innovations in poverty eradication in zimbabweLocated in southern Africa, Zimbabwe is characterized by impressive landscapes and diverse wildlife. Currently, Zimbabwe is suffering from immense poverty. In 2019, extreme poverty was at 34% in Zimbabwe, an increase from 29% in 2018. Furthermore, this represents a change from 4.7 million to 5.7 million people living in poverty. The cause of this swift increase was an economic contraction of around 8%. The World Bank expects a continued increase in extreme poverty in Zimbabwe in 2020. Fortunately, many organizations are working on innovations in poverty eradication in Zimbabwe to combat this problem.

Hyperinflation and Drought

In addition to a general economic downturn, several droughts across Zimbabwe have caused the prices for food and other essential goods to rise. These same droughts slumped agricultural production, especially in rural communities, where people were hit the hardest by this downturn.

The African nation has also been struggling with hyperinflation for more than a decade. This problem results from economic mismanagement by the nation’s previous president, Robert Mugabe. The Zimbabwean dollar lost 85% of its value against the American dollar between February and December of 2019. According to Trading Economics, Zimbabwe’s inflation rate was 737.3% in June 2020, growing to 837.5% by July 2020. As such, Zimbabwe faces severe hyperinflation, which does not help with its fight against widespread poverty. Here are two innovations in poverty eradication in Zimbabwe that are aiming to solve this problem.

Children in the Wilderness

One of these innovations in poverty eradication in Zimbabwe is a project by Children in the Wilderness (CITW), which started in February 2020. The project’s goal is to generate income within rural regions by creating businesses for women to operate. In northern Matabeleland, poverty levels are high due to a lack of diverse income-generating fields. Previously, this land relied on farming to produce income; however, unreliable rainfall and poor soil have made this method ineffective. Families now rely on an average monthly income of $9. This makes it a challenge to survive and prohibits many families from sending their children to school, which could help lift them out of poverty.

In response, CITW hosted classes that educated women on business and budgeting. The women who participated learned how to apply their innovative ideas, make money from their crafting skills and sell their work. CITW’s teachings have also promoted sustainability and self-management amongst the community. For example, the project provided a way to recycle unwanted waste by having women use it in basket weaving. To help women sell these goods, CITW pitches the crafts to businesses around Hwange National Park and Victoria Falls. As these businesses grow, poverty in northern Matabeleland will decrease. Importantly, CITW’s project has not only worked to eradicate poverty but has also brought women together and built pride in their local culture.

The Shoe That Grows

In 2020, CITW arrived in Tsholotsho, an area heavily affected by poverty, to act on a donation made by Melissa Cabrera Wilson. Wilson aims to ease the effects of poverty on children by providing them with another of many innovations in poverty eradication in Zimbabwe. The Shoe That Grows brand has provided children in Tsholotsho with something that most of them will never receive: new shoes. Without this donation, children would have to use shoes that have been passed down to them or nothing at all. So far, CITW has donated more than 45 shoes. The shoes can adjust from sizes one to four, allowing them to be used as the children grow. This innovation has given children relief from the harsh terrain they must walk miles on to get to school every day.

Hit by poverty and hyperinflation, Zimbabwe’s citizens are struggling. With these innovations in poverty eradication in Zimbabwe, they are beginning to overcome poverty step by step. The income-generating groups in northern Matabeleland will have a lasting effect on citizens, as a reliable and creative source of income is game-changing. Additionally, the shoes given to children in Zimbabwe and all over the world have also softened the harsh results of poverty on kids. In all, these innovations in poverty eradication in Zimbabwe have made life more tolerable for many of those affected.

Emma Green
Photo: Flickr

Rising Poverty in Lebanon
Before COVID-19, Lebanon was already facing an economic crisis, and rising poverty in Lebanon was a growing concern. As a result of COVID-19, the country’s economy is failing. The pandemic threatens to push up to 75% of the country’s population to poverty. A country with one of the highest debts in the world, Lebanon has now defaulted on its debts. Inflation has risen, putting many members of the middle class at risk of poverty. The people of Lebanon blame corruption and mismanagement for the problems that are plaguing the country.

Lebanon’s Political Dysfunction

From 1975 to 1990, Lebanon experienced a civil war that religious tensions caused. Ultimately, Lebanon’s new government decided to adopt a system based on confessionalism, which gives religious groups a strong voice. The president of Lebanon must always be a Maronite Christian, the prime minister a Sunni Muslim and the speaker of the house a Shia Muslim. However, government action has been slow as a result. It took Lebanon 12 years (from 2005 to 2017) to pass a state budget. Increasingly, people in Lebanon have been calling for an end to this political system, which is not only fragmented and ineffective but also filled with corruption and meddling from countries like Iran and Saudi Arabia.

Inflation and Rising Poverty in Lebanon

In 2019, the World Bank predicted that Lebanon’s poverty rate would increase as a result of the country’s economic problems. Inflation had already risen — but not by the margins that the country has seen during the COVID-19 pandemic. The Lebanese currency has now lost over 80% in value. With the devaluing of its currency, Lebanon is experiencing an increase in prices on goods. Many people are struggling to afford meals, as food prices have increased by 190% in comparison to last year. Meanwhile, the price of clothes has increased by 170%.

