Archive for category: Economy

Information and stories about economy.

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Fragility and Rule of Law in CAR

Fragility and Rule of Law in CARThe Central African Republic (CAR) is a landlocked country in sub-Saharan Africa and has a population of 6.1 million, ranking among the lowest on the human capital and development indices. Poverty in CAR is widespread, with nearly 70% of its population living in extreme poverty. Its history of conflict and political displacement has undermined economic growth for several reasons, such as reduced business investments. The country suffers from fragility. Its weak government has limited legitimacy and struggles to provide basic public services, including the rule of law. Fragility and the rule of law in CAR need addressing.

Politics, Violence and Economy

CAR has a long history of instability, state disintegration and political violence. It straddles the Sahel region, with a majority Muslim population, while savanna communities are mainly Christian. The conflict has regularly broken out between the Muslim ex-Seleka rebels and the Christian anti-balaka rebels. In 2013, Seleka rebels stormed the capital, Bangui and the country descended into a brutal civil war that continues in some parts of the country.

CAR suffers acutely from gender-based violence (GBV) against women and girls, recording 23.644 cases of GBV in 2022. Inadequate food and water resources, poor health care and weak housing infrastructure exacerbate tensions within households. These challenges, along with socio-cultural norms that are unfavorable to women, have led to sub-optimal survival strategies.

An unstable economy also influences fragility in CAR. Its government has failed to provide basic public goods, including water, food and health care. Poor education and job insecurity have stunted its growth. CAR has a rich endowment of natural resources but has not benefited due to mismanagement. According to the World Bank, the country has also suffered from flooding, fuel shortages and declining international timber trading. These challenges risk an already fragile economy.

Solutions

MINUSCA is a multidimensional United Nations peacekeeping operation set up by the Security Council in 2014. Its mission is to assist CAR in building national stability. It prioritizes the country’s security, rule of law, human rights and political crisis. MINUSCA provides military and police services from regions such as Rwanda to handle disarmament, demobilization and reintegration in CAR.

Cooperazione Internazionale (COOPI) focuses on supporting victims of GBV in CAR. Women and girls gather in a welcoming home in Bangassou where they are encouraged to participate in activities such as knitting and patternmaking, providing them with psychosocial support.

Pelvia, an 18-year-old girl spoke about the positive effect COOPI has had on her life. She spoke about the skills she has learned and how they have provided her with an income to buy necessities that she would otherwise be unable to afford. Pelvia is also glad for the company and support of the other women and girls who have shared similar traumatic experiences, UNOCHA reports.

Economic Growth

CAR receives most of its financial aid from the International Monetary Fund (IMF). In June 2024, the IMF approved an extended $25 million disbursement to continue the push for economic growth in CAR. The aid has been distributed to assist the economy and sustain priority spending on basic public services. The IMF forecasts that CAR’s economy will grow by 1.4% in 2024.

Looking Ahead

Fragility and rule of law in CAR are improving. The country has a long road to stability but there are positive forecasts for its future. 

The Economist Intelligence reports that the country’s economic activity will continue to rise over the next few years, with help from the IMF’s funded program. Whilst many areas of CAR are still overrun by rebel groups, the government, with assistance from Russian and Rwandan forces, has control over several major cities, including the capital. This allows for a more stabilized political structure and open rule of law in these areas.

– Millie Trussler

Millie is based in London, UK and focuses on Politics for The Borgen Project.

Photo: Flickr

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Projects in Tunisia Combat Food Insecurity and Boost the Economy

Projects in TunisiaOn March 15, 2024, the World Bank’s Board of Directors approved two loans worth $520 million to strengthen Tunisia’s economy. The loans will be used for two projects aiming to address and combat food insecurity and reduce regional inequalities in Tunisia. High unemployment, a five-year drought and the nation’s dependence on agricultural imports have amplified inflation rates and led to many food shortages in the country.

The Emergency Food Security Support Project (PAUSAT) will have a range of objectives that will help combat the food insecurity problem while also strengthening Tunisia’s economy and self-sufficiency. Meanwhile, the second loan will focus on the Tunisia Economic Development Corridor Project. This will address the urban infrastructure along the Kasserine – Sidi Bouzid – Sfax corridor.

PAUSAT

This project will help to strengthen Tunisia’s economy by increasing resilience to future food crises. This is by supplying short-term agricultural inputs for farmers to guarantee the next cropping season. A difficult cereal harvest of 2023 contributes to the string of droughts that Tunisia has suffered. By focusing on long-term solutions, this project will also provide barley and climate-resilient seeds to small-scale farmers and milk producers.

