Inflammation and stories on trade

coffee in vietnamThe comforting routine of having a rich cup of coffee in the morning is a habit shared by numerous people around the world. Unique flavors and distinctive brews come from various countries such as Brazil, Colombia and Indonesia. Vietnam, once an underdog in the coffee industry, has now become one of the top coffee exporters in the world. As a new major contender in the international coffee trade, Vietnam faces new economic opportunities moving forward. Importantly, coffee in Vietnam has the potential for reducing poverty.

How Coffee in Vietnam Took Root

French colonists introduced coffee in Vietnam in 1857. The central highlands region, Buon Ma Thuot, had ideal growing conditions for the crop. Accordingly, it became a target region for coffee cultivation. Growing coffee in Vietnam proved to be difficult yet promising. The government encouraged citizen migration to rural regions such as Buon Ma Thot, which gained a 265% increase in the overall population. By the end of 2000, over 4 million people settled in this area, which created a new and expansive workforce for the coffee industry. This new workforce, combined with the government’s coffee-growing program and the increased demand for coffee worldwide, created a boom in Vietnam’s economy.

In the span of just two decades, Vietnam became one of the most competitive coffee producers in the world. It now ranks as the 2nd largest coffee exporter behind Brazil. Starting with 8,400 tons of coffee produced in 1980, production numbers skyrocketed to 900,000 by 2000. Coffee production has contributed to Vietnam’s GDP increasing by 7.7% within the past few years. Unexpectedly, coffee became an important player in the Vietnamese economy.

Challenges Brewing Within the Industry

Two main types of coffee beans, Robusta and Arabica, compose most of the beans exported by countries worldwide. Currently, 95% of Vietnamese coffee exports are Robusta, known as lower quality beans. As a result, the success of Robusta in the market depends on fluctuations in global demand. Vietnam’s coffee industry must account for this variable by improving the flavor and quality of beans harvested in Buon Ma Thuot to remain competitive in the worldwide market.

But remaining competitive in the market is no easy task. Unlike globally known brands such as 100% Colombian coffee, Vietnam still needs to establish its trademark in the international market. Currently, processed coffee accounts for only 7% of Vietnam’s exports. Increasing coffee processing by establishing joint ventures with known retailers and roasters could create new opportunities for the industry. If Vietnamese brands become household names, Vietnamese coffee can garner substantially greater profit margins in the global market.

In addition to increasing coffee quality and ameliorating marketing tactics, Vietnam’s farming strategies must improve. Though Robusta is typically more resilient to environmental stressors, such as hot climates, pests and disease, this coffee crop is still susceptible to the dangers of unsustainable farming practices. Farming strategies that rely on intensive irrigation and the overuse of fertilizers can exhaust soil quality.

To combat land degradation, Vietnam’s government collaborates with global companies such as Kraft Foods and Nestlé. It also works with conservation organizations such as the 4C Association, Rainforest Alliance and Fairtrade Foundation. Together, they educate farmers, improve farming practices and establish an agricultural standard. This works to effectively and sustainably increase the production of coffee in Vietnam.

Solving Poverty One Cup at a Time

The significant surge in coffee production in Vietnam also means countless farmers and citizens gain a newfound source of income. With only 6% of total coffee production used domestically, coffee has become Vietnam’s key export. Coffee production provides a livelihood for around 2.6 million people. Importantly, 600,000 of these individuals are small-scale farmers, many of whom belong to underrepresented social groups.

This emerging industry has allowed Vietnam’s economy to vastly improve within a short span of time. Economic growth continuously boosts Vietnamese citizens’ quality of life. In 1994, Vietnam’s poverty rate was at 90%. As of 2020, the poverty rate has lowered to 23%.

Global corporations also take part in developing Vietnam’s coffee industry and helping farmers. Nestlé and Mondelez International have each invested more than $200 million in training farmers to distribute stable supplies of coffee. In 2015, Starbucks introduced Vietnam Da Lat, its first single-origin coffee from Vietnam, to its locations in more than 50 countries. Altogether, more than 21,000 farmers benefited from foreign investments in this booming industry.

Overall, coffee in Vietnam is a growing industry with many future possibilities. With the right policies and guidance, Vietnam’s coffee industry can further improve its economy, provide income opportunities and increase standards of living for countless communities nationwide.

-Vanna Figueroa
Photo: flicker

Innovations in the PhilippinesOver the past decade, there have been drastic innovations in the Philippines. The country has experienced dramatic economic growth and development. In 2019, the Global Innovation Index (GII) found that the country improved on all metrics used to calculate advancement.

Economic Growth

In 2019, the Philippines appeared for the first time in the “innovation achievers group.” The country outperformed many other countries in the area.  Some of the metrics used to calculate these scores included increased levels of creative exports, trademarks, high-tech imports and employed, highly educated women.

