Information and stories about economy.

Morocco's EconomyPreviously, a myriad of tourists had visited Morocco to explore its diverse culture, food, landscapes, history and people. However, due to the COVID-19 pandemic, the nation has faced a devastating economic crisis. Without its regular influx of tourists or traveling diaspora, Morocco is in the depths of a recession for the first time since 1995. The government is working to ensure that Morocco’s economy can recover from the pandemic.

5 Ways Morocco’s Economy is Recovering

  1. The Mohammed VI Investment Fund: In November 2020, King Mohammed VI established a $1.6 billion economic plan to revive Morocco’s economy due to the economic crisis that the COVID-19 pandemic brought on. Shortly afterward, the International Finance Corporation, as part of the World Bank Group, officially announced its support for the Moroccan Ministry of Economy and Finance’s efforts to boost the country’s economy.
  2. Moroccan Transportation Companies Decrease Prices: In June 2021, King Mohammed VI announced that all transportation companies must make tickets more affordable for Moroccans living abroad. The announcement targeted airlines such as Royal Air Maroc, which dropped flight ticket prices by more than 50% globally. Within a few days of the announcement, flights were being booked much faster than before. During the first week of discounted airline ticket prices, 195,547 people traveled to Morocco.
  3. Other Discounts for Tourists: Airline discounts are not the only thing Morocco’s economy is relying on to attract travelers. All forms of transportation in Morocco, from car rentals to train and bus tickets, have decreased in price. Additionally, 30% of hotel prices have decreased.
  4. More Visitors: International travel restrictions drastically affected tourism, causing a 78% deficit in the sector’s revenue in the first quarter of 2021. In response, the Moroccan government established a new economic plan that specifically targeted revenue from tourism. Now, tourism is surging more than it ever has since the onset of the COVID-19 pandemic. In 2019, 12 million tourists visited Morocco, half of whom were Moroccans living abroad. From June to September 2021, Morocco will see 72% of the visitors it saw in the same period in 2019, or around 3.5 million travelers.
  5. Rapid Tourism Sector Rebound: Morocco’s tourism sector suffered a loss of $7.2 billion in 2020. The COVID-19 pandemic hit small businesses and tourism hotspots hard, especially during national lockdowns. However, these businesses are benefiting from the country’s new economic plan. Travel reopenings are also catalyzing Morocco’s economic recovery.

Laudable Economic Growth

Despite the effects of COVID-19 on Morocco’s economy, the World Bank ranked it 53rd out of 190 countries for ease of doing business in 2020, reflecting its laudable economic achievements within merely a decade. With King Mohammed VI’s plan in place, the country’s setbacks hardly seem significant. The restoration of Morocco’s economy is underway and the country’s effervescent tourism sector is back on the rise.

– Nora Zaim-Sassi
Photo: Flickr

Community Development Programs in Togo
Togo, a country located in West Africa, has a population of more than 8.2 million. Since 1998, the country has created many community development programs. Its first Agence d’Appui aux Initiatives de Base (AGAIB), which is a Grassroots Initiative Support Agency, was in the Maritime region. AGAIBs aims to help communities develop more income-generating activities and community infrastructures. In 2001, four more AGAIBS began. Since then, the country has continued establishing different community development programs that target impoverished populations. Here is some information about community development programs in Togo.

Poverty in Togo

The United Nations considers Togo one of the Least Developed Countries (LCD) and a Low Income Food Deficit Country (LIFDC). It is one of the poorest countries in sub-Saharan Africa. As of 2018, more than 50% of the population was living below the poverty line. The government’s National Development Plan for 2018-2022 has aimed to promote social and infrastructure services to reduce poverty and improve the overall quality of life. Although the country has high poverty rates, its economy has continued to grow.

Togo’s Economic Development

In the past five years, Togo’s gross domestic product (GDP) has averaged 5.5% growth. The country’s government has created public investment programs to help alleviate demand. Agricultural production and trade have also contributed to this GDP growth. Agriculture makes up 40% of the GDP and more than 60% of employment in Togo. Due to the COVID-19 pandemic, economic momentum could slow as a result of trade tensions and the threat of security. However, its economy still performed well in 2019 with an estimated GDP growth rate of 5.3%. Economists predict that Togo’s GDP growth rate declined to 1% in 2020. Despite this stunt in economic growth, the government and other global partnerships have helped Togo fund different community development programs to reduce poverty rates.

