Serbian YouthBelgrade is Serbia’s capital, with a population of over 1.7 million people. With a 40% youth unemployment rate, large numbers of Serbs were forced to leave the country and search for work elsewhere. Unemployment in Serbia is significantly higher than the European average and one of the country’s significant economic challenges is the need for private-sector job creation. In the last 12 months, Serbia has had 62 startups with $0 in total funding. More than ever, the country is in need of a program like Impact Hub to help Serbian youth.

Impact Hub

Impact Hub was founded in London in 2005 and now has over 7,000 members in more than 60 locations, one of which is Belgrade. The program is funded by USAID and assists young innovators in accessing the tools they need to connect with investors because unsuccessful funding is the biggest obstacle for startups. On Impact Hub’s website, online visitors can become “Impact Angels” and invest in a startup in minutes.

Impact Hub assists in the development of new products and business models. The program focuses on technological innovators and entrepreneurs and the future of their businesses. The organization provides collaborative workspaces, program support, an inspirational environment and diversity.

Impact Hub Belgrade offers young entrepreneurs resources such as acceleration and connections to grow their business. It is both a community center and a business incubator. The program encourages the sharing and building of a community and the space in which the project operates is used to organize events, from arts and culture to entrepreneurship.

Guiding Young Entrepreneurs

Impact Hub founders believe talent allows for growth and production. Since many young people know how to code, design and create innovative solutions, Impact Hub aims at helping  Serbian youth grow their startups. The program secures investments and teaches young people about using money in competitive markets. Impact Hub wants to get young entrepreneurs out of their comfort zone to expand their network. There are two different paths that Impact Hub employees guide entrepreneurs through. The first is “Core Competence for Market Validation,” in which individuals learn how to get the first buyer, expand their customers and make financial projections. The second is “Growth Readiness” and focuses on profiling a buyer, expanding traction and creating revenue models.

Impact Hub Belgrade implemented an initiative called We Founders, in which startup teams, founders, leaders and business developers can connect and work to improve their businesses. Impact Hub helps form partnerships to allow people to share the risks and prepare together for possible losses.

Impact Hub is Positively Impacting

Participants of Impact Hub raised $230,000 in investments from the Serbian public sector and private investors, not including a $100,000 investment from Dubai’s Innovation Impact Grant Program.

Alongside USAID, Impact Hub Belgrade gives Serbian youth the chance to see their innovations and ideas come to life. Outside of Belgrade, Impact Hub is available worldwide to allow individuals the opportunity to receive education regarding the tools and skills necessary for creating a business.

– Rachel Durling
Photo: Flickr

Livestock WealthPoverty in South Africa has historically been linked with the institution of the racial apartheid regime. The national government began to pass segregationist policies in 1948, with racial discrimination policies only officially dismantling in 1994 when South Africa became a democracy and Nelson Mandela stepped into power. Livestock Wealth is a company that introduced South Africa to “crowdfarming” as a means of supporting farmers and alleviating poverty in the country.

Apartheid and Poverty

Under the apartheid regime, the minority-white government passed policies aimed at keeping black South Africans, who made up a majority of the population, from having any meaningful participation in the economy. This left millions trapped in cycles of poverty and the residual effects of such discriminatory policies are still being contended with, in the effort to reduce poverty today.

Apartheid laws confined poor South Africans to rural regions and made the migration to urban areas difficult. The lack of opportunities and social mobility in rural areas made overcoming poverty a challenging task. The legacy of this limited mobility is still present today. South African provinces in rural areas have more households in chronic poverty compared to urban provinces. As of 2015, 25.2% of the population of urban areas lived below the upper-bound poverty line (UPBL), whereas 65.4% fell below the UBPL in rural areas. In order to reduce poverty, it is most important that rural communities receive support and investment.

