local communities.

Bulgaria’s Sustainable Tourism Conference: A Global Showcase of Commitment

The significance of Bulgaria’s pursuit of sustainable tourism was on full display during the Bulgaria Sustainable Tourism Conference. This international platform served as a testament to Bulgaria’s unwavering dedication to nurturing sustainable tourism practices and promoting responsible travel on a global scale.

Bulgaria seized the opportunity to spotlight its innovative approaches to sustainable tourism. These approaches, including fruitful partnerships with international organizations and the adoption of cutting-edge green technologies within the tourism sector, not only bolstered Bulgaria’s own economy but also shone as a beacon of inspiration for other nations aspiring to combat poverty through the transformative power of sustainable tourism.

Global Support for Sustainable Tourism in Bulgaria

USAID has also recognized Bulgaria’s efforts in sustainable tourism. USAID’s support has facilitated the development of tourism-related infrastructure, improved the quality of services and enhanced the competitiveness of local businesses. These efforts are not only driving economic growth but also creating job opportunities and improving living standards in Bulgaria. 

Sustainable tourism initiatives in Bulgaria have also received support from other international partners, including the European Union. The Support and Promotion of Sustainable Tourism project, funded by the EU, has played a crucial role in bolstering Bulgaria’s sustainable tourism sector. This project aims to create sustainable tourism products promoting cultural and heritage services and increasing cross-border tourism. By investing in these projects, Bulgaria not only strengthens its own economy but also contributes to the broader European goal of reducing poverty and inequality through sustainable economic development. 

Looking Ahead

Sustainable tourism initiatives in Bulgaria offer a blueprint for other nations to follow, demonstrating that economic prosperity can go hand in hand with environmental stewardship and social equity. By working together and emulating Bulgaria’s success, a future can be envisioned where sustainable tourism becomes a potent force in lifting communities out of poverty, protecting our planet and creating a more equitable world for all.

– Valentin Lyazov
Photo: Flickr

Guyana’s Economic Growth
Guyana is a country located in South America, sharing borders with Venezuela, Brazil, Suriname and the Atlantic Ocean. In 2015, ExxonMobil, a natural gas company, discovered offshore oil fields and transformed Guyana’s struggling economy into “one of the biggest success stories of the decade.” Guyana’s economic growth as a petrostate alleviates poverty and is key to improving public services, economic development and living standards through the sudden influx of wealth an oil-based economy can provide. Guyana’s rapid economic growth has made it “one of the most improved countries on the Fragile States Index in 2023.” 

ExxonMobil has reached an “output of 340,000 barrels per day this year” in 2022 with oil production expected to exceed “1mn b/d in three years.” The oil being dug up should greatly help the economy by increasing government revenue from $4 billion in 2022 to “$10 billion a year from 2025.” The country experienced 57.8% growth in 2022 largely due to the oil boom. The effect of the oil boom has trickled down to all aspects of the economy and society and caused a sharp decline in poverty between 2006 and 2019 from 60.9% to 48.4%.

While Guyana’s economic growth as a petrostate alleviates poverty, it is also important to realize the dangers of rapid economic growth especially in a country with political instability divided by deep ethnic rivalries.

How Does Oil Wealth Alleviate Poverty?

With the country’s $2.4 billion generated in oil revenue, Guyana has constructed two highways and a deep-water port. This money comes from the deal Guyana signed in 2016 with the ExxonMobil consortium which dictated that Guyana would receive “50% of the profits.” Since 85% of Guyana is forest, there is a huge issue of mobility. Investment in roads will help Guyana connect with surrounding countries and help improve transport efficiency and regional trade with countries like Brazil. Furthermore, the deep-water port will help trade with Suriname “promising the potential of a new regional trade hub.” Along with this investment, a 1.9 billion gas-to-energy project has been set up to “double Guyana’s energy output and slash high power bills by half” according to Vice President Bharrat Jagdeo.

Furthermore, “12 hospitals, seven hotels and scores of schools” are being built to improve health care, education and the tourism economy in Guyana. Along with the financing from oil, a $97 million loan from the Inter-American Development Bank aimed to “strengthen Guyana’s health care network.” This includes “improvements in logistics, management and processes,” which should “benefit 406,000 people, over half the country’s population.”