Inflation is a vicious cycle, influenced by both suppliers and consumers. Suppliers in Lebanon — such as supermarkets and shop owners — are unable to sell as many goods, because people are unable to buy as much. In addition, the pandemic shut down certain aspects of the economy, preventing people from receiving wages and having money to spend. As a result of the economic crisis, banks imposed limits on how much money people could withdraw, which increased financial uncertainty for many citizens. Without sufficient support from their government, the people of Lebanon face a desperate future.

Rising inflation is not the only disruptor to many people’s lives in Lebanon. Access to reliable electricity is becoming more of a concern. According to the Human Rights Watch, power cuts are disrupting life in Lebanon. People face hurdles in storing food and disruptions to work, while also worrying about health risks for family members who depend on electrical medical equipment.

Support for Refugees and Citizens

The pandemic is also affecting refugees from Syria. There are close to 1 million registered refugees in Lebanon — more refugees per capita than any other country. The World Food Program is currently providing aid to refugee families.

To help with the crisis in Lebanon, local groups like Mission Joy and the COVID-19 Task Force for Lebanon have donated 960 food parcels and 400 hygiene kits. The World Food Program is also working to help hundreds of thousands of citizens, as many families are financially constrained and struggling to meet rising food prices. Currently, Lebanon is negotiating with the IMF for more loans to help its economy. With help from international organizations, Lebanon can hope to provide a more secure economic future for its people.

Joshua Meribole
Photo: Flickr

Hyperinflation In ZimbabweThe southern African country of Zimbabwe has one of the most horrendous track records regarding hyperinflation. Hyperinflation, which is when the prices of goods and services rise uncontrollably, usually occurs when a government prints more money into the money supply than what can be supported by the country’s economic activity. Hyperinflation in Zimbabwe has had the effect of lowering GDP per capita by 38% and increasing the unemployment rate to more than 70%, which in turn has increased poverty. Zimbabwe has tried many different solutions to stabilize its inflation rate, but it still struggles with high inflation rate volatility. In May 2020, the inflation rate was at 785.55%, well over the defined amount of 50% to be considered hyperinflation. This article explains Zimbabwe’s political and economic situation that led to its hyperinflation, and possible tactics to combat it.

Rampant Corruption and Mugabe’s Regime

Robert Mugabe governed Zimbabwe in 1980 to 2017 after the country had gained independence from Great Britain. Mugabe had been a Socialist revolutionary icon who was elected as president after the revolution but later regressed into an oppressive dictator. Mugabe’s tight grip on power, rampant corruption and monetary policies of his regime are some of the principal causes of Zimbabwe’s economic problems. After almost four decades in power, Mugabe was usurped from power. He was replaced by his longtime vice president, Emmerson Mnangagwa in 2017. Mnangagawa’s presidency has maintained power for the country’s ruling party: the Zimbabwe African National Union-Patriotic Front (ZANU-PF). Throughout both administrations, corruption has been embedded throughout all levels of society, including much of Zimbabwe’s political institutions. Bribes and facilitation payments are commonplace among the police, private companies, local councils and public officials. These kinds of payments are responsible for the $1 billion dollars of public money that Zimbabwe loses every year.

The 2009 Hyperinflation Crisis

During the worldwide recession of 2008, Zimbabwe’s own financial crisis made the country’s inflation rate skyrocket astronomically. Mugabe’s policies regarding land redistribution from white commercial farmers to the majority black population had the undesired effect of widespread food shortages and economic sanctions from the U.S. and E.U. Hyperinflation then reached incomprehensible rates of 79.6 billion percent. While these events are claimed by the ZANU-PF to be the initial causes of Zimbabwe’s hyperinflation, every effort Zimbabwe has taken to control hyperinflation is held back by the status-quo of corruption that the ZANU-PF upholds.

The root economic causes of Zimbabwe’s hyperinflation lies within monetary policies that make the Reserve Bank of Zimbabwe (RBZ) print too much money. Some ways the government has tried to curb inflation have included demonetizing the Zimbabwean dollar in 2009 and adopting many different currencies, including the US dollar, South African Rand, Euro, Chinese Yuan and more. This allowed for higher transparency, which led to deflation. Over the next decade, the U.S. dollar became more scarce. This led to the reintroduction of the Zimbabwean dollar in 2019, bringing back high levels of hyperinflation. Some experts say that a radical change in the financial system as a whole is needed to properly address this trend. In particular, changing the system from having a dissatisfactory central bank to a currency board or free banking system could allow for better monetary policy.

Non-Governmental Institutions Helping the Situation

Certain NGO’s are working to combat Zimbabwe’s corruption and financial issues. Two are Transparency International Zimbabwe and Zambuko Trust.

Transparency International was established in 1993 and currently works in more than 100 countries. They research and advocate for policies and laws to end systemic corruption. They provide statistical data such as the corruption perceptions index and the global corruption barometer and also provide information on the state of corruption and their activities through their own blog, magazine and academic publications. Transparency International and other civil society groups across the continent have become serious actors in the fight against corruption and the loss of public money from it.

