Archive for category: Economy

Information and stories about economy.

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BPO Industry Lifts Philippine Population from Poverty

BPO Industry Lifts Philippine Population from PovertyIn recent years, the Philippines has experienced an economic resurgence, a significant shift from its prolonged economic struggles post-World War II. Historically, since the 1960s, a series of political regimes contributed to bleak economic prospects. Economic disparity widened significantly, with the rich getting richer and the poor facing increasing desperation. This disparity stemmed largely from an agrarian economy in which farmers, who did not own their lands, had to pay exorbitant rents to landowners. The introduction of the Business Process Outsourcing (BPO) industry has played a crucial role in altering this economic landscape.

The Feudal Legacy

The Philippines, often labeled a democracy, functioned more like a feudalistic society where the landed gentry controlled the economy and its tenants. This structure left the majority of the population either farming or working menial jobs, with minimal economic prospects and limited to earning only minimum wage. However, the early 2000s marked a significant shift when the Philippines opened its borders to international companies seeking a more affordable workforce.

The BPO Industry’s Impact

A significant challenge in the Philippines has been the scarcity of stable jobs, with many Filipinos reporting unstable job statuses or complete unemployment. However, the advent of the BPO industry has markedly reduced the unemployment rate. This industry has not only provided jobless individuals with new employment opportunities but also enhanced the purchasing power of the overall population.

International Career Opportunities

Before the proliferation of BPO companies in the Philippines, opportunities for Filipinos to work for international firms were limited, often requiring them to become overseas foreign workers to earn higher wages. BPO companies have changed this dynamic by providing Filipinos the opportunity to earn international wages without leaving the country. Additionally, these companies offer career paths with global firms, allowing employees to advance professionally within their home country.

Economic Revitalization

According to the World Bank, traditionally, only the upper and middle classes could afford a college education, limiting access to more lucrative jobs to a small segment of society. However, the emergence of BPO companies has transformed employment opportunities. The Philippines, known for its high percentage of English speakers, has become an ideal location for BPO operations. These companies typically do not require college degrees, instead prioritizing proficiency in English and basic computer skills. This shift has allowed a broader segment of the population, already literate and motivated, to secure employment, support their families and contribute effectively to their employers, thus expanding economic opportunities beyond the traditionally educated elite.

Before the BPO boom, a substantial portion of the population possessed minimal buying power, with many families reliant on a single source of low income. The introduction of BPO jobs provided higher wages, enhancing the economic strength of individual households. This increase in income allowed families to spend, invest and save more, stimulating demand for products and services and invigorating the national economy.

Looking Ahead

The rise of the BPO industry looks set to alter the economic landscape in the Philippines, providing stable employment opportunities and lifting many out of poverty. This shift could not only improve wages but also facilitate broader access to international careers without requiring emigration. The continued growth of the BPO sector offers a path toward sustained economic development, enhancing the quality of life for countless Filipinos and strengthening the nation’s overall economic resilience.

– Neil Misola

Neil is based in Kitchener, Ontario, Canada and focuses on Global Health and Politics for The Borgen Project.

Photo: Pexels

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Poor Labor Conditions in Uganda: How Are Citizens Affected?

Labor Conditions in UgandaAs Uganda continues to expand its manufacturing industries, such as food processing, textile production and metal fabrication, there’s a higher demand for laborers across the nation. Currently, Uganda has one of the largest labor forces in sub-Saharan Africa, totaling 6.9 million workers in 1993. However, with 42% of citizens of Uganda less than the age of 14, the government has found it difficult to provide proper training, education and labor conditions. As a result, Uganda continues to be an undeveloped country with high levels of “vulnerable employment,” leading to inadequate salaries, low productivity and unsafe labor conditions.

Low Minimum Wages

Uganda’s poor working conditions are a huge reason why the country remains undeveloped. From low wages to extensive working hours to unsafe working environments, Uganda’s workforce is a potential threat to the health and safety of citizens. In 2017, Uganda upped its minimum wage from UGX 6,000 (About $1.60) per month to UGX 130,000 (About $35.08) per month.

