Information and stories about economic growth.

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How Mobile Money Accounts Can Transform Africa

Mobile Money accountsMobile Money refers to digital payments that require no bank account to complete the transaction. A telecom provider, Verizon in the United States, for example, performs the function that a bank account would traditionally carry out. Mobile money accounts are particularly prevalent in emerging markets such as sub-Saharan Africa because individuals and small businesses in these places lack access to formal savings accounts and credit.

Mobile Money in Sub-Saharan Africa

There are more than one billion registered mobile money accounts worldwide and sub-Saharan Africa makes up nearly half of those accounts. The implementation of digital finance has the capability to boost an emerging nation’s GDP by 6% ($3.7 trillion) by 2025. Boosting sub-Saharan Africa’s economy by this amount would be the same as adding an economy the size of Germany to the global market.

COVID-19 Accelerates Mobile Money Usage

African governments have worked to increase the use of mobile money accounts to stimulate the national economy by reducing barriers to sign up. Rwanda implemented lockdown restrictions in response to the COVID-19 pandemic and mobile money transfers doubled within a week after the placement of these restrictions. Other African nations followed Rwanda’s lead and also eased restrictions on mobile money accounts, hoping to accelerate economic growth amid the global crisis.

The Success of Mobile Money in Africa

Roughly one in 10 African adults utilize mobile money accounts, which equates to about 100 million active accounts. This is more than double the number of accounts in the second-biggest region for mobile money, South Asia. MTN, the largest mobile telco in Africa, has 171 million customers, far outweighing leading African banks such as Ecobank and Barclays Africa, which have between 11 million and 15 million customers.

Mobile phone penetration in Africa is on average 80%, whereas banking penetrates approximately 40% of Africa. Telcos have found ways to create client experiences that are attractive to African consumers, with minimal restrictions and time investment necessary to set up mobile money accounts. There are often no transaction fees on bill payments and merchant acceptance is widespread, making mobile money an attractive way for African citizens to build wealth and manage their finances.

How Mobile Money Reduces Poverty in Africa

Studies predict that by 2025, 84% of Africans will have access to a mobile SIM card connection. Furthermore, mobile money payments will be crucial to the success of individuals, businesses and the overall African economy. Mobile payment technology allows people to manage their money securely, regardless of credit history. It also removes the barriers that people typically experience with bank account access. Mobile money essentially allows for financial inclusion. Mobile money transactions have the potential to reduce poverty in Africa and financially include millions of previously excluded people.

A study by the Gates Foundation found that mobile money directly impacts an African household’s ability to deal with shocks and extreme poverty. For example, in Uganda, mobile money increased food security by 45% for households far from a bank. In Kenya, mobile money account holders who experienced a shock had no decrease in consumption level, compared to a 7% decrease in consumption for households without a mobile money account.

The Future of Mobile Money

Mobile money fosters financial resilience and thus reduces poverty levels. Households with mobile money accounts are able to respond to unforeseen events. For example, if there is a flood, a household with access to mobile money can rely on the easy transfer of money from friends and family to support them even if they live far away. Since mobile money account usage increases per capita consumption and savings, it thus reduces the rate of poverty.

Mobile money has long-term impacts on poverty, especially in female-headed households. It has the power to empower millions of women. Digital payment platforms can give women in male-headed households more financial independence and can help them increase their savings.

According to research, increased consumption rates due to mobile money account utilization drove 196,000 households out of extreme poverty in Kenya. The ability of mobile money to lift African households out of poverty is impressive and shows promise for the continent’s future economic development.

– Tatiana Nelson
Photo: Flickr

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Green Shoot Foundation’s FASE Program

Green Shoot Foundation's FASE ProgramThe Green Shoots Foundation aims to reduce international poverty in seven countries by implementing three programs: ELSE, FASE and MAME. This Foundation focuses particularly on the FASE program, or Food, Agriculture and Social Entrepreneurship. The FASE program aims to educate individuals in business and agricultural work to promote productivity within the economy. About 80 students and 10 farmers from the Philippines and Cambodia have enrolled in the AgriTech Centre.

Reason for Action

The Philippines and Cambodia both heavily depend on the success of annual harvests to improve the economy. About 40% of Filipino citizens work in the agricultural industry. This industry contributes to around 20% of the GDP and 70% of total output in the Philippines. On the other hand, 22% of Cambodia’s agricultural work contributes to the GDP.

