Poverty AlleviationFor the past four decades, the Chinese government has viewed poverty alleviation as integral to its economic development. The government’s efforts against poverty have intensified under the leadership of President Xi Jinping who proposed ambitious measures to eliminate poverty by the end of 2020.

China has made tremendous progress in alleviating poverty through the government’s efforts, as the number of people living in poverty in China has fallen from 750 million in 1990 to just 16.6 million in 2019. However, obstacles remain ahead of China’s efforts to completely eradicate poverty and improve the standard of living for its residents.

Poverty Eradication Under Xi Jinping

In 2014, China’s government implemented a strategy of Targeted Poverty Alleviation, which allows the government and local officials to address the needs of individuals and households rather than entire villages. Local officials use data from a local registration system containing information from more than 128,000 villages to identify and provide support to poverty-stricken areas. According to China’s President Xi Jinping, Targeted Poverty Alleviation follows an approach based on policies in five areas:

  • Industrial development
  • Social Security
  • Education
  • Eco-compensation
  • Relocation

 At a local level, the Targeted Poverty Alleviation program employs the pairing-up strategy, which enables impoverished families in western provinces to receive support from the more affluent eastern provinces. Officials who exclusively support rural inhabitants support impoverished households, including those in ethnic minority areas. The government supports the local industry by establishing internet commerce centers in rural areas known as Taobao villages. In Taobao villages, rural residents can support themselves by selling crops and local products online. By 2015, Taobao villages supported 200,000 shop owners and employed one million people.

The Targeted Poverty Alleviation campaign has also implemented nationwide initiatives to facilitate industrial development. In 2019, China spent 19 billion dollars on a variety of infrastructure initiatives. Through these initiatives, China has been able to build or renovate more than 124,000 miles of roads and provide 94% of rural villagers with internet access.

China also uses a resettlement program to help elevate rural residents from poverty. Under this program, the government encourages residents in remote and ecologically vulnerable rural regions to relocate to areas closer to the cities. By one estimate, over nine million people have been resettled by this initiative between 2016 and 2020. Increased economic opportunities in cities and reforms that allow greater internal migration in China have also encouraged resettlement. These migrations have resulted in China’s urbanization rate rising from 17.92% in 1978 to 57.3% in 2016.

Metrics of Success

China’s efforts to alleviate poverty have been judged as tremendously successful by most measures. Between 2014 and 2019, 68 million rural residents have risen from poverty. China’s reforms to its economy has enabled 730 million people to emerge from poverty over the past four decades, accounting for nearly three-fourths of global poverty accomplishments from this time period. According to the UN Millennium Global Development Report, China’s policies have enabled the international community to meet the UN’s goal of reducing extreme global poverty by 50%.

China’s economic success has enabled it to address disparities between its urban and rural populations in healthcare. Urban and rural populations have both witnessed infant mortality rates decline below 1%, and maternal mortality rates for urban and rural mothers have declined and attained parity at the level of two per million in 2019.

Obstacles

Despite China’s progress in eliminating poverty, the nation continues to face obstacles in attaining its ambitious standards and supporting the needs of poor residents. Local officials’ administration of financial support is often arbitrary or impeded by stringent bureaucratic procedures, which has resulted in some poor households being denied or receiving insufficient financial support. The increased funds invested in poverty alleviation efforts has also contributed to significant “corruption and mismanagement.”

China’s Central Commission for Discipline Inspection (CCDI) reported that 730 yuan (112.21 million USD) in poverty alleviation funds were misappropriated in 2018 through violations, such as embezzlement, fraud and bribery. The government uses the CCDI to maintain oversight on how its funding is used, and officials who fail to accomplish poverty reduction in their region face expulsion from the Communist Party and “career oblivion.”