Livestock Wealth

Livestock Wealth is a startup founded in 2015 by Ntuthuko Shezi which aims to provide investment for farmers in South Africa’s rural areas. Livestock Wealth allows investors from anywhere in the world to effectively purchase from South African farmers four different livestock and crop options: a free-range ox, a pregnant cow, a connected garden or a macadamia-nut tree. When the cows or the crops are sold, both the farmer and the investor receive a share of the profit.

The investment provides liquidity to farmers for whom there is limited availability of short-term funds. Livestock Wealth is currently a credit provider with South Africa’s National Credit Regulator and is registered with the Agricultural Produce Agents Council.

Livestock Wealth currently has 58 partner farmers all across the country and all cows are hormone-free and grass-fed. In recent years, its business has expanded to also provide meat for investors who join the “Farmers Club.” There are currently more than 2,800 investors with Livestock Wealth and more than $4 million has been invested.

Alleviating Poverty in South Africa

Livestock Wealth is a representation of an initiative that has great potential to alleviate poverty in South Africa. South Africa’s rural populations have a long history of exclusion from the economy and have struggled to reduce poverty for decades. Livestock Wealth provides cash investments for farmers and creates a market in which they can reliably trade. By doing so, the firm exemplifies an innovation within the South African economy, one which is helping to alleviate poverty and can inspire others to do the same.

– Haroun Siddiqui
Photo: Flickr

On June 28, the U.N. International Children’s Emergency Fund (UNICEF) released its report “Narrowing the Gaps: The Power of Investing in the Poorest Children.” The new peer-reviewed report compiled data from 2003-2016 and supports the claim that investing in the health of the world’s poorest communities saves lives and is cost-effective. The following are 10 facts learned from the compelling report.

  1. This report is a result of UNICEF’s 2010 prediction that although the cost of reaching the poorest children is high, greater results would outweigh the cost.
  2. The key finding in “Narrowing the Gaps: The Power of Investing in the Poorest Children” is that for every million dollars invested in the most deprived populations, the number of lives saved is nearly double that saved by an equal investment in other populations.
  3. The number of lives saved is even greater for children under five. More than four more lives are saved per $1 million invested in poor communities compared with other communities.
  4. In this report, people living on an average income below $3.10 per day were considered to be poor.
  5. Children living in extreme poverty are twice as likely to die before five years of age than children living in better circumstances. Most die from preventable diseases.
  6. While progress was made to address the global under-five mortality rate, UNICEF discovered that until recently little to no progress was achieved to lower preventable childhood deaths, specifically among the world’s poorest communities.
  7. The report analyzed data from 51 countries and found that gaps in health coverage between poor and non-poor populations narrowed in 37 of the 51 countries by the end of the study. Coverage did not decrease for non-poor populations, coverage increased for both.
  8. In the final year of the study, UNICEF estimated that 1.1 million lives were saved due to increases in coverage, including 940,000 lives from impoverished populations.
  9. However, UNICEF’s prediction is that by 2030, 70 million children under the age of five will still die from preventable diseases unless action is taken.
  10. To prevent this from happening, the report suggests governments and organizations identify the poorest children and communities. Governments should then invest in proven, low-cost high-impact interventions, strengthen health systems, work with the private sector to spur innovation and monitor results to ensure equity between poor and non-poor populations.

While previous thought may have suggested that investing in the extreme poor is a hopeless cause, UNICEF’s report “Narrowing the Gaps: The Power of Investing in the Poorest Children” clearly shows that doing so saves more lives and is more cost-effective. Pursuing equity in health coverage between and investment in poor and non-poor communities is right not just in principle but also in practice.

Sean Newhouse

Photo: Flickr

Local Cambodian millers will be able to boost rice production through increased storage capacity. The progress is possible through the investment of two Chinese investors in a proposed rice storage facility.

The Phnom Penh Post reported on July 3 that two Chinese investors are interested in building a large rice storage facility. The investors, Jilin Province Investment Group Co. Ltd. and Jilin Ianzhong Agricultural Development Co. Ltd., are from the northern Chinese province of Jilin.