While this has been a win for Ugandan citizens, this minimum wage almost exclusively applies to formal vocations. Other sectors of work, such as manufacturing, laboring and processing, remain vulnerable and uncovered. The cost of living continues to increase in Uganda, leaving those uncovered by minimum wage at a loss of proper shelter, nutrition and working conditions.

Lack of Training

Uganda has a significant youth population in sub-Saharan Africa. However, due to the lack of proper vocational training, nearly 13% of the youth are unemployed. This is one of the main factors contributing to Uganda’s high poverty and unemployment rates. Lack of training in Uganda especially affects young women.

A high school dropout, Evelyn Nakabuye, who lives on the outskirts of Kampala, survived years of joblessness due to the lack of proper training. She lived in a small house with her four children and her mother. However, in 2018, Nakabuye enrolled in a training program known as TEXFAD, which teaches carpet design in weaving. After just six months in the academy,

Nakabuye is now self-sufficient enough to own her own home and take care of her children. “This fund has really helped me,” Nakabuye said. “And it has changed my life.”

Low-Labor Productivity

Due to inadequate salaries and improper training, many Ugandans are at risk of low-labor productivity. Low labor productivity makes it difficult to generate morale among employees, profitability and high performance. The International Trade Union Confederation (ITUC) states that 70% of Ugandan employees work without a legal or written contract, despite it being a legal requirement for the employer to provide an employment contract for each employee. This is just one of the ways in which companies in Uganda sabotage the collective voices of workers in order to profit themselves.

Solutions

By introducing more reasonable salaries, training programs and working conditions, Uganda can begin to emerge from global poverty and economic crisis. Uganda’s Skills Development Project, for example, delivers high-quality training programs in Agriculture, construction and manufacturing.

As one of the rapidly growing economies in sub-Saharan Africa, Uganda is investing in proper training, funding and salaries to keep pace with the rest of the world. By ensuring that employees have safe, comfortable working conditions, proper education and adequate earnings, Uganda can work itself out of global poverty and thrive as a nation.

– London Collins Puc

London is based in West Palm Beach, FL, USA and focuses on Global Health for The Borgen Project.

Photo: Unsplash

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Lebanon’s Hash: The $1 Billion Industry to Lift Its Rural Poor

Lebanon’s Hash“Our hash is the best,” said former President of the Lebanese Republic, Michel Sleiman, despite the country’s illegal status on the cultivation, trading and usage of hash. Although meant as a joke, it still points to the popularity of the drug and its transformation into a necessity. In a study done by the European Monitoring Center for Drugs and Drug Addiction (EMCDDA), 53% of cannabis users confessed to an increase in hash consumption following the 2020 Beirut explosion, citing relief from anxiety as one of their primary motivations.

Lebanon’s Hash Industry

Lebanon has been cultivating and exporting hash for 100 years. Despite being the fourth smallest country in the region, Lebanon ranks among the top four largest hash producers in the Middle East, raking in millions of dollars annually. The amount of profit that hashish produces on an annual basis in Lebanon is difficult to pin down since the production of the drug is still illegal and, therefore, remains heavily undocumented.

In 2020, however, following a devastating economic crisis, the Lebanese government and the McKinsey consulting company produced a financial plan titled “Lebanon Economic Vision.” The document proposes that the legalization of hash for medical and recreational use could increase drug exports from $828 million to $1.79 billion by 2025. This revolutionary idea could mean an unprecedented cash flow into Lebanon’s long-neglected agricultural sector.

Where the Money Flows

Most of Lebanon’s illegal hashish farming occurs in the Bekaa Valley, a stretch of farming land that is 70 miles long and 16 miles wide. Many farmers have switched to growing hash after the economic crisis in 2019, which kept Lebanon’s inflation in triple digits for years. Many farmers have switched to growing hashish because it is cheap. Cultivating one-tenth of a hectare of a hash farm costs $150, while other crops, such as wheat, can cost up to $3,000.

Legalizing Lebanon’s Hash

In light of this trend, there has been growing pressure on the Lebanese government to legalize hash for domestic use and export. As of today, 55% of Lebanese youth are for the recreational use of hash and up to 75% of them are for its medical use. The growing popularity of Lebanon’s hash has also been apparent in parliament.