As a country, the Philippines has risen 19 spots in the ranking since 2018, to 54th out of 129 participating countries. This indicates a significant increase in the standard of living for many Filipinos. This is apparent in the significant decrease in the poverty rate over the past few years. From 2015 to 2018, the national poverty rate dropped a total of 6.7%, or by 5.9 million people.

Prosperity is largely due to the success of local business owners and entrepreneurs. They have used their influence and prosperity to help those in need in their communities and countries, especially in the health sector. Coincidingly, there was a significant increase in global trade. Both factors have propelled the Philippines into the global economy as an important emerging market to keep an eye on.

Global Benefits

In 2018, the Philippines and the United States trade relationship developed significantly. The total goods trade was $21.4 billion collectively, in the petroleum and coal, aerospace and computer software, motor vehicles and travel/hospitality sectors. This is beneficial to the U.S. because international trade employs over 39.8 million Americans. As the Philippines becomes more prosperous, more Filipinos are able to pour money and resources into helping marginalized communities across the country. As such, there has been an increase in innovations in the Philippines, notably in the health and medical sectors.

RxBox

A distinct industry on the frontlines of innovations in the Philippines is the health sector. Increased health for a population is directly related to better access to opportunity and a higher standard of living overall. One company doing this important work in the Philippines is RxBox.

RxBox was developed by the country’s Department of Science and Technology. It is a biomedical telehealth system that provides health care and diagnoses to people in communities that are remote, difficult to access. The service is additionally available for people who do not have access or the ability to travel for health care.

It is a game-changer for disadvantaged people who would otherwise not be able to get fast, effective medical care. RxBox reduces costly hospital and medical visits, which facilitates better health for people. Communities are then better able to care for themselves and for their families, providing greater opportunities for everybody.

Biotek M

There is another player in the innovations in the Philippines: Biotek M. It is a revolutionary diagnostic kit for Dengue. A local team at the University of the Philippines-Diliman were the creators of this new technology.

Traditionally, the Polymerase Chain Reaction (PCR) test is used to confirm the disease but can cost up to $8,000 and takes 24 hours to get results. That is inaccessible to lower-income people who are oftentimes the demographic most commonly afflicted by the dengue infection. The kit helps reduce resource usage for both medical centers and patients by making the diagnosis process significantly more streamlined.

In 2017, 131,827 cases of Dengue were recorded with 732 deaths, mostly affecting young children aged 5 to 9-years-old. Being able to quickly diagnose and treat people who contract this illness makes a huge impact on people living in poverty.

When people spend less time, energy and money on being healthy, they are able to use their resources more efficiently. In this way, medical innovations in Philippines and a growing economy directly increased the standard of living for people living in poverty within the country.

Noelle Nelson
Photo: Flickr

women in developing countriesInternational trade is arguably the most significant economic development of the last century. Its growth has been roughly exponential due to technological advancements and specialization, and exports today are more than 40 times the amount they were in 1913. Although this growth contributes to higher wealth and more stable economic systems for many countries, it simultaneously can exasperate already-existing inequalities, particularly those concerning women. International trade has contributed to the creation of new workforces containing more women. However, the employment opportunities in developing countries are typically low-paying positions with little prospects for skill development. Women in developing countries are limited to such positions due to social and cultural dynamics, policies and other country-specific contexts.

Employment of Women in Developing Countries

Women in developing countries oftent act as a cheap source of labor for firms. In manufacturing, women are mainly employed in jobs involving the production of goods, rather than higher-paying jobs involving management positions. If an economy is predominantly agricultural, women are often subsistence farmers or members of family businesses. In these situations, many women in developing countries do not get paid for their work. In service-based economies, women occupy low-skill positions such as street vendors. However, increasing the pay women receive for these jobs and successfully closing the gender gap could add about $28 trillion to global GDP.

The tendency of women to work in low-skilled jobs results from ingrained social norms designed to limit women’s economic mobility. Societies that expect women to assume the full responsibility of childcare often give them few opportunities to receive education or reduce the burden of their domestic labor. Consequently, these women are less likely to have the same access men do to land, credit and labor markets.

Little Access to Opportunities

Women in developing countries often also experience disproportionate rates of unemployment or remain in low-paying positions because they are unable to learn more about job opportunities in other locations. Robert Jensen, a former professor from the University of Texas at Austin, examined this phenomenon. He concluded that women living in rural areas in India who were contacted by recruitment campaigns providing information about job opportunities in urban areas ultimately participated more in the labor force. As a result, they experienced increased mobility.

Current Trade and Employment Policies

In 2016, the U.N. Conference on Trade and Development released a report stating that gender-blind trading policies exacerbate the inequalities women experience in developing countries. These gender-blind trading policies do not create equal opportunities. Instead, they allow men in the workforce to further benefit from existing economic advantages they enjoy.

