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Everything You Should Know About Poverty in the Philippines

Poverty in the PhilippinesThe Philippines is an archipelagic country in Southeast Asia, consisting of more than 7,000 islands. The South China Sea bounds it to the west, the Philippine Sea to the east and the Celebes Sea to the south. The country has made gains in poverty reduction but further reduction is necessary. The future of poverty in the Philippines rests on the country’s economic development and the work of government initiatives. Here is everything you need to know about poverty in the Philippines.

The Extent of Poverty in the Philippines

Poverty in the Philippines declined to 22.4% in 2023, down 1.3% from the same period in 2021. However, despite this decrease, the current state of poverty and inequality is startling. The poverty incidence was 22.4% in the first semester of 2023, affecting approximately 25.24 million Filipinos. The poverty incidence refers to the proportion of Filipinos whose per capita income is insufficient to meet their basic needs. On average, a family of five needs at least PhP 13,797 monthly to cover their basic needs, according to the Philippine News Agency. Additionally, the subsistence incidence or the proportion of Filipinos whose income is insufficient to buy basic food needs stood at 8.7%, meaning approximately 9.79 million Filipinos are unable to fulfil basic food needs.

These statistics demonstrate the extent of poverty in the Philippines and provoke the question of why the Philippines continues to struggle from poverty despite its growing economy. The Philippines struggles with a huge disparity in wealth equality. According to the World Bank, the Philippines holds one of the highest Gini Coefficients in the East Asian and Pacific region, sitting at 40.7% as of 2021. This means that, despite economic improvements, those most susceptible to poverty may not see the benefits of economic growth.

The Affected Population

Poverty affects the unemployed and underemployed and those who lack education most in the Philippines as they are unable to find opportunities or jobs which pay a sufficient wage. Environmental instability is also an issue, in regions most vulnerable to natural disasters schools have to shut down, disrupting education. In April 2024, hundreds of schools in the Philippines had to close due to extreme heat, an issue which annually rising global temperatures will exacerbate.

The World Bank estimates that 60% of the land in the Philippines is vulnerable to multiple natural hazards. This causes severe damage to homes and transport infrastructure, interrupting business and education and costing billions to repair. This has been an issue in Mindanao recently, where flooding caused more than 411,000 people to flee.

The State of the Economy

Despite the pessimism surrounding poverty in the Philippines, there is reason for optimism. The Philippine economy grew by 5.5% in 2023, making it one of the best-performing economies in Asia, according to the Philippine News Agency, but high inflation has offset the benefits of income growth on poverty reduction. To overcome inflation, growth must remain consistently high. Currently, economic growth for 2024-2025 could be at an average of 5.8% if growth in the domestic market is achieved. The World Bank expects this domestic market to grow due to the thriving tourism sector and the information technology-business process outsourcing industry. This indicates a bright future for the Philippine economy. For the poorest Filipinos to benefit from the projected growth in 2024, income gains from economic growth must be guided towards reducing inequality.

Positive Progress in Poverty Alleviation

The reduced poverty rate from 2021 to 2023 is a move in the right direction. The government achieved this through initiatives such as the fuel subsidy and the one-time rice allowance, according to the Philippine News Agency. However, greater income equality must still be strived for if President Marcos wants to reach his goal of a single-digit poverty rate by 2028. The Philippine Development Plan of 2023-2028 is one initiative which can help achieve this goal. This plan aims to bring economic and social transformation by reinvigorating job creation and accelerating poverty reduction. It aims to be the mechanism of implementation of the Sustainable Development Goals (SDGs) and includes programmes to improve education and to upskill the workforce. If The Philippines achieves this plan, it can make further poverty reductions by addressing the key areas where inequality thrives.

To relieve the problem of environmental instability, the government is building new infrastructure under The Metro Manila Flood Management Project. This benefits the Metropolitan Manila area but fails to help other areas susceptible to flooding. This only furthers the issue of inequality, benefiting the city of Manila instead of reaching more deprived areas. More deprived areas struggle to recover from natural hazards, weakening their ability to become more prosperous and resistant to annually occurring hazards. Last year, Bulacan was placed under a state of calamity due to the damage that typhoons and subsequent flooding caused.

