Archive for category: Poverty Reduction

Information and stories about poverty reduction.

Dispelling the Myths of “Charity”: Social Safety Nets in Asia

Social Safety Nets in Asia
Regardless of its title—alms, gifts, handouts, welfare, aid—the true meaning of social safety nets is not universally accepted in the developing world. As a useful form of poverty reduction, there are several purported reasons as to why “charity” is regarded as wasteful spending. One is the belief that social assistance programs diminish incentives to work and create dependency on the program’s benefits into the foreseeable future.

The Issues with Social Safety Nets in Asia

The myth of “crutch economies” being the bane of current work ethic and the cause of further, more established and resilient poverty, appears to be losing its already slippery empirical footing. Recent studies conducted by the World Bank in countries such as Mexico, Indonesia and the Philippines have found no evidence that workers who receive assistance go on to work less. Instead, social safety nets routinely form a stable barrier for further slides into economic degradation in developing countries.

But spending on them still appears to be minimal. Although the levels of spending as a percentage of GDP varies across countries, spending on social safety nets in Asia, South and East Asia especially, is relatively low. The developing world on average spends 1.5 percent of its GDP on some form of welfare programs. South Asia, meanwhile, spends only 0.9 percent of GDP on social safety nets.

In lieu of more conventional welfare programs, the region has relied instead on more customary and time-tested economic assistance programs. A mix of ample growth, a youthful population and a devoted and helping family has filled the void of official government social safety nets in Asia.

While an admirable economic support system, there are more modern social safety net programs that do not become victim to the “crutch economy” fears. A unique pension plan in Mexico is disproving both the myth of diminishing work ethic and future drags on the economy due to dependency.

The Older Adults Program in Mexico

Pension plans provide better well-being later in life, as they allow people to project their current earnings into the future. But the regency of informal labor in developing countries has made large-scale worker contribution plans rather toothless in practice. Instead, Latin American countries are trying a pension program that targets age and income and does not rely on the contributions of workers. This form of social security could encourage Asian countries to provide a more substantial safety net at home.

Removing the fear of falling into abject poverty, or burdening close relatives once workers are removed from the labor market, is the goal of the Older Adults Program (OAP) in Mexico. The OAP is a noncontributory universal pension system for elderly Mexicans living in small towns. Initiated in 2007, the program took only four years to cover 2.1 million elderly people in 76,000 communities in Mexico. A recent study of the OAP by the International Development Bank (IDB) helps dispel the myth of crutch economies.

One concern of social safety nets in Asia is that they instill a sense of complacency in the younger population. Expecting to receive future income from the program’s benefits, the pension warps the savings and work ethic of the younger generations. The IDB’s study, however, found no evidence of such dependence. These “anticipation effects” that are widely feared and cited by critics of social safety nets were not backed up with any empirical findings. Negative labor supply effects of working age citizens was not a side effect of the pension plan for the elderly.

Work ethic among the elderly was not negatively affected either. Although beneficiaries working for pay in the official labor force dropped, this was more than compensated for by the rise in informal, unpaid family business employment. Rather than sapping their willingness to work, the pension program transferred those efforts to where families deemed most urgent.

The Coming of Age in Asia

But despite the lack of spending, there is hope that social safety nets in Asia will soon grow in usage and acceptance. This is already the case in Indonesia and the Philippines, even if they are outliers in the region.

A cash-transfer scheme in the Philippines, having covered four percent of the population in 2009, increased coverage to 20 percent in 2015. A similar scheme in Indonesia has grown in coverage from two percent of the population in 2009 to nine percent in 2016 with help from the World Bank.

In Indonesia, the payments from the Family Hope Program provide benefits to those in the bottom 10 percent of income distribution. Benefits are available to households with a pregnant mother or a child between the ages of zero to 18. Assistance focuses on promoting education and health of the family. The cash payments are made only if beneficiary households keep children enrolled in school and respond to health issues by taking children to clinics.

As promising as the Family Hope Program is, other countries in Asia have yet to adequately address welfare programs relative to other regions of the world. A fear of diminishing labor supply motivation and perpetual dependency on benefits should not deter the acceptance and administration of social safety nets.

