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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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Economic Development In Iran Could Help Reduce Poverty

Economic development in Iran
Economic development in Iran seems to be on the horizon. The World Bank released a report called “Iran’s Economic Outlook” in which it states that 2018-19 will see an overall economic improvement in the nation as the increase in investments and the reelection of President Hassan Rouhani in May 2017 provides political stability.

Moreover, the GDP growth rate is estimated at 3.6 percent, and the International Monetary Fund projects the Iranian GDP to expand by 3.8 percent in 2018, for a future economic growth of 4.1 percent in 2022. According to many analysts, such unprecedented economic development in Iran is most likely due to the removal of international sanctions over the country’s nuclear energy program in 2016.

Iran’s Economy is On the Rise

Both the World Bank and the International Monetary Fund (IMF) have revealed that Iran has seen a staggering 12.5 percent increase of its GDP in 2016. The increase in oil output was a major factor toward such economic development in Iran, after restrictions on crude sales were removed.

Such economic improvement gives hope for a comprehensive reduction of poverty in Iran. In fact, the Institute for Management and Planning Studies has released a study in which it shows more than 900 figures of what the poverty line in Iran looks like.

Data of Economic Development

This data was collected from over 40 reports released by the Statistical Center of Iran, the Central Bank of Iran and other independent research centers. Furthermore, according to study co-authors and economists Majid Einian and Davoud Severi, 12.31 percent of all Iranians are poor and a total 10.61 percent of urban and 17.03 percent of rural households live in poverty.

According to the Financial Tribune, however, the Ministry of Cooperatives and Labor and Social Welfare draws the poverty line at $159 a month for a household of 3 to 5 members. Interestingly, the economists who led the study chose $61.3 for an individual living in urban areas and $38.6 for each person living in rural areas as the standard to define what living in poverty means.

As the World Bank has reported, Iran managed to reduce poverty to 8 percent between 2009 and 2013. However, the divide between rural and urban is still quite impressive. On average, in fact, poverty in rural areas is three times higher than in urban areas.

Action to Reduce Poverty in Iran

Between 2009 and 2014, the Iranian government took action towards the reduction of poverty by assisting its citizens with universal cash transfer. This action contributed to a economic growth of 1.3 percent of the bottom 40 percent of the population.

As far as other sectors of the economy are concerned, the World Bank foresees a growth of the agriculture at a rate of 4.1 percent in both 2018 and 2019 and of the industrial sector at 4.7 percent and 4.8 percent for 2018 and 2019 respectively, and the services sector is expected to grow at 3 percent and 3.4 percent. With these statistics in sight, the future of Iran’s economic development is promising.

– Luca Di Fabio

Photo: Pixabay

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Continued Progress for Credit Access in Bolivia

Credit access in BoliviaCredit access is considered a key driver of economic growth and poverty alleviation, capable of granting the poor and small businesses the funding necessary to invest in their future. In the past, credit access in Bolivia has seen an expansion through innovative commercial initiatives and through recently imposed laws, Bolivia’s government has sought to encourage the expansion of credit in the country and to direct it toward productive and socially useful sectors.

In one respect, the story of credit access in Bolivia has been particularly influential: commercial microfinance. When BancoSol, originally a charity sponsored by Acción Internacional, transformed itself into a microfinance commercial bank in 1992, it became the first chartered microfinance bank in the world.

The transition showed the country that microfinance could function without the largesse of nongovernmental organizations and within a commercial environment. Significantly, by proving this model was feasible, it provided a meaningful lesson for international observers.

Since then, the country has continued to burnish its legacy of credit initiatives in microfinance and beyond. It has consistently ranked highly in the annual Global Microscope, a report prepared by the Economist Intelligence Unit (EIU) that assesses the regulatory environment for financial inclusion in 55 countries.

In 2016, Bolivia ranked thirteenth of 55 and sixth of the 21 Latin American and Caribbean countries included, and in its 2015 report, the EIU highlighted the country’s Financial Services Law (FSL) as a key in moving toward greater financial inclusion. Whether the FSL, enacted in 2013, will achieve all its goals is yet to be determined, but evidence to date suggests the government’s initiatives have had their intended effect.