This assistance will help to rebuild Tunisia’s economy as it aims to prevent future agricultural challenges. With 30% of children aged less than 5 and 32% of pregnant and breastfeeding women having been affected by malnutrition, the economy is not Tunisia’s only focus. Ensuring access to bread for impoverished and vulnerable households is one of PAUSAT’s short-term objectives.

PAUSAT also aims to combat food insecurity in the short term by offering the vulnerable percentage of the population bare necessities such as bread. With women making up 46%-51% of the family farm labor force and are also 50% of Tunisia’s rural population, PAUSAT’s supply of soft wheat and barley to local markets will also help reduce food insecurity and prevent malnutrition among children and pregnant women.

Tunisia Economic Development Corridor Project

The Kasserine–Sidi Bouzid–Sfax corridor faces regional economic disparities that this project seeks to address. By adding 65 km of new roads and 117 km of feeder roads, the initiative aims to enhance accessibility to inter-regional areas, facilitate business financing and improve mobility for Tunisia’s rural population. The creation of these feeder roads and roadworks will benefit small and medium-sized enterprises (SMEs) and encourage small businesses to open up further.

The Tunisia Economic Development Corridor Project also benefits households that depend on roads. By improving mobility and expanding access to more regions, the enhanced rural infrastructure enables isolated households in the countryside to reach nearby towns and cities more easily. Significantly, this connectivity opens up new employment opportunities, allowing access to businesses and fostering the growth of new SMEs.

Toward a More Connected, Well-Fed Future

Tunisia continues to face extremely challenging conditions regarding cereal harvests, droughts and rural mobility. These two new loans bring new hope as they commit to two projects dedicated to fighting food insecurity and strengthening the economy of Tunisia. By addressing important issues with these two projects, Tunisia will be able to provide both long and short-term solutions for a more sustainable and self-sufficient future.

– Chelsey Saya McCloud

Chelsey is based in Southampton, Hampshire, UK and focuses on Good News and Technology for The Borgen Project.

Photo: Pixabay

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Innovations in Poverty Eradication in Kuwait

Poverty Eradication in Kuwait
Despite Kuwait’s wealth and robust welfare system, poverty eradication in Kuwait remains a pressing issue, particularly among expatriates. While every Kuwaiti citizen get support from the government, with no reports of poverty in the country from the World Bank, expatriates—who remit approximately $4 billion annually—face stark inequalities. Many low-income foreign workers live in conditions that could be considered below the poverty line, despite labor laws meant to protect their rights. These workers often endure overcrowded housing, abuse, non-payment of salaries, and limited access to basic services. Although every expatriate is supposed to arrive with a guaranteed job, thousands live jobless in the country, contributing to a growing sense of neglect and exploitation.

Dilapidated areas, begging and the exploitation of household helpers have tarnished Kuwait’s image. Despite discussions around eliminating the sponsorship system, the issue persists, with companies exploiting loopholes and underpaying workers. Strikes, unpaid wages and the need for charitable donations for basic necessities reflect the failure to enforce labor protections, according to Times Kuwait. While there should be no poor people in Kuwait by law, the reality for many expatriates tells a different story. In response, poverty eradication in Kuwait has become a priority, with several innovative programs focused on expanding social protection, fostering public-private partnerships, empowering youth, managing water resources and addressing energy poverty. Each initiative reflects Kuwait’s commitment to poverty eradication despite its wealth.

Expanding Social Protection Programs

Kuwait has expanded its social protection programs under Public Assistance Law 12/2011, administered by the Ministry of Social Affairs (MOSA). These programs provide financial assistance, health care and education to vulnerable groups such as the elderly, widows, orphans and low-income families. Since its implementation, the law has supported thousands of families, ensuring basic living standards and contributing to poverty eradication in Kuwait. In line with SDG 1 (No Poverty), MOSA’s initiatives have supported 2,030 families locally and 316,701 poor families abroad, while employing 14,518 previously unemployed youths, according to a 2019 report. Collaboration with organizations like Bayt Al Zakat has also strengthened poverty eradication in Kuwait, particularly through housing subsidies and health care services for vulnerable groups.

Expanding Public-Private Partnerships

Public-private partnerships (PPPs) are a key component of poverty eradication in Kuwait. The Kuwait Authority for Partnership Projects (KAPP) oversees initiatives like the Shagaya Renewable Energy Park, which generates clean energy and creates job opportunities, according to a 2019 report. By reducing energy costs, this project helps low-income families afford utilities, contributing to poverty eradication. These partnerships highlight the private sector’s role in supporting poverty eradication in Kuwait, leveraging private resources to benefit public welfare and improve living conditions for marginalized communities.