The Jilin province is a major food producer, specializing in rice, corn, grain sorghum, millet and beans. Unlike Cambodia, the region is also very industrialized.

According to the World Bank, the agricultural industry in Cambodia is experiencing a deceleration from its prior growth, decreasing from 5.3 percent between 2004 and 2012 to less than two percent between 2013 and 2014. At the same time, poverty rates in the country also decreased, at least partly fueled by positive developments in agriculture. The World Bank reported it at 18 percent in 2012.

With 14 percent of the population living below the poverty line, Cambodia has a higher poverty rate than some of its neighbors. For example, in Indonesia only 10.9 percent of the population lives below the national poverty line, and in Vietnam the percentage is seven.

The Asian Development Bank emphasized the importance of the agricultural industry in sustaining the economy in Cambodia.

The World Bank reported that “since 2013, Cambodia’s rice production has flattened. This was due to the deceleration in land expansion, bad weather, failing global rice prices, and the tightening of completion among rice partners.”

The World Bank also recommended a policy of developing the agricultural business and agro-processing industry in Cambodia. Structural innovations like a rice storage facility in Cambodia would be able to contribute to a boost in the country’s economy.

In addition to boosting Cambodia’s rice exports, the new rice storage facility also has the potential to allow local millers to operate year-round. With safe, dry storage, the rice will also be less likely to absorb water from the humid environment.

By increasing the number of rice storage facilities, rice farmers will be able to protect their harvested rice from the weather and increase their crop production to offset lower global rice prices.

Hannah Pickering

Photo: Google

Despite India’s growing economic success, a recent study by Oxford University found that over half of India’s youth lives in acute poverty. Of the staggering 528 million impoverished Indians, almost half are under the age of 18. The study looked at their access to health care, nutrition, clean water, education and other standards of living when assessing poverty in India.

According to the study, of the 689 million impoverished children in the world, 87 percent live in South Asia or sub-Saharan Africa. This study was designed in accordance with the United Nation’s primary Sustainable Development Goal of eradicating poverty in all forms. By addressing youth poverty in highly-populated areas such as India, global poverty could be greatly reduced.

There are many possible explanations for why so many of India’s impoverished are those under the age of 18, including policy issues, general values and the mindsets of India’s citizenry. Rural areas, in particular, are vulnerable to cultural issues such as early marriage and pregnancy, as well as a lack of educational access for girls. These issues are more complex than simple economic reform.

Additionally, author and former Indian Administrative Officer, Anirudh Krishna, addressed three overarching explanations for this phenomenon: healthcare deficiency, insufficient state support of citizens and the upper class’s prejudices towards those in poverty in India. These issues are attributed to India’s particular value system and a lack of opportunity for families living in rural slums. Children from these families lack access to the same opportunities as higher-income children, depriving India of potential economic resources.

The results of this study are particularly astonishing in the context of India’s economic boom. In recent months, India’s GDP grew at seven percent and is set to continue growing to about eight percent in upcoming years — primarily due to its digital boom and healthy startup economy. Despite this growing GDP, India’s rural youth population remains in a state of economic strife.

However, young professionals are beginning to look at the problem as fellows trained to study issues of poverty in India. These fellows study rural areas to understand which resources they lack most and which issues affect children the greatest. Their work focuses on how higher standards of health care and education, as well as access to electricity and technology, are achievable in rural India.

Investing in education is of high importance; it equips children with skills to enter the workforce and might effectively challenge potentially harmful values in rural communities. By addressing this lack of basic needs in rural areas, India can cultivate a generation of healthy, educated and productive citizens. Investing in modern education, technology and opportunities for rural youth could provide India with a great economic return.

Julia Morrison

Photo: Flickr

Touirism in Kenya
An international hotel chain is investing in tourism in Kenya. Tune Hotels, based in Malaysia, opened a hotel in Nairobi, Kenya last July. The hotel chain is focused on giving travelers the bare necessities in exchange for a reasonable price, similar to low-cost airlines such as Spirit Airlines.

