Zero Poverty in Wake Island
Wake Island is a small landmass resting between Hawaii and the Northern Mariana Islands. The Spanish discovered the island in 1568 and received its name from William Wake, a British Captain who came across the island in 1796. It covers a total of 6.5 square Km, which is approximately 11 times the size of the National Mall in Washington, DC. This island boasts an impressive statistic: there is zero poverty on Wake Island.

Wake Island’s Background

In 1899 the U.S. created a cable station on the island after seizing it from Spain. In 1941, the country then constructed an air and naval base. However, the Japanese stole it shortly after, forcing the U.S. to bomb the island until Japan surrendered. By 1945, the U.S. recaptured Wake Island. During World War II, the island served as a military landing strip for the Pacific region. Wake Island is a National Historic Landmark due to its involvement in WWII. It has been under preservation by the National Preservation Act since 1966 and is protected by the United States Air Force. The U.S. government maintains the Island for emergency landings.

Reasons for the Absence of Poverty

However, Wake Island has no indigenous people: the only residents on the island come from the United States government and are contractors or military personnel. The sparse population watches over the facilities and airfields. There is currently one military doctor on the island for emergencies. There are no commercial flights to or from Wake Island, making it accessible solely to military personnel. The only telecommunication systems on the island are the Defense Switched Network circuits off the Overseas Telephone System (OTS), located in the Hawaii area code.

Approximately 150 people live on Wake Island as of 2019. Wake Island’s small perimeter does not have the structure or capabilities to hold more people. Thus, the small population creates the condition of zero poverty in Wake Island.

The U.S. regulates, and the present military personnel manages the island. The U.S imports all of the island’s food and manufactured goods for the limited population. By having the food and products imported, Wake Island has a lower possibility of falling into poverty. The island’s currency is in U.S. dollars due to its status as a United States territory. With the U.S. defensive base and government support, the island stays out of poverty.

Environmental Impacts on the Economy

In 2006 a super typhoon almost hit Wake Island, carrying the potential to devastate the island. The government evacuated all residents, but due to the storm’s size, there was a possibility of severe damage. The storm could have destroyed the island’s economy; however, despite the storm’s 155 miles per hour winds, no significant impact affected the military base or buildings. With wreckage of only trees, power lines and rods, the island was fortunate to escape destruction narrowly.

Since 2006, there have not been any storms or other major disasters to threaten the island’s economic status. The island also did not contribute to any wars: following WWII, the island sat peacefully with zero damage. This overall safety has significantly contributed to the absence of poverty in Wake Island.

– Mackenzie Reese
Photo: Flickr

Poverty in Mongolia
Mongolia is a landlocked nation in East Asia, caught between Russia to the north and China to the South. Since transitioning into a capitalist democracy in the 1990s, it has become one of the region’s fastest-growing economies. However, Mongolia is held back by various issues such as poverty and uneven economic growth. Here are five facts about poverty in Mongolia:

