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Economic Diversification in Guinea-Bissau

Economic Diversification in Guinea-Bissau
Guinea-Bissau is a small West African country with a poverty rate of more than 60 percent. Poor infrastructure and a stagnant business climate fostered a reliance on its main income producer, subsistence farming. Despite this, its GDP growth rate has remained fairly high. Real GDP growth rate in 2017 was 5.9 percent, one of the highest in Africa. Though a recession increased debt and caused Guinea-Bissau to seek assistance from the International Monetary Fund (IMF), the country has slowly rebounded. The nation stands to benefit from a diversified economy.

Current State of the Economy

Guinea-Bissau consistently ranks among the top 10 poorest countries in the world. About 80 percent of the population works in agriculture, while industry and services make up the remaining workforce. As is typical for a developing country, many residents rely on subsistence farming. Cashew production is an important export and source of income for Bissau-Guineans, making up more than 80 percent of income. Economic diversification in Guinea-Bissau could add jobs, begin infrastructure developments and lead to further investment in health and education.

A Cashew Economy

In a visit to Guinea-Bissau in January of this year, an IMF team led by Tobia Rasmussen discussed the importance of favorable cashew prices and production. “Ensuring a transparent and competitive cashew marketing season will be critical,” stated Rasmussen. Cashew production and pricing are important to most Bissau-Guineans. The issue, as with most developing countries, is an over-reliance on the agriculture industry.

Although economic diversification in Guinea-Bissau could be partially achieved by emphasizing crops other than cashews, there would still be a more widespread effect by focusing on services and other industries that have been left untapped. Further investment in the agriculture industry, such as through equipment and green technology, could also provide some relief to poverty-stricken residents.

Areas for Development

Guinea-Bissau lacks strong energy infrastructure and general infrastructure. Adding roads, bridges, railways, ports, hospitals and schools are examples of infrastructure developments that don’t just benefit the native population. Both tourists hoping to visit and business people interested in investing in a country that has the potential for growth stand to benefit, as well. Mineral resources, such as phosphates, mineral sands, bauxite, diamond and gold all are untapped. There are currently only small-scale mining of construction materials, such as clay, granite and limestone. Further development, as well as additional funding by the government in infrastructure, would provide a suitable foundation for the basis of a developed country. Infrastructure, such as roadways, is a necessary beginning to a developing economy. To demonstrate the current state of roadways in the country, only 10 percent of the national road network is tarred.

Energy Infrastructure

Only 21 percent of the population has electricity. There are also no telephone lines. Opening investment to the energy sector, especially to external corporations, is often foundational for further development. Current President of Guinea-Bissau Jose Mario Vaz has promised to reduce poverty and drug trafficking, both of which are rampant. At the 73rd United Nations Assembly President Vaz stated he wished to “eradicate poverty and hunger, combat major endemic diseases, as well as guarantee education and potable water for all.”

Promising Ports

The key location of the country is often overlooked. Guinea-Bissau is a western port of Africa that enables it to be a strategic location for trade. Fishing is usually grouped with the agriculture industry but could become a new income source for the 60 percent of Bissau-Guineans in poverty. Advancements in fishing, such as sonar technology that allows the user to find fish, is one example that provides simple and modern solutions to poor countries.

External Investment

China is a major investor in Africa and has announced it would invest more than $60 billion to help developing countries. One way it achieves this is through investment in infrastructure. China has built Guinea-Bissau’s parliament building, a government palace and a national stadium. The most economical investment China has made for Guinea-Bissau is its $184 million investment in a 30-kilowatt biomass power plant. The partnership is a major step in providing electricity to its residents while also adding to economic diversification in Guinea-Bissau.

With a continued focus on economic diversification and energy infrastructure Guinea-Bissau holds the potential for boundless development. The aforementioned initiatives and investment products indicate that positive change is already occurring in the West African nation.

– Lucas Schmidt
Photo: Flickr

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Three Ways to Reduce Poverty in Cote d’Ivoire

Poverty in Cote d'IvoireAlthough Cote d’Ivoire’s GDP growth rate remains among the highest in the world from 2015 to 2017, 46.4 percent of the population still lives below the poverty line. The West African country, also known as Ivory Coast, relies heavily on agriculture, as do most developing countries. As the African country continues to develop, there are three possible areas that could help reduce poverty in Cote d’Ivoire: economic diversification, improving the agricultural industry and eliminating government corruption.

Economic Diversification

The country is over-reliant in one industry with 68 percent of Cote d’Ivoire residents having occupations in the agriculture sector. Although the country has grown partly due to the agriculture industry, relying solely on one industry is risky. Price fluctuations of popular exports, such as cocoa and coffee beans, are a high risk for Ivorians. Developing the healthcare, education, transportation, technology, infrastructure and mining industries would create tens of thousands of jobs and reduce poverty in Cote d’Ivoire.