Clarified Youth Empowerment Initiatives

Youth empowerment is vital to poverty eradication in Kuwait. Initiatives like the 2018 SDG workshops, organized by the International Youth Federation (IYF), aim to foster leadership and innovation among young Kuwaitis. These workshops equip participants with the skills to address poverty at the community level. By creating social enterprises that offer affordable education and health services, young Kuwaitis contribute directly to poverty eradication efforts in their neighborhoods. Empowering the youth to actively participate in poverty eradication in Kuwait is essential for building a more equitable future.

Water Desalination Initiatives

Kuwait’s efforts in poverty eradication are closely tied to its water management strategies, particularly given the nation’s challenges with low groundwater levels, which renew at a rate of less than 70 mm per year. To address this, Kuwait has increasingly depended on cross-border groundwater and, more importantly, established seawater desalination facilities. Desalination now accounts for 93% of Kuwait’s drinking water, providing a vital resource for its growing population and urbanization. By ensuring access to clean water, desalination plays a key role in poverty eradication in Kuwait, supporting both domestic needs and irrigation for agricultural development. This strategy not only alleviates the strain on natural resources but also fosters economic stability, which is essential for long-term poverty eradication in Kuwait.

Decent Work and Economic Growth

Kuwait’s focus on decent work and economic growth is critical for poverty eradication in Kuwait, particularly as the country transitions away from its heavy reliance on the oil sector. Fluctuations in oil prices have historically impacted Kuwait’s GDP, as seen when the GDP per capita dropped from $10,113 in 2012 to $9,208.8 in 2016 due to a decline in oil prices. Furthermore, the employee per capita share of GDP decreased from $85,200 to $75,640 over the same period.

To mitigate such risks and reduce the vulnerability of its economy, Kuwait established the Kuwait Direct Investment Promotion Authority (KDIPA) in 2013 to attract both local and foreign investment. This move not only diversifies income sources but also fosters economic resilience, thereby contributing to poverty eradication in Kuwait. Moreover, The Public Authority of Manpower (PAM), established in 2017, supports small and medium entrepreneurs, streamlines access to government tenders and promotes equitable employment. PAM enforces laws requiring at least 4% of staff in private companies to be persons with disabilities and collaborates on vocational training for women in low-income households. These efforts diversify the economy, foster inclusivity and strengthen economic resilience, crucial for poverty eradication in Kuwait.

Conclusion

Kuwait’s comprehensive approach to poverty eradication includes expanded social protection programs, public-private partnerships, youth empowerment, and technological solutions. By focusing on community engagement and sustainability, the country is making significant strides in reducing poverty and improving the quality of life for its vulnerable populations. These efforts underscore Kuwait’s commitment to poverty eradication and addressing social inequalities despite its considerable wealth.

– Laila Alaya

Laila is based in Abuja, Nigeria and focuses on World News and Technology for The Borgen Project.

Photo: Flickr

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Reducing Poverty Via Social Entrepreneurship in Indonesia

Social Entrepreneurship in IndonesiaThe largest economy in Southeast Asia, Indonesia, has achieved impressive economic growth in the last decade, with a steady gross domestic product (GDP) growth rate after overcoming the effects of the Asian financial crisis in 1998. However, a significant portion of the country’s population is still living in poverty. As of March 2024, Indonesia’s poverty rate stood at 7.09% for the urban region and 11.79% for the rural area. In total, more than 25 million Indonesians are living below the national poverty line.

Social Entrepreneurship in Indonesia

Social entrepreneurs or entrepreneurs who pursue innovative ideas with the potential to solve a community problem, can contribute to poverty reduction in Indonesia. As of 2018, there were an estimated 34,205 social enterprises in Indonesia, including nongovernmental organizations (NGOs), cooperatives and micro, small or medium businesses. The study also found that young people are strongly represented in social enterprises, suggesting the increasing popularity of social entrepreneurship among young people and the growth potential of social entrepreneurship in the future. Social enterprises in Indonesia are mostly in the creative industry (22%), followed by the agriculture and fisheries industry (16%) and the education sector (15%).

Social entrepreneurship in Indonesia can support business opportunities and economic development in the country. Researchers found that amid economic crises like the COVID-19 pandemic, social entrepreneurship plays an important role in encouraging the creation of existing and new social entrepreneurial business opportunities to help solve economic development problems. Besides, social entrepreneurship also contributes to sustainable environmental policies in Indonesia. Research on green space development in Indonesia suggests that social enterprises serve as catalysts for ecological impact, effectively converting community perceptions that favor sustainability into sustainable practices.

