Archive for category: Economy

Information and stories about economy.

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Why is Nicaragua Poor?

Destruction from ten years of The Contra War (1980-1990), as well as a 1987 economic crisis, led to the collapse of Nicaragua’s economy. Among the almost half of the population that is rural, about 68 percent live on less than a dollar a day. Why is Nicaragua poor? Nicaragua’s population currently stands at 6.1 million with two million school-aged kids. Here are four primary answers to the question “why is Nicaragua poor?”

  1. Lack of public services such as education
    The United Nations International Children’s Emergency Fund (UNICEF) logged that 500,000 Nicaraguan kids aged 3 to 17 are not in the education system. Most of these children cannot access education as they are of indigenous descent live in poor, rural areas.Children are more active in the workplace than in the classroom. In 2005, the national child labor survey calculated almost 240,000 child workers aged 5-17. One in three employees is under 14 years old. Nicaragua’s education system is not federally supported, for only a small portion of the government budget is allocated to education. Moreover, teachers in Nicaragua are among the worst paid in the world.
  2. Obstacles to market access
    Nicaragua’s economy is driven primarily by agriculture. Cassava is the main crop grown by local farmers who do not have access to technical support and profitable markets, in turn creating a distortion of commodity prices in the international market. They sell it to local markets at low prices and struggle to earn a profit. Indebted farmers in the coffee-dependent region of Nicaragua are paying off loans even with the increase in coffee prices.
  3. Fragile ecosystems
    In November 1998, Hurricane Mitch caused the destruction of hundreds of thousands of homes, lives and crops, and infrastructure suffered severely. In Posoltega, 2,000 people died in a mudslide. Much land has been overexploited, lessening agricultural productivity, and there is high population density on that same land. In addition, most families live on marginal lands where water is scarce.
  4. Physical isolation
    In 2001, only one out of five poor, rural households had access to electricity. In addition to the damage caused by natural disasters, Nicaragua had previously lacked adequate infrastructure such as roads, water accessibility and electricity supply.

Governmental negligence has left Nicaraguans independently surviving to the best of their ability, and this lack of support goes some way toward answering the question “why is Nicaragua poor?” Consequently, children must enter the workforce, farmers navigate an unfamiliar international market and locals struggle to live without access to transportation, water and technology.

It is the responsibility of the government to expand access to fundamental resources to Nicaraguans in isolated locations. While keeping the geography of rural locals in mind, it is also important for the government to be attentive of Nicaragua’s overall geographic disposition.

– Tiffany Santos

Photo: Flickr

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App Boosts African Informal Economy

African Informal Economy

The informal economy in sub-Saharan Africa is booming. Comprised of jobs ranging from independent manufacturers to food vendors, the informal economy is responsible for nearly 70 percent of employment in the sub-Saharan. Additionally, it’s estimated that on average, the African informal economy accounts for nearly two-fifths of national GDP.

Working in the informal economy does come with certain challenges. Access to communication technology and money transfers is particularly difficult. Additionally, access to loans for ready liquid capital is slim. Most could be addressed with banking infrastructure and all are necessary services that businesses operating in the formal economy enjoy.

However, from the bank’s perspective, it is not in their financial interest to service many in the informal economy. Many unbanked Sub-saharan Africans, nearly 500 million of them, consistently make small transactions—usually less than $5  a day. For this reason and the cost of opening and maintaining banking branches, banks don’t consider these individuals serviceable.

That’s where companies like Nomanini step in.

Nomanini, meaning “Anytime” in saSwiti, is just one of several tech companies investing in the African informal economy. With the use of mobile point-of-sale (PoS) devices, individuals can become walking, talking ATMs.

Nomanini’s physical PoS terminal is no bigger than perhaps two smartphones put together and is fully wireless. The Google cloud also hosts the system, giving clients more stability.

Armed with the PoS device, vendors can sell pre-paid mobile airtime, electricity, facilitate banking transactions, and help others pay their bills. In some cases, clients are even granted micro-loans, allowing them access to working capital and the opportunity to build credit.

With the help of Nomanini’s digital PoS app, the African informal economy is exploding. Some vendors have seen their monthly incomes grow 20-30 percent.

