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Archive for category: Economy

Information and stories about economy.

Economy, Global Poverty, Government, Inequality

Balancing Prosperity and Income Inequality in Luxembourg

Income Inequality in LuxembourgEconomically, Luxembourg is rated one of the most affluent and prosperous countries in Europe. Acclaimed for high standards of living, a strong economy and a strategic geographical position to become a doorway for international business, the Grand Duchy has made its own identity in the international arena. Nevertheless, one of the greatest challenges of the country comes in the form of income inequality and societal differences.

Economic Prosperity

Luxembourg has a very high economic potential, with a strong financial services industry, high-quality steel and a strategic position in geography. Its financial sector acts as the backbone of its economy. It attracts world corporations, investment funds and financial institutions who are looking for stability and fine regulatory frameworks.

Financial services are one industry that heavily contributes to Luxembourg’s gross domestic product (GDP). Luxembourg for Finance reports that “the financial sector accounts for approximately 26% of the GDP of the country, making it one of the greatest contributors to the economy.”

Although not quite as prosperous as in its heyday, Luxembourg’s steel industry remains another important sector of the country’s economy. Its location in the center of Europe makes it easy to trade and carry out commerce, making it a good place for international businesses to have their headquarters or regional offices.

Income Inequality in Luxembourg

Despite its prospering economy, Luxembourg is faced with sharp income inequality, a challenge pervading many aspects of society. According to a report by Sustainable Development Goal (SDG) Watch Europe, the top 20% of earners in Luxembourg take home about five times what the bottom 20% earn.

Differences between the well-off and the underprivileged are reflected in the accessibility of basic services: education, health and housing. While the country is generally characterized by a high living standard, spots of poverty and social exclusion do remain, particularly among certain groups.

Government Response

The government of Luxembourg has implemented social welfare policies that try to alleviate poverty and enhance social mobility. At the very core of these lies a comprehensive social safety net. They include salient welfare programs in the form of unemployment allowances, housing subsidies and even health support schemes. These range from better education and training opportunities to job prospects that economically empower marginalized communities.

Conclusion

Of course, Luxembourg’s impressive economic success is praiseworthy. The government continues with new social welfare policies and programs intended to level the playing field in society.  They aim to foster mobility and bring the nation closer to achieving its vision of an equitable society.

– Honorine Lanka Perera

Honorine is based in Highland, NY, USA and focuses on Business and Good News for The Borgen Project.

Photo: Unsplash

June 16, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Lynsey 2 https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Lynsey 22024-06-16 01:30:392024-06-15 08:50:26Balancing Prosperity and Income Inequality in Luxembourg
Development, Economy, Electricity and Power, Global Poverty

How Renewable Energy in Malawi Is Driving Economic Growth

Renewable Energy in MalawiIn Malawi, a landlocked country in southern Africa, economic inequality persists, hindering significant poverty reduction efforts despite consistent growth. Currently, about 70% of the country’s 20 million residents live on less than $2.15 a day and a considerable portion of national income belong to the top 20% of earners. A major factor explaining the persistent economic inequality in Malawi is the low electrification rate. Currently, only 15% of Malawi has access to electricity, one of the lowest rates worldwide, primarily due to inadequate infrastructure in information, communication and energy technology. Renewable energy in Malawi offers a viable solution to increase access to electricity and support economic growth.

The disparity between rural and urban areas is stark, with only 5% of rural regions having electricity access compared to 42% in urban areas. Additionally, even areas with electricity face inconsistent service. Leo Randall-Brown, a volunteer in Bangwe, noted, “We lose power once a week or so,” remarked Leo Randall-Brown, a volunteer in Bangwe, “but [a few months ago] it was worse.” Despite these challenges, optimism grows around Malawi’s emerging energy sector. Innovative and collaborative efforts in renewable energy present a promising pathway to address disparities and support the nation’s poorest communities.

Hydroelectric Power

Hydroelectric power is a crucial element of Malawi’s energy portfolio, generating 90% of its electricity primarily from the Shire River. Yet, this represents only about 17% of the nation’s potential hydroelectric capacity. Modernization efforts are underway to improve this infrastructure. Notably, the rehabilitation of the Nkula Hydropower Plant, a project undertaken by the Austrian company Andritz Hydro and Portuguese firm Mota Engil, has increased energy generation capacity by 50%. Additionally, projects like the Mpatamanga Hydro, supported by a World Bank-backed Public-Private Partnership (PPP), aim to significantly enhance hydroelectric capacity, marking a robust effort to maximize Malawi’s energy resources.

These ongoing initiatives are crucial for enhancing energy security and alleviating poverty in Malawi. Hydroelectric projects catalyze job creation, providing substantial employment opportunities during the construction and operation phases. They also boost agricultural productivity in downstream villages by improving access to electricity for irrigation and agro-processing activities. The development of hydroelectric power in Malawi thus represents a multifaceted approach to combating poverty, fostering economic growth and empowering local communities to thrive.