However, the U.N. proposed two new global development frameworks to promote gender equality and women’s empowerment through trade. The 2030 Agenda for Sustainable Development focuses on combating gender issues. It links economic, social and environmental factors to address power structures and social dynamics that contribute to gender inequality. The Addis Ababa Agenda on Financing for Development requests equal gender inclusion into the formulation and implementation of financial, economic, environmental and social policies. It also aims to ensure women’s equal rights through access to economic activities that would combat gender-based violence and discrimination.

Together, these development plans are a holistic, firm course of action in the fight against women’s economic inequality. The U.S. Council on Foreign Relations recently reported on the progress nations have made in adopting plans, allocating funds and formulating policies. It found higher numbers of trade agreements with gender-related provisions in the last three decades. Although the global economic impact of COVID-19 may disrupt this progress, comprehensive plans and agendas will ensure that the pursuit of gender equality in trade continues.

Isabel Serrano
Photo: Unsplash

Global MarketAfter ten years of negotiation, the European Union Vietnam Free Trade Agreement (EVFTA) came into action on August 1, 2020. The deal will reduce tariffs by 99% over the next 10 years and will provide relief from the economic drops caused by COVID-19. The market contains over 500 million individuals and is valued at 18 trillion USD. The trade relationship will enable Vietnam to compete in the global market better, especially against markets like Japan and South Korea. Currently, out of all of the countries in the Association of Southeast Asian Nations (ASEAN), Vietnam is the European Union’s (EU) second-largest trade partner behind Singapore. Compared to its regional rivals of Indonesia and Thailand, Vietnam has a stronger trade relationship and involvement in the global market.

Vietnam and the EU Ties

For exports, Vietnam relies on the EU as its largest partner. Vietnam’s exports to the EU are larger than any other ASEAN country. A World Bank study found that from 2001 to 2018, Vietnam’s exports to the EU have grown annually at an average rate of 16%, gaining it a trade surplus over the EU. According to the European Commission, these exports are mostly textiles and clothing, agriculture products like coffee, rice, seafood, electronic products, telephone sets and more.

As the agreement is implemented, both countries could see a rise in GDP and new job opportunities, amongst other positive effects. More immediately, Vietnam’s GDP will increase by 2.18-3.25%, said the Ministry of Planning and Investment. Unlike most countries, Vietnam will see positive economic growth this year – estimated to be up by 4.8%, according to a study by the World Bank. In 2030, Vietnam will see a 6.8% growth in its GDP.

Both countries will have large growths in their exports. The EU could see a $16.9 billion per year increase in exports by 2025. Vietnam is expected to increase exports by 42.7% in the first five years of the deal, mostly in farm produce, manufacturing and services. Additional domestic reforms by Vietnam could raise productivity and further increase GDP by 6.8% in the next 10 years.

Vietnam’s Participation in Global Value Chains

As Vietnam increases trade with other countries through agreements, it will become more involved in the global market. Further globalization will also push Vietnam to participate more in global value chains (GVCs), shifting away from the manufacturing market from China. The bilateral treaty signed between Vietnam and the EU will also ensure that electronics and electrical equipment (a large portion of current imports) comes to Vietnam exclusively from the EU.

Due to this shift, the EU has increased its foreign direct investment in Vietnam. The EU already was the largest foreign investor in Vietnam, with a total of 6.1 billion euros endowed as of 2017, mostly into processing and manufacturing. This investment will go towards new jobs and increased productivity by reducing the number of imports to Vietnam and shifting towards in-house production for higher gains.

To be eligible to avoid tariffs, Vietnamese products must not contain imports from other countries. In addition, agriculture must meet requirements for sanitation, meaning farmers will have to refine their growth system. The deal places especially tight regulations on the quality of agricultural and manufactured products shipped by Vietnam, pushing technological developments in order to avoid drops in efficiency.

Poverty Reduction

Over the past two decades, Vietnam has made steady progress in reducing extreme poverty. From 1992 to 2018, Vietnam’s GDP per capita increased by more than four times, pulling extreme poverty rates from 52.9% down to 2% of the population. EVFTA will continue this trend. A World Bank Study found that EVFTA is expected to reduce extreme poverty (less than $1.90 per day) by 0.1-0.8 million people by 2030, 0.7% more than the poverty-reduction rate without the agreement. Overall, this will amount to an 11.9% decrease. In addition, poverty at $3.20 per day is expected to reduce from 8% to 3.5%.

Vietnam has now broadened its poverty baseline from $1.90 to $5.50. From 2016 to 2030, developments caused by EVFTA will influence this poverty rate to drop from 29% to 12.6%, allowing Vietnam to achieve upper-middle-class status. In addition, the income gap between genders will be decreased by 0.15 percent. This difference affects low-income families the most, as they are traditionally involved in manual labor jobs where this is most prevalently seen.