Since launch in 2010, Nomanini has facilitated more than 16 million transactions. With the help of Nomanini, the African informal economy, armed with only smartphones and a wireless connection has shown its viability, It has also proven that its large number of unbanked shouldn’t be ignored by institutions just because of the size of their transactions.

– Thomas James Anania

Photo: Flickr

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The Mysterious Case of the Poverty Rate in Benin

Poverty Rate in Benin
Benin, a country of 9.4 million people and 113,000 square miles, is known to  be one of the most stable and inclusive democracies in Africa. The country has seen consistent GDP growth over the past two decades, between 4 and 5 percent annually, with even higher rates in 2013 (7.7 percent) and 2014 (6.4 percent). However, political stability and economic growth have not lessened the poverty rate in Benin. Instead, the country’s poverty rate has been rising.

Despite the GDP, Poverty Rates are Climbing

In 2006, the poverty rate in Benin stood at 37.5 percent, dropping slightly to 35.2 percent in 2009. It then began to rise again, reaching 36.2 percent in 2011 and 40.1 percent in 2015.

How is it that GDP growth has gone hand-in-hand with rising poverty rates?

Economic Vulnerabilities

Twenty-five percent of Benin’s GDP is based on agricultural production. Environmental factors, like drought and severe weather conditions, affect the economy’s predictability and stability. Additionally, production tools are outdated, infrastructure is inadequate, and financing is absent.

Benin’s economy is largely dependent  on informal re-export and transit trade with Nigeria, which makes up about 20 percent of the country’s GDP. Informal labor employs over 90 percent of the country’s labor force and makes up roughly 65 percent of the overall GDP. According to the World Bank, “events in Nigeria can have considerable impact on Benin and create uncertainty in its fiscal space.” African Economic Outlook has reported that the recent economic slowdown in Benin is in part due to lower growth in Nigeria.

Recent Attempts at Reducing Poverty

Benin has been formally trying to fight poverty since 1999. In 2000, the country implemented the Interim Poverty Reduction Strategy (I-PRS). It  then enacted the Poverty Reduction Strategy (PRS 1) for 2003-2005, the Growth and Poverty Reduction Strategy (GPRS 2) for 2007-2009, and most recently the Growth and Poverty Reduction Strategy (GPRS 3) for 2011-2015.

These strategies aimed to bolster the rural economy, control demographic growth, reduce gender inequality, strengthen basic infrastructure, and enrich a microcredit policy–especially for women. Some progress has been measured, with Benin’s Doing Business ranking moving from 158th in 2015 to 155th in 2016.

Building a Diverse Economy from Within

With reliance on Nigeria and agriculture, Benin has the opportunity to improve its business environment from within, becoming more attractive to domestic and foreign investors. Increasing access to credit and infrastructure, such as electricity, will also be key in generating and sustaining business development.

Continuing its efforts to ensure the equal geographical distribution of resources, including access to health and education, and increasing economic opportunities for women will be instrumental for Benin to overcome the steady level of poverty its people have been facing.

 

– Joseph Dover

Photo: Flickr

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Tourism Holds Hope for Dominica Poverty Rate

Dominica Poverty Rate

The Dominica poverty rate has always been high, but in recent years with changes in the banana industry, the poverty rate has increased. There are very few wealthy Dominicans and there are no huge income gaps making Dominica one of the poorest countries of the Eastern Caribbean. But tourism to the country may be one solution that can decrease the poverty rate.

The area that is most affected by poverty in Dominica is the northern rural areas where agriculture is the main source of income. In these rural areas, one in every two households is poor. There is also a small urban class of people, which is made up of professionals and civil servants, who are considered middle class while the rest are working class. For the island as a whole, the unemployment rate has reached an estimated 20 percent.

This increase of unemployed people has to do with the decline of banana production. The decrease in banana production partly has to do with large agricultural businesses choosing suppliers in South American countries and getting bananas for a cheaper price. At the height of the banana industry, banana farmers in Dominica were producing 72,000 tons. That number has since dwindled to 12,000 tons of bananas being produced, with banana farmers barely able to cover costs.

