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How Diamonds Have Reduced Poverty in Botswana

Botswana
Supported by the discovery of diamonds, poverty in Botswana has reduced while the country has achieved universal access to HIV treatment and strengthened their social services.

Botswana, a small landlocked country of 2 million people, was once one of the poorest countries in Africa. In 1996, the country was one of the least developed and poorest nations in the world with a per capita annual income of $83. In the years that followed, Botswana had one of the fastest growing economies in the world. By the 21st century, Botswana’s per capita annual income was $7,300. The success has come from Botswana’s partnership with De Beers, a diamond mining and trading company, which helped develop its diamond resources.

The diamonds of Botswana are very difficult to find. They are not sedimentary, rather they are found deep in the ground making them more valuable. The country shares joint-ownership, which guarantees Botswana the majority of the profits, with De Beers.

Due to low global demand for minerals and metals, Botswana’s economy began to decrease in 2012, but bounced back in 2013 and then decelerated again in 2014 and 2015; however, the economy is expected to rebound with projected economic growth rates of 3.7% and 4.3% respectively in 2016 and 2017, driven mainly by an improvement in diamond prices.

Once the money from diamonds starts coming in, all the revenues are reinvested in other assets. Priorities include investing in schools, roads, electricity and getting running water into homes and farms.

When the HIV/AIDS crisis came to Botswana, the country used its diamond money for public investment to essentially buy HIV/AIDS treatments for every citizen that was infected. Nearly 95 percent of the population now lives within 8km of a healthy facility.

Botswana’s discovery of the diamond has created more than 2,000 jobs and stabilized the economy. The percentage of people in poverty in Botswana continues to decrease, with a decline in citizens living at or below the poverty line from 50 percent to about 19 percent today.

– Jacqueline Venuti

Photo: Flickr

Niti Aayog Addresses the Poverty Line in India

Niti Aayog

Niti Aayog, the National Institution for Transforming India (of the Government of India), is redefining the poverty line in India. The program functions to assess the impact of the government’s anti-poverty schemes and other welfare initiatives.

The BJP Government of India plans to address the definition of the poverty line in India by having Niti Aayog set up a panel of experts to devise a new poverty line.

Niti Aayog has been measuring the impact of the government’s anti-poverty schemes and welfare initiatives. With this information, the institution plans on determining a poverty reduction target in addition to a 15-year vision document and seven-year strategy paper outlining poverty reduction tactics.

The Brainstorming Process

It is important to note that the new poverty line will only define poverty; it will not be used to distribute resources under government schemes. The change will be important on how it affects the Niti Aayog measurement of the impact of poverty reduction programs.

The decision to address the poverty line arose after controversies surrounding the issue during the United Progressive Alliance regime. Once discussion began on the issue, the parties involved decided that the current poverty line defined as the Tendulkar Line was too low and the Rangarajan Line was too high.

The new poverty line will be based on the latest available National Sample Survey Office’s household consumption expenditure survey.

The Indian Rupee, Rs, buys more in India relative to what the dollar buys in the U.S. The new poverty line will reflect a weaker dollar, relative to the country of India.

Suresh Tendulkar proposed the Tendulkar Line determining that Indian citizens spending at least Rs 27 in rural and Rs 33 in urban areas (2011-2012) lived above the poverty line. As a reference,$1 is about 67 Rs today.

The New Poverty Line

Chakravarthi Rangarajan proposed the Rangarajan Line, raising the poverty line in rural areas to Rs 32 and Rs 47 in urban areas respectively. Chakravarthi Rangarajan’s method of determining the poverty line is based on the monthly expenditure of a family of five. In theory, it is cheaper to live in a family of five than single.

Although the new poverty line will be equivalent to a higher U.S. dollar at the Tendulkar Line, it will still be relative in real terms in India. The changing poverty line drives up the amount of U.S. dollars a person can survive on, even though poverty itself is changing very little. For example, $1.90 in 2011 bought approximately the same things as $1.25 did in 2005 in a poorer country.