Other than evidence-based research, there is one persuasive reason for adopting more widespread social safety nets in Asia: human kindness. Harry Truman, commenting in 1946, said, “The word ‘charity’ has regained its old, true meaning—that of goodwill toward one’s fellowman; of brotherhood, of mutual help, of love.” Until that is realized, the world will have to rely on empirical arguments to persuade decision makers that social safety nets are necessary.

– Nathan Ghelli
Photo: Flickr

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Significant Strides in Poverty Reduction in Jamaica

poverty reduction in Jamaica
The poverty rate in Jamaica has declined dramatically between 2015 and 2016, marking the largest annual decrease in poverty in a decade. Job creation and government policies have allowed for significant poverty reduction in Jamaica.

The Minister of Finance and Public Service, Dr. the Hon. Nigel Clarke, reported that the poverty rate fell 4 percent in 2015-2016, dropping from 21.1 percent to 17.1 percent. This is a six-year low for the nation and representative of a larger trend. Poverty levels in Jamaica have fallen to their lowest since 2009, for a total drop of 19 percent.

These figures, delivered by the Minister of Finance and Public Service in a public statement, came from the Jamaica Survey of Living Conditions, which is a survey conducted annually by the Statistical Institute of Jamaica.

Both Rural and Urban Areas of Jamaica Seeing Poverty Decreases

Not only has the national level declined, rural and metropolitan areas are also seeing significant poverty reduction in Jamaica. Rural poverty has seen an 8 percent decrease in poverty to 20 percent, while the poverty rate in the Kingston metropolitan area has hit an eight-year low, dropping 2.5 percent to 11.9 percent.

It is important to note that not all towns have seen a decrease in poverty rates, indicating that it is an unbalanced decline, which could point to the need for policies that target all vulnerable groups in the nation. While it is good news that the rates are decreasing, there is still room for improvement.

Causes of the Decline

According to Clarke, unemployment rates are one of the key areas that have prompted the decline in poverty rates. He states that “the unemployment rate has been falling steadily from a high mid-teens in 2013 to 9.6 percent in January 2018.” The Jamaican government has focused on job creation, which is helping spur poverty reduction in Jamaica.

There has also been a 12 percent increase in agricultural output, which brings in money to the economy and creates jobs.

The Future of Poverty Reduction in Jamaica

The Planning Institute of Jamaica is expecting the poverty decline identified in the last decade to continue. This is based both on government policies and increased job creation, said the Director General of the Planning Institute of Jamaica, Dr. Wayne Henry.

It is expected that job creation in the wholesale, retail trade, construction, hotel and restaurant industries will continue into the future. These industries have seen large increases in the past few years. For example, the wholesale and retail trade industry was up 7,900 persons, and construction was up 7,300 persons in 2015-2016.

The Planning Institute of Jamaica has also said that they will keep an eye on the Poverty Reduction Policy that was launched by the Jamaican government this year to see how it impacts poverty reduction in the nation.

Other institutions are also contributing to poverty reduction efforts in Jamaica that promise further reduction in the future. The Caribbean Development Bank pledged $1 million to renew its program helping countries in the region support poverty reduction efforts.

Huge strides have been made in poverty reduction in Jamaica, and through policy and job creation, the trend will likely continue.

– Katherine Kirker
Photo: Flickr

doTERRA’s Healing Hands Foundation Provides Jobs to Alleviate Poverty

Healing Hands Foundation
Oxfam estimates that it would take $60 billion annually to end extreme global poverty, less than one-fourth of the income of the top 100 richest people in the world. Although there are billionaires that donate to certain organizations, some of the most powerful efforts come from companies, like doTERRA’s Healing Hands Foundation, which works diligently with the actual individuals suffering from extreme poverty.

doTERRA Makes Social Responsibility Part of Its Corporate Mission

doTERRA, an essential oils company with $1.2 billion in annual revenue in 2016, was founded in 2008 with the vision of producing a new standard of therapeutic-grade essential oils that would positively influence individuals and communities around the world. In addition to making products such as lotions and supplements, as well as the pure essential oils themselves, the company truly desired to serve people and communities with the resources they had. In June 2012, doTERRA created the Healing Hands Foundation, a nonprofit organization that serves communities in need.

The organization partners with other groups and doTERRA Wellness Advocates to offer hope to millions around the world. One of the corporate partners, Operation Underground Railroad, works with the doTERRA Healing Hands Foundation to bring healing and hope to the world by rescuing children from sex trafficking by using some of the world’s experts in extraction operations and anti-child trafficking efforts. Through the foundation’s efforts, not only are the lives of many freed from disease and poverty, communities are empowered with the tools they need to become self-reliant.