The government’s poverty alleviation efforts have also been criticized for its emphasis on the rural poor while ignoring those in urban areas who are struggling to meet high living costs. China’s poverty alleviation campaign invited high polluting industries, such as those that have been associated with reduced air and water quality in impoverished regions, causing many to question whether China’s progress is sustainable. The relocation program has also been controversial as many rural residents often relinquish their land for little compensation, only to subsequently struggle to find work in the cities. Government officials have also expressed impatience with residents who were unwilling to relocate.

The progress of the poverty alleviation campaign was also complicated by the COVID-19 pandemic. During the initial four months of 2020, unemployment rose to 6.2% and one expert calculates that 80 million people in China were unemployed when rural villagers and migrant workers were included in the calculation. Despite the economic effects of the pandemic, Beijing has not relented in its endeavor to eliminate poverty, and experts doubt that China will admit to having failed to meet its goal for 2020, regardless of the state of the economy. Regardless of whether China attains its goal for 2020, experts doubt that it will abandon its endeavors to improve its people’s standard of living.

China’s efforts towards eradicating poverty have yielded tremendous success, yet the government and the country’s people will be responsible for ensuring that its progress is sustainable and results in tangible improvements to the standard of living of people in urban and rural areas.

Bilal Amodu
Photo: Pixabay

Inuit Poverty
The Inuit are a group of Aboriginal peoples who have occupied the Arctic lowlands for the past 5,000 years. They have a robust history and culture but suffer from one of the highest levels of poverty in the world. In Northern Canada, Inuit live in four regions that comprise the Inuit Nunangat: Nunavut, the Northwest Territories, northern Quebec and northern Labrador. The Inuit Nunangat, where most of the 65,000 Canadian Inuit live, is a territory that includes the land, water and ice all integral elements of Inuit culture. This region spans 53 communities and ultimately makes up 35% of Canada’s landmass. Given the significant presence of Inuit throughout the country, some are giving much attention to the poverty that this group has faced. Here are five contributions to Inuit poverty in Northern Canada.

5 Contributions to Inuit Poverty

  1. Colonization. Inuit poverty in Northern Canada stems from European colonization. In the 1700s, European whalers and fur traders entered the Arctic region to hunt and barter with the Inuit. While trade brought new technologies into Inuit communities, this era left the land depleted of seals, whales and fish. Later, missionaries and the Canadian government entered Inuit society as well. Following that, Inuit Tapiriit Kanatami wrote that: “many but certainly not all of the traditions, values, skills and knowledge that bound us together as Inuit gave way in response to the demands placed on us from the outside.” This culminated in pressure for Inuit societies to adopt Western culture and begin engaging in the world economy.
  2. Economy. The “Inuit Great Depression” occurred due to contentions over the commercial seal trade, a primary source of income for many Inuit communities. The International Fund for Animal Welfare (IFAW) successfully mobilized public opinion against Inuit seal hunting and in 1983 the European Economic Community placed a ban on the importation of fur and seal skins. Despite the written exemption for indigenous Inuit hunters, markets across the Arctic crashed and the Inuit economy suffered immensely. During this ban, the average income of an Inuit hunter fell from $54,000 CAD to $1,000 CAD. An estimated 18 out of 20 Inuit villages lost at least 60% of their income. Today, Inuit regions have some of the highest unemployment rates in Canada along with the highest suicide rates globally. The second ban by the E.U. in 2010 further exacerbated Inuit poverty. The need to work also takes time away from hunting, as well as limits Inuit access to traditional natural resources like food.
  3. Food. Due to geographic location, Inuit sustenance relies on hunting. The Inuit have less access to goods readily available throughout the rest of Canada since grocery stores struggle to supply food to remote Arctic regions. Depending on the season, planes cannot deliver fresh produce. Environmental changes diminish access and availability of traditional food, and store-bought alternatives are extremely expensive. A healthy diet for a four-person Inuit family costs an estimated $18,200-$23,400 per year, while the median yearly income is less than $17,000. The increased reliance on processed food leads to poor nutrition and health problems.
  4. Health. Health is another major challenge to Inuit people. According to UNICEF, “[Inuit] experience higher infant mortality rates, lower child immunization rates, poorer nutritional status and endemic rates of obesity, diabetes and other chronic diseases.” More than this, they “suffer higher rates of suicide, depression, substance abuse and fetal alcohol spectrum disorder and their representation in the welfare and justice systems is generally higher than in the non-Aboriginal population.” Housing exacerbates these health conditions.
  5. Shelter. Inuit communities suffer some of the worst living conditions in Canada. The close living quarters allow communicable diseases like viruses and pneumonia to spread quickly, making Inuit children less likely than non-Aboriginal children to receive medical treatment. In fact, 31% of Inuit live in crowded homes due to housing shortages throughout their communities. UNICEF reports that approximately 28% of Inuit live in homes needing major repairs. Deteriorating housing poses a great risk to Inuit health and safety.

