Posts

Economic Diversification in Guinea-Bissau

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

Current State of the Economy

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

A Cashew Economy

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

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

Areas for Development

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

Energy Infrastructure

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

Promising Ports

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

External Investment

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

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

– Lucas Schmidt
Photo: Flickr

The Urban-Rural Poverty Gap in Morocco

the urban-rural poverty gap in morocco

Though Morocco’s economic and political status has improved as a result of King Muhammad VI’s reign, the North African nation remains impoverished. Specifically, the urban-rural poverty gap in Morocco is one of the nation’s most complex issues. Morocco’s larger cities, namely Casablanca and Rabat, are evolving into flourishing economic centers, attracting companies and tourists from around the world. Simultaneously, Morocco’s rural and agrarian communities–the Amazigh people–have found themselves stuck living with little access to modern commodities.

A First-Hand Account

Sophie Boyd, an undergraduate student majoring in Middle Eastern and Islamic Studies at Colgate University, studied abroad in Rabat last summer. Boyd provided the Borgen Project some insight into the poverty situation in the North African nation. “There was a huge disparity between the living conditions of Moroccans in cities compared to the rural Amazigh villages we visited,” Boyd said. “You could be wandering around the enormous shopping mall in Casablanca and still only be an hour drive away from people who live with almost no electricity. This extreme gap was unfortunate to see and these neglected and impoverished people desperately need more accessible resources and aid.”

The Amazigh People

Unfortunately, Boyd’s observations were fairly accurate and realistic, as Morocco’s Amazigh population has faced hardship and poverty for decades. Though there are about 19 million Amazigh people living in Morocco, which makes up approximately 52 percent of the nation’s population. Their language, known as Tamazight, was not even recognized as an official language of Morocco until 2011. Not only do the Amazigh people who occupy these rural communities not have adequate means to subsist on, but they had also lost their representative voice in the Moroccan government until recently.

Urban Gains

A 2017 study conducted by the World Bank and the Morocco High Commission for Planning found that poverty was actually decreasing at a much faster rate in urban areas than in rural communities. This makes sense considering there is more room for economic growth and consumption in urban centers. Still, this phenomenon contributes to the urban-rural poverty gap in Morocco and creates an even more drastic inequality between rural and urban communities.

Poverty Rising

Another aspect of the urban-rural poverty gap in Morocco that has continued to develop over time is the concept of subjective poverty. The subjective poverty rate refers to the percentage of people, in this case, Moroccans, who consider themselves to be poor or impoverished. The aforementioned World Bank study found that from 2007 to 2014, the subjective poverty rate in rural areas increased from 15 percent to 54 percent. This drastic increase can be partially attributed to the recent economic growth in urban areas. However, it may also have to do with the daily living conditions of the rural Amazigh communities. For example, CIA World Factbook states that only 68.5 percent of Moroccans are literate. This can make life for rural people trying to emerge from poverty increasingly difficult, compounding with other factors such as the infertile, arid land.

A Hopeful Future, Still

The Moroccan government has made it a point to address the urban-rural poverty gap in Morocco. The nation has already demonstrated its interest in resolving this gap through initiatives such as the National Initiative for Human Development Support Project, a plan launched in 2005 to try and close the poverty gap. Morocco will have to continue to work toward better living conditions in its rural communities. If the nation can fix issues like illiteracy and decrease the subjective poverty rate, then it will be well on its way toward closing the urban-rural poverty gap in Morocco.

–Ethan Marchetti
Photo: Flickr

Visa Helps Advance Consumerism in Sub-Saharan Africa

Advance Consumerism in sub-Saharan Africa

As a way to build a more “digitally exclusive ecosystem,” Visa is partnering with Branch International to advance consumerism in sub-Saharan Africa. So the Branch-Visa partnership offers over 2 million consumers in sub-Saharan Africa virtual, prepaid Visa debit cards. With these virtual Visa accounts, consumers can then create accounts on Branch, the most downloaded finance app in Africa. Now, with access and finance, citizens are even able to invest in technology. As a result, this donation will advance consumerism in sub-Saharan Africa, even enabling consumers to start their own tech companies.

Here’s how and why Sub-Saharan Africa needs this.