Healing Hands Foundation Focuses on Innovative Co-Impact Sourcing Model

A major part of the Healing Hands Foundation’s efforts are based around its concept of co-impact sourcing, a model in which farmers are paid a fair wage for their work and in turn, the company receives a higher quality product, creating a strategy of economically sustainable development. The Healing Hands Foundation has co-impact sourcing initiatives in 10 different countries: Guatemala, Nepal, Somalia, Kenya, Madagascar, Haiti, India, New Zealand, Jamaica and Bulgaria; this list is predicted to grow further. The initiatives have sustained social impact and benefit farmers, harvesters, and distillers, their families and communities.

The doTERRA Co-Impact Sourcing Initiative in Somalia pays frankincense harvesters equal and fair wages. Frankincense harvesters have been around for thousands of years in Somalia; however, they often have treacherous journeys to collect the resin. Frankincense is grown from wild Boswellia trees, and it takes more than five months to complete the delicate process, forcing harvesters to leave their families and often live in caves. Even after all of this dedication, the harvesters are often unable to sell the frankincense at a fair price.

Because of doTERRA’s co-impact sourcing, all harvesters receive fair wages and on-time payments by bypassing the middlemen and instead working directly with the harvesters themselves. Because it is often the responsibility of women to clean and sort the frankincense resins, the foundation makes it a top priority to ensure that the women are able to do their work as close to the harvesters as possible. The foundation has made an impact on Somalia as a whole, due to the construction of two new schools for hundreds of students from harvester clans.

The doTERRA Healing Hands Foundation is actively eliminating global poverty by not only collaborating with other organizations, but by providing thousands of poverty-stricken individuals and communities worldwide with well-paying jobs. The foundation works to promote healing, hope, community and self-reliance in many developing countries.

– Angelina Gillispie
Photo: Flickr

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Economic Development In Iraq Contributes To Fight Poverty

Economic Development In Iraq Contributes To Fight Poverty
According to the World Bank, after the complete eradication of ISIS in all of its territory, economic development in Iraq will most likely be deployed and bear fruitful results.

ISIS and Iraq

More specifically, the increase of oil prices and the promising rise of investments towards reconstruction are presumably fueled by a set of government actions. These decisions are set to facilitate and accelerate the process of economic and social recovery in the wake of ISIS which, as of December 2017, is no longer a major threat for Iraq.

Since 2014, the ISIS war and prolonged decrease of oil prices heavily contributed to the contraction of a non-oil economy by 21.6 percent. Therefore, a safer economic and social environment will bring nothing but economic and social relief.

Indeed, the most treasured tool for economic development in Iraq is certainly oil extraction, which accounts for 55 percent of the GDP. The remaining part of this number is divided between the services sector (33 percent), manufacturing, construction, water and electricity production (8 percent) and agriculture (4 percent).

Iraq’s Economic Growth

Oil prices and restored security, then, have been the main factors for Iraq’s solid economic growth in 2016, which amounted to 10 percent. However, fiscal responsibility and curbing corruption should go hand-in-hand with such economic development in Iraq.

To maintain a steady trend in economic growth and the road of improvement, the Iraqi government should take a serious look at how tax revenue as a percentage of GDP is barely detectable because of quite high levels of evasion and poor enforcement. Moreover, in terms of public spending, the government has been spending an amount close to to 42.7 percent of the (GDP) over the past three years, and budget deficits have averaged 8.6 percent of GDP. Public debt, as a consequence, is equivalent to 63.7 percent of GDP.

Poverty Eradication

Actions, however, have been taken towards the greater goal of poverty eradication in Iraq. In terms of analysis and planning, the government has, in fact, determined an official poverty line based on the 2006/07 IHSES (Household socio-economic survey), which also formed the basis for Iraq’s National Strategy for Poverty Reduction 2009.

Assessment reports measuring causes of poverty paired with high frequency, advanced impute expenditure surveys are top methods used to estimate poverty.