As of 2018, the ExxonMobil Foundation had invested $10 million for sustainable employment and conservation. This is to help Guyana diversify its economy and achieve its economic growth in a sustainable manner while conserving the country’s ecosystem, which many people still rely on for their livelihoods and sustenance. This has occurred through the support and improvement of community-based fishing along the coastline. This has been a sector highlighted by both the government and ExxonMobil as “critically important to the wellbeing of the Guyanese people.” Furthermore, ExxonMobil has spent around “$39 million with local suppliers” creating business and employment opportunities with “approximately 68% of ExxonMobil’s current in-country employees” being Guyanese as of 2018. 

Dangers of Rapid Economic Growth

Due to nominal Gross National Income (GNI) jumping 86.2%, Guyana was classified as a high-income country by the World Bank, previously being a middle-income economy as a result of its thriving oil sector. As a result of this, the nonprofit organization Food for the Poor (FFTP) sees great challenges with access to aid within the country. According to the FFTP, the fact that Guyana is now being seen as a high-income country might affect donations as potential donors may choose to divert their funds to other countries in need. This is a problem affecting the poor, as, despite the oil boom and increase in the country’s GDP, salaries have flatlined with the cost of living rising, with goods such as “sugar, oranges, cooking oil, peppers and plantains more than doubling in price.”

The FFTP is hopeful in the next five years’ time that living conditions will improve however the CEO Kent Vincent stated: “I can’t confirm whether there is any major change.” Vincent stated that “Guyana will now, more than ever, need the support of its corporate society to assist those in need,” until Guyana’s living standards catch up with economic growth from its oil boom.

Looking Ahead

Developing nations have often fallen into a resource curse, growing too quickly and fostering reliance on a single industry. Guyana is aware of the pitfalls, showing keen interest in implementing reform and investing across all sectors to ensure sustainable growth. With good leadership and the right policies, the country will be able to benefit from its oil boom and reduce poverty benefiting the entire population. While Guyana’s economic growth as a petrostate alleviates poverty it is just the beginning, and even though they are moving in the right direction they still have a long way to go.  

– Kishan Patel
Photo: Flickr

Cabo Verde’s Economic GrowthSince gaining independence in 1975, Cabo Verde’s economic growth has brought about great improvements to the welfare of the poorest in the country. During the 1970s, the GDP per capita was $190; this figure rocketed dramatically to over $3,600 before the 2010s ended. However, despite the growth to a middle-income country, the nation still had 35% of the population living below the poverty line in 2019. Here are the main reasons why the economic growth of the island is promising not only for Cabo Verde’s poorest but also for the rest of Africa.

A Lack of Natural Resources

Cabo Verde cannot rely on its natural resources as it is lacking compared to the countries closest to it. Only 11% of all of its land mass is suitable for agriculture, fresh water has very few sources, and frequent draughts prove to be major issues in the conservation of resources. The main natural valuables of the nation only include salt, limestone and pozzolana — used in making cement.

Due to these limitations, Cabo Verde has had to use clever strategies to ensure resources do not become scarce. 90% of all food is imported, so the only food source that they have an abundance of — fish — is protected. 21% of all foreign investment from 1994 – 2000 was used on fishing infrastructure, including developing large processing plants for the freezing and storage of fresh fish.

Energy demands are almost entirely met by imported petroleum fuel. The ECOWAS Center for Renewable Energy and Energy Efficiency, established in 2009, was created to improve the renewable energy capability of Cabo Verde. Strong wind has enabled the use of wind turbines on the national grid, solar-powered systems have been introduced into villages, and a 20-70kW/m wave strength allows for untapped potential into a new avenue.

The natural problems of Cabo Verde should serve as an indication for other countries on how to effectively preserve resources to boost the economy. Despite having very little, Cabo Verde’s economic growth has been contributed to by the smart planning of the postcolonial government.

The Focus on Tourism

Tourism is the single most important sector of Cabo Verde’s economy. Nearly 5% of the economic growth in 2022 was due to the service of accommodation and restaurants — the highest of any category.

Over 700,000 tourists visited Cabo Verde in 2022, 90% of the record-breaking 819,000 figure from 2019. An impressive vaccination program allowed Cabo Verde to speed up its reopening to visitors in 2021. The Cabo Verde government is expecting these numbers to surpass 1.2 million in 2026 as the funding for tourism sites and resorts grows each year.

An increase in tourism only brings positivity to the nation as, in 2019, 39% of total employment was in the travel and tourism sector. (From January to September 2022, around $105 million was generated in foreign investment, compared to only $60 million in the same period for 2021. With a majority of this investment directly impacting tourism, the number of jobs will increase, and thousands more will be employed, impacting the lives of those living along the poverty line.