Five Facts About Poverty in Mongolia

  1. Poverty Rates: According to the World Bank, 28.4% of Mongolians lived below the poverty line as of 2018. The Mongolian Poverty Line is defined as living off 166,580 Tugrug ($66.4 USD) per month. A further 15%  are considered vulnerable to falling into poverty due to unforeseen events. Taken together, these statistics show that two out of every five Mongolians live in or close to poverty.
  2. High Inflation: Mongolia has been experiencing rapid inflation over the past few years, compounding the issues surrounding poverty in Mongolia. Inflation rates increased from 0.73% in 2016 to 7.26% in 2019. This financially strains vulnerable communities who already struggle to provide for necessities. High inflation notably impacts the urban poor more than the rural poor; while the urban poor need to buy all their food, many rural herders and farmers can produce much of their own food and gain greater profits from increased prices.
  3. Uneven Economic Growth: Mongolia’s GDP has grown in the past few years, but that doesn’t mean that everyone has benefited. Approximately one-third of Mongolian GDP growth comes from mining, which only employs about 6% of the total population and relies heavily on foreign investors. Rural areas are experiencing continuing economic growth due to increased livestock prices, as well as higher rates of consumption and decreasing poverty rates, as opposed their urban counterparts. This is most evident in the rates of herders who fall below the poverty line. According to the World Bank, “Herders were among the poorest in 2010, but now only one in three herders are estimated to be poor.”
  4. Rural v. Urban: This uneven economic growth can best be seen in the divide between the rural and urban poor. While poverty percentages have decreased in rural areas, the rate of urban poverty has remained unchanged. As previously stated, those in rural areas are experiencing economic growth while the urban poor are trapped in stagnation. Rural poverty decreased from 34.9% in 2016 to 30.8% in 2018, while Urban poverty hovers just above 27%. While the rural poverty percentages are still higher, it’s important to keep in mind that 63.5% of the poor live in cities.
  5. Poor Living Conditions: Due to the country’s nomadic past, gers (traditional Mongolian tents), are still widely used throughout the country. These structures are cheap compared to apartments and other housing arrangements, with both the rural and urban poor living in them. A reported 57% of all poor Mongolians live in gers. However, most gers lack many modern necessities such as insulation and running water. This exacerbates the fact that nine in 10 poor Mongolians lack access to various basic infrastructure services like sanitation and heating. The central government is continuing to address these issues and is attempting to move those living in gers into more modern housing.

The Good News

Mongolia has been experiencing nearly 30 years of economic growth and social development. Many experts describe Mongolia as “The Wolf Economy” due to its massive growth and supply of natural resources. The nation has tripled its GDP since 1991 with help from international groups and smart government investments. Healthcare industries have seen a massive improvement, with Mongolia seeing declines in maternal and child mortality rates. The government has also instituted various programs to help people out of poverty in Mongolia and raise the general standard of living. The United States has provided aid and development funds to help strengthen the Mongolian economy and promote democratic political reforms. As a result, the US is Mongolia’s fourth-largest import partner, valuing more than $200 million dollars in items such as machinery and consumer goods. Various American businesses also operate within Mongolia such as Visa, Caterpillar Inc. and GE.

– Malcolm Schulz
Photo: Flickr

E-commerce in AfricaAfrica’s recent growth in online technology has allowed the continent to join in on a new, digital economy. There are an estimated 264 start-ups in Africa as of January 2020. Currently, these e-commerce startups in Africa are active in at least 23 countries and are projected to expand into the rest of Africa.

The Importance of E-Commerce

The growth of e-commerce in Africa opens the door to new jobs. By 2025, Africa could see as many as three million jobs emerge from digital markets. These jobs would focus directly on online marketplaces, online services and other byproducts of economic activity.

Moreover, this new market will allow rural communities access goods that were previously inaccessible, helping establish the continent’s growing consumer class. According to the UNCTAD, Africa’s number of online shoppers has increased by 18 percent every year since 2014, six percent higher than the world average.

While e-commerce in Africa generates greater consumer gains, the young entrepreneur also benefits from this emerging market. Particularly, it opens the door to new revenue-generating jobs.

Challenges Facing E-Commerce in Africa

Although the future of e-commerce in Africa is bright, there are challenges blocking this booming market. Most of these are logistical. For instance, many countries in Africa lack proper national address systems. This complicates the delivery of purchased goods. Additionally, road conditions are less than ideal for deliveries. Deliveries are often delayed or canceled due to traffic jams, resulting in a loss of revenue.

Another significant challenge comes in the form of weak internet connections and an overall lack of trust in internet payment. Africa’s internet penetration rate falls at a median of 41 percent, meaning that less than half of the continent has internet access. For those who do, the absence of consumer protection makes it difficult for consumers to pay in any way besides ‘cash on delivery.’ Additionally, only 10 to 15 percent of those living in Africa have a bank account. As a result, 90 percent of online purchases are paid in cash. This, coupled with a lack of trust due to a history of scammers, complicates the success of e-commerce in Africa.

Solutions to E-Commerce Issues in Africa

Some large e-commerce players are taking steps to improve the road networks and overall infrastructure in Africa. Companies, like Jumia and Zipline, are implementing techniques in drone delivery to combat these logistical challenges. Further, Safe.Shop South Africa, a new trustmark, has worked to increase trust between consumers and online stores. Safe.Shop allows e-merchants to be verified by lawyers against South African laws and the standards of the trustmark. Once verified, the e-merchants carry the trustmark as a guarantee that their business is legitimate.