Road to Improvement

The Iraqian economy is largely state-run and oil extraction represents some 90 percent of government revenues. Meanwhile, 3.9 percent of people in Iraq are living in extreme poverty (2012). In fact, 18.9 percent live below the national poverty line (2012), with greater rural poverty than urban poverty; 11.6 percent of people in Iraq are multidimensionally poor (2011).

In recent years, economic improvement has been proven effective due to major social internal accomplishments — liberating ISIS territory is certainly on top of the list. Government and state presence can certainly encourage investments and economic development in Iraq, as they have done sporadically in previous occasions. However, it would be quite beneficial towards goals of poverty reduction if a larger portion of the economy could be left to the private sector.

– Luca Di Fabio
Photo: Flickr

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How to Eradicate Extreme Poverty and Hunger

how to eradicate extreme poverty and hunger
Poverty is like a cancer for society — it is debilitating and does not have a cure-all solution. People in extreme poverty live on less than $1.90 a day and face poverty traps due to factors such as geographic location, malnutrition, effort required to meet daily needs, lack of education and poor governance. With so many ways for people to become poor, it’s not surprising that different regions need to focus on different issues when determining how to eradicate extreme poverty and hunger.

Poverty Eradication Across the Globe

According to the 2017 World Bank Annual Report, Europe and Central Asia focused 41 percent of the $5.3 billion they borrowed from the International Bank for Reconstruction and Development as well as the International Development Association on energy and extractives but only two percent on education.

In contrast, South Asia concentrated 14 percent of the $6.1 billion they borrowed on energy and extractives, and 12 percent on education. Despite such disparities between these two countries’ prioritization of their energy and education sectors, both areas took action to build resilience to climate change, invest in human capital and improve infrastructure.

Benefits of Migration

For poor households trapped by low-productivity and in oftentimes remote, rural locations, migration could be a viable solution to increasing their standard of living. Such families may not be willing to migrate because it would put their sources of subsistence at risk. However, there are large potential gains from migrating to a highly productive country like the U.S.

According to a study by Clemens, Montenegro and Pritchett in 2016, the annual gain from working in a high-productivity environment is more than four times the total lifetime value of the most successful anti-poverty program.

Cash Transfer Solutions

On the policy side, well-targeted and structured cash transfers have been an increasingly popular tool for alleviating poverty in low-income countries. Cash transfers not only provide safety nets by raising the incomes of the poor, but they also help them escape from ‘psychological poverty traps.’

Contrary to the common concern that welfare programs can discourage work, a study done by Banerjee et al. in 2016 found no systematic evidence that cash transfer programs affect the overall number of hours worked nor the propensity to work among the men and women in the seven programs carried out in the Honduras, Indonesia, Morocco, Mexico (which had two programs), Nicaragua and the Philippines.

There are also solutions that require the consideration of measuring poverty based on other factors besides income and consumption. One example would be the offshoring of low-skilled jobs. While these jobs do provide a steady source of income, they are often also unpleasant, risky and may lead to adverse health effects. So, although these jobs can provide a short-term safety net, they are not a long-term solution to poverty.

Small Changes, Big Outcomes

Specific strategy government programs that have lasting effects countering poverty involve multifaceted household-level interventions. In one study by Banerjee et al., implementation of an anti-poverty program at the household level in India, Ethiopia and Pakistan (as well as both the village and household level in Ghana, Honduras and Peru) led to at least a year’s worth of lasting impact after the short-term intervention of the program.

Statistically significant impacts were made in the areas of consumption, food security, productive and household assets, financial inclusion, time use, income and revenues, physical health, mental health, political involvement and women’s empowerment. The intervention consisted of six elements: a productive asset grant, temporary cash consumption support, technical skills training, high frequency home visits, a savings program and health education and services.

Pros and Cons of Policy Change

On the other hand, governments also need to be careful when deciding on policies that involve low-income countries. Bill Clinton admitted in 2010 that his policy to dump American tariff-free rice in Haiti was a mistake. By forcing Haiti to drop tariffs on imported subsidized U.S. rice, the damage done to rice farming severely hindered Haiti’s ability to be self-sufficient.

In response to the incident, Oxfam recommended that food aid should be bought in local markets inside the country receiving aid.

Oxfam also said the Haitian government should decentralise services away from the capital, make sure farmers have credit access and improve their land tenure system where farmers could be cheated by judges able to transfer land into the hands of ‘whoever offers the biggest bribe.’