This agreement will open up new territories for both the EU and Vietnam to expand into. Vietnam’s primarily agricultural economy might see large shifts into one of manufacturing and processing. This agreement is a stepping stone for Vietnam’s involvement in the global market, and it might be a sign of large changes to come.

Nitya Marimuthu
Photo: Pixabay

hunger in turkmenistanThis time last year, the London-based Foreign Policy Centre reported that Turkmenistan was “a country teetering on the edge of catastrophe.” An economic crisis has exacerbated hunger in Turkmenistan. Additionally, Human Rights Watch calls Turkmenistan “an isolated and repressive country.” Without freedom of speech or information, the authoritarian government leaves no room for economic autonomy, thus resulting in hunger among citizens.

Economic Crisis and Hunger in Turkmenistan

Turkmenistan sits on 9.9% of the world’s gas reserves, with 19.5 trillion cubic meters. Statistics like these attract foreign investors, which in theory should boost the nation’s economy. However, in 2019 Turkmenistan entered its worst economic crisis since its independence from the Soviet Union in 1991. The state heavily controls the economy, and the European Bank for Reconstruction and Development (EBRD) lists Turkmenistan as the “least competitive economy among the EBRDS’s countries of operations,” meaning that economic autonomy is essentially nonexistent. The Foreign Policy Centre’s report labeled Turkmenistan’s economy as a “Potemkin economy,” meaning its public record of ordinary, satisfactory GDP figures — a result of strictly regulated state companies — hides a crumbling economy.

In 2018, a video of a Turkmen student cutting up his debit card, salting it and cooking it for dinner circulated around media sites. The student, who was studying abroad in Ukraine, spoke on the matter, saying that “the [bank] cards stopped working and, as a result, I’ve lost 15 kilograms.” While the banks never released explanations, economists suggest that the debit card failures may be a result of Turkmenistan’s active black market. Officially, the exchange rate is three and a half Turkmen manats to one U.S. dollar. But the black-market rate is closer to 22 manats to one U.S. dollar. The government would lose large sums of money with students trying to withdraw from their banks in foreign countries.

The Turkmen government lacks transparency about its crop supply as well; in 2018, Deputy Chairman Esenmyrat Orazgeldiev released data stating that Turkmenistan had overshot its yearly harvest goal, and had harvested 1.099 million tons of cotton. However, reports from the Agriculture and Water Resources Ministry and the International Cotton Advisory Committee said that the country had harvested between 300 and 450 thousand tons. A similar inconsistency in reports occurred for the wheat harvest. These economic and agricultural struggles have led to widespread hunger in Turkmenistan, particularly in the form of major food shortages across the country.

Food Shortages

For the past three years, hunger in Turkmenistan has resulted from dire food shortages. The Diplomat conducted an interview with Turkmen “activist-in-exile” Fareed Tukhbatullin in 2018, and Tukhbatullin recalled fights breaking out among citizens waiting to purchase necessities such as bread, flour, vegetable oil and eggs, all of which are in short supply despite being government-regulated foods. Inflation and the disparity between the official manat’s value and the black-market manat’s value have made importing ingredients and farming equipment nearly impossible. In the interview, Tukhbatullin emphasized that there are no official news coverings or statistics released in Turkmenistan about this crisis, but he estimated that 60% of the population is unemployed and living with food insecurity. Last month, Turkmenistan increased its regulation of subsidized foods by enforcing the use of registration books by individual households. Families are instructed to bring their books, which have a certificate containing their address and the number of people in their household, to food stores, where their purchases will be documented.

Foreign Aid Reducing Hunger in Turkmenistan

Currently, the U.S. Agency for International Development (USAID) is working to stabilize Turkmenistan’s economy and strengthen its international connection around Central and South Asia. USAID also provides assistance to dairy and meat-producing livestock farmers to keep their livestock healthy, and it works to connect the farmers to local and international markets. In July 2020, USAID announced the launch of its hotline for Turkmen farmers. The hotline is accessible over email and telephone, and it offers necessary advice on the exportation of goods to foreign markets. USAID claims that this extra support will help the Turkmen farmers “maximize their revenues, stabilize seasonal sales, and expand the markets for quality Turkmen products.” USAID also worked between 2010 and 2019 to introduce Turkmenistan into the International Financial Reporting Standards, which allows the country more access to the global economy.

Turkmenistan has not known peace or stability since its independence in 1991. Inflation, food shortages and disconnect from the rest of the world have plagued the country for almost 30 years, and government officials worry that this instability will soon lead to catastrophe. Helping the citizens of a highly isolated country is extremely difficult, but organizations like USAID are doing what they can to end hunger in Turkmenistan.

