Information and stories about economy.

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

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

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

Why Does Ethiopia Need Funding?

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

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

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

Ethiopia’s Economic Recovery

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

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

Final Note

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

– Tanita Love

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

Photo: Unsplash

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Having An Impact: NGOs In Tunisia

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

FISTA

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

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

Assen

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

Islamic Relief Worldwide

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

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

Islamic Relief and Schools

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

Looking Ahead

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

– Malik Vega

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

Photo: Flickr

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

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

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

Singapore’s Social Safety Net

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

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

The Many Helping Hands Approach

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

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

Looking Forward

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

– Asiya Siddiqui

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

Photo: Flickr

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How Microfinance in India Transforms the Lives of Rural Women

<span style=India is a rich, diverse nation in Southern Asia, within what is known as the “Indian subcontinent.” It has long boasted extremes of all sorts, with Antilia – the residence of India’s richest family – located on Billionaire’s Row adjacent to the Dharavi Slum, which houses more than one million people. This extreme poverty is nothing short of ubiquitous.

Microfinance in India

Microfinance in India, which surfaced in 1974, refers to financial services aimed specifically at low-income individuals who do not meet traditional banking services requirements. The microfinance institutions offer small business loans at reduced interest rates to finance entrepreneurial initiatives for low-income individuals. In India, microfinance has proven instrumental to more than 160 million impoverished households as of 2023.

The Impact of Microfinance in India

Rajpoot was a homemaker in Narela, Madhya Pradesh, in rural India. She had fallen into loan shark schemes, borrowing twice to cover emergency medical expenses and her son’s college tuition. However, loan sharks are notorious for their high interest rates, which only prove troublesome for low-income borrowers. Rajpoot could not repay the 5% daily interest on her last loan in 2019, forcing her to give away a family heirloom as compensation.

However, in 2020, her life changed when she registered for a low-cost loan program with a group of women from her village. She used the funds to start a dairy herd business. Today, she proudly owns seven cows and one buffalo. She comfortably repays the $19 monthly installment to the microfinance company, Spandana Spoorthy Financial Ltd, while also affording her expenses, freeing her from crippling poverty.

The success story of Rajpoot highlights the impact of microfinance in India. Her story comes in addition to prominent microfinance banks, such as the National Bank for Agriculture and Rural Development (NABARD), which have empowered more than 160 million impoverished Indian households as of 2023.

The Importance of Microfinance in India

In India, where about 80% of women are financially illiterate, loan sharks often charge high daily interest rates. This practice drives more people into extreme poverty as they are forced to borrow from one lender to repay another. Microfinance provides an alternative to predatory lending, offering fair and manageable loan terms. By empowering women with access to financial resources and education, microfinance helps break the cycle of debt and fosters economic independence and stability.

Final Remark

Microfinance in India plays a critical role in bridging the nation’s economic extremes. Encouraging this practice involves supporting the banks directly engaged in microfinance. It increases marketing prospects in villages where microfinance would yield the greatest benefits in alleviating poverty. These measures would ensure that the initiative is maximized and that as much of the population as possible is aware of this initiative. Additionally, the initiative can help brighten the nation’s future by empowering illiterate women as legitimate income earners.

– Disheta Anand

Disheta is based in Dubai, United Arab Emirates and focuses on Business and Politics for The Borgen Project.

Photo: Pexels

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The Path to Poverty Reduction in South Korea

Poverty Reduction in South KoreaSouth Korea has adopted a long-term, comprehensive, multifaceted approach to reducing poverty, integrating government initiatives, technological innovations and international cooperation. These strategies have resulted in significant improvements in the country’s economy, education and infrastructure, making South Korea “the 12th largest economy in the world.” Here is information about poverty reduction in South Korea.

Economic Growth and Poverty

Since the end of the Korean War, South Korea’s economy has expanded, turning it from a low-income nation into a major player in the world economy. According to the World Bank, South Korea’s real gross domestic product (GDP) increased by an average of 5.7% each year between 1980 and 2023. Moreover, its gross national income (GNI) per capita swiftly advanced from $67 in the early 1950s to $33,745 in 2023.

South Korea faces challenges in addressing relative poverty, especially among senior citizens. The Human Rights Measurement Initiative (HRMI) ranks the country among the bottom three OECD countries in terms of relative poverty rates. For people aged 65 and older, South Korea has the highest relative poverty rate in the OECD.