Looking Ahead

Despite projected economic growth and current initiatives being in place to address poverty, there remains a significant proportion of Filipinos who are vulnerable to poverty. While there is room for improvement, the country has great potential to reduce poverty further. The progress made in 2023 and the current economic growth projections are a testament to this. The persistence of inequality requires greater attention from the government in addressing areas of education and environmental relief. Initiatives to help those most vulnerable to poverty must be used to ensure more people can benefit from the coming economic growth. In this way, the Philippines can continue to progress in reducing poverty.

– Lauren Alkhalil

Lauren is based in London, UK and focuses on Good News and Technology for The Borgen Project

Photo: Unsplash

US Solar Collaboration to Power the Developing World

US Solar CollaborationAs the greater community of nations constantly collaborates for sustainable, alternative energy solutions, one key issue that has been at the forefront of these discussions has been developing nations’ inability to take advantage of the road toward alternative energy. Due to the experimental and expensive nature of alternative energy and the need for more infrastructure, the world leaves developing nations behind in its collective pursuit of new methods of harnessing energy to power the increasingly industrialized planet. The United States (U.S.), particularly U.S. solar companies, can mitigate the absence of resources by expanding its solar power grid and forming a symbiotic relationship with the developing world. U.S. solar collaboration can be an innovative form of global poverty relief that grows the U.S. solar industry and its profits, expands developing nations’ economies and provides the globe with new energy sources.

This crucial shift could transform many nations where access to electricity is greatly underdeveloped. Nations like Cambodia where 75% of the population lives in rural areas could have their livelihoods transformed through American solar collaborative efforts.

Global Solar Expansion and US Opportunity

Developing countries present immense opportunities for U.S. solar collaboration. Since CarbonBrief indicates that developing countries have new driving potential in solar energy output, communities are more open to seeking affordable and sustainable energy sources. As leaders in innovation and technology, U.S. solar companies are in the most strategic position to contribute to this global paradigm shift. Solar Energy International, an organization numerous U.S.-based solar companies attend, is an example of one of the newest trends by U.S. companies, taking advantage of the increasing affordability of solar technology and the growing demand for alternative energy sources. Consequently, U.S. companies have acquired new opportunities to engage with the developing world in this project.

Examples of Successful Collaboration

USAID lists a notable instance of U.S. solar collaboration leading development efforts as partners within the private sector that the agency works with to power Africa. Several U.S. companies have partnered with USAID to support energy growth in Africa, “committing toward more than $40 billion in investments into African energy markets,” including energy grids within sub-Saharan Africa.

Additionally, 60Hertz Energy is a U.S.-based startup that implemented computerized maintenance management software systems to streamline operations and maintenance for solar infrastructure that can withstand extreme environments. As it works to establish itself in sub-Saharan Africa, it has developed a presence in Benin, Nigeria, Sierra Leone and Uganda, according to USAID. The work that 60Hertz Energy commits itself to would improve the quality of life for residents and could position the U.S. solar industry as a key player within the emerging alternative fuel paradigm.

In another instance, Acumen, a U.S.-based nonprofit impact investment fund, has invested $88 million into 82 different companies that provide “agricultural inputs, quality education, clean energy, health care services, formal housing, safe drinking water and sanitation services to low-income” recipients in East Africa, West Africa and Latin America, according to USAID. This strategic effort by the U.S.-based fund to finance various companies could make a direct impact by providing a multifaceted approach that can harness results favorable to the African solar power industry and showcase the benefits of cooperation by multiple firms.

Economic Growth and Sustainable Development

Beyond the numerous advantages for U.S. companies, solar infrastructure that originates from the U.S. to assist developing nations can potentially contribute to economic growth and sustainability in other ways. As part of the World Bank’s commitment, recipient nations that achieve affordable, reliable and modern energy services, including alternative energy sources to achieve that objective, could provide a catalyst that improves the living and working conditions for all of humanity. The most vulnerable demographics, particularly those most affected in developing countries without access to modern energy sources, will be most served by transitioning to a net-zero-emissions energy system. Therefore, a sustainable energy grid substantiated by U.S. solar could provide these benefits. In doing so, sustainable communities could create stability across the continent to empower communities and foster entrepreneurship. The U.S. would have a crucial role in building upon its geopolitical status if it were to commit itself to these arrangements.

By embracing the symbiotic framework between the U.S. and its private sector with the opportunities offered by the developing world, U.S. solar could become the forefront of sustainable growth, leading to the global prosperity many of the world’s poor need.

