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poor in Myanmar
Agriculture is Myanmar’s most important sector and provides jobs for more than 60 percent of the population. Myanmar, formerly known as Burma, decreased its poverty rate from 48.2 percent in 2005 to 24.8 percent in 2017. One of the reasons for this huge reduction in poverty is its transition from a military-led government through economic reforms and development in sectors such as agriculture, finance, transportation and energy. The poor in Myanmar reside mainly in rural areas, and have poor education and employment in the agriculture field. By developing the agriculture industry, the government intends to continue to reduce its poverty.

Developing the Agriculture Sector

A 2018 report launched by the Central Statistical Organization, with technical support from the UNDP and the World Bank, provided data on poverty in Myanmar and what the country needs to do to continually reduce poverty. The report acknowledged the success of reducing the poverty rate in half, yet brought up challenges in alleviating poverty in rural areas such as the Chin State. The Chin State is a state in western Myanmar with about a 60 percent poverty rate. Approximately 500,000 live in the Chin State. Since the poor in Myanmar have employment in the agriculture sector, the key findings show that the country can achieve poverty reduction by focusing its efforts on improving agricultural productivity.

Myanmar is the second-largest exporter of beans and pulses and the ninth-largest exporter of rice. In 2016 and 2017, Myanmar exported agricultural products worth more than $3 billion, yet productivity was less than neighbors such as Vietnam, Thailand and Cambodia. Low productivity has stalled poverty reduction in areas such as Chin State due to relying on crops that are expensive to maintain and less profitable than most other crops that endure the same climate.

How Exactly Can Myanmar Reduce Poverty?

Findings from a separate report delved into even greater detail about what Myanmar needs to do to improve agricultural productivity, and therefore, increase income for the poor in Myanmar. The report, Myanmar: Analysis of Farm Production Economics, stated that a single day’s harvest during the 2013/2014 monsoon season produced 23 kg per paddy. In comparison, Cambodia produced 62 kg, Vietnam 429 kg and Thailand 547 kg per day. Reasons for lower production of paddy than Myanmar’s competitors include poor seed quality, insignificant use of fertilizers and a lack of infrastructure.

The conclusion to the report mentioned the need for broad-based agricultural development, as most farmers in the country produce paddy and not much else. Paddy is more expensive to produce and less profitable than other crops in the region. A lack of infrastructure further impedes progress and causes farmers to seek employment in distant urban areas for higher wages. The poor in Myanmar could benefit from diversifying into low-cost crops, especially ones that can handle the typical monsoon weather that the country experiences.

Investors Taking Action

The government and private investors are currently investing in Myanmar’s agriculture sector, particularly the growing fertilizer sector. Myanmar Awba Group received a $10 million loan from the International Finance Corporation to construct a chemical plant that will produce fertilizer. The Hmawbi Agricultural Input Complex opened in August 2018 and is expected to meet 50 percent of the demand for fertilizer in Myanmar. The demand for fertilizer has increased in the country, attracting investors from across the world. The Japanese conglomerate Marubeni Corporation invested $18.5 million in a fertilizer facility in the Thilawa SEZ.

Myanmar is also dealing with infrastructure, low productivity and poor seed quality this year, 2019. In January 2019, CITIC Corporation collaborated with Myanmar Agribusiness Public Corporation (MAPCO) to invest $500 million into constructing high-end rice mills and agribusiness service centers across Myanmar. Ye Min Aung, the Managing Director of MAPCO, said, “The establishment of the high-end rice mills will boost both the local and export market.” Thanks to foreign investors and government initiatives, Myanmar is seeing action in poverty reduction by focusing efforts on improving the agriculture industry.

– Lucas Schmidt
Photo: Flickr

Cameroon’s Agriculture Industry
There is potential for growth in Cameroon’s agriculture industry. Although Cameroon is Africa’s fourth-largest cocoa producer, the country imports more than $800 million worth of cereal, flour and fish to feed its people and meet demands in production.

The subsistence agriculture industry employs more than 50 percent of Cameroonians, which requires hard labor without machinery. Cameroon President Paul Biya emphasized the need for a more productive and modern agriculture industry that would benefit small and medium-sized farms. The World Bank, Nestle and the IFC have made various efforts to develop the Cameroonian agriculture sector.

World Bank Project

The World Bank created the Agriculture Investment and Market Development Project to improve the productivity of subsistence crops such as cassava, maize and sorghum. The project began in 2014, costs $166 million and closes on July 2021. The areas of focus range from improving seed quality and public infrastructure to enhancing agricultural technology and distribution systems. Commercial farming is rare. This is why the World Bank is helping create a dominant industry that departs from the old, inefficient and arduous ways of subsistence farming.