Human Rights and Social Outcomes

On the other hand, the HRMI gives South Korea a positive score in ensuring basic rights such as food and health for its people. The right to food is 97.3% of what should be possible with South Korea’s GDP per capita, indicating that the majority of the population has adequate access to food, according to the HRMI.

However, the organization also notes that the right to work is less adequately addressed, with South Korea scoring only 74.4% of its potential in ensuring employment. This disparity is due to the high rate of relative poverty and the significant gap between regular and non-regular workers.

Government Policies and Welfare Programs

In recent decades, poverty reduction in South Korea has become more prevalent largely due to various government policies on enhancing social welfare and labor reforms. Social spending has increased significantly, quadrupling as a percentage of GDP from 1990 to 2015. The current administration has continued this trend by raising the minimum wage and expanding welfare budgets, according to the HRMI.

However, South Korea’s social spending still remains relatively low compared to other countries in the OECD. According to the HRMI, social spending in 2020 was only 10.4% of GDP, far below the OECD average of 21.6%.

According to the Ministry of Economy and Finance, the South Korean government has implemented various initiatives to stabilize the economy through fiscal policies, regulatory reforms and measures to manage inflation and stabilize prices. These policies create an environment that is conducive to business growth and job creation.

Expansion of Social Safety Nets

South Korea’s efforts to expand its welfare programs since the late 20th century have continued to this day. These enhanced safety nets aim to provide comprehensive economic support and safeguards to vulnerable populations. In particular, many of these programs focus on providing tailored health care, pension benefits and direct financial aid to senior citizens and rural residents, promoting equitable growth and development.

However, despite the expansion of these safety nets, relative poverty among vulnerable populations in South Korea remains an issue to this day. For example, the 2022 OECD Economic Survey of Korea reports that the average pension paid by the National Pension Service was only the equivalent of a third of the country’s minimum wage. Such factors have contributed to the ongoing high rate of relative poverty found by the HRMI in South Koreans aged 65 and older.

The international dimension of South Korea’s poverty reduction strategy applies active participation in global economic forums and hosting significant events like the World Bank’s 21st International Development Association (IDA) replenishment meeting. In only six decades, with the help of the IDA and World Bank, South Korea has transformed from an IDA recipient to a contributor that is now positioned to support the development of other countries.

The Future

South Korea’s journey from a war-torn nation to an economic giant is a testament to its resilience and effective policy-making. The government’s integrative approach to reducing poverty within the country through innovative policy-making, technological advancements and international cooperation has demonstrated rapid success.

However, there is still room for further improvement. The ongoing refinement and expansion of South Korea’s social spending, labor reforms and targeted poverty alleviation programs are still essential to ensuring sustainable poverty reduction in South Korea and improving the social outcomes for all its people.

– Sophia Lee

Sophia is based in Media, PA, USA and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr

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Roots of Underdevelopment: Fragility and Rule of Law in Kosovo

Fragility and Rule of Law in KosovoWith a growing population of young, working age people, Kosovo’s potential for economic development is evident. In spite of this, it continues to be ranked one of the poorest countries in Europe, the poverty rate in 2023 standing at 21.7%. By understanding how poverty and troubles with fragility and the rule of law in Kosovo are interconnected, the roots of underdevelopment in this new nation can be illuminated.

Where: The Origins of Fragility

The present difficulties with fragility and the rule of law in Kosovo have deep ties to its historically tumultuous path to sovereignty. Kosovo originally existed as a province in the former Yugoslavia, however, demands for Kosovan self-determination increased after the final breakup of Yugoslavia in 1992. Kosovo gained independence in 2008, though this process proved to be difficult. The Kosovo War exemplifies this troubled journey, a context in which the ethnic cleansing of Kosovar Albanians sparked international outrage.

Demographically, Kosovo is predominantly ethnic Albanian (93%), although there is a minority of Kosovar Serbs that reside in the country, particularly in the North where Serbia maintains de facto rule. Kosovo, then, is still an area of significant political and cultural importance to Serbia. While the civil conflict between ethnic Serbs and ethnic Albanians peaked during the Kosovo War, the legacy of this ethnic tension post-1999 remains, continuing to threaten stability in Kosovo.

What: The Present Manifestations of Fragility

In 2022, violent protests began to emerge as the national government cracked down on ethnic Serbs who failed to adopt Kosovo license plates. Following this civil unrest, there was a mass withdrawal of ethnic Serbs from national institutions as a second form of protest, according to the 2024 Research Briefing from the House of Commons.