The Future of Africa’s E-Commerce

Although Africa still faces logistical challenges, the future looks bright for the continent’s role in e-commerce. The World Economic Forum supports the UN’s statistics regarding the increase of jobs by 2025. As of September 2019, the WEF created an agenda for the future of e-commerce in Africa.

This agenda highlights that seven growing internet populations are found in Africa, giving e-commerce the support it needs to grow throughout the continent. With this in mind, the WEF calls for entrepreneurs, negotiators and regulators to work together to build e-commerce in Africa. By joining forces, these actors are aiming to create jobs across the continent and to increase Africa’s presence in the global economy.

Overall, e-commerce is positively impacting Africa’s economy and infrastructure. The work being done to help standardize addresses, increase internet access and create better road networks is helping increase the continent’s standard of living. In turn, these changes are creating new opportunities for those living in Africa.

– Ariana Davarpanah

Photo: Pixabay

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

Fall in Whiskey Sales

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

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

Rise in Rum Sales

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

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

Project Alcatraz

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

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

Cocuy

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

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

– Scott Boyce
Photo: Pixabay

 Homelessness in South Korea
It is easy to dismiss homelessness in South Korea, as the nation ranks as one of the top 20 economies in the world. High-tech society can overshadow the unfortunate reality that many of the homeless face in South Korea. In 2017, the South Korean government estimated that there were more than 11,000 homeless people in South Korea. This is not a surprise to many South Korean. When walking in Seoul for an extended amount of time, it is common to come across the homeless.

Factors that Contribute to Homelessness

  1. Housing Index: While homelessness in Seoul has dropped significantly, from 4,505 people in 2014 to 3,478 in 2018, there is still a sizable homeless population in Seoul. A variety of factors contribute to homelessness in South Korea. The rapid rise in housing prices all around the country is making owning a home more difficult for many Koreans. The housing index, a trend of average housing prices across the country, in South Korea is on a constant rise. The housing index rose from 33.60 points in 1987 to 100.20 points in 2019. This lack of affordable housing is one of the factors that contributes to homelessness in South Korea.
  2. Financial Bankruptcy: Financial bankruptcy is another leading cause of homelessness in South Korea. According to a study by the Seoul Metropolitan Government, 24 percent of the homeless lost their homes due to snowballing debts. The study stated that the average age of homeless people in South Korea is in their mid-50s.
  3. Alcoholism: For the homeless who suffer from alcoholism, receiving support can be especially difficult. Mr. Lee, a homeless in Seoul who was interviewed by South China Morning Post, testified to this issue. Since many homeless shelters have a zero-tolerance policy toward alcohol, many of the homeless elect to live on the streets. When questioned about why he left the homeless shelter, Mr. Lee said, “I used to receive support from organizations, but I stopped going to these centers because there was no freedom there.” This further reflects the prevalence of alcoholism among the homeless in South Korea.

Government Efforts to Reduce Homelessness

The South Korean government is making positive steps toward reducing homelessness in South Korea. In Seoul, the homelessness problem is still easy to spot; however, the homeless population is in a steady decline. A 2017 assessment by the Seoul government found that there had been a 30 percent decrease in the homeless population in Seoul since 2010.

South Korea’s commitment to supporting the homeless is also very public. With the election of President Moon Jae In, the Ministry of Welfare announced an expansion to assisting the homeless. The South Korean government pledged to increase the supply of housing for the homeless, creating jobs and providing job training programs for the homeless.

Currently, the city of Seoul is running an outreach program. Simin Chatdongi or “People Visiting Their Neighbors” is a program that encourages citizens to alert the authorities about their neighbors who might be on the verge of becoming homeless. Citizens who want to participate can sign up for the outreach program online or visiting a program booth at a residents’ assembly or neighborhood festival. As of Dec. 2019, the program gathered 8,563 reports.