Community Development Programs Fight Poverty Through Microprojects

A microproject is a small-scale project that looks to improve a specific aspect of life for a targeted population. Togo’s Projet de Développement Communautaire (PDC), which began in 2008, is working to improve access to social services for impoverished populations through microprojects in various communities. Its goal was to fund 350 micro-projects in different sectors, like education and health. This project also sought to develop more income-generating activities. PDC was very successful and many consider it Togo’s first big community development program since 1998. After the 2008 global food crisis, PDC provided solutions, specifically agricultural tools, to help alleviate starvation and improve food security. This community project also provided funding to 233 groups to partake in various economic activities in different impoverished communities. The project officially ended in 2013, but still impacts the country today.

Emphasis on Education

PDC helped fund a school feeding program. In 2018, this project reached 85,000 primary school children in 308 schools. One year later, the project increased its availability by 5%, reaching 91,000 children in 314 schools in 2019. Other community development projects have created school canteen programs. These programs not only employ more citizens but also allow for impoverished children to get an education. At least 36,000 children receive benefits from this program. As a result, dropout rates in primary and secondary education have decreased. Although they focus specifically on education, education-community development projects work to reduce poverty in Togo since increasing education allows for more future economic opportunities.

An Expanded Version of PDC

The Community Development and Social Safety Nets Project (PDCplus) formed in 2012, four years after the initial PDC began. Togo’s government and the World Bank help fund this project that works to improve the social and economic situations of impoverished populations in the country. Its strategy, known as the strategy for accelerated growth and the promotion of employment (SCAPE), worked to increase community participation and involvement in the program’s microprojects.

PDCplus completed its mission in 2017. In total, it created 346 micro-projects to improve social infrastructures, 208 micro-projects to develop more income-generating activities, 305 schools with school canteen programs and 196 school buildings. PDCplus was successful like its predecessor PDC, showing how Togo’s community development programs continue to work to reduce poverty rates in the country. The government has continued developing new projects that are similar to PDC and PDCplus due to their successes. As a result, the country has made progress toward mitigating its poverty levels through similar programs.

The Involvement of Impoverished Communities

These community development programs seek to increase citizen participation, specifically through microprojects that provide training for community members. The Borgen Project spoke with Dr. Theresa Davidson, a professor and Sociology Program Director at Samford University. She mainly focused on how participation in these programs could impact how effective they are: “If community development is a process that is led by the people there, it will likely be more effective […] because they know what they need.”

These impoverished populations know how these projects will impact their community. Projects like PDC and PDCplus are so impactful in alleviating poverty since its microprojects worked within these communities and relied on their participation. The active involvement of communities with PDC helped make these community development programs so successful in reducing poverty rates. New projects that the government has created need to continue community participation in order to be as successful as its predecessors.

There are many nonprofit organizations in Togo that seek to expand on the progress that these community development programs made. One nonprofit, Education Leadership Community Development, known as EDULCOD Togo, works to improve quality and accessibility to education for impoverished populations. The mission of this organization echoes outcomes from PDC and PDCplus.

This West African country has created many community development programs. PDC and PDCplus have been its most successful projects. These programs range from microprojects aimed at improving social infrastructure and involvement to improving accessible education and feeding programs. Although it ended more than a decade ago, Togo’s government is continuing to enact similar projects to improve its economy. Overall, the community development programs are reducing poverty rates in Togo.

– Mia Banuelos
Photo: Pixabay

Economic Development in NicaraguaEconomic development in Nicaragua has encountered issues that have slowed the country’s development. Nicaragua declared itself an independent country in 1821. However, it has directly felt the crippling effect of economic issues from the onslaught of crimes. As recently as 2020, Nicaragua was recognized as a critical threat location for crime by the Overseas Security Advisory Council. Nicaragua has also encountered natural disasters. As of November 2020, Hurricane Eta and Hurricane Iota, Category 4 and 5 hurricanes respectively, caused more than $740 million in damage.

However, even with mounting external and internal pressure, economic development in Nicaragua has shown potential for improvement. This change is based on securing educational opportunities that turn into growth in economic projects. Private organizations have created community centers and offered low- and middle-income citizens better access to education. Such organizations have also created jobs by amplifying the reach of renewable energy, agricultural irrigation expansion and fortification of infrastructure.

Nicaraguan Poverty

Nicaragua has faced an uphill battle in economic growth due to its criminal and poverty-stricken background. The conflict between rival gangs within the country exacerbates this issue. This instability has also caused a decline in economic fortitude. Moreover, inflation has reached undeniably high levels, and people have left Nicaragua in droves to pursue better economic opportunities. The people left behind continue to suffer from a lack of proper healthcare and education.