Although the agriculture industry is large, both countries face many difficulties. The Philippines lacks programs to ensure food security, connections to industries and efficient harvesting technologies. Furthermore, natural disasters such as typhoons and droughts damage agricultural facilities, supply markets and harm farmers themselves. Flooding also severely affects Cambodia. A massive flood cost around $355 million in damage to agriculture in Cambodia. Thus, the FASE program emerged to combat these harmful effects.

FASE in the Philippines

The Green Shoots Foundation collaborated with Gawad Kalinga to establish the FASE program in Southeast Asia. Gawad Kalinga is a nonprofit that aims to end international poverty in the Philippines. It works to provide education and employment opportunities to all citizens. Additionally, it has reached over 3,000 communities and fed over 100,000 students in schools through various programs. This organization has taken great steps in stabilizing the country’s workforce and economy.

The FASE program sends volunteers from the United States and England to the Philippines to provide training sessions. Volunteers teach people business and micro-financing information. Additionally, the FASE program provides platforms to inspire citizens to become entrepreneurs and support agricultural farmers.

Furthermore, incorporating a university on a farm allows farmers to obtain an education and promote their business. This program has supported over 1 million people and created over 300 jobs. Additionally, over 80,000 children attend school and 60 social enterprises have undergone establishment.

FASE in Cambodia

The Green Shoots Foundation has made a difference in Cambodia as well. The FASE program helped build the Agri-Tech Centre in North West Cambodia. Additionally, it focuses on environmental sustainability, training young children and preparing them for a future in the agricultural business.

Community-based Integrated Development is an NGO that works with the Green Shoots Foundation in Cambodia. Both organizations introduced the FASE program in Oddar Meanchey, a province in Cambodia. Furthermore, it provides training to improve agricultural opportunities and GDP. The Agri-Tech Centre has aided in establishing six sustainable enterprises as well.

In addition, the FASE program collaborates with the Agriculture Skills in Public Schools Project. The organizations discuss the most efficient farming styles to implement in the youth curriculum. Additionally, it creates irrigation systems and ponds to improve water accessibility and provide farmers with a suitable work environment. Children continue to learn farming skills to help improve the agricultural sector in Cambodia.

The Green Shoots Foundation and the Agriculture and Social Entrepreneurship program help advance agricultural sectors in the Philippines and Cambodia. Through support from the international community, the Foundation works to train and inspire citizens to become entrepreneurs. The Green Shoots Foundation continues to work to reduce international poverty and expand its influence in more countries.

– Sylvia Boguniecki
Photo: With Permission from Green Shoots Foundation

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Digital Finance Sources in Developing Countries

digital finance sourcesIt is no secret that cash is becoming more and more obsolete in developed nations. Venmo, Cash App, Square, PayPal, Zelle and Google Pay — none of these popular money transfer services require a physical transfer of cash. The onslaught of a global pandemic has only accelerated the shift to cashless transactions amid efforts to minimize physical contact. China is rapidly moving forward with central bank digital currency (CBDC) trial rollouts while the United States Federal Reserve is conducting ongoing research to potentially develop its own CBDC, a “Digital Dollar.” In lower-income nations, digital finance sources have the potential to transform economies.

Digital Finance in Developing Countries

In developed countries, the notion of an entirely cashless society is not far out of reach. However, the story is very different in developing nations. Many individuals are excluded from participating in even the most basic financial systems and instead rely primarily on physical cash. As of 2017, about 1.7 million adults globally were “unbanked.” This means they lacked any account with a financial institution or mobile money provider. This is nearly one-fourth of the world’s population.

Some of the most commonly cited barriers to account ownership include insufficient funds and inaccessible banking services. Virtually all unbanked adults live in developing economies, with women over-represented among this cohort. Digital finance services delivered via mobile phones, the internet or cards, function as a means of including these unbanked populations. The benefits of digital financial inclusion are prolific.

Digitizing Financial Inclusion

The strong link between financial inclusion and a wide array of global development goals is becoming increasingly clear. Significantly, seven of the 17 U.N. Sustainable Development Goals for 2030 explicitly mention financial inclusion as central to achieving these objectives.

Digital technologies offer financial services at lower costs, fostering opportunities for large-scale inclusion by enabling institutions to serve lower-income customers profitably. Such broadened financial access can sustainably transform emerging economies. A 2016 report by the McKinsey Global Institute estimated that digital finance alone could boost the annual GDP of all emerging economies by $3.7 trillion by 2025 due to productivity gains of businesses and governments.