Nairobi, in particular, has become an attractive site for foreign direct investment as opposed to simply development aid. Tune Hotel is just one example of foreign direct investment, another of which is China’s investment in infrastructure in Kenya.

The target market for this hotel chain is business travelers since they normally do not use all the services they pay for at a normal hotel. Business travelers, both local and foreign, make up about 70 percent of Tune Hotel’s guests.

In addition, business travelers comprise about 95 percent of hotel bookings in Kenya. Business travel spending accounted for 37.5 percent of all tourism spending in Kenya in 2015 and is expected to rise due to increased flights between Nairobi, China and the Middle East.

Kenya has a growing middle class, which has led to a rise in domestic tourism. Kenyan tourists make up around 60 percent of the guests at Tune Hotels, and about a third of Africans have entered the middle class over the last 10 years. The Kenyan Tourism Board launched a campaign in 2013 called “Tembea Kenya” or “Tour Kenya,” which is a campaign targeted at the nation’s own middle class.

The tourism industry, which consists of hotel jobs, travel agents and leisure activities, is expected to create around 275,000 jobs in Kenya by 2025. Tourism in Kenya makes up about four percent of the gross domestic product. Thus, foreign investment in this sector is crucial to its growth.

Jennifer Taggart

Photo: Flickr

The Millennium Compacts for Regional Economic Integration Act (M-CORE Act), introduced by Rep. Karen Bass in May 2015, would allow the Millennium Challenge Corporation (MCC) to engage in multiple projects in an eligible country at any given time.

The MCC was established in January 2004 thanks to bipartisan efforts in passing the 2003 Millennium Challenge Act.

However, the law currently prohibits the MCC from entering into more than one concurrent assistance agreement – or compact – in any country at any given time.

  1. The M-CORE Act will allow the MCC to develop multiple compacts with a country at any given time.
  2. Multiple compacts in a country, particularly in Africa, will promote regional economic integration and cross-border collaborations.
  3. An eligible country that already has a Millennium Challenge Compact in effect can enter into another compact if one or both compacts are or will be for regional economic integration, increased regional trade or cross-border collaborations.
  4. This act establishes new assistance criteria for a low-income or a lower middle-income candidate country to enter into a Millennium Challenge Compact with the U.S.
  5. Candidate countries must meet the International Bank for Reconstruction and Development’s (IBRD) threshold.
  6. If the per capita income of a low-income candidate country changes during the fiscal year to that of a lower middle-income country, then the country will need to meet the per capita income requirement for that fiscal year and the two subsequent fiscal years.
  7. Eligible countries that already have a Millennium Challenge Compact in effect can enter into another compact if the country is making considerable and demonstrable progress in implementing the terms of the existing compact.
  8. The MCC’s board must notify Congress 15 days prior to providing assistance to an eligible country, commencing negotiations with an eligible country, signing a compact and terminating a compact or agreement.
  9. In addition to the notification requirement, the MCC is required to provide detailed information on economic rates of return.
  10. The MCC’s board is required to disclose information on their website and provide notice of the information’s availability in the Federal Register.

The Millennium Challenge Corporation has signed 29 compacts with 25 different countries since its inception — and the M-CORE Act has the potential to increase their impact.

According to a March 2015 Congressional Research Service (CRS) report, concurrent regional compacts could provide higher rates of return on investments, benefiting from economies of scale and supporting trade between nations.

Summer Jackson

Sources: The United States House of Representatives, Congress, FAS
Photo: Google Images

12 dollars
Before the 1990s, many people disapproved of giving unregulated cash to the poor. People feared that handing out checks would lead to corruption, waste and an increase in drug and alcohol abuse among the impoverished.

However, the increasingly popular cash grant programs that have appeared in countries such as Brazil and Mexico are disproving these stigmas. Those in extreme poverty receive invaluable benefits from cash grants of as little as 12 dollars per month. When desperately needy individuals get small monthly cash transfers, research shows that better health, education and smarter overall life decisions will follow.