Education is one productive area that would drive economic change and help reduce poverty in Cote d’Ivoire. Only about 48 percent of the population is literate. Education is a basic human right and necessary to develop further; investing in it is the foundation of a strong economy. However, Cote d’Ivoire is focusing more on public education. In 2014, the government spent about 4 percent of GDP on education. In comparison, the U.S. spent 5 percent of GDP on education in the same year. Investing in education has a spillover effect, as those seeking degrees in engineering or in the sciences may build hospitals or work in the lacking Ivorian healthcare industry.

Agricultural Industry Improvement

About 70 percent of the world cocoa production comes from West Africa. The country grew considerably and diversified the agriculture industry by exporting products such as cocoa beans, palm oil, coffee, bananas, sweet potatoes, cotton, sugar and many other products. Due to more than 60 percent of Ivorians relying on crops to feed their families and earn an income, further development in the agriculture industry is a viable option to reduce poverty in Cote d’Ivoire.

Cote d’Ivoire is the world’s largest producer of cocoa beans. Small farmers make up most of the agriculture industry. As the country slowly transitions toward urbanization, especially in the capital and in the major port city Abidjan, investing in more advanced farming techniques could help increase production and lead to a higher income.

Eliminate Government Corruption

Reducing poverty in Cote d’Ivoire begins with government initiative and policy. A strong foundation in government policy, particularly in strengthening the economy and creating jobs, is one fundamental way to reduce poverty in Cote d’Ivoire. A corrupt or passive government will lead to slow or little progress toward eradicating poverty. Under the leadership of President Alassane Ouattara, the country plans to have universal, affordable and clean drinking water by 2030. This goal demonstrates that Ouattara, unlike his predecessor who started a civil war, believes in achieving the Sustainable Development Goals by 2030.

Under President Ouattara, the Ivorian economy grew significantly. Cote d’Ivoire ranked 10th in the world in real GDP growth in 2017. In an effort to improve the economy after the civil war that stemmed from Ouattara’s election, the president increased investment in infrastructure and services. In 2008, the poverty rate was 48.9 percent. A decade later, it went down to 46.4 percent, a modest reduction, but still representing a large percentage of the population.

Reducing and ultimately eliminating poverty in Cote d’Ivoire is a long, and sometimes slow, process. It takes leadership with a moral vision to help its own people. Three solutions to the high poverty rate in Cote d’Ivoire are economic diversification, investment in the agriculture industry and strengthening government policy in order to create jobs that pay above the poverty level. Thanks to the strong growth in the Ivorian economy, poverty has already gradually reduced.

– Lucas Schmidt
Photo: Flickr

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Main Reasons Why Development in Saudi Arabia Matters

development in Saudi Arabia
Saudi Arabia is steadily growing to be a formidable player in the 21st century on the world stage, especially with its massive oil industry, staunch relationship with the United States, and the crucial role it plays in middle eastern geopolitics and international affairs. Yet, at the same time, development in Saudi Arabia has been hindered over the decades due to its conservatism and hidebound ideals.

Saudi Arabia On the Global Stage

Although statistics and figures on the country’s poverty rate remain elusive, it is predicted that a quarter of the population may live under the threat of poverty, which is considered to be about $17 a day, or $530 a month. Income disparities also continue to be on the rise and the unemployment rate currently stands at about 12.7 percent.

Moreover, even though government-run welfare programs and spending systems like Zakat have helped aid development in Saudi Arabia in the past, the country still prioritizes the strength of its oil industry and its own self-image above all else.

Fortunately, Saudi Arabia now experiences a new wave of revolutionary change via the new crown-prince Salman’s reign. The prince’s new policies usher in a new period gradually shifting away from the traditional pivotal ideologies of Wahhabism, pan Arabism and conservatism that Saudi Arabia once stood for. The Saudi economy has great potential and capacity due to the country’s relatively young, and working-age population.

Vision 2030

In its new era of social and economic changes, the Kingdom hopes to achieve its Vision 2030 reform plan and focus on promoting greater social and political stability, sustainability and transparency. Vision 2030 also concentrates on important factors like improving standard of living and education reform so as to make future workers more skilled and competitive for the labor market.

Moreover, Prince Salman’s policies will hopefully lead to greater social progress and development in Saudi Arabia, owing to its focus on anti-corruption measures, gender equality and the empowerment of women.