Education Improves Economic Development

The educational system within Nicaragua is adjacent to the poverty level. Children within the educational system find themselves facing the challenge of completing school due to a wide range of reasons. A recent study from the USAID reported that an estimated 72% of Nicaraguans do not finish secondary school, leaving them likely to be impoverished. In addition, more than 18% of teachers do not have more than primary school education. This creates a new generation of unprepared Nicaraguan citizens.

The correlation between educational attainment and job development is significant. It is the bridge that keeps many Nicaraguans in impoverished income brackets. With the constant issues that many lower-income Nicaraguan students face, there has been an increase in steering them toward an attainable educational path and improving educational success.

Formative Ways of Change

Outside help from the U.N. and the U.S. has created a shift in economic and educational development in Nicaragua in recent years. Organizations such as Save the Children and the World Bank have supported the upturn of educational prowess within Nicaragua. Save the Children has created an infrastructure for educational access by establishing toll roads and paving new ones. Additionally, the World Bank has established more community centers with creative and technical workshops to teach and fortify skills. The skills taught include knowledge of irrigation, infrastructure fortification and a new era of clean and renewable energy.

The organizations have also increased job development and commercial development projects from the private sector. These development projects have provided more job opportunities within the industries of agricultural irrigation, the fortification of infrastructure, renewable energy and the reinforcement of trade.

Projects of this magnitude were given more than just a prime objective with the World Bank portfolio. Such projects totaled more than $400 million for nine planned projects. These projects include the enhancement of telecommunications, roads, education, health and insurance for natural disasters. Two credits have already been passed together, worth more than $100 million, to combat COVID-19 and help those most affected by hurricanes.

The Nicaraguan educational system has had a rise in scholars coming through the ranks to create an ever-growing class of job-ready individuals. Problems of organized crime and violence have troubled Nicaragua in the past, but there is hope to establish a better economic system that can create many more jobs and lead Nicaragua to a better future. Organizations like the World Bank and Save the Children are instituting an educational and job pathway for young and experienced Nicaraguan citizens alike to create a more prosperous Nicaragua.

Mario Perales
Photo: Unsplash

Growing Industries Improve Lesotho's EconomyThe small kingdom of Lesotho lies in the middle of South Africa, completely landlocked within its mountainous regions. When Lesotho gained its independence from the United Kingdom in 1966, it was established as a parliamentary constitutional monarchy. A majority of the country lives in poverty, relying on subsistence farming and the economy of its much larger neighbor, South Africa. Struggling to stand alone as a country vastly overshadowed by South Africa, four factors contribute to increases in Lesotho’s economy. Industries, such as diamond and textiles, are working to bring the country out of poverty and increase its GDP.

Private Sector-Led Economic Growth

Part of Lesotho’s economic growth can be attributed to the promotion of businesses and industries that are not under the direct control of the government. This initiative was supported more fully by the World Bank Board of Executive Directors, who approved $13.4 million donated to the government of Lesotho to assist with its promotion.

According to the World Bank, “the Second Private Sector Competitiveness and Economic Diversification Project (PSCEDP II) will help improve the business environment through the continued facilitation of reforms to reduce the time and cost associated with doing business in Lesotho, provide easier access to finance, make trading across borders simpler and provide streamlined, accessible and efficient government to business services in order to attract private investment and boost growth.” The PSCEDP II is already seeing growth through economic diversification and an improved business environment, which is crucial for Lesotho’s economy.

The Diamond Industry

The discovery of diamonds made a large impact on the economy of Lesotho, as some of the world’s most valuable diamonds have been discovered there. Mining for diamonds began in the mid-20th century, but a lack of decent finds made the mines close. However, the mines reopened in 2004 when new technology helped increase diamond discovery and the country’s overall GDP. Through the use of diamond exportation, revenue has drastically helped assist the economy of Lesotho. In 2011, diamonds constituted 31% of Lesotho’s total exports.

Additionally, operators of the mines aim to assist local communities. The Letseng mine, world-famous for its priceless diamonds, set aside $300,000 in 2014 to help its local community. This money funded projects to increase living conditions and provide survival training for herd boys. Not only is the diamond industry extremely beneficial for the economy of Lesotho, but it is also beneficial for the local communities and areas surrounding the mines.

The Textile Industry

Starting with a handful of textile factories originating in the 1990s, the textile industry has now become one of the largest employers of Lesotho people, with approximately 50,000 jobs available to communities. The textile industry holds thousands of jobs, primarily for women who account for 80% of employees within the industry. Between 2014 and 2019, the manufacturing sector of Lesotho’s economy grew 34%. Consequently, this increase allowed for a tripling of textile exports sent out to South Africa. By providing thousands of jobs to people, especially women, the poverty levels have eased and the GDP has increased significantly. With the assistance of the textile industry, the increased exportation of products is healing and strengthening the economy of Lesotho.