The new poverty line will prospectively be made higher than the current Tendulkar Line. With this change, one can determine that as the prices in poor countries become lower, their currencies become stronger in purchasing power.

ICP price surveys have concluded that price levels in poor countries are lower than they were in previous years, relative to those in the U.S. World Bank.

Niti Aayog acts as a think tank for the Government of India, providing directional and policy inputs for the country and designing strategic and long-term policies. The group also provides technical advice to states, and replaced the Planning Commission to better serve the needs of the people of India.

Niti Aayong serves as a good omen for increased progress within the fiscal realm of India, but only time will tell if the group is actually invaluable.

– Kimber Kraus

Photo: Flickr

Berlin Students Live to Fight Global Hunger

 

Berlin Students Poverty Line
A small number of Berlin’s financially secure recently underwent self-imposed poverty to raise awareness of Germany’s poor, as well as the millions worldwide who live below the poverty line.

Students of Berlin High School (BHS) took the Live Below the Line Challenge by eating only $1.50 worth of food each day for five days. That is the equivalent of two small candy bars or a cheeseburger from McDonald’s.

The idea behind the “walk-a-mile-in-their-shoes” event was to fight global hunger by proving that poverty exists in even the most prosperous countries.

BHS maintained a Facebook page to document the progress of its students. Only four out of 20 participating students completed the five-day challenge, standing as “a testament to how difficult [it is] and hungry nearly one billion humans are around the world every day.”

Zach Ingrasci, co-producer of the 2013 documentary “A Dollar a Day,” describes in his film the difficulty of earning a living on such a low-calorie diet. Ingrasci and three friends lived on a dollar a day for two months while traveling through rural Guatemala.

“When you’re not eating anything, you become incredibly lethargic,” he says in the documentary. “You have zero energy.”

Since the end of World War II, Germany has become the fifth richest country in the world. However, 12.5 million Germans are struggling to make ends meet. In Berlin alone, 21.4 percent of the population lives in poverty.

“We would have the chance to fight this poverty as the fifth richest country in the world, but obviously we have extreme problems of distribution in times of increasing prosperity,” Ulrich Schneider, Head of Germany’s Equal Welfare Organization, told Euro News.

Like Germany, many countries struggle to address the needs of all their citizens. As countries develop and move forward, the poor often fall through the cracks of public awareness. In 2015, the World Bank estimated nearly 10 percent of the global population lives on $1.90 or less per day. Yet that fact has not received the recognition it deserves.

In addition to developing empathy for the critically impoverished, BHS students encouraged family and friends to sponsor their Live Below the Line Challenge. Donations raised by the event went to Heifer International, a charity-based organization that donates livestock to struggling rural communities.

“Our animals provide partners with both food and reliable income, as agricultural products such as milk, eggs and honey can be traded or sold at market,” said Heifer International’s statement.

Experiences such as the Live Below the Line Challenge will help foster a generation that fully understands the detrimental effects of global hunger. Exposure to the issue will better equip future leaders to fight global poverty and put an end to it for good.

– Sarah Prellwitz

Sources: Heifer 1, Euronews, Facebook, Heifer 2, World Bank, YouTube
Photo: Berlin Citizen

New Standards for Poverty Line in India

India’s Economic Advisory Council enacted its highest standard for poverty this summer. The new standards will place 30 percent of the nation’s population below the poverty line. This adds an extra eight percent to the estimate under previous standards.

By the new benchmarks, a rural family of five living on 4,860 rupees (or about $80) a month or an urban family on 7,035 rupees (at 2011-12 prices) is considered poor.

Despite encompassing more citizens under the poverty line in India, these new standards reflect progress. This year, after recent elections and a new government, marks the first time the nation has taken on major economic reform in two decades.

