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Cambodian Poverty: Halved in 8 Years

Cambodian PovertyCambodia is home to nearly 17 million people in Southeastern Asia, nestled between Thailand to the west and Vietnam to the east. The country has a troubled history involving decades of conflict and economic and political instability. Because of these conditions, the Cambodian poverty rate topped 36% as of 2014.

The good news is that in the last eight years, Cambodian has improved significantly, cutting its poverty rate in half even during the pandemic years, which took a massive toll across the globe. The number of people living in poverty has decreased from 5.6 million to 2.8 million, and while there is more work to do, there is tangible evidence that progress is possible.

Steps Toward Improvement

Cambodia is a developing nation where 61% of the population lives in rural areas, and the majority, around 77%, depends on agriculture for their livelihoods. Notably, the country has experienced significant economic growth, particularly in the tourism and construction sectors. The garment industry has also seen expansion, and foreign investments have resulted in increased job opportunities in manufacturing and services, offering better-paying work.

Because of the growth in tourism and garment exports, Cambodia’s economy is one of the fastest-growing in the world. When higher-paying jobs are made available, residents can move away from low-paying agricultural jobs, boosting their earnings and the quality of life around them. The World Bank reports that access to essential services, such as sanitation and education, and access to electricity and water sources has also improved.

USAID is an NGO that has been working diligently to address poverty in Cambodia, spending the last five years helping farmers raise and reinvest earnings to expand the markets where they can sell their products. It has trained 230,000 people on improved nutritional practices and allowed more than 14,000 farmers to access credit. USAID has also been crucial in private sector investments, leveraging more than $20 million to support economic growth and accountable governance.

Cambodian Youth

Children are among the most vulnerable in Cambodia and account for almost 35% of the population as of 2019, which continues to increase. Access to education is on the rise, but many children rely on boats and rivers to attend classes as they commute from rural areas. Cambodia is prone to environmental threats like flash floods, which were responsible for the closure of more than 200 schools in October 2022. 

Cambodia ranks 46th on the Children’s Climate Risk Index, but the Royal Government of Cambodia has already begun tackling climate change, aiming for net-zero emissions by 2050. As part of this emissions goal, future and existing infrastructure dedicated to solar and hydropower is being climate-proofed. The Royal Government also wants to increase forest cover by 60% in the national land area within six years. These measures will protect the land within Cambodia’s border and secure the future for the next generation of Cambodians.

Looking Ahead

Cambodia offers valuable insights for countries addressing poverty. It collaborates with local NGOs on a well-thought-out plan to combat climate change. The nation prioritizes tourism and garment exports, boosting its economy. These initiatives could leave a lasting impact on Cambodia’s young population, who are the future custodians of their country and people.

– Benett Crim
Photo: Unsplash

Hawaii’s Tourism Dilemma: Impact on Poverty

Hawaii’s TourismIn recent years, Hawaii’s tourism dilemma has come to the forefront, shedding light on the intricate balance between economic prosperity and environmental and socioeconomic concerns. Local voices have highlighted the trains on resources, rising costs of living and housing and cultural erosion caused by mass tourism. This exploration delves into Hawaii’s tourism dilemma, dissecting its multifaceted impacts and the possibility of a balanced future. 

Strains on Resources 

While tourism breathes life into Hawaii’s economy, it also exerts tremendous pressure on the islands’ resources. The demand for accommodations, water and energy strains already limited supplies. Due to the severe drought and the depletion of water supplies, West Maui residents and Upcountry villages were subject to mandatory water restrictions starting on June 30, 2022. The use of water for non-essential purposes, such as watering lawns or washing cars, might result in a $500 punishment and having their water meters taken away for locals from these regions. However, the tourist sector, which uses 44.7% of Hawaii’s water, is not subject to any water restrictions. This struggle for essential resources often forces residents to contend with water rationing and conservation efforts, affecting their quality of life.