The Highlands Water Development Project

Lesotho and South Africa created and signed a plan concerning Lesotho’s exceedingly large water resources. This infrastructure project would benefit both countries in the transferring of water and the production of hydroelectricity. The initiative began in 1986 to help Lesotho’s electricity production independence. In addition, Lesotho would gain revenue by providing water to South Africa.

Moving water from the Orange River toward the Atlantic, this project includes the building of five dams and approximately 200 kilometers of tunnels to transport water to South Africa and produce electricity for Lesotho in three distinct phases, the last of which was to be completed in 2020. With this project, approximately 2,000 million cubic meters of water are transported from Lesotho to South Africa every year. This initiative has already helped improve the economy of Lesotho and save money through the production of hydroelectricity.

The assistance of these four factors is working to change the economy to alleviate the impacts of poverty throughout Lesotho. If growth continues with the assistance of private sector-led promotion, the diamond and textile industries and the Highlands Water Development Project, significant hope remains for this small country.

– Allie Degner
Photo: Flickr

How Costa Rica’s New Infrastructure Will Help Reduce PovertyOn May 4, 2021, President Carlos Alvarado addressed Costa Rica with the State of the Republic, a yearly analysis of the country’s accounts, progress and goals for the future. In his speech, he discussed the various infrastructure projects set to begin in Costa Rica. The projects will create opportunities for employment and reduce poverty across the country. President Alvarado’s plan for Costa Rica’s new infrastructure projects responds to the current economic crisis in the country. Due to the COVID-19 pandemic, poverty in Costa Rica has hit an all-time high since 1992, with 26.2% of families in the country experiencing household poverty.

New Infrastructure to Reduce Poverty in Costa Rica

Costa Rica’s economy is sustained by tourism, a sector that hit a sharp decline as a result of the COVID-19 pandemic. In 2020, Costa Rica’s “economy shrank by 4.5%” while unemployment rose by 6%. The various infrastructure projects which President Alvarado discussed aim to decrease poverty in the country and help bring Costa Rica out of its economic slump.

  1. Road Infrastructure. In his address, President Alvarado emphasized the need for improving roads and bridges across Costa Rica. He remarked that the Government intends on accessing a loan in order to treat all roads in the country with an asphalt seal and improve bridges across Costa Rica. The transformation of Costa Rica’s road infrastructure is a considerable undertaking that would provide thousands of people with jobs. Improving roads will lead to decreased congestion and facilitate transportation throughout the country. This directly benefits Costa Ricans and increases their access to jobs, which would greatly decrease the country’s record-high levels of poverty.
  2. Educational Infrastructure. Another key subject that Alvarado touched upon is the need for equal education opportunities for Costa Ricans. Investing in education infrastructure will help achieve this goal. Education for all Costa Ricans is important because education breaks cycles of poverty. Educating impoverished people on nutrition, health and safety can help them improve their living conditions. Additionally, educating children will provide them with the knowledge and skills to secure future employment and lift their families out of poverty.
  3. Land for Indigenous Groups. President Alvarado has a special recovery plan for indigenous territories. In the State of the Republic, he pledged monetary funding to address the inequities indigenous Costa Ricans experience due to existing legislation. The indigenous groups in Costa Rica have historically been subjected to slavery, displacement and exclusion and are disproportionately affected by poverty. Ensuring indigenous land rights are protected and prioritizing aid for indigenous people’s development would help reduce poverty across Costa Rica.
  4. Public Transportation. President Alvarado discussed an initiative to transition to electric mobility. The President “requested the support of Congress to approve a project to modernize public bus transport.” Additionally, the Costa Rican President introduced the Greater Metropolitan Area Electric Passenger Train, which is expected to generate almost 2,670 jobs, ignite economic growth and attract investors to the country. Another railway project that the President presented to Costa Rica is the Limon Electric Freight Train (TELCA). The construction of public transportation projects will provide Costa Ricans throughout the country with jobs and facilitate transportation between communities in order to spur economic growth.

Costa Rica’s commitments directly benefit citizens and the economy. Costa Rica’s new infrastructure projects show the country’s commitment to developing Costa Rica and reducing poverty.

– Eliza Kirk
Photo: Flickr

Social Ecology in RojavaRojava, also known as the Autonomous Administration of North and East Syria, is a region in Northeastern Syria. It was born out of the political instability that started at the beginning of the civil war in 2011. Surrounded by conflict, Rojava represents a rare success story of a war-torn region determined to help its local communities by reducing poverty through social ecology.