Digital services include those such as M-PESA, a mobile phone-based transfer, payment and micro-financing service. Mobile money has lifted an estimated 196,000 Kenyan households out of extreme poverty from 2008 to 2016.

The Benefits of Digital Finance Sources

  • Increased Security: Digital footprints provide greater transparency and hold individuals and institutions accountable, reducing vulnerability to fraud and corruption.
  • Time and Cost Savings: Digital services are quicker and more efficient, lowering costs for both providers and consumers.
  • Financial Inclusion: The lower costs and convenience of mobile services make them accessible to more people, including those living in remote or rural areas.
  • Women’s Empowerment: Women with access to financial services like loans, savings accounts and mobile payments can achieve independence. It has been found that women with digital savings accounts also spend more on development endeavors like education.
  • Higher Tax Revenues: Digital finance has been proven to increase tax-paying compliance, and in turn, government revenues.

Given the wide-ranging benefits of digital finance sources, it is clear why many organizations are attempting to accelerate the transition from cash-based to digitized economies in the developing world. A growing number of groups such as the U.N.-based Better Than Cash Alliance are working to extend the reach of financial services by using digital technologies to go where physical banks cannot, bringing access to mobile money, savings accounts, credit and insurance to the under and unbanked. Digital finance is more than a trend of modern societies. It is a vital tool for achieving inclusive and sustainable development in emerging economies that are still far from being cashless.

– Margot Seidel
Photo: Flickr

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Giga Shanghai: Tesla’s Gigafactory in China

Gigafactory,Over the last few years, there has been a lot of turbulence between the U.S. and China, especially in the areas of business and trade. Through all of the challenges though, U.S. car company, Tesla, managed to erect one of its famed Gigafactories in China in 2018 — one of the world’s largest emerging markets. Other than reducing the price of Teslas globally, the Shangai Gigafactory will also continue to raise employment in China and allow the Chinese economy to better develop.

What is a Gigafactory?

Tesla has been revered for its innovation in the electric vehicle (EV) market. Every year, the company seems to attract higher demand from around the world. With demand showing no signs of slowing down, Tesla was forced to rethink how it handles production. The Gigafactory serves as a production powerhouse to resolve the demand problem.

With the addition of the Shanghai Gigafactory, or Giga Shanghai, Tesla now says that it can produce roughly half a million vehicles per year. Gigafactories centralize production and allow for more parts to be made in-house. This cuts time and costs which ultimately results in lower prices for the consumer.

Tesla also made it paramount to make the Gigafactories as environmentally friendly as possible. All three Gigafactories are zero net energy. This means that they only rely on energy from renewable sources. In the case of Gigafactories, this means lots of solar power and no harmful byproducts.

How Giga Shanghai Helps Impoverished Chinese Citizens

Perhaps the most obvious way that Giga Shanghai helps is by providing jobs in China. Since its completion in 2019, the Gigafactory has employed roughly 2,000 people. Many of the jobs are in the production line so they are attainable for everyday citizens with no formal secondary education.

In addition to jobs, Giga Shanghai serves as a solution to the city’s immense pollution problem, with the most impoverished citizens living in the hardest-hit areas. Shanghai usually has an air quality index (AQI) that hovers around 150. Good air quality levels mean an AQI of between zero and 50. In a country where up to 1.24 million people die from pollution-related illnesses every year, Giga Shanghai proves that factories can still operate on a massive scale without relying on fossil fuels and other non-renewable energy sources.

If the energy technology used in Giga Shanghai is applied to other factories in the city, thousands of lives can be saved every year, especially the lives of the most impoverished citizens who cannot afford to move out of the most polluted areas.

Cutting Costs and Bolstering Relations

Before Giga Shanghai, the price of the world’s most popular EV (Tesla Model 3) remained too high for many people in China and abroad. Now, with the ability to produce the Model 3 in China, production and transportation costs have been slashed across Asia and Europe. Compared with the U.S. models, the production cost of the Chinese Tesla Model 3 has dropped by up to 28%. Now more than ever, Chinese citizens can access clean and reliable personal transportation that does not pollute their cities.

Giga Shanghai has also opened the door for new trade opportunities with European nations. Now, countries such as Germany, France, Italy, Portugal and Sweden prefer to purchase Teslas from China since the cost is lower. Trading in higher volume with developed economies means that China is inching closer to becoming a fully developed economy.