The events of April 2023 are a similar case: ethnic Serbs boycotted the local elections in the Northern municipalities. These events are related to the demand that ethnic Serbs were not represented sufficiently in government, which the poll data further reflects, showing that the majority of Kosovans recognise that the nation is governed in the interest of some groups, but not all.

In a similar way to many post-conflict countries, political and social fragility also manifests itself in an undermined rule of law. In post-conflict and fragile states, there tends to be a significant state “capacity gap” making the enforcement of law difficult. This capacity gap occurs at the judicial level in Kosovo, with U.N. military peacekeepers having to establish Civilian-Military Centres to deal with crime reports, according to USAID.

Government corruption and organized crime continue to plague the nation, taking advantage of these gaps in institutional and judicial capacity. The prevalence of bribery is an exemplary case of how the rule of law in Kosovo is weak at the state level, along with the proliferation of the drug trafficking and human smuggling industry.

Hindering Development

Generally, evidence shows that fragility causes poverty to become more deeply entrenched. As Carolina Sánchez-Páramo, Global Director for the World Bank’s Poverty and Equity Global Practice, states: “Unless we tackle the drivers of fragility and conflict, we won’t be able to win the fight against extreme poverty.” In line with this rhetoric, then, the potential for increasingly heightened ethnic conflict in Kosovo puts poverty alleviation initiatives at risk of failure or stagnation.

Furthermore, whilst organized crime has proliferated, other industries have failed, according to Per Concordiam Magazine. The 2023 polls show that the lack of jobs in Kosovo is a major concern, second only to the cost of living and this unemployment is exacerbated amongst the Kosovan youth leaving much of their younger, working-age population little to no sustainable income, according to the Center for Insights in Survey Research.

In turn, reliance on organized crime for income makes little room for sustainable industry development or legal employment opportunities, whilst also significantly reducing fiscal tax revenues. On average, countries in the Balkans lose between 20% and 30% of their annual revenues to this sort of activity, Per Concordiam Magazine. These revenues could be useful for the development of public infrastructure, health care and education services and other public spending projects.

Long-Term Solutions

Despite the evident difficulties with fragility and the rule of law in Kosovo, there is certainly a possibility for sustainable development, guided by international initiatives looking to support private industry development and regional integration.

The European Bank for Reconstruction and Development (EBRD) recognizes the complexities of Kosovo’s situation, acknowledging the intricacies of its relationship with Serbia, its multi-ethnic population and the flaws in the state’s institutional capabilities. Through a five-year investment and policy strategy that promotes deeper regional integration, The EBRD aims to stimulate the domestic private sector by opening up the Kosovan industry to new markets.

The EBRD’s previous 2016-2021 strategy was successful in a multitude of fields by financing the country’s first two large-scale renewable energy projects, Baigora wind farm and KITKA wind; rehabilitating Kosovo’s Rail Route 10, helping to improve connectivity with North Macedonia and Serbia; and setting up Women in Business specific lending schemes.

The road to sustainable economic development in Kosovo has, so far, been difficult, hindered notably by a fragile socio-political context, underdeveloped state institutions and extensive crime networks. But the untapped potential of Kosovo’s youthful population remains, and so does the international initiatives looking to support Kosovo economically.

– Tilly Phillips

Tilly is based in Surrey, UK and focuses on Good News and Politics for The Borgen Project.

Photo: Flickr

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Social Enterprises in Colombia

Social Enterprises in ColumbiaColombia is witnessing a transformative wave of social enterprises addressing pressing social issues while generating employment and reducing poverty. These innovative businesses are tackling critical challenges such as waste management, economic inclusion and sustainable agriculture, all while creating jobs and improving the quality of life for many Colombians. 

Tackling Waste with Innovation

Conceptos Plásticos is a leading example of innovation in waste management and housing solutions. This enterprise transforms plastic waste into building materials for affordable housing. In 2018, Colombia produced approximately 14 million tons of municipal waste daily and only 17% is recycled. Conceptos Plásticos reduces plastic pollution, creates jobs and provides sustainable housing solutions for low-income families. The company has already built more than 1,500 homes using recycled plastic. By converting plastic waste into a valuable resource, Conceptos Plásticos significantly impacts both environmental sustainability and social welfare.

Promoting Economic Inclusion

Fundación Capital is another notable enterprise making strides in Colombia. This organization focuses on economic inclusion by offering financial education and digital tools to low-income individuals. In Colombia, approximately 30% of the population lives below the poverty line. Fundación Capital’s initiatives help individuals manage their finances and improve their livelihoods. The organization has reached more than six million people across Latin America with its programs. By empowering people with the knowledge and tools to achieve financial stability, Fundación Capital plays a crucial role in reducing poverty and promoting economic growth. The initiative highlights the importance of financial literacy in achieving long-term economic sustainability.