Sub-Saharan Africa Can Participate in Global Consumerism

Giving citizens in sub-Saharan Africa access to online purchasing allows them to contribute to global markets. Many setbacks prevent citizens of impoverished African countries from entering this market. These setbacks include:

  • Lack of transportation
  • Limited stores selling modern, technological products
  • Having only cash to buy products
  • Having low or no credit score

Enabling these citizens to start their own tech companies will advance consumerism in sub-Saharan Africa, as products become accessible and affordable.

Most of Sub-Saharan Africa is Unbanked

According to Business Insider, only about 30 percent of sub-Saharan African adults had a bank account as of 2014. This percentage drops to below seven in Niger, Guinea and the Central African Republic. About 42 percent of citizens in these countries cite lack of money as the reason for not having an account.

But with prepaid debits cards, over 2 million citizens in Sub-Saharan Africa can now access online banking. Additionally, the region is also expanding its internet access, to even the most remote parts of Kenya and Tanzania. Ultimately, these efforts will advance consumerism in sub-Saharan Africa, as online banking becomes accessible to more citizens.

Merchants Can Grow Their Businesses

Currently, most small businesses and startups in sub-Saharan Africa are unable to access quick loans. However, the Visa-Branch partnership also includes preferential small business loans to Visa merchants. So as small businesses and startups grow, citizens will have greater access to tech companies across the region.

Because most sub-Saharan African citizens do not possess bank accounts, they rely on cash and only invest in local businesses. But this partnership with Visa and Branch International allows these citizens to use online banking and expand their reach. In doing so, they not only help grow businesses across the region but advance consumerism in sub-Saharan Africa.

– Sara Devoe
Photo: Flickr

Infrastructure in Algeria Under Significant Improvement

Recovering from a gruesome civil war that left the nation paralyzed between 1991 and 2001, Algeria has slowly been restoring the backbone of its infrastructure. Algeria’s infrastructure system is highly important, as it serves as a gateway between North Africa and Europe.

The Algerian government has launched an extensive public investment program in an effort to make transport a top priority. According to CountryWatch, in 2010, Algeria began “a five-year $286 billion development program to update its infrastructure and provide jobs.”

Another area of improvement that will directly impact infrastructure in Algeria is tourism. In 2012, the government began investing in the tourism sector and set a target of attracting 3.5 million tourists by 2015. The tourism sector has been the main focus of delivering employment in Algeria to better improve living conditions. The Minister of Tourism and Handicrafts, Hacène Mermouri, announced in December 2017 that 1,812 new hotel infrastructure projects have been approved by the Ministry.

These changes also impact nearby airports within the region. New terminals are being built to better accommodate international tourists in Oran and Algiers. Additional renovations include the establishment of Algeria’s first underground metro system, as well as extending roads and rail services.

The Ministry of Transport has reaped the successes from infrastructure in Algeria, earning €35.7 billion between 2010 and 2014. Such investments are expected to improve Algeria’s logistics performance, as well as reduce congestion and transport costs in a hub that serves as the primary source of transportation.

A surge in the number of vehicles that are to circulate Algeria’s roads is also concerning, leading the government to focus on expanding the country’s road network. According to the Ministry of Public Works, from the start of 2000 to 2014, the government invested in €46.9 billion in road infrastructure.

Some caveats that may impede Algeria’s growth in the near future are the fall of oil demand from nations such as the U.S., allocating between 20 to 25 percent of all Algerian exports. In addition, there has been a decrease in gas and oil production, of which Algeria ranks fourth and tenth as the largest exporter worldwide, respectively.

Per a PricewaterhouseCoopers (PWC) report, this decrease is putting increasing pressure on Algeria’s government to liberalize its economic and investment policies. Despite such internal worries, Algeria has significantly improved its logistics infrastructure, which had them ranked 140th in 2007, to which they have climbed to 96th out of 160 countries.

The central component of Algeria’s projected growth resonates with the success of the $262 billion five-year investment plan. This project is aimed at “boosting domestic production and moving the country’s economy away from oil and gas reliance,” per CountryWatch.

In a nation where poverty remains widespread, a high unemployment rate, particularly among the youth, is obstructing the country from any consistent growth. Moreover, PWC reports that the labor market is inefficient, ranking “last globally in the 2013 Global Competitiveness Index.”

Reforming institutions and monetary policies are vital to an environment crippled by political unrest and faced with strenuous complications. Infrastructure in Algeria, especially under the five-year plan, is set to ensure “significant continued development of transportation networks in the coming years,” as Oxford Business Group reports. Apart from the advertised objectives, the future of Algerian development is also contingent upon its domestic production. Algeria has a plan, but its path forward in a rapidly adjusting global system remains to be seen.