To combat some of the economic burdens that the Inuit bear and to mend relations with indigenous peoples, the Government of Canada initiated an act in 2019 to provide Inuit with economic opportunity and lifelong prosperity. The Indigenous Skills and Employment Training (ISET) Program, in partnership with the Kakivak Association, offers community needs-based skills training and development programs. While Canada needs to do much work to right the wrongs toward Indigenous peoples, it is making progress to help end Inuit poverty in Northern Canada.

– Rochelle Gluzman
Photo: Flickr

Investment Zones in Africa
Although populous, rich in natural resources and blessed with an abundance of arable land, many countries in the African continent continue to contend with poverty and food insecurity. That said, the status quo in Africa is far from all doom-and-gloom. More than 400 African companies boast annual revenues of $1 billion or greater, and the continent’s average GDP increased at an annual rate of 5.4 percent from 2000-2010. Meanwhile, a 2018 report from the World Bank noted that six of the world’s 10 fastest-growing economies were in Africa, with Ghana claiming the top spot. New markets and investment zones in Africa offer entrepreneurs a host of business opportunities.

Competition for African Business

Africa’s economic revolution and ongoing population boom are an enticing prospect for international companies and foreign investors. China, Russia and India are just three of the nations competing for African business. In 2019, Chinese-African trade accrued $170 billion in profits, more than 20 times what it was in the early days of the current millennium. Foreign powers import Nigerian crude oil and cobalt from the Democratic Republic of the Congo or establish utility contracts in West Africa and this is only the beginning – Africa’s fast-growing economies promise even greater profits down the road.

Agriculture

Africa owns more arable land than any other region on earth, but most of that land is unutilized. African agricultural imports account for only 10 percent of the world market, while 60 percent of the world’s uncultivated land lies in African borders. Agribusiness has the potential to become one of the most profitable investment zones in Africa, as cash crops like sugar, tobacco and coffee have already yielded dividends for exporters even at less than optimal production.

Industry and Infrastructure

Given Africa’s generally outdated energy grids and telecommunications networks, infrastructure projects should prove a lucrative investment sector. Egypt initiated a full-scale infrastructure overhaul in 2015, while the Infrastructure Consortium for Africa (ICA) financed a number of ventures across the continent, including the North-South Power Transmission Corridor project. Some people project Africa’s domestic gas markets to grow 9 percent annually through 2025. African manufacturers are on track to double their production to roughly $1 trillion by 2030, giving the region the capability to undercut traditional (and more costly) manufacturing exporters like China.

Profit for a Purpose

Continued industrialization and population growth in Africa should lead to an influx of new markets and future generations of consumers. Importantly, the locals also stand to benefit from new revenue streams and investment zones in Africa, not just multinationals. African investors are increasingly trying their hand in the international stock exchange, contributing $13.39 billion to global Foreign Direct Investment (FDI) projects, and $10.2 billion to FDI funds in Africa itself. Africa, it seems, should become the next big player at the international economic table.