Zambuko Trust is a microfinance institution that has given financial opportunities to many, especially those who work in the informal sector. It was established in 1990 by Christian businessmen who set out to provide financial services for the poor. They provide small business loans, horticulture funding and agricultural jobs, business management training, advisory services and loan insurance. Zambuko Trust provided services to 16,000 people before the hyperinflation crisis of 2009. After the country demonetized the Zimbabwean dollar and introduced multiple currencies, the institution was able to revive itself. These services have allowed businesses to sustain themselves and people to buy a house or afford schooling during such periods of economic strife.

While Zimbabwe’s financial institutions are scrambling to bring this recent wave of hyperinflation under control, NGO’s are able to combat the effects economic turmoil has on small businesses and the poor and advocate for a society free of corruption.

– Tirza Morales
Photo: Flickr

venezuelan crisisVenezuela is currently facing a political and economic crisis. Along with severe economic factors such as food shortages, lowered oil production and inflation, there are also two men who claim to be president. Socialist leader Nicolás Maduro and opposition leader Juan Guaidó both claim to be president after widely recognized fraudulent elections in 2018. While Venezuela struggles with choosing its president, the country is falling apart. Thankfully, one NGO is working to help people impacted by the Venezuelan crisis.

A Political Crisis

The 2018 election caused confusion and turmoil in Venezuela. Nicolás Maduro was elected after the death of his socialist predecessor, Hugo Chávez. Many Venezuelans blamed Maduro for the struggling economy since he was first elected in April 2013. To ensure his reelection in 2018, Maduro’s administration blocked many opposition party members from running against him. Some went to jail or into exile. The opposition as well as the people regarded the election as fraudulent and rigged.

After the election, the National Assembly claimed that the presidency was void. National Assembly leader Juan Guaidó appointed himself acting president. In response, Maduro created a new National Constituent Assembly with only government loyalists as members. The military and police still support president Maduro and continue to do so as he grants them raises and grants top members important roles in the economy. However, around 50 countries, including the U.S., recognize Guaidó as the acting president.

Economic Crises

Throughout the history of Venezuela, oil production has been central in the economy.  Oil exports make up 95% of Venezuela’s export revenue and 50% of its GDP. However, within the past two decades, oil production has steadily dropped. Venezuela’s GDP decreased by double digits for the third year in a row in 2018, reaching its new low. This has led to hyperinflation, which is now more than 80,000% annually. Many people blame Maduro for the drop in production due to his appointment of inexperienced leaders and his lack of investment in the industry. Importantly, the drop in oil production has led to decreased funding for education, infrastructure and medical care. Along with hyperinflation, these factors have created hardship for the working class.

Not only did oil production drop during Maduro’s first term, but he also tried to reduce the gap between the rich and the poor by capping prices on goods to make them more affordable to the working class. This policy backfired, as many companies ceased production because of lack of profit. This resulted in food and goods shortages across the country, leading to 3.7 million Venezuelans being undernourished. As a result of this and the lack of adequate healthcare, water and education, many Venezuelans are fleeing the country. According to the U.N., 3.9 million people have left Venezuela to seek a better life.

Helping Those Impacted by the Venezuelan Crisis

The South American Initiative, founded in 2016, is a NGO addressing the Venezuelan crisis. It helps by providing resources for the impoverished and starving people of Venezuela. This initiative has held major campaigns, such as the “Help Venezuelan Orphans” and “Help Hospitals and Children” campaigns. In all, it has helped more than 10,000 people. In order to provide a stable and lasting food source for hospitals and children, the South American Initiative has invested in large agricultural development. This has allowed the organization to distribute 70,786 meals to people in need. The South American Initiative has also utilized donations to provide medicine to those who need it in Venezuela.

The Venezuelan crisis is not only an economic issue but also a humanitarian issue, as people face unlivable conditions. Neither Venezuelan leader has the means to provide for people’s healthcare, food, water and education. This makes the work of organizations like the South American Initiative central in addressing the needs of those affected by the Venezuelan crisis.

– Samira Akbary
Photo: Flickr

Top 10 Facts About Human Rights in Venezuela
People have long associated the current humanitarian crisis in Venezuela with the autocratic governance of late President Nicolás Maduro and decades of socioeconomic downfall. Gross political corruption persists in Venezuela that constitutional violations show. These began in 2017 and have barred acting president Juan Guaidó from assuming the duties of his office. In September 2019, The UN Human Rights Council dispatched a team to the country to investigate alleged human rights abuses, including state-sanctioned killings, forced disappearances and torture. With this information in mind, here are the top 10 facts about human rights in Venezuela.

