Chinese Investment in Africa
China’s rise to economic prominence is unparalleled in modern history. In just 40 years, China has become the manufacturing center of the world, built an enviable infrastructure system and created a robust middle class by lifting 800 million people out of poverty. The regime has also expanded Chinese investments abroad, funding a wide range of projects in far-flung corners of the globe. China’s international strategy has met with skepticism from the West due to allegations of corrupt business practices and sketchy dealings between often authoritarian states. This article will explain the effects of Chinese investment in Africa specifically, exploring the impact through the perspective of the international community, China itself and the receiving African nations.

The Extent

The value of Chinese investment in Africa since 2005 has passed $2 trillion. Chinese investment has many dimensions but primarily focuses on infrastructure and resource extraction. The regime’s plan to extract and ship resources through Chinese-built infrastructure connects more foreign markets to China as part of an ambitious megaproject called the Belt and Road Initiative. In doing so, China benefits by ensuring its supply of material needed to further economic growth and receiving nations benefit through job creation and economic diversification. Additionally, Chinese entrepreneurs own over 10,000 businesses on the continent.

One can only accomplish a proper understanding of foreign influence in Africa comparatively. Chinese interests in Africa are primarily commercial, but raise alarm bells in the West due to the scale of China’s acquisition of hard assets. Meanwhile, the West has had cultural and political interests in Africa for centuries, interests that continue today through the presence of Western military bases, political boundaries and cultural footprints of language and religion.

The Benefits

The ease and effectiveness of Chinese investment have provided many benefits for African nations. From its perspective, China provides fast access to capital and prompt delivery of services and workers. Additionally, Chinese loans do not need receiving nations to meet the ethical restrictions that organizations like the IMF require. The nature of Chinese investment often produces tangible results. Infrastructure projects increase access to transportation, healthcare, education and telecommunication services for ordinary Africans. Resource extraction diversifies the economy and can immediately sell to China’s booming market, as Chinese trade to Africa generally eclipses $100 billion every year.

Outside of investment, China plays an active role in addressing poverty on the continent. In 2018, the regime approved a $60 billion aid package and currently participates in five U.N. peacekeeping missions in Africa. In general, African nations view China as a valuable ally with no history of colonialism, but also as an avenue for successful economic development.

The Concerns

While the economic benefits of Chinese investment are numerous, allegations about the regime’s business practices and intentions are of justifiable concern. The lack of accountability measures and regulatory mechanisms on the continent have led corrupt actors to hijack many Chinese-funded projects. In many cases, extraction and infrastructure markets are more concerned with connecting resource markets to China than considering the needs of the population. The influx of Chinese entrepreneurs and cheap goods have also decimated domestic industries such as the Nigerian textile market.

Additionally, Chinese investment projects often lack sustainability regulations and native Chinese laborers frequently dominate them. In fact, every million dollars of Chinese investment only creates 1.78 jobs for African citizens. Chinese lending practices have also received criticism for creating trade imbalances and debt for countries unable to pay them back in time. Finally, Chinese intentions are hard to ascertain, and as their economic influence grows, so does their ability to influence Africa’s diplomatic and political landscape.

The Solutions

Despite the shortcomings of Chinese investment in Africa, there are policy and organizational solutions actively addressing these issues. The findings of international organizations such as the U.N. and WHO can influence the state of Chinese business dealings. In particular, the Ease of Doing Business Index and WHO influence provides international awareness and transparency to Chinese investment projects. African nations have also realized the need to implement more effective regulatory mechanisms in order to combat corrupt dealings.

Additionally, nations such as Nigeria and South Africa have accepted deals from the U.S. and E.U. as a way to mediate Chinese diplomatic influence. China has also sought to improve its image, improving procedural transparency and establishing NGOs throughout Africa. The Beijing Gender Health Education Institute has opened a division in Africa, where it seeks to empower LGBTQ individuals by producing documentaries and spreading visual works. Transnational NGOs with Chinese offices such as the Bill and Melinda Gates Foundation and the “Free Lunch for Children” campaign have started operating in Africa as well.