Giga Shanghai and the Future

Tesla CEO, Elon Musk, has stated that he would like to see 10 to 20 Gigafactories built over the course of the next couple of decades. Giga Shangai is the “guinea pig” since it is the first Gigafactory outside of the United States. So far, things appear to be running smoothly.

Soon, Gigafactories could be popping up in other emerging markets like Argentina, Mexico and Morocco. Gigafactories may be a stepping stone to help emerging markets become better developed. Job creation is a significant benefit of a Gigafactory. They advance industry, create new opportunities to trade with other countries and offer a clean alternative to gas-powered vehicles. Ultimately, Gigafactories can serve as a catalyst for global poverty reduction.

– Jake Hill
Photo: Flickr

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VisionSpring: Eye Care and COVID-19

Eye Care and COVID-19
Globally, more than 1 billion need eyeglasses but do not have them. VisionSpring is an organization that recognizes that the lack of access to eye care worldwide highlights the link between poverty and vision impairment. To improve the situation, VisionSpring provides eyeglasses for individuals who need them the most. Currently, the organization fights the lack of access to eye care in the world in the midst of the COVID-19 pandemic.

Seeing the Connection Between Poverty and Eye Care

Poor eye health and poverty link in a feedback loop. Poverty can worsen eye health due to lack of resources, and worsened eye health can cause or intensify poverty. For example, estimates have determined that vision impairments like cataracts and trachoma are more prevalent in impoverished communities due to missing clean water access and overcrowded environments. Once individuals become significantly vision-impaired or blind, they are not able to access beneficial opportunities as easily.

Subsequently, people with compromised eye health or eye disabilities are negatively affected in multiple aspects of their normal lives. This impacts a wide range, including employment, health, education, material wealth, social prosperity and access to aid. In summary, poor eye health lowers a person’s quality of life, especially if that person is or already was in poverty. Now more than ever, this issue draws attention as the quality of life worsens for those experiencing poverty due to inadequate eye care and COVID-19.

VisionSpring’s Intentions and Influence

VisionSpring’s mission is to provide eyeglasses to those who need them. Eyeglasses are instrumental in furthering social, economic, educational and personal advancement. Proper eyeglasses can correct about half of the world’s vision impairment problems. Supplying vision-challenged individuals with eyeglasses can boost their productivity up to 32%, which in turn can allow them to have greater opportunities for income.

Giving students the eyeglasses they need can increase their learning gains by up to one full additional year of school. VisionSpring aims to make these empowering changes in peoples’ lives. It specifically focuses on providing eyeglasses for people in new or growing markets, typically living on less than $4 a day. The organization does this through a mix of revenue, generated by “high-volume low-margin sales,” and philanthropic contributions.

For every $4-5 donation, VisionSpring can give one pair of glasses to someone struggling to see, which can then translate into an average 20% growth in their income. VisionSpring has screened millions of people for vision correction, including garment workers, students, drivers and more.

Over the years, the organization provided 6.8 million pairs of corrective eyeglasses in 24 countries. It has seen an increase in productivity between 22-32% among those receiving eyeglasses and witnessed $1.4 billion in economic influence. Despite all this momentum, however, VisionSpring’s global service slowed in 2020 due to the pandemic. It is now navigating the process of tackling eye care and COVID-19.

VisionSpring Through a COVID-19 Lens

Eye care and COVID-19 alleviation fit together under VisionSpring’s scope of action. Although it has scaled back efforts to provide eye care services in the midst of COVID-19, VisionSpring has ramped up its efforts to serve in other ways.

“Because our eye screening work intersects with community health workers, hospitals, government health ministries, supply chain providers, and the manufacturing sector, we have built in capabilities that have been helpful in the COVID-19 response,” said VisionSpring in a statement.

Accordingly, it established multiple “COVID-19 response goals.” These include obtaining and sending two million units of PPE, including goggles, face shields, gowns, masks and more, to health workers VisionSpring has an association with. Additionally, VisionSpring intends to provide 250,000 cloth masks to people and health centers in low income communities to curb the spread of COVID-19. It has employed and commissioned people it works closely with in the garment industry to make these masks.

VisionSpring also works to deliver 300,000 food and hygiene care kits to people who need them due to lockdowns. In particular, it has targeted transportation drivers, migrant workers and others with the kits and is working to implement handwashing stations outside health facilities in communities it is present in.

