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The Promise of the East African Federation

East African FederationA proposed federation between Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda seeks to establish a single currency, political unity, modern infrastructure, improved trade relations and ensured peace. In the 1960s, when many of the above countries won their independence, a political federation was first proposed. Today, all six countries are members of the East African Community (EAC), which started in 1999 as a less ambitious form of unity. The East African Federation remains mostly an idea; however, leaders in all six countries are now working together to see the idea come to fruition.

Where it Stands

The countries began drafting a unified constitution in 2018, which would render each member’s individual constitution subordinate to that of the East African Federation. They have set the deadline for its completion to 2021. The EAC has already neared completion of a monetary union, likely being something akin to the European Union’s euro. The euro has allowed for the free movement of capital, stimulating trade activity between member states. Additionally, all six countries are planning to hold a referendum with their own citizens in order to gauge support.

Ambitions

The countries’ leaders say that a federation will lead to economic development and greater African sovereignty. The advantages of the East African Federation include linkages of infrastructure, which will allow four of the landlocked members to have access to the trading ports of Kenya and Tanzania. Further, the East African Federation, due to its enormity, will have more influence in international diplomacy, and its governmental institutions will become more robust through information sharing.

Limitations

When integration efforts were attempted in the past, they became derailed by individual national interests and existing tensions. While the East African Federation attempts to overcome these tensions, some doubt its ability to do so. Critics point to trade disputes between Rwanda and Uganda and military rivalries between Tanzania and Rwanda as prominent examples for why unity will remain unaccomplished.

The Promise

East Africa’s economy is the fastest-growing on the continent; GDP increased by 5.7 percent in 2018 and is forecasted to hit 5.9 percent in 2019. According to the World Bank’s most recent data, the average poverty rate for the 6 countries is 49.6 percent. Kenya has the lowest rate with 36.8 percent, and Burundi has the highest with 71.8 percent. The East African Federation promises to improve cooperation methods and increase economic potential, yielding greater growth, quicker development and lasting stability for the region.

– Kyle Linder
Photo: Flickr

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Top 10 Facts About Living Conditions in Guadeloupe

Living Conditions in GuadeloupeSoutheast of Puerto Rico and north of Dominica lie the French Caribbean islands of Guadeloupe. France is a parent of this archipelago, providing systems to manage the islands’ legislation, health and education.

Top Ten Facts About Living Conditions in Guadeloupe

  1. Guadeloupe’s government runs under the French Constitution and executes authority with the French legal system. With France as the head of state, this country has no military of its own, rather it relies on their overseas French parliament to defend their borders. Ironically, the most recent conflict was the riots of 2009 which revealed the French government’s inability to deflate the cost of living on the island.
  2. The construction of new housing and low-cost residence funded by tax plans created the availability of living spaces. This is a good start to addressing the issues of living costs challenged in 2009. However, in 2011, the National Institute of Statistics and Economic Studies of France (INSEE) reported that 19 percent of households in Guadeloupe are still living in poverty.
  3. With an unemployment rate of 26.9 percent, the Regional Council of Guadeloupe decided to improve the job market through its Regional Scheme for Economic Development (SRDE). Their plan is to optimize access to employment through work placement programs. Satisfying Guadeloupe’s population with opportunities for wealth will feed into the country’s economy.
  4. As arable land decreases, so does Guadeloupe’s agriculture. This affects the industry which inputs 6 percent of the region’s GDP and employs 12 percent of its workers. The production can’t feed the population alone. In fact, the country imports 90 percent of its food for consumption.
  5. The urbanization rate is at an alarming 98 percent. This means, by 2030, 1,500 hectares (approximately 3,700 acres) will be needed for the construction of 19,000 units to house 50,000 dwellers. The unbalanced spread of the population creates congested urban centers.
  6. The annual expenditure on health care and medical products per habitant is 1,800 euros (approximately $2,000). Funding comes from partnerships and programs for EU members, so Guadeloupe doesn’t receive aid from international organizations such as the World Bank and U.N. entities. As a security system, laboratories, like Guadeloupe’s Pasteur Institute in Pointe-à-Pitre, report threatening cases of diseases like dengue which had a fatality ratio of 0.06 percent during the 2012-2013 outbreak. Public health authorities watch and respond to potential threats as a means to establish early warning systems.
  7. The country also follows the French education system with primary schooling from age six to 11 followed by a four-year middle school. At 15 years of age, students may take a leaving examination and begin working. Those seeking to attend a university continue into secondary school with an additional three years.
  8. The country’s history brought together a diverse ethnic culture. It is a mixture of European, Indian, African and Caribbean. As such, the people celebrate Carnival. Beyond this traditional music and dance jubilation, the Creole culture is displayed through the celebration of literature. In fact, Guadeloupe hosts the International Congress for Caribbean Writers, showcasing such work.
  9. Though French is the official language, Creole is also taught in schools to keep the country’s heritage alive. History lives in the buildings as well. Colonial sugar, banana and coffee plantations still remain. Their slave houses, also known, in Creole, as “cases,” hold presence and display the country’s roots.
  10. Travelers can visit this island via French, U.S., Canadian, British and Dutch airlines connecting to Pole Caraïbes International Airport or the other small airports on the surrounding islands. A ferry provides passage between Guadeloupe’s associated islands. The bus system services main routes but becomes scarce on Sundays in secondary routes.