Over the past 20 years, the Indian economy has witnessed rapid changes. The United Nations reported that the Indian economy is expected to grow at a rate of 5.6 percent this year. It is on track to surpass these expectations, already having expanded its economy by 5.7 percent by August. The manufacturing and mining industries have accounted for this growth, according to the Central Statistics Office.

These changes will better acknowledge and help address the actual needs of the Indian population, argue many economists.

This new definition puts India’s standards above the average in the developing world. The most popular definition of poverty is the World Bank’s $1.25 a day standard. Some economists argue that this low standard of poverty undermines the struggles of many legitimately poor families. A low bar for poverty often minimizes legitimate needs for poor families that are above the bar.

This perpetuates many myths about poverty. For example, many believe food is the biggest need for India’s poor. However, health care, drinking water and proper sanitation make up 40 percent of the poor’s biggest needs, according to the Director of McKinsey Global Institute Richard Dobbs.

“The kinds of contrasts we possess, no other country has,” said Himanshu, an economist at Jawaharlal Nehru University in Delhi, in an interview with the Washington Post. “And in a democracy, these things need to be questioned. That’s what the poverty lines do.”

— Ellie Sennett

Sources: Business Standard, The New York Times, The World Bank, The Wall Street Journal, Economic Times (India), Huffington Post

Down Under the Poverty Line

Australia_Sinkhole_Diving_Ocean
Australia is known for gorgeous beaches, the Great Barrier Reef and incredibly attractive accents. Many people would be shocked to hear that according to the Australian Council of Social Service and the Social Policy Research Centre (ACOSS), almost 13 percent of the population is struggling with poverty.

Low income families can get assistance from programs like NewStart, an ‘allowance’ payment similar to the welfare system in the United States.

However, ACOSS has determined that the payment of thirty five dollars per week has fallen well below the cost of living. That allowance numeral has not been updated since its implementation in 1994. Per week, the allowance is about two hundred and fifty dollars and the poverty line income is three hundred and sixty as of today.

Families with children meet the poverty line at seven hundred and fifty dollars, which the allowance payment is obviously not qualifying. Critics are fighting for new policies and programs that address the real number needed to live above the poverty line, and a way to fix the outdated New Start allowance amount.

One idea is to increase the allowance immediately by fifty dollars per week and help families find sustainable incomes so that eventually they can support themselves.

One issue that is being brought to the fore-front of the fight against poverty in Australia specifically is climate change. The poor population of Australia spends a large chunk of their income on basic needs like water sanitation and energy. Both of these basic services are going to become more expensive as the world’s climate continues to change, and coming up with policies to deal with this change and prevent poverty from spreading is of the utmost importance.

It will cost the nation more if they do not act now than if they spend the necessary funds to create solutions to the problems that climate change will inevitably bring. Heating, insulation and more weather related activities are more costly to low income families than to wealthier ones.

Officials in Australia and United Nations are committed to making climate change a priority in order to help citizens of the outback better their quality of lives and their futures. Reintroducing the unemployed and underpaid into jobs with increased wages and lasting security of future employment will help pull families out from under debilitating circumstances.

Assistance programs and awareness of what needs to be done in Australia will help not only their own citizens but also the rest of the world as new wealth and innovation comes from the newly assisted people down under.

– Kaitlin Sutherby

Sources: The Australian, ACOSS, ACOSS
Photo: An Infinite Summer

Income Inequality in 2014

income_inequality
The World Economic Forum (WEF) meeting is occurring in Davos, Switzerland and there is one issue that is being presented as one of the largest challenges that has to be faced in the coming years.  Income inequality around the world is rising and experts say that it is going to become an explosive issue as time goes on.

Oxfam recently released an article that puts into startling perspective how significant an issue income inequality is becoming. Oxfam found that the 85 richest people on the globe have as much collective wealth as the poorest half of the world.  This is a staggering statistic. Oxfam goes on to point out that the richest one percent of the world holds an accrued wealth of $110 trillion dollars, while the 3.5 billion poorest people in the world posses roughly the same amount.

