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Distributing Foreign Aid
No unitary world body is responsible for coordinating and distributing foreign aid. Foreign aid efforts generally consist of bilateral or multilateral aid. One country directly grants bilateral aid to another, while several countries pool resources together before joint-delivering multilateral aid. The U.S. Agency for International Development (USAID) is an example of a bilateral aid organization because only the United States is part of its decision-making process. A strong example of a multilateral aid donor would be the United Nations or the World Bank, where the organizations themselves exercise a strong degree of autonomy over distributing foreign aid.

International Cooperation in Foreign Aid

The World Bank, United Nations and the Organisation for Economic Co-operation and Development (OECD) are some of the biggest agenda-setters in foreign aid. While they all operate independently, each contributes to a shared effort and common understanding in achieving their goals.

In 2012, the United Nations convened a large conference to set targets and an agenda for goals in sustainable development by 2030. Of its 17 development goals and 169 targets, poverty topped the list and contained seven targets. The conference determined the most significant and salient issues relating to sustainable development until 2030. In support of this common objective, OECD also incorporated a platform regarding the 2030 Agenda for Sustainable Development. This exemplifies how one organization’s agenda can cross over and influence agendas that others set.

The Coordination Efforts of the OECD

The OECD advises the distribution and implementation of effective foreign aid flow among the aid members of its Development Assistant Committee (DAC). Within many different frameworks and groups, OECD utilizes a “gold standard” for foreign aid called Official Development Assistance (ODA). Since 1969, the largest countries convened within the DAC have adopted ODA as their primary source of distributing foreign aid. The definition of ODA is a complicated matter, because, for instance, the countries that are eligible for ODA change over time. Regardless, distributing foreign aid undergoes careful optimization to promote and target economic development and welfare in developing countries. These repercussions are wide-ranging. International bodies from the World Bank to the U.N. respect the standards that the OECD sets.

The OECD utilizes a top-down approach to achieving broader development and aid objectives. The organization regularly measures and assesses its progress in implementing its objectives. This includes providing advice to member countries. In its report on “Measuring Distance to the SDG Targets,” it provided member countries with an assistive overview of strengths and weaknesses when it comes to achieving the Sustainable Development Goals (SDGs) that the U.N. set. Such feedback helps countries stay on track to best reach the goals. Overall, the study revealed uneven progress on the Sustainable Development Goals. Some targets, such as infrastructure experienced near achievement, but other targets rated medium to low progress.

The World Bank

The World Bank is something of a twin to the International Monetary Fund (IMF). However, instead of preventing and dealing with financial catastrophes like the IMF, “the [World] Bank is primarily a development institution.” One can see the international links when the World Bank discusses ODA while considering foreign aid flows.

In 2021, one of the World Bank’s primary objectives is to soften the economic blow of COVID-19. It plans to deploy up to $160 billion by June 2021 in support of countries’ responses to the virus. For example, the World Bank provided nearly 7,000 infection, prevention and control supplies and more than 31,000 personal protective equipment to Papua New Guinea. In Ghana, it supported the training of thousands of health professionals and technicians. Today, the World Bank is the largest external financier of education in developing countries. In its 2020 annual report, the World Bank estimated that the International Finance Corporation, a member of the World Bank Group, would contribute to the creation of at least 1.9 million jobs through the projects it financed in the fiscal year 2020.

Looking Forward

Thanks to organizations such as the World Bank, the U.N. and OECD, foreign aid benefits from higher levels of cooperation than ever. While no unitary body exists to overlook aid distribution, these organizations are filling the gap. Their efforts foster hope for even greater effectiveness in distributing foreign aid.

– Marshall Wu
Photo: Wikipedia Commons

3RF: Helping Lebanon Recover from the Beirut Explosion
The United Nations has announced a new plan to support Lebanon after Beirut’s deadly explosion in August 2020. Operating in conjunction with the World Bank and the European Union, the U.N. has named its program 3RF, short for “Reform, Recovery[ ] and Reconstruction Framework.” Lebanon has long struggled under the weight of political and economic crises, which the explosion in its capital city only exacerbated. Therefore, 3RF comes as an effort from the international community to improve conditions in Lebanon over the long term.

An Explosion in the Capital

Shortly after 6 p.m. local time on August 4, 2020, a colossal explosion at Beirut’s port sent shockwaves rippling through the city. The disaster killed 200 people, injured thousands more and rendered approximately 300,000 individuals—out of the city’s total population of 2 million—homeless and destitute.

Officials have since identified the cause of the explosion as 2,750 tons of improperly stored ammonium nitrate, a chemical found in fertilizer. A welding project in one of the port’s warehouses sparked a fire that triggered the blast.