These top 10 facts about living conditions in Guadeloupe depict more than French colonial power. The archipelago distinguished itself from simply taking on the French way of life. The islands have a culture of their own which is the catalyst in their tourist economy.

– Crystal Tabares
Photo: Pixabay

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Sustainable Agriculture in Mauritania

Sustainable Agriculture in Mauritania
Mauritania is a rather large country in western Africa that has abundant natural resources like iron, oil and natural gas. Unfortunately, water and arable land are not at the top of the list. Nearly two-thirds of the nation is desert. Despite the lack of water, nearly half of the nations 3.8 million people make a living from livestock and cereal grain farming. Sustainable agriculture in Mauritania is essential to put this land to its best use and help the rapidly urbanizing population economically.

Promoting Sustainable Agriculture in Mauritania

According to the FAO, the amount of food produced domestically in Mauritania each year only meets one-third of the country’s food needs, leaving the other 70 percent to be imported from other countries. The FAO has been working to increase crop output by promoting and supporting agriculture farming in Mauritania. One such program is the Integrated Production and Pest Managment Program (the IPPM) in Africa.

This program covers nine other countries in West Africa. Since its inception in 2001 as part of the United Nations new millennium programs, the program has reached over 180,000 farmers, 6,800 in Mauritania. In Mauritania, the IPPM program focuses on simple farming techniques to increase both the quantity and quality of the crop yield each year.

These techniques include teaching farmers how to chose the best seeds to plant along with the optimum distance to plant the seeds from one another. The program also educates farmers about the best use of fertilizers and pesticides. Overuse of these chemicals can pollute the already small water supply and harm the crops. The program also teaches good marketing practices to help with crop sales.

Programs Working With Government Support

It is not only outside actors that are promoting sustainable agriculture in Mauritania. The government has been helping as well. A report by the Guardian from 2012 explains the government’s new approach since 2011. The plan includes new irrigation techniques, the promotion of new crops, such as rice, and the training of college students in sustainable agriculture techniques through subsidies.

Data from the World Bank in 2013, showed that the program was slowly succeeding; however, too little water was still the biggest issue. The World Bank and the government of Mauritania are still working towards those goals by building off of the natural resources available. According to the CIA, a majority of the economy and foreign investment in Mauritania involves oil and minerals.

A Work In Progress

Data is not easy to find on the success of these programs after 2016. What can be noted, though, is that programs run by the FAO and other international organizations are still fighting for sustainable agriculture in Mauritania. They have been able to sustain using money from mining and oil that is coming in each year.

While these are certainly not the cleanest ways for a government to make money, it is a reliable way for the foreseeable future. The government has already proven that it is willing to spend this money on its people. Hopefully, the government will continue to invest in its people and sustainable agriculture in Mauritania.

– Nick DeMarco
Photo: Flickr
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An Opportunity for Growth within Bosnia and Herzegovina

Growth within Bosnia and Herzegovina

Bosnia and Herzegovina is a sovereign state in the southeastern region of Europe, found on the Balkan Peninsula and borders Croatia, Serbia and Montenegro. This nation has been through a multitude of financial struggles, yet there has been continued growth within Bosnia and Herzegovina. The country is now on the path to stable economic development.