In 2020, the government passed legislation that allows for the farming of local medicinal cannabis (less than 1% tetrahydrocannabinol). However, the methods of injection into the market, the regulation and taxation of the market remain undefined and therefore make the drug illegal still.

Final Remark

With an ongoing war in the South and a financial crisis that a weak central government prolongs, the legalization of hash can be seen either as a temporary impossibility or a possible lifeline for the country.

– Carl Massad

Carl is based in Sarba, Jounieh, Lebanon and focuses on Politics for The Borgen Project.

Photo: Pexels

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How the Youth of Moldova Are its Future

Youth of MoldovaIn 2023, reports indicated a decline in the involvement of youth in decision-making and public policy implementation in Moldova. By early 2024, statistics revealed that Moldova’s population was 3.3 million, with young people making up over a quarter of this figure. Further analysis reveals that 72% of community youth programs fail to meet the population’s needs effectively, particularly those of the most vulnerable citizens. This situation highlights a significant gap between the objectives of youth programs and the actual needs of young Moldovans.

Economic Challenges and Depopulation

Moldova is facing significant depopulation, primarily due to the high emigration rates among young people. This trend presents a critical challenge to the economy, potentially limiting national development and restricting access to essential services. As one of Europe’s poorest countries, economic downturns disproportionately affect families with children, exacerbating the risk of poverty. Although there have been overall improvements in recent years, Moldova continues to experience high poverty rates, with child poverty being a major concern.

Youth and Social Policy

In 2020, Moldova recorded a child poverty rate of 26%. Households with multiple children, as well as those headed by a self-employed, unemployed or single-working parent, are particularly vulnerable to poverty. Current social policies fail to meet the needs of children living in poverty. Despite this policy gap, 72.7% of households with children reported satisfactory living conditions in recent years.

Educational and Employment Challenges

In Moldova, the youth population contends with significant challenges in education, employment, health and civic participation. Although 39% of 25 to 29-year-olds hold high-ranking degrees, the quality of education often fails to meet satisfactory standards. Many Moldovans remain disengaged from education and employment opportunities, complicating efforts to empower this generation with suitable jobs. Despite a general decline in poverty rates in recent years, the country faces hurdles in achieving economic growth, compounded by high emigration rates that particularly affect young citizens. Currently, 29% of Moldova’s youth are unemployed, a rate that exceeds many other countries and fosters social exclusion among this demographic. Prioritizing youth development is essential for Moldova’s national progress.

Various factors contribute to youth unemployment beyond economic challenges. Individual circumstances often require young people to assume caregiving responsibilities, leading them to become homemakers rather than active job seekers. Additionally, many young Moldovans plan to emigrate in search of better job opportunities that match their skills and qualifications. This trend is particularly pronounced among the most vulnerable segments of the youth population. Those from impoverished families, orphaned children or residents of rural areas face significant barriers to accessing education, further limiting their employment prospects.

The Youth Participation Program Initiative

Following youth-led protests in 2009, which demanded fairer governmental procedures and inclusion in policymaking, the Eurasia Foundation initiated the Youth Participation Program (YPP) in Moldova. This program aimed to channel the passion of the youth toward enhancing their country’s economy. To build momentum, the Eurasia Foundation collaborated with Moldova’s Ministry of Youth and Sports, organizing a series of youth debates across the country in partnership with Ministry representatives. These debates highlighted the perspectives of young people on policy reforms. The culmination of these efforts was the National Youth Forum, providing a platform for young Moldovans to discuss the 2009 to 2013 Youth Strategy directly with government officials.

Youth Sector Development Strategy

In 2023, the Moldovan government approved the “Youth 2030” Development Strategy, which targets three main objectives to bolster the nation’s youth. This strategy is designed to expand access to youth programs and enhance the participation of young Moldovans in voicing their ideas for the country’s future. Despite the absence of a specific public policy dedicated to the social inclusion of young people, the Youth 2030 strategy represents a comprehensive effort to unify various institutions that influence youth development and empower young citizens in Moldova.