Cabo Verde still has a way to go if it wants to be as successful as another African island nation in terms of tourism — the Seychelles. Seychelles has a much lower poverty rate than Cabo Verde so the success story has already been created, and with more time the government is hoping to further boost the economy and lower the poverty rate again.

Consistent Fall of Poverty

In 2001, the poverty rate was just under 60%. Only 14 years later the number was 35%. Almost a decrease of half in less than two decades is incredibly impressive and highlights how the work of strategic implementations can allow an economy to thrive and people to succeed.

Cabo Verde’s location makes the country very vulnerable to key natural hazards so the economy is still volatile. The World Bank introduced a Catastrophic Deferred Drawdown Option (Cat DDO) to provide Cabo Verde with the funding necessary to deal with a natural disaster. Since 2018, the Cat DDO has been utilized to introduce policy reforms and update the data systems used to identify risks.

Even with the highly susceptible environmental conditions, Cabo Verde has had a consistent fall in poverty since gaining independence. In 1989, the number of people living in extreme poverty was around 14%. In 2015, the figure was just over 2%.

There is no sign of stopping the reduction in poverty from the government. Prime Minister Ulisses Correia e Silva made a statement in February highlighting the need to eradicate extreme poverty from Cabo Verde by 2026.

He stated, “We must eliminate extreme poverty in Cabo Verde, reduce absolute poverty, in the name of human dignity, but also of the positive impacts at the level of people’s quality of life, public security, increased productivity of families and happiness of people.”

Cabo Verde’s economic growth is a testament to the dedication of the government, foreign aid workers and investors that envision a more prosperous future for the nation. Other countries in the region can certainly benefit from the knowledge and experience of plans carried out by Cabo Verde, especially regarding conservation and creating tourism spots that will get their economies thriving.

– Oliver Rayner
Photo: Flickr

Economic Growth in Indonesia
Although Indonesia has almost eradicated extreme poverty, one-third of Indonesians still experience economic insecurity. Taking steps such as creating policy to ensure financial inclusion and investing in infrastructure can help prevent Indonesians from falling into poverty. Economic growth in Indonesia could significantly lower the poverty rate around the country.

Economic Inequality

Indonesia is currently ranked the sixth country with the most wealth inequality in the world. The four wealthiest men in Indonesia have more wealth than the poorest 100 million Indonesians. This increasing inequality is making the fight against poverty even more difficult. It is stalling economic growth and endangering integration.

The poorest citizens, especially women, receive low and unequal wages at work. Those living in rural areas often do not receive proper access to infrastructure such as well-kept roads and electricity. The education system is also underfunded and unequal, which means poorer Indonesian workers are frequently unable to obtain higher-skilled and higher-paid jobs.

Poverty Reduction Barriers

The World Bank lays out several issues Indonesia must address within its country to reduce poverty by increasing its economic growth. Although human capital outcomes in Indonesia are improving, they are still low in Eastern Indonesia. This situation undermines the productive potential of the population and creates drastic financial inequality. 

To regain its high-income status, Indonesia needs to expand its poverty reduction policies. It must protect households against poverty, create more opportunities for work, focus on investing in helping the poor and promote better information for making decisions. Collectively, social support, social insurance, financial inclusion and infrastructure investments can help keep households out of poverty.

Indonesia cut its poverty rate by more than half since 1999. In 2019, its poverty rate was under 10% before the COVID-19 pandemic hit the country. As of July 2021, Indonesia dropped from upper-middle income to lower-middle income status due to the pandemic. The pandemic also partially reversed some of Indonesia’s progress in poverty reduction. Its poverty rate jumped from 9.2% in September 2019 to 9.7% in September 2021. In a post-COVID-19 world, Indonesia is working toward growing its economy to reduce its poverty rate further. 

The United Nations Takes Action in Indonesia

The United Nations (U.N.) works with the Indonesian Government to improve economic growth in Indonesia. Since Indonesia joined the U.N. in 1950, the U.N. has worked with the Indonesian Government to enhance economic development and end extreme poverty by 2030. The two organizations have a strategic partnership with the goal of returning Indonesia’s economy to high-income status. They are also working together to mitigate the economic impacts of the COVID-19 pandemic on Indonesia. 

UN Women Indonesia collaborates with various stakeholders, including the private sector, to foster women’s economic empowerment. Its efforts include providing access to skill development and resources and creating an enabling environment that encourages greater participation of women in the economy. 