Various targets under the project are complete. Yields in cassava, maize and sorghum have all increased. Maize yields have already surpassed the set target while cassava and sorghum are just below their targeted yields. The project has implemented more than 86 sub-projects out of the target goal of 100. More than 15,000 clients have adopted improved agricultural technology that the project introduced, and there are more than 139,000 direct project beneficiaries out of the goal of 150,000. The project also distributed more than 16 million cassava seeds. Although the project ends in July 2021, it met many of its targets. The project benefited Cameroon’s agriculture industry and will continue to do so thanks to the World Bank and its partners.

A Win-Win Scenario

Due to Cameroon’s position as a trade hub off the coast of Africa, companies are seeing opportunities in the growing agriculture industry. Tiger Brands bought Cameroonian company Chococam in 2008 and afterward saw “excellent growth in operating income, driven by strong volume growth and tight cost management.” Nestle produces its Maggi stock cubes in Cameroon but wants more inputs from local farmers. Nestle views it as a win-win scenario, as it gives Nestle a competitive advantage and also helps local farmers and rural development. Nestle also wants to create a starch similar to cornstarch from Cameroon’s cassava plant. It currently imports cornstarch from Europe.

The insurance industry is also developing Cameroon’s agriculture industry and helping farmers insure their crops. International Finance Corporation (IFC) partners ACTIVA Assurance and AXA Cameroon are two insurance companies that provided index insurance to nearly 8,000 cotton growers. Index insurance helps farmers during climatic shocks, such as floods that are common in the country. The goal of IFC and its partners is to provide 135,000 agricultural index insurance contracts by the end of 2020. This will enable 700,000 farm households to offset yield reductions during natural disasters.

Future of the Industry

Companies and NGOs aided Cameroon’s growing agriculture industry either directly or indirectly. Progress is ongoing, but more the industry requires more to develop and help those in poverty. About 90 percent of the poor reside in rural areas, where the main source of income comes from subsistence farming. Thanks to the World Bank, Nestle, Tiger Brands and various NGOs and nonprofits, Cameroon is seeing positive growth in agriculture development.

– Lucas Schmidt
Photo: Flickr

Private Sector in Poverty Reduction
Poverty and world hunger stand on the docket of extinction, for the first time in human history. Even just one generation ago, this acknowledgment would seem absurd. The United Nations advocates that the world can meet the unimaginable goal of eradicating world hunger by 2030.

To achieve this goal, it would take between $170 and $190 billion a year from the U.S. to take everyone out of extreme poverty in the next two or three decades. Just to put that number in perspective, as the largest bilateral donor, the U.S. allocates roughly $49 billion to foreign funds every year to 96 percent of the globe. This article will look at the role of the private sector in poverty reduction.

Advantages of Private Sector in Poverty Reduction

Directing focus on the magnitude of the nation’s role in poverty reduction must be noted, considering only 1 percent of the federal budget goes to foreign aid, the question arises if there is a cheaper, quicker way to fast-track the eradication of extreme poverty. What about the private sector?

The role of the private sector in poverty reduction is that it naturally brings to the table what governments and nongovernmental organizations do not. Federal funds can only cover so much with a $49 billion a year budget. Some of the most transformative investments in poor regions around the globe come from private lenders.

Most U.S. money goes to direct assistance, like world health programs, providing aid packages and doing the heavy lifting for broad-based long-term economic development. The private sector can help stimulate poor economies. Private business contributes a different model to aid and public resources. They can provide jobs, goods and services sometimes more effectively than agencies can do alone.

Developing Countries Opportunities

Developing countries offer business opportunities unheard of in the developed world. The potential for market growth in underdeveloped regions is monumental. Social entrepreneurs likewise are more flexible in carrying out the demands of poverty because they can develop new cross-sector models out of competition, without being tied to the orthodoxies of foreign aid.

Take for example infrastructure in the developing world. The International Finance Corporation (IFC) estimates that it will take $2 trillion a year to fix the world’s infrastructure needs, especially in the developing world where billions of people lack access to safe water, electricity, roads and other basic services.

While often the domain of governments, poor countries cannot support the immense costs of upgrading infrastructure. Infrastructure is essential to eradicating poverty. To escape low-income agricultural dependency, countries need infrastructure projects to communicate, process and transport quality goods. The private sector can work at a much larger scale enabling investments in energy and transportation infrastructure that administer long-term benefits to the economy for local entrepreneurs to take advantage of.

In theory, by solving insurmountable problems in developing countries economies, the role of the private sector in poverty reduction is improving value chains. The private sector and entrepreneurship play a fundamental role in innovation, improving business standards and job creation without development goals as their primary agenda.