Dan Zamarelli
Photo: Flickr

Industrialization in Kenya
With a current growth rate hovering between 5 and 6 percent, Kenya is one of the fastest-growing economies in Sub-Saharan Africa. Industrialization in Kenya, as part of Vision 2030, is a priority that could help transform the agriculture-dependent country into a developed economy. According to Kenya’s Ministry of Industrialization and Enterprise Development, its three main goals include increasing foreign investment, improving the business environment and reducing corruption. Kenya has a massive goal of reaching a GDP of $211 billion. That would be approximately the same GDP as Romania in 2017. Kenya’s GDP increased from $18 billion in 2005 to $78 billion in 2017. The 2017 figure was $17 billion more than expected. China is one foreign investor that sees potential in developing Kenya’s economy.

Why Develop Kenya?

One side effect of developing an economy is a reduced poverty rate. Approximately 60 percent of Kenyans work in the agriculture industry, which is typical for developing economies. A developed economy such as the U.S. involves a mostly service dependent economy.

A drought-affected part of Kenya in 2017 slowed GDP growth, increased inflation to 8 percent and harmed the economy. President Uhuru Kenyatta acknowledged the need for industrialization in Kenya and the country’s dependence on agriculture. Vision 2030 includes increasing manufacturing from 11 percent of Kenya’s GDP to 20 percent of its GDP and focuses on developing its oil, minerals, tourism, infrastructure and geothermal sectors.

Businesses and countries investing in Kenya could add jobs for Kenyans, help diversify into a new market and improve trade between the two entities. Foreign direct investment was $1.6 billion in 2018. The United Kingdom, China, Belgium, the Netherlands and South Africa are the main investors. Banking, tourism, mining, infrastructure and information and communications technology are some of the investment sectors for these countries.

First Steps to Industrialization in Kenya

China is a major investor in Kenyan infrastructure. The Mombasa-Nairobi Standard Gauge Railway (SGR) costs $3.6 billion and connects the capital with the largest city in Kenya. The China Road and Bridge Corporation hired more than 25,000 Kenyans to work on the railway that opened in 2017. It extended the railway to Naivasha in October 2019. More than one million people rode the SGR in 2018.

China Road and Bridge Corporation also invested in the Nairobi Southern Bypass Highway that relieves congestion through the capital city Nairobi by redirecting traffic to and from the port city of Mombasa. Mombasa has a population of over three million and receives visitors from Uganda, Burundi, Rwanda and South Sudan. “There is no doubt the infrastructure projects financed and developed by China are making a huge impact in the country, especially when you look at the ease of travel and employment opportunities,” said Philip Mainga, managing director of Kenya Railway Corporation.

The World Bank also helped rural regions with its Kenya Informal Settlements Improvement Project. The project involved the construction of more than 60 miles of roads. Also, the project built 52 miles of footpaths, 66 miles of drainage canals, 39 miles of sewer pipelines, 68 miles of water pipelines and 134 security lights by its end date of November 2019.

Progress Ongoing in Kenya

Various organizations completed many other projects that have benefitted millions of Kenyans. Vision 2030 includes ambitious goals that will benefit its economy and people through job growth, key sectors growth and poverty reduction. One of Kenya’s key sectors, tourism, already saw a 5.6 percent growth in 2018, which is higher than the global average of 3.9 percent. The Information and Communication Technology sector saw an average growth of 10.8 percent since 2016, giving Kenya its “Silicon Savannah” name. Kenya’s poverty rate continues to decline as the country develops. Its poverty rate lowered from 46 percent in 2005 to 36 percent in 2016, demonstrating that progress is ongoing in poverty reduction and industrialization in Kenya.

Lucas Schmidt
Photo: Flickr

Intra-African tradeSince 2015, the African Union (AU) has been working to boost intra-African trade. In May 2019, 52 out of the 55 AU member countries signed the African Continental Free Trade Area (AfCFTA) agreement, making Africa the largest free trade area in the world. Africa, as a whole, has struggled with extreme global poverty and economic development. AfCFTA aims to unlock Africa’s economic potential and improve the lives of over 1.2 billion people. Here are eight ways AfCFTA will positively impact Africa.