Despite uncertainty dominating it, Chinese investment in Africa has provided undeniable benefits to ordinary Africans. Ensuring that Chinese actions receive mediation will take the concerted effort of international institutions and accountability mechanisms. With concentrated reforms and an open diplomatic dialogue, Chinese financial support will be instrumental in helping the international community alleviate global poverty.

– Matthew Compan
Photo: Flickr

Technology in Mexico
Mexico’s image tends to receive negative portrayal in news reports depicting violence and crime. However, advancements of technology in Mexico provide an alternate image of the country as a pioneer in the Latin American technological scene. Here are five key facts that represent the country’s incredible achievements.

Guadalajara is a Growing Tech Hub

Located in Jalisco, Guadalajara presents itself as Mexico’s own Silicon Valley due to its massive community of 600 tech companies, 35 design centers and four research centers. With this cluster of tech companies, Jaslico exports more than $148 billion tech products to global consumers.

Guadalajara houses 13 universities such as Tecnologico de Monterrey, which graduates 85,000 students in IT yearly. This is especially notable considering that the city has 78,000 employed IT professionals, 57 percent of whom come from Guadalajara, presenting an excellent investment into the growth of the Mexican IT community for a sustainable tech hub.

Technological Outsourcing and Nearshoring Favors Mexico’s Location

Up until the 1990s, outsourcing in Mexico existed mostly in manufacturing capacities, such as Ford manufacturing at the south of the border. Now, thanks to the startup movement in the 2010s, Mexico is also an outsourcing hub for nearshoring. This is the process of conducting business operations in a nearby country that shares the same time zone. This results in convenience, consistency and better collaboration. For example, border neighbors such as the U.S. and Mexico adopt this relationship in software development companies such as ITexico, which have relationships with U.S. clients such as McDonalds and IBM. With low labor costs and a thriving technological community, companies such as ITexico with revenues of $5 million view Mexico as a great source of outsourced nearshoring.

Technology in Mexico Receives Vast Amounts of Venture Capitalist Investments Yearly

From 2014-2016, the U.S. invested nearly $120 million into 300 Guadalajara startups. In 2017, out of all Latin American countries, Mexico received one-quarter of total investment at $80 million in funding for 59 venture deals. Viewing investments from a grander scale, nearly 1,900 venture capitalists received $22 billion in investments between 2010 and 2018.

Investments per company vary between $80,000 – $120,000. Companies such as Voxfeed provide investors with a great return on investment considering its $2 million in revenue.

Such financial growth benefits the Mexican economy as it is currently the world’s 11th largest economy. It has the potential to gain $245 billion GDP by 2025, and the possibility of being the world’s largest economy by 2050.

Fintech Growth in Mexico Surpasses Other Latin American Countries

In 2017, Mexico led Latin America with the growth of 80 Fintech companies in 10 months, amounting to a total of 238, and ahead of Brazil which had 230. In 2018, Mexico retained its lead with 394 Fintech startups, still ahead of Brazil which had 380.

Fintech is continually growing thanks to entrepreneurship to create Fintech startups, as well as low banking and lending. For instance, 44 percent of the population does not use any banking products.

In this sense, growth not only increases the size of this sector but also aids the Mexican population in becoming more financially secure with platforms like Konfio that assists individuals and businesses with access to affordable loans.

Aside from Fintech expanding the function of technology in Mexico, investors such as Goldman Sachs view the sector as an opportunity for growth. Just recently, in September 2019, Goldman Sachs invested $100 million into Konfio, a small business loan lender. This allows $250 million in loans to 25,000 companies.

Technology in Mexico Advances With New Urban Landscapes

As Mexico advances technologically, the city landscape in Guadalajara does so to sustain a future generation of tech. As part of the 2012 Ciudad Creativa Digital project, the city has undergone construction to reinvent the historic district of Parque Morelos with the aim of creating a more urban, media/tech center and a 21st-century creative workspace. Developers envision Guadalajara with new educational and cultural institutions such as the Digital Creative Institute, as well as a Middle School in Visual Arts. On a cultural scale, institutions such as The Mexican Marketing Museum and Media Center engage the public to learn more about media. Outdoor theatres, pools and playgrounds provide a recreational experience.

By investing in this new landscape, Mexico will tap into the $1.5 trillion media and entertainment sector. Allowing more revenue, jobs and new technology to overall ensure a durable urban fabric to foster the growth of media in Mexico.