Rising Costs and Widening Poverty Gaps 

The influx of tourists has brought with it rising costs that hit residents hard. The cost of living has surged, particularly in terms of housing and everyday essentials. From 2019 to 2022, Maui County’s housing prices rose by nearly 35%; they had already been rising since the financial crisis. Additionally, based on statistics from the Council for Community and Economic Research, Hawaii had the highest cost of living in 2022. 

Skyrocketing housing and high cost of living prices have led to displacement for many locals, as investors snatch up properties for vacation rentals. 

Cultural Erosion 

The cultural erosion brought about by mass tourism is a poignant concern. Native Hawaiians, who hold a deep spiritual connection to their land, often feel that their traditions and values are commodified for profit. The influx of visitors seeking superficial representations of Hawaiian culture can overshadow the authentic practices and beliefs of the local community, further eroding the island’s unique identity.

Tackling Hawaii’s tourism dilemma involves recognizing the importance of cultural preservation as a means to both attract visitors and empower local communities.

The Positive Impact 

Despite these challenges, the impact of tourism isn’t entirely negative. It has propelled economic growth, generating jobs, investment opportunities and revenue streams that support local infrastructure and services. A quarter of Hawaii’s GDP comes from the tourism industry. The tourism sector in 2019 supported a total of 216,000 jobs across the state. It also resulted in nearly $17.8 billion in tourist spending and contributed more than $2 billion in tax revenue for the state.  

Moreover, tourism provides a platform to showcase Hawaii’s rich cultural heritage and environmental significance to a global audience. By engaging visitors in educational experiences, the islands can foster a greater appreciation for their unique attributes.

Moving Toward a Balanced Future

Addressing Hawaii’s tourism dilemma requires a multi-faceted approach that takes into account the need to alleviate poverty, preserve culture and ensure a sustainable flow of visitors.

A key pillar to finding effective solutions to Hawaii’s tourism dilemma requires involving local communities in decision-making processes. Residents, who are the heart of Hawaii, possess a profound understanding of the islands’ needs and sensitivities. By giving them a voice in shaping tourism policies and regulations, the industry could become more attuned to the wishes and concerns of those who call Hawaii home. This collaborative approach fosters a sense of ownership and shared responsibility for the islands’ well-being. 

Balancing the scales of tourism also means supporting local businesses and economies. Encouraging visitors to explore lesser-known destinations and engage with off-the-beaten-path experiences redirects economic benefits to smaller communities. Promoting sustainable agriculture and indigenous crafts not only diversifies revenue streams but also safeguards Hawaii’s authenticity against a homogenized tourist culture. Additionally, encouraging tourists to explore less crowded areas will prevent damage to vulnerable cultural and natural sites. 

Dr. Agrusa asked hundreds of participating U.S. tourists what they would be prepared to do to make sure their visits benefited Hawaii and its residents. Around four out of 10 respondents stated they would be willing to pay 10% more at restaurants if it meant that local suppliers would profit more from the food supply chain and pay more during their stay to respect Hawaiian culture. 

Hawaii’s tourism challenge stands at a crossroads, casting both concerns and the need for a balanced future. As mass tourism on the islands causes strains on resources, vanishing cultural roots and increasing poverty levels, embracing community voices and fostering local economies emerges as a solution to foster sustainable tourism. 

– Hannah Klifa
Photo: Unsplash

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Poverty in Denmark – 3 Facts You Need to Know

Poverty In Denmark
Denmark has one of the lowest poverty rates in the world, and it is important to look at what allows the nation to have such a low rate. With aggressive public health programs and a well-rounded social welfare program that
brings aid for unemployment, disability and old age, the people of Denmark can often receive proper help and assistance in times of need.

Social Welfare Aid

Widespread access to welfare in the country stems from a systemically upheld belief that welfare is a right of the people and not a privilege as it is all paid for through taxes. The benefits received by those who are unable to properly support themselves or their children work to lower poverty in Denmark. Furthermore, while the Danish have access to assistance programs, one poll suggests that nearly 60% of respondents believe that the economic gap between the upper and lower classes needs to be reduced.