Solar Power

With an annual daily mean global solar radiation equivalent to 250 million tonnes of oil, Malawi possesses a vast and sustainable solar energy resource. Solar power, a versatile form of renewable energy, facilitates both household-level and large-scale photovoltaic (PV) cell electrification. Across Malawi, tens of thousands of solar home systems (SHS) have been adopted, providing households with reliable lighting, heating, water pumping and radio usage. Mr. Randall-Brown notes, “We have a small solar panel that charges throughout the day. It acts as a kind of backup generator.”

The 2018 Energy Policy in Malawi emphasizes off-grid electricity, highlighting a cooperative effort between the government and the private sector. Companies such as VITALITE Malawi have capitalized on this policy framework, enhancing public-private partnerships (PPPs) to expand solar home system (SHS) services to an unprecedented number of households and communities. This focus on off-grid electrification significantly benefits the nation’s most vulnerable populations, reducing the need for extensive infrastructure investments while ensuring sustainable and renewable energy in Malawi for all.

Malawi has made notable progress in developing utility-scale solar power plants, exemplified by the completion of projects such as the 60 MW Salima, 20 MW Golomoti and 21 MW Nkhotakota. These projects underscore the government’s commitment to expanding grid infrastructure. Collaborative efforts with USAID and other international partners highlight Malawi’s proactive approach to promoting interconnected sustainable development. These ongoing initiatives are creating new income opportunities for both rural and urban households and enhancing agricultural practices with solar-powered irrigation. This technology is particularly crucial for Malawi, which relies heavily on rain-fed agriculture, marking a transformative era of resilience and prosperity for the nation’s agricultural sector.

Geothermal Power

Geothermal energy holds immense promise for Malawi’s energy future, owing to its location in the East African Rift System (EARS), which endows the country with significant reserves. Approximately 55 geothermal sites dot the landscape, with three major ones—Chiweta, Mwankeja and Nkhotakota—identified for detailed investigation, boasting a combined potential of 200 MW. While geothermal efforts are largely in the exploratory phase, a plant in Nkhotakota is planned for construction.

In a concerted effort to harness the vast potential of geothermal energy, the Malawian government is actively pursuing avenues for both public and private investment.  A notable stride occurred in 2013, when the government-owned energy company EGENCO forged a groundbreaking agreement with Kenya’s Geothermal Development Company, fostering intra-African technological collaboration within the East African Rift System (EARS). Beyond its role in sustainable electricity generation, geothermal energy holds the promise of delivering direct community benefits and catalyzing economic growth and technological advancement.

Looking Forward

Malawi is on the cusp of a transformative era in its energy sector, poised to make significant strides in electrification, sustainable development and poverty alleviation. The country boasts vast untapped potential in renewable energy sources such as hydroelectric, solar and geothermal resources. By harnessing these opportunities through pro-growth domestic policies and integration with foreign entities, Malawi is primed to drive inclusive growth and prosperity. As the nation embraces foreign investment in renewable energy in Malawi, it paves the way for collaborative efforts to unlock the full potential of clean energy and propel Malawi toward a brighter, more sustainable future for all its citizens.

– Matthew Candau

Matthew is based in St. Andrews, Scotland and focuses on Business and Technology for The Borgen Project.

Photo: Flickr

June 4, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Precious Sheidu https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Precious Sheidu2024-06-04 07:30:162024-06-03 13:32:11How Renewable Energy in Malawi Is Driving Economic Growth
Economy, Electricity and Power, Global Poverty

How Renewable Energy in Croatia Can Reduce Energy Poverty

Renewable Energy in CroatiaSprawling across the Adriatic Sea, Croatia comprises more than 1,200 islands – 48 of which are inhabited. Currently, the country imports much of its energy needs in the form of fossil fuels. National Energy and Climate Plan outlines the efforts to expand renewable energy in Croatia: by 2030, Croatia aims to have a 36.4% renewable energy share and a 45% reduction in total emissions. At the end of last year, Croatia recorded four days powered fully by renewable energy sources.

Politics and Renewable Energy

Recent and upcoming political changes could impact the renewable energy share in Croatia and have important impacts on those living in energy poverty. The 2024 election year has been deemed a “super-election.” In April, the country’s long-dominating center-right party, Croatian Democratic Union (HDZ), won the Parliamentary Election on April 17, but change could still occur with the European Parliament Election taking place in June and the Presidential seat being up for reelection at the end of the year. 

In a recent survey conducted for Croatia’s 2024 election, 70% of people expressed concerns about rising costs of living accompanying inflation. While the focus of this year’s election is economic, discussions surrounding renewable energy initiatives play a role in growing Croatia’s economy and helping those living in energy poverty. Making investments in renewable energy is an economic endeavor.

This is important because typically, renewable energy discussions are pushed to the side in Croatia in favor of issues the population finds more pressing such as food safety, economic growth and youth unemployment, Clean Energy Wire reports. Renewable energy in Croatia only enters the political discourse when severe weather events occur and brings attention to the impacts of changing weather patterns. Bringing attention to the economic advantages of independent renewable energy in the election will bolster initiatives for renewable energy in Croatia and benefit initiatives targeting energy poverty.