The law, among other objectives, mandates credit quotas and interest rate caps to encourage lending to designated productive sectors and social housing. This requires banks and other financial institutions to extend a minimum share of their credit toward these objectives at an affordable rate. A 2015 report by the International Monetary Fund (IMF) found that the requirements were spurring progress: total credit reached almost 46 percent of GDP in 2015 from 35 percent in the mid-2000s, and credit directed to the productive sectors and social housing increased 26 percent in the year leading to June 2015.

In combination with elements of the law improving deposit insurance and consumer protection measures, the FSL has laid the groundwork for furthering the expansion of credit access in Bolivia. As the IMF report emphasizes, the Bolivian financial system is fundamentally sound, but the methods employed to increase credit access do not come without risks.

In attempting to lower borrowing costs, interest rate caps can ultimately limit access to credit and hurt bank profitability, while credit quotas can lead to banks’ portfolios becoming over-concentrated and designated borrowers becoming over-indebted, as credit is extended disproportionately to certain sectors. The report stresses that managing these risks will be vital for the country to ensure its expansion of credit is healthy and sustainable.

Overall, from BancoSol’s breakthrough in the 1990s to modern regulatory initiatives, credit access in Bolivia has continued to expand. Given the capability of financial inclusion to economically empower the poor, it is likely to remain an important goal in the country for the foreseeable future.

– Mark Fitzpatrick

Photo: Flickr

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Top 10 Poverty in Jordan Facts

Top 10 Poverty in Jordan Facts
Jordan is a country of key interest to the United States, situated as it is in the center of the conflict-ridden Middle East. This is principally why the United States has planned more than $1 billion in foreign aid to Jordan in 2018, focused on military assistance, economic development and health.

Much of this aid aims to address poverty in Jordan, a major cause of discontent given that more than 14 percent of the country currently lives below the poverty line. Understanding poverty in Jordan is key to addressing it, which in turn would help to secure a peaceful future for the country and the Middle East in general. This 10 poverty in Jordan facts break down the basic concept of the issue and the possible solutions to Jordan’s ails.

Top 10 Poverty in Jordan Facts

  1. Jordan Lacks Natural Resources
    While many Middle Eastern countries possess large oil reserves, to their great economic benefit, Jordan lacks this kind of natural wealth. The country also has a poor climate, which contributes significantly to its high rates of poverty.
  2. Jordan Is Not Poor
    However, poverty in Jordan is not just a matter of natural resources or a pervasive lack of wealth. The United Nations classified Jordan as a middle-income nation. Though it is by no means wealthy, it is also not in economic despair. Many of the problems in Jordan stem not from lack of money, but rather its distribution throughout the country.
  3. Economic Development Is Key
    Jordan has a low rate of economic participation among its citizens, accelerating the problem of poverty. Economic development in Jordan is poor, and has led to low wages and underwhelming career opportunities that discourage citizen participation in economic activity. This helps to explain why the United States dedicated part of its foreign aid to Jordan to economic development, as this is key to lowering poverty levels.
  4. There Is No Safety Net
    Another problem in Jordan is the lack of a social welfare program that delivers meaningful benefits to unfortunate citizens. This is related to low economic activity and serves to trap citizens in poverty because there is little assistance available to allow anyone to rebound. This only deepens low economic participation rates and poverty in the country.
  5. The Budget Is Tight
    Due to multiple external stressors and government mismanagement, Jordan faces a mounting fiscal deficit, with little money available to fight growing poverty levels and low participation rates in the economy.
  6. Debt Contributes to Inflation
    The growing national debt and economic stress have led to skyrocketing inflation rates in Jordan, which the country is unequipped to properly address. This devalues money quickly for struggling individuals and discourages savings and long-term investments. Adding to this problem is the fact that combating inflation risks raising unemployment, which could further cripple citizens looking to escape poverty.
  7. Poverty Has Not Always Been This Bad
    In the early 1980s, Jordan was a relatively wealthy country, with only 3 percent of the population living below the poverty line. It was only after an economic crisis in the 1980s that poverty became a prevalent issue. The crisis hit Jordan hard, and though the economy has resumed steady growth, much of the population still feels the lasting effects.
  8. The Syrian Refugee Crisis Has Taken a Toll
    The refugee crisis created by the brutal civil war in neighboring Syria has left Jordan reeling. Thousands of civilians have poured into the country in search of solace from the conflict, putting more economic strain on the country and adding thousands of people living below the poverty line.
  9. Many Live at the Margins
    Studies in Jordan have found that the majority of citizens living in poverty are either slightly below or above the poverty line. This indicates the fluctuations that surround poverty in Jordan, with many citizens constantly falling back beneath the poverty line after rising just above for a short time.
  10. Solutions Exist
    The problem of poverty in Jordan is vast and at times feels difficult to grasp and control, but solutions to the crisis are available. Further increasing foreign aid to the country to assist in economic development would help the nation cope, especially given its current refugee intake. So, too, would the development of joint programs with the United Nations to improve health conditions. Such aid is vital and could help Jordan evolve into a keystone of stability in a region known for political strife.