Social responsibility is a large key ideal held by many people in Denmark. Social responsibility carries into the ideas of the social welfare programs and correlates to funds allocated toward helping members of the community. Because of governmental and social efforts, the level of poverty in Denmark is able to stay relatively low. For instance, funds and programs go to help parents raising new children, allowing a year of paid paternity or maternity leave.

The Poverty Rate

As of 2018, Denmark had a poverty rate of around 0.30%, which was a 0.1% increase from the previous year. Those living with fewer than $5.50 U.S. dollars per day are counted within the poverty figures. This is one of the lowest poverty rates in the world, around 10% less than the United State’s poverty rate in 2020. With a high poverty rate in the late 1980s of around 1.2%, the decline has occurred steadily over the years. While the poverty rate tends to fluctuate from year to year, it remains relatively low. Currently, Denmark is often compared to nations like the Netherlands, Malta, the Czech Republic and Norway. However, changes in social spending correlate to the fact that poverty seems to be been rising despite the high levels of support offered by the system.

Child Poverty

Despite Denmark’s reputation for strong welfare programs, child poverty rose in the country from 2016 to 2017. In the span of that year, the number of children recognized as living in poverty rose from around 40,000 to more than 60,000. Despite the level of social welfare benefits, employment rates have remained largely unchanged among certain groups. Among those affected by reduced social spending are refugees and minority groups in the country. As of 2017, the number of children under the poverty line accounts for more than 5% of the child population. Programs like the Integration Benefit are targeted to those living in extreme poverty in Denmark.

With many different social programs, poverty in Denmark has been able to stay relatively low in recent years, notably due to social programs and community mentalities. Despite the rising poverty rates among those in danger of falling below the poverty line, the Danish government has been implementing programs to try and reduce these issues like the Integration Benefit. Lastly, the programs afforded to parents allow for a stable environment for parents to raise their children. The solutions to these issues through more aid and higher access to aid stand to lower the poverty rate further.

– Jake Herbetko
Photo: Flickr

3 Groups Creating Jobs in Underdeveloped Countries

3 Groups Creating Jobs in Underdeveloped CountriesPoor infrastructure and lack of job opportunities are among the top reasons that underdeveloped countries remain in poverty. Creating jobs in underdeveloped countries is key to achieving developmental goals and providing economic and political stability that can help many developing countries out of destitution. Furthermore, jobs provide income, independence and choice to individuals. It is for these reasons that creating jobs in underdeveloped countries can improve conditions and help in eliminating hunger and poverty. Creating new job opportunities can also help advance gender equality and many other pending societal issues.  In September 2015, many organizations came together to establish the U.N. 2030 Agenda for Sustainable Development, which recognized the importance and impact of jobs on these economies. Since then, corporations and organizations have been launching efforts to try and reduce global poverty by creating more jobs in developing countries.

3 Groups Creating Jobs in Underdeveloped Countries

  1. The Overseas Private Investment Corporation (OPIC): This U.S.-based finance development organization has long created jobs in underdeveloped countries that have boosted countries’ economies. OPIC has supported major infrastructure projects such as airports and hospitals, which have created many construction jobs. It also has provided and allocated financial resources to entrepreneurs in developing countries. These resources give entrepreneurs the means to start and grow their businesses, which will, in turn, produce more jobs. In 2019, OPIC merged with the Development Credit Authority, which was a part of the United States Agency for International Development (USAID), to form the Development Finance Corporation (DFC). The DFC partners with the private sector to invest in energy, healthcare and technology initiatives, as well as infrastructure and jobs.
  2. The World Bank: The international organization works to reach goals in the employment sector by launching efforts to improve financial access, provide financial training and build more robust infrastructures for lacking governments. Due to the World Bank’s international efforts, countries are recognizing the top challenges they face using job diagnostics. After evaluating data, governments can focus on more pressing socioeconomic issues. This will create jobs that benefit people in need and give them more economic stability. The World Bank counsels governments to invest in transportation, information and communications to connect more people to job markets. Finally, the World Bank is responsible for developing programs that promote entrepreneurship in small-and-medium-sized businesses.
  3. Mother’s Service Society (MSS): Founded in 1970, MSS is a social science research institute in Pondicherry, India, that leads research and conferences on subjects from global leadership to economic theory. MSS research projects and conferences develop action plans to increase employment and create jobs in developing nations. These plans detail multiple factors that, when combined, generate employment and boost the economies of these countries. According to MSS, the Newly Industrializing Economies (NIEs) in East Asia have demonstrated that more comprehensive strategies for job generation have yielded the most progress. More comprehensive strategies for job generation can include ideas such as having more of an emphasis on agriculture, promoting small businesses, improve marketing efforts, develop exports and employment planning.