With banana production so low, the Dominican government has been looking at other ways to boost the country’s economy. Tourism is being touted as a new solution since the island has beautiful views of waterfalls, rainforests, coral reefs and volcanic sites. Today, tourism contributes more than 30 percent of the country’s foreign exchange earnings while banana production only contributes 10 percent.

But Dominica has a long way to go to increase its economy and decrease the poverty rate. The government needs to protect the island’s ecosystem since that is the draw for tourists. Protection of the island’s ecosystem includes creating and supporting sustainable development and energy systems, having water quality management and deforestation prevention. With these plans set in place, the Dominica poverty rate will be able to decrease once the economy improves.

– Deanna Wetmore

Photo: Flickr

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Why is Guyana Poor?

Why is Guyana Poor
With a population of 758,000, Guyana is the third smallest country in South America. It is at once considered a middle-income country and the third poorest in the Western Hemisphere. So why is Guyana poor?

Tense History and Natural Riches

Guyana has been ruled by the Dutch, the French and the British. It became an official British colony in 1831 and won its independence in 1966. Since then, the country has faced tensions between its African and Indian populations. These cultural divisions have caused political instability and corruption.

In 2015, former army general David Granger won elections and ended the rule of the Indian-dominated People’s Progressive Party. Granger’s goal has been to end corruption and racial divisions. He formed a multi-ethnic coalition, Afro-Guyanese Partnership for National Unity and the Alliance for Change.

Guyana has one of the lowest deforestation rates in the world. Tropical rainforests cover over 80 percent of Guyana, and its agricultural lands are fertile.

Eighty-three percent of Guana’s exports are natural resources, including sugar, rice, gold, bauxite and timber. While offshore oil also shows economic potential, it has also revived border disputes with Venezuela.

A Fluctuating Economy

Guyana’s economy has shifted between strong periods of growth and impending disaster. In 1982 Guyana nearly faced an economic collapse. The country then saw some recovery from IMF-backed economic reforms. Guyana has since privatized many state-owned industries, which has led to new investments and more jobs.

Guyana’s economy was thriving during the mid-1990’s, growing at an annual rate of more than six percent. In 1998, economic growth stalled due to drought, falling commodity prices and political uncertainty. Growth was halted until 2005 and then increased until 2008 when world demand collapsed. Starting in 2009, the economy showed signs of growth at an annual rate between 3 and 5.5 percent.

The People Facing Poverty

The most recent poverty survey in Guyana was in 2006. The survey revealed that 36 percent of its people live in poverty and that 18 percent live in extreme poverty. The per capita income in 2015 was $4,090. Guyana’s currency is the Guyanese dollar. The exchange rate equals 206.55 Guyanese dollars for one U.S. dollar.

Children and indigenous people are the most likely to experience poverty. In 2006, UNICEF reported that 47.5 percent of children under the age of 16 in Guyana were living in poverty. Young adults between ages 16-25 are the second most affected, with a poverty rate of 33.7 percent.

Poverty levels vary by region. Rural coastal communities are the most impacted, followed by urban areas and the rural interior. Thirteen percent of people in urban areas are considered poor. In rural areas, 22.5 percent are considered poor, nearly doubling the urban percentage.

Why is Guyana Poor?

The poverty rate in Guyana is a case of contradictions.

Guyana has a growing economy and an abundance of natural resources. While this seems to suggest prosperity and jobs, the youth unemployment rate is over 30 percent. Current estimates are closer to 40.

Education is another factor that contributes to why Guayana is poor. The country has one of the highest reported literacy rates in the Western Hemisphere. From 2008-2012, youth ages 15-24 had literacy rates of 93.7 percent for females and 92.4 percent for males. However, the functional literacy rate is considered low, due to poor quality education, teacher training and infrastructure.

According to the World Factbook, Guayana has one of the highest emigration rates in the world. Over 55 percent of Guayana’s citizens are residents of other countries. More than 80 percent of citizens with higher education emigrate, causing a deficit of skilled workers, especially in healthcare. In addition to a lack of professionals, Guyana’s healthcare sector also suffers from a lack of medical resources.