 

Homelessness in South Korea is caused by many factors, including the housing index, financial bankruptcy and alcoholism. However, the South Korean government’s commitment to helping its less-fortunate populace leaves a silver lining to this otherwise bleak reality. Many in South Korea look forward to the positive changes that are to come for the homeless.

YongJin Yi
Photo: Flickr

Economy in Croatia
While beautiful, Croatia is not the most affluent in terms of economic standards. As of 2015, 19.5 percent of the Croatian population was below the poverty line. The financial crash of 2008 stunted the development of gross domestic product the country experienced since 1998. The convergence gap widened by 3 percent, launching the country into a recession. Luckily, RIMAC and its car, the Concept Two, is impacting the economy in Croatia in a positive way by offering Croatian’s jobs and allowing Croatia to compete in the international market.

Croatian Economic Slump

Various key issues lead to a poor economy in Croatia including labor shortages, minimal pay, lack of adequate education and subsequent lack of skill. Such domestic problems are integral to why many Croats are unable to find opportunities that match up to wealthier Western European countries such as the United Kingdom, Germany, Sweden and/or Switzerland. According to the Croatian Employers Association (HUP), firms in Croatia are unable to fill some 30,000 jobs. Most of these openings exist in the tourism industry, making up at least 20 percent of Croatia’s gross domestic product.

Potential for a Great Economy

Despite the current state of the economy in Croatia, an emerging market may turn it around. Croatia, along with many other European Union member states, has benefited from the integration and trade of modern goods and services, specifically in technology.

Concept Two’s Impact

In 2018, a zoomer of a car sped onto the world’s tech radar at the Geneva Motor Show called the Concept Two. This car may support the development of a thriving economy in Croatia. Some have deemed the vehicle as “alive with technology,” elevating the bar as the fastest electric car around the globe.

The CEO of RIMAC, Mate Rimac, developed the lightning-fast vehicle. Mate Rimac began the development roughly 10 years ago when he turned his gas-powered vehicle into an electric car. The CEO has also discussed his desire to create opportunities in Croatia, “a country where people usually emigrate from,” to keep citizens from leaving. Further, Mate Rimac has already hired individuals of 22 different nationalities to work at his company.

The company manufactures all components of the Concept Two in-house. With the pricey, technologically loaded unit selling for more than $2 million, the average Croat would not be able to afford such a speedster. although, this hefty price tag could bring in a large influx of stimulation for the economy in Croatia.

RIMAC’s Impact

According to recent reports, the manufacture and production of the Concept Two are now employing many. The company has listed 429 full-time employees as of October 2018. Prior to this report in 2017, a venture capital funding organization noted the availability of 100 new jobs at RIMAC. These efforts have resulted in a growth of nearly double.

Further, the European Investment Bank (EIB) notes RIMAC as a good investment. In 2018, the EIB provided a direct loan to expand the research and development department, in part due to RIMAC introducing jobs and growth of the economy in Croatia.

Investment in Innovation

Often, the best way a country can improve the national economy is to grow business that can compete on an international level. Countries in the Baltic have been able to improve the internal business climate by increasing competition at the global playing field. One can promote allowing businesses to start and grow through investment in innovation, much like the Concept Two with RIMAC. One of the most productive methods to increase economic growth is through research and development in modern technology.

Companies like RIMAC should improve the business climate and economy in Croatia. With enough investment and support, companies with bravery and innovative force have the potential to be a major player in promoting Croatia into the international economy.

– Robert Forsyth
Photo: Wikimedia

Randomized Control Testing
“It can often seem like the problems of global poverty are intractable, but over the course of my lifetime and career, the fraction of the world’s people living in poverty has dropped dramatically.” – Dr. Michael Kremer

In October 2019, Michael Kremer of Harvard and Esther Duflo and Abhijit Banerjee of MIT won the Nobel Prize in Economics for their extensive, randomized control testing-based research in tackling global poverty. At 46 years old, Duflo is the youngest economics laureate ever and only the second woman to receive the prize over its 50-year history.