Economic Opportunity

Currently, Croatia imports the majority of fossil fuels it uses: 100% of coal, 80% of oil and 40% of gas, according to Clean Energy Wire.

Dependency on importation makes Croatia “particularly vulnerable to the rise in fossil fuel prices” contributing to the country’s high energy prices, Clean Energy Wire stats. This shows that developing renewable energy sources could help stabilize energy prices and allow more people access to consistent energy.

Renewable energy is growing as the cheapest option for electricity. The cost of solar power electricity has been declining – falling 85% from 2010 to 2020. Similarly, wind energy has seen dramatic declines in cost. Expanding renewable energy sources in Croatia could offer cheaper energy to more people, allowing those who cannot afford the high and volatile fossil fuel prices to access this essential resource.

Renewable Energy Policy

Initiatives to combat energy poverty in Croatia are underway in legislation through the expansion of renewable energies.

New drafts of Croatia’s National Energy and Climate Plan (NECP) include language targeting energy poverty in the country. Under this Plan, an Energy Poverty Program aims at achieving the following objectives from 2021 to 2030 with an overall goal to define criteria for energy poverty:

  • Incorporation of energy education for citizens living in energy poverty
  • Creation of national standards and key identifiers describing energy poverty as a system for measurement and monitoring
  • Creation of programming will likely effectively increase energy efficiency for those in and at risk of living in energy-poverty households

Currently, 9.4% of the population cannot heat their homes adequately and is living in energy poverty. NECP plans to implement monitoring and allow the Country to identify at-risk populations, target policy accordingly, and ultimately lead to effective structural policy combating energy poverty.

Closely tied with the Energy Poverty Program, a 2020 initiative targeting energy poverty through the expansion of renewable energy use assists in renovating homes. The Program for Renovation of Family Houses has provided 100% funding for these renovations for qualifying houses in addition to free energy auditing. As of summer 2020, the program received more than $4 million.

The upcoming 2024 elections could spur change in Croatia’s priority on renewable energy and help to drive out investments in fossil fuel. This, in accordance the ongoing renewable energy initiatives, give hope to decreasing the levels on energy poverty in Croatia. 

– Carlee Unger

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

Photo: Flickr

June 3, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Jennifer Philipp https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Jennifer Philipp2024-06-03 01:30:562024-06-03 14:01:53How Renewable Energy in Croatia Can Reduce Energy Poverty
Africa, Economy, Global Poverty

Circular Economy Innovations and Poverty in Ethiopia

Poverty in EthiopiaEthiopia is a country with a cultural heritage and natural wealth. Yet, it faces high rates of poverty and environmental challenges. Even in this adversarial backdrop, innovative approaches toward a circular economy are emerging as one of the transformative solutions. These efforts shed light on how zero-waste initiatives, resource recovery programs and upcycling enterprises are not only mitigating environmental degradation but also creating economic opportunities and combating poverty in Ethiopia.

Poverty in Ethiopia

Ethiopia is among many African countries that face pervasive poverty. According to estimates by the World Bank, more than 20% of Ethiopia’s population lives below the poverty line and has little access to clean water, education and health facilities. Furthermore, rapid population growth and climatic changes raise the difficulty of the already existing challenges, making sustainable development a matter of high priority.

The principles of circular economies stress the use of resources in ways that are more regenerative, wasting little and reaping full value. It is within this argument that the circular economy opens a promising pathway for poverty alleviation in Ethiopia by inspiring economic growth while at the same time protecting the environment.

Zero-Waste Initiatives

Zero-waste initiatives aim to eliminate waste through redesigning production, reusing and promoting responsible consumption. In Ethiopia, organizations like the Zero Waste Ethiopia project pioneered such waste management strategies, with the core of reuse and recycling. By diverting waste away from landfills and incinerators, these initiatives effectively reduce environmental pollution while creating employment opportunities in the waste collection and recycling sectors.

An example of this progress is the Addis Ababa Waste-to-Energy Facility, which commenced operations in 2018. This facility converts municipal solid waste into electricity, offering a sustainable energy source to the capital while reducing methane emissions at landfill sites. In addition, community-based initiatives like the “Clean and Green Ethiopia” campaign encourage citizen participation in waste segregation and recycling, promoting environmental stewardship and community empowerment.

Resource Recovery Programs

Resource recovery programs tap into innovative technologies that release value from waste materials. Such initiatives in Ethiopia include producing biogas from organic waste and wastewater treatment plants, reducing environmental pollution and producing renewable energy and organic fertilizers. These programs empower locals by providing them with access to clean energy sources and enhanced agricultural productivity for poverty reduction.

With the support of international organizations, the Ethiopian Biogas Program began in 2009 and has since installed more than 42,000 biogas digesters in rural households, substituting traditional sources of biomass fuels and hence improving indoor air quality. The same applies to the wastewater treatment plant of the Hawassa Industrial Park, which recycles and treats industrial effluent to prevent water pollution of Lake Hawassa, sustaining the industrial development of the region in an environmentally friendly way.