Oxfam’s report also pointed out that in the United States, the wealthiest one percent captured 95 percent of post financial crisis growth since 2009, while the bottom 90 percent have become poorer. The report goes on to point out how the wealthy have taken advantage of their wealth and created tax havens and other political means to ensure their wealth remains unaffected.

The Huffington Post released a report in which it found that the U.S. has the worst income inequality in the world. It cited the tax code as a huge reason  for the massive income inequality bracket in the U.S. The report also highlighted Wall Street as a reason for the U.S. having the world largest income inequality range. “The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy.”

Oxfam’s Executive Director, Winnie Byanyima, issued a statement saying, “Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table.” She went on to say that with the WEF having income inequality as a hot button issue, the attendees will work personally to make sure that they are not taking advantage of various tax breaks and things of that nature as well.

The WEF is a amazing opportunity for many of the world leading figures to come together and begin to try and sort out many of the issues that plague our society.

– Arthur Fuller

Sources: Business Insider, Huffington Post, Huffington Post, Oxfam
Photo: WTW

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Road to Ending Global Poverty


According to scholars, poverty is just not what it used to be.

With approximately 1.4 billion people living at the poverty line or below, policymakers are reevaluating what the definition of poverty truly comes down to.

“The incidence of poverty in the world is higher than past estimates have suggested. The main reason is that [previous data] had implicitly underestimated the cost of living in most developing countries,” according to The World Bank.

The data fails to reflect the recent global food crisis and increasing costs of energy. These two factors alone are predicted to bring another 100 million people into poverty.

Previously, the label of “poverty” was defined in the terms of income, in reference to the “minimum flow of cash needed to pay for recurring expenses.” Recently, individuals are arguing that these definitions of poverty “fail to measure what it really takes to get by.”

Ending poverty, however, is now seen as not enough to move families beyond “the outskirts of hope.”

The average single mother who has an income of $15,500 is considered to be in the spectrum of poverty. Studies show, that even if that persons income increases to $15,600 and she is moved out of poverty, the financial stability is still minimal.

According to an article by The Huffington Post, “escaping the perpetual financial insecurity of low-wage work requires more than incrementally higher wages, it requires savings and investments for the future. Income helps families get by, but savings and investments help them get ahead.”

The key to overcoming poverty begins with access to a bank account and the proper knowledge of how to use it to sustain funds. The savings are necessary in times of emergency, while the investments build stability for an endured period of time.

Although the overall poverty rate has declined in the last 10 years, keeping individuals out of poverty and preventing others from delving into it is another task entirely.

In addition to savings and investments, reducing inequality and reducing income differences are also key to reducing poverty. The road to ending global poverty is an enduring one, but each great journey begins with a single step.

– Samaria Garrett

Sources: Huffington Post, Global Issues
Photo: MONEAD

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Oxfam: 85 People Have the Same Wealth as the Lower 50 Percent

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The global income inequality numbers are staggering. According to a new report from Oxfam International, 85 people control as much wealth as half the world’s population, or 3.5 billion people.

The study also found that 70 percent of all people live in countries where this income gap is growing. Oxfam calls this economic trend “ a major risk to human progress.”

The research, focused on the global stage, echoes the sentiment of both United States President Barack Obama, who called American income inequality, “the defining challenge of our time” and Pope Francis’ indictment of global capitalism. It now seems the whole world is paying attention to the growing divide between rich and poor.

However, in spite of growing awareness, the problem seems to be getting worse, not better.

The Oxfam report raises concerns about the effects of economic inequality on democratic systems of government, saying that the concentration of money in the hands of a few undermines the influence of ordinary people.

They argue that markets are not impartial phenomena, but are the construction of the wealthy elite—rigged to move more money and assets into their hands. The report goes on to provide short, specific examples from across the globe indicating how capital corrupts (and breaks) political processes.