Hope for Sustainable Growth

Guyana has the potential to reduce its poverty level. One of the first steps is to update the 2006 poverty measurements. UNICEF recommends that Guyana adopt methods to monitor poverty that takes various ages, regions and ethnicities into consideration.

Guyana has signed onto to Sustainable Development Goals to end poverty by 2030.

– Christiana Lano

Photo: Flickr

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Jordan Poverty Rate Increases with Refugee Crisis

Jordan Poverty RateJordan, while small in size, is often seen as a focal point in many Middle Eastern conflicts. This, among other points of stress, has been a major contributor to the country’s economic struggles.

The Jordan poverty rate has taken some hits in recent years, with high unemployment and weak economic growth. Job growth is a particular challenge in the area. In 2016, unemployment was at 15.3 percent.

The World Bank reported that in April that there are over 650,000 Syrian refugees currently in Jordan, which has put a strain on the country’s economy.

Economic growth has slowed in recent years. In 2016, Jordan’s economic growth saw a slight decrease, from 2.4 percent in 2015 to 2 percent. The ongoing Syrian crisis and the closure of export routes to Iraq and Syria have contributed to the country’s state of minimal growth.

However, the Jordan poverty rate is expected to see improvement in the coming years. The World Bank reports that Jordan should see a 2.3 percent growth rate for 2017, and an average rate of growth of 2.6 percent between 2017 and 2019.

According to data from the World Bank, Jordan’s GDP is approximately $38.655 billion. Its population is approaching 9.5 million.

As of 2010, the poverty headcount ratio at national poverty lines was approximately 14.4 percent, according to data from the World Bank.

According to a report from the World Bank, Jordan has undergone massive reforms in respect to education, health services, privatization and liberalization.

Additionally, social protection systems and reformed subsidies have been introduced by the country’s government. While issues of investment and business exchanges are still present, these improvements have positively influenced the region’s economy and poverty rate.

Jordan’s proximity to major conflicts in the area has put a major strain on the country’s economy. However, Jordan’s government has major improvements in the works that will benefit the economy and the Jordan poverty rate.

– Leah Potter

Photo: Flickr

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Poverty Rate in Burundi Continues to Rise

poverty rate in BurundiFrom the civil war that ravaged Burundi between 1993 and 2005 to the political turmoil that erupted in 2015 when President Pierre Nkurunziza announced he would run for a third term, Burundi has consistently battled displacement, violence and neglect that has dramatically increased the number of people living in poverty.

The civil war of 1993 through 2005—an ethnic conflict between Hutu’s and Tutsi’s that resulted in over 300,000 dead and hundreds of thousands more displaced—took a toll on the poverty rate in Burundi, which rose from 48 percent to 68 percent.

In the aftermath, people lacked access to potable water, adequate sanitation and medical aid. The vast majority of Burundian’s were thrust into poverty, battling sickness, hunger and violence.

Still, the country fought to recover. With the Arusha Accords, which ended the conflict and placed a two-term limit on presidential tenures, and an influx of foreign aid, the poverty rate in Burundi began to decline.

Yet, in 2015, as President Pierre Nkurunziza declared he was going to run for an unconstitutional third term, the country again fell into turmoil.

The repercussions have taken a toll on the poverty rate in Burundi—the United Nations Development Programme has estimated it as an astonishing 77.7 percent. What’s more, the country ranks 184 out of 188 countries on the 2016 Human Development Index. All said, Burundi is one of the poorest nations in the world, where access to basic goods and services is increasingly hard to come by.

As Nkurunziza, the Imbonerakure and Security Forces continue to capture, rape, torture and intimidate the people of Burundi, foreign aid is being pulled. The majority of major donors to the country have suspended budgetary assistance for the Burundian government and both the United States and the European Union have imposed sanctions on many opposition leaders and senior officials.

Even now, the turmoil continues to boil on and people continue to face a precarious future. This has led over 325,000 people to flee the country since 2015, most to neighboring Tanzania, Rwanda, Uganda and the Democratic Republic of Congo.

This outflux has severely crippled Burundi’s economy. Agriculture, which makes up 40 percent of the country’s GDP and employs over 80 percent of Burundians, is losing the labor necessary for production and distribution. What’s more, private consumption has plummeted as people continue to march across borders away from the atrocities being committed.