– Alexandre Dumouza

Photo: Flickr

, ,

Challenge Initiative Takes on Poverty

Family Planning

Women are the key to smart family planning. By increasing access to sexual education and contraceptives, women gain the power to make decisions about their own health and the chances of economic success.

Kamla is a 22-year-old female from Gaya, India. She is a domestic helper and lives in a single room shanty with her husband and young daughter. She does not want another child anytime soon because she feels financially unable to care for one. However, she does not have access to information about contraceptives. Increasing access to information about sexual health should be a priority for four main reasons.

  1. Uncontrolled population growth is an economic barrier
    Nearly all population growth occurs in the developing world, and high fertility is an expensive burden on economies of these countries. High population growth limits opportunities for economic growth and increases health risks for both women and children. Quality of life suffers due to limited access to education, nutrition, employment and scarce resources such as clean water.
  2. Women want control over their fertility
    Surveys in developing countries suggest that 10 to 40 percent of women want to spread out or limit childbirth but do not have access to contraception. This demonstrates an unmet need for birth control. The biggest barriers for women are lack of knowledge and concerns about undesirable health effects.
  3. Quality of life is enhanced
    Family planning improves the lives of both women and children. Reducing the fertility rate would save many women from dying during childbirth. In developing countries, maternal mortality rates are 20 times higher than in developed countries. Increased access to contraceptives also benefits children. Children born fewer than two years apart are twice as likely to die in the first year of life as children born further apart. Being unable to spread out pregnancies also interferes with breastfeeding, which has a crucial role in child nutrition.
  4. Gender equality is advanced
    Improvements in gender equality result from the power that contraceptives give women. Teen pregnancies interfere with education and unwanted pregnancies at any life stage interfere with a woman’s economic power. Giving women control over their bodies and family size allows them to make smarter economic decisions for themselves and their families.

The Challenge Initiative is a $42 million grant from the Bill & Melinda Gates Foundation to promote reproductive health in developing countries. A previous initiative funded by this foundation showed promise in increasing contraceptive access in certain cities in Kenya, Nigeria, Senegal and India.

Based on rigorous data collected from the earlier initiative, The Challenge Initiative will use demand-based methods and partnerships with cities in order to implement successful programs in a variety of locations. If philanthropic organizations continue to invest in this solution, people – especially women – around the world will soon reap the benefits of family planning.

– Kristen Nixon

Photo: Flickr

,

The World Health Organization’s Global Health Goals for 2030


There has always been an unfortunate imbalance in the level of health and health care received around the world. However, the World Health Organization (WHO) health goals for 2030 seeks to change things in 67 countries, both low and middle-income.

These 67 countries make up at least 75 percent of the world’s population. The WHO projections take into account increasing population and increasing health coverage in these 67 countries. When looking forward to 2030, the organization can see the potential costs and effects of such healthcare growth.

The WHO plotted out two scenarios with different levels of progress. The progress scenario entails many of these countries advancing toward their healthcare goals but hindered by various factors. In the progress scenario, the countries manage two-thirds or more of the way to these health goals for 2030.

There is also the ambitious scenario in which these 67 countries meet the healthcare goal. It would include employing at least 23 million health workers and building at least 415,000 new health facilities. If services towards universal health coverage in these countries expand as hoped for, these goals could prevent as many as 97 million premature deaths before 2030, and could add up to 8.4 years to the average life expectancy in some of these countries.

In order to accomplish these health goals for 2030, health services need investment. Most of these countries can afford the necessary investments with strategic planning, priority management, and realistic budgeting, but the poorest nations, as many as 32 countries, need assistance.

The WHO estimates that in order to achieve the ambitious scenario, the investments in global healthcare would need to increase from $134 billion to $371 billion by 2030. However, it calls for more than just funding; it requires respect for human rights and the political will to make it happen.

– Ellen Ray

Photo: Flickr

, ,

“Power Africa” and the Return on Investment of USAID


On the surface, the term “foreign aid” indicates a government policy that is purely altruistic. The reality is that foreign aid is also an investment. Aid opens new opportunities for American businesses overseas and promotes domestic job growth by developing future trading partners. The Power Africa initiative is a prime example of the return on investment of USAID.