Top 10 Facts About Human Rights in Venezuela

  1. The Situation: Deteriorating social and economic conditions in Venezuela have incited a refugee crisis in the country. Since 2014, more than four million Venezuelans have fled (a figure which excludes unregistered migrants). Displaced by violence and corruption, Venezuelan migrants struggle to obtain legal residence, food security, education and health care resources in the nations they flee to. These bureaucratic hurdles and unstable living situations force many to return home.
  2. Maduro and Corruption: The dismantling of Venezuela’s National Assembly in March 2017 was the Maduro Administration’s first attempt of many to silence political opposition. The move stripped the opposition-led parliament of its legislating powers and immunity—important checks against potential exploits by the executive branch. Research from Amnesty International confirms that Maduro’s government used torture, unhinged homicides and extrajudicial executions to maintain support in the years following this constitutional scandal.
  3. Protests and Arrests: Nationwide protests and demonstrations began in 2014 in response to human rights violations and a buckling economy. According to the Penal Forum, authorities have arrested more than 12,500 people between the years 2014 and 2018 in connection with protests. Security personnel and government-backed militias often use excessive force—tear gas, firearms, asphyxiation, severe beatings and electroshock, etc.—against protesters and detainees in order to quell resistance efforts.
  4. Censorship: Maduro’s regime has used censorship of mainstream media to control Venezuelan civilians and eliminate its critics. A pervasive fear of reprisal effectively denies Venezuelans their freedom of expression and speech.  During times of global scrutiny, the government has blocked online news broadcasts, VPN access and streaming services to curb bad press and anti-government organizing. The government staged an information blackout in February 2019 in response to a clash between the military and aid convoys at the Colombian border.
  5. Political Bribery: The Venezuelan government has used political bribery to keep Venezuelans compliant. The government has used its monopoly on resources to withhold food and other basic goods from dissenters and reward supporters with the same incentives. In 2016, Maduro launched the government-subsidized food program, Local Food Production and Provision Committees (CLAPS). Through this insidious program, Venezuelans received monthly (oftentimes late or empty) food shares in exchange for having their voting activity tracked.
  6. Human Rights Crisis Denial: In February 2019 Maduro denied claims to the BBC that the country was undergoing a human rights crisis. He has repeatedly used the same rhetoric to reject foreign aid and unassailable evidence of health and welfare shortages in the country, by equating the acceptance of aid with the fall of his regime. That same month, there were disputes over $20 million in U.S. and European aid shipments at the Colombia-Venezuela border.
  7. Venezuela’s Inflation Rate: The International Monetary Fund forecasts Venezuela’s inflation rate will reach 10 million percent in 2019. Food scarcity and hyperinflation have led to millions of cases of malnutrition and premature death, especially amongst children.
  8. Doctors and Hospitals: Twenty thousand registered doctors have left Venezuela between 2012 and 2017 due to poor working conditions and growing infant mortality rates. Hospitals are unhygienic and understaffed, lacking the medicine and medical equipment to accommodate the excess number of patients. Tentative water sources and power outages make most cases inoperable, presenting a liability to doctors and causing untreated patients to become violent.
  9. Death Squads: In June 2019, the UN reported that government-backed death squads killed nearly 7,000 people from 2018 to May 2019. Maduro attempted to legitimize the killings by using the Venezuelan Special Police Force (FAES) to conduct the raids, which he staged through family separation techniques and the illegal planting of contraband and narcotics. Again, Maduro devised this strategy to threaten political opponents and people critical of the Maduro government.
  10. Human Trafficking: A 2016 report conducted by the U.S. Department of State condemned Venezuela’s handling of human trafficking in the country, in both regards to sex trafficking and internal forced labor. Venezuela lacks the infrastructure to properly identify and assist trafficking victims due to governmental corruption and rampant gain violence which facilitates human trafficking and forgoes accountability. Traffickers often trick or coerce Venezuelan migrants into the sex trade. In fact, 10 percent of 1,700 recorded trafficking victims in Peru between 2017 and 2018 were Venezuelan.

The top 10 facts about human rights in Venezuela should read as a call to action. Global aid agencies and national governments are currently working to bring humanitarian aid to Venezuelans and the growing Venezuelan migrant community. While the current political climate complicates internal relief efforts, spreading awareness about the state of human rights in Venezuela is the first step in addressing the crisis.

Cuarto Por Venezuela Foundation is a nonprofit organization conceived in 2016 by four Venezuelan women living in the United States eager to alleviate the situation at home. The Foundation works to create programs and partnerships to deliver comprehensive aid to Venezuelans in need. In 2018, the organization shipped over 63,000 lbs. of medicine, food and school supplies to Venezuela (four times the number of supplies shipped the previous year). Additionally, its health program has served nearly 40,000 patients to date through vaccination and disease prevention services.

– Elena Robidoux
Photo: Flickr

inflation in Venezuela

Venezuela has been in a decades-long economic crisis. Its economic decline is historically marked by el Viernes Negro or Black Friday. Black Friday took place on February 18, 1983, when the nation’s bolivar began depreciating in value. Inflation in Venezuela has been rising ever since. Recent hyperinflation in Venezuela has caused mass poverty across the nation. The result have been shortages of food and medical supplies and an unemployment rate of 35 percent as of December 2018.

Origins of Depreciation

In order to understand potential ways to alleviate Venezuela’s rising inflation rates, it is essential to understand how the economy reached this point. Back in the 1970s and early 1980s, Venezuela was a flourishing oil tycoon in possession of some of the world’s largest oil deposits. A worldwide shortage of oil raised the prices of barrels and created a golden period of economic growth for oil giants like Venezuela. Once the 1980s rolled in, oil prices stabilized. People started looking for more affordable, alternative energy methods.