Rojava in Action

Rojava functions as a confederated system of local communities. Political decisions are implemented by democratic means and policy is decided from the ground up. Members of the immediate community have the first and final say on policies and practices that affect their communities directly. This political method of local autonomy relies on a specific degree of local sustainability and social responsibility. Communities take an active role in ensuring each member can access essential resources such as food and clean water.

Ecological sustainability is strong at play. Communities in Rojava aim to transform the landscape back into a more ecologically diverse and fertile area. This will mean reversing land practices inherited from the Assad regime. Groups such as the Internationalist Commune of Rojava, and its project, Make Rojava Green Again, focus efforts on this transformation. This is the crux of how Rojava hopes to reduce poverty through social ecology.

The Problem

Under the Assad regime, Northern Syria became deforested and transformed into monoculture croplands. One example of the practice is the deforestation of Afrin in favor of planting olive trees. This practice, along with the use of chemical fertilizers and unnatural water sources, destroyed the quality of topsoil and degraded the overall fertility of the land. Such practices also forced the population to rely on supermarket-based systems of distribution to purchase food and other essentials, decreasing local access to resources in favor of international markets. This form of politically-induced scarcity increased poverty rates in the Kurdish regions of Northeastern Syria.

Making a Change

After the withdrawal of the Syrian Government in 2011, lands once used for monoculture cultivation were expropriated by local farming cooperatives. These cooperatives form the basis of the economic system that now functions in Rojava. Each cooperative includes roughly 25 to 35 people. The priority of each cooperative is to provide for the basic needs of the region’s most impoverished citizens. The reallocation of resources and land back to local communities has seen success.

The localization of food production has notable environmental and social benefits. According to a study conducted in 2019, eggs supplied by local cooperatives required less than 2% of the monetary cost and energy needed for eggs supplied by modern supermarket supply chains. This means the people in Rojava have improved access to food, and, at a substantially reduced cost.

The Make Rojava Green Again project has spearheaded multiple ecological initiatives throughout Northeastern Syria aimed at reducing poverty by encouraging practices of ecological sustainability at the local level. Examples of such initiatives include efforts to rebuff rivers with the reforestation of native plant species. This will create wider access to clean water for communities that rely on such rivers. Other examples include reusing water for irrigation and planting urban gardens in order to grow food for impoverished members of the community who cannot grow their own. This will increase food security for otherwise vulnerable areas.

Continuing Forward

Despite the threat of military annihilation, Rojava continues to implement a green future for its citizens. Ecological initiatives have increased access to natural resources for populations in both urban and rural environments. The effort to reduce poverty through social ecology in Rojava is an ongoing initiative that requires international support if it is to survive. Nevertheless, Rojava has already demonstrated the effectiveness of such measures, and in doing so, has provided the rest of the world with a model for a green future.

Jack Thayer
Photo: Flickr

Oil and Poverty in Kazakhstan
Oil and poverty in Kazakhstan have an inextricable link. Kazakhstan is located in Central Asia with a population of over 19 million people. The last country to declare independence from the Soviet Union, Kazakhstan spent its first years as an independent nation focused on nation-building rather than economic policy. However, thanks to the development of the country’s oil and gas resources and a focus on exports at the turn of the century, the country became one of the top 10 fastest-growing economies in the world as recently as 2015.

This dependence on oil exports has created challenges for the country. In 2014 and 2015, large drops in oil prices cut export revenues in Kazakhstan by almost half. The deficit that followed caused the government to take quick action. It reduced or delayed previously planned spending on infrastructure and tightened exchange rate policies.

Poverty in Kazakhstan

The statistics on poverty in Kazakhstan are hopeful. In 2018, only about 4.3% of the population lived below the poverty line and the unemployment rate was only 4.8%. This is an impressive improvement from the 48.9% poverty rate in 2005. The improvement is largely due to new employment opportunities from the oil industry that have allowed more people to have a steady income.

While this decrease in poverty has been inarguably a good development, the rate at which the increase has happened has led many to worry that the country could just as quickly fall back into decline. With so much of the economy dependent on oil prices, a very volatile industry, the impact of oil and poverty in Kazakhstan is something that experts are very concerned with.

On top of the regular fluctuations in oil prices, the COVID-19 pandemic had a huge impact on the economy of Kazakhstan. The pandemic brought activity across the globe to a halt. As stay-at-home orders went into place, the demand for oil dropped significantly, which caused oil prices to drop. 

The Good News

Despite the link between oil and poverty in Kazakhstan, there is good news. According to the World Bank, the life expectancy in Kazakhstan is 73 years. This has been steadily rising since the country became independent in 1991. Infant and maternal mortality rates have also been in decline in recent years. 