Two-thirds of people in sub-Saharan Africa do not have access to electricity. Established in 2013, Power Africa is a government-led partnership aiming to double access to electricity in sub-Saharan Africa. The initiative aims to establish 60 million new connections for homes and businesses by 2030. American firms, such as General Electric and SunEdison, sponsor and manage projects in conjunction with other international and local businesses.

Sen. David Perdue (R-GA) recently highlighted the return on investment of USAID and the Power Africa initiative. He elaborated, “USAID put $8 billion up and attracted more than $45 billion [in commitments].” According to USAID, $2.8 billion has been spent thus far and $14 billion guaranteed. That amounts to a return on investment ratio of one to five.

The return on investment of the Power Africa initiative should not solely be considered a short-term goal; USAID funding and assistance have fostered immediate short-term investments by U.S., African and other international businesses. However, the long-term ramifications of the development of the energy sector in sub-Saharan Africa have the potential for much larger returns.

Growing the energy sector and bringing more and more African citizens into the global marketplace creates new opportunities for American exports. Access to electricity boosts business growth in the local economy, improves medical care, encourages investment and creates a platform to further integrate Africa into the global economy.

Power Africa benefits current and future generations of Africans as it gives them the opportunity to become more self-reliant and less dependent on foreign subsidies. For example, South Korea received billions of dollars in U.S. foreign assistance from the 1940s through the 1970s. In 2013, South Korea was the sixth-largest trading partner of the U.S., with exports of $42 billion and imports of $62 billion.

The Marshall Plan is another notable success story of the return on investment of international development money. The Marshall Plan was a policy under President Truman in which the U.S. government spent just over $120 billion in today’s dollars to rebuild Western European economies after World War II. The policy was a resounding success. The U.S. now exports approximately $240 billion to the EU every year, and millions of Americans have jobs as a result.

Historical examples provide concrete evidence that both the recipient and donor benefit from foreign aid. Power Africa has the potential to transform the energy sector in sub-Saharan Africa and provide further evidence of the return on investment of USAID.

– Michael Farquharson

Photo: Flickr

,

IBM Investment to Train African Youth in Technology

IBM is investing $70 million in building digital, cloud, and cognitive IT skills among youth in Africa in order to support a 21st-century workforce. The initiative, “IBM Digital – Nation Africa,” will provide a cloud-based learning platform offering free skills development programs for up to 25 million African youth over the next five years. The IBM investment is part of their global push to equip the next generation with the skills needed for “New Collar” careers, a term used by IBM to describe non-traditional careers that require sought-after skills in cybersecurity, artificial intelligence, data science, cloud and more, rather than a traditional four-year college degree.

The IBM investment will offer programs ranging from basic IT literacy to advanced IT skills development to enable digital competence and sprout innovation in Africa. The platform is geared to raise overall digital literacy, increase the number of developers able to tap into cognitive engines and enable entrepreneurs to grow businesses around new digital solutions.

The program will run through a free, cloud-based online learning environment delivered on IBM Bluemix and will allow users to learn a wide range of skills, from basic IT literacy to highly sought-after advanced IT skills. Users will even have access to career-oriented topics including programming, cybersecurity and data science. The initiative aims to empower African citizens by giving them the educational tools to design, develop and launch their own digital solutions. The program will run in English and is completely free of charge.

In Africa, just 25% of people have a bank account, but 75% have access to a mobile phone. There is no doubt that technology plays a huge part in Africa’s future development, and that with this much-needed technological revolution will come an influx of job opportunities. Programs such as that from the IBM investment will ensure that the youth of Africa are equipped for such opportunities that are quickly arising.

– Mayan Derhy

Photo: Flickr

Relief, Investment and Infrastructure: 10 Ways to Stop Poverty

Relief, Investment and Infrastructure: 10 Ways to Stop Poverty
Though there are many ways to combat global inequity, this list of 10 ways to stop poverty addresses several primary concerns, including providing relief, investing in communities, and setting up the infrastructure necessary to further development.