Bosnia and Herzegovina

Rates continue to improve substantially. For example, the unemployment rate among adults decreased from 25.4 percent in 2016 to about 20.5 percent in the first six months of 2017. This is a meaningful advancement for the country.

Bosnia and Herzegovina is also a candidate nation, which signifies that it could potentially be a partner within the European Union. This is a great opportunity for Bosnia and Herzegovina as it could accelerate the country’s economic and political systems even more quickly.

In addition to this hopeful alliance, the World Bank assists Bosnia and Herzegovina by both funding initiatives and formulating a new growth model.

Projects for Growth

Growth within Bosnia and Herzegovina begins with foreign aid from international organizations, particularly the World Bank, which will implement advanced infrastructural and economic structures within the country.

There are now 11 active projects within Bosnia and Herzegovina that will hasten reforms, and the World Bank will lend an overall $521.63 million to the nation.

Better Than Before

“Better than Before — Rebuilding Bosnia and Herzegovina” is one of the many projects that are currently active. The country witnessed devastating floods that impacted 25 percent of the population. Since the economy is agriculturally-based, they lost approximately 15 percent of the country’s GDP. This initiative salvaged 248 infrastructure facilities and helped 580,000 individuals.

“Banking Sector Strengthening Project” improves “banking regulation, supervision and resolution capacity and by enhancing the governance of the Entity development banks.” This will better banking among every sector since they plan to replace obsolete banking styles with improved strategies that will promote economic development.

“Bosnia and Herzegovina Employment Support Program” will increase private sector opportunities and jobs for citizens. It will allow better interaction and discourse for employers, employees, public policy makers, etc. It will also allow the government to expand active labor market programs.

There are eight more projects that will accelerate growth within Bosnia and Herzegovina. They address public health programs, transportation systems and energy efficiency.

New Model for Growth within Bosnia and Herzegovina

Growth within Bosnia and Herzegovina also starts with a new economic strategy. The new framework consists of structural reforms within the public and private sector.

The World Bank will:

  • Encourage public policies that better public efficacy
  • Create and implement initiatives that hasten private sector advancement
  • Implement new strategies to counteract natural disasters/emergency crises

The World Bank will guide and fund this new growth model for Bosnia and Herzegovina and will continually advise the financing so economic growth occurs more rapidly.

Conclusion

The World Bank’s robust presence within Bosnia and Herzegovina is vital to its development as a sovereign state. This nation represents countries’ ability and capacity to progress and change economically.

Its history is sad and unfortunate, yet thankfully, Bosnia and Herzegovina is recovering and growing. The country has earned the right to be an E.U. candidate country.

– Diana Hallisey
Photo: Flickr

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Top 10 Facts About Poverty in Kosovo

Top 10 Facts About Poverty in Kosovo
The Kosovo War in the late 1990’s destroyed much of country’s agricultural sector and infrastructure, and a large portion of the working population was crippled by war consequences. Currently, Kosovo’s total population is about two million. The scars of the war can still be seen in its high poverty rate and human development index (HDI) score compared to its neighbors. Here is the list of the top 10 facts about poverty in Kosovo.

  1. Kosovo’s GDP per capita or Gross Domestic Product (the number that gives an estimation of individual-based economic health) tripled from 2000 to 2017 and is currently at $3,902. However, Kosovo is still the third-poorest country in Europe.
  2. In 2015, approximately 17 percent of the population was living below the poverty line of $2.11 a day, and about five percent of the population was living below the extreme poverty line of $1.51 a day.
  3. UNICEF, based on 2006-2007 data, found that families in Kosovo with children were less likely to be poor than families without children. However, this research also concluded that children aged 0-19 were more likely to be at risk of poverty than the general population.
  4. Kosovo is rich in lignite (a type of coal) and many other natural resources, but the population’s energy needs exceed the production of the country’s two power plants. Less than 0.8 kW (kilowatts) is generated per person, which is under half of that in Slovenia and under a quarter of that in Austria.
  5. From December 2014 to February 2015, the number of migrants seeking asylum from Kosovo to the EU had grown by 40 percent.
  6. Economic growth in Kosovo is projected at between two to four percent for the period from 2018 to 2020. It has held a steady rate of growth since the 2008 global recession.
  7. Nearly two decades after the Kosovo War, ethnic tensions began to ramp up again. Local politicians are taking advantage of fear from potential conflicts and are using nationalist slogans for their political campaigns.
  8. Foreign aid and remittances from countries such as the United States, France, and others reached more than 700 million dollars in 2017, reducing poverty and trade deficits in Kosovo, according to the country’s Central Bank.
  9. Self-employment is widely recognized as one of the solutions to poverty in Kosovo, but conducted surveys show that the low investment capital and limited access to loans keep most of the people away from starting a business.
  10. Kosovo’s transportation infrastructure is very weak, with undeveloped networks of railways and motorways. It lags behind the EU average as well as other Balkan states, such as Macedonia and Albania.