— Anya Chung
Photo: Flickr

American ExportsThroughout the past several decades, nations in Southeast Asia have seen significant declines in extreme poverty rates. As poverty has fallen and these nations have developed economically, the Association of Southeast Asian Nations has become the United States’ fourth-largest trading partner. While the United States does rely heavily on this region for imports, trade with ASEAN also supports American exports and bolsters nearly 346,000 American jobs. The following five countries in Southeast Asia are critical trading partners and demonstrate the economic benefits that can coincide with a decrease in extreme poverty:

1. Malaysia

Malaysia has been extremely successful in reducing poverty throughout the past several decades. According to the United Nations, “… in 1970, 49.3% of Malaysian households were below the poverty line.” As of 2015, the figure had fallen to 0.4%. As poverty has fallen, Malaysia has also grown economically, developing profitable manufacturing, petroleum and natural gas industries.

As the country has reduced poverty and developed economically, it has become an important trading partner to the United States. The United States imports electrical machinery, tropical oils and rubber from Malaysia. It also exports soybeans, cotton and aircraft to the nation. In total, the trade between the two nations totals around $57.8 billion each year and supports nearly 73,000 American jobs.

2. Thailand

Thailand is another country that has seen impressive levels of poverty reduction in recent decades. According to The World Bank, poverty rates fell from around 65% in 1988 to under 10% in 2018. The nation has also evolved economically, developing large automotive and tourism industries as poverty rates have fallen.

Trade between the United States and Thailand has steadily grown, totaling $48.9 billion in 2018. When analyzing imports, the United States relied on Thailand for machinery, rice and precious metals. In terms of exports, the United States provided the nation with electrical machinery, mineral fuels and soybeans. In total, the exports to the nation supported nearly 72,000 American jobs. Additionally, exports to Thailand have been increasing in recent years, growing nearly 14.5% from 2017 to 2018.

3. Vietnam

Vietnam is perhaps one of the most astounding examples of poverty reduction and economic development. The World Bank reports that “the poverty headcount in Vietnam fell from nearly 60% to 20.7% in the past 20 years.” As it has done so, the nation developed one of the most rapidly growing middle classes in Southeast Asia, became a center for foreign investment and developed key industries in electronics, footwear and textiles.

While the United States has come to heavily rely on Vietnamese imports, Vietnam is also a rapidly growing market for American exports. In fact, American exports of goods to Vietnam increased by 246.9%, and American exports of services to the nation increased 110% since 2008. According to the Office of the United States Trade Representative, “U.S. exports of Goods and Services to Vietnam supported an estimated 54,000 American jobs in 2015.”

4. Indonesia

Though the nation still has significant progress to make, Indonesia is another nation that has seen a reduction in extreme poverty rates. Since 1990, the nation has managed to half its poverty rate and make significant economic advancements. Currently the largest economy in Southeast Asia, the nation has developed notable industries in petroleum, natural gas, textiles and mining.

Trade with the nation totaled around $32.9 billion in 2019. While the United States imported apparel and footwear from the nation, it also exported soybeans, aircraft and fuels to Indonesia. In total, American exports to Indonesia are growing, increasing 19.1% from 2017 to 2018 and supporting nearly 56,000 American jobs.

5. Philippines

While poverty is still an issue in the Philippines, it has seen significant declines in recent years. According to the World Bank, poverty fell from 26.6% to 21.6% from 2006 to 2015. The nation has also made significant improvements in developing industries outside of agriculture. While agriculture composed nearly one-third of the nation’s GDP in the 1970s, it currently represents 9.3%, split between an emerging industrial and service sector.

Trade with the nation currently provides $29.6 billion each year, and exports to the Philippines grew 3% from 2017 to 2018. Mainly, the Philippines relies on American exports for electrical machinery, soybean meal, and wheat. Overall, exports to the Philippines support an estimated 58,000 American jobs.

Affecting nearly one in five American jobs, international trade is a critical part of the American economy. As demonstrated by Southeast Asia, a reduction in global poverty rates not only contributes to global economic development but also supports the export industry and American jobs.

– Michael Messina
Photo: Pexels

African Continental Free Trade Agreement Increases Economic Growth

Uniting 54 countries in the African Union, The African Continental Free Trade Agreement (AfCFTA) will create the largest free trade area in the world since the World Trade Organization formed in 1994. The implementation of the treaty was originally supposed to occur on July 1, 2020, but was postponed due to COVID-19 restrictions. Over 1.3 billion people with a cumulative GDP of $3.4 trillion will come together to further economic expansion. This effort will push Africa into a competitive spot in the global economy. The treaty outlines a reduction of tariff restrictions and of non-tariff barriers (NTBs) as well as a trade facilitation agreement (TFA). The AfCFTA will make vast improvements in catching intra-African trade up with the numbers of the rest of the world. 