Looking Ahead

Moldova’s initiatives to engage and support its youth are intended to contribute to the nation’s future development. The “Youth 2030” Development Strategy seeks to address significant gaps in youth participation and to improve access to essential programs. Addressing the root causes of emigration and enhancing opportunities for young people could be vital in fostering a more prosperous and stable society. By prioritizing youth inclusion and development, Moldova can potentially build a stronger, more resilient future.

– Brogan Dickson

Brogan is based in Edinburgh, Scotland and focuses on Good News and Global Health for The Borgen Project.

Photo: Flickr

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Guatemala’s Economic Growth and Equality

Guatemala’s Economic GrowthIn the past three decades, Guatemala has experienced a steady economic growth trajectory, yet this progress has not translated into significant reductions in poverty or inequality. Since the signing of the 1996 peace accords, which ended a 36-year civil war, the Guatemalan economy has grown at an average annual rate of 3.5%. This period of economic expansion saw the gross domestic product (GDP) growth rates of 4.1% in 2022 and 3.6% in 2023​.

However, these figures mask a deeper issue: the benefits of this growth have not been evenly distributed across the population. Urban areas, particularly Guatemala City, have seen substantial investment and development, while rural and indigenous communities continue to lag. This disparity highlights the challenge of achieving inclusive growth that benefits all segments of society.

Key Drivers of Economic Growth

Guatemala’s economy is largely driven by the private sector, which contributes approximately 85% of the country’s GDP. The services sector is the largest, accounting for 68% of GDP. This includes a wide range of activities such as banking, tourism, retail and telecommunications. The manufacturing sector, contributing 14%, is also a vital component, with industries such as food processing, textiles and pharmaceuticals playing significant roles​​.

Agriculture, though comprising only 10% of GDP, remains a critical sector, employing a substantial portion of the population and producing key exports like coffee, sugar and bananas. Additionally, remittances from Guatemalans living abroad, particularly in the United States (U.S.), are a crucial economic lifeline, contributing significantly to household incomes and foreign exchange reserves​.

Persistent Poverty and Inequality

Despite Guatemala’s economic growth and stability, poverty and inequality remain pervasive issues. As of 2023, approximately 55.1% of Guatemala’s population lives in poverty, with indigenous and rural communities bearing the brunt of this economic hardship​​. These communities often have limited access to education, health care and employment opportunities, perpetuating a cycle of poverty.

The informal sector is a substantial part of the economy, accounting for 49% of GDP and employing 71.1% of the workforce​. This sector is characterized by low wages, job insecurity and lack of social protections, which further exacerbate economic disparities. The country faces significant human capital challenges, with high rates of child malnutrition and limited access to basic services such as clean water, sanitation and electricity​.

Efforts and Challenges

Various initiatives have been undertaken to address these socioeconomic challenges. The U.S. Agency for International Development (USAID) has been active in Guatemala, implementing programs aimed at improving financial management, fostering innovation and supporting entrepreneurship. These programs are designed to create a more conducive environment for business growth and to empower local entrepreneurs.

However, the effectiveness of these initiatives is often undermined by systemic issues such as corruption and governance weaknesses. Corruption remains a significant problem, affecting public trust and the efficient allocation of resources.

Potential for Future Growth

Guatemala has considerable potential for future growth, thanks to its rich natural resources, cultural heritage and strategic geographical location. The country is rich in minerals such as gold, silver and nickel, which present opportunities for the mining sector. Its cultural heritage and natural beauty make it an attractive destination for tourism, which can be a significant source for Guatemala’s economic growth. 

– Sofia Reynoso

Sofia is based in Tampa, FL, USA and focuses on Business and New Markets for The Borgen Project

Photo: Pexels

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Tackling Poverty in the Cook Islands Post-Pandemic

Poverty in the Cook IslandsThe Cook Islands, an idyllic South Pacific archipelago, faced significant socioeconomic and poverty challenges after the COVID-19 pandemic. Traditionally reliant on tourism, global travel restrictions severely disrupted the nation’s primary industry, leading to widespread economic hardship.