More Strategies

Besides the great work of these groups, other comprehensive strategies for creating jobs in underdeveloped countries include extending basic education, improving higher education, raising productivity and upgrading the skill level of workers. By implementing these strategies, economies can close socioeconomic gaps, join the global market and create more job opportunities.

– Annamarie Perez
Photo: Flickr 

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The Benefits of the AfCFTA for the African Economy

the AfCFTATrading within the African Continental Free Trade Area (AfCFTA) finally took effect on January 1, 2021. The AfCFTA is the world’s largest trading area since the establishment of the World Trade Organization with 54 of the 55 countries of the African Union (AU). The AfCFTA was established by the African Continental Free Trade Agreement signed in March 2018 by 44 AU countries. Over time, other AU countries signed on as the official start of trading under the provisions of the agreement approached. The AfCTFA is projected to create opportunities and boost the African economy. By facilitating this intra-African trade area, the international community expects sustainable growth and increased economic development.

The Implementation and Benefits of the AfCFTA

  1. Creating a Single Market. The main objective is to create a single market for goods and services to increase trading among African nations. The AfCFTA is tasked to implement protocols to eliminate trade barriers and cooperate with member states on investment and competition policies, intellectual property rights, settlement of disputes and other trade-liberating strategies.
  1. Expected Economic Boost and Trade Diversity. UNECA estimates that AfCFTA will boost intra-African trade by 52.3% once import duties and non-tariff barriers are eliminated. The AfCFTA will cover a GDP of $2.5 trillion of the market. The trade initiative will also diversify intra-African trade as it would encourage more industrial goods as opposed to extractive goods and natural resources. Historically, more than 75% of African exports outside of the continent consisted of extractive commodities whereas only 40% of intra-African trade were extractive.
  1. Collaborative Structure and Enforcement. All decisions of the AfCFTA institutions are reached by a simple majority vote. There are several key AfCFTA institutions. The AU Assembly provides oversight, guidance and interpretations of the Agreement. The Council of Ministers is designated by state parties and report to the Assembly. The Council makes the decisions that pertain to the Agreement. The Committee of Senior Trade Officials implements the decisions of the Council and monitors the development of the provisions of the AfCFTA. The Secretariat is established as an autonomous institution whose roles and responsibilities are determined by the Council.
  1. Eliminating Tariffs. State parties will progressively eliminate import duties and apply preferential tariffs to imports from other state parties. If state parties are a part of regional trade arrangements that have preferential tariffs already in place, state parties must maintain and improve on them.
  1. Settling Trade Disputes. Multilateral trading systems can bring about disputes when a state party implements a trade policy that another state party considers a breach of the Agreement. The AfCFTA has the Dispute Settlement Mechanism in place for such occasions which offers mediated consultations between disputing parties. The mechanism is only available to state parties, not private enterprises.
  1. Protecting Women Traders. According to UNECA and the African Trade Policy Centre, women are estimated to account for around 70% of informal cross-border traders. Informal trading can make women vulnerable to harassment and violence. With the reduced tariffs, it will be more affordable for women to trade through formal channels where women traders will not have to put themselves in dangerous situations.
  1. Growing Small and Medium-Sized Businesses. The elimination of import duties also opens up trading activities to small businesses in the regional markets. Small and medium-sized businesses make up 80% of the region’s businesses. Increased trading also facilitates small business products to be traded as inputs for larger enterprises in the region.
  1. Encouraging Industrialization. The AfCFTA fosters competitive manufacturing. With a successful implementation of this new trade initiative, there is potential for Africa’s manufacturing sector to double in size from $500 billion in 2015 to $1 trillion in 2025, creating 14 million stable jobs.
  1. Contributing to Sustainable Growth. The United Nations 2030 Agenda for Sustainable Development includes goals that the AfCFTA contributes to. For example, Goal 8 of the Agenda is decent work and economic growth and Goal 9 is the promotion of industry. The AfCFTA initiative also contributes to Goal 17 of the Agenda as it reduces the continent’s reliance on external resources, encouraging independent financing and development.