  1. Improve national and international responses to natural disasters. Though just 26 percent of storms take place in lower income countries, these same countries account for 89 percent of storm-related deaths. The World Bank estimates that 26 million people are forced into poverty as a result of natural disasters, each year. Early warning systems, improved building codes and emergency preparedness strategies can save lives and help save $100 million in damages each year.
  2. Address water quality and improve sanitation. The entire workforce in France works 40 billion hours per year — the same number of hours spent just collecting water in sub-Saharan Africa. In addition to the value of work and school time lost to water collection efforts, an adequate supply of clean water is essential for agriculture and basic sanitation.
  3. Address hunger and nutrition. Malnutrition early in life can make children more susceptible to lasting physical and mental disabilities, preventing them from fully participating in the social and economic spheres as adults. The U.N. Development Program (UNDP) aims to end hunger and malnutrition by 2030 through supporting small farmers with land, technology and market access.
  4. Provide access to healthcare. Every day, 16,000 children die from preventable diseases like measles and tuberculosis, and in Sub-Saharan Africa, AIDS is the leading cause of death among teenagers. Healthcare services including immunizations, disease prevention and treatment are essential to UNDP sustainable development goals.
  5. Improve gender equality. Combating gender-based discrimination improves agricultural productivity and school attendance, and leads to increases in income. In the long run, gender equality contributes to the family, community and nation-wide development, and is vital to the effort to stop poverty.
  6. Invest in transportation infrastructure. The availability of transportation is important for access to jobs, education and healthcare. Better transportation infrastructure can also prevent traffic accidents. Worldwide, 90 percent of traffic accidents and resulting fatalities occur in low and middle-income countries, and constitute a larger health risk than malaria or tuberculosis.
  7. Make microfinance options available. Microfinance provides banking services to people with minimal access to such services. Loans, bank accounts, insurance and help with financial literacy may all be offered by microfinance companies. This allows people living in poverty to participate in economic activities like opening businesses. Currently, microfinance is available to only 20 percent of the world’s three billion people living in poverty.
  8. Make education accessible. In many countries, students may not be required to pay tuition, but other costs are still associated with school. The cost of textbooks and transportation, plus the money that children might otherwise earn from working, can all keep children out of school. The benefits of education are huge: Child Fund International says that “Education can be the catalyst needed to pull families and communities out of the cycle of poverty.”
  9. Combat climate change. Life and livelihood are on the line with changing precipitation patterns, rising sea levels, higher temperatures and extreme weather threatening agriculture, food supplies and water quality. UNDP argues that “It is still possible, with the political will and a wide array of technological measures, to limit the increase in global mean temperature to two degrees Celsius above pre-industrial levels. This requires urgent collective action.”
  10. Gather more information. Individual communities’ development goals must be a part of the effort to stop poverty. To this end, information must be collected regarding the location, necessities and priorities of people living in poverty to correct old or inadequate data and provide meaningful assistance.

– Madeline Reding

Photo: Flickr

,

The Recovery of Mogadishu

Recovery of MogadishuAs demonstrated in How We Made it in Africa, the mention of the Somalia’s capital city Mogadishu, alluded to images of ruin and destruction due to the World War II aftermath. In 1991, the country’s longtime military leader, Mohamed Siad Barre was overthrown, triggering a constant struggle over the control of Mogadishu for years to come.

The once beautiful city, filled with wide boulevards and Italianate colonial architecture had become divided among rival warlords. Government-built schools and hospitals became prime targets for looters bent on destroying all remaining vestiges of Siad Barre’s 22-year rule. For a long period of time, chaos and crime thrived in one of Africa’s most cherished cities.

However, when the militants were pulled out of the city in 2011, the reconstruction of Mogadishu began. According to the New York Times, the hammering sound of machine guns has now been replaced with the sound of construction demonstrating that the recovery of Mogadishu is well underway. New hospitals, homes, shops, hotels and bars are being built and life has emerged from the once decrepit city.

BBC acknowledges a wave of reconstruction, which is being led by Somali expats who have come back to invest in their homeland. Foreign investors are also providing capital toward the recovery of Mogadishu.

Mohamed Yusuf, director of Madina Hospital told  How We Made it in Africa that the city is like “a patient who was in a deep coma, and then suddenly he moves his fingers and opens his eyes. Now he is moving his limbs and unfolding his legs.”

Consequently, the outside world has noticed. In a recent survey of the world’s fastest-growing cities with a population of at least 1 million, the U.S.-based consulting firm Demographia ranked Mogadishu second on the list. Demographia estimated Mogadishu’s annual growth rate at 6.9 percent, due to the return of Somalis who have come home to explore investment opportunities following improvements in the city.

In Mogadishu, the central business district is once again a beehive of commercial activity. Somali singers just held their first concert in more than two decades at the National Theater, which formerly served as a weapons depot and a national lavatory.

Mogadishu has a bright and thriving future in the context of culture, enterprise and new markets.

– Megan Hadley

Photo: Flickr