– Arman Ahmed
Photo: Wikimedia

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Reggaeton’s Global Impact Empowering Latin America

More Than Music: Reggaeton's Global Impact Empowering Latin AmericaIn a world increasingly interconnected by media, few genres have reshaped the cultural and economic landscape as dynamically as reggaeton’s global impact on music. At the forefront stands Bad Bunny, a Puerto Rican artist who rose from bagging groceries in 2016 to becoming the second-most streamed artist globally in 2023. His journey mirrors the genre’s significant influence on societies, particularly in Latin America. Beyond musical rhythms, reggaeton has become a catalyst for economic growth and an amplifier for social change in the region.

Economic Impact

The surge of reggaeton, Latin rap, Latin trap, or música urbana, has elevated Latin music to unparalleled financial heights. Latin music revenue in the U.S. soared to $1.1 billion in 2022, with a remarkable 24% annual increase, outpacing other markets. Major labels and artists are bridging language barriers to engage global audiences, reflecting the genre’s booming popularity. Streaming revenues, accounting for 97% of Latin music earnings, showcase the genre’s dominance, fueled significantly by Bad Bunny’s chart-topping albums. The importance of this revenue lies outside of the United States, where artists and fans in Latin America are fueling economic growth.

Reggaeton has generated a higher demand for popular live experiences in Latin America. Festivals like Estereo Picnic in Bogota and Lollapalooza in Argentina and Chile have seen surging attendance due to these popular artists and the genre’s appeal, turning Latin American countries into exporters of musical talent and generating substantial revenue within these economies.

Social Impact

Beyond economic effectiveness, reggaeton has emerged as a powerful social platform, shedding light on pressing issues. Bad Bunny’s music video for “El Apagón” didn’t merely entertain but served as a voice for Puerto Ricans amid crises like Hurricane Fiona. The video highlighted long-standing injustices, resonating deeply with audiences. Many even became aware of these issues in Puerto Rico thanks to Bad Bunny’s platform.

Notably, artists like Bad Bunny have used their influence to address socio-political matters. When Bad Bunny confronted hate speech from political figures, his stance echoed across continents, demonstrating reggaeton’s global impact. The capacity for stars to leverage their platforms to address millions regarding injustices across governments, within developing nations, or in their home countries, elevates these issues onto a global stage, holding immense significance in raising awareness, mobilizing action and potentially mitigating the effects. 

Global Revolution

Reggaeton’s rise signals a shift in global music dynamics. Artists like J Balvin have paved the way for Spanish-singing artists to resonate internationally without compromising their cultural identity. Balvin’s unprecedented success on streaming platforms showcases the growing acceptance and integration of Latin American music into mainstream culture, without having to adapt to English-speaking audiences.

This global recognition isn’t limited to music alone. Influential figures such as Colombian reggaeton artist J Balvin or Spain’s innovative flamenco fusion singer Rosalía serve as prime examples. Their impact goes beyond music; they’re influencing young people daily on social media, boasting millions of followers. For instance, the cover of the Rolling Stone magazine dedicated to Bad Bunny and J Balvin in June highlighted not just their musical prowess, but also their influence as cultural icons. 

This global recognition isn’t limited to music alone. Investment in Latin American creators across various media, including television, has soared. “Money Heist,” a Spanish series, has become Netflix’s most-watched non-English show, captivating audiences across Argentina, Brazil,and Chile, signifying the expanding influence of Latin American narratives beyond music.

Again, supporting Latin American creators, and Spanish media, is stimulating investment in these markets, increasing the economy and exports.

Future Facing

Reggaeton’s global impact, beyond its contagious beats, represents a shift in global culture and commerce. From empowering Latin American economies to amplifying voices on social issues, the genre and its artists serve as catalysts for change. The journey from bagging groceries to topping global charts isn’t just Bad Bunny’s story; it’s a testament to the genre’s transformative power, paving the way for a more inclusive global cultural landscape.

In essence, the global embrace of reggaeton’s global impact isn’t just a musical phenomenon; it’s a revolution, shaping economies, fostering unity and amplifying voices for change in Latin America and beyond. This outlook emphasizes reggaeton’s global impact on cultural shifts and societal change.

– Kailey Schwinghammer
Photo: Flickr

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