Facilitating Positive Changes

For instance, Azzura Solar, a social enterprise co-founded by Hemant Chanrai, is a social enterprise that focuses on solar energy and empowers communities with its businesses. The Bright Future Program (BFP) of the company installs solar panels for the population in the Marga Mulya area of North Jakarta, a more impoverished region of the country with limited access to electricity. The enterprise developed its own indigenous, low-cost system that not only promotes access to electricity for needier populations but encourages the reuse of drinking bottles. The receivers of the services can pay what they can afford, with the rest of the cost covered by sponsors and Azzura Solar.

Javara, on the other hand, focused on assisting local indigenous farmers to earn their livelihood from traditional agricultural products. Through ethical partnerships with farmers, fishers and food artisans, the enterprise brings biodiversity-based food products from rural Indonesia to a broader market. With a wide range of products from honey and coffee to pasta, the company has exported sustainable agricultural products in Indonesia to 33 countries on five continents.

Looking Forward

Policymakers in the Indonesian government have promoted social enterprises mainly through financial assistance and training. The Kredit Usaha Rakyat (KUR) Program, for instance, has been in place to provide bank loans to small businesses in Indonesia since 2007. The Beginner Entrepreneur Program also provides funds for young entrepreneurs with training certificates from the Ministry of Cooperatives and Small and Medium Enterprises.

The ProKUS program in 2021 assisted impoverished and vulnerable families with activities and social and business approaches to prevent and overcome social risks after the COVID-19 pandemic. The program collaborated with social workers and 26 business mentors to incubate social enterprises across 33 districts of the country, improving entrepreneurship skills for the recipients.

With significant government commitment and existing successes, social entrepreneurship in Indonesia is a highly promising solution that can promote poverty reduction in the country. By further promoting social entrepreneurship, the government can empower the local community and contribute to sustainable development in the long term.

– Wangruoxi Liang

Wangruoxi is based in Ann Arbor, MI, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Pexels

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The Approach of the Catalan Integral Cooperative to the Economy

Catalan Integral CooperativeThe Catalan Integral Cooperative (CIC) is a network of more than 600 interlinked but autonomous cooperatives and projects located in Catalonia, the easternmost region of mainland Spain. Despite being relatively unheard of, CIC boasts its own currency, legal infrastructure, food pantries, investment bank and more. Even more intriguing, it has the audacious mission of transforming the way we think about the global economy.

Background of the Catalan Integral Cooperative

While the 2008 financial crisis was global in scope, it hit Spain particularly hard: the unemployment rate skyrocketed from 8.2% in 2007 to 26.1% by 2013, while youth unemployment was above 55% by 2013. With a declining gross domestic product (GDP) and a ballooning national debt, the Spanish government instituted austerity measures in 2010. Actions included rolling back the welfare system and making hiring and firing easier for employers. Civil unrest swept the nation and Catalonia in particular.

The CIC was born in this milieu with the aim of creating an alternative economy based on the principles of direct democracy, transparency and cooperative ownership. While CIC dissolved as an organized entity in 2015, many of its autonomous components survive to this day. Here are three of its most fascinating components.

  • The Catalan Supply Center (CAC): Started in 2012, the CAC constitutes one of CIC’s most successful undertakings. It consists of 20 self-managed pantries and about 70 small local producers, whose actions are coordinated via committee. Through logistical and transportation support, CAC’s main objective is to help small farmers get their products to markets and connect them with buyers. Thus with one project, CIC is working to both promote food security and boost small farmers’ incomes in the region.
  • The Eco: The “eco” is the local currency used by CIC, in parallel with the Euro. In contrast to regular fiat currencies, the eco is not backed by any state. This leaves its value entirely dependent on its holders’ beliefs. The eco can be traded with other members of CIC’s various autonomous organizations for goods and services. In a testament to its success, CIC’s “eco-network” had more than 2,600 members as of April 2017.
  • Casx: CIC’s investment bank—Casx, pronounced “cash” in Catalonian—is also highly unorthodox. For instance, the bank charges zero interest on loans. This entitles depositors to participate in deliberations on which projects to fund and makes all accounts fully visible to one another. Despite these limitations, deposits totaled more than $250,000 from 2012-2015.

Concluding Remarks

The CIC may have collapsed as an organization almost a decade ago, however, its legacy of furthering the public good endures by way of its numerous still-active offshoots and sub-organizations. Cooperative projects like CAC, the eco and Casx have sheltered living standards. Furthermore, they have boosted purchasing power in the region while granting valuable insight into both the promise and pitfalls of a post-capitalist economy.

– Kipling Newman

Kipling is based in Denver, CO, USA and focuses on Good News and Global Health for The Borgen Project.