As the economy continues to struggle; as violence, displacement and death are an ever-present threat and as foreign aid remains stagnant, precarity is becoming a way of life. The poverty rate in Burundi will continue to rise unless the international community takes a stand. Aid is essential, both monetary and humanitarian, in order to overcome the crises and stem rising poverty. The world sat back passively during the first civil war that tore the country apart. Will it happen again now?

– Joseph Dover

Photo: Flickr

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Armenia Poverty Rate Falls After Six-Year Rise

Armenia Poverty RateFollowing a sharp economic downturn in 2009, Armenia is finally seeing a slow but steady decline in its poverty rates. As the country continues to find ways to increase wages and create jobs to stimulate the economy, Armenia’s poverty rate will maintain its decline.

Although Armenia has been experiencing a decline in its poverty rate in recent years, this decline comes after a six-year period of high poverty rates. In fact, in 2008 Armenia’s poverty rate was reported at 17.4 percent and had virtually doubled to 32.4 percent at the end of 2012.

This increase comes directly from the sharp economic decline in 2009 coupled with extremely low salaries that did not compensate for the cost of living in Armenia, despite it already being 54 percent lower than the United States.

However, the country quickly found a solution at the end of 2013 that gradually decreased the poverty rate and increased salaries and pensions.

ARKA News Agency noted that in 2014, 900,000 people were poor, with 310,000 very poor and 60,000 extremely poor. These accounted for 19.4 percent of the population as poor, 8.4 percent as very poor and 2 percent as extremely poor. But by 2015, Armenia had returned to a 29.8 percent poverty rate, just 12.4 percent more than the poverty rate in 2008.

Despite a still inflated poverty rate, the country continues to see improvements in its poverty rates. In 2015, Armenia ranked second to its neighbors in poverty rates at 29.8 percent, but now in 2017, at the same rate, it is ranked fourth.

With the poverty rats continuing to fall, the GDP has reflected the trend by increasing. Last year, the GDP climbed to $10.547 billion, a $0.018 billion increase from 2015.

As the country continues its substantial improvement, Armenia’s poverty rate will sustain its reduction while its GDP and salaries increase.

– Amira Wynn

Photo: Flickr

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Causes of Poverty in Somalia and the Need for Aid

Help People in Somalia
It is no secret that the countries most affected by climate change are the least equipped to combat the implications. Much of Somalia is dependent on livestock and agriculture, and more than half the population is now in dire need of humanitarian assistance after two seasons of poor rainfall. There have been many causes of poverty in Somalia that have left the country unable to aid its own citizens — in fact, the U.N. estimates a need for $864 million to assist 3.9 million people.

 

Leading Causes of Poverty in Somalia

 

The War on Hunger

Famine looms as a very viable threat. In just 48 hours, 110 people died from starvation and drought-related illness in rural Somalia. The drought is more severe in the country’s rural regions. Many Somalis from these areas took to the road out of necessity. Somalia’s capital city of Mogadishu offers feeding centers and food distribution.

Like most, Fadumo Abdi Ibrahim made the 30km journey on foot with her nine-month-old malnourished son in arms. While she was fortunate to complete the trek, others were not so lucky. “We found several bodies of children on the road,” Ibrahim said. The malnourished children died in their mothers’ arms; mothers too weak to carry the small corpses the rest of the way.

Like Ibrahim, Somalia travelled a long and challenging road to arrive at its current state of affairs. There are many causes of poverty in Somalia. The following are a few of the most significant.

In the early 1980s, the International Monetary Fund (IMF) and World Bank instigated an intervention in Somalia and imposed economic and agricultural reforms in hopes of spurring development.

In theory, macroeconomic development seems reasonable.

POVERTIES is an online publication reporting social scientific research and information on economic development, public policy, human rights and discrimination. One article helps to simplify the damages of neoliberal reforms. The neoliberal ideology consistently follows a pattern of “currency devaluation for cheap exports and cheap labor, trade liberalization by opening the borders to world trade (and to global competitors), reducing budget deficits through massive cuts in the public sector and reduction of social services.”

Somali met with many of these consequences thanks to the IMF’s reformations. Unemployment, extremely limited wages and higher food prices proved among the most punishing.