These 10 poverty in Jordan facts have outlined the basics of Jordan’s political and economic problems that have led to high rates of poverty and many of the solutions available. In order to secure a peaceful future for the Middle East, it is vital that the United States continues its investment in allied countries in the region and prevent further political instability.

– Shane Summers

Photo: Flickr

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Why Poverty In China is Still a Problem and Methods Towards Alleviation

poverty in china
By the year 2020, according to most financial and political analysts, China will surpass the U.S. as the largest economy on the planet. The World Bank even reported that China opening itself to free-market reforms in the last few decades managed to raise more than 800 million people out of poverty in China.

The Positives

In addition to this positive news, the financial institutions also added the reassuring fact that thanks to this unprecedented growth rate, the Chinese economy improved the living standards for a massive percentage of its population. A closer look at the data reveals how in 1981, 88.3 percent of China’s population lived on less than $1.90 a day (roughly 870 million people), and 99.1 percent lived on less than $3.10 a day (over 980 million people).

The last reported year for which the World Bank gathered official data is 2010, and the results are staggering — only 11.2 percent (almost 150 million people) lived in poverty in China in 2010. The overall prospect, then, seems quite promising; however, there are some further considerations of note in regard to this set of data.

The Divide

Taking into account China’s enormous social and economical strides since the Communist Party took power, one can see that there is a massive divide in income between rural and urban areas.

More specifically, in 1978 only 23 percent of the population was employed in urban areas; by 2014, over 770 million Chinese citizens were urban workers. Such figures acknowledge the significant improvement in the urbanization process, while also concealing the fact that the rest of population still lives and works in rural areas.

Those families are largely stuck in the same economic and social distress they were before the Communist revolution and unfortunately, haven’t made significant steps forward. Other statistics reveal how China’s per capita GDP, for example, is still very much below the standards of a developed country. It ranked, in fact, at $6,894.50 in 2016, which is 55 percent below the world’s average.

The Question

How can a country whose GDP grows at an annual rate of 6.9 percent still have children begging on the streets and families living on less than $2 a day? While it’s hard to provide a definite answer, a few considerations are worth bringing forth about the Chinese political system.

The country is still ruled by a one-party system which owns and controls the vast majority of enterprises and sectors of the economy. Private property is still very weakly protected and the judicial system is dominated by the Communist Party that arbitrarily appoints judges and influences court operations and verdicts.

Moreover, the regulatory framework is also arbitrary and very intricate — details that make it difficult for a private enterprise to blossom and grow. Corruption is also a massive issue which, when paired with the state-controlled financial system and state-owned enterprises, highly depresses foreign investments and contributes to enriching the economic elite and maintaining poverty in China.

China has made improvements in its poverty alleviation efforts, but there is clearly still room for improvement. Only time will tell how the nation keeps up with its progress.