Photo: Wikimedia Commons

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Project Mano: Ethiopia Uses Bitcoin to Fight Poverty

Project ManoIn Ethiopia, 40% of the population still doesn’t have access to electricity, contributing to high unemployment, particularly among young adults. Without proper technological skills and access to electricity, people are less likely to find jobs. Nearly 4% of the country’s population is unemployed across both rural and urban areas. Ethiopia’s new initiative, Project Mano, aims to address these challenges by utilizing Bitcoin. The project focuses on Bitcoin mining facilities and substations to strengthen the country’s economy.

Project Mano

Project Mano aims to integrate intensive bitcoin mining into Ethiopia’s economy, powered by the country’s renewable energy resources, including the Grand Ethiopian Renaissance Dam (GERD), the largest dam in Africa. Led by the Russian bitcoin mining company Bitcluster, the project will support Ethiopia’s environmental goals of clean energy while also boosting technological infrastructure and growing the nation’s economy. If GERD is repurposed for bitcoin mining, it could generate billions of dollars annually for Ethiopia. At full capacity, the dam could power 200,000 similar machines, potentially yielding more than $2 billion per year.

Project Mano will establish a mining facility in Addis Ababa, strategically located near the GERD. Ethiopia’s climate is also a significant advantage for the facility’s construction. With temperatures ranging from 9°C to 24°C throughout the year, the country provides ideal conditions for bitcoin mining, as facilities are less likely to overheat or freeze. Additionally, Addis Ababa’s Bole International Airport, the largest on the continent, offers direct flights to most global capitals, making it a key transport hub and helping reduce the cost of importing equipment and materials.

The Benefits

Project Mano will offer significant benefits to Ethiopia’s population in the fight against poverty. Inflation remains high and the crises in Ukraine and Gaza have increased pressure on import prices. With 55% of the population unbanked, money circulation is limited, forcing the government to print more money and worsening inflation. One of Project Mano’s initiatives is to adopt Bitcoin as legal tender, allowing it to be used for purchases, employee salaries and taxes. Since bitcoin maintains its value, this could help reduce poverty by stabilizing Ethiopia’s economy and promoting fiscal security.

Furthermore, using the GERD for bitcoin mining will provide 24/7 electricity access, helping Ethiopia combat poverty. The “electrification” of rural areas will lead to the establishment of bitcoin mining substations, allowing remote communities to gain access to electricity while creating new tech-related job opportunities. This increase in employment will boost Ethiopia’s economy and significantly reduce the number of people struggling with food poverty.

Summary

Project Mano proposes bitcoin mining as a solution for securing a stable economy. It plans to establish a facility in Addis Ababa powered by Africa’s largest hydroelectric project and other renewable energy sources. The project aligns with Ethiopia’s renewable energy goals while having the potential to generate billions of dollars for the economy. By expanding technological infrastructure, bitcoin mining will create more employment opportunities, address the high unemployment rate among young adults and help alleviate food poverty. Additionally, the Bitcoin facilities present significant opportunities for foreign investment and access to foreign currency, improving the quality of life for average Ethiopians and stabilizing the economy on a larger scale.

– Chelsey Saya McLeod

Chelsey is based in Southampton, Hampshire, UK and focuses on Good News, Technology and Solutions for The Borgen Project.

Photo: Pexels

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6 Things to Know about Vietnam’s Economic Development

Vietnam’s Economic DevelopmentVietnam’s economy is steadily growing, with remarkable development following decades of economic reform and strategic investments. Once an underdeveloped nation, Vietnam has significantly reduced poverty. This economic growth is driven by reforms, industrialization, infrastructure development and improved access to education and health care.

Doi Moi

Vietnam implemented the Doi Moi reforms in 1986, transitioning from a strictly communist economy toward a more open market with socialist influences. Before these reforms, the country was considered “underdeveloped.” The Doi Moi reforms modernized Vietnam’s trade economy, setting the foundation for its subsequent economic boom.

Industrialization and Infrastructure Development

Industrialization in Vietnam began in the early ’90s and continues today, driving economic development as the country transitions from a primarily agricultural economy to a more diversified and advanced industrialized one. Vietnam now manufactures products such as cars, electronics and textiles. Between 2020 and now, the country’s manufacturing, construction, services and industrial sectors grew from 81.1% to 85.2%.

Investment in public infrastructure has been one of the fundamental driving forces behind Vietnam’s economic development in recent decades. The country has mainly focused on roads, airports and seaports. Private and public investment in infrastructure has accounted for as much as 5.7% of the gross domestic product (GDP) in recent years. This is the second highest in all of Asia, following China.

Better Access to Education

Since gaining independence in 1945, Vietnam has prioritized education and reduced illiteracy rates. Today, the country places even greater emphasis on improving education. In 2002, the government allocated 3.9% of its GDP to education, which increased to 6.3% by 2014. Vietnam has enhanced access to education by ensuring universal preschool education through public spending and engaging communities and the private sector. The country has also improved learning outcomes, with Vietnamese students outperforming the average students in Organisation for Economic Cooperation and Development (OECD) countries.