Upcycled Ventures

Upcycled ventures give otherwise discarded material a high-value new life, creating a circular economy where waste represents a valuable resource. In Ethiopia, social enterprises like Sabahar and SoleRebels typify transformational potential through upcycling. Sabahar produces exquisite textiles from recycled materials, which gives artisans sustainable livelihoods while preserving traditional weaving techniques. Similarly, SoleRebels transforms old tires into fashionable footwear, offering opportunities for employment among marginalized groups while reducing waste in landfills.

These businesses not only help reduce poverty but also promote social inclusion and cultural conservation. These enterprises combine traditional craftsmanship with innovation in design, projecting cultural heritage to the world while generating income for their local communities.

Final Remark on Poverty in Ethiopia

The impacts of circular economy innovations extend into environmental sustainability dimensions, such as social and economic benefits, by creating new markets for recycled materials, employment opportunities and efficiency in resource use that contribute to poverty reduction and inclusive economic growth. However, such scaling up would involve a collaborative partnership among government, private sector and civil society stakeholders, coupled with investment in research, infrastructure and capacity building.

For a country like Ethiopia, which faces huge challenges regarding poverty and environmental issues, embracing circular economy innovations could show the way toward sustainable and inclusive development. The potential of zero-waste initiatives, resource recovery programs and upcycling enterprises can secure resilience in communities, protect natural resources and uplift the most vulnerable populations in Ethiopia. 

– Honorine Lanka Perera

Honorine is based in Highland, NY, USA and focuses on Business and Technology for The Borgen Project.

Photo: Flickr

June 3, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Lynsey 2 https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Lynsey 22024-06-03 01:30:072024-06-01 13:31:34Circular Economy Innovations and Poverty in Ethiopia
Developing Countries, Economy, Global Poverty

India’s Journey: Emerging as a Global Economic Powerhouse

Global Economic PowerhouseIn recent years, India has emerged as a global economic powerhouse, displaying remarkable economic progress that has positively impacted both extreme and non-monetary poverty. This is evident in the poverty decline over the years.  In 2022, India witnessed a substantial reduction in its Multidimensional Poverty Index (MPI) rate, dropping from 55.1% to 16.4% in 15 years. Several critical factors influence this decrease in poverty and the improvement of the global economic outlook.

India’s Growing Middle Class

The middle class in every country plays a pivotal role in shaping its economic outlook. India’s middle class is the fastest-growing demographic group in India, as it has witnessed a significant growth rate of 6.3% annually from 1995 to 2021.

Currently, the middle class makes up 31% of the population and projections indicate that this percentage will increase to 38% by 2031 and to 60% by 2047. The increase in the middle class has been one of the determining factors behind India’s growing success as a global economic powerhouse, as it leads to an increment in consumption and human capital for innovation.

IT Services and Digital Transformation

India’s IT services and digital transformation have propelled its position as a major player globally. India’s technology industry is a powerhouse driving the country’s global economy, job market and overall growth. In the fiscal year 2022, its revenue surpassed $200 billion. The COVID-19 pandemic has accelerated India’s digital progress, leading to a surge in internet users and a shift toward online services, including education and food delivery. As a result, India’s digital economy, comprising online businesses and services, is projected to reach a worth of $1 trillion by 2030.

Digital transformation is important for big companies and also smaller ones. Businesses are realizing they need to embrace technology to survive and grow. India is exploring exciting possibilities, like using artificial intelligence (AI) to improve internet access and digital services for everyone, even in rural areas. It is investing in innovations like AI to solve big challenges. While it is still early, the potential is huge for transforming India’s society and global economy for the better.

India’s Agricultural Landscape

The agriculture sector, a vital component of India’s economy, contributes significantly to the country’s gross domestic product (GDP) and employment. In the past years, it has experienced robust growth, accounting for 18.8% of the Gross Value Added (GVA) in 2021-22. Growth in allied sectors like livestock, dairying and fisheries has been the primary driver of this expansion.

Indian agriculture is now consumption-driven rather than population-driven, with farmers displaying diverse skills and small farms serving multiple functions. India ranks fourth globally in terms of the total value of agricultural production. Additionally, it is the second-largest food producer by calorie content, trailing only behind China.

India’s Foreign Direct Investment (FDI)

Over the past decade, India has experienced robust growth in its domestic market. It has attracted additional foreign direct investment (FDI) and focused on establishing foundational elements for sustainable economic development. Notably, India has advanced in global rankings for innovation and ease of doing business, indicating a favorable environment for further economic expansion.

In FY 2021-22, India saw a significant surge in annual FDI inflows, reaching $84,835 billion, surpassing the previous year by $2.87 billion. FDI equity inflows in the manufacturing sector increased by 76% compared to the previous fiscal year, totaling $21.34 billion. During FY 2022 (April-December), total FDI inflows in India amounted to $55.27 billion, with FDI equity inflows totaling $36.74 billion. Key countries contributing to FDI equity inflows included Singapore, the United States (U.S.), Mauritius, the Netherlands and Switzerland. The top sectors attracting FDI equity inflows in FY 2021-22 were computer software and hardware, services, the automobile industry, trading and construction activities.