These five facts prove the successes of technology in Mexico in the forms of a new tech hub, nearshoring, venture capital investment, Fintech growth and a media/tech-oriented environment. Such successes in investing and growing a solid tech foundation will allow the country to sustain a future in the continuously digitizing world.

– Elizabeth Yusuff
Photo: Wikipedia Commons

Stock Market Participation in Nigeria
People have considered online fraud a major problem in Nigeria for a long time now. One popular online scam, known as a 419, is to send an email, letter, text or social media message wherein the sender offers the recipient money. The offer includes a request to help transfer money in exchange for a monetary reward. Although people now practice this scam worldwide, it originated in Nigeria.

As a result, many Nigerian stock investors have a difficult time opening stock accounts. Part of the account opening process involves selecting their nationality. Oftentimes, once they select Nigerian, they flag the account without opening it. One way people try to boost their assets is by investing; however, this effectively cuts Nigeria off from the world stock markets. Nigerians continue to face exclusion from the rest of the world and its stock markets. Of African countries, Nigeria makes the most from its movie and entertainment industry and is the top in the continent. It has also become a popular place for venture capital activity and the creation of startups.

Increasing Stock Market Participation in Nigeria

Since Nigerians are not able to open a stock account on these trading platforms, Chaka created a new platform. Chaka has a design to meet Nigerians’ needs; however, it is also open to everyone. It enables Nigerians to participate in foreign stock markets, including those in the U.S., U.K., Japan and Australia. One of Chaka’s drivers is to break down global investment barriers that block Africa from the rest of the world. This makes it easier for foreign investors to invest in Africa and vice-versa.

The platform works in partnership with DriveWealth, where Nigerian investors receive an affordable way to invest in stock markets with fractional shares. They only need an email to sign up and they start with a minimum of 1,000 Naira (or $10 USD) in their digital wallet. They can then begin investing in over 40 countries and over 4,000 assets, including major companies such as Google and Apple. Local trades cost 100 Naira and global trades cost $4 USD. Although the exchange rate of the Naira does fluctuate often, Chaka solves this problem by converting it to USD. The rate is set at 9 AM and continues until 2 PM for all transactions.

Security and Regulations

Chaka is locally and internationally regulated and provides bank-level encryption for all data and transactions. A local brokerage firm provides regulations, working with the Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS) and Nigeria’s Securities and Exchanges Commission (SEC). A U.S. brokerage firm that follows the regulations of the U.S. Financial Industry Regulatory Authority (FINRA) and SEC provides international regulations. Advanced Encryption Standard (AES) protects all website traffic and keeps all transactions confidential.

Users

Currently, many Nigerian stock investors are looking for foreign investment opportunities to maximize potential profit. Chaka has become the go-to trading platform for Nigerians, causing its user base to skyrocket. Chaka already has between 1 and 2 million users, a number which is growing daily.

Chaka’s future plans include branching out to other investment products from its app, such as mutual funds, fixed income products and cryptocurrencies. In a five-year partnership with NASDAQ and Airtel Africa, it will be upgrading its platform to include more listings and improve digitization. It has also received an undisclosed amount of pre-seed funding from Iyinoluwa Aboyeji, but it has not provided the exact amount.

Chaka has also partnered with DriveWealth, a company that provides Chaka with the access that it needs to U.S. markets, as well as a series of digital products. DriveWealth also allocates Chaka with some of the best technology for Nigerian stock investors to use in international trading. Thus far, the merging of the two technologies has been simple. Further, Chaka believes the partnership will last for a while. Another organization that plans to help Chaka is Citi Investment Capital Limited (CICL), which is a local stockbroking firm that can make brokerage transactions easier. In return, Chaka has assisted CICL with improving its digital products. These combined efforts will aid the country in accessing foreign stock markets and provide more opportunities for stock market participation in Nigeria.

Nyssa Jordan
Photo: Wikimedia Commons

Poverty in Yemen
Yemen has become increasingly war-torn since 2014, and as a result, poverty in Yemen has significantly increased. In 2014, poverty in Yemen was at 45 percent. The percentage should reach 75 by the end of 2019.