This was detrimental to Venezuela’s economy since there was less demand for oil. Heightened production due to the previously increased oil prices left Venezuela with an abundance of oil produced and less demand. Venezuela’s reliance on exporting oil became its undoing. The price of oil continued to drop as the years progressed. Venezuelan oil production continued to exceed the actual demand. Inflation in Venezuela began here as the nation struggled to adapt in the face of failing exports.

Worsening Factors

Several factors contributed to the inflation of the Venezuelan bolivar. One factor was increased spending on social welfare programs and the importation of basic goods during Hugo Chávez’s presidency. While these actions helped to alleviate social unrest, this type of spending couldn’t be sustained as the oil-based economy tanked. In 2008, the global price of oil dropped to around $34 dollars per barrel, a record low that severely cut Venezuela’s core income. In 2014, another record low sealed Venezuela’s economic down spiral as the nation could no longer rely on its chief export for a means of financial stability.

However, this did not deter spending on welfare programs and imports, which led the nation into deficit spending. Deficit spending continues to be a major factor in increasing inflation in Venezuela. The further the nation falls into debt, the more the value of the bolivar depreciates. Currently, the full value of Venezuela’s debt is exceeds “the value of its exports” by 738 percent. Because of its massive debt, the U.S. implimented trade restrictions in early 2019. This has further decreased the sales from exports and the nation’s gross revenue.

Currency printing has been another cause of inflation in Venezuela. In order to pay for the importation of basic goods, more money has and is being printed by banks and the government. The value of the bolivar depreciates the more that is printed. It should be kept in mind, however, that these aren’t the only factors in inflation. The situation is deeply complex, spanning over decades of domestic mismanagement and failing international relations.

Qualifications for Hyperinflation

According to Forbes, a nation’s economy reaches hyperinflation once its monthly inflation rate surpasses 50 percent for a full thirty days. Once that inflation rate drops below 50 percent for another full thirty days, it is no longer in hyperinflation. Venezuela has been in a continued episode of inflation with some peaks of hyperinflation since November 2016.

Because of the longevity of Venezuela’s financial crisis, the nation’s economy is considered to be in hyperinflation. According to the International Monetary Fund, Venezuela’s GDP will drop another 25 percent by the end of 2019. The projected inflation rate by the end of 2019 will surpass 10 million percent.

Alleviating Inflation

Despite the economic down spiral in Venezuela, there is a potential solution that is common across business analysts. Forbes and Bloomberg Business both suggest that Venezuela adopts “dollarization.” This means abandoning the domestic currency in favor of foreign currency. Dollarization allows the economy to stabilize as Venezuela could leave behind the bolivar and adapt to an already stable foreign currency.

The reasons for inflation in Venezuela are numerous. There are some solutions out there, but they have yet to be implemented. In this case, adopting the American dollar may be the best approach to curb the rising inflation in Venezuela and reduce the poverty caused by inflation.

Suzette Shultz
Photo: Flickr

Hyperinflation

When it comes to global poverty, an important factor of a country’s economy is its inflation rate. Inflation occurs when the value of a nation’s currency decreases, but the prices for goods increase. Inflation affects many facets of everyday life, such as nationwide poverty rates, food and medical supplies.

Hyperinflation occurs when inflation rates rise quickly and uncontrollably. Hyperinflation is reached when an economy’s inflation rate is at least fifty percent for a thirty day period. However, high inflation rates consistent over a prolonged period of time also qualify as hyperinflation.  Here are three countries in hyperinflation today.

Venezuela

In the 1970s world energy crisis, Venezuela was a highly profitable oil producer. After oil prices dropped once the energy crisis ended in the 1980s, Venezuela’s chief export greatly declined in revenue and its economy began to suffer. Despite the decline in exports, Venezuela still needed to spend large sums of funding on the importation of basic goods for its people. This led to inflation, as the country dug itself into deficit spending. To pay for imported goods, Venezuelan banks then printed out paper notes not backed by actual wealth.

Now, inflation in Venezuela has reached monumental levels of devastation. Venezuela has been in hyperinflation since November 2016, when the inflation rate exceeded 50 percent. The International Monetary Fund estimates that inflation in Venezuela will exceed ten million percent by the end of 2019.

Because of this economic crisis, poverty is widespread. In 2017, the poverty rate across Venezuelan households reached 87 percent. On top of widespread poverty, food and medical supply shortages are rampant across Venezuela. The health of its people has deteriorated as weight loss and the spread of disease inflict the nation.

Currently, the Venezuelan government rejects the International Monetary Fund’s option to default on its debt. Venezuelan U.N. representatives have commented that in order for the nation to progress, it needs internal structural changes, not foreign aid.

South Sudan

South Sudan’s economy is also almost entirely oil-based. Of the countries in hyperinflation, South Sudan is the newest, gaining independence from British rule in 2011. However, South Sudan was quickly caught in a civil war from 2013 to 2018, soon after its founding. Damage to oil fields and other resources due to warfare severely affected the revenue of South Sudan’s exports. Inflation began as the struggle for resources and funding inflicted this budding nation.