Economic Disruption and Job Losses

The COVID-19 pandemic dealt a devastating blow to the Cook Islands’ economy. Tourism, which contributed approximately 70% of the nation’s gross domestic product (GDP) in 2018, abruptly halted as global travel restrictions were imposed to curb the spread of the virus. This led to a dramatic decline in national income, with the GDP recession estimated at 26% in 2021.

The immediate consequence was widespread job losses, particularly in the hospitality and service sectors. Many businesses were forced to close their doors permanently due to the lack of revenue. This economic shock rippled through the community, significantly increasing poverty in the Cook Islands.

Government Response and Social Welfare

In response to the crisis, the national government implemented a series of financial aid packages and social welfare programs to reduce poverty in the Cook Islands. The COVID-19 Active Response and Economic Support (CARES) Program, backed by the Asian Infrastructure Investment Bank (AIIB), provided much-needed financial assistance.

These initiatives supplied grants and loans for businesses to help them stay afloat. The programs also supported households with food programs and educational opportunities for children. These measures were crucial in preventing a complete economic collapse and maintaining social stability during the height of the pandemic.

Recovery and Diversification of Economy

  1. Fisheries and Agriculture: Investments are being made to enhance sustainable fishing practices and improve agricultural productivity. These efforts aim to provide alternative sources of income and ensure food security. For instance, the government has introduced high-yield crop varieties and modernized fishing fleets with support from international partners like the Australian Government through its Department of Foreign Affairs and Trade (DFAT).
  2. Digital Economy: Expanding digital infrastructure has become a priority in integrating the Cook Islands into the global digital economy. Projects funded by organizations like the Asian Development Bank (ADB) aim to improve internet access, foster new business opportunities and support remote work. This digital expansion is crucial for economic diversification and for creating new avenues of income.
  3. Renewable Energy: The Cook Islands government has set ambitious targets to transition to renewable energy, aiming for 100% renewable energy in the near future. Significant progress has been made with solar and wind energy projects contributing to the national grid. These projects reduce dependency on imported fuels while creating green jobs and attracting investment in clean technologies.

Looking Forward

The COVID-19 pandemic highlighted the vulnerabilities of the Cook Islands economy. However, it also presented an opportunity to rethink and diversify economic strategies. By focusing on other sectors of the economy, poverty in the Cook Islands can be replaced by prosperity. The collective efforts of the government, international organizations and the community will be instrumental in driving this transformation and ensuring that the nation emerges stronger post-pandemic.

– Asiya Siddiqui

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

Photo: Unsplash

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Remittance in Lebanon

Remittance as a Poverty Reduction Mechanism in Lebanon In Lebanon, international worker remittance has been playing an increasingly important role in the economy since the 2019 financial crisis. The International Monetary Fund (IMF) defines remittance as household income from foreign economies arising mainly from migration to those economies. In 2022, international remittances from migrants made up 37.8% of Lebanon’s GDP, surpassing the share of exports in the country’s GDP. In addition, the figure represents the highest remittance to GDP ratio in the Middle East and North Africa region. 

Remittance in Lebanon

The high volume of emigration in Lebanon plays a central role in the size of remittances the country’s citizens receive. While the country has a population of 5.49 million population as of 2022, an estimated 880,000 Lebanon migrants or more than 16% of the population, resided outside the country. Other Arabian countries, North America and Europe are the top destinations for migrants. Before and during the 2008 global recession, remittance composed more than 25% of the country’s GDP, but its share decreased steadily in the decade between 2008 to 2018 until the 2019 financial crisis emerged in Lebanon.  

Since the year 2019, Lebanon’s economy has been grappling with a deep financial crisis that was exacerbated by the COVID-19 pandemic and the Port of Beirut explosion in 2020. The country’s GDP plummeted from around $52 billion in 2019 to an estimated $23.1 billion in 2021, leading to a rapid decline in income and basic services in the country. According to the World Bank estimates, the poverty rate of the country more than tripled since 2012, with 44% of the country’s population living below the poverty line as of 2022. 