VisionSpring’s Impact During the Pandemic

As of December 2020, VisionSpring delivered over 2.1 million units of PPE, exceeded its cloth mask distribution goal by a factor of two and sent out about 304,000 kits to communities. At the same time, due to limitations, the organization scaled back its eye screening services because it lacked the ability to conduct them while social distancing.

VisionSpring CEO Ella Gudwin says VisionSpring plans to return to its full services with a priority on reading glasses due to current specializations and COVID-19 safety precautions. Through VisionSpring’s efforts, past, present and planned, it shows a commitment to the wellbeing of people and communities it serves. By working to maintain priorities and expand impact, VisionSpring strengthens both vision and economic capabilities for individuals, even in challenging times.

– Claire Kirchner
Photo: Flickr

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The Benefits of the AfCFTA for the African Economy

the AfCFTATrading within the African Continental Free Trade Area (AfCFTA) finally took effect on January 1, 2021. The AfCFTA is the world’s largest trading area since the establishment of the World Trade Organization with 54 of the 55 countries of the African Union (AU). The AfCFTA was established by the African Continental Free Trade Agreement signed in March 2018 by 44 AU countries. Over time, other AU countries signed on as the official start of trading under the provisions of the agreement approached. The AfCTFA is projected to create opportunities and boost the African economy. By facilitating this intra-African trade area, the international community expects sustainable growth and increased economic development.

The Implementation and Benefits of the AfCFTA

  1. Creating a Single Market. The main objective is to create a single market for goods and services to increase trading among African nations. The AfCFTA is tasked to implement protocols to eliminate trade barriers and cooperate with member states on investment and competition policies, intellectual property rights, settlement of disputes and other trade-liberating strategies.
  1. Expected Economic Boost and Trade Diversity. UNECA estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The AfCFTA will cover a GDP of $2.5 trillion of the market. The trade initiative will also diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources. Historically, more than 75% of African exports outside of the continent consisted of extractive commodities whereas only 40% of intra-African trade were extractive.
  1. Collaborative Structure and Enforcement. All decisions of the AfCFTA institutions are reached by a simple majority vote. There are several key AfCFTA institutions. The AU Assembly provides oversight, guidance and interpretations of the Agreement. The Council of Ministers is designated by state parties and report to the Assembly. The Council makes the decisions that pertain to the Agreement. The Committee of Senior Trade Officials implements the decisions of the Council and monitors the development of the provisions of the AfCFTA. The Secretariat is established as an autonomous institution whose roles and responsibilities are determined by the Council.
  1. Eliminating Tariffs. State parties will progressively eliminate import duties and apply preferential tariffs to imports from other state parties. If state parties are a part of regional trade arrangements that have preferential tariffs already in place, state parties must maintain and improve on them.
  1. Settling Trade Disputes. Multilateral trading systems can bring about disputes when a state party implements a trade policy that another state party considers a breach of the Agreement. The AfCFTA has the Dispute Settlement Mechanism in place for such occasions which offers mediated consultations between disputing parties. The mechanism is only available to state parties, not private enterprises.
  1. Protecting Women Traders. According to UNECA and the African Trade Policy Centre, women are estimated to account for around 70% of informal cross-border traders. Informal trading can make women vulnerable to harassment and violence. With the reduced tariffs, it will be more affordable for women to trade through formal channels where women traders will not have to put themselves in dangerous situations.
  1. Growing Small and Medium-Sized Businesses. The elimination of import duties also opens up trading activities to small businesses in the regional markets. Small and medium-sized businesses make up 80% of the region’s businesses. Increased trading also facilitates small business products to be traded as inputs for larger enterprises in the region.
  1. Encouraging Industrialization. The AfCFTA fosters competitive manufacturing. With a successful implementation of this new trade initiative, there is potential for Africa’s manufacturing sector to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
  1. Contributing to Sustainable Growth. The United Nations 2030 Agenda for Sustainable Development includes goals that the AfCFTA contributes to. For example, Goal 8 of the Agenda is decent work and economic growth and Goal 9 is the promotion of industry. The AfCFTA initiative also contributes to Goal 17 of the Agenda as it reduces the continent’s reliance on external resources, encouraging independent financing and development.