Kazakhstan has also improved the basic necessities of its citizens. About 97.4% of the population now has access to clean drinking water and 99.9% have access to sanitation facilities. Meanwhile, 100% of citizens have access to electricity. Education, which has a direct link to economic growth, is doing well with 99.8% of people over 15 being able to read and write. 

Looking to the Future

Looking forward, there are ways for Kazakhstan to mitigate the damage fluctuations in oil prices can cause to its citizens. Oil and poverty in Kazakhstan will always have a link. However, diversifying the economy is a major step to reducing the impact of changing oil prices on the country. The country must focus on the non-oil economy by implementing new policies that will focus on investing in infrastructure and human capital. By focusing on expanding the economy, decreases in oil prices will not result in such massive deficits in the future.

Taryn Steckler-Houle
Photo: Flickr

Impact of COVID-19 on Poverty in Jamaica
The impact of COVID-19 on poverty in Jamaica has been immense since the pandemic began in 2020. Jamaica has always been a popular vacation destination for people to enjoy the sun, beaches and culture. In fact, according to the World Bank, the country’s yearly tourism numbers reached 4.2 million in 2019, twice the numbers from two decades before. However, since COVID-19 struck the world, the country’s tourism industry fell downward as fewer persons could travel to Jamaica.

Businesses, such as eateries and resorts, have experienced a significant decline in business. As a result, 50,000 Jamaicans working in tourism lost their jobs, illustrating the substantial impact of COVID-19 on poverty in Jamaica. Thus, many persons that finally overcame poverty will most likely face this reality again. Before COVID-19, the World Bank’s graph depicted Jamaica’s poverty rate at around 19% in 2018 and 2019; however, it increased to about 23% in 2020.

COVID-19 Effects on Working Women

According to the World Bank, like other nations, the impact of COVID-19 on poverty in Jamaica has had a tremendous effect on working women. About 78% of healthcare and humanitarian employees and 55% of staff in industries highly susceptible to COVID-19, such as commerce, resorts, restaurants and schooling, are women.

The Inter-American Development Bank stated that women have always had lower-income and less stable employment than men in Jamaica. Now, females are suffering more than males once again, because of higher unemployment rates and business closures. Also, the need for free healthcare has risen due to school closures and households staying indoors. In addition, with less money, more single mothers are unable to purchase sufficient meals compared to males.

How COVID-19 has Impacted Jamaica’s Economy

The Inter-American Development Bank stated that before the pandemic, it expected GDP for FY2020/21 to increase by 1.1% due to more tourist visits and sales of products like bauxite. However, the impact of COVID-19 on poverty has changed this scenario.

Also, the International Monetary Fund projected Jamaica’s economy to decline by more than 5% in 2020. It also forecasts government income to continue to fall twice as much as medical, societal and commercial costs increase. According to the World Bank, GDP declined from around 310,000 in 2019 to 280,000 in 2020, showing an actual reduction of 9.67%.

Recovery Strategies

The Jamaican public system has implemented various strategies to combat the impact of COVID-19 on poverty. The World Bank states that the country has reduced taxes to around 0.6% of GDP and has limited expenditures to 0.5%. Also, the government has diminished General Consumption Taxes for smaller-scaled businesses along with mandatory costs for farming products. Jamaica also relinquished some expenses for tactical gear and cleaning supplies.

CARE Programme

Jamaica has implemented its CARE Programme, which provides monetary compensation for the country’s neediest citizens. The Jamaican government implemented this program on March 24, 2020. So far, approximately 500,000 Jamaican citizens have benefited from this initiative, especially individuals who became jobless due to the COVID-19 pandemic. Jamaica Information Service reported that these qualified persons received $9,000 bi-weekly every month.

According to the IMF, this strategy also includes:

  • Considerate contributions to persons without work or with casual employment before COVID-19.
  • Provisional allowances to persons who were working but lost their jobs due to COVID-19.
  • Funding to freelance workers whose income reduced due to the pandemic, as well as small-scale companies.

The program also assists senior citizens and persons who are ill or incapacitated.

Financial Budget Changes

Jamaica is also adjusting its financial plan to fit with reduced income, more medical expenses, changes to initial spending plans and the use of monetary supplies. For instance, the government has suspended import tariffs for essential healthcare materials. In addition, the Central Bank of Jamaica has reduced its required reserves for funds while keeping the rate at 0.5%. Doing so has helped to increase the amount of money in the economy. Also, the country has asked the IMF for $520 million to help them recover from the pandemic.

Strategy Results

These various government initiatives have significantly helped to reduce the impact of COVID-19 on poverty in Jamaica. The CARE Programme donated $25 billion Jamaican dollars to assist the economy, which is the most significant accomplishment the country has achieved thus far in fighting the economic effects of COVID-19.