In 2012, Vietnamese youth ranked 8th in science, 17th in mathematics and 19th in reading out of 65 countries. The Vietnamese government also prioritizes equity in education, contributing to these high learning outcomes. The central government allocates more funding per capita to geographically disadvantaged provinces and teachers in these areas are paid more than those working in cities. Vietnam’s progress in education has been a critical factor in its ranking of 48 out of 157 countries on the Human Capital Index.

Better Access to Health Care

Along with the economic growth, the health of the Vietnamese people has improved between 1990 and 2020. Life expectancy grew from 69 to 75. The aged than 5 child mortality rate decreased from 30 to 21 per 1000 live births. While the health care system has improved significantly in the past decades, Vietnam stands before an inevitable challenge: it has one of the fastest-growing aging populations in Asia.

Looking Forward

Vietnam’s transition from a centrally planned to a market economy has transformed it from one of the poorest countries in the world into a lower-middle-income nation. Since the Doi Moi reforms, GDP per capita has increased sixfold. Economic growth is projected to reach 5.5% by the end of 2024. Vietnam aims to become a high-income country by 2045, requiring an average annual growth rate of about 6% per capita to achieve this goal.

Vietnam has experienced significant development over the past few decades, with investments in health and human skills playing a central role in this progress and delivering substantial economic benefits. Despite this development, the country faces significant social issues. Vietnam is dealing with an aging population, persistent inequalities in the education sector and ongoing economic effects from the pandemic. Like many other countries, Vietnam’s economy faced a downturn in 2023 due to post-pandemic challenges. However, Vietnam’s economic development is now on the rise again.

– Sigrid Nyhammer

Sigrid is based in Bergen, Norway and focuses on Good News and Politics for The Borgen Project.

Photo: Pexels

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$20 Billion in Funding to Boost Ethiopia’s economic recovery

Ethiopia's economic recoveryEthiopia, Africa’s second most populous country, has faced significant economic challenges recently, including a total debt of $28 million, a foreign currency shortage and the default of its $33 million Eurobond in 2023. In response to these pressures, the National Bank of Ethiopia (NBE) made a decisive move on July 29, 2024, by floating its currency to secure much-needed funding. This shift allows for free trade in the foreign exchange market, which the NBE believes will increase the country’s integration with the global economy.

The International Monetary Fund (IMF) and the World Bank have pledged $20 billion in funding in the next four years to support Ethiopia’s economic recovery and growth. This financial assistance aims to boost the financial sector, enhance investment and trade opportunities and advance the overall economy. The plan also focuses on reforming critical areas such as education, renewable energy, urban development and job creation, laying the groundwork for a more sustainable and prosperous future.

Why Does Ethiopia Need Funding?

The effects of the pandemic were felt worldwide and Ethiopia’s agriculture industry, the most significant contributor to the country’s gross domestic product (GDP), was no exception. Accounting for approximately 75% of the workforce and 80% of exports, the sector faced immense pressure as COVID-19 restrictions disrupted the food supply chain, limiting business operations and employment. These disruptions led to decreased crop production, particularly in rural communities, resulting in reduced household incomes, higher food prices and increased financial instability.

Additionally, tensions between Ethiopian and Eritrean forces escalated into the Tigray War from 2020 to 2022. Although a cease-fire agreement was eventually reached, the aftermath of the conflict left widespread devastation across Ethiopia, displacing many people and damaging critical infrastructure. The situation became particularly dire in the Amhara region, with communities deprived of access to food, water and health care. As a result, the area was declared an emergency zone in August 2023.

Relentless natural disasters have also severely impacted Ethiopia in recent years. In November 2023, heavy rainfall caused floods in parts of the Somali region. This year, floods struck several areas, including Afar, Central Ethiopia and Oromia in May and much of the Horn of Africa in June, leading to widespread damage and further displacement. Last month, two catastrophic landslides buried villages in the Gofa zone, marking the deadliest such events in the country’s history. Recovery efforts are ongoing, with humanitarian aid programs working tirelessly to rebuild and restore these devastated areas.

Ethiopia’s Economic Recovery

Since the announcement of the floating currency, Ethiopia’s birr has faced a sharp decline in value, immediately triggering a rise in inflation and widespread concern. In response, the government lifted import bans on more than 30 products that had been restricted since 2022. While this move could enhance Ethiopia’s competitiveness in the global market, the long-term benefits are yet to be seen.