Eradicating Extreme Poverty and Hunger

The same goes for humanitarian organizations in deciding what kinds of resources and assistance to provide. To answer the question of how to eradicate extreme poverty and hunger, these organizations need to first determine what consequences their intervention would lead to. By looking for methods to complement local capacities to combat poverty, humanitarians can prevent their efforts from displacing local businesses.

A great example is The Hunger Project — a global nonprofit organization dedicated to ending world hunger. With programs throughout Africa, South Asia and Latin America, this organization empowers women and men in rural villages to sustainably overcome hunger and poverty. Members of the community accomplish this feat by mobilizing and fostering effective partnerships to engage local government.

In conclusion, there are many factors to consider in different parts of the world when looking at how to eradicate extreme poverty and hunger. Auspicious solutions to poverty traps include migration, conditional cash transfers and multifaceted household-level programs. On the side of humanitarian organizations and the government, much deliberation is essential to providing goods, services and policies that complement and protect rather than displace local needs and markets.

– Connie Loo
Photo: Flickr

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Top 10 Facts About Poverty in Jakarta

Top 10 Facts About Poverty in Jakarta
While Jakarta has one of the lowest poverty rates in Indonesia, the nation as a whole has had fairly stagnant poverty levels for a few years now. The nation has seen much economic growth lately; however, this growth has not aided all citizens equally. These 10 facts about poverty in Jakarta illustrate the differences and similarities between the nation and its capital city.

Facts About Poverty in Jakarta

  1. Jakarta had a population of almost 11 million people in 2016.
  2. The poverty rate in Indonesia fell from 24 percent to 11.4 percent between 1999 and 2013, paralleling the poverty rate in the city of Jakarta. This is a reduction of more than 50 percent, demonstrating the Indonesian government’s ability to combat poverty effectively.
  3. However, in 2017 the poverty rate in Indonesia was 10.64 percent. In 2016, the poverty rate was 10.7 percent of the population. There has been very little change in poverty levels in Jakarta and Indonesia as a whole in the past few years, indicating the need for new policies and practices.
  4. The Gini ratio is an income inequality measurement tool, where zero represents total inequality and one represents total equality. In March 2017, the Gini ratio in Indonesia was 0.393, and the ratio has been unchanged since the previous September. Such inequality is even more prevalent in large urban areas like Jakarta.
  5. The Indonesia Central Bureau of Statistics (BPS) conducts poverty surveys twice a year, indicating an interest in the issue. They conduct research on the national and local levels. Additionally, these statistics are publicly available, showing good levels of transparency.
  6. Jakarta has been facing a widening income disparity, and the Jakarta BPS attributes it primarily to inflation. Inflation in the nation has also prevented development in labor-heavy industries, worsening poverty levels.
  7. Basuki “Ahok” Tjahaja Purnama, the governor of Jakarta, hopes to reduce the poverty rate in Jakarta to 1 percent between 2016 and the end of 2021. He plans to do this through a profit-sharing program, in which Jakarta’s poor will be able to start businesses and retain 80 percent of the revenue. The other 20 percent would go to the government.
  8. Indonesian President Joko Widodo indicated that, through a number of poverty alleviation programs, he believes the poverty rate will drop to the single digits. At a national meeting of regional legislative assemblies, he expressed that this is a major target for the government. These programs will be implemented in many cities, including Jakarta.
  9. One such program is the Family Hope Program, which is a social aid program that currently supports 10 million families. With this plan and others like it, the president hopes to significantly reduce poverty in the nation.
  10. President Widodo also pointed to “Kartu Indonesia Sehat,” which are cards that give people access to free healthcare at special service centers. Currently, 93 million people in Jakarta, and other towns and cities, are able to use the cards at a variety of centers.

These are the top 10 facts about poverty in Jakarta. Ultimately, there is still a lot of room for improvement in Jakarta and Indonesia as a whole. Poverty levels have been stagnant and action needs to be taken to move more people and families above the poverty line. However, the government seems to be putting in place far-reaching programs and setting goals for poverty reduction in the nation, which are very important steps. If these efforts continue and improve, Indonesia may well be on its way to eradicating poverty.