Conclusion

In the past two decades, India has made remarkable strides in reducing extreme poverty. Between 2011 and 2019 it has halved the population living on below $2.15 per person per day. India aims to achieve high middle-income status by 2047.

According to the World Bank, for India to achieve this goal, it would need to focus on growth-oriented reforms and the expansion of quality job opportunities that match the influx of labor market entrants. Additionally, addressing gaps in economic participation, including increasing female workforce participation, is imperative to its global economic outlook.

– Teniola Yusuf

Teniola is based in Norwich, UK and focuses on Good News for The Borgen Project.

Photo: Pexels

May 8, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Lynsey 2 https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Lynsey 22024-05-08 01:30:102024-05-11 10:30:25India’s Journey: Emerging as a Global Economic Powerhouse
Africa, Economy, Global Poverty

Zimbabwe’s New Currency: A New Start?

Zimbabwe’s New CurrencyZimbabwe is a country in Southern Africa that has faced a volatile economy and high poverty and unemployment rates in the last decades. Amid surging inflation, which reached 55% in March 2024, the government announced the creation of a new currency, the ZiG, indexed on market prices and backed by gold. The hope is that this new currency could stabilize the economy and restore market confidence. Zimbabwe’s new currency and poverty situation are now closely interlinked.

Zimbabwe’s Economic Situation

The 2023 elections, which saw President Emmerson Mnangagwa get reelected, largely happened under the sign of economic concerns plaguing the country. The foregone rule of Mugabe left the country in dire financial circumstances. Among other problems, high inflation, corruption and a suspension of aid from the World Bank and the International Monetary Fund (IMF) as part of sanctions have yielded a cutthroat economic situation.

Although real gross domestic growth (GDP) reached 5.5% in 2023, this number is expected to fall to 3.3% in 2024 due to the effects of an El Nino induced drought and the general macroeconomic instability. However, the country’s economic foundations are considered decent as several sectors, such as agriculture and mineral production, remain locally and globally competitive. Yet, structural economic challenges will have to be tackled head-on to fulfill Zimbabwe’s economic potential truly.

Zimbabwe and Poverty

The decades of economic instability have stunted the country’s ability to fight poverty. As of 2023, it’s estimated that 42% of the population still lives in extreme poverty, with a quarter of the population being food insecure. With certain economists claiming the country’s unemployment rate is as high as 85%, much of the burden for the slow progress in diminishing poverty rates falls upon the country’s economic situation.

Zimbabwe’s New Currency and Poverty

Finance Minister Ncube announced the creation of the ZiG (Zim Gold) as part of a series of measures that sought to restore economic stability to the country. Since its election, the government has increased taxes on products such as sugar to repay some of the debt that has caused much of the country’s structural problems.

The new currency, indexed on the country’s gold reserves and precious minerals, would be less volatile than its predecessor. Indeed, backed by hard value items, this would prevent the currency from losing its worth. If successful, the new currency could help restore the country’s economy, where currently 85% of transactions are recorded in the United States (U.S. dollars). The government’s main objective is to regain strength and trust in a national currency as a path to leave the U.S. Dollar.

Suffering from high exchange rates, confidence in a national currency could lend itself to a better overall context for small and private businesses if restored. Zimbabwe’s new currency and poverty both rely upon stability and forthcoming measures.

Looking Ahead

The currency debuted and Zimbabweans were asked to exchange their remaining Zimbabwean Dollars for the ZiG in early April. Since then, mixed reports have come out. The general mistrust of the population regarding the historically chaotic management of the country’s economic institution leads many to remain keen on prioritizing the U.S. Dollar in most exchanges.

However, the ZiG does stay at a much lower exchange rate than its predecessor, the U.S. dollar. The choice of backing up the currency with hard assets still yields questions as economists wonder if the country’s gold and mineral reserves are large enough to back a currency. Whether this new approach will bear its fruits for Zimbabwe’s new currency and poverty alleviation requires close monitoring in the future.

– Felix Stephens

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

Photo: Flickr

May 7, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Lynsey 2 https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Lynsey 22024-05-07 01:30:202024-05-07 00:40:59Zimbabwe’s New Currency: A New Start?
Economy, Global Poverty, Poverty Eradication

Why Solving Global Poverty Is Everyone’s Concern

Solving Global Poverty

In today’s world, which is filled with newfound technological advancement, widespread wealth and endless opportunities for many, it can be both confusing and distressing that millions still live in poverty. Therefore, while we tend to celebrate the advancements of the modern world, a significant portion of humanity struggles to meet their most basic needs.