South Sudan’s current economic crisis has caused mass poverty and food insecurity for its civilians. According to recent reports from the U.N., 43 percent of South Sudanese households are food insecure. At its peak, inflated food prices reached about 513 percent in December 2016. By the end of December 2018, the inflation on food prices dropped to 51 percent but is still hyperinflammatory by definition.

Unfortunately, South Sudan is currently not focusing on any poverty-reduction programs. According to the World Bank Organization, South Sudan’s overall inflation rate was an estimated 130.9 percent by the end of 2018; by the end of 2019, it is expected to drop to 49.3 percent, just under the hyperinflation threshold. However, given the financial instability of the nation, South Sudan will remain under close observation of the International Monetary Fund and similar entities for the foreseeable future.

Zimbabwe

Zimbabwe’s economy thrived in the 1980s and early 1990s, after declaring its independence from British control and creating its own domestic dollar currency in celebration. In the 1990s, however, Zimbabwe’s agricultural-based economy took a major hit after a series of crop failures. Compounded by the high costs of imports and funding for the war, Zimbabwe’s economy began to falter. In a panic to pay for goods, Zimbabwean banks rushed to print excess bills, leading the nation into hyperinflation.

Zimbabwe’s economy reached hyperinflation in March 2007, just passing the 50 percent threshold. For the next year, the nation’s inflation was a tumultuous series of highs and lows, eventually reaching a staggering 79.6 billion percent in November 2008. Eventually, Zimbabwe was forced to abandon its domestic currency, as its own population boycotted using the drastically inflated Zimbabwean dollar.

Despite the nation’s inflation rate lowering back down to 59.4 percent as of February 2019, Zimbabwe is still struggling to limit its cost of imports and boost its revenue from exports.

Potential Solutions

While there are numerous potential ways to address hyperinflation, a common solution for this phenomenon is dollarization — the abandonment of a failing domestic currency in favor of a stable foreign currency. A notable success story of dollarization is Montenegro, where the considerably weak Yugoslavic dinar was replaced with the euro, a more stable currency used widespread across the European Union. Before total dollarization, the inflation in Montenegro peaked at 26.5 percent in 2001. After adopting the euro, the country’s inflation is under one percent, as of 2019.

Of the three countries in hyperinflation today, Zimbabwe did utilize this method of dollarization; however, as of 2019, it abandoned dollarization, triggering the start of nationwide economic problems yet again. Overall, for these three countries in hyperinflation today, maintaining dollarization may be their best chance in regaining economic stability.

– Suzette Shultz
Photo: Wikimedia

Crisis in VenezuelaIn March 2013, after a 14-year rule, Venezuelan President Hugo Chavez died of cancer. He was succeeded by Vice President Nicolas Maduro. Since then, the oil-rich but cash-poor South American country has been in a political and economic crisis. Here are 10 things you should know about the crisis in Venezuela.

10 Things to Know About the Crisis in Venezuela

  1. Inflation rates are at an all-time high. The biggest problem in the day-to-day lives of Venezuelans is due to the record high inflation rates. Throughout the Chavez presidency, the inflation rate had fluctuated between 10 and 40 percent but never higher. Since Maduro took office inflation rates have grown exponentially. In 2018, the inflation rate hit 1.3 million percent and is projected to reach 10 million in 2019. With inflation being so high, it becomes impossible for Venezuelans to buy basic necessities.
  2. Minimum wage is as low as $6 a month. On top of the high inflation rate, the minimum wage is now $6 dollars a month. Nearly 90 percent of the country’s population is living in poverty and unable to buy basic goods. Additionally, the number of active companies in Venezuela has dropped dramatically, minimizing the number of jobs available to citizens.
  3. More than 3 million people have fled the country. Over the last five years, the crisis in Venezuela has forced more than 3 million people out of their homes. Most of these refugees have claimed that the lack of rights to health and food were among the main reasons for them to leave. These migrants, who made up roughly 10 percent of the Venezuelan population, have fled to neighboring countries including Chile, Colombia and Brazil.
  4. There are currently two presidents. Since 2019 started, political tensions in Venezuela have escalated. In early January, President Nicolas Maduro was sworn in for a second term, following an election period of boycotts and opposition. The results of this election led to a new wave of rallies throughout the streets of Venezuela, particularly the capital city of Caracas. These boycotts culminated with the elected leader of Venezuela’s National Assembly, Juan Guaido, naming himself interim president.
  5. The rest of the world is very split over who to support. The most unique part about Guaido declaring himself interim president is that several countries around the world immediately acknowledged it as legitimate. The United States, much of Europe and several South American countries recognize Guaido as the rightful interim president of Venezuela. However, Russia, China and most of the Middle East still recognize Maduro as the president. Additionally, some countries, including Italy, are calling for a new election to determine the rightful president.
  6. Oil output has declined dramatically. Venezuela has over 300 billion barrels of proven oil reserves, making it a leader amongst the world’s oil-rich countries. Oil production dropped in 2002 after Chavez was first elected, but soon after, it rose back up to regular rates and has been steady since. Since 2012, however, there has been a consistent decrease in oil output. In January 2019, President Trump announced that the U.S. will not import oil from Venezuela for the time being, in hopes that economic pressure will lead to correcting the political crisis.
  7. There have been countless mass protests across the country. The crisis in Venezuela has sparked riots and rallies across the whole country. In 2018 alone, there were more than 12 thousand protests, according to the Venezuelan Observatory of Social Conflict. These protests, starting in 2002 after Chavez came to power, have only escalated in violence since.
  8. Officials have resorted to excessive use of force. In April of 2017, Maduro ordered armed forces to put a stop to what had been weeks of anti-government protests. In the two months to follow, more than 120 people were killed, 2,000 were injured and more than 5,000 were detained. Since then, multiple citizens have been killed or injured when police and protesters have clashed.
  9. Maduro’s administration denies that it is in a human rights crisis. Despite the statistics pointing to the crisis in Venezuela, Maduro and his administration have not acknowledged the human rights crisis. Additionally, the administration has not recognized the shortages of food and medication, and, as a result, it has not accepted international humanitarian assistance. Despite the lack of official recognition, the current state of Venezuela has been regarded as the worst humanitarian crisis in recent memory in the Western Hemisphere.
  10. The crisis is taking a toll on the overall health of the country. Since 2014, the number of malaria cases in Venezuela has more than quadrupled. After years of remaining steadily below 100 thousand cases, there are now more than 400 thousand people living in Venezuela with malaria. This is because there is a dramatic shortage of anti-malaria drugs for all strains. Medical facilities are struggling with a shortage of 85 percent for medications. At least 13 thousand Venezuelan doctors were among those who have fled the country. A lack of proper medical care is making the people of Venezuela more susceptible to treatable diseases such as tuberculosis.