Advancing Sustainable Agriculture

SiembraViva, a Colombian social enterprise, addresses environmental sustainability and agricultural innovation. Agriculture accounts for about 6.3% of Colombia’s GDP, with many small farmers struggling to maintain sustainable practices. SiembraViva supports small farmers by providing technology and promoting sustainable farming practices. These ongoing efforts improve crop yields and reduce the environmental impact of agriculture. The enterprise has supported more than 1,000 farmers, reducing waste from 30% to 5% and guaranteeing farmers an income. By focusing on sustainable methods, SiembraViva helps ensure that farming practices contribute to long-term ecological health.

The Broader Impact

These social enterprises in Colombia illustrate the powerful role of entrepreneurship in driving social good. By tackling critical issues such as waste management, economic inclusion and sustainable agriculture, these social enterprises are creating jobs and improving the quality of life for many Colombians. Colombia’s unemployment rate, which stood at 11.3% in 2024, underscores the need for job creation initiatives. The innovative solutions provided by Conceptos Plásticos, Fundación Capital and SiembraViva demonstrate the potential of social enterprises to transform economies and uplift communities. As Colombia continues to support and nurture these initiatives, the positive impact on society is expected to grow, contributing to a more sustainable and inclusive future.

– Chelsea Rasool

Chelsea is based in Stirling, Scotland and focuses on Technology and Solutions for The Borgen Project.

Photo: Flickr

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Uganda’s Economic Growth in the Face of Global Challenges

Uganda’s Economic Strength in the Face of Global ChallengesUganda’s economic landscape has faced significant global challenges over the past few years, yet the country has demonstrated notable resilience and potential for sustained growth. Despite external pressures such as high commodity prices, global inflation and the repercussions of geopolitical events, Uganda has managed to maintain steady economic growth.

Economic Growth and Performance

In 2024, Uganda’s economy is expected to grow by 6.0%, a testament to its resilience and robust economic strategies. This growth projection follows a substantial 6.3% increase in real GDP in 2022, reflecting the country’s capacity to bounce back from economic downturns. The primary drivers of this growth have been the agriculture and services sectors. Agriculture, particularly food crops, has thrived due to favorable weather conditions and government initiatives aimed at boosting productivity and sustainability.

The services sector has also shown strong growth, especially in trade, repairs and health services. For example, as more Ugandans move to urban areas, there is an increasing need for retail services, which has led to the proliferation of shopping malls, supermarkets and smaller retail outlets. Improved transportation networks and better logistics support this growth, making it easier for businesses to distribute goods across the country. 

Inflation and Monetary Policy

Inflation in Uganda peaked in late 2022, driven by global supply chain disruptions and high commodity prices. However, it has since been on a declining path, due to the Bank of Uganda’s (BOU) monetary policy. The BOU has implemented measures aimed at stabilizing inflation around 5%, which include adjusting interest rates and using open market operations to control liquidity. The proactive approach aims to mitigate economic shocks and prevent unnecessary volatility in monetary policy reactions. 

External Financial Support and Debt Management

A significant challenge Uganda face is its reliance on external financing, particularly in light of global monetary tightening and rising borrowing costs. However, Uganda’s external debt profile is relatively favorable, as it is predominantly owed to multilateral creditors such as the World Bank, IMF and African Development Bank. These institutions offer concessional loans with lower interest rates and longer repayment periods, which reduces the risk associated with commercial loans. Increasing domestic revenue through improved tax collection is crucial for financing development projects and maintaining debt sustainability. Effective tax policies and administration could further enhance government revenue, reduce dependence on external debt and provide more resources for essential public services and infrastructure projects​.

Sectoral Contributions and Structural Challenges

Uganda’s economic growth has been uneven across different sectors. While agriculture and services have performed well, the industrial sector has struggled, particularly in construction. The construction sector has faced challenges such as high costs of materials, regulatory hurdles and insufficient infrastructure investment. Additionally, Uganda faces structural challenges like the impact of climate change, limited fiscal space and stagnant productivity. These ongoing challenges are compounded by high local lending rates, which stifle business growth and innovation. 