AfCFTA: A Trade Milestone for Reducing Poverty in Africa

The establishment of the AfCFTA marks a key milestone for Africa’s continental trade system. The size of the trade area presents promising economic development and sustainable growth that reaches all market sectors and participants. Additionally, the timing of the initiative launch is expected to contribute to the alleviation of the pandemic’s economic damages.

– Malala Raharisoa Lin
Photo: Flickr

The BSCFA, Fairtrade and Sugar in Belize

the BSCFABelize’s sugar cane production has been a major staple to its economy since the 1800s. Today, it supports the livelihood of around 15% of Belizeans, contributes to 6% of Belize’s foreign exchange income and adds 30% gross value to the country’s agriculture. Due to its overall importance, organizations have taken great steps to help protect sugar farmers and improve their working conditions. A major step toward this goal was when the Belize Sugar Cane Farmers Association (BSCFA) became Fairtrade certified in 2008. Since then, the value of sugar from Belize has grown and better working conditions and human rights have been established.

Sugar Cane Farmers in Belize

Sugar cane farmers and plantation workers often struggle because sugar prices in international markets are low and processing sugar cane is long and expensive. Smaller farms also have trouble getting access to lucrative markets that would buy more sugar. The compensation smallholder farmers receive for cane often fails to cover the costs they incur to produce it, leaving them in a debt trap and with little capital to reinvest in farms. They also cannot pay for newer equipment that would help make the process easier, faster and cheaper. The significant amount of time invested in farming to provide an income often leaves little time to engage in other opportunities that can pull them out of poverty, such as education. Fairtrade aims to alleviate these problems by helping people and organizations get better representation in the market and better prices for their crops.

The Impact of Fairtrade Certification

Since 2008, Belize’s sugar cane exports have increased greatly, particularly in the European market. In the first five years of the BSCFA becoming Fairtrade certified, Belize’s sugar cane gross profit grew significantly. Belize has also been able to increase the amount of sugar cane produced every year due to farmers getting resources to control pests in the early stages of the growing process and access to better farming and processing tools. From 2018 to 2019 alone, Belize went from producing 150,000 tons to more than one million tons of sugar cane.

Impact on Communities in Belize

A huge benefit of being Fairtrade certified is that organizations will receive premiums — extra money that farmers and workers can invest in their businesses or the community. The BSCFA gets around $3.5 million in premiums a year and has used that as grants for education, building and repairs, community spaces such as churches and libraries, funerals for impoverished families, water tank systems and more.

The BSCFA has continued advocacy and empowerment efforts to improve the working conditions of sugar cane farmers. In 2015, the BSCFA took a strong stance against child labor, lobbying the government to make laws against child labor and personally suspending support of farms that violated fairtrade practices.

Due to advocacy efforts such as these, the government of Belize has taken steps to stop child labor, such as working on bills that help others identify child labor situations and updating its Child Labor Policy to add additional protection for children. It also established a Child Labor Secretariat that works on identifying and reporting child labor cases.

Fairtrade and the BSCFA have made significant strides in protecting the rights of sugar cane farmers while expanding the economy. These efforts are lifting people out of poverty and ensuring that fairness prevails.