– Luca Di Fabio

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Foreign Investment Growing Development Projects in Mauritius

development projects in Mauritius
Mauritius is a southern African island country in the Indian Ocean that is famous as a tourist destination. The country is known for its peaceful people comprised of mixed races and multiple languages. Mauritius initially had an agriculture-based economy which the nation diversified into various sectors, including sugar, tourism, textiles and apparel and financial services, transforming it from a lower- to an upper-middle-income economy.

At present, the country is trying to achieve the status of a high-income economy by 2020. In order to reach this goal, various development projects in Mauritius are aiming to create job opportunities, update primary education, generate sustainable energy and improve the infrastructure of the country.

Indian Government Development Projects in Mauritius

In March 2017, India allocated ₨ 12.7 billion for various priority development projects in Mauritius, including the following:

  1. Metro Express Project
    In August 2017, ₨ 9.9 billion was earmarked for the construction of an express metro, which will facilitate transportation between Curepipe and Port Louis, covering a distance of 26 km. The project aims to decrease traffic congestion and save ₨ 4 billion each year. It consists of 19 stations, 6 urban terminals and four interchanges with 18 air-conditioned trains in operation. It is expected to be completed by September 2019.
  2. Early Digital Learning Program
    The project started in 2017 with the aim of supplying digital tablets to students in grades one and two containing digitized study materials. ₨ 500 million has been spent on this program, which includes the cost of hardware, software and training assistance.
  3. Trident Project
    India is providing a fund of $4 million with an additional $52.3 million line of credit for this project. Its aim is to upgrade the maritime and surveillance operations of the Mauritius National Coast Guard to fight against drug trafficking in the Indian Ocean.
  4. Building Projects
    The remainder of the ₨ 12.7 billion is going towards the construction of several new buildings, including ₨ 1.1 billion for a new Supreme Court building in the capital city of Port Louis, ₨ 700 million for construction of social housing units and ₨ 500 million for an up-to-date ENT hospital.

Projects with the African Development Bank

In 2013, the Sustainable Energy Fund for Africa granted $1 million for the development of a Deep Ocean Water Application Project in Mauritius. The aim of the project was to install an innovative low carbon seawater air conditioning system.

Mauritius has no oil or natural gas reserves, and so to reduce its energy imports, it has employed this seawater air conditioning system. The system extracts and pumps cold water from the Indian Ocean, which is used to air condition the business district of Saint Louis and its adjacent regions.

This innovative technique has helped to lower the cost of air conditioning systems and reduced carbon emissions by 40,000 tons. It has provided jobs to local engineers and technicians and also created job opportunities in other sectors like aquaculture, pharmaceuticals and bottling.

Mauritius is also looking forward to other development projects in cooperation with India as well as the World Bank, which will help it achieve the status of a high-income developed country.

– Mahua Mitra

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How International Trade Benefits Latin American Development

How International Trade Benefits Latin American Development
Latin America encompasses the area from Mexico to the southern tip of South America, and consists of 19 sovereign states amidst other territories and dependencies that span two continents.

The region has had a varied and unstable economic history: in 1982, rising oil prices led to the Mexican debt crisis, latin American GDPs began to decline and around 64 million people lived in poverty. In 2010, however, the overall GDP growth rate rose to 5.8 percent. Some of this recent growth can be attributed to various trade agreements adopted by Latin American countries.

From Mercosur to the Pacific Alliance, international trade benefits Latin American development in very significant ways.

Mercosur

Created on March 26, 1991 by the Treaty of Asuncion, Mercosur is a South American economic and political trade bloc that includes four members: Argentina, Brazil, Paraguay and Uruguay.

The bloc is a notable example of renewed global interest in regional trade agreements, and the four countries agreed to five terms:

  1. Eliminate customs duties
  2. Adopt a consistent trade policy toward outside countries and blocs
  3. Enforce a 35 percent external tariff on certain imports from outsiders
  4. Coordinate macroeconomic and sectional policies
  5. Abrogate restrictions on reciprocal trade

In addition, people from member countries can apply for a two-year residency with the right to work. This policy benefits immigrants because they can obtain permanent residency as long as they do not have criminal records.