– Liyanga de Silva
Photo: Flickr

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Jim Yong Kim and the World Bank’s Goal to End Poverty

Jim Yong Kim and the World Bank's Goal to End Poverty
Since 2012 (and now in his second term), physician and anthropologist Jim Yong Kim has served as the president of the World Bank Group. After assuming leadership of the World Bank, he took up two goals: “to end extreme poverty by 2030; and to boost shared prosperity, focusing on the bottom 40 percent of the population in developing countries.” His career has revolved around health, education and improving the lives of the poor.

Milken Institute and Global Poverty

On May 19, Jim Yong Kim spoke at the Milken Institute Global Conference which focuses on “advancing collaborative solutions that widen access to capital, create jobs and improve health.” 

The Milken Institute hosts its Global Conference from April 29 to May 2 in Los Angeles, California, and possesses various centers focused on topics such as the Center for Financial Markets, Center for the Future of Aging, and Center for Jobs and Human Capital. One of the organization’s foci is children — 150 million children around the world are affected by poor nutrition, undersized growth, and cognitive impairment, and live primarily in South Asia and African countries.

According to VOA, if leaders don’t focus on investing in their people, then “many, many, many people will find themselves undereducated and without the skills to be able to compete in the economy of the future and so many countries are going to go down the path of fragility, conflict, violence, and then of course, extremism and migration.”

Business, Health and Development

In the talk, Jim Yong Kim stated there should be a business-like mindset when talking about health and development of individual; in fact, Kim has made it his mission to make this world a better place by working towards a common goal of reducing poverty.

According to Forbes, Kim wants to “reduce extreme poverty levels to below 3 percent of global people, and grow the incomes of the bottom 40 percent of each country.” His organization also lends out cash — almost $59 billion a year.

Before Kim assumed his position as president of the World Bank, he was president at Dartmouth College and “from 2003 to 2005, as director of the World Health Organization’s HIV/AIDS department, he led the “3 by 5” initiative, the first-ever global goal for AIDS treatment, which greatly to expand access to antiretroviral medication in developing countries.” 

From A Ted Talk to Today

In a Ted Talk in April of 2017, Kim spoke about going to Haiti when everyone told him that the best thing to do was to focus on vaccination and possibly a feeding program. Since Kim’s parents had emigrated from Korea to flee the Korean war, though, Kim had a different perspective — what he saw in Haiti was what he saw in parents: to give their children the opportunity that they didn’t have.

In the Ted Talk, he goes on to say, “the Haitians wanted a hospital. They wanted schools. They wanted to provide their children with the opportunities that they’d been hearing about from others, relatives, for example, who had gone to the United States. They wanted the same kinds of opportunities as my parents did.”

In conclusion, Jim Yong Kim is a accredited president of the World Bank Group, and a charitable person who traveled to Haiti to help build hospitals and schools, and give children increased opportunities. All in all, if more people follow Kim’s example, the world will be a stronger and more sustainable place. 

– Valeria Flores
Photo: Flickr

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Top 10 Facts About Poverty in Riyadh

Top 10 Facts about Poverty in Riyadh
Riyadh is an expansive metropolis located in Saudi Arabia and is also its capital city. It is home to about seven million of the country’s 32.5 million people. Despite there being a plethora of information on the country’s steadily growing economy, updated statistics and data on the poverty rates in Saudi Arabia and Riyadh are lacking, as the Saudi government seems to keep such information under wraps. Nevertheless, these 10 facts about poverty in Riyadh and Saudi Arabia can shed some light on the situation.