Silver lining

Despite many domestic challenges Kosovo faces regarding the economy and its infrastructure, the country is back on track in economic growth and self-sustainability. Country’s quality of life has steadily improved, while poverty has decreased over the last two decades and this can be attributed to international aid and domestic policy reform.

If Kosovo can continue to maintain its growth rate and effectively integrate foreign aid and advising into both its public and private sectors, in addition to addressing its social issues, the country can expect a brighter future for its citizens in the upcoming decades.

– Alex Qi

Photo: Flickr

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Ukraine Bounces Back After Revolution of Dignity

Revolution of DignityIn November 2013, student protests in Ukraine turned into a full-fledged revolution against government corruption that has since been dubbed the Revolution of Dignity. Now, with a new government in place, the country is attempting to align itself with its European neighbors and become a stable democracy. With multiple roadblocks in the way, such as the annexation of Crimea by Russia, Ukraine will need to rely on its allies in order to achieve its goals.  

How the Revolution of Dignity Began

Ukraine’s Revolution of Dignity started out as a series of student protests to pressure the prime minister to sign an association agreement with the European Union. However, as the protests raged on, they became a catalyst for the rest of the country to express its discontent with larger issues with the government like the regime’s power grabs and rampant corruption.  

Despite these issues, protests only became a revolution when violence broke out between the government and protesters on Nov. 29, 2013. After this point, the goal became to overthrow the government and establish a more democratic state, one free of corruption and acting in the people’s best interests. In 2014, the people in overthrowing the government, reinstating the previous constitution and holding new elections in May.

While the revolution was successful, it was not without consequence. The destabilization in the country helped lead to the annexation of the southeastern Crimea region by the Russian Federation. On top of that, while the previous regime was friendly to the Russian government, the new one looked for a more independent governance supported by the E.U. and other western allies. With tough challenges ahead, Ukraine needed to look to allies for help.

What Allies Are Doing to Help

Since the protests initially started to pressure the Ukrainian president to sign an agreement with the E.U., it comes as no surprise that the E.U. is a key ally in helping Ukraine handle its political turmoil. One of the first things the newly elected government did was pass the Ukraine-European Union Associated Agreement and join the Deep and Comprehensive Free Trade Area. These moves strengthen the nation’s economic, political and cultural ties with Europe through mutually beneficial relationships.  

While the U.S. is not as geographically close to Ukraine as the E.U., it has a vested interest in keeping the region stable and independent. Currently, over $204 million is planned in foreign aid for Ukraine. Among this, 33 percent is for peace and security, 32 percent goes toward human rights, democracy and governance, 29 percent is for economic development, and six percent goes toward health. With this aid, the U.S. hopes to keep Ukraine free of Russian influence and welcome them into the western world.

Through USAID, foreign aid is being used to help out local communities of Ukrainians.  In 2017, the organization helped 50 communities effectively manage resources and become sustainable without the central government. This not only fights corruption but also helps improve the everyday lives of Ukrainians who face instability in the face of recent changes.   

Continuing Progress in Ukraine

The aftermath of the Revolution of Dignity and the struggle with Russia has left many Ukrainians in a state of upheaval. With an uncertain future and violence a real possibility, it is key that allies help the country through this traumatic point in its history. The humanitarian impact of political uncertainty is often understated in the media, but it is real. While there are larger political reasons for Ukraine’s allies to help it, the aid these allies give to the Ukrainian people has an impact on the ground that can help save many lives.

– Jonathon Ayers
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

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Economic Development in Ghana Can Help Fight Extreme Poverty

Economic Development In Ghana Can Help Fight Extreme PoverAccording to the World Bank, Ghana has not been a low-income country since 2011; in fact, it has been upgraded to a middle-income one. For reference, the World Bank study defines low-income countries as those with average gross national incomes (GNIs) of less than $1,005 per person per year.