Shockwaves blew out windows at Beirut International Airport five miles away, and scientists from the United States Geological Survey reported that these equated to a 3.3-magnitude earthquake. Besides destroying commercial buildings and residential properties, the explosion also incapacitated three major hospitals and more than 24 clinics. Victims flooded the remaining healthcare centers, placing further strain on a system already contending with the COVID-19 pandemic.

Economic Crisis

Unfortunately, Lebanon was beset by problems before the August 2020 explosion. Public discontent has simmered for years, stoked by political corruption, economic hardship and a government struggling to provide services like reliable power and clean drinking water.

In October 2019, following a foreign currency shortage and the eruption of major wildfires, the Lebanese government announced new taxes in a bid to raise desperately needed revenue. However, the Lebanese government scrapped the plans after large-scale protests gripped the country.

Then, after lockdown measures underwent implementation in March 2020 to slow the spread of COVID-19, Lebanon’s economic crisis worsened. As businesses had to fire employees or place them on furlough without pay, prices on basic goods rose to prohibitory levels. In May 2020, former Prime Minister Hassan Diab wrote in The Washington Post that much of the country’s population had ceased buying meat and fresh produce and that soon people would be unable to afford bread.

Poverty and Corruption

The blast in Beirut has significantly compounded the hardships that Lebanese people have faced. Many residents within the financial capital have experienced trauma, including older citizens for whom the explosion brought up memories of the violent Lebanese Civil War (1975-1990). Additionally, more than 55% of the country lives below the poverty line, almost doubling the percentage registered in 2019. Extreme poverty has also surged within the past year, rising from 8% to 23%.

Unfortunately, corruption among Lebanese political elites has meant the lack of a government-led recovery plan. Popular protests in the wake of revelations about mismanagement of the ammonium nitrate at Beirut’s port led to the mass resignation of then Prime Minister Hassan Diab’s government. Instead, volunteers and NGOs have spearheaded efforts to clean up the city. Funds raised abroad have gone straight to these NGOs on the ground, bypassing the Lebanese government due to the international community’s lack of trust in its leaders.

3RF and Lebanon’s future

The program 3RF aims to address the desperate situation in Lebanon. Announced at the recent International Conference in Support of the Lebanese People, the plan underscores urgent needs for political reform to solve the root causes of Lebanon’s economic crisis. Such reforms will facilitate recovery and reconstruction in the long run.

For his part, U.N. Secretary-General António Guterres called upon political leaders in Lebanon “to put aside partisan political interests and form a government that adequately protects and responds to the needs of the people.” The International Monetary Fund also promised to help but emphasized the importance of active participation from a legitimate Lebanese government during the reform process.

Conditions for Lebanon’s people have been difficult during 2020. Stemming from a spiraling economy and political corruption, the COVID-19 pandemic and the catastrophic explosion at Beirut’s port exacerbated these hardships. With thousands of people homeless and poverty rising, the U.N.’s 3RF will hopefully provide immediate relief while also laying the foundation for better governance in the future. Pressure from the international community can likewise encourage Lebanese leaders to form a new government and begin implementing necessary reforms.

– Angie Grigsby
Photo: Flickr

Poverty Eradication in Angola
Angola has struggled to recover from decades of civil war and economic turmoil, with over 40% of the population, mostly in rural areas, living in extreme poverty. However, recent innovations in poverty eradication in Angola have begun to help the once virulent nation gain stability. New technologies and funding from private companies, financial institutions and organizations have allowed Angola to modernize and combat extreme poverty. Here are three innovations in poverty eradication in Angola.

Open Data Platforms

Open data platforms are a way to gather large amounts of data, statistics and information from diverse and large groups to analyze potential problem areas. Governments and large organizations use this analysis to tackle identifiable issues head-on. For example, an investment group may notice a glaring need for communications upgrades in rural areas, which leads to the creation of jobs and infrastructure.

Open data is a recent innovation in poverty eradication in Angola and examines anything from economic growth to healthcare strategy. Through the International Monetary Fund’s Enhanced General Data Dissemination System, Angola set up its own National Summary Data Page at opendataforafrica.org in 2018. The African Development Bank and the International Monetary Fund (IMF) offer the NSDP to Angola for free. Using key indicators through the NSDP, the IMF and other organizations utilize this information for transparency, economic investment opportunities and identifying necessary aid in Angola, which are ways the NSDP’s data collection can reduce poverty.