This war-torn region has not yet recovered from political instability. Because of this, the United Nations Development Programme (UNDP) estimates that it has lost 21 years of development.

The UNDP published a report, Assessing the Impact of War in Yemen on Achieving the Sustainable Development Goals, on September 26, 2019, which is the result of five years of research on how war has impacted Yemen’s social and economic structure and how the international community can successfully invest in Yemen.

Poverty in Yemen

The UNDP report found that the instability in Yemen has had disastrous effects on the Yemenese people. It reports that 11.7 million individuals have become impoverished as a result of the war. In addition, 4.9 million are malnourished. Of this number, 600,000 are children under the age of 5. The report also found that the war reduced economic growth in Yemen by $88.8 billion. This resulted in Yemen’s status as the world’s second least equal country in the world in terms of income. Without any change in the status quo, Yemen will become the world’s most impoverished country by 2022.

Yemen is largely reliant on food and imports for economic stability. Because of this, the economy has been unable to recover quickly without international intervention. The public sector employed 30 percent of the Yemenese population. However, a crash in the availability of assets left those individuals unemployed and unable to contribute to a jumpstart in the economy that would feed, clothe and put money in the hands of the impoverished.

The report concludes that the international response to the extreme poverty, economic crises and inequality in Yemen must be holistic and address both the root of the problem and the result of the issue.

Potential Investment in Yemen

The report examined four criteria: poverty, work and economic growth, hunger and inequality. Increasing international aid and investment can help with all four criteria. The article outlines a method of aid for addressing each area. A combination of efforts would resolve each criterion and address the issue of poverty overall. Increasing household consumption to pre-war levels which reflect “the spirit (though not the magnitude) of current cash-transfer programmes operating in Yemen,” can also combat hunger according to the report. This, combined with the distribution of food that would provide sufficient caloric intake and support Yemenese food exports, would alone prevent 73,600 death by 2030. A focus on improving access to clean water via changes to food prices through sanctions and providing sanitation implementation would save 255,000 lives by 2030.

Direct foreign investment into the Yemenese economy would significantly improve the everyday living conditions of Yemenese citizens. Without increased aid, Yemen will continue to stay on track to become the world’s most impoverished country by 2022. Direct aid programs and an increased amount of liquid capital poured into the economy would decrease poverty in Yemen, jumpstart the economy and improve the overall standard of living.

– Denise Sprimont
Photo: Flickr

ethical impact investingOne of the benefits of living in a developed nation with a strong economy is investing and making money off the success of the market. Traditional investing holds profits above all else, and generally shun factors such as environmental impact and workplace equality. Ethical impact investing tries to marry consciousness investing with profit to help both investors and companies active in creating a better world reach greater success.

According to the Global Impact Investing Network (GIIN), impact investing consists of “investments made with the intention to generate positive, measurable social and environmental impact alongside a finical return.” Examples of ways that companies can qualify for impacting investing include: reducing their carbon footprint, installing green energy and creating a more diversified board of directors and executive suit. In terms of viability, the GIIN reports that impact investing portfolios “overwhelmingly meet or exceed investors expectations for both social and environmental impact and financial return.”  Ethical impact investing portfolios do not sacrifice profits for impact or the other way around, they are the best of both worlds.

Who Does Impact Investing?

Many firms including the biggest in the world operate some form of impact investing. Blackrock calls their form of impact investing, “sustainable investing” and focuses on “investing in progress and pioneering.” Blackrock runs funds which are made up of multiple companies which meet a certain criterion. For example, Blackrock’s “02 SDG [sustainable development goals] fund” is made up of companies which help to “advance the U.N.’s sustainable development goals.”

Companies in this fund include: Tesla INC, Procter and Gamble Vesta Wind Systems and New Oriental Education and Technology. Blackrock’s funds are incredibly diverse with the highest percentage weight in the 02 SDG Fund making up only 4.72 percent of the weight. Having a diverse fund helps the fund stay stable in case any of the companies or markets crash.  And the proof is in the numbers — with the Blackrock fund outperforming the market. According to Investopedia, the average return of the U.S. market on average is 8 percent while the average return of Blackrock’s 02 SDG Fund is 9.3 percent.