Conversely, middle-income countries are those with per capita GNIs of between $1,006 and $3,975 per year, while upper-middle-income countries are those with per capita GNIs between $3,976 and $12,275. Fortunately, the number of countries listed as low-income has declined to 35 from 63 in 2000.

Economic Development in Ghana

Economic development in Ghana is the key factor for its upgrading to a middle-income country. Ghana’s economy is the second biggest in West Africa and strong exports of cocoa, gold and oil constitute the main pillars of Ghana’s economy.

The combination of successful sectors like gold and cocoa exports and the launch of crude oil production in 2011 boosted Ghana’s GDP growth to 15 percent in 2011 and 7.9 percent in 2012. Revenue from the oil and gas sector amounted to $846 million in 2013. In 2011 and 2012, revenues reached $444 million and $541 million respectively. The vast majority of this success stems from a project called Jubilee oil field.

Economic development in Ghana is also furthered by a stable political system. Ghana has a long history of political stability and trust in democracy with a long string of free elections and turnover in terms of governing political parties.

Problems in Ghana’s Economy

Although the country is experiencing rapid growth, Ghana is also burdened by a large fiscal deficit and a large balance of payments deficit. The fiscal deficit jumped to 11.5 percent of GDP in 2012 as a consequence of the government’s increased spending on public sector wages and subsidies, while public debt level rose to 56 percent of GDP in 2012, up from 33 percent of GDP in 2008.

Economic development in Ghana, however, has certainly helped to increase the per capita incomes. The percentage of people living in poverty has, in fact, declined to less than 30 percent.

Poverty in Ghana

But Ghana’s relative poverty is still an issue. About 52 percent of Ghanaians live on less than $2 a day and another 27 percent live on between $2 and $4. The emerging middle class, on the other hand, which represents one in five Ghanaians, has a per capita daily consumption of between $4 and $20. The steady rise of a middle class in Ghana represents good news, especially considering the social and political stability that makes Ghana an exception in the African continent.

An accurate combination of safe monetary policy, higher oil production and controlled expenditures are likely to boost government revenues, which, with declining inflation and interest rates, will boost economic activity and facilitate the reduction of extreme poverty in Ghana.

– Luca Di Fabio
Photo: Google

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Three Companies That Use Franchising to Fight Poverty

franchising to fight povertyThe concept of franchising is not new. But for most people, the word “franchising” only brings up images of fast food restaurants. This is not a surprise; food giants like McDonald’s remind consumers of how impactful franchising can be. But the impact of franchising stretches beyond the food industry. Franchising has worked for countless industries, ranging from pet supplies to hair salons.

With the benefits that franchising provides, it is not hard to see why. The training and resources that franchisors offer make starting a business much easier. A complete business model helps offset the risk of failure. For many, this makes the dream of entrepreneurship a reality.

In the developing world, franchising can be a powerful force as well. The business systems that franchising provides are a framework for success. With more citizens owning businesses, empowerment is inevitable. For these three businesses, the usefulness of franchising to fight poverty is clear.

Jibu Uses Franchising to Fight Poverty

In Kenya, Rwanda and Uganda, Jibu uses franchising to increase water access. The company establishes storefronts in communities that lack adequate clean water. The storefronts use filtration to produce and provide water to those that need it.

In addition, the stores provide a path to entrepreneurship. Franchisees start off with a micro-franchise business. These businesses distribute (but do not produce) clean water. This allows the franchisee to become accustomed to running the business.

Throughout the process, Jibu provides training and support. If successful, a full franchise with on-site filtration is set up. Franchise owners can then produce and distribute clean water. Despite the greater effort, allowing business owners to become accustomed to running a store is a key part of its strategy. And since the average Jibu business owner breaks even in three months, the effort is worth it. With the Jibu model, using franchising to fight poverty is a reality.

Fan Milk Limited

The model of franchising in developing nations is not new to Fan Milk Limited. Established more than 50 years ago, this company sells ice cream products in Ghana.

Business owners set out on a bike each day and distribute product throughout the country. The vendors bike to a central depot to pick up the product. After this, they bike around various routes in their region to sell the ice cream treats.