Nigel Clarke, Jamaica’s Minister of Finance and the Public Service, said that due to these strategies, the country has a lesser deficit than it did a decade ago with the global financial crisis. “In addition, we had accumulated cash resources of over [3%] of GDP through public body reform, inclusive of divestment of state enterprises, and fiscal over-performance,” he stated. Also, by controlling prices, the country now has more than $1 billion in reserve funds that it did not borrow. As a result, Jamaica is now in a better place with more possibilities for recovery.

Loop, a Jamaican News Website, reported that the Minister also said that some persons have returned to work due to various government initiatives. As a result, the rate of unemployed persons dropped from around 12% in July 2020 to 10.7% in October 2020. However, it will take two to four years to get back to the pre-pandemic rate of 7.2%.

According to the Statistical Institute of Jamaica, as of January 2021, the percentage of persons unemployed was 8.9%, which is an improvement from the previous year. However, the Jamaican government must continue developing innovative strategies to economically recover and reduce the impact of COVID-19 on poverty in Jamaica.

– Jannique McDonald
Photo: Flickr

Georgia's economic policiesGeorgia’s poverty and unemployment rates hit 13.3% and 18.5% respectively in 2020. A vast number of factors have contributed to these statistics. The Borgen Project spoke with Toby Davis, the former division chief for the Caucasus and Central Asia Office for the Analysis for Russia and Eurasia, to explore the economic landscape of Georgia and the factors impacting Georgia’s economic policies.

Unemployment and Poverty in Georgia

Davis explains that 70% of polled citizens will declare unemployment. However, when taking away pensioners, students and people who are not currently looking for work, only about a third of the 70% are actually unemployed. For example, many subsistence farmers register as unemployed because they are not currently working for a recognized business and thus do not consider their trade as a job.

Davis explains that “Unfortunately, this tilts the balance of the statistics, resulting in government decisions that may not always be the best for those who are genuinely unemployed and struggling to find work.” Despite a sometimes inaccurate reflection of statistics, Georgia is nevertheless working to improve the level of poverty and unemployment within the country with solutions that can bring Georgia’s citizens out of their current state of poverty.

Causes of Georgia’s Economic State

Two main factors impact Georgia’s economic state. First, Davis states that Georgia’s economic problems stem from the establishment of the Georgian Dream-Democratic Georgia party in 2012. Billionaire politician, Bidzina Ivanishvili, established Georgia’s previous state of government, changing the motives of politicians within the country.

Teona Zurabashvili, policy analyst at the Georgian Institute of Politics (GIP), explains that when the Georgian Dream came into power, it “squandered the political capital” it accumulated and supporters “never received the social justice they were promised.” She explains that the political climate reflected “an unfocused economic program, clannish rule in the judiciary system, rampant nepotism in the civil service, decreased direct foreign investments, a devaluation of the national currency and clear signs of state capture.”

Due to poor governance, poverty in Georgia has largely gone unaddressed. Davis reaffirms that because of political interests and weak governance, many of Georgia’s economic policies do not help the economy reach its fullest potential.

The second major contributor to Georgia’s economic state is the imbalance between exports and imports. Currently, Georgia spends more than it sells and produces, with export levels barely making one-third of the number of imports. The statistics show that the total exports are around 3.3 million, whereas its imports are at approximately 9.1 million. In 2016, Georgia imported most of its oil and natural gas to satisfy the energy demand in Georgia. With a transition to renewable energy, Georgia may be able to reduce these imports.

Past Plans and Current Projects

The Economic Development and Poverty Reduction Programme was a past proposal to fix Georgia’s poverty. It was approved in 2003 but was never implemented. Although the plan had funding from the World Bank and the IMF, Georgia’s government lacked interest and never followed through with it. Davis seconds this point, stating that, “there are individual party projects trying to fix [poverty rates], but nothing ever reaches the grand government scale. The projects improve it in increments, but there are a lot of questions as to why it isn’t improving faster.”

The Namakhvani HPP project aims to help Georgia gain “energy independence” through hydropower. The project’s goal is to satisfy 20% of the energy demand in Georgia, increasing domestic annual generation by 15%. A large portion of Georgia’s spending goes toward importing oil and fuel for energy demands. Therefore, Namakhvani HPP would reduce these expenditures. Wealth from this project would allow Georgia to gain energy independence and focus on implementing poverty reduction programs.