A Buffer During Crisis

Against the backdrop of the enduring economic crisis, international remittance acts as a crucial buffer against poverty for families in Lebanon and a hedge against the complete collapse of the economy and social order. In 2022, an estimated 15% of households rely on remittance for income, up from the pre-crisis 10%. A survey by the UNDP also revealed that 29% of households started receiving remittances from their family members abroad as a response to the impacts of the financial crisis. The majority of the remittances were used to pay for food, electricity and medical expenditures, highlighting the importance of the remittance for Lebanese households to maintain their living standards.   

Remittances have become more important in alleviating poverty in the country after the financial crisis. In 2022, receiving remittances reduced a household’s possibility of being poor by five percentage points and the results were significantly robust. In comparison, in the year 2012, the percentage was four points and the statistical correlation was weak. 

Development Aid

From a long-run perspective, before the financial crisis in Lebanon, remittance played an important role in facilitating poverty reduction and economic development. The research found that remittance correlates positively with schooling attendance in Lebanon, indirectly contributing to the development of human capital and the long-run development of the economy. In addition, there is also evidence that the inflow of remittance contributes to the development of the financial market and long-run economic growth. A 2019 study further estimated that every 1% increase in remittance increases economic growth by 2%.

Looking Ahead

International remittances have become a vital lifeline for Lebanon, significantly contributing to the economy and providing essential support for families amid ongoing economic challenges. With remittances comprising a substantial portion of Lebanon’s GDP, their role in alleviating poverty and sustaining living standards remains critical. As Lebanon continues to recover from its financial crisis, the ongoing flow of remittances could be essential for economic stability and future development.

– Wangruoxi Liang

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

Photo: Unsplash

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CIRCLE Alliance: Increasing Circular Plastic Economies

CIRCLE AllianceJune 6, 2024, marked the launch of the new CIRCLE Alliance collaboration. The public company Unilever, the United States Agency for International Development (USAID) and the private organization Ernst and Young (EY) have all partnered to create the CIRCLE Alliance. These organizations are working with entrepreneurs and small businesses that are already established in the plastic waste sector.

They aim to find solutions to scale the work already being done through their $21 million investment. Through this and by focusing on increasing circular plastics economies, CIRCLE will work to reduce the use and waste of plastic products. CIRCLE’s initial plan is to launch projects in four key countries: India, Indonesia, Vietnam and the Philippines. Within these countries, CIRCLE will focus efforts on those who already perform most of the collection and disposal of waste – women.

Plastic in CIRCLE’s Key Countries

  • India produces the most plastic waste in the world, behind the United States (U.S.) and the European Union (EU), with 26,000 tons generated daily. It is also the leader in polymer production, the substance used to create plastic.
  • Indonesia generates just more than 21,000 tons of plastic waste daily. Most of the waste comes from rural locations without proper waste management systems. Most of the waste ends up in waterways, floating down rivers. Only 17% of the waste that makes it into rivers either washes up or is removed.
  • Vietnam’s recent economic growth contributes to the plastic waste problem. The nation produces almost 8,500 tons of plastic waste daily and if it continues on its current path, this amount is projected to double by 2030.
  • The Philippines produces just less than 8,000 tons of plastic waste daily and the country’s coastlines are suffering. Much of the country’s economy is based on coastal work—fishing, tourism and shipping. With 20% of all plastic waste finding its way to the ocean, these industries are being impacted. 

What Are Circular Plastic Economies?

In circular plastic economies, plastic waste is reduced by finding solutions to recycle and reuse plastic products that are currently being thrown away. Plastic, a material used globally, is estimated to double in production in the next 20 years. We are creating and producing new plastics daily and therein lies the problem. The world currently creates more plastic than is recycled for reuse. Currently, 84% of all plastic created is disposed of in landfills, fires or the ocean.

Globally, plastics are mostly operating in a “linear take-make-waste model,” a term coined by the Ellen MacArthur Foundation, a leader in circular economy creation and research. With the introduction of circular plastic economies, the economic value of production is recouped. Additionally, the material does not find its way into the environment.