Goldman Sachs also works towards ethical impact investing, but through a geographical lens which seeks to relive certain communities of specific ills. For instance, Goldman Sachs reports that it “invested over $300 million in the City of New Orleans [with an] integrated, place-based approach [which] has provided more than 1,450 units of…housing [and] over 1,300 new jobs.”

Goldman Sachs post-2008 has helped to create housing and jobs for an area ravaged by natural disaster. One of the projects that Goldman Sachs operated in New Orleans was the Harmony Oaks Apartments which Goldman Sachs poured “$61.2 million in financing to support the rebuilding effort [post Katrina].” Rather than having citizens invest in a fund, Goldman has corporations and projects apply for a grant which they can then be approved or denied for.

The Bottom Line

In terms of accessibility to the average investor, Goldman Sachs falls behind Blackrock’s fund management. Blackrock also includes companies from around the globe in their sustainable investing funds, while Goldman Sachs only offers impact investing related grants in the U.S. Blackrock also runs two other sustainable investment funds with one centered on low-cost sustainability, “01 ESGU” fund and one focused on reducing carbon footprint, “03 CRBN” fund. For investors who want to see a direct correlation with their profits and their impact, investing in Blackrock sustainability funds offers an effective, profitable alternative to traditional investing strategies.

Spencer Julian
Photo: Flickr

Impacting Investing
Investing in the right organizations has the potential to change the world. Impact investing is a type of investment that focuses on social or environmental benefits as well as financial or capital returns. Impact investing can be done through for-profit or nonprofit organizations that are looking to improve the world. It can be done in emerging or developed markets anywhere in the world as part of a growing market that provides capital to address global issues in sectors like “sustainable agriculture, renewable energy, conservation, microfinance and affordable and accessible basic services including housing, healthcare and education,” as the Global Impact Investing Network (GIIN) says. The market is estimated to be at around $502 billion as of April 2019.

According to GIIN, there are four primary characteristics of impact investing:

  1. Intentionality – The intention is one of the main things that differentiates impact investing from regular investing. The intention behind impact investing must be the desire to create measurable social or environmental benefits.
  2. Use evidence and impact data in investment design – Investments must have evidence or data that indicates the investment will have social or environmental benefits.
  3. Manage impact performance – Investments must be managed toward the specific intention of the investment. This would mean having feedback loops and means of communicating performance information to ensure that the investment is working toward the intention of the investment.
  4. Contribute to the growth of the industry – Impact investors must use shared industry terms to communicate their goals, strategy and growth. They also share information so that others may learn from their experience and adjust their investments accordingly.

Examples of Impact Investments

  • The Omidyar Network – Pierre Omidyar, the founder of eBay, and his wife Pam obtained large quantities of wealth after the company went public and wanted to do some good with it. He set up a limited liability company (LLC) to make investments in early-stage innovations that are able to generate profits. He also set up a 501(c)3, a tax-exempt nonprofit, to provide grants for public goods and assistance to disadvantaged communities as well as subsidize the production of beneficial goods. The use of both of these allows the Omidyar Network to use for-profit capital and nonprofit grants to benefit society.
  • Actiam Impact Investing – Actiam Impact Investing invested in Pro Mujer Bolivia, an organization that provides training and financial services to women in Bolivia. Janeth Villegas is one of many women who benefited from the program. Pro Mujer taught Villegas a number of skills including accounting and business management which empowered her to start her own chocolate company that she is now teaching her kids to run.
  • Salkhit Wind Farm – Impact investors invested capital in Salkhit Windfarm, the first renewable energy generator connected to the central grid in Ulaanbaatar, Mongolia. The installation of this wind farm has reduced coal burning by 122,000 tons annually and has created over 3,000 local jobs.
  • General ElectricGeneral Electric (GE) provides impact capital through its Ecomagination Accelerator to finance energy conservation efforts. Ecomagination investments totaled $1.4 billion in 2014. “We want to inspire more companies to work together and tackle the world’s greatest resource problems,” Ecomagination’s global executive director Deb Frodl said. With this goal in mind, the company also aims to decrease reliance on fossil fuels in order to reduce greenhouse gas emissions.
  • d.light – This for-profit company invests in and manufactures solar energy and distributes its products through the developing world. d.light’s mission is “To create a brighter future by making clean energy products universally available and affordable.” The focus here is on providing clean energy to the developing world which helps reduce dependence on fossil fuels and provides electricity to people who might not otherwise have it.