Since 1991, Mercosur has grown intra-bloc trade from $5.1 billion to $58.2 billion while world trade growth was only five-fold. In addition, the bloc acts an essential step in boosting industrial activity; for instance, Argentina and Brazil are the third biggest global markets for automobiles. Through results such as these, Mercosur demonstrates how international trade benefits Latin American development.

NAFTA

In 1994, Canada, the U.S. and Mexico signed the North American Free Trade Agreement (NAFTA), which created a trilateral trade bloc in North America. NAFTA’s goal was to integrate Mexico into the highly developed economies of the U.S. and Canada.

NAFTA is the largest free trade agreement in the world. This agreement eliminates tariffs to a large extent, and Mexico abrogates non-tariff barriers and other trade-distorting restrictions. This policy also leads to lower prices on groceries and oil in the U.S. and more exports from Mexico. Regional trade grew from around $290 billion in 1993 to more than $1.1 trillion in 2016.

Although Mexico’s unemployment has risen since then, many experts conclude that its economic performance is affected by non-NAFTA factors, such as devaluation of the peso and competition with China’s low-cost manufacturing sector. Overall, NAFTA has reshaped the trade pattern between these three countries and is one of the ways that international trade benefits Latin American development.

Pacific Alliance

Established in 2011, the Pacific Alliance is a Latin American trade bloc that includes four member countries: Chile, Colombia, Mexico and Peru. Its goal is to build a comprehensive trade relationship between its member countries, promote a free flow of capital, goods, people and services, and further expand this relationship to Asia-Pacific trade. Under this agreement, member countries agree to reduce tariffs to 10 percent. This kind of international trade benefits Latin American development.

In 2014, the Alliance signed the Framework Agreement to cut 92 percent of all tariffs and phase out the remaining 8 percent in the coming years. In 2016, the Pacific Alliance accounted for 35 percent of the total GDP of Latin American and the Caribbean. Compared to Mercosur, Pacific Alliance has an even more powerful influence on Latin American economic growth.

The growth in exports of goods and services reached 14.6 percent in 2010, while Mercosur resulted in more than 7 percent growth. All in all, the Alliance stimulates foreign investment in member countries and regulates government intervention in economic affairs.

Global Engagement

These trade agreements are good examples of the effect that international cooperation can have on the economies of developing countries. The continued encouragement of free trade both within Latin America and with other nations will promote growth and opportunities for all of Latin America’s people.

– Judy Lu

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Electrification to Reduce Poverty in Africa

Electrification to Reduce Poverty in AfricaLack of infrastructure in Africa has continued to perpetuate its impoverished state. Poverty in Africa is caused by dozens of factors that contribute to intergenerational poverty, but a key issue is access to electricity. Although access to electricity has advanced, there are still many more improvements to be made.

In Africa, access to electricity has been a serious challenge. Two out of three people in sub-Saharan Africa lack access to electricity. In total, there are over 600 million Africans without connection to an electrical network. Reports from the International Energy Agency’s (IEA) Africa Outlook state that on average, electricity consumption per capita is not even enough to power a 50-watt light bulb continuously.

Even with electricity, reliability is low. Twenty-five of the 54 countries in Africa report frequent power crises including outages, irregular supply and high electricity costs. This creates numerous problems and constraints for individuals and businesses.

Investments in Africa’s electrification offer many benefits beyond the important direct job creation in energy infrastructure. Evidence suggests that household electrification also increases job opportunities due to its ability to allow people more working time, and enables the growth of rural micro-entrepreneurship. Improvements appear to be underway, with a variety of recent initiatives aimed at investment in electrification.

Africa’s demand for electricity is also growing. With a current growth rate of 6 percent per year, it will likely exceed GDP growth until 2040. This has sparked private investment and stimulated more diversified project financing. As a result, sub-Saharan Africa has seen power generation increase by 21 percent, with Chinese contractors accounting for 30 percent of this growth, to reach 115 gigawatts between 2010 and 2015.

Investment interest in Africa’s electrification has continued to increase since 2011. Of the 38 sectors reported in the Financial Times fDi Markets database, which monitors investment projects, capital investment and job creation, the alternative/renewable energy sector was the third most attractive for companies that invested in Africa in 2015 and 2016.