Prime Minister Abiy Ahmed emphasized the importance of this shift, stating that it is “critical to relieving foreign exchange shortages, removing constraints to private sector investment and growth and aligning the prices of imported and exported goods and services with market realities.” The restructuring is expected to keep Ethiopia on track to becoming a middle-income country within the next several years.

Final Note

The $20 billion funding from the IMF and World Bank will help stabilize Ethiopia’s economic recovery by restructuring debt, boosting key sectors and supporting recovery from natural disasters and conflict. This aid is crucial for enhancing global competitiveness and advancing the country toward middle-income status.

– Tanita Love

Tanita is based in Chicago, IL, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Unsplash

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Having An Impact: NGOs In Tunisia

NGOs In TunisiaTunisia, the northernmost African country, is classified as a developing country by the International Monetary Fund (IMF). It boasts a unique culture, characterized by a blend of European and Middle Eastern influences and reveals promising prospects for economic well-being. However, it faces several significant barriers to development. These include a rising debt burden, worsened by the COVID-19 pandemic, which has hindered Tunisia’s ability to borrow from foreign organizations and an alarming youth unemployment rate of 40%. Tunisia is actively working to rectify these ongoing issues and the efforts of nongovernmental organizations (NGOs) play a crucial role in alleviating the common roadblocks faced by developing countries, providing essential assistance globally.

FISTA

The First Step Together Association (FISTA), is one of the NGOs operating in Tunisia, with a primary focus on at-risk youth, in particular those with cognitive impairments and learning disabilities. Since its humble beginnings in 1989, as a reed-built school housing nine children, FISTA has gradually expanded its operations to cover and support the needs of adolescents impacted by learning disabilities outside of just North Lebanon. The work of FISTA is crucial. Youth with learning disabilities are all too often disregarded even in nations not classified as developing countries. 

Another initiative from FISTA, in partnership with UNICEF, is its internship program. This pre-vocational program specifically targets increasing diversity and inclusion in the workforce and empowers those with disabilities or other factors impacting their success to find their footing. The initiative funded a program that engaged eight young individuals in two-month training programs for various trades, including haircutting, mechanical work and restaurant work. Empowering those with disabilities to secure sustainable income is vital in reducing Tunisia’s youth unemployment rate of 40%.

Assen

The Association de Soutien aux Enfants (Children’s Support Association, also known as ASSEN) is an NGO based in Tunisia that supports women and children in the country, particularly by aiding low-income women who aspire to become entrepreneurs. ASSEN focuses on what it calls “micro-projects.” For example, by funding small-scale projects such as building new breeding broilers, ASSEN significantly impacts the economy, aiding a group that might otherwise remain underrepresented. Targeting initiatives like these effectively assists the economy by creating more jobs and enabling those without resources to achieve personal goals and contribute economically.

Islamic Relief Worldwide

Islamic Relief Worldwide (IRW) is an NGO operating primarily in Muslim countries, including a chapter based in Tunisia. Its operations are notably diverse, with programs to assist Tunisian youth through educational initiatives similar to those of FISTA and others focused on supporting the country’s sustainability needs. IRW assists Tunisia in achieving its developmental goals by empowering farmers with the tools and technical knowledge necessary to thrive in the country’s sometimes challenging climate.

In a specific instance, IRW responded to a call for assistance in the Kebili province of Tunisia, a region challenging for farmers due to its climate. When heavy sandstorms in 2017 damaged farmers’ equipment and jeopardized their productivity, IRW intervened. With the organization’s help, 276 farmers received new greenhouses to replace those lost. In a follow-up to this program, 66 farmers received new resources and vocational training to further aid their operations. Supporting Tunisia’s farmers aligns directly with the country’s broader interests and the impact of programs like this from Islamic Relief Worldwide continues to be felt at the moment.

Islamic Relief and Schools

Another example of IRW impacting Tunisia involves its efforts to improve the health and safety of schools in the region. A common challenge faced by Tunisian schools is the lack of access to basic washing facilities, which contributes to poor hygienic standards and the inadvertent spread of diseases such as hepatitis and COVID-19. Additionally, poor infrastructure planning has resulted in many unisex bathrooms, increasing the risk of sexual violence and abuse for many youths. To address these issues, Islamic Relief conducted sessions to stress the importance of hygiene and installed necessary hygiene facilities in schools, benefiting an estimated 75,000 students. Addressing hygiene issues has been a significant game changer, as approximately 100,000 students previously dropped out due to the lack of proper hygienic facilities in schools.