Economic Recovery

With Indonesia’s economy in recovery, the country’s GDP growth was more than 5% in 2022. The country focused its efforts on growing commodity exports and developing related fiscal policy to fight the lasting negative impacts of the pandemic. Economic growth in Indonesia has led to some success in reducing the country’s poverty rate. However, there are still obstacles the country must overcome. 

– Marisa Del Vecchio
Photo: Flickr

Digital RetailWhen considering the needs of those in poverty, a demographic often lacking consistent access to basic necessities such as food, shelter and clean water, advancements in digital retail may seem an unnecessary luxury. However, in recent years, many have noted the positive impact of the digitization of commercial services on economic growth in China; despite being “the world’s third largest and fastest-growing major economy,” 13% of China’s population (almost 200 million people) still live below the poverty line of $5.50 a day as of 2021.

Advantages of Digital Retail

One of the main advantages of digital retail is its ability to overcome geographical obstacles: rural workers are now able to promote their products and services to a much larger consumer base than previously. They are also now able to contribute to the development of entire industrial chains in e-commerce. Think tank China Watch attributed the creation of over 28 million jobs in rural regions of China to the expansion of online retailing and, in 2019, digital sales reached almost $16 billion in more than 760 impoverished counties. Marginalized groups in particular, such as the elderly and women with children, have benefitted from gaining access to customers and resources that might otherwise lie beyond their reach.

The expansion and implementation of digital retail in urban areas can also come with additional financial resources: digital access to loans and insurance can provide support and protection for burgeoning businesses. Key players in China include MYbank, which granted more than 4 million contactless loans within impoverished counties in its first five years (2015-2020), and JD.com, whose digital agricultural loan collaborations in the first two years (2017-2019), worth approximately 1 billion yuan ($143.5 million), reported no overdue repayments or defaults.

The Barriers

Despite the progress so far, there are still challenges and nuances that need consideration. Many of the above-mentioned developments require a certain level of technological infrastructure to operate, which many rural and impoverished regions have not yet reached. Almost 30% of the Chinese population is still without internet access, rendering these services unattainable to them, according to a 2021 study. The same study noted a “digital divide” in the nation, whereby the expansion of digital inclusive finance significantly alleviated poverty rates in the more developed eastern region of China yet showed “no significant effect” on the “relatively backward in development” western region.

Ongoing Efforts

In 2019, Xubei Luo, senior economist at World Bank, discussed attempts to facilitate e-commerce for marginalized groups: a village agent to assist locals in navigating digital retail platforms, make payments for villagers so that the latter only pay once they are satisfied with their product and bypass the need for villagers to make their own website results in a “lower threshold for the less advantaged to participate.” She equally noted the possibility of government assistance through “strategic subsidies.”

Looking Ahead

In the face of poverty, the expansion of digital retail in China has brought tangible benefits, enabling rural workers to reach a wider consumer base and contribute to local economic growth. The accessibility of digital loans and insurance has provided crucial support to emerging businesses, fostering financial stability. Although challenges remain, efforts are underway to bridge the digital divide and ensure that marginalized groups can participate in and benefit from the opportunities offered by e-commerce.

– Helene Schlichter
Photo: Flickr

Abu Dhabi PortsThe Abu Dhabi Ports group has recently announced its plans to work with Angola, a country located in southwestern Africa. This partnership aims to boost trade and investment between the two nations and promote economic growth in the region.

The group is a renowned port operator and logistics provider with a global presence. It operates several ports and industrial zones in the United Arab Emirates (UAE) including the flagship deepwater Khalifa Port. The company has an exemplary track record of delivering world-class port infrastructure and advanced technology services. Abu Dhabi Ports promotes the maritime industry in the UAE and enhances the flow of imports and exports, making it an ideal partner for Angola.

Angola and Its Natural Resources

Angola is a country with a long coastline and vast natural resources. The country “is the second largest oil producer in sub-Saharan Africa.” It has an output of 1.55 million barrels of oil a day. Unfortunately, the volatile nature of the oil market has resulted in high levels of poverty and inequality in Angola. In 2018, Angola’s poverty levels were just under 50%. In contrast, the country ranks 6th in the world for diamond production. Furthermore, Angola is also rich in certain minerals including iron, phosphates, copper and gold. With demand for these minerals rising in the near future due to the global energy transition from fossil-based systems to renewable energy sources, mineral extraction could eventually comprise a significant portion of Angola’s GDP.

Economic Instability and Underdevelopment

Despite the abundance of natural resources, Angola as a country has struggled with economic instability and underdevelopment. In 2022, Angola had an urban unemployment rate of approximately 38%. Angola’s government, however, has recently launched a series of reforms to attract foreign investment and promote economic diversification. These reforms have resulted in this partnership between Abu Dhabi Ports and Angola’s Ministry of Transport.