Anti-Corruption and Empowerment Efforts

There has been a widespread crackdown on problems like the income gap and corruption as the country’s new anti-graft campaign to ‘clean up the economy’ goes into full swing. The anti-corruption campaigns have already yielded more than an estimated $106 billion in financial settlements from many corporates, executives, businesses, and high profile figures from both the government and the royal family.

Furthermore, with the country’s focus on socially and economically empowering women, notable social transformations will take place in Saudi society as women are given more places in the workforce and granted permits and licenses for investment and commercial activities. Consequently, the National Transformation Program 2020 also aims to boost employment opportunities among women and the youth population.

Saudi Arabia’s Continued Progress

The ban on female drivers is steadily being lifted and women will also be given more places in the municipalities in the future. In 2017, Saudi Arabia was given a place at the U.N. Women’s Rights Commission for a four- year term.

Due to recently falling oil prices, it is vital for the country to reduce its over-reliance and dependence on the oil industry. Development in Saudi Arabia can be stimulated by future growth in the country’s non-oil sectors and further economic and industrial diversification.

Fortunately, the country’s competitiveness is improving as is its growing independence and decline in the level of imports. The government also hopes to further open up the economy and interact with global markets.

Although social and economic changes in Saudi society will take time to materialize, the liberalization of the country is imperative for building a foundation for long-term sustainable growth in a fast-paced and dynamically changing world.

– Shivani Ekkanath

Photo: Flickr

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The Future Course of Alleviating Poverty in Iran

Poverty in Iran

As Iran is currently at the epicenter of geopolitics and regional conflicts in the turbulent Middle East, the country’s role in international affairs is steadily growing in importance. Moreover, the Iran nuclear deal is also revitalizing Iran’s presence and significance on the global stage at the same time.

The Current Situation in Iran

According to the World Bank Group, Iran’s GDP in 2017 was $439.5 billion while its population peaked at 80.6 million. On the poverty alleviation front, poverty in Iran fell from 13.1 percent to 8.1 percent between the years 2009 to 2013. Also, in the changing dynamic of its domestic politics and a new wave of secularism and liberalism brought on by a burgeoning young population in the country, addressing poverty in Iran is a very key objective for various stakeholder groups.

However, according to a report by the Independent from Dec. 2017, the economic situation in Iran appears rather bleak in some regard because food prices are on the rise and unemployment figures are at an all-time high at over 12.4 percent. Expanding income inequalities in the country are also becoming quite widespread due to major deficiencies in the taxation and welfare systems offered to the people.

How Iran’s Political Climate Could Affect Poverty

Historically, since the culmination of the Pahlavi dynasty and revolution in Iran in 1979, the country’s social and economic progress has been a vital priority. In recent years, owing to the perceived threat of its nuclear arsenal, Iran’s diplomatic relations with its western counterparts have impacted its trade and commerce majorly due to the imposition of crippling international sanctions.

Furthermore, the changing attitudes of the Trump administration are a major threat to the deal as it may be detrimental to the future economic and diplomatic recovery Iran is trying to seek. Unfortunately, the collapse of the deal could be a major hindrance to countering poverty in Iran.

The Iran nuclear deal can help greatly bolster the capacity to alleviate poverty in Iran due to the level of investment Iran could easily achieve in the future with the expansion of its oil market, given its vast and abundant reserves. Iran can boost its oil output, GDP and household incomes in the future with diminished sanctions.

Consequently, the introduction of the Iran nuclear deal was followed by noticeable economic recovery in the country with Iran’s economy growing at an annual rate of about 12.5 percent after a sizeable contraction of about 1.6 percent in the year 2015. The country hopes to maintain growth amounting to four percent annually.

Alleviating Poverty in Iran through Investment

Moreover, remediating poverty in Iran can also be achieved by increasing the level of investment and tapping into Iran’s potential. Iran is beginning to expand and diversify its industries, especially its hydrocarbon, agriculture and services sectors, and is also continuing to focus on boosting its financial and manufacturing capabilities as well. Additionally, this may help decrease Iran’s over-reliance on its oil market as prices have often tended to remain quite volatile, especially in recent years.

The government is also implementing its twentieth-year vision and sixth five-year development plan in order to focus more on market-based reforms and techniques. This strategy is targeting three important realms: economy, science and technology. The subsidy reforms orchestrated by the government will directly help reduce poverty in Iran as they aim to target price adjustment and further increase cash transfers to low-income households in the country.

Alleviating poverty in Iran shall largely depend on existing and future initiatives that involve opening up the economy further, engaging in economic and trade liberalization with its key trading partners and embarking on further domestic structural reforms.