Currently, continental exports across Africa clock in at about 19% of total exports, comparatively lower to intra-Asian and intra-Europe exports which make up around 60% of their total exports. AfCFTA looks to encourage a higher level of intra-African trade by cutting all tariffs between countries in the zone by 2035, expected to increase intracontinental exports by more than 81%, as stated by the World Trade Organization in its 2020 report.  According to CNBC, this could mean a $2.8 billion per year rise in net income in the area.

Overall, the UN Economic Commission for Africa expects African trade to increase from 15% to 25% by 2040, translating to a GDP growth of over $2 trillion. Expectations also determine that intra-African trade will encourage globalization and technology advances. Africa’s adoption of e-commerce and other electronic advantages into its economy will further those goals.

Poverty Reduction Effects

AfCFTA projects that an additional 30 million people will emerge out of extreme poverty, reducing the headcount ratio without the deal from 10.9% to 9.3% with it. The World Trade Organization also expects that 67.9 million will rise out of moderate poverty by 2035. The largest change in income will be for unskilled workers and women. Still, most social groups will see a 10% increase in income.

A key factor in poverty reduction is the growth of industries, which creates new jobs. Energy-intensive manufacturing will grow as African trade and other markets develop. Total exports related to the manufacturing industry should rise by 110% in intra-African trade and by 46% worldwide. The production of the manufacturing industry will see a $56 billion increase. As a result, a number of countries are looking to provide larger foreign direct investments to the continent. 

Growth in the agricultural sector will work alongside manufacturing to pull people out of poverty. The AfCFTA will cause the industry to see a loss of $8 billion. However, agricultural employment will see a rise in 60% of the countries involved in the deal. Expectations determine that agricultural exports (only second to manufacturing) will grow 49% in intracontinental trade and 10% in worldwide trade.

Overall income will also grow as a result of the AfCFTA. A higher quality of life will close the gender gap and the gap between skilled and unskilled workers. The full implementation of AfCFTA could cause a 7% growth in real income ($450 billion) by 2035. Still, it is important to note that this growth will not occur equally over all the countries involved.

Mitigation of COVID-19 Economic Effects

Due to COVID-19, the implementation of the AfCFTA terms is on hold indefinitely. Officials expect to start again Jan 1, 2021 but are unable to continue negotiations at this time. Poor internet connections and language barriers amongst different officials also pose challenges. Nevertheless, the AfCFTA will act as a stimulus plan for countries in the region that lack economic or fiscal means to distribute a large relief package.

While economic growth has been steadily increasing at about 2.4% in 2019, the World Bank expects it to drop from anywhere between -2.1% to -5.1% in 2020. This means a loss of between $37 billion to $79 billion during 2020. The economic drops could cause less food security as food prices rise in many areas.

The losses come from a combination of sources. Shutdowns reduced exports and imports, and many African countries are reluctant to open borders. The shutdowns caused welfare losses of up to 14%. In addition, reduced tourism and commodity prices have taken their toll.

Connecting Countries

The AfCFTA will look to open up borders between African countries in order to encourage free trade once again. As a larger market, African countries can obtain necessary medical instruments and food resources at a cheaper price. The agreement will double or triple exports in Cameroon, the Arab Republic of Egypt, Ghana, Morocco and Tunisia. The countries will see the largest benefits, although almost all of the other countries will see growth.

The introduction of AfCFTA will shift the global marketplace significantly. China has been the center of manufacturing in recent years, but there may be a shift to Africa, as China’s investment in the signing of the AfCFTA has shown. Major powers, such as the U.S., European Union and India, have shown an increased interest in African foreign development as they see the rise in this cohesive market. Although COVID has taken its hit on the world, the AfCFTA might encourage a quick bounce back, lifting millions out of poverty and increasing jobs for many.

– Nitya Marimuthu
Photo: Flickr

illicit trade in kenyaKenya’s 48.5 million people have chronically suffered poverty because of rampant unemployment, crime and drought. Among other factors, illicit trade in Kenya has contributed to these stressors in a damaging way. Here are five things to know about the illicit trade in Kenya.