Things to Consider when Investing

Private companies can provide lending to update infrastructure projects as Chinese companies have done in Africa. However, there are negative aspects of foreign funding as well. While the inflow of investments does help locals and spark economic growth, these are debts to be repaid to commercial outsiders. For example, several Chinese infrastructure investments have helped support corrupt and undemocratic regimes and only compounded local problems. Not to mention this activity supports an extractive business model.

Infrastructure and jobs help immensely, but the private sector needs to share its wealth capacity with the developing world. Since 2000, the poorest half of the world has received just 1 percent of the increase in total wealth, while the wealthiest 1 percent of the world received over 50 percent of the total wealth. Wealth tends to stay in the hands of the wealthy people. Businesses need to keep in mind that the most valuable asset for then is their labor force. Better paid skilled jobs are keys to growth anywhere.

Foreign direct investment grew from under $50 billion in 1990 to almost $500 billion in 2011. For the first time in 2013, foreign direct investment in developing countries exceeded investment in developed countries. At the same time, commercial lending and remittances have grown significantly.

GDP growth has been high for the last decade in developing countries. But the growth in jobs has not been enough to transition from an agricultural economy to a high productivity economy. Stimulating these economies to help in that transition is key to transitioning. The role of the private sector is that it must be relevant to the poor. Their intervention can be life-changing in guiding the poor to the path to prosperity, remembering that their labor force may be the main assets they possess.

– Joseph Ventura
Photo: Unsplash

credit access in Mongolia

In 2016, 43 percent of Mongolia’s herders owned less than 200 animals, limiting their ability to access credit from lenders. Without credit access, these herders face challenges to produce hay for the winter, build animal shelters and move their herds long distances to reach sufficient pastures. However, efforts are being made to improve credit access in Mongolia.

 

USAID’s Reach Project

In June of 2016, the U.S. Agency for International Development (USAID) and Development Solutions NGO launched the Reach Project to support Mongolia’s small and medium-sized enterprises (SMEs). The Reach Project’s main goal is to improve and scale access to credit for Mongolia’s SMEs by helping them find appropriate financial products for their needs and to qualify for loans. The U.S. government expects the two-year project to improve Mongolia’s economy.

“SMEs make up 20 percent of Mongolia’s GDP, but they don’t have efficient financial resources,” said Mongolia’s U.S. Ambassador Jennifer Galt. Additionally, 75 percent of Mongolia’s SMEs would need more collateral assets in order to take out loans. “We will provide real support to small business through the Reach Project to meet their demand,” Ambassador Galt said.

The Reach Project takes place in Mongolia’s Dundgovi, Selenge, Bayan-Ulgii and Dornod provinces. The Reach Project also partnered with the government of Mongolia’s Credit Guarantee Fund. The fund can provide credit guarantees of up to 60 percent of individual loan amounts to Mongolia’s SMEs.

 

Positive Effects of Mongolia’s Rising Credit Access

On June 28, 2016, an executive summary from Mongolia’s retail sector revealed that the country’s improved credit access facilitated a further rise in disposable income. Mongolia’s banking sector has expanded rapidly in the past few years and there is now a multitude of non-bank financial institutions and credit cooperatives. Improved credit access in Mongolia has dramatically boosted the average Mongolian’s spending power as well.

Mongolia’s central bank also implemented a successful price control program that brought inflation to 2.6 percent in 2013, 6 percent in 2014 and 5.8 percent in 2015. Mongolia’s price stability could have a positive effect on consumer spending and should similarly affect demand for high-quality retail space. Rising credit access in Mongolia has led to increased sales for the country’s retailers and has motivated international brands to open stores in Ulaanbaatar.

 

Web-Based Collateral Registry

In February 2017, the International Finance Corporation (IFC), in conjunction with the Ministry of Justice and Internal Affairs, launched a web-based collateral registry for Mongolia. The registry was part of a joint initiative to reform Mongolia’s secured transactions and improve the country’s financial access for SMEs. This reform would take place by facilitating lending against Mongolia’s movable assets as collateral.

Improving Mongolians’ credit access will also be a key factor in the collateral registry. The registry will enable creditors to search for Mongolia’s existing interests on movable assets and file security interest on the collaterals they approve. “Mobilizing movable collateral to boost access to finance, especially for MSMEs, can play a significant role in Mongolia’s sustainable economic recovery and job creation,” said Tuyen Nguyen, IFC’s representative in Mongolia.

 

Looking Forward

USAID’s programs will continue to focus on increased credit access for Mongolia’s SMEs. USAID is also collaborating with Mongolia’s government to strengthen the capacity of SMEs by helping them adopt accounting practices, gain financial access and develop business plans. In December 2017, USAID also announced plans to strengthen the financial literacy of Mongolia’s SMEs and help them access loans worth $25 million.