– Mikayla Burton
Photo: Flickr

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Least Developed Country List: Vanuatu’s Graduation

Vanuatu's Graduation Vanuatu is a southwestern Pacific Ocean country made up of about 80 islands with a small population of around 300,000. Vanuatu has recently graduated from the list of least developed countries (LDC) despite setbacks due to ongoing natural disasters and other factors. Vanuatu’s graduation from LDC status took place on December 4, 2020. It was first recognized as an LDC in 1985.

What is the Least Developed Country List?

Less developed countries are countries that struggle with maintaining sustainable development, causing them to be low-income countries. In 1971, The United Nations created a category list of the least developed countries in the world. The United Nations reviews and checks the list every three years based on the country’s economic vulnerability, income per capita and human assets. There are currently about 46 countries on the least developed country list. Angola is another country that will be scheduled for its graduation in 2021. Vanuatu has recently joined the five other countries that were able to graduate since the creation of the least developed country list.

Although less developed countries are economically vulnerable, they receive special international aid to help with creating sustainable development. These countries also have specific trade with other nations that are not accessible to more developed nations. This is why less-developed nations are sometimes referred to as “emerging markets.” The majority of the support that countries in the least developed countries list receive is either directly from or set up by the U.N. Committee for Development Policy.

The Success Behind Vanuatu’s Graduation

Vanuatu graduates form the least developed country list despite major setbacks due to climate change, natural disasters and the COVID-19 pandemic. Similar to other countries that graduated, most of Vanuatu’s success is as a result of the international aid which enabled the country’s stable economic growth. In addition to the aid, Vanuatu has also had success in its strong agriculture sector. The increased diversification in agricultural crops and stocks has helped with the per capita income and human assets criteria for the least developed countries list.

When it comes to the economic vulnerability criteria, Vanuatu is still at risk despite graduating. The risk of economic vulnerability stems from the prevalent natural disasters. Even though the country has shown consistent economic growth, the external shocks from natural disasters are out of the country’s control as it faces about two to three disasters a year. However, there is still a great chance that Vanuatu will have continued success in maintaining sustainable development.

Maintaining Sustainable Development

The most well-known source of maintaining sustainable development for less developed countries is through international aid. Even though Vanuatu has graduated from the least developed country list, the country still is able to receive aid and continue its trading relationships with countries it was given priority to when classified as a less developed nation. For instance, Vanuatu had still received $10 million in emergency aid from the World Bank organization. The funding was for the impact that both COVID-19 and a tropical cyclone had on Vanuatu earlier in 2020.

Significant Success for Vanuatu

Vanuatu’s graduation from the least developed country list is a significant achievement that demonstrates the country’s ability to maintain consistency in its economic growth, while also overcoming challenges such as the COVID-19 pandemic and natural disasters. Although the graduation signifies major growth, there is still more economic stability that is needed before the country can significantly reduce its economic vulnerability.

– Zahlea Martin
Photo: Flickr

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Vanuatu’s Graduation From the LDCs List

Vanuatu's Graduation From the LDCsSince the United Nations created the least developed countries (LDCs) list in the 1970s, only six nations have moved off of the list to a higher ranking of development. Vanuatu, an island nation in the South Pacific, became the sixth country to do so on December 4, 2020, after being designated an LDC in 1985. Vanuatu’s graduation from the LDCs list can serve as a beacon of hope for more LDCs to achieve higher rates of development.

Economic Growth

The U.N. Committee for Development Policy (CDP) identifies LDCs based on their level of human assets, environmental and economic vulnerability and per capita income. Since 1991, Vanuatu has met the CDP’s income per capita threshold and was recommended for graduation in 2012, having more than twice the income per capita threshold and also meeting the threshold for human assets. In an effort to pursue graduation, Vanuatu began shifting its economic policies to decrease reliance on imports, increase exports and create employment and income-generating opportunities. Vanuatu’s rural economy grew after improvements in the livestock sector in addition to the country’s diversification of agricultural activities to include timber, kava, coconut oil and copra. The tourism industry and real estate investments were also an aid to Vanuatu’s economic growth as income per person increased by more than 2.5 times between 2002 and 2017.