In describing the consequences of widespread poverty, Regis University Professor tells The Borgen Project in an interview, “There are many negative consequences of poverty, both for individuals and for society at large. Poverty is not only associated with exploitation, lack of decent housing, lack of access to health care and lack of access to education, which all impact life expectancy and life satisfaction at the individual level, but it has huge impacts on whole societies. Poverty correlates with high criminality, criminal gang membership and recruitment, civil war onset, with various forms of radicalization and even some forms of gender-based violence.”

As a result, the persistence of global poverty is a challenge that demands immediate attention from every corner of the globe. This being said, here are further reasons why solving global poverty is everyone’s concern.

Moral Concerns

At its core, the fight against global poverty is an urgent moral concern. This is because every individual, regardless of their circumstances, deserves the right to live a life of security and equal opportunity. Nonetheless, widespread poverty continues to undermine these moral principles by depriving individuals of access to food, clean water, education and health care, all of which are essential human rights.

In expressing these inequalities, Regis University Professor tells The Borgen Project, “Of course, we should all care about poverty because it is a moral issue and we should strive for a more just world where people have access to their basic needs at the very least. It is important to point out too that we in rich countries should reflect more often on how our consumerism and choices perpetuate poverty and rely on the oppression of poor individuals in poorer nations.”

Adding to this statement, a report by the United Nations Development Programme (UNDP) emphasizes how poverty remains a significant obstacle to achieving basic human rights globally. For example, poverty often deprives individuals of access to fundamental necessities such as food, clean water, education and health care, all thereby impeding their ability to lead dignified lives. Finally, poverty can exacerbate existing inequalities and perpetuate systemic injustices, injustices we remain complicit in perpetuating if we fail to recognize why solving global poverty is everyone’s concern.

Global Interconnectedness

As our world becomes increasingly interconnected, the impacts of poverty also extend far beyond the communities where it is most prevalent. Poverty is something that breeds instability, perpetuates conflict, fuels migration across the globe and, as a Regis University professor tells The Borgen Project, “can be one variable explaining civil wars. Scholars have found, for example, that civil wars can spread to neighboring countries through the inflow of arms, ideas and combatants across borders. Thus, this is a very real way in which poverty can be a backdrop explaining civil war and the contagion of other neighboring countries, generating regional instability.” Therefore, the eradication of poverty is not only a matter of social justice but also a matter of global security and stability and it is a key reason why solving global poverty is everyone’s concern.

Economic Growth and Prosperity

Despite many traditional beliefs, poverty is not simply a consequence of underdevelopment. It also poses significant obstacles to all types of development. For example, poverty hinders economic growth by depriving communities of human capital and productive resources. Moreover, when individuals lack access to education and health care, their potential contributions to the economy can never be realized. In this way, poverty creates a cycle of hardships that leads families and communities into a state of continuous struggle.

Nonetheless, working to reduce poverty has the potential to break this cycle. The Department for International Development (DFID) highlights, for example, that “strong economic growth therefore advances human development, which, in turn, promotes economic growth.” Therefore, by contributing to poverty alleviation efforts and recognizing why solving global poverty is everyone’s concern, we are able to realize the economic potential of all people, leading to greater prosperity for society as a whole.

Environmental Sustainability

The alleviation of poverty is also inherently connected to environmental sustainability. Research conducted by the Intergovernmental Panel on Climate Change (IPCC) specifically describes this intricate relationship between poverty alleviation and environmental sustainability. The IPCC reports that poverty often compels individuals and communities to engage in unsustainable practices, such as deforestation and overexploitation of natural resources, as a means of survival.

These activities then contribute to environmental degradation, including habitat destruction and loss of biodiversity, intensifying the effects of climate change on the most vulnerable populations. As a result, impoverished communities are disproportionately affected by the negative impacts of poverty, such as extreme weather events and declining agricultural productivity. However, by helping to lift people out of poverty and providing them with paths to more prosperous livelihoods, we can promote sustainable practices that protect the planet for future generations.

Long-Term Stability

Finally, working to eradicate poverty is not merely a short-term fix. It is an investment in long-term stability and prosperity. Therefore, by realizing why solving global poverty is everyone’s concern and addressing the underlying structural factors that perpetuate it, we are able to create the conditions for sustainable development and lasting change. Improving education, health care and economic opportunities, for example, serve as platforms for societies to withstand future challenges relating to poverty.

In regard to creating these long-term solutions, Regis University Professor tells The Borgen Project, “As citizens in a democracy, we should recognize more fully the power we have to shape policy. We can form advocacy or lobbying groups, join social movements or create them and donate to international organizations that are credible in fighting poverty. We can also demand better policy-making around this area. In the United States (U.S.), a very tiny percentage of taxes are used for foreign aid through the USAID (U.S. Agency for International Development). We must demand more transparency on how funds are allocated and programs evaluated so we understand which projects and programs are more effective in poverty alleviation.” In these ways, we can lay the groundwork for a more equitable world that will prosper for years to come.