While more Mongolians have gained credit access, there is still much work to be done. On Feb. 5, 2018, the Heritage Foundation revealed that Mongolia’s economic freedom ranked 125th worldwide. Improving credit access in Mongolia will continue to be a priority for many entities and possibly attract more efforts to decrease the country’s financial dilemmas.

– Rhondjé Singh Tanwar

Photo: Flickr

poverty in armenia
Landlocked between Azerbaijan, Turkey, Georgia and Pakistan, the country of Armenia has faced economic hardships since the collapse of the Soviet Union in 1991. Between 1989 and 1999, warfare with Azerbaijan and tensions with Turkey have led both countries to impose economic blockades against Armenia; an international settlement has yet to happen. The country’s main source of trade occurs across the border shared with Georgia and into Russia.

Despite some growth and improvements from bilateral humanitarian efforts, Armenia faces several economic and food security challenges. Though Armenia’s gross domestic product growth rates have reached double digits in recent years, this is largely attributed to the widening of the poor-rich gap and the uneven distribution of wealth. Areas of poverty in Armenia are concentrated in rural areas and the country’s borders. Harsh winters, infertile and highly elevated lands and a lack of agricultural diversity have hampered Armenia’s goal of achieving economic sustainability.

The United Nations Development Programme (UNDP) reports that levels of poverty in Armenia have halved from 56.1 percent in 1999 to 23.5 percent in 2008. Though promising, the hard fact is that about 48 percent of the country’s population was below the poverty line of $2 per day in 2008. In 2006, a severe lack of funding forced the World Food Programme to cease its food aid operations in Armenia. Already dire conditions for the country’s most vulnerable people worsened.

Several organizations have since taken up the task of aiding Armenia’s long-term development. USAID is the leading donor agency in Armenia, focusing operations on diversifying Armenia’s economy and agriculture, rebuilding infrastructures, fueling education and bolstering Armenia’s economic competitiveness.

In addition, USAID has partnered with several inter-World Bank and IFC Armenian initiatives to provide extensive technical assistance as well as monetary aid to the bolstering of water safety, road construction and the modernization of healthcare and the public sector.

The International Finance Corporation (IFC) has focused on increasing investments by $2.5 million to improving food safety measures of Armenian meat factories; improving food safety practices to international standards would bolster future international trade potentialities and competitiveness. The IFC has invested $271.5 million in the country over 44 projects spanning several diverse sectors.

The United Nations Food and Agriculture Organization is also supporting the Armenian Government in the improvement of food safety; methods involving training government assessment personal and educating rural farmers. The World Bank has invested $1.746 million to dozens of projects in Armenia, focusing on job creation and again economical competitiveness. The World Bank has since renewed its partnership with the Republic of Armenia for 2014 to 2017, paying particular attention to rapidly reducing both urban and rural poverty.

Armenia is one of the international success stories of multi-lateral humanitarianism. The country that crumbled economically two decades ago has seen vast improvements and is on its way to economical sustainability and independence, but only as a result of international collaboration and investments.

– Malika Gumpangkum

Sources: Action Against Hunger, World Food Programme, World Bank, The Armenian Weekly, World Bank, World Food Programme, World Bank, United Nations Development Programme, USAID, USAID
Photo: Ararat Magazine

station
Flexenclosure received $24 million from investors such as the International Finance Corporation (IFC) to help in their efforts to reduce poverty. Based in Sweden, the company manufactures modular data centers and corresponding power infrastructure for rural communities where construction is often difficult.  The data centers give telecommunication companies the ability to expand into emerging markets previously unavailable to them.  The expansion provides individuals in rural areas of Asia and Africa access to communication via cell phone.

The unit Flexenclosure produces houses all the telecom data and equipment, is low cost, and is energy efficient. The on-site power system that runs the unity supports wireless towers with wind, solar, and battery power. When those sources are unavailable, the unit can also run on diesel power. The power site also provides power for mobile phones, water pumps, and schools. Software manages the power for various uses and applications.

Currently, the majority of cellular base stations in emerging markets run on diesel generators for power supply which raises costs associated with the stations. Flexenclosure’s innovation power sources will help to reduce the costs and spread mobile technology further. IFC is the private equity arm of the World Bank and is supportive of Flexenclosure’s growth strategy and production methods.

A recent report on sustainable energy further supported Flexenclosure’s product. The report, Sustainable Energy for All, monitors universal access to modern energy as well as energy efficiency and renewable energy. The report finds only modest progress is being made since the report first started in 1990. Demand continues to outpace the supply of electricity and new supplies need to be affordable, sustainable, and efficient. Flexenclosure is working to create energy that follows those three standards and reduces the information gap between the rich and the poor.

– Amanda Kloeppel
Source: Sustainable Business News