The crisis in Venezuela is worsening by the day. There are countless people being forced to leave their homes, jobs and families in hopes of finding a safer place to live. While the country awaits political intervention and foreign aid, there are still ways for people overseas to give help. Many nonprofit organizations, including The Better World Campaign, are doing their part in helping the humanitarian crisis. These groups are always looking for volunteers and donations. Spreading the word about the situation in Venezuela, raising awareness and mobilizing others to donate is also a great way to help, even from afar.

Charlotte Kriftcher
Photo: Flickr

Top 10 Facts About Poverty in VenezuelaVenezuela is in crisis. On the verge of economic collapse, riots proliferate in the streets along with demands for an end to the populist, authoritarian government. Much of this anger is directed at President Nicolas Maduro — since his arrival to office in 2013, poverty rates in Venezuela have increased dramatically. Many struggle to provide for their families as food and medicine become scarce. Below are the top 10 facts about poverty in Venezuela that are essential to know.

Top 10 Facts About Poverty in Venezuela

  1. Poverty in Venezuela is an epidemic. Nearly 90 percent of Venezuelans live in poverty. According to estimates by the United Nations Economic Commission for Latin America and the Caribbean, this is a dramatic increase from 2014 when 48 percent of Venezuelans lived in poverty. Maria Ponce is an investigator with the local universities researching the food shortage, and she stated that “this disparity between the rise in prices and the population’s salaries is so generalized that there is practically not a single Venezuelan who is not poor.”
  2. Economic statistics are disappearing. In an attempt to stifle economic outrage, the Venezuelan government ceased publication of poverty statistics in 2015. It is now the responsibility of universities and sociologists to report on the current state of Venezuela and provide alternative sources of information. Luis Pedro España, a sociologist at the Universidad Católica Andrés Bello in Caracas, estimates that up to 70 percent of households in Venezuela could fall below the poverty line this year. It would be the highest rate of poverty since statistic tracking began in 1980.
  3. Venezuela is experiencing ‘hyperinflation.’ Venezuela is experiencing one of the worst inflation rates in history. According to Robert Renhack, deputy director of the IMF’s Western Hemisphere Department, Venezuela “is one of the most severe hyperinflation situations that we’ve known about since the beginning of the 20th century.” And the nation shows no sign of stopping. Currently, Venezuela’s inflation rate sits at 27,364 percent, dooming those without savings or foreign aid to poverty.
  4. Oil industries in Venezuela are crumbling. Many economists blame Venezuela’s heavy reliance on oil exports for the poor economy. One of the world’s largest exporters for oil, Venezuela was reported to possess 20 percent of the world’s oil reserves in 2012. Since then, production of crude oil in Venezuela has dropped heavily. Global Data, a digital media company, has predicted that by the end of 2018, Venezuelan crude oil production would drop by one million barrels a day.
  5. Government corruption is deeply rooted. Other economists blame deep political corruption and government mismanagement for Venezuela’s poverty crisis. Despite months of protests, Maduro has recently cemented his power by replacing an opposition-controlled legislative branch of the government with loyalists. Since then, thousands of Venezuelans responsible for running the large oil exports have been fired or arrested in an act of power consolidation for Maduro. The White House has issued a statement reporting that President Trump refuses to speak to Maduro until “democracy is restored in that country.”
  6. Minimum wage in Venezuela is $6.13. In an attempt to control inflation, the minimum wage in Venezuela was recently raised 58 percent. Based on current exchange rates, this values at about $6.13. Yaimy Flores, a Caracas housewife, struggles to provide basic necessities for her family. Her household income, provided by her husband’s minimum wage job as a janitor, is 5,196,000 bolivares a month. That is approximately $20. Much of the food they eat is dispersed from government programs and hygiene products are rationed. Despite working long hours in dire conditions, Venezuelans are barely scraping by on the minimum wage under heavy economic inflation.
  7. Food crisis leads to “Maduro diet.” Malnutrition is spreading. According to a recent survey, over two-thirds of Venezuelans report losing an average of 25 pounds in the last year and 61.2 percent of Venezuelans report going to bed hungry. Doctor Marianella Herrera states that “people are developing strategies to survive but not to feed themselves.” Iron-rich foods, such as maize and vegetables, have been nearly eliminated from the Venezuelan diet while government food programs fail to end the hunger.
  8. Medicine is running out. Due to the poor economy, Venezuela is experiencing a severe medicine shortage and hospitals are struggling to stay open. The Pharmaceutical Federation of Venezuela estimates the country is experiencing an 85 percent shortage of medicine. This has forced many Venezuelans to seek medication, often expired or unaffordable, on the black market. Meanwhile, President Maduro continues to refuse foreign humanitarian aid, blocking pharmaceutical shipments from entering the country.
  9. Government food subsidies aren’t enough. Iron-rich foods, such as maize and vegetables, have been nearly eliminated from the Venezuelan diet, and programs like CLAP — a government subsidized food box platform — fail to end the hunger. Initially, these packages included products like eggs, chicken and pasta and were distributed in poverty-stricken neighborhoods. Originally a ‘temporary measure,’ these boxes have become a method to generate government dependency and supply nearly half of Venezuela’s food requirements.
  10. Venezuelans are fleeing the country. In the past two years, nearly one million Venezuelans have fled the struggling nation, one of the biggest migration crises in Latin American history after the mass exodus following Fidel Castro’s 1959 revolution. Many Venezuelans report they no longer feel safe in their home country and have lost hope in government officials.