– Olivia Pitrof
Photo: Pexels

April 1, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Lynsey 2 https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Lynsey 22024-04-01 03:46:152024-04-04 08:33:29Why Solving Global Poverty Is Everyone’s Concern
Economy, Global Poverty

Exploring Social Solidarity Economy

Social Solidarity EconomyFor more than 25 years, the global economy has grown significantly. However, it has also faced challenges such as environmental degradation and wealth inequality. The top 10% of the world’s population holds more than half of global incomes, while the bottom half earns only 8%. As a result, there is a growing recognition of the need for alternative economic models prioritizing sustainability and fair resource distribution.

One such alternative is the social solidarity economy (SSE), which focuses on cooperation, democratic decision-making and community welfare over profit maximization. SSE is a comprehensive approach that addresses not only economic concerns but also social and environmental issues, recognizing the interconnectedness of these factors.

These initiatives blend economic and social aspects rooted in sociocultural foundations and a rationale that intertwines productivity, participation, efficiency and welfare. SSE extends beyond economic realms to serve societal needs like health care, education and environmental protection, providing a holistic solution. Achieving these goals necessitates substantial efforts, particularly strong member commitment to democratic principles and cooperative work.

Social Solidarity Economy in Action

A compelling case study of SSE in action is found within the indigenous community of Nuevo San Juan Parangaricutiro, a village in Mexico. Through collaboration with governmental entities and a commitment to inclusive governance, this community has transformed a small sawmill operation into a diverse ecosystem of cooperative enterprises. By reinvesting profits into new projects to create job opportunities, Nuevo San Juan Parangaricutiro has seen significant growth, boasting more than a thousand jobs annually, with 800 permanent positions through its 11 community enterprises, including sawmills, furniture factories and tourism ventures.

The community’s organizational structure notably reflects its commitment to SSE principles, democratic decision-making and community engagement. At its core is the General Assembly of Community Members, which serves as the highest authority for decision-making, with approximately 1,254 individuals participating. Additionally, the Board of Directors, comprising the ejidal commissioner and the supervisory council, oversees governance matters. The Community Council serves as a platform for sharing experiences and knowledge, drawing from the extensive participation of members with decades-long involvement. Each company within the community operates under its own management, contributing to the collective prosperity of Nuevo San Juan Parangaricutiro.

Globalizing Localized Solutions

The International Network for the Promotion of the Social Solidarity Economy (RIPESS) facilitates the dissemination of SSE principles globally. RIPESS fosters collaboration among SSE practitioners worldwide through organizing meetings and knowledge-sharing platforms. By connecting local initiatives like Nuevo San Juan Parangaricutiro with regional, national and international entities, RIPESS enables the exchange of ideas and best practices, driving innovation and collective action towards more inclusive and sustainable economic systems.

Looking Ahead

RIPESS has achieved significant international success and recognition by collaborating with different branches of the United Nations, such as the United Nations Conference on Trade and Development (UNCTAD), the United Nations Economic and Social Council (ECOSOC) and the U.N. Inter-agency Task Force on Social Solidarity Economy (UNTFSSE).

However, the real challenge lies in expanding localized SSE models and incorporating them into conventional economic frameworks. Through fostering partnerships between governments, civil society organizations and the private sector, SSE presents a promising path towards a more equitable and environmentally sustainable future. In this future, prosperity is measured by the well-being of people and the planet, not just economic indicators.

– Spencer Springob
Photo: Flickr

March 24, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Lynsey 2 https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Lynsey 22024-03-24 01:30:042024-06-11 00:12:44Exploring Social Solidarity Economy
Economy, Global Poverty

Haiti Remains Resilient

HaitiDespite having faced multiple challenges and with “more than half of its population living below the poverty line,” the people of Haiti remain resilient. Haiti was once the wealthiest colony in the Americas producing sugar, coffee, cacao, cotton and indigo. Today Haiti is the poorest country in Latin America and the Caribbean region. As of 2023, some 4.4 million people, 40% of Haiti’s population, are facing acute food insecurity according to the United Nations (UN) Humanitarian Affairs Agency, Office for the Coordination of Humanitarian Affairs (OCHA). In 2022, Haiti ranked 163 out of 191 countries on the United Nationals Human Development Index.

Today the country needs economic growth. Although humanitarian assistance could alleviate some urgent needs it does not address the root of the current economic and political paralysis Haiti faces. Eradicating poverty is vital to Haiti’s economic growth. The existence of poverty leaves Haiti open to corruption and impedes the growth of the economy. Poverty in Haiti is so excruciating that most of the Haitian population finds it almost impossible to meet their basic needs such as shelter, health care and food.

International Support

The United Solar Associates partnered with the Ministries of Aides International Organization and delivered an “Off-Grid Photovoltaic System” designed by the Department of Electrical Engineering, University of Massachusetts. The system was installed at the Port-Margot School Solar Project in Haiti to eliminate the existing problem of intermittent electricity. Students and residents will benefit from reliable service of electricity to their computers, copiers and printers in the computer learning center.

Furthermore, the Ministry of National Education registered “more than a million students, more than 17,000 schools and more than 30,000 teachers” in its 2023 data collection.