Incorporating Scientific Studies

The trio set out to establish a more scientific approach to studying the effects of investment projects in the developing world. One of the ways they discovered that they could accomplish this is through randomized control testing. Commonly used in the medical field and made legitimate in the social sciences by the trio, this type of testing involves randomly selecting communities as beneficiaries of experimental projects. Randomly selecting the beneficiaries removes selection bias, providing more accurate and legitimate results.

Randomized Control Testing in India and Kenya

Duflo and Banerjee used randomized control testing experiments in schools in India in an effort to improve the quality of education. The authors discovered that simply getting students to school was not sufficient in improving test scores. Previous research also noted that additional resources, even additional teachers, had minimal impact on students’ performance.

The laureates discovered instead that providing support for an interventionist to work with students behind on their educational skills and making computer-assisted learning available so that all students could have additional math practice improved their scores. In the first year, the average test scores increased by 0.14 standard deviations and in the second year, they increased by 0.28 standard deviations. In the second year, the children initially in the bottom third improved by over 0.4 standard deviations. Those sent for remedial education with the interventionist saw 0.6 standard deviations increase and the computer-assisted learning improved math scores by 0.35 standard deviations in the first year and 0.47 in the second year for all students equally. These results provide clear and definite numbers on the success of the program and show that those who experienced the most benefits were the students in the greatest need of assistance.

Kremer completed a similar study in Kenya. Again, the research found that additional resources did little to improve the learning abilities of the weaker students and that much of the school policies and practices were helpful to the advancement of the already high achieving students. Another of Kremer’s studies in Kenya further showed the impact small interventions can have on student retention. His research found that by bringing deworming medication directly into the classroom, school absenteeism rates decreased by 25 percent, leading to higher secondary school attendance, higher wages and a higher standard of living.

Impact vs. Performance Evaluations

The key to Kremer, Duflo and Banerjee’s success was not the result of pumping out positive statistics. Their success, and reason for winning the Nobel Prize, came from the rigorous scientific approach they took with their studies by using randomized control testing that led to not only positive results but also to meaningful impact where they were working and beyond. For instance, after the success in Kenya with the deworming, the U.S. Agency for International Development (USAID) agreed to finance Kenyan scientists to travel to India to help expand the program. Soon, 150 million children were receiving treatments of deworming medication each year.

This example shows the lasting impact of the work of the laureates. When the fields of economics and politics use more rigorous and randomized studies, it becomes clearer what programs work and which do not, creating greater efficiency and enabling successful projects to expand. The work of the three professors has already led to the leaders of USAID to question the utility of performance evaluations over impact evaluations. In other words, the agency has started to see a shift from success defined as the generated output of the programs to success as the net gain or impact as a direct result of the programs.

Altogether, the work of Kremer, Duflo and Banerjee has raised the bar for economic and social research in the future. Their work has set new expectations that will force researchers to create more detailed and accurate studies that will continue to guide policy.

– Scott Boyce
Photo: Flickr

World Problems To Write About
Across the world, many disasters have left poor legacies for many to deal with. Currently, organizations such as UNICEF and the United Nations Foundation are making efforts to eliminate global problems like climate change and global poverty. With this being said, many individuals are not aware of the full extent of these issues. It is time for journalists and writers to focus on today’s most prevalent issues to educate the public to take action. Here are five world problems to write about.