– Shivani Ekkanath
Photo: Flickr

Hunger in Tuvalu

hunger_in_tuvalu
Hunger has been a problem for Tuvalu in recent year due to the environment and the economy. This article will examine the country of Tuvalu, the problem of hunger, and some possible solutions to this issue.

 

THE COUNTRY OF TUVALU

Tuvalu is a small country in the southwest Pacific Ocean made of up nine islands. By land area, this country is the fourth smallest country in the world and it is inhabited by 11,636 people. Most of the islands are less than fifteen feet above sea level. Subsistence fishing and subsistence farming primarily drive the economy. The climate is typically hot and rainy.

 

HUNGER AND DROUGHT

Tuvalu experienced extreme droughts from 2010 to 2011 due in part to La Niña and exacerbated by climate change

During this time, most residents could not get clean water and many were concerned about food security. A lack of rain spelled trouble for farmers and contributed to hunger in Tuvalu.

 

HUNGER AND CLIMATE CHANGE

Climate change has had an immense impact on hunger in Tuvalu. Subsistence fishing is the most common trade on the islands and most people of Tuvalu have a heavy diet of fish, but it has become harder for Tuvaluans to catch and eat fish.

Even the fish that many fishermen catch have been noticeably smaller. Fishermen have to fish farther from shore and for longer periods to catch enough fish to feed their families.

This is because the habitats of the reef fish are being threatened. The warmer sea waters cause the coral reefs to bleach and die. This, in turn, means that reef fish will die because they no longer have a thriving habitat.

Additionally, rising sea levels have made the soil more salty, which has made it harder for farmers to grow food. Consequently, more subsistence farmers are having trouble feeding their families.

 

HUNGER AND THE ECONOMY

In recent years, Tuvalu has experienced high levels of unemployment and few opportunities for employment.

As the climate of the globe has changed, the farmers and fishermen of Tuvalu have faced economic problems because they are used to being self-sufficient. Now Tuvalu must import much of its food, but many families cannot afford to.

 

SOLUTIONS

The solutions to the problem of hunger have to consider both economic and environmental factors that contribute to this problem.

In 1998, the Government of Tuvalu allocated funds called the Special Development Expenditures to help diversify the economy. This has been successful. More people in Tuvalu are owning private businesses, and more people are becoming commercial fishermen.

However, the problem of climate change puts more responsibility from other countries around the globe because other countries contribute to climate change that greatly affects Tuvalu, especially because of its low-lying islands. Other countries must take responsibility to combat climate change to alleviate the problem of hunger in Tuvalu.

– Ella Cady

Sources: Tuvalu Millenium Development Goals, The Guardian The Hunger Site Tuvalu Islands
Photo: Flickr

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Nigeria To Diversify Economy, Focus on Software

Nigeria_software
Omobola Johnson, Nigeria’s Minister of Communication Technology, reaffirmed the government’s commitment to improve the Nigerian economy through software development. Speaking at Techlaunchpad, a forum to discuss issues facing local software entrepreneurs, Johnson stressed the need to not only educate and identify talented software developers but also to facilitate the creation of Nigerian software companies that provide jobs and increase the country’s general prosperity.

Johnson compared her vision for Nigeria to the Indian IT sector and its ability to form, “Indigenous companies that were created, nurtured and established in India, but servicing global markets.” By following Johnson’s prescription Nigeria could diversify its economy, which has traditionally been dominated by oil production.

At 166 million people, Nigeria is Africa’s most populous country and since 2011 has had an expanding economy, growing at rates between 6-8% of GDP per year. However, its economy depends largely on oil and agriculture and higher growth has not lead to reduced poverty rates or greater employment. For instance, in 2012 the oil sector grew by 8% but non-oil industries contracted by -.35% and the unemployment rate remained over 20%. Unfortunately, while oil tends to yield high profits it does not create significant employment opportunities.

The low employment prospects and dearth of economic opportunity have created a dire situation in Nigeria and now over half the population lives in poverty. Consequently, Boko Haram, an al-Qaeda ally, has increased its presence in Nigeria and caused mass turmoil. It has waged attacks on schools, religious structures and public institutions leading to massive tragedies such as the murder of 65 sleeping students at the agricultural college of Yobe state in September 2013.

To reduce the presence of Boko Haram and improve both public safety and quality of life in Nigeria, it is essential that initiatives such as Johnson’s succeed. Terrorist organizations take hold in countries where people feel robbed of opportunity. The best way to combat them is to provide legitimate means for employment and personal prosperity. By reducing barriers in the Nigerian software sector, Omobola Johnson may be putting Nigeria on the right path to better provide for its people.

– Martin Levy

Photo: Epilepsyu
Sources: IT News Africa, BBC, Council on Foreign Relations, African Development Bank