Facts About Poverty in Riyadh

  1. Saudi Arabia has one of the world’s most powerful economies, yet social welfare programs and job growth seemingly cannot keep up with such rapid population growth. The population of Saudi Arabia was just six million in 1970 and has been expanding quickly ever since.
  2. The Saudi family is the richest royal family in the world, with a net worth of around $1.4 trillion due to plentiful oil reserves, yet the country itself can be considered poor, with an estimated 20 percent of its people living in poverty.
  3. In 2011, three young men were arrested and jailed after uploading video footage to YouTube showing poor citizens in Riyadh. The video was a report on an impoverished area of the city which contained personal interviews and a call to action for the Saudi Arabian government to do more to address the issue of poverty. Thousands of people showed support and distaste for the arrests via social media.
  4. The government under King Abdullah has spent $37 billion on housing, unemployment and other programs as of 2012 in an attempt to assist the increasing number of poor people, despite the fact that the programs seem to be ineffective.
  5. The country controls about 22 percent of the world’s oil and relies on that source of income for approximately half of its GDP. Through Saudi Vision 2030, the action plan to privatize more industries and lower the unemployment rate from 11 to 7 percent, government officials hope to reduce the economy’s dependence on oil. The plan even lists specific goals related to the health of Saudi citizens, including building facilities dedicated to sports and physical activity.
  6. As the poverty rate increases, so do youth unemployment rates. Close to 75 percent of all unemployed citizens are in their 20s.
  7. High-status, image-conscious Saudis have downplayed the existence of poverty in Saudi Arabia and the topic was avoided in Saudi Arabian media. It was considered a taboo subject by the Saudi media until 2002, when King Abdullah visited a slum in Riyadh, providing an opportunity for proper news coverage of a Riyadh slum.
  8. The Saudi government provides free education, healthcare and burials to its citizens, although it does not offer food stamps or a welfare system. It also provides pensions and payments for food and utility bills for the poor and disenfranchised. It has been stated that many families still rely on donations from private citizens in spite of these efforts.
  9. Because Saudi Arabia is a largely Muslim nation, citizens observe the religious requirement of zakat that says people and businesses should donate 2.5 percent of their wealth to charity. That money is collected by the government and distributed among the poor.
  10. Women who are widowed or unmarried often struggle financially, as Islamic law and Saudi culture indicate that men should be the main breadwinners. Some establishments require women to have written permission from a guardian before being hired. Fifty-six percent of unemployed youth age 15 to 25 are women as of 2015.

Saudi and American analysts report that, regardless of the efforts to alleviate poverty, large quantities of money are acquired by the royal family through corrupt tactics and schemes. Perhaps through the actions of Saudi Vision 2030 and the charitable and religious nature of the country, a long-term solution may be implemented in the future.

– Camille Wilson
Photo: Flickr

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Life in the Slums of Nairobi: How Childaid is Helping

Slums of Nairobi
Interestingly, 21 out of 25 of the world’s poorest countries are located in Africa. As a result, many families in these nations are forced to live in slums, which are residential areas characterized by insubstantial shelters and unsanitary conditions.

One of the major slums in Africa is the Mukuru Slum in Nairobi, Kenya. Dermot Higgins, a director of the charitable organization, Childaid, spoke to The Borgen Project about his organization and how they are changing lives in this slum, among others.

Poverty in Africa

As home to the world’s poorest nations, poverty in Africa is widespread.

  • Amount Spent Per Day: 47 percent of the African population lived on less than $1.90 per day in 2012.
  • Malnutrition: The Save the Children foundation estimates that two in five African children have stunted growth due to malnutrition.
  • Expected Population Growth: Business Insider approximated that more than half of the population growth that will occur between now and 2050 will take place in Africa, likely resulting in increased poverty and hunger.

The Mukuru Slum

Higgins explained that Childaid is helping to fight poverty in Africa by supporting projects in many different areas, but their main efforts are focused in the Mukuru Slum. According to the Ruben Centre, another organization based in Mukuru, the community was established about 35 years ago by people who worked in the factories nearby. It now holds over 600,000 inhabitants.

  • Physical Conditions: The physical conditions of the slum are rough. Higgins described the environment: “Most families survive in tiny one roomed corrugated iron shacks which measure 3 x 3 meters and have no toilets, electricity or running water. There are few communal toilets and water taps and open sewers run past many of the shacks.”
  • Safety and Health Concerns: Other hardships faced by the slum’s inhabitants are safety and health concerns, Higgins noted. “Diseases are rife in the slums and security is a major concern especially after dark when it is not safe to go out.” The Ruben Center listed malaria, typhoid, dysentery, tuberculosis and AIDS as some of the most common diseases in the slum.
  • Education: The Ruben Center noted that 44 percent of children in the slum drop out of school to work. Even the children that are fortunate enough to attend school have subpar education due to limited funds and materials.

How Childaid Helps

According to their website, “Childaid is a charity that supports child orientated projects which will help them get out of the harsh and brutal conditions of slum life. We strive to improve the welfare of disadvantaged children through education, health and residential care projects.”