AfCFTA: A Trade Milestone for Reducing Poverty in Africa

The establishment of the AfCFTA marks a key milestone for Africa’s continental trade system. The size of the trade area presents promising economic development and sustainable growth that reaches all market sectors and participants. Additionally, the timing of the initiative launch is expected to contribute to the alleviation of the pandemic’s economic damages.

– Malala Raharisoa Lin
Photo: Flickr

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Government-Approved Hemp Production in Pakistan

Hemp production in PakistanIn September 2020, the Pakistani Government approved industrial hemp production, legalizing hemp and allowing hemp farming in agricultural sectors. Hemp is a type of cannabis plant, used commonly for medicinal purposes due to its cannabidiol (CBD) concentration. Considering the many benefits of hemp production, this landmark decision brings exciting possibilities for many areas in Pakistan. Since the economy of Pakistan has been long in need of a boost, the new approved hemp production and legalization is said to bring economic benefits to the country.

The Economic Benefits of Hemp Production

Officials in Pakistan’s government encouraged hemp legalization and production in efforts to relieve fiscal deficits and Pakistan’s struggling economy. Considering the industrial hemp market is worth about $25 billion globally, Pakistan’s science and technology minister, Fawad Chaudhry, says Pakistan is aiming for a profit of $1 billion over the next three years by joining the global hemp market. Exports in hemp can target CBD oils and cannabis-based products and can be a sustainable cotton replacement during slowdowns within the cotton industry.

A Sustainable Replacement for Cotton

Hemp production in Pakistan is most exciting to the workforce, especially for farmers participating in hemp markets and those working within the cotton industry. Cultivating hemp will create more jobs for the small-scale farmers responsible, but more importantly, become a sustainable replacement for cotton in Pakistan’s markets. As the fourth biggest cotton producer in the world, Pakistan’s cotton production has been declining due to climate change, water scarcity, locust attacks and industrial imbalances such as declining prices and low-grade seeds. The hemp plant’s stalk has strong properties of cellulose-rich fiber which is an effective ingredient in the making of paper, rope, construction and reinforcement materials, due to its strong fiber components. Hemp, therefore, makes for a worthy sustainable replacement to cotton.

Hemp Research Possibilities

For researchers, hemp production in Pakistan is exciting for many reasons. With the new hemp legalization, hemp research is no longer taboo, according to Muhammed A. Qayyum, an advisor in the Pakistani government and the director of Medics Laboratories. With this new allowance, researchers can delve into more potential applications of hemp in medicine and more.

Medicinal Properties of Hemp

Advocates have listed numerous medicinal properties to hemp, more specifically, the chemical cannabidiol (CBD) within the plant. Cannabis is seen as medically beneficial as the cannabinoid compound is said to relieve pain and regulate appetite, mood, memory inflammation, insulin sensitivity and metabolism. Hemp is also a valuable food supplement, incorporated in gluten-free products to increase nutritional value from hemp’s high levels of fiber and proteins.

The Potential of the Hemp Industry in Pakistan

With this new federal approval, Pakistan can enter global markets as a new exporter of CBD with the ability to generate millions of revenue similar to China, the United States and India. Hemp production in Pakistan opens up a wide range of possibilities but also brings thousands of jobs across multiple fields such as farm work, production, marketing, transportation, research and medicine. As a flexible crop, the hemp market can address several demands, from textiles, clothing, home furnishing and industrial oils to cosmetics, food and medicine.  Holding an overall market value of more than $340 billion and 263 million cannabis consumers worldwide, Pakistan’s economy can shift dramatically with the newly approved hemp production.

– Linda Chong
Photo: Flickr

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Why Countries Should Be Investing in Brazil

investing in BrazilThere are numerous reasons to invest in foreign aid in general. That can include partaking in growing the global economy, promoting international human rights and opening donor countries to potential investment returns. What makes Brazil a particularly good market to invest in is its promising role in the global economy. There are several reasons why investing in Brazil is beneficial.

COVID-19 Response

As of January 2021, Brazil has the third-most COVID-19 cases worldwide. The Brazilian economy was not in its best shape at the start of the pandemic because it has not fully recovered from the 2014-2015 recession. This made the economy vulnerable to precarious economic shocks that resulted in increased poverty, unemployment and small business fragility.

The COVID-19 pandemic has left countries like Brazil with possible lasting economic damages. Many emerging and developing countries rely heavily on foreign aid for financial and humanitarian support. Offering foreign aid to Brazil will not only help pave the way for a domestic post-COVID recovery but also alleviate some of the negative impacts of the pandemic through humanitarian benefits.