Reviving the Deep Sea Port Project

Another option regarding Georgia’s economic policies is the revival of the canceled deep sea port construction that would have taken place on the coast of the Black Sea. The project has the potential to generate cargo trade with China and Central Asia, with the potential to bring in significant revenue. The project was canceled due to a lack of funding. Thus, if the project were able to garner the international support and funding it needs, the project could positively impact the import and export sector.

The government of Georgia needs to prioritize developing the economy and reducing poverty, which should be reflected in Georgia’s economic policies. With politics aside, Georgia has the potential to thrive.

Seren Dere
Photo: Flickr

Finland's Foreign Aid
Rankings and dollar signs are typically what one can use to compare a country’s contributions to foreign aid against the next. However, what is not present in those comparisons and dollar signs is the context and structure behind the contributions of these countries. The Development Assistance Committee (DAC) ranked Finland number 19 out of 30 countries because it provides only $1.08 billion in aid. This ranking is consistent across the board showing Finland as one of the lowest contributors of foreign aid, however, Finland’s foreign aid contributions include quality standards that every country should mimic to get the most out of their contributions.

Finland’s Goal Regarding Foreign Aid

Finland’s long-term overarching goal is not simply to help countries in need but also to free those countries from their dependency on aid and provide each country it contributes to with the ability to flourish. This goal puts Finland in a position to use the idea of quality over quantity when it decides its foreign aid budget and what country will benefit the most from Finland’s foreign aid contributions. Finland’s foreign aid policies follow a strict set of criteria that helps to guide and direct small but potent decisions. The Ministry of the Foreign Affairs of Finland has spelled out the four driving components to criteria for foreign aid contributions within Finland’s Development policy.

4 Driving Forces Behind Finland’s Foreign Aid

  1. Strengthening the Status and Rights of Women and Girls: Finland intends to improve the rights of women and girls across the globe and promote gender equality. In fact, Finland is one of the largest contributors to UN Women, after giving the organization 10 million euros in 2016.
  2. Strengthening the Economic Base in Developing Countries and Creating Jobs: Without a strong economy, a country may have limited jobs, so it is crucial for Finland to actively participate in the rebuilding or strengthening of that economy. Finland seeks out partnerships and opportunities to promote the creation of jobs and strengthen the countries’ trade environments. In a three-year span of time, between 2016 and 2019, Finland contributed over $500 million in investments and loans to support sustainable development. Finland’s investment in Somalia went solely toward economic infrastructure and electricity distribution as well as the private sector. This contribution should provide valuable stepping stones to help Somalia rebuild and sustain the resources available to it.
  3. Education, Well-Functioning Societies and Democracy: Finland stands by its rule of law to provide a safe and peaceful environment, sustainable resources and public services to its population. Moreover, it extends those values to other countries. In fact, 57% of Finland’s foreign aid goes to fragile states in order to promote stability and security.
  4. Environmental Challenges and Natural Resources: Finland also aims to offer reliable access to safe and clean water and better water and land resources. It also intends to promote better farming conditions, forest management and decreased risk of hygiene-related diseases. It has implemented sanitation projects in Nepal, Vietnam, Ethiopia, Kenya and more.

Examples of Finland’s Foreign Aid Projects

Finland’s foreign aid contributions have centered around rural development, food security and land tenure in Africa and Asia. Again, while Finland’s contributions may not evenly compare to other countries’ contributions, they directly align with its overarching goal of creating opportunities for countries to build and sustain their own resources. As a result, those countries might be able to enter a position to sustain themselves.

Another great example of Finland’s contributions is its investment in water supply and sanitation programs. Access to clean water and food is a worldwide issue and Finland is aiming to alleviate those issues in Ethiopia, Kenya and Nepal. Ethiopia and Nepal were among the top five recipients of Finland’s foreign aid in 2015. Finland has dedicated itself to providing support to countries that have the highest need for funds. In Vietnam, Finland contributed to the urban water supply and sewage system, helping those countries achieve self-sufficiency and providing them with consistent access to the sources they need.

These programs and resources are only effective if they can occur over the long term. This is why Finland’s foreign aid contributions focus on programs that support rule of law and political systems. For example, Finland gave Afghanistan $3.2 million between 2016 and 2019 to broaden “civic engagement” and help foster an environment where the people participate more closely with the decision-making process of Afghanistan’s government.

Concluding Thoughts

Individually, each criterion above may seem like an impossible mountain to climb, but for Finland, these are simply the small but potent foundational steps necessary to create and sustain an efficient, profitable and sustainable economy. Finland’s foreign aid contributions may seem like only a small blip on the radar compared to the contributions that the United States and other larger countries are making, but it is blazing a trail to ensure that the funds, no matter how big or small they are, can make a powerful contribution to countries in need.

– Janell Besa
Photo: Flickr