CIRCLE Alliance’s Investment in Entrepreneurs

CIRCLE Alliance has already shown its dedication to the cause and displayed how circular plastic economies promote poverty reduction. In the Philippines, for example, lives Riza Santoyo. Her inspiring story starts with a self-funded waste-collecting business in her small town. She used the resources available to her to collect waste, making about $2 a day. CIRCLE Alliance’s investment in equipment for Santoyo allowed her to increase not only her efficiency and productivity in waste collection but also her income. The efforts that the CIRCLE Alliance is making in these key countries are at the intersection of sustainability and poverty reduction.

Expand Producer Responsibility

Another initiative to increase circular plastic economies is to expand producers’ and companies’ responsibility for the aftermath of their products. To combat the myth that single-use plastic is the most cost-effective method, USAID, EY and Unilever are working to promote systems of use called Extended Producer Responsibility (EPR Systems). These systems flip the responsibility of waste removal from the consumer to the producer. It forces the producer to evaluate the true cost of their single-use product. This has encouraged companies to make their plastic recyclable and to think of solutions outside of plastic for their products.

– Carlee Unger

Carlee is based in Pembroke, NC, USA and focuses on Global Health and Politics for The Borgen Project.

Photo: Pexels

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Unlocking Economic Opportunities With Education in the Congo

Education in the CongoThe Democratic Republic of Congo (DRC) boasts the world’s second-largest rainforest, a wealth of precious minerals and large crude oil reserves, the spoils of which most Congolese do not enjoy. In fact, two-thirds of the population lives below the poverty line, subsisting on less than $2.15 a day. This dire situation stems from a long history of sociopolitical turmoil. Additionally, ongoing violent conflict in the DRC has stunted economic growth and subjected citizens to prolonged instability and violence.

Furthermore, inhospitable conditions are most acutely burdensome for women, who face gender discrimination, early marriage, poverty and food insecurity. Women with little or no educational attainment are even more vulnerable to experiencing these issues. Humanitarian organizations are investing in programs to make high-quality education more accessible throughout the Congo. These efforts are instrumental in the fight against gender inequality and extreme poverty.

Education in the Congo

For underprivileged Congolese children, tending to crop fields is more routine than sitting in classrooms reading and writing. Beginning in the ’80s, parents had to pay tuition fees to send their kids to school. Then, in 2019, a new policy waived the cost of attendance, enabling more than three million children to enroll. While higher rates of young people attending school is an encouraging sign of progress, the education system in the DRC needs to be equipped to accommodate the influx; classrooms are overcrowded and instructors are overwhelmed.

Education Cannot Wait

Education Cannot Wait (EWC), the global fund for education in less-resourced areas, has stepped in to aid the DRC. The nonprofit is addressing teacher shortages, supplying psychosocial support services and training for educators and instituting nutrition programs at school. As of August 2023, EWC has built or rehabilitated 343 classrooms and trained 2,425 teachers. The inclusivity and protection component of its mission has facilitated the distribution of more than 3,000 female hygiene kits to girls and supports the monitoring of school performance.

Other Initiatives Supporting Education in the Congo

Another organization dedicated to increasing the universal availability of education in the Congo is the United States Agency for International Development (USAID), which has allocated $7.7 million toward improving classroom instruction. USAID works closely with faith groups, private institutions and international partners to provide greater academic resources for at-risk communities with low literacy rates and poor math scores. Its initiatives aim to equip schools with sufficient supplies like textbooks and higher-quality lessons in social and emotional skills, numeracy, soft and vocational skills and literacy.

The United Nations Educational, Scientific and Cultural Organization (UNESCO), partnered with the French Development Agency (AFD), is also conducting a four-year teacher training project in the Congo. One of the guiding motivations behind the program is to boost the presence of women in the educational profession, which may make school environments more welcoming for girls.

Final Remark

Certainly, investing in the education and empowerment of young Congolese will yield significant benefits for the DRC. It will advance the country’s efforts to eliminate extreme poverty and build a more prosperous future for its citizens. Enhancing the availability and quality of educational resources is the crucial first step toward these overarching objectives.