Investment and Development Initiatives

International organizations like the World Bank, International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) are actively supporting Uganda’s development across various sectors. These organizations invest in projects that aim to diversify the economy, support smallholder farmers and improve access to finance and jobs. For example, initiatives in the agricultural sector focus on enhancing productivity through modern farming techniques and access to markets. In the financial sector, efforts are being made to increase access to credit for small and medium-sized enterprises (SMEs), which are vital for job creation and economic diversification.

Strategic and Policy Recommendations

Enhancing coordination between fiscal and monetary authorities is essential for maintaining economic stability. For instance, aligning fiscal policies with monetary policy objectives could help control inflation and ensure sustainable public finances. Additionally, Uganda should focus on boosting productivity in established sectors like agriculture while exploring new growth avenues such as value-added production and export diversification. Investing in infrastructure, education and health services is critical to improve human capital and support long-term economic growth. Climate change adaptation and transition financing present opportunities that Uganda can potentially capitalize on to bolster its external balance position. 

Looking Ahead

Uganda’s steady economic growth, driven by agriculture and services sectors, reflects its resilience amid global challenges. Effective monetary policies have stabilized inflation, creating a favorable environment for recovery. External financial support and strategic investments in infrastructure and education aim to enhance Uganda’s economic stability and long-term growth prospects. Addressing structural challenges and boosting productivity remain crucial for sustaining this progress.

– Sofia Reynoso

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

Photo: Flickr

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Ben & Jerry’s: Divesting from Israel

Divesting from IsraelBy divesting from Israel, Ben & Jerry’s did more than end the sale of ice cream in the occupied Palestinian territories. As the leading brand, Ben & Jerry’s is the face of the U.S. ice cream – a $19 billion U.S. market. Its divestment not only signals a significant economic impact but also a strong ethical stance in the human rights discourse at large. It bolsters Palestinian advocacy efforts and increases international pressure for policy reform.

“We believe it is inconsistent with our values for our product to be present within an internationally recognized illegal occupation,” wrote Ben & Jerry’s in a statement. Corporate divestments from Israel not only shift significant financial resources but also set precedents for other investors and reflect growing societal concerns about corporate responsibility in geopolitical conflicts.

What Is Divestment?

Divestment is the process of selling off assets for either financial, ethical or political reasons. In the context of the Israel-Hamas war, divestment refers to the withdrawal of investments from companies or entities operating in Israel or the occupied Palestinian territories.

Anyone who has watched the news in recent months has seen students at major universities calling for divestment. Protestors at Columbia University, for example, have a long list of divestment targets, demanding the college disclose and divest from companies like Amazon, Google and Airbnb.

Other major corporations, including Hudson’s Bay Company and UniCredit, have also announced divestments. To understand the significance of major corporate divesting from Israel, let’s consider Ben & Jerry’s as a case study.

Impacts of Ben & Jerry’s Divesting from Israel

Ben & Jerry’s divestment from the occupied Palestinian territories represents a strong ethical stance, influences public discourse, interacts with complex legal and political frameworks and applies economic pressure. This move highlights the potential for businesses to impact global human rights and policy issues through their investment decisions.

The Ben & Jerry’s divestment has placed economic pressure on Israel with an impact on both U.S. and Israeli economies and contributed to a broader social and political discourse around Israel’s occupation of Palestinian territories.

Economic Pressure on Israel

Ben & Jerry’s divestment from Israeli-occupied Palestinian territories puts economic pressure on Israel by challenging the legitimacy of its occupation and potentially promoting other companies or countries to reconsider their business ties.

The tangible economic pressure from divestment involves a combination of direct financial losses, disruptions in supply chains, impacts on local employment, stock market reactions, regulatory costs and changes in consumer behavior. Collectively, these pressures incentivize changes in policies and practices, aligning business operations with human rights considerations.

Impact on Israel and the US Markets

In Israel, the decision led to increased support for local ice cream brands and alternative suppliers. Local impacts include the reallocation of market share within Israel’s economy, particularly in the affected territories. In the U.S., depending on Ben & Jerry’s political affiliation, many consumers have supported and boycotted the company’s decision, leading to temporary influxes or declines in sales within certain demographics or regions.

The shifts in consumer preferences due to the controversy could have led to short-term changes in market share within the premium ice cream segment. In the past year, Ben & Jerry’s has lost nearly $1 billion in sales. This has allowed competitors like Häagen-Dazs, Baskin-Robbins and smaller artisanal brands to see an uptick in sales from consumers boycotting Ben & Jerry’s.