A Fork in the Road

Poverty has encapsulated the nation with seemingly no end in sight. These top 10 facts about poverty in Venezuela aim to provide a comprehensive understanding of the crisis in Venezuela and how it affects everything from inflation, to food and medicine.

Although the Venezuelan government still refuses to accept foreign aid, supporting local organizations in Venezuela allows for humanitarian aid to be distributed in poverty-stricken areas. As for the future, many Venezuelans envision only two possible directions: either Maduro leaves, or they do.

– Brooke Fowler

Photo: Flickr

Financial Crises in Developing Nations
Financial crises in developing nations have been an uncomfortably common occurrence. This presence has necessitated a guide for avoiding such debilitating economic events. Corruption and the impact of exchange rates are often the culprits of fiscal destabilization, and poor monetary choices, and often result in hyperinflation and tremendous harm. There are some practical antidotes, though, for addressing concerns to assist low-income nations in averting financial ruin.

The Cost of Corruption

There is an important relationship between corruption, foreign direct investment and domestic lending. The impact is pretty simple: corruption makes a nation’s potential FDI benefactors run for the hills, and leaves the riskier practice of bank lending as the primary mechanism for new capital. This occurs because foreign investors have few assurances that they could successfully operate in an opaque environment with weak property rights (as an example).

Corruption does more to dissuade FDI than exorbitant tax rates and other poor conditions, according to some analyses. State-owned banks accentuate the issues caused by relying on lending for capital investment because many engage in dubious lending practices like “connected lending” – a convenient euphemism for nepotistic banking. As a result, banks often disregard the imperative to issue economically sound loans.

To remedy these concerns, one suggestion is the foreign ownership of banks, as they mimic the effects of FDI by pairing capital with better technology and managerial experience, along with a better regulatory apparatus.

Rates of Exchange

Another pertinent issue regarding financial crises in developing nations is exchange rates. Fixed but adjustable exchange rates have historically exacerbated financial turmoil because they were seen as more stable than they actually were. Additionally, in the case of large foreign currency debts during a recession, lowering interests rates to stimulate the economy would force out FDI and further hurt the currency.

Instead, managed-floating currencies help stability because they afford greater awareness of the volatility of exchange rates, thereby promoting more prudent investments.

Printing Problems

Many financial crises in developing nations are triggered by hyperinflation, which is typically defined as sustained inflation rates of over 50 percent. When governments get into trouble with debtors, they often are forced to print money to afford their loans. This increases prices dramatically, making ordinary products unaffordable.

Many countries dependent on oil revenues have fallen victim to the affliction of hyperinflation. When oil prices surge, they increase their budgets accordingly; but, when the price of oil craters, they are often left with bloated budgets and cannot pay back their debts without resorting to a printing spree.

To insulate them from this, experts suggest establishing an independent central bank which would not print excess money to bail out imprudent spending. Although poor nations have historically been susceptible to financial crisis, there are practical solutions they can adopt to guard against them and usher in greater financial stability.

– Brendan Wade

Photo: Flickr