Diversified Opportunities in Emerging Markets

The Brazilian economy is classified as an emerging market. Emerging markets are economies that are transitioning into a developed economy. Since the launch of the MSCI Emerging Market (EM) Index in 1988, which measures portfolio performances of emerging markets, investing in emerging countries proved to create new and diversified opportunities outside of common markets.

Market Expansion and Economic Growth

Since 2016, Brazil has shown an increase in GDP growth with approximately a 1.3% increase. In 2020, Brazil fell back into recession because of COVID-19. However, Brazil’s economy displayed growth and has played an important role in the growth of the Latin American economy as it makes up 35% of the Latin American GDP. It is approximated that the Brazilian market reaches 900 million consumers in just the Americas.

On how quickly the Brazilian economy rebounded, Bloomberg reports boosted domestic demand and exports with a 9.47% rise in economic activity index from July to September of 2020 in comparison to the previous months.

As Brazil recovers from COVID-19’s economic impact, it leaves opportunity for foreign investors to take advantage of Brazil’s growing market, especially with its low interests. Some of Brazil’s profitable sectors include real estate and agricultural goods like coffee, sugar cane, corn and soybean. Participating in these sectors expands Brazil’s domestic market and hence the world market size.

Geographical Location

Especially for the United States, Brazil’s proximity allows easier trade. For other advantages, Brazil’s geographical properties for the agriculture sector also make its commodities attractive. Approximately 28.7% of land is used for agricultural production which makes up more than 4% of the annual Brazilian GDP. Following China, the United States and Australia, Brazil has the fourth-most amount of agricultural land.

Foreign Investment Returns

Encouraging enterprises to invest in foreign aid can ultimately result in great returns. A common type of foreign aid for these corporations is Foreign Direct Investment (FDI). Through FDIs, corporations can potentially gain lasting interests, multinational consumers and flexible production costs. This type of foreign aid also brings developing countries like Brazil innovative technology, investment strategies, jobs and infrastructure from investing corporations of developed nations.

Foreign investment is critical to developing and emerging markets. Investing in Brazil promotes development and sustainability and also benefits foreign investors greatly. Furthermore, foreign investment assists economic recovery following unforeseen economic shocks like that of the COVID-19 pandemic.

– Malala Raharisoa Lin
Photo: Flickr

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Increasing Mobile Data Traffic in sub-Saharan Africa

Mobile Data TrafficMany poverty-stricken individuals do not have access to the internet, creating a digital divide. The COVID-19 pandemic has revolutionized mobile data traffic around the globe, particularly in sub-Saharan Africa. Mobile broadband supports access to education, work, healthcare, goods and services. It plays an imperative role in reducing poverty. With nearly 800 million people in the region still without access to the mobile internet, it has never been more urgent to close the digital divide.

The Need for Mobile Broadband

According to Fadi Pharaon, president of Ericsson Middle East and Africa, the increasing demand for mobile broadband provides an unprecedented chance to improve economic conditions for Africa. Currently, Africa is one of the quickest growing technology markets.

In addition to younger populations requiring technology to develop practical computer skills, during the COVID-19 pandemic, access to the internet is also crucial for remote learning and remote work to continue development and economic progression.

In response to the pandemic, sub-Saharan African countries that were able to implement telework adaptations had considerably greater access to the internet, as much as 28 % of the population, as opposed to countries that were not implementing telework, at 17 %.

Due to the increase of digitalization during the pandemic, these developments are expected to positively contribute to the region’s economic recovery post-pandemic. Research suggests that expanding internet access to cover an additional 10% of the region’s population has the ability to increase gross domestic product (GDP) growth by one to four percentage points.

The Mobile Broadband Demand

Fixed Wireless Access (FWA) delivered over 4G or 5G is a more affordable alternative to providing broadband in areas with limited access. By 2025, FWA connections are expected to reach 160 million, accounting for 25% of global mobile data traffic.

The estimated total growth of mobile data traffic is from 0.87EB per month in 2020 to 5.6EB by 2026, an increase of 6.5 times the current figures.

To keep up with the demand, service providers are predicted to continue upgrading their networks to meet their customers’ evolving needs.

Additionally, networks expect to see an increase in customers purchasing mobile data subscriptions. Long-term evolution (LTE) was predicted to amount to 15% of subscriptions at the conclusion of 2020.