In the case of Fan Milk Limited, biking is profitable. With this business, the average franchisee breaks even in about two weeks. This provides a lifestyle benefit, as well as a clear use of franchising to fight poverty.

Like Jibu, the franchisee can expand. Vendors can fund their own depots with greater investment. This provides a host of opportunity for Fan Milk Limited business owners.

Mr. Bigg’s

In the case of Mr. Bigg’s, the benefit provided by franchising is less direct. This Nigerian fast food chain, owned by UAC Restaurants, is a favorite in the country. With the franchising model, this company has managed to expand to more than 150 locations.

The effects of Mr. Bigg’s are far-reaching. The franchised restaurants provide meaningful employment to 6,000 Nigerians. Having income helps to lift Nigerians out of poverty and improves their quality of life.

On top of this, the restaurant owners receive extensive training to help them succeed. These tools aim to ensure that the businesses thrive. The average Mr. Bigg’s restaurant owner breaks even between 24 and 30 months after opening. And when businesses succeed, the country as a whole does, too. With its model, Mr. Bigg’s uses franchising to fight poverty.

Whether with water, ice cream or fast food, franchising brings results. Franchising implements a system of support that helps business owners find success. In developing nations, this concept can drive concrete change. Jibu, Fan Milk Limited and Mr. Bigg’s show exactly that. For these companies, franchising is more than smart business. It is the right thing to do.

– Robert Stephen

Photo: Google

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Credit Access In Burkina Faso Is Slowly But Steadily Improving

credit access in Burkina Faso

In Burkina Faso, a landlocked country in West Africa, access to credit is very limited. Around 44 percent of the population lives on less than $1.90 a day, only 15 percent of the population has access to a checking account and a mere seven percent of the population has access to banking services.

But the scarcity of credit access in Burkina Faso is more reflective of the country’s socioeconomic structural barriers rather than a systemic lack of capital. The banking system is regulated by the Centrale des États de l’Afrique de l’Ouest (BCEAO) and is comprised of 12 commercial banks and five specialized credit institutions, and as of June 2011, the majority of these banks met the new capital regional requirement of CFAF five billion.

But credit access is generally concentrated to a few large clients, with collateral requirements and high interest rates of 10-12 percent, preventing the majority of small and medium sized borrowers from participation. Pervasive gender inequality especially exacerbates these high barriers of access for women. Women are typically confined to lower paid informal sector jobs (such as subsistence agriculture) and there is no legislation prohibiting discrimination in access to credit based on gender or marital status.

However, the recent implementation of microcredit initiatives has helped lower these barriers to credit access in Burkina Faso, especially for women in rural areas. One of these programs is part of the Victory Against Malnutrition Project (VIM) that works with 200 villages in the Sanmatenga province and is funded by USAID’s Office of Food for Peace, implemented by ACDI/VOCA, Save the Children and three local NGOs. For example, in 2015 through a partnership with the microfinance institution Caisse Populaire, VIM brought financial agents to the village of Ouintokouliga and offered education and access to financing options.

For village resident Nobila Koroga, access to this additional capital allowed her to buy more animals on her farm which, in turn, generated enough extra produce and additional income to create food security for her household, pay her children’s school fees and cover unexpected issues such as family medical visits. This is especially significant considering that Burkina Faso’s human development index ranking is one of the lowest globally and the country is especially challenged by low levels of education and healthcare.

As Koroga’s experience demonstrates, credit access is a crucial asset in socioeconomic development and empowerment. The government of Burkina Faso has recognized this and is making financial inclusion a priority, as outlined in a recent IMF report.

One of the goals of the government’s four-year National Plan For Economic And Social Development, which went into effect in 2016, is to bring broader banking service utilization rates to 35 percent by 2020. This will begin to be implemented in 2018 through the national inclusion financial strategy, which, alongside further expanding microcredit initiatives, also emphasizes mobile banking and the reduction of administrative barriers.

Additionally, on March 14, the IMF approved a three-year arrangement with Burkina Faso under its extended credit authority, totaling $157.6 million in support of these initiatives. While credit access in Burkina Faso, and banking more broadly, still has a long way to go in terms of inclusion, the success of these international collaborative microfinance initiatives and the country’s broader long-term strategy demonstrate it is embarking on a path toward success.

– Emily Bender

Photo: Flickr

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