5 Things to Know About Illicit Trade in Kenya

  1. Illicit trade in Kenya robs its economy of $900 million every year. Kenya’s largest economic sectors like food and construction frequently fall victim to piracy. Criminals steal from these industries and sell their products illegally on the black market; this causes Kenyan companies and the government to lose money they could have made conducting legal business. Firms in Kenya reportedly lose 37.69% to 42.14% of their profits to illegal trade.
  2. Illicit trade contributes to unemployment as well. Unlawful practices like piracy and the production of counterfeit products caused the loss of 7,484 jobs between 2016 and 2018. The rise of COVID-19 has already threatened the livelihood of Kenya’s 15 million informally employed laborers as people grow less comfortable doing businesses with individuals; illicit trade has only harmed Kenya’s job market further. Kenya’s unemployment has remained fairly stable over the last couple of decades, ranging from 2.6% to 2.9%. However, data has yet to be collected on unemployment in 2020 and across the globe. Unemployment rates have shot well beyond established averages as a result of the COVID-19 pandemic.
  3. Inattention to the issue may be its biggest propagator. Only 30% of the companies experiencing theft by illicit trade are even aware of the crimes against them. Due to the disproportionately high number of foreign banks and poor economic regulation in Kenya, discovering illegal trade proves difficult. The Financial Sector Deepening (FSD) Kenya conducted a study from 2015-2016 to look into complaints about Kenyan banks issuing unwarranted charges. The FSD discovered that many banks charged its customers odd quantities in an opaque manner and the surveyors had great difficulty obtaining any further information on the subject due to the industry’s opacity.
  4. Illegal trade is a global issue and Kenya has joined in the fight against it. The international trade of products like cocaine and tobacco has sparked movements across the globe. In 2020, Kenya joined The Protocol to Eliminate Illicit Trade in Tobacco Products, a treaty signed by 59 countries to universally end the illegal trade of tobacco. The Protocol will lower tobacco smuggling by an estimated 60% and Kenya has already seen success in combating the illicit tobacco market. “The Kenyan Revenue Authority estimates that the illicit cigarette trade market share declined from 15% in 2003 to 5% in 2016, a direct result of the implemented measures [taken],” reports Michal Stoklosa of the Tobacco Atlas.
  5. Kenya’s government has decided to tackle this problem head-on. Kenya’s Anti-Counterfeit Authority, established in 2008 as part of the Anti-Counterfeit Act, has declared its mission to end illicit trade in Kenya. The organization has created jobs, spread awareness of counterfeit activity and its harmful effects, and marked World Anti-Counterfeit Day this year by holding a ceremony and destroying $270,000 of counterfeit goods.

Kenya’s situation may appear difficult, particularly with the added stress of COVID-19, but its government and hardworking people have taken important steps to end illicit trade and its detrimental effects on the Kenyan economy.

– Will Sikich
Photo: Needpix

Hunger in SamoaWith a population smaller than 200,000, Samoa is a small island in the south-central Pacific Ocean. Samoans gained their independence from New Zealand and Germany in 1962, and now inhabit the westernmost islands within the archipelago. Although the United Nations has not identified Samoa as a “Least Developed Nation” since 2014, food insecurity and hunger remain in Samoa as lingering consequences of poverty, natural disasters and foreign dependency.

Lack of Resources

Samoa lacks arable land and agricultural resources; almost three decades of devastating natural disasters, including the 1990 Ofa and 1991 Val cyclones, have flooded and destroyed much of the once arable land in Samoa. Samoan hunger rates rise following such incidents. However, in 2015, despite a cyclone hitting that same year, Samoa was declared one of the 40 countries that have cut hunger rates in half within thirty years. As of 2016, 81.9% of Samoans lived in rural areas, yet only 2.8% of the country’s 1,097 square miles of land was arable. For Samoans, barren land has made agricultural innovation one of the only, yet most complex, options. In 1994, 22.1% of the Samoan GDP was derived from agricultural sales and other food production. By 2019, agricultural contribution to GDP fell to 9.8% due to a lack of farming land, knowledge and financial incentive.

Lack of Quality Food

Imported foods provide increased caloric quantity, not quality; from 1961 to 2007, the surge of imported foods made 900 extra calories available per person per day, largely curbing hunger in Samoa. Overall calorie availability nearly doubled during that time, yet dietary fat availability rose at a disproportionately fast rate of 73%. Imported foods, like meats and vegetable oils, rose from 10 calories to 117 per Samoan per day. Yet, the caloric intake of traditionally consumed and locally produced food like coconuts, starchy vegetables and fruits rose negligibly. Overconsumption of calories and high-fat foods are linked to chronic diseases such as obesity, diabetes and heart disease, all of which are on the rise in Samoa.

Obesity, diabetes and malnutrition coexist. In 2013, 45.8% of Samoans had diabetes, compared to 22.3% in 2002. In 2017, an estimated 89.1% of Samoan adults were overweight and 63.1% obese. Yet, an estimated 4% of children aged five or less experienced acute malnutrition or wasting, and 5% experienced stunting in that same year. Such rates are related to tariff liberalization, which continues to increase accessibility to non-perishable, mass-produced foods. Samoan’s overconsumption of processed macronutrients and sodium has led to obesity, masking the underlying micronutrient deficiencies and severe undernourishment.