– Sarah Faure
Photo: Wikimedia Commons

Nicaragua’s Poverty Rate

Although Nicaragua remains one of the poorest countries in Central America,  the poverty rate has been cut in half in the last 10 years. Between 2005 and 2016, Nicaragua’s poverty rate fell from 48 percent to 25 percent. One reason for this dramatic reduction is industrialization. Over time, tourism and mining have become important to Nicaragua’s economic growth and stability.

According to the United Nations Industrial Development Organization, the key to reducing poverty is “to mobilize private and public investments […] around a long-term inclusive and sustainable industrialization plan for export-oriented and job-creating industrial capacity.” The following are three areas that both keep the U.N.’s policy recommendation in mind and hold promise in reducing Nicaragua’s poverty rate.

The Impact of Tourism

Tourism is the second largest industry in Nicaragua and has grown significantly since the Nicaraguan Revolution in the 1980s. For the first time in Nicaraguan history, there were more than one million visits to the country in 2010. This is an 8 percent increase from 2009. The tourism industry is currently thriving and provides revenue to small businesses. Additionally, it provides income to poor Nicaraguans in rural areas.

Tropical islands and volcanoes, such as the Mombacho volcano and the Corn Islands, are two popular destinations that attract tourists from the U.S., Europe and Central and South America. In 2010, gross income from foreign tourism was approximately $360 million. This is a $15 million increase in gross income from the previous year.

Mining Sparks Economic Growth

Alongside tourism, there has also been an increase in gold mining production. Between 2006 and 2016, production has gone from more than 109,000 ounces to 267,000. The results are even greater for silver mining, which increased from 94,000 ounces in 2005 to almost 682,000 in 2016. Mining is steadily growing to become one of Nicaragua’s driving economic forces.

Gold, beef and coffee are the country’s top three exports. Gold production has doubled and is emerging as an important source of income to the Nicaraguan government and their citizens. For each dollar earned from mining, $.66 cents go to taxes, remuneration and acquisition of goods and services. This revenue can aid in investing in better farming equipment for poor farmers and creating jobs through emerging industries like mining.

Agricultural Advances Combat Nicaragua’s Poverty Rate

Nicaragua still remains an agriculture-dependent economy. About 50 percent of its exports come from textiles and the agriculture industry. Bananas, cotton, sugarcane, rice and tobacco are some of Nicaragua’s other exports. However, Nicaragua’s poverty rate remains high, especially in rural areas where extreme poverty is heavily concentrated.

Many in the agriculture industry are migrants who harvest crops for half the year and search for other work during the other half. By investing in farm equipment and technology, farmers of smaller plots have a chance to increase their income beyond than $2 a day.

An example of increasing crop quality and yields is shown through conservation tillage, which is transgenic insect control. This system decreases erosion, increases organic matter in soil and conserves soil moisture. Additionally, marker-assisted breeding and biotechnology traits are new developments that have been shown to increase yields and improve traits, such as grain moisture in corn.

Other traits include providing resistance to corn rootworm and borers. Lastly, diversification is another way to help those in the agriculture industry. If crop prices are unfavorable, another crop’s production would offset the negative effect of those prices.

There are several ways to reduce Nicaragua’s poverty rate. A combination of improvements in quality and quantity alongside the diversification of crops can help increase income to those in poverty.

– Lucas Schmidt
Photo: Flickr

Credit Access in Bulgaria
Bulgaria is an Eastern European country with a population of approximately 7 million people. In 2016, the country’s poverty rate stood at 23.4 percent, which means that around 1.6 million Bulgarians lived below the national poverty line. In addition, Bulgaria has the lowest GDP per capita in the European Union and the highest levels of income inequality among E.U. countries. Increasing credit access in Bulgaria could be one way to recharge the economy and help reduce poverty.