Vanuatu’s Setbacks

Throughout Vanuatu’s progress in economically developing the country, the nation has also been stymied by recurring natural disasters. The U.N. Conference on Trade and Development estimates that Vanuatu is affected by an average of two to three natural disasters per year and noted that Vanuatu is uniquely affected by natural disasters as its size causes the entirety of the country to be affected as opposed to just specific regions. In 2015, Vanuatu was hit by Cyclone Pam, a Category 5 cyclone that destroyed 50-90% of the country’s shelters and 95% of crops. Cyclone Pam delayed Vanuatu’s previous progress toward graduation and warranted an extension of the country’s grace period to 2020. Additionally, the onset of the COVID-19 pandemic has caused a decrease in the country’s tourism industry. While Vanuatu’s first case of COVID-19 was reported only in November 2020, the pandemic has impacted the nation and its economic sectors.

A Pathway for LDCs

While Vanuatu is the third country in the Asia-Pacific region to graduate from LDC status, following Samoa in 2014 and the Maldives in 2011, it is only the sixth country to graduate overall. On track to move up from LDC status are Angola in 2021, Bhutan in 2023 and São Tomé and Príncipe and the Solomon Islands both in 2024. Vanuatu’s graduation can bring hope to the other 46 countries on the LDC list, especially given the global circumstances in which Vanuatu achieved this feat. The COVID-19 pandemic has effectively stalled worldwide markets and further excluded many LDCs from international supply chains. With the encouragement of Vanuatu’s graduation from the LDCs list during a global pandemic, hope for the four countries scheduled for graduation in the near future increases alongside support from the international community to ensure an eventual zero countries on the LDCs list.

– Caroline Mendoza
Photo: Flickr

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Silk Invest: Africa Food Fund Helps Local Businesses

Silk InvestSilk Invest is a private equity firm founded in 2008 that invests in emerging markets that demonstrate the potential for long-term economic growth. The largest private equity fund managed by the firm is called The Silk Africa Food Fund. Investments made from this fund target companies involved in food processing and distribution throughout Africa.

The Silk Africa Food Fund

The fund was started in June 2012 and focuses primarily on businesses that distribute food to African consumers. Countries that attract investment the most are those which are institutionally and politically stable enough to support long-term economic growth. Silk Invest is distinct from many other foreign investment funds that support the effort to reduce hunger in Africa in that it does not target agriculture but rather the distribution of food to consumers.

The three largest investments the fund is involved with are Nigeria’s Sundry Foods Limited, Ethiopia’s Nas Foods Plc and Egypt’s El Rashidy El Asly. Of these three, Nigeria’s Sundry has seen the most significant success and expansion following its partnership with Silk Invest.

The Success of Sundry Foods Limited

The company runs the popular restaurant chain, Kilimanjaro, as well as bakery and food catering services throughout the country. When Silk Invest first gave funds to Sundry in 2012, the company had seven restaurants open and a revenue base of around $3.4 million. In 2020, just eight years later, Sundry has 40 restaurants and a revenue base of around $34 million. The entrepreneurial effort of the company’s founder, Ebele Enunwa, has been instrumental in this progress.

Sundry is a company firmly rooted in supporting its fellow local businesses. Instead of setting up in the more commercial capital of Lagos, Enunwa established headquarters in Port Harcourt where he is a local entrepreneur. Its management team consists of local hires and its supply chain uses locally sourced raw materials, including chicken and rice from rural areas.

Sundry’s Impact and Potential

Sundry Foods Limited represents an example of the enormous potential which exists for businesses in developing nations when the proper investment is made. By providing capital to Sundry, Silk Invest gave the company the tools it needed to expand its operation. By doing so, Sundry has not only offered an improved service to consumers throughout Nigeria but has also stimulated its broader community’s own economy by maintaining a steady and even increasing demand for local products.

The impact made by Sundry’s growth is palpable. Over the last 10 years, the company has created over 2,000 jobs. Silk Invest’s Africa Food Fund is hugely impactful in the effort to reduce poverty in developing nations not only because of the direct benefit the invested capital provides to individual businesses but also because of the economic growth created in broader communities as an indirect result.