Novissi Digital Cash Transfers

The Novissi cash transfer program in Togo is an example of why mobile broadband access is important in developing countries. To support struggling people in Togo during COVID-19, instant mobile cash payments were made to their mobile phones to address urgent needs. The program provided more than half a million people with financial assistance during a crisis.

Closing the Digital Divide Reduces Poverty

Experts suggest that funding infrastructure, increasing electricity access and developing approaches to support digital businesses will aid in economic recovery and continue to close the digital divide. While sub-Saharan Africa has seen an acceleration of mobile data traffic during COVID-19, more action still needs to be taken to support its citizens post-pandemic. Providing affordable access to mobile phones, mobile broadband subscriptions and internet access will help support the recovering economy and alleviate poverty in the region.

– Diana Dopheide
Photo:Flickr

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How the RCEP Will Benefit Asia’s Impoverished

RCEP will benefit Asia's impoverishedOn November 15, 2020, 15 Asia-Pacific countries signed The Regional Comprehensive Economic Partnership (RCEP). The RCEP is a free trade agreement (FTA) establishing new relationships in the global economy. The 15 countries that signed the trade deal account for 30% of all global gross domestic product and impact more than two billion people. The new economic opportunities that will emerge from the RCEP will benefit Asia’s impoverished.

The Introduction of the RCEP

In 2011, the Association of Southeast Asian Nations (ASEAN) Summit introduced the RCEP. Simultaneously, another free trade agreement, the Trans-Pacific Partnership (TPP), was undergoing development. The TPP’s existence failed to come to fruition when former U.S. president, Donald Trump, removed the U.S. from negotiations in 2017. Consequently, this led many Asia-Pacific nations to negotiate with each other to make the RCEP become a reality. The ASEAN Secretariat has declared the RCEP as an accelerator for employment and market opportunities. The RCEP has been seen as a response to the absence of U.S. economic involvement and a form of stimulating the economy due to the COVID-19 pandemic.

RCEP Regulations

The RCEP has a set of new regulations that made it enticing for many nations to join. As much as 90% of tariffs will be eliminated between participating countries. Moreover, the RCEP will institute common rules for e-commerce and intellectual property. The trade deal will also include high-income, middle-income and low-income nations.

RCEP Benefits for the Philippines

Allan Gepty, a lead negotiator from the Philippines, assures that the RCEP will benefit the low-income country in many ways. The RCEP will mean more investments in sectors such as e-commerce, manufacturing, research and development, financial services and information technology. Moreover, the trade secretary, Ramon Lopez, also believes the Philippines will benefit because the RCEP will bring job opportunities. In a country where the poverty rate stood at 23.3% in 2015, the RCEP will benefit Asia’s impoverished.

Supporting Myanmar’s Economic Growth

According to the World Bank, a way to promote the reduction of poverty in Myanmar is supporting the private sector to create job opportunities. Furthermore, vice president of the Asian Investment Bank (AIIB), Joachim von Amsberg, also believes the RCEP will benefit Asia’s impoverished. He sees the RCEP as a way to grant small and medium-sized enterprises (SMEs) more access to markets, thus creating more job growth and promoting infrastructure development.

Industries Impacted by the RCEP

Many other nations will benefit from the RCEP as well. Textile and apparel (T&A) is a key sector under the RCEP. While countries such as Australia and Japan have high labor and production costs, many others do not. The RCEP will increase investment to lower-cost and less skilled countries such as Myanmar, Cambodia and Laos. The trade deal will also impact the country of Vietnam. Vietnam will benefit from its exports which include footwear, automobiles and telecommunications. Furthermore, Vietnam is could also benefit from the exporting of agriculture and fisheries products. Malaysia anticipates greater opportunities in travel, tourism and the aviation industry. Malaysia is expected to increase its GDP between 0.8% and 1.7% through the RCEP.

The Potential for Poverty Reduction

The RCEP is the biggest trade deal in Asia-Pacific’s history. The trade deal is predicted to add US$186 billion to the global economy and 0.2% to the gross domestic product of each participating nation. Also, free trade agreements allow emerging economies to become more sustainable. According to the World Bank, poverty is reduced by boosting international trade. Global trade expands the number of quality jobs and encourages economic growth. The RCEP came at a time when there are future uncertainties due to the COVID-19 pandemic and its economic impacts. Many anticipate that the RCEP will benefit Asia’s impoverished.

– Andy Calderon
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