Background

Poverty in the country has been steadily rising. Since 2000, the poverty rate has increased by 9.4 percent. Contradictorily, the unemployment rate has never been lower and wages have never been higher than they are now. To explain this contradiction, it is important to know that Bulgaria has experienced a rapid population decline. Between 1988 and 2018, the population of Bulgaria declined by nearly 2 million people. By 2050, economists predict that the Bulgarian population will fall to 5.5 million if the country does nothing to reverse the trend. This has precarious implications for the nation’s economy, and increasing access to credit is a viable solution to stymie population loss.

Particularly concerning is the fact that young and educated Bulgarians constitute the bulk of those leaving the country. In most cases, they leave to find employment elsewhere in the E.U. Some dubbed this phenomenon a “brain drain,” and studies confirm that it hinders economic growth and development. Experts at the Institute for Market Economics in Bulgaria argue that political stability and economic growth are the surest ways to dissuade young people from leaving the country; in other words, the overall outlook for the country must be bright.

Credit Access in Bulgaria

One possible way to address Bulgaria’s population problem is to increase access to credit. With increased credit access, impoverished Bulgarians can secure the funding they need to start a business, purchase a home or own a car. Expanding credit for small businesses could be due to economic growth. Furthermore, a 2006 study found that increased credit access in Bulgaria had a strong correlation with total factor productivity. Credit access has also led to growth in both the manufacturing and service sectors. A Georgia State University study found that access has led to a 0.34 percent annual increase in value for both sectors. These sectors account for 83 percent of Bulgaria’s GDP.

By further developing access to credit, Bulgaria has a brighter economic outlook. Despite its population decline, the GDP has increased by $52 billion since 2000. In order to reverse the brain drain and address national poverty, financial institutions and the Bulgarian government should continue to invest in credit access. Credit access will allow young entrepreneurs to remain in the country, helping the economy grow and encouraging Bulgarians. Economic growth, according to the Institute for Market Economics, remains Bulgaria’s best chance at recovering its lost population.

– Kyle Linder
Photo: Flickr


Nearly 63 percent of people living in Africa lack internet access. In contrast, 11 percent of North Americans, 13 percent of Europeans and 48 percent of Asians lack internet access. In response to this issue, Africa50, an infrastructure investment organization, has launched an innovation challenge asking for modern innovators to submit their original ideas on how to provide internet to under-served areas in Africa.

The Africa50 Innovation Challenge began May 14, after it was announced at the Transform Africa Summit held in Kigali, Rwanda the same month.

The submitted solutions will be piloted in Rwanda, which Africa50 CEO Alain Ebobissé said was the ideal place to implement and test the solutions.

Rwanda: A Country Evolving in ICT

Ebobissé described the country as having a thriving Information, Communications and Technology (ICT) sector. Cooperation between the challenge and the co-development of the Kigali Innovation City, a project Africa50 invested $400 million in 2018, is evidence of this ICT boom.

Rwanda has increased its internet access to 29 percent, as of 2019. The increase is a marked improvement compared to the less than 1 percent who had access in 2000. This development can, in part, be accredited to the National Information Communication Infrastructure (NICI) policy the country adopted in 2000.

The policy defines four separate stages of increasing internet and communication in Rwanda. The country has already prepared the ICT groundwork and is currently in the fourth and final stage; enhancing the infrastructure and improving the service delivery.

The goal of the final stage is to increase technological skills, develop the community and private sector and enhance the government’s use of the internet and cyber-security. The policy is planned to end in 2020.

The ideas will be implemented more broadly across the continent once the pilot phase in Rwanda is complete.

Winning Criteria and Perks

The judges will be looking for six main criteria in the proposals submitted to the Africa50 Innovation Challenge:

  • Innovation and originality
  • Ability to be implemented on a large scale
  • Affordability for both implementors and consumers
  • Sustainability for the environment
  • Readiness to be piloted in Rwanda
  • Adaptability of the solution for a variety of circumstances

The finalists will be announced mid-October and they will present their solutions at AfricaCom the following month.  Those selected will be announced at the 2020 Transform Africa Summit, but the organization does not specify how many winners will be chosen.

The winners will be awarded a cash prize or project development funding, connections to investors and exposure as an innovator.