Eight Ways the African Continental Free Trade Area Agreement Will Impact Africa

  1. AfCFTA will lower tariffs. Within five years, AfCFTA plans to cut tariffs by 90 percent. Currently, it is easier for AU members to export goods to the U.S. and Europe than to other African countries. Only 15 percent of trade in Africa is intra-regional. In comparison, intra-regional trade accounts for approximately 70 percent of all trade in Europe. By reducing the cost of importing and exporting goods in Africa, AfCFTA hopes to increase trade negotiations between African countries.
  2. AfCFTA will replace Africa’s Regional Economic Communities. Since 1991, eight sub-regional bodies called Regional Economic Communities (RECs) were the key building blocks for economic growth. RECs were one of the obstacles that prevented intra-regional trade from blooming. Essentially, Africa was home to eight different trading blocks. Each REC followed its own unique set of trade rules and regulations. AfCFTA will replace RECs as the authority over trade and ultimately unify all the RECs into one trading block.
  3. AfCFTA will standardize trade rules and regulations. Time and money were frequently wasted due to the ambiguity and guesswork required for intra-regional trading. AfCFTA will simplify the process for AU members to trade with each other by standardizing trade rules and regulations. Standardization eliminates the inefficiencies related to intra-regional trading and gives AU members the freedom to build trade relationships with neighboring countries.
  4. AfCFTA will promote a shift towards industrialization. Africa’s new trade agreement came at the best time. China, the lead producer of industrial goods, is increasing its efforts to move away from industrializations. China’s trade tensions with the U.S. has prompted the country to find other ways to sustain their economy. Many economists have predicted that Africa will become the next hub for industrial goods. By allowing goods to move more freely across the continent, AfCFTA will give AU members an incentive to shift towards industrialization.
  5. AfCFTA will advance manufacturing opportunities. With the new focus on industrialization, Africa will have to add more factories to produce more goods. AfCFTA gives small and large African countries alike the opportunity to advance manufacturing opportunities. Many economists believe that manufacturing is one of the main drivers of economic growth. Since global trade is based on goods, countries that produce the most goods often have the highest economies. The increase in factories and goods produced in Africa will help drive economic development.
  6. AfCFTA will replenish Africa’s natural resources. Raw materials, such as oils and minerals are currently one of Africa’s main exports. These extractive exports account for 75 percent of Africa’s external exports. The U.S., Europe and China are the main consumers. The extractive market is a volatile one and severely depletes African countries from valuable natural resources. The shift towards industrialization and manufacturing will help stabilize reserves of oils and minerals in Africa. AfCFTA also opens a new demand for extractives within Africa, allowing for the continent’s natural resources to move freely throughout its borders.
  7. AfCFTA will create more job opportunities. Employment is another important factor for economic development. Agriculture is the biggest industry in Africa and therefore the source of most employment opportunities.  As AfCFTA encourages AU members to invest in industrialization, the labor force will shift from agriculture to manufacturing. Research has shown that one manufacturing job has created an additional job in another sector that supports the work being done by the manufacturers.
  8. Through AfCFTA, Africa hopes to improve the lives of its citizens. Today, Eritrea remains the only AU country that has not signed the AfCFTA. Benin and Nigeria signed the agreement in early July. Once all 55 countries sign the agreement, it is predicted that intra-African trade will spike up to 52.3 percent. Industrialization and manufacturing opportunities are predicted to develop rapidly in Africa as well.

These changes will not occur overnight. But in a couple of years, through intra-African trade, Africa can expect to see an overall improvement in its economy and a significant dip in extreme global poverty thanks to the African Continental Free Trade Area Agreement.

– Paola Nuñez
Photo: Flickr