In addition, the University of Miami (UM) Miller School of Medicine physicians and staff treated more than 250 critically injured within 48 hours of arriving in Haiti after the 2010 earthquake. Subsequently, they have provided telemedicine consultations, fundraising and communications support.

Post-Earthquake Projects

Next, the World Bank provided support to Haiti following the 2010 earthquake and the 2016 hurricane has achieved significant results. Moreover, there are 18 active projects focusing on energy, education health, agriculture, water, infrastructure, disaster risk management and sanitation and the World Bank has invested more than $1.2 million as of October 2023, according to its website.

Finally, the International Development Association (IDA) financed 456,000 tuition waivers for Haiti residents and developed a school feeding program that will provide meals to over 23,000 students. IDA’s intervention also provided cholera education and prevention training to more than 3 million people. In 2011, there were 350,000 cases of Cholera. Since 2019, there have been “no laboratory-confirmed cases.”

“The Heart Has a Memory”

Scholars argue the truth to be found in Friedrich Nietzsche’s statement, “That which does not kill us makes us stronger.” Perhaps the memory of having once been the richest colony is the root of Haitian resilience. “The heart has a memory of its own and it has forgotten not one thing; and yet, all seems to slip away in the blink of an eye.”

– Pamela Fenton
Photo: Unsplash

March 12, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Jennifer Philipp https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Jennifer Philipp2024-03-12 07:30:212024-03-12 01:03:24Haiti Remains Resilient
Development, Economy, Global Poverty

IFAD’s Plans to Transform the Rural Economy of Uganda

IFAD's Plans to Transform the Rural Economy of Uganda In 2020, reports indicated that 84% of Uganda’s population lived in rural areas, with the majority earning their livelihood through farming. Despite being the primary food producers for their nation, rural residents disproportionately face poverty. In 2022, about 30% of the rural population, approximately 10 million men, women and children, lived below the national poverty line. The rural economy of Uganda is pivotal to the nation’s overall economic health.

A continued focus on agricultural productivity is essential to sustain and accelerate Uganda’s economic growth, for a large amount of Uganda’s population agriculture is the main pathway out of poverty. The International Fund for African Development (IFAD) is dedicated to eradicating poverty and hunger in rural areas of developing countries. IFAD plans to transform the rural economy of Uganda and involves multiple projects working to increase the income and livelihood of the rural population.

The National Oil Seed Project

The National Oil Seed Project (NSOP), which will span from 2019 to 2028, has an estimated total cost of $160.69 million, with IFAD financing $99.56 million of it. This project represents IFAD’s commitment to transforming the rural economy of Uganda by reducing oilseed and their product imports. It aims to address the domestic production shortfall of oilseeds used in making vegetable oil and other by-products.

By reducing imports, the project boosts national production to satisfy demand. It targets at least 120,000 smallholder farmers to foster rural transformation by sustainably developing the oilseed sector. Additionally, the initiative will create opportunities for private sector investment in oilseed and by-products like animal feed. This effort seeks to build a competitive oilseed industry in Uganda, significantly benefiting the rural economy.

The National Oil Palm Project

IFAD’s plan to transform the rural economy of Uganda also includes the National Oil Palm Project (NOPP). This ongoing project will run from 2018-2029 and has a total project cost of $216.2 million, with IFAD financing $77.03 million. NOPP aims to support inclusive rural transformation through strategic investment in oil palm.

Establishing an efficient oil palm industry will sustainably boost rural livelihoods through generated opportunities. The National Oil Palm Project is estimated to directly benefit 30,800 poor and vulnerable rural households. Additionally, the project aims to minimize market risks for smallholder oil palm growers by ensuring their access to investment credit, technical expertise and quality inputs.

Rural Development

Investing in agriculture in Sub-Saharan Africa proves up to 11 times more effective in reducing extreme poverty compared to other sectors. This effectiveness stems from small farms hiring unskilled laborers, generating income that boosts rural communities and strengthens the rural economy.

IFAD’s plans to transform Uganda’s rural economy are pivotal in alleviating poverty. Central to efforts to eradicate hunger and poverty, rural development encompasses not only economic transformation but also social change and the promotion of gender equality and inclusiveness. This holistic approach aims to enhance the overall well-being of rural communities.

Looking Ahead

With initiatives like the National Oil Seed Project and the National Oil Palm Project, Uganda is on the cusp of an agricultural revolution that promises to uplift its rural population. IFAD’s targeted investments aim to transform the rural economy, fostering a sustainable pathway out of poverty for millions. In addition, these efforts, centered on enhancing agricultural productivity and promoting inclusivity, herald a brighter future for Uganda’s rural communities, driving economic growth and improving lives.

– Arabella Wood-Collins
Photo: Flickr

March 7, 2024
https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg 0 0 Precious Sheidu https://borgenproject.org/wp-content/uploads/borgen-project-logo.svg Precious Sheidu2024-03-07 07:30:382024-05-30 22:32:51IFAD’s Plans to Transform the Rural Economy of Uganda
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