One major investment highlight was the $21 billion for new projects, many of which focus on renewable sources of energy. Investment trends in the renewable energy sector continue to be especially impressive, further combating poverty in Africa. Ethiopia has been seen as a leader in clean energy infrastructure, having generated the bulk of its energy needs from hydropower and other investments in geothermal, solar and wind. Its recent creation of the Ashegoda wind farm has the capacity of generating 120MW.

In the Democratic Republic of the Congo, the development of the Grand Inga Dam has the potential to generate 40,000MW of electricity. Both of these provide Africans with not only more access to electricity but also ways to make it more affordable.

Improving access to electricity is essential to decreasing poverty in Africa. It provides households and businesses with a tool for successful operation. There have been great strides in solving this problem in Africa, yet much work still needs to be done. Estimates from the World Bank concluded that 93 percent of Africa’s economically viable hydropower potential remains unexploited.

Persistent challenges need to be addressed by the government. A Greenpeace South Africa report found that two main challenges are changing misconceptions about renewable energy’s capabilities and developing the political will to invest in clean energy infrastructure. There is no doubt that through the electrification of Africa, many new opportunities for its countries will be brought to light.

– Ashley Quigley

Photo: Flickr

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The Expansion of Infrastructure in Croatia

 

infrastructure in CroatiaCroatia officially became part of the European Union on July 1, 2013. With membership in the European Union came an increase in access to funds and European Union-backed financing. These funds, along with outside funding from institutions such as The World Bank, are helping to make the much-needed expansion of infrastructure in Croatia possible. Below are five examples of ways that infrastructure in Croatia is expanding.

The Building of the Pelješac Bridge

One of the largest infrastructure projects in Croatia is the building of the Pelješac Bridge. This bridge will connect southern Croatia and Dubrovnik, as well as some access roads. On January 12, 2018, it was announced that the bridge will be constructed by a Chinese consortium led by the Chinese Road and Bridge Corporation. The building of this bridge has been long awaited in Croatia, and this decision signals the beginning of what will become one of Croatia’s largest infrastructure expansion projects in recent years.

The Opening of a New Terminal at Zagreb International Airport

A new terminal was opened at Zagreb International Airport on March 22, 2017. The terminal cost $450 million, and was built by a consortium supported by the International Finance Corporation. Up to this point, the construction of this terminal was the largest infrastructure project that had occurred in Croatia in the last 10 years. This terminal is 65,000 square meters, and more than doubled the airport’s capacity, increasing it from two million to five million passengers per year. The hope is that this new terminal will allow for increased tourism in Croatia, which will ultimately improve the nation’s economy.

Reconstruction of the Croatian Road Network

There is currently a Modernization and Restructuring of the Roads Sector Project underway in Croatia. On April 28, 2017, the World Bank’s board of directors approved a $23.32 million loan to aid Croatia in this project. The road network in Croatia carries more than 75 percent of transport demands in the country, so the reconstruction and expansion of the road network will strengthen the effectiveness of this vital sector of infrastructure in Croatia.

Railway Construction

The Croatian railway network has been largely ignored in recent years, but that is beginning to change. The reconstruction of the railway that connects Dugo Selo to Križevci is underway. The 38-kilometer line is undergoing extensive reconstruction, and a second track is being added to it as well. This project is being largely funded by the European Regional Development Fund, and is expected to be completed by 2020.

Clean Water Project

Clean water will be more readily available to thousands in northern Croatia thanks to a project directed at improving infrastructure for water management and treatment. This project will cost €64.3 million, and is being funded by the European Union. In a press release on November 29, 2017, commissioner for regional policy Corina Cretu said, “Croatian households now have access to clean water thanks to our investment – this is a practical example of the value added by the European Union which cares about the environment and health of its citizens.”

The above projects are just a handful of the infrastructure projects that Croatia has undertaken since becoming an official member of the United Nations in 2013. These, along with the numerous other improvements being made to infrastructure in Croatia, are helping to expand economic opportunities in the country and improve the overall quality of living for the citizens of Croatia.

– Nicole Stout

Photo: Flickr

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