Michelle Adato has studied the impact of cash transfers for many years. She reveals, “Cash grants are now being seen as a part of a comprehensive development strategy as opposed to just a safety net.” What was previously thought of as a short-term solution is proving to have longer, more sustainable results.

When individuals and families receive grants, such as South African child support grants and those from The Transfer Project led by UNICEF, they can buy things they really need such as food, clothes and an education for their children. Extended grants to adolescents have proven to decrease risky sexual behavior, thereby reducing the chances of teen pregnancy and HIV, by 63 percent.

John Hoddinott, a deputy director at the Washington-based International Food Policy Research Unit, argues that cash grants not only give the poor a means to buy necessary survival items, but they “give beneficiaries a base from which to make longer term investments.”

“The research shows that in the vast majority of cases, poor people use their money well — the evidence is unambiguous.”

The Transfer Project, which runs programs across Sub-Saharan Africa, operates on the premise that income poverty has highly damaging impacts on human development, and that cash empowers people living in poverty to make their own decisions on how to improve their lives.

Those receiving grants from The Transfer Project in Zambia, Ghana and Malawi “all reported being happier with their lives, and research showed that recipients in these countries were eating better too.”

The child support grant in South Africa has expanded to include 17-year-olds, and now reaches 11 million children. The U.N. reports that a total of 20 African countries have social protection programs like these and both the number of countries and size of the programs are growing, with Kenya, Zambia, Lesotho, Mauritania, Mali, Niger and Zimbabwe all expanding their programs.

In many ways, the initial skepticism of cash grant programs have only served to increase scrutiny and research, in turn strengthening them. Handing out cash rather than food and supplies empowers the impoverished to make their own choices and invest the stipends wisely. The widespread success of programs like The Transfer Project and the South African child support grants is a testament to the power of a small amount of money on lifting the poorest of the poor out of dire living conditions and into a brighter future.

– Grace Flaherty

Sources: CPC, IRIN News
Photo: Poke

Japan’s Pledge to Africa
Japan’s Prime Minister, Shinzo Abe, began a week-long tour of three African nations yesterday. The PM will visit the Ivory Coast, Mozambique and Ethiopia as part of a plan to garner more foreign business and extend Japan’s influence. The traveling is a follow-up to a June meeting hosted by Japan of almost 40 African state leaders during which Japan pledged $14 billion over the next five years.

There is some speculation that the move is aimed at competing with growing Chinese influence on the continent, but officials have denied such motivation. However, the juxtaposition of the two Asian nation’s contributions to Africa in recent years is significant. In addition to Japan’s pledge of $14 billion, the PM also promised billions more in private investments. Raw consumer numbers in Africa are immensely enticing, as is the promise of resources such as Mozambique’s natural gas and coal.

At the same time, China has been providing affordable goods, raw materials and massive infrastructure to the continent—notably footing the bill for the African Union’s new headquarters costing $200 million. In comparison, the United States government allocated 29 percent of its overall foreign assistance to Africa in 2011, totaling $9.28 billion.

For the African nations, the influx of investment is welcome regardless of the motivation. Unemployment in Africa is only one percent above the global average of 5 percent, but the youth unemployment rate is at least twice that. According to the World Bank, 60 percent of unemployed people in Africa are youth. In addition, over 70 percent of all youth survive on less than $2 per day. Poverty in general is a major factor in Africa, where the poverty rates in Ethiopia, Mozambique and the Ivory Coast are 29 percent, 54.7 percent and 42.7 percent, respectively.

Though the current allocations of Japan’s pledge is not public, there are numerous prospects. Whether resource extraction, business investment or basic consumer goods, Japan’s pledge has the potential to ameliorate even a small portion of Africa’s poverty and unemployment.

– Katey Baker-Smith

Sources: UN, World Bank, USAID
Photo: Photo: The New York Times