– Natalie Kaufman

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

Photo: Wikipedia Commons

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The Declining Yen and Its Impact on Japan

Declining YenDespite its small size, Japan has consistently ranked as the world’s third-largest economy, following the United States (U.S.) and China. However, in 2024, the country fell to fourth place, overtaken by Germany. Japan has experienced a declining yen, its weakest in history, leading to a rapid economic decline. Businesses relying on imported goods are facing even greater economic challenges. Several factors contribute to Japan’s economic difficulties and this stagnation poses significant concerns for the country’s future.

Reluctance to the Digital Shift

Japan remains one of the few analog societies, still relying on fax machines and cash while retaining traditional methods. This digital gap stems from Japanese companies’ reluctance to adopt information and communications technology (ICT) and a fixed mindset. Renowned tech companies like Sony, successful in the past, resist adapting to new technologies. Additionally, the COVID-19 pandemic exacerbated this issue. While much of the world shifted to remote work, many in Japan continued working on-site, missing opportunities to embrace digitalization.

Japan’s Economic Golden Age

In the 1960s, Japan’s economy flourished, opening to world trade and focusing on exporting goods. The Income Doubling Plan of 1960, which aimed to boost Japanese income through enhanced government support for social welfare and education, played a significant role. During this period, Japan emerged as a leading manufacturer of electronics, automobiles, metals and chemicals. Companies such as Sony, Nikon, Canon, Toyota, Honda, Mazda, Mitsubishi and Suzuki dominated the international market by emphasizing high-quality and high-technology products.

The Economic Bubble Burst

In the 1980s, Japan’s economy grew rapidly, with soaring stock prices, real estate values and the Yen’s strength. This period of economic excess is known as the bubble economy. However, the bubble burst in 1992 when the Bank of Japan raised its interest rate. This led to a stock market crash and a steep decline in asset prices. Since then, Japan has faced economic stagnation, a period often referred to as the lost decades.

The Dilemma of Low Interest Rates

The Bank of Japan has maintained a low-interest rate for decades, contributing to the continuous decline in the value of the Yen. Higher interest rates can boost a currency’s value by attracting foreign investment, which is why countries often raise rates to curb inflation. For instance, the U.S. increased its interest rate during the COVID-19 pandemic to stabilize the dollar. Conversely, lower interest rates can reduce a currency’s value but are used to stimulate economic activities such as borrowing, spending and investing. In Japan, the strategy to drop interest rates to near zero was intended to encourage consumer spending. However, this approach backfired by making the economy less attractive for foreign investment and further decreasing the Yen’s value.

Path Forward for Economic Recovery

Over the years, Japan has resisted raising its interest rates despite economic stagnation. With low demand for the Yen, Japan feared that higher rates would exacerbate its ability to pay off debts. However, in March 2024, for the first time in 17 years, Japan increased its interest rate from 0% to 0.1%, ending its negative interest rate policy.

By 2026, Japan will face a shortage of 2.3 million digital workers due to a fundamental lack of digital skills. Embracing a digital shift to enhance technology promises to spur economic growth. Additionally, gradually raising the interest rate at a steady pace could eventually strengthen the value of the Yen.

Focusing more on tourism offers another avenue to alleviate economic stagnation. Currently thriving due to the declining Yen, Japan’s tourism industry benefits from government efforts to attract more foreign visitors. In 2024, visitor numbers from the U.S. and Germany, where currency strength outpaces the Yen, surged by 64.3%. The weakened Yen draws tourists looking for cost-effective travel options, presenting an opportunity for Japan. By actively attracting international visitors, Japan could leverage its economic challenges to bolster the tourism industry, potentially significantly contributing to the gross domestic product.

Looking Forward

Japan’s decision to increase interest rates and its openness to digital transformation offers hope for economic revitalization. As Japan adapts to global digital trends and continues to enhance its tourism sector, it sets a path toward overcoming decades of economic stagnation and the declining yen. These ongoing strategic shifts promise to gradually restore the strength of the Yen and reinvigorate Japan’s global economic standing.

– Eunsung Koh

Eunsung is based in Seoul, South Korea and focuses on Technology and Politics for The Borgen Project.

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