Looking Ahead

NGOs play a pivotal role in addressing Tunisia’s developmental challenges, particularly in areas such as youth unemployment, education and agricultural sustainability. Organizations like FISTA, ASSEN and Islamic Relief Worldwide are implementing targeted initiatives that provide essential support to vulnerable populations, including at-risk youth and low-income women. Through vocational training, micro-projects and improvements in education and agricultural infrastructure, these NGOs in Tunisia contribute significantly to Tunisia’s efforts to overcome its economic hurdles and enhance overall well-being.

– Malik Vega

Malik is based in Miami, FL, USA and focuses on Good News for The Borgen Project.

Photo: Flickr

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Singapore’s Social Safety Net: A Blueprint for Reducing Poverty

Singapore’s Social Safety NetSingapore, often hailed as an economic miracle, boasts a diverse economy that has propelled the nation to high-income status. Additionally, the country’s financial landscape is distinguished by a blend of globally leading industries, including manufacturing, services and emerging sectors. Manufacturing, a cornerstone of Singapore’s economy, spans electronics, chemicals and biomedical sciences. Furthermore, it contributes significantly to gross domestic product (GDP) and employment.

Meanwhile, the services sector encompasses finance, insurance, tourism and, more recently, data hosting and digital services. The sector has made Singapore a hub for innovation and business. This diversity is a critical factor in Singapore’s resilience. Additionally, it has enabled the country to weather global economic fluctuations and adapt to new trends, such as digital transformation and green technologies. The government’s strategic investments in education, research and infrastructure have further bolstered the economy’s adaptability, ensuring sustainable growth and job creation.

Singapore’s Social Safety Net

Singapore’s approach to social welfare is built on a unique social compact designed to provide opportunities for all citizens, regardless of background. This compact is underpinned by five pillars: asset building, education, health care, housing and employment. These pillars form a robust safety net that protects vulnerable groups, promoting social mobility and financial security.

  • Education: Education is a cornerstone of Singapore’s social policy. Indeed, it reflects the belief that education is a key driver of economic mobility. The government invests heavily in education at all levels, ensuring access to quality schooling and lifelong learning opportunities. Initiatives like SkillsFuture encourage citizens to upgrade their skills continuously, keeping pace with the evolving job market. This emphasis on education equips Singaporeans with the knowledge and skills necessary to thrive in a competitive global economy.
  • Health Care: Singapore’s health care system is renowned for its efficiency and accessibility. The government employs a multi-tiered approach to health care financing, combining personal responsibility with state support. This approach ensures all citizens have access to basic health care services. Programs like MediShield Life and the Community Health Assist Scheme (CHAS) help alleviate the financial burden of medical expenses, particularly for the elderly and lower-income groups. Furthermore, this guarantees that no Singaporean is denied health care due to monetary constraints, contributing to a healthy and productive population.
  • Housing: Homeownership is another key pillar of Singapore’s social safety net. The government’s public housing program, managed by the Housing & Development Board (HDB), provides affordable residences for most Singaporeans. Subsidies and grants allow lower- and middle-income families to own homes. This policy improves living standards and serves as asset-building, helping citizens accumulate wealth over time.
  • Employment: The government has implemented various programs to support lower-wage workers, ensuring they can achieve a decent standard of living. The Workfare Income Supplement (WIS) scheme, introduced in 2007, provides cash and Central Provident Fund (CPF) contributions to supplement the incomes of lower-wage workers. The Progressive Wage Model (PWM), launched in 2012, sets minimum wage levels for specific industries and outlines career progression pathways. These initiatives are part of a broader effort to reduce income inequality and promote social inclusion.

The Many Helping Hands Approach

In addition to government-led initiatives, the Many Helping Hands (MHH) approach supports Singapore’s social safety net. This community-based framework involves government bodies, donors, grantmakers, enablers, volunteers and Voluntary Welfare Organizations (VWOs).

The MHH system ensures that social assistance reaches the most vulnerable members of society, providing comprehensive support beyond just financial aid. One notable program under this framework is ComCare, which was launched in 2005. ComCare consolidates various welfare projects to offer more streamlined and effective support for those in need. It provides financial assistance, medical support and social services, catering to the diverse needs of low-income families, elderly citizens and individuals facing health care challenges.

Looking Forward

Singapore’s success in achieving a high-income and financially secure population is largely due to its diverse economy and comprehensive social safety net. Additionally, the government’s forward-looking policies in education, health care, housing and employment, combined with community-based support through the MHH approach, have created a resilient and inclusive society. This model aims for all citizens to lead fulfilling lives, regardless of socioeconomic background. As Singapore continues to evolve alongside global challenges, its commitment to social equity remains a guiding principle for sustained prosperity and social harmony.

– Asiya Siddiqui

Asiya  is based in Fremont, CA, USA and focuses on Business and Good News for The Borgen Project.

Photo: Flickr