But it is not all finger pointing. Oxfam does offer specific recommendations as to how people can face this problem in the coming years. Their policy recommendations include tax reform, living wages, labor safety and healthcare legislation, stronger regulation and the reduced political influence of capital.

The cost of not adopting these recommendations, the claim, will likely prove catastrophic for the world’s poor and for democracy abroad.

– Chase Colton

Sources: Oxfam, Al Jazeera, NPR
Photo: Borgen Project

Poverty Line in America

poverty_line_america
Although the United States ranks among one of the richest nations in the world, poverty persists throughout the country. However, in the midst of the plenty, defining American poverty is an arduous task. When brand new model cars and upscale mansions dot city streets and suburbs, what exactly constitutes as poverty in the land of the rich and free?

According to the Institute for Research on Poverty, the federal poverty guideline (with the exception of Alaska and Hawaii) for a household in 2013 consisting of one individual is $11,490, while the threshold for a family of four is $23,550. The national poverty lines delineated by the federal government were initiated after the work of Mollie Orshansky, a statistician who worked with the Social Security System in the 1960’s.

Orshansky calculated the poverty level by estimating the average proportion of income that a family sets aside for groceries in conjunction with the average standard of living. Since the cost of food changes from year to year along with the socially-acceptable standard of living, the federal government adjusts Orshansky’s formula for calculating the annual poverty line by accounting for inflation.

Poverty guidelines provide the minimum income level in order to ascertain eligibility for federal poverty assistance programs such as Head Start for education, Food Stamps for sustenance, the National School Lunch Program for nutrition, and the Low-Income Home Energy Assistance Program for energy costs. However, other programs such as Temporary Assistance for Needy Families do not implement poverty guidelines when determining an individual’s or a family’s eligibility.

However, according to a 2007 Gallup poll, many Americans agree that $23,550 is not a sufficient measure of poverty for a family of four. According to Orshansky’s measure of poverty, the poverty guideline for a family of four today, should actually amount to $41,000, meaning that with current poverty guidelines, many Americans who are classified as above the poverty line are actually near or within poverty, but, by government standards, fail to quality for many assistance programs.

Despite government-initiated assistance programs, for the second consecutive year, the U.S. poverty rate hovered at 15 percent in 2013 according to a report released by the U.S. Census Bureau, meaning that between 2012 and 2013, little progress at had been made in providing adequate relief for the estimated 46.5 million impoverished Americans. Quite dismayingly, roughly 34 percent (16 million) of the individuals living in poverty in the United States are children. Therefore, the poverty line must be recalibrated and reflect the true costs of living in America in order to initiate a substantial decline in the federal poverty rate.

– Phoebe Pradhan

Sources: Huffington Post, ASPE

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900 Million: Just Past Poverty

International-Monetary-Fund-report
While 1.2 billion people live in poverty, subsisting on less than $1.25 a day, a recent study published by the International Monetary Fund states that 900 million people are at risk of falling into poverty if another economic crisis occurs.

A significant recession such as the Great Recession that hit the global economy in 2008 could increase the number of people living in poverty by as much as 75 percent.  This would add three times the size of the U.S. population to the world’s poor, greatly increasing the strain on humanitarian and foreign aid organizations.

The IMF report does praise the work that has been done to alleviate global poverty and bolster the world economy, but it cautions against reductions in foreign aid.

While USAID creates new markets and trade partners for the United States, roughly 40 percent of the world’s population remains unemployed. The recent recession exacerbated income inequalities, making it more difficult for the employed to support their families on their existing income.

A subsequent recession could occur if the eurozone, already destabilized by the Cyprus bailout, is further disrupted, so the U.S. government would have to maintain or increase USAID in order to support expansions to its programs.

The number of people currently living in poverty already makes up about 17% of the world’s population, and 900 million more would raise this number to 30 percent.

– Katie Bandera

Sources: IMF, The Guardian, The Huffington Post
Photo: Worldwide Center