The two parties have entered an agreement to begin the development of maritime services and infrastructure across Angola. Abu Dhabi Ports will also work with Angola’s state-owned transportation company, UNICARGAS, which controls Angola’s most thriving port, the Port of Luanda. The Port of Luanda navigates more than 70% of Angola’s imports and 80% of its non-oil exports.

Developing and Modernizing Infrastructure

According to reports, the strategic partnership between the Angolan government and Abu Dhabi Ports will focus on developing and modernizing Angola’s logistics infrastructure. The agreement also includes a Maritime Academy in Angola. The construction and operation of new logistics facilities and ports in Angola could help improve the country’s connectivity and competition with global trade, thereby resulting in economic growth.

Looking Ahead

The partnership between Abu Dhabi Ports and Angola holds great promise for economic growth and development in the region. By leveraging Abu Dhabi Ports’ expertise in port operations and logistics, Angola can enhance its maritime industry and improve trade connectivity. The planned development of infrastructure and logistics facilities, along with the establishment of a Maritime Academy, could contribute to Angola’s economic diversification and attract foreign investment. This partnership marks a positive step towards fostering stronger trade relations and driving sustainable growth in Angola.

– Aemal Nafis
Photo: Flickr

Economic Development in The DRC
While the Democratic Republic of the Congo has a history of extreme poverty and political instability, a recent International Monetary Fund (IMF) report stated that growth in the Democratic Republic of the Congo rebounded astoundingly from 1.7% in 2020 to a projected 6.2% in 2021. The projected growth includes impressive metrics considering that the most recent IMF projections for Sub-Saharan Africa predicted 4.5% growth. While the DRC still has improvements to make to infrastructure, public health, literacy, child mortality and access to utilities, recent reforms have proven effective in stabilizing the Congolese economy.

Background

The DRC has a history of political corruption dating back to the nation’s independence in the 1960s, “combined with countrywide instability and intermittent conflict that began in the early-90s.” This has consequently led to “reduced national output and government revenue, and increased external debt.” However, since implementing a transitional government after peace negotiations in 2003, economic development in the DRC has continued to improve, as the country reopened relations with international financial institutions and donors.

While the DRC’s economy contracted by 2.2% in 2021, inflation remained contained at 2% in 2021, despite sharp food price increases that rose by about 3.4%. The decline in oil prices in 2021 originally damaged economic development in the DRC. However, while the war in Ukraine could potentially increase inflation, “high oil prices could potentially boost the economic recovery.” This reality, while devastating to the nation’s poor, could contribute to growth and development in the DRC as the oil sector represents nearly half of the country’s gross domestic product (GDP) and 80% of its exports, making the nation the third largest oil producer in the Sub-Saharan African region. 

Differences in Sub-Saharan Governments and Economies

The primary difference between the DRC and other Sub-Saharan African nations in regard to the economic metrics is government stability. For instance, the United States’ African Growth and Opportunity Act (AGOA), a duty-free trade group, has cut Ethiopia, Mali, Guinea and Burkina Faso “over alleged human rights violations and recent coups.” This exclusion from the AGOA excludes Burkina Faso, Ethiopia, Mali and Guinea from accessing more than 1,800 products, as well as more than 5,000 products suitable for duty-free market access, or non-taxable market access, under the Generalized System of Preferences program.

The state of democracy in the DRC is questionable at best, with the U.S. State Department reporting incidents such as “forced disappearances and abductions by government and armed groups; torture by government; arbitrary detention by the government; [and] harsh and life-threatening prison conditions.” However, the relative stability of the DRC’s centralized constitutional republic has come with privileges. While other Sub-Saharan nations have faced exclusion, the DRC “regained AGOA beneficiary status as of” January 1, 2021. 

Economic Reforms

While the DRC has been in recovery mode from the economic contraction of 2021, the nation has still exceeded projections for economic growth and development due to a number of key strategies. Namely, the country includes the use of “a Fund-supported program” through which, DRC authorities adopted policies to regulate and stabilize inflation and the exchange rate. Also, debt restructuring agreements, increased oil prices and improvements in debt management have decreased public debt, which fell from 113% of GDP at the end of 2020 to 102% by the end of 2021. Ukraine-related inflation has also led to high commodity prices which have supported increased exports, revenues and international reserves.