 

Growing Dependency

Somalia was largely self-sufficient in food until the 1970s. Its economy was based on an exchange relationship between herdsmen and agriculturalists. The IMF’s economic reforms undermined these fragile relationships, victimizing food distribution and the agricultural economy.

Since the collapse of the country’s last government in 1991, social and political order in Somalia presents itself in the form of clans. The situation has proved surprisingly less violent than expected. Most conflict, however, is rooted in land and water resources. There is a necessary method within this madness: for many Somalis, access to such resources is dependent on their clan — that is, if they have a clan at all.

Again, the causes of poverty in Somalia are countless, but the IMF and the loss of a centralized government certainly caused the greatest damage.

Somalia’s traditional pastoral economy presented itself as the perfect project for modernization, but forced reformation led the population towards a fight for survival. The reforms devastated Somalia’s agricultural sector, and war and civil war further strained essential resources (as well as other factors too numerous to list).

When the rain stopped, the entire population was at the mercy of drought, with no centralized government to provide relief from impending famine.

The fate of more than half of all Somalis now lies in the hands of foreign and humanitarian aid. Somalia and its citizens like Ibrahim have fought to make it this far on a challenging journey; the question is, will help be waiting to greet them?

– Sophie Nunnally

Photo: Flickr

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Germany’s Poverty Rate

Germany Poverty RateGlobally known for its engineering prowess and beautiful landscape, Germany lies in Western Europe and is undeniably one of the world’s superpowers. Although the country has experienced economic success over the past two decades, there are an unexpectedly large portion of people living below the poverty line. In fact, in 2015 the Germany poverty rate reached previously unseen levels of 15.7 percent of the population living in poverty.

Germany’s thriving economy is the fourth-largest in the world and has continued to grow with the success of its many companies, notably including Siemens Group, BMW and Volkswagen. There was even a 1.7 percent increase in GDP from 2014 to 2015.

This obvious economic development, however, has not had the expected effect of reducing poverty. The welfare organization Paritätische Wohlfahrtsverband reported an uptick in the Germany poverty rate as well as a surge in the rate at which poverty is increasing. The poverty rate in Berlin rose from 20 percent to 22.4 percent from 2016 to 2017. In fact, in 11 of the 16 German states, the number of people living in poverty has increased from the past year.

Single parents and their children are heavily affected, as 43.8 percent remain below the poverty line. Also, many of those who immigrate to Germany do not have access to a stable source of income and consequently live in poverty. Over a third of foreigners are affected by poverty. Old-age poverty has also significantly risen, with a 5.2 percent increase from 2005 to 2015, and it will only continue to rise due to the spread of job insecurity.

Even in the face of lower unemployment, Germany’s poverty rate has not decreased. This may be due to an unequal distribution of resources and wealth. The rich are getting richer while the poor are not necessarily getting poorer, but are increasing in number. The number of millionaires increased from 12,424 to 16,495 from 2009 to 2016. However, the number of homeless also increased by more than 100,000 between 2008 and 2014, and 4.17 million Germans are in serious debt.

Additionally, while the national average pay has increased by 10 percent, wages for lower paying jobs have not increased along with them. The pay for managers has also increased by 30 percent in the last 15 years, which is four times faster than wages. Thus, the problem may lie in the inadequate support of those in poorer social groups.

The booming economy may create new jobs, but these jobs pay so little that people are not able to live above the poverty line even with a stable job. Too many people work part-time jobs that don’t allow them to make ends meet. To help remedy this lack of well-paying jobs, Germany has agreed to increase its minimum wage by four percent in 2017. While the advantages of a higher minimum wage are highly debated, low-wage workers will potentially have the chance to finally climb above the poverty line.

Germany is undoubtedly one of the world’s most influential and powerful countries, but it has much work to do if it wishes to dramatically lower its poverty rate. A few examples of potentially beneficial policy actions include more emphasis on promoting the education of children from low-income areas, more targeted taxes on the rich to help redistribute wealth, financial support for single families and poor pensioners and an overall higher priority placed on combating rampant poverty.

– Akhil Reddy

Photo: Flickr