  • Building Schools and Sponsoring Students: To improve the quality of education, Childaid is helping by building better schools. “The Kwa Njena primary school, rebuilt and developed by Childaid,” Higgins noted, “is like an oasis in the slum for over 2,000 children who receive education in a safe environment.” The organization also prevents students from dropping out by sponsoring them; Higgins spoke of one of their former students: “One of the past pupils of the schools, who was sponsored by a Childaid volunteer in secondary school and university, recently wrote to thank us. He was qualifying as a pharmacist and planning to buy a house and bring his parents out of the slum.”
  • Providing Food: Childaid is helping to eliminate malnutrition by feeding students in school. Higgins spoke of the charity’s accomplishments: “As a result of Childaid’s work, over 2,000 children are getting educated and fed every day.”
  • Funding and Supporting Institutions: According to Higgins, Childaid is helping by raising money to fund institutions, such as a maternity ward, orphanage, HIV program and skills training center.

Childaid strives to not only help those in Mukuru, but to fight general poverty in Africa. The organization’s impact has been considerable given its new schools, support of other institutions and positive influence on a population of poor children across the continent. Higgins concluded, “It’s very satisfying to see the children getting food, education, love and security in school.”

– Olivia Booth
Photo: Flickr

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A Comprehensive 75-Year History of the World Bank

history of the World Bank
The history of the World Bank is one of change. As the world’s leading development finance institution, the World Bank has established a unique global role over its 75-year existence leading to its modern goal of poverty alleviation. Its longevity and evolution have fostered a bevy of admirers and critics, and its efficacy in achieving its goals has been a cause célèbre for members of the international development community.

How the History of the World Bank Began

The World Bank was formed in 1944 during and because of the ruin caused by World War II. Its original purpose was as a source of financing for the reconstruction of Western Europe, as countries such as France, the beneficiary of the bank’s first loan in 1947, were so devastated that no commercial lender would risk their own capital. As Europe gained its footing and could once again access capital markets, the bank shifted to a global focus including Latin America, Asia and Africa.

However, the history of the World Bank is one of not just an expanding geographical focus but of expanding policy focus. The bank’s initial projects in the 1950s-60s focused on infrastructure and reconstruction, but over the decades this mission has evolved.

The World Bank’s Growing Purpose

The creation of the bank’s International Development Association (IDA) in 1960, with a mission to provide concessional loans and grants to the world’s poorest countries, presaged a shift toward supporting the world’s least developed economies. Bank president Robert McNamara’s pivotal 1973 speech in Nairobi was considered a turning point toward what is thought to be the most important of its many modern mandates: poverty eradication. In 2013, current President Jim Yong Kim described the institution’s twin goals as eliminating extreme poverty by 2030 and promoting income growth among the poorest 40 percent of the world’s population.

To this end, the World Bank has continued to represent a formidable source of financing. Its 2017 annual report totaled commitments of $61.8 billion in loans, grants, equity investments and guarantees to partner countries. For perspective, this is 57 percent greater than the 2019 President Budget for the State Department and USAID of $39.3 billion. The annual report also highlights the diversity of its initiatives, with projects ranging from support of Syrian refugees to cash transfers and nutrition services in

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Pushback Against the World Bank

However, for an institution committed to a goal as noble as poverty eradication, the World Bank has attracted its fair share of critics. This stems from both the consequences of the Bank’s projects and questions surrounding the relevance of its strategy.

High profile projects have come under fire for decades for their unintended environmental consequences, such as the displacement of more than 60,000 Brazilians after the construction of the Bank-financed Sobradinho Dam in the late 1970s. Bank defenders would acknowledge these failures, but also cite the many safeguards implemented over the years to manage such unintended risks.

Other critics question the Bank’s relevance: in a world where private investors willingly commit over $1 trillion a year to emerging markets, is the multilateral really needed as a backstop? In stark contrast to the 1940s, financing is abundant and capital moves freely in many parts of the world. However, defenders might argue that the World Bank continues to fill financing gaps, as certain arms of the institution, such as the IDA, offer grants and concessional loans to low-income areas that cannot attract private investors seeking a profit.

Criticisms are likely to continue, but among multilateral institutions the size and clout of the World Bank in financing poverty alleviation projects are unmatched. Given its shareholders’ recent approval of a capital increase, the Bank’s financial footprint looks set to continue growing in the near future. The history of the World Bank is one of evolution, and supporters of international development hope its positive influence will continue to shape the poverty eradication landscape.

– Mark Fitzpatrick
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