5 World Problems to Write About

  1. Climate Crisis: Right now, many news publications have been reporting on one of today’s most known issues: climate change. Affecting millions of individuals around the world,  the current climate crisis is a problem that many activists and scientists are trying to solve. Some people like Greta Thunberg have made it their mission to educate the public on what is going on and how to involve themselves. First, it is important to write about this issue because it has drastic consequences on human lives. For example, studies show that climate change will displace about 200 million people by 2050, leaving them with no home. Second, climate change also has repercussions on the planet itself. Sea levels have risen approximately eight inches in the past century, and the Earth’s surface temperature has risen almost 1.62 degrees Fahrenheit as well.
  2. Food Security: Quite a lot of today’s agriculture relies heavily on quick and easy access to water; however, access to natural resources such as water has grown limited due to its exploitation for other purposes. The lack of food security has contributed to the sharp increases in world hunger as people are not meeting their dietary needs. According to the United Nations, approximately 925 million people around the world go hungry either because they cannot afford food or because it is just too scarce. People need education about food security from the news, as many personal choices, such as wasting food, contribute to the problem.
  3. Lack of Education: Another important issue to write about is the lack of education that is so persistent in many low-income areas. Currently, more than 759 million adults are illiterate and do not properly understand the consequences of lacking education. Not only does it limit the number of job opportunities available in the future, but it also has drastic effects on future generations. Many organizations such as the Association for Childhood Education International have identified the source of the issue and are determined to alienate it in the coming years. By empowering children and adults to pursue an education, it hopes to shed light on its importance and help individuals grow.
  4. Gender Inequality: As the world progresses, it is important for society to acknowledge the age-old issue of gender inequality. Consequences such as wage discrepancies and stereotypical gender roles have limited many women across the world from achieving their full potential. According to the World Economic Forum, it will take almost 108 years to fully solve this issue; however, it is important that people write about gender inequality more often and educate the public to speed up that time. By understanding the full scope of the problem, men and women everywhere will have the empowerment to take action and fight for equality.
  5. Global Poverty: Finally, one of the largest world problems around the world is global poverty, affecting almost half of the world’s population. Global poverty, in general, has economic and social consequences. Not only can it be very dangerous for one’s health, but it also has dire effects on the environment and physical landscape. To add, poverty can negatively affect economic growth by limiting the amount of money available to invest and increasing crime rates. The Borgen Project has been a key player in writing on this issue, raising money and spreading awareness globally. It has also been very active in legislature, advocating for certain bills to alleviate global poverty. Writing on this issue can increase its urgency and push for more individuals to involve themselves.

It is important for writers and journalists across the world to report on these world problems that are most prevalent in today’s society. The world problems to write about above are some of the most urgent problems to address, affecting many politically, economically and socially. By reporting on these topics more frequently, people have the education and empowerment to take action. After all, action can only happen after awareness.

– Srihita Adabala
Photo: Flickr

Human Capital Investment in Somalia

Somalia is one of the 10 poorest countries in the world. UNICEF estimates that 43 percent of the Somali population live on less than a dollar a day, while around half of the labor force is unemployed. Social unrest caused by a long civil warcoupled with weak institutions have contributed to devastatingly high levels of poverty in the region. One especially prominent effect of this has been the incredibly weak education system in Somalia. Only half of the Somali population is literate and in 2016, only 32 percent of Somali children were enrolled in school. This has undermined much of the government’s attempts to build successful anti-poverty initiatives, as economic development requires substantial improvements in the human capital development of Somalia.

Partnership with the World Bank

Somalia had previously been unable to attain a partnership with the World Bank, due to high levels of debt carrying over from previous World Bank loans. However, the ambitious economic reforms of the new Somali government which was established in 2012, offer hope for improvement, culminating in the new Country Partnership Framework established by the World Bank in 2018. The World Bank has dedicated its resources to aiding the Somali government in developing stronger institutions and economic growth, in line with the government’s National Development plan. As a result of the new partnership, the World Bank now accounts for 15 percent of total financing (around $28.5 million) for Technical and Vocational Education and Training programs in Somalia.

Human Capital Investments

These investments play a significant role in human capital development, as they offer an opportunity for Somalia to diversify its economy and offer the potential for granting individuals access to sustainable long-term income. This is especially true of the role that education plays, as creating a more educated population can be vital to ensuring continued economic growth, reducing the overall reliance on foreign aid. Improvements in human capital have the potential for massive returns. The World Bank estimates that human capital growth can produce a 10 to 30 percent increase in per-capita GDP, providing economic resilience, as well as developing the tools necessary to help lift a country out of poverty. 

Such programs can play a vital role in improving employer confidence and organizing effective human capital advances. While many other reforms may contribute to economic growth, it is important to note that since the World Bank began the partnership in 2018, the country’s GDP has grown by 0.7 percent.

Overall, by securing this partnership with the World Bank, Somalia is working toward major educational reforms to boost human capital development for this and future generations.

– Alexander Sherman
Photo: Flickr