A Need for Humanitarian Aid

While the IMF projections exceed original GDP-growth projections by the World Bank, which predicted “1.9% in 2022 and 4.1% on average over the period 2023-2024,” the conditions allowing for the DRC’s growth in economic development can be simultaneously harmful to the most vulnerable communities. For instance, the War in Ukraine, while improving commodity prices, has simultaneously led to increases in food prices which has intensified food insecurity. The DRC is also host to a number of social problems.

Infant mortality stands at a rate of 33 deaths per 1,000 live births, and access to electricity stands at 66% of the population in urban areas and only 15% in rural areas. The DRC’s access to clean water is also below the country’s “hydrological potential.” Luckily, groups like USAID offer assistance in such areas as “Agriculture and Food Insecurity, Democracy, Human Rights and Governance, Education and Global Health.” 

USAID has partnered with the government and people to improve citizens’ quality of life and the efficacy of national institutions while fighting for lasting peace. While many other African nations have suffered from the effects of coups, inflation and American sanctions, the DRC’s semblance of state stability and the intervention of humanitarian aid organizations have seemed to elevate the nation past expected metrics. One will be able to more clearly see how stable the DRC’s economy will be soon as economic projections are descriptive and not prescriptive. However, the DRC is currently exceeding predictions of GDP growth and facing less market insecurity than Sub-Saharan African nations that have faced punitive sanctions from Western nations for recent coups.

Braden Hampton
Photo: Flickr

Algeria’s Economic Future
Algeria’s economic future looks bright as its role as a supplier of liquid crude oil has expanded amidst the shifts in European sourcing due to the Russian invasion of Ukraine. Algeria typically provides only 8% of natural gas for the European Union. However, the country is already taking steps to provide more oil as nations look to lessen their dependence on Russian oil. Such a change in supply could mean an economic boost, enabling Algeria to build future long-term renewable energy and labor markets.

Historical Context

Algeria is a country with a deep history of relying on its own resources and people to power its economy. Having internationally-recognized independence since 1962, Algeria has had to resort to its oil exports, internal agricultural labor and deals with neighbors such as Morocco and Spain in order to stay afloat. After former president Abdelaziz Bouteflika resigned in 2019, the old guard of Algerian leadership faced a new era in which the country’s non-oil industry required expanding and strengthening in order for its economy to have a bright future.

How Algeria’s Role is Currently Changing

Countries such as Spain, Italy, Greece and France are weaning off of Russian oil, while capital cities such as Madrid, Athens and Rome are currently setting up new energy provisions with Algeria.  In its most recent report, the World Bank noted that Algeria’s economy grew 3.9% bigger due to the extra demand for European oil alongside new construction and industrial activity. To maintain this continued growth Algeria’s leaders need to pay close attention to the possible obstacles.

In order for Algeria’s economy to find the funds to diversify its future economy, it must be able to provide more oil to European countries in the first place, an increase estimated at 12% to 38% of its current rate by the fall and winter of this year.  However, the state-run oil company Sonatrach is facing bureaucratic slowdowns, hacking to the refinery operations, and complications maintaining its already existing contracts.

In addition, there is a geopolitical complication in Algeria’s current status as a primary buyer of Russian weapons and arms, according to Modern Diplomacy.  If Russia can mitigate some of its lost oil revenue by increasing weapons sales to a growing Algerian economy, then European nations may turn away from contracting more oil supplies from Algeria.  These are complications that make Algeria’s economic future a tricky path of policy and economic landmines.

Possible Solutions

The primary solution for longer-term economic growth is to focus on building non-hydrocarbon industries with the profits from oil exports that could take place in the coming months. One major way to do this is for the World Bank to support further private sector projects related to agriculture, construction and development. In addition, Algeria could create stability in its current leadership by funding social programs, human rights protection and anti-corruption legislation. These measures could help prevent the widespread political uprising from citizens and extremist groups while keeping the leadership needed to maintain the centralized economy going.

According to Council on Foreign Relations, the U.S. role in Algeria’s economic future should be kept to a minimum of interference. Algeria is a nation that is very insistent on being self-sufficient and sovereign. In order for political and economic stability to succeed, U.S. measures need to include not sending more troops or intelligence to Algeria and instead diplomatic peers in order to better understand the needs and wants of the nation, CFR stated.

Algeria’s economic future looks bright when taking into account the post-COVID-19 recovery and the opening avenues for revenue to which Algeria can build a stronger, more diversified economy. This serves two primary purposes: keeping intact its sovereignty and forging a new path forward to end its long-tenured instability.

– Albert Vargas
Photo: Flickr