If these solutions are implemented, economic growth and job creation are a few of the newfound benefits that may come to these countries. Companies can grow and have an improved role in the competitive market if they have access to the internet.  As a result, these solutions allow them to reach more consumers, labor pools and raw materials, according to a 2012 report by the International Telecommunication Union.

ICT Progress in Other African Countries

There will certainly be interesting proposals from this year’s Africa50 Innovation Challenge entries,  but there are already solutions that have worked in other African countries.

For example, Kenya has had a considerable jump in their internet speed and bandwidth — which increased 43 percent from 2016 to 2017. This increase can be attributed to the National Broadband Strategy for Kenya. Additionally, Nigeria has increased its number of internet users from 72 million in 2017, to 92 million in 2018.

Nigeria’s fiber network, 21st Century, is partnering with Google Station and anticipates the installation of 200 Wi-Fi hotspots by the end of 2019, according to Fortune.

Africa50 aims to spread high-speed internet and improve opportunities for those living in under-served communities, whatever the solution.

– Makenna Hall
Photo: Flickr

Industrialization in Bolivia

Although Bolivia’s poverty rate declined significantly from 63 percent in 2004 to 36 percent in 2017, the industrial production growth rate has been slow at about 2 percent. One major challenge to continually reducing the poverty rate is industrialization in Bolivia. The country’s state-oriented policies discourage investment, especially in the underutilized mining sector. Further economic developments that include incentives to spur investment, as well as policies to improve income equality, are needed to continually reduce the high poverty rate.

Improving the Business Environment

Bolivia’s state-oriented policies is a barrier to development. According to Joe Lowry, head of Global Lithium and a former employee of FMC, FMC wished to develop Uyuni in the late 1980s and early 1990s, but “governmental chaos and poor infrastructure were too much to deal with.” President Morales is preventing external corporations from exploiting natural resources, such as lithium. FMC Corp, a major lithium producer, and South Korean steelmaker POSCO tried to make deals with Morales’ government, yet no agreement was made due to strict government control.

To induce foreign companies to form operations in Bolivia, reducing government control on the private sector is an essential requirement. This laissez-faire style of welcoming outside companies to build relationships with Bolivians would not only create jobs but also improve the poor roadways leading to its neighboring countries. A lack of infrastructure also creates difficulty for external corporations who wish to start operations within the country. Inefficient roadways slow transportation vehicles and create major obstructions to traveling throughout Bolivia.

About 12 percent of roadways are paved. The Inter-American Development Bank approved a $178 million loan to Bolivia in an effort to improve or add roads, traffic flow and increase security. The loan also increases job opportunities for women in non-traditional sectors through training in truck-weighing procedures, toll-collection and heavy machinery operation. The regions with paved roads earn the majority of the gross domestic product. In these areas, the travel time and cost of operating vehicles is less than areas with crude and poorly maintained roads. Additional infrastructure development is needed to create jobs and increase the probability of future investment prospects.

Key Sectors for Bolivia’s Growth

Lithium mining is one key sector to increase industrialization in Bolivia. With demand for lithium expected to double by 2025, President Evo Morales is set to invest $250 million into lithium operations after signing an agreement with ACI Group. Morales vowed to “industrialize with dignity and sovereignty.” Bolivia has nine million tons of untapped lithium, the second-largest amount in the world. Construction begins in 2021 and already companies are showing interest.

While Morales envisions Bolivia as a major lithium producer, Bolivia’s economy and finance minister, Luis Arce, perceives a future in the tourism industry. Arce agreed with Morales on its need for industrialization, especially in mining, natural gas and tourism sectors. Lake Titicaca, Salar de Uyuni and La Paz are three popular destination sites that receive tourists from across the world. Arce also plans to target income inequality by redistributing wealth. This would give compensation to families whose children complete a school year and a program guaranteeing a minimum retirement payment. Arce also stated salary increases outpacing inflation would help Bolivians, especially those in extreme poverty.

Present Infrastructure Status

Industrialization in Bolivia, especially in road construction, is already underway. Reducing state-oriented policies could offer an incentive to investors interested in lithium. It is an important component in batteries that power electric vehicles and an important resource for the future of vehicles. With a decrease in strict government control, Bolivia could rise out from its slow development, create jobs and reduce its high poverty rate.

– Lucas Schmidt
Photo: Flickr