State-Level Regulations That Penalize Companies

The Israeli government lobbied states like North Carolina with anti-BDS (Boycott, Divestment, Sanctions) laws, which penalize companies that boycott Israel, potentially impacting business relations and financial interests. These state-level regulations prohibit state entities from contracting with or investing in companies that participate in boycotts against Israel or Israeli-controlled territories.

Broader Economic and Political Reactions

Human Rights Watch praised Ben & Jerry’s decision to stop selling ice cream in Israeli settlements in the occupied West Bank, urging the U.S. to follow suit in response to human rights abuses. The move by Ben & Jerry’s prompted reactions from various political and business entities. Israeli officials and pro-Israel groups in the U.S. pushed back strongly, labeling the move as economic terrorism and antisemitic. They warned of broader economic ramifications, including potential boycotts of Unilever products and strained business relations between U.S. entities and the company​.

​​In summary, Ben & Jerry’s divestment from the occupied Palestinian territories not only applies economic pressure but also reflects a strong moral position, influences public discourse and interacts with complex legal and political frameworks in the name of human rights advocacy.

– Sheridan Smith

Sheridan is based in Madrid, Spain and focuses on Business and New Markets for The Borgen Project.

Photo: Flickr

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Investing in R&D for Diseases in Africa

Diseases in AfricaThe world has become a global village and events in one part of it affect everyone in many ways. Depending on the event, the effects can be good or bad. The African continent is of immense significance. Neglected diseases like HIV, tuberculosis, malaria and other tropical diseases are not just problems in Africa; they are global challenges. Africa currently accounts for 20% of the global disease burden and that means both the loss of 630 million lives and $2.4 trillion in economic value yearly.

The United States (U.S.), as a global leader, holds a key position in global health security. It can further strengthen this position by allocating investments in Africa, particularly in research and development (R&D) for these diseases. This strategic move will contribute to global health and boost the U.S. economy, creating new jobs and fostering innovation. Recent research published by the Global Health Technologies Coalition (GHTC) has proven that investment from the U.S. can impact not only global health but also boost the U.S. economy.

The US Investments in Health R&D in Africa

The U.S. investments are vital to supporting the development of new drugs for diseases like malaria, tuberculosis, HIV and Ebola, which are among the most pressing health challenges in Africa and globally. For instance, U.S. investment in the development of antiretroviral drugs has significantly reduced the mortality rate of HIV/AIDS in Africa, saving millions of lives. This is a testament to the potential impact of the U.S. investments in health R&D in Africa.

In the last two decades, the U.S. has invested $46 billion in R&D for neglected diseases like HIV, malaria, tuberculosis and other health issues. In 2022, this investment was 0.21% of its gross domestic product (GDP). The investment helped develop 12 products for tuberculosis and 11 for malaria. The development of Pretomanid has revolutionized tuberculosis treatment. It also works for drug-resistant cases, reducing the treatment duration from 18 months to 6 months. Using it for all drug-resistant cases can save up to $740 million annually.

Two drugs, Cabotegravir and Dapvirine, developed with U.S. investments, have the potential to revolutionize HIV prevention and treatment. Many other products against different diseases are in the pipeline, also developed with the country’s investment.

Boosting the US Economy

These investments have boosted the U.S. economy and benefited U.S. companies and people in more ways than one might think. Here are some key points describing how these investments have contributed to the growth of the U.S. economy:

  • Investments in R&D for diseases have created 600,000 jobs in the U.S. 
  • The investments resulted in an additional $104 billion in the U.S. economy.
  • The investments on the governmental level have enhanced private sector investments in R&D for global health as well and $1 will result in an additional $8 investment in the private sector. These figures imply that the U.S. economy will ultimately gain an investment advantage of $102 billion.

These investments will result in future products worth $255 billion, further boosting the U.S. economy.

Final Thoughts

The U.S. has financial power and moral authority globally. More investment in R&D for diseases can improve life expectancy in Africa, strengthen the economies of partner countries, boost the U.S. economy and protect Americans’ health. The world has become a global village and diseases can spread quickly, creating a potential danger for everyone. Cases of malaria and leprosy have emerged in the U.S. in the recent past.

R&D of treatments and prevention products can help control the emergence of diseases in the U.S. and globally secure the financial future of thousands of Americans through jobs and boost a strong U.S. economy. In our current circumstances, allocating resources toward R&D for diseases in Africa is crucial. This investment can revitalize the U.S. economy during these challenging times.

– Maria Waleed

Maria is based in Yokohama, Kanagawa, Japan and focuses on Good News and Global Health for The Borgen Project.

Photo: Pexels