Lack of Financial Equality

Education, income and access to healthy foods are interconnected. The percentage of Samoans living below the food poverty line had dropped from 10.6% of the population in 2008 to 4.3% in 2014; incidences of extreme hunger and poverty have steadily declined due to heightened caloric availability. However, Samoan financial inequality continues to climb as a result of the globalization that also has nearly eliminated extreme hunger. Samoa imports goods at a much higher rate than they export goods, leading to a lack of cash in the economy as well as a lack of job opportunities for those not directly connected to the global trade market.

Those living at or below the food poverty line typically lack formal degrees and belong to the 8.7% of Samoans who are unemployed. Cultural and historical circumstances have made imported food, regardless of their quality, more desirable than traditionally consumed foods. Wealthy and impoverished Samoans alike have developed an appetite for imported foods. The most vulnerable in the population, however, do not have a choice in what they consume.

Initiatives Tackling Food Security in Samoa

An alarming uptake in cases of overnutrition and resulting chronic diseases have occurred in Samoa. As a result, strides have been taken in addressing the root causes of food insecurity and the remaining hunger issues. An example of this is the recently launched 2019 Agriculture and Fisheries Productivity and Marketing Project. This project aims to improve food production infrastructure and implement sustainable agricultural practices over the next several years. By improving data collection of food insecurity, chronic disease and poverty rates, this project will localize Samoan food production industries. The project’s emphasis is on creating a more interconnected food landscape; this will not only continue to eliminate hunger in Samoa but will also increase cash flow and decrease chronic disease rates in the country over time.

Until then, groups like Caritas will continue to serve as a lifeline. Caritas runs two programs that prepare Samoans for natural disasters by training locals and installing emergency supplies throughout the island for distribution. The group was able to help more than 1,476 Samoans in 2012 suffering from hunger after Cyclone Evan.

Caledonia Strelow
Photo: Flickr

Salmon Farming in ChileSalmon farming in Chile has grown to become one of the nation’s top trading exports. Chilean salmon farming now produces “25% of the world’s supply” with more than 1,000 fish farms in operation. It also created 61,000 jobs. In recent years, however, the practice has come under fire due to the overuse of antibiotics and environmental damage to surrounding wild fisheries. Chile’s aquaculture has brought in much-needed revenue to the economy. However, it has also threatened many impoverished indigenous communities, such as the Kawésqar, who have lived in Patagonia for thousands of years. Chile’s fragile ecosystems and artisanal fishing culture are at risk of being degraded from the country’s poorly regulated farmed salmon industry.

Fishy Farms

Once considered a seasonal delicacy, salmon is now one of the most widely available superfoods on the market. The fatty fish is rich in omega-3 fats, selenium and several B vitamins. It has also been attributed to lowering the risk of illnesses and conditions such as heart attacks and strokes. Store-bought salmon is either wild-caught or farm-raised. The Monterey Bay Aquarium’s Seafood Watch program rates wild salmon, particularly from Washington, to be one of the best sustainable seafood options. The company suggests avoiding farmed Atlantic salmon from Chile.

One of the biggest concerns of salmon farming in Chile is the high levels of antibiotics and pesticides used to fight diseases and parasites in the net pens. In 2014, the industry used 1.2 million pounds of antibiotics in their marine enclosures. In comparison, Norway used roughly 2,142 pounds. The overuse of antibiotics like florfenicol and oxytetracycline can create antimicrobial resistance. This could lead to public health issues, as well. Since both drugs are regularly used in human medicine, more studies are needed before Chilean salmon farming companies continue to use them responsibly.

Unregulated Industry

The salmon farming industry threatens Chilean artisanal fishing, which relies on the ocean’s natural abundance for their livelihood. In 2016, massive red algae bloom toxified almost all of the wild shellfish in Southern Chile, putting enormous economic pressure on local fishing communities. Thousands of fishermen protested the lack of governmental response and aid during one of the country’s worst red tides.

Cage-Free

In southern Patagonia, local community members and campaigners celebrate a rare victory of protecting Chile’s coasts from salmon farming operations. The combined efforts prevented the raising of 1.9 million fish and construction of 18 industrial cages in the Beagle Channel. The remote untouched habitat stretches over 240 kilometers. The Channel is also home to a wide array of species, including whales, dolphins and penguins. Indigenous groups like the Kawésqar fish these waters, continuing to be a vital natural resource today. The protection of the Beagle Channel is also a victory for the region’s tourism industry. The Beagle Channel contributes $74 million annually to the local economy.

With salmon farming in Chile becoming more regulated, traditional fishing communities can continue to harvest seafood off their coastline. Local wild-caught fisheries, along with eco-tourism, are sustainable options for traditional Chilean fishermen. Historically, the indigenous people of Chile ate and dined on hundreds of different species of fish and marine life. With more government regulation and support, Chileans can continue to gain economically from the seas while also protecting them.

Henry Schrandt
Photo: Flickr