The Importance of Investing in Africa

This impressive progress was all stimulated by a $2.4 million investment. The high return for Silk Invest demonstrates that funding businesses in developing countries is not only beneficial to the growth and development of those businesses but is also a practical and sound investment for the firms offering the capital.

Investing in the effort to reduce world hunger presents impactful and beneficial opportunities for all parties involved. By establishing the Africa Food Fund, Silk Invest has committed itself to this effort while simultaneously supporting developing economies.

– Haroun Siddiqui
Photo: Flickr

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AgDevCo: Impact Investing in Rwanda

Impact Investing in RwandaImpact investing is a growing industry with huge potential for combatting poverty around the world. The practice consists of firms and individuals directing capital to businesses and enterprises that have the capacity to generate social or environmental benefits. Traditional businesses tend to avoid such investments due to the high level of risk, low liquidity and general difficulty to exit if returns are not satisfactory. Most impact investing is done by particularly adventurous capitalists as well as nongovernmental organizations (NGOs) that aim to create social change. Impact investing in Rwanda, in particular, has yielded positive results.

AgDevCo

AgDevCo is an example of a social impact investing firm that aims to invest with the intention of reducing poverty and increasing opportunity in developing regions. Based in the United Kingdom, AgDevCo was incorporated in 2009 and has engaged in numerous projects since.

The firm’s specific area of investment is in African agriculture, where it believes that impactful investments have the potential to be a significant force in reducing poverty. The firm is currently investing in eight different African countries. Its portfolio includes $135 million worth of funds in 50 different companies. These investments have engaged more than 526,000 customers and have created or sustained more than 15,000 different jobs.

Uzima Chicken Limited

One of its investment projects is a partnership with the East African poultry company, Uzima Chicken Limited. Uzima Chicken produces and distributes the Sasso breed of chickens. Sasso chickens are resistant to disease and can feed through scavenging. These beneficial traits make Sasso chickens particularly useful in the struggle to reduce poverty in East Africa.

In 2017, AgDevCo invested $3 million to support Uzima’s establishment in Rwanda. As a result of the investment, Uzima gained funds necessary for rapid operational growth as a domestic producer of poultry. This is in line with the government of Rwanda’s strategy to achieve poultry self-sufficiency in two to three years. Uzima has also been able to expand into Uganda, where its business is rapidly scaling upwards.

The Uzima Business Model

The Uzima model of business involves the employment of company agents who raise the chicks for six to eight weeks before selling them to low-income households in rural areas. Such a model provides benefits to farmers, who can increase income through the sale of the more valuable Sasso chickens, as well as the agents.

Agents typically make a 25% profit from selling chickens. A survey of Uzima agents found that, on average, 27% of household income came from selling Sasso chickens. By providing a reliable source of extra income for employed agents, Uzima helps to alleviate the burdens of poverty for these people. As of 2017, the efforts had created 150 new jobs, 40% of which are held by women. Rwandan women have benefitted significantly from Uzima’s employment with 64% of women agents reporting that the income they earned from selling Sasso chickens led to a positive change in the decision-making power they had in their households.

Impact Investments for Poverty Reduction

Uzima’s Sasso chickens grow faster, live longer, produce more eggs and have higher market prices. They are disease-resistant and thrive in local, rural conditions. Out of all the customers buying these chickens, 54% live below the $2.50 poverty line. AgDevCo investment gave Uzima the capital necessary for operational expansion, and as a result, a greater quantity of impoverished people in East Africa could buy superior chickens and increase income. Uzima’s business also has clear potential for women’s empowerment, making it a great tool in the effort to reduce poverty and inequality in the region.

The impact investments made by firms like AgDevCo have clearly measurable impacts in impoverished regions, particularly noting the success of impact investing in Rwanda. This makes impact investment firms an important part of the global effort to reduce all poverty.

– Haroun Siddiqui
Photo: Flickr