South Atlantic Cable System

Angola lacks a strong telecommunications network. Rural communities suffer the most due to decreased technological abilities in farming and irrigation and emergency medical services. But a revolutionary project may help. One of the most impressive innovations in poverty eradication in Angola is the South Atlantic Cable System. Developed by the telecommunications operator, Angola Cables, this submarine communications cable provides interconnectivity between Luanda, Angola and Angonap Fortaleza, Brazil. The SACS improves the telecommunications and information technology infrastructure in Angola while connecting fast communication services throughout Africa and South America.

Although Angola is still developing its ICT sector and job growth has remained stagnant, the SACS potential is exponential. Angola could use this project to establish the country as a leader in tech in sub-Saharan Africa. This would reduce Angola’s reliance on oil exports and drive IT education to encourage entrepreneurship and competition, leading to increased IT and communications jobs and eventual ICT expansion in rural Angola to reduce poverty and improve healthcare access.

Neighboring nations that lack IT infrastructure can reach out to Angola Cables and the Angolan government, launching international funds to Angola. The SACS also makes Angola a centralized location for data in the entire southern hemisphere. The premium digital connection is unrivaled, leading to even more considerable international interest in Angola as a tech hub.

Commercial Agriculture Development Project (PDAC)

Due to the Angolan Civil War, farming in Angola suffered from a lack of development and slow regrowth due to landmines. Agriculture also suffers due to persistent and unpredictable droughts in Angola. The Commercial Agriculture Development Project received funding from the World Bank in 2018 to improve the economic condition and technology in Angola’s rural areas, providing much-needed support to the most vulnerable people in Angola to improve domestic food security. Primarily directed at improving irrigation systems and infrastructure related to the electric grid, the PDAC receives funding through 2024 and supports developers’ creative solutions to these problems.

So far, the project has granted contracts and requests in 2020 for the following:

  • Creating innovative management systems for irrigated perimeters, which help water efficiency usage during periods of drought
  • Development of financial risk tools, like risk management software and microinsurance for at-risk communities to ensure oversight of food security
  • Geospatial electrification options to create renewable energy that people can use in rural areas
  • IT tools, such as tablets, drones and tech support for better agriculture analysis
  • Multiple feasibility studies

All of these contracts and requests have happened in 2020 during the COVID-19 pandemic. Even with the pace slowing to handle the pandemic, the PDAC has led to several innovations in poverty eradication in Angola. Developers have maintained a healthy advancement rate since the beginning of the project, and they will continue through 2024.

Angola’s Future

With all the new technology and projects, Angola will continue to reduce extreme poverty for large portions of its population. As the nation continues to establish a commercial agriculture program and the telecommunications sector, there is a reduced reliance on oil exports. Angola can continue to diversify its economic strategy allocating its vast resources for a bright future and eliminate extreme poverty.

– Zachary Kunze
Photo: Pixnio

Low-income pakistanis
The COVID-19 pandemic has led to a major healthcare crisis in Pakistan and reversed years of efforts to eliminate poverty. The pandemic has also disproportionately affected low-income Pakistanis. The poverty rate in Pakistan declined from 64% to 24% in 2015 — after 20 years of progress. However, with the arrival of COVID-19, the International Monetary Fund (IMF) predicts that the poverty rate will increase to 40%, reversing years of progress.

Who is Most Vulnerable?

The IMF also expects Pakistan’s GDP growth slow by 3% as a result of the pandemic. Agriculture accounts for 20% of Pakistan’s GDP and 43% of its labor force. The continuation of lockdowns with no end in sight is negatively affecting transportation, labor and the consumer market — which in turn, affects the millions of people working in the agriculture industry.

Children and youth amounting to 17 million are missing important vaccinations for diseases such as polio. Moreover, the pandemic has increased the number of people that suffer from food insecurity by several million, bringing up the total to 43 million. Those most at risk are the people that already exist below the poverty line including women, children, senior citizens, the disabled and minorities.

As more and more of these people fall below the poverty line, Pakistan is coming up with different digital solutions that can cater to the millions of people experiencing multidimensional poverty. Here are three digital solutions helping low-income Pakistanis.

3 Digital Tools Helping Low-income Pakistanis

  1.  The Ehsaas Program is a Pakistani government-launched scheme in 2019, to fight the nation’s prevailing poverty levels. With the coronavirus and lockdowns stifling the income of millions of daily wagers — the program quickly implemented a new project known as the Ehsaas Emergency Cash Program. Under this program, low-income Pakistanis can gain access to financial assistance through text messaging. As of right now, the program is helping 12 million families throughout the country — providing stipends of 12,000 PKR each, which families are using to buy food rations.
  2. The Benazir Income Support Programme (BISP) is a federal scheme launched in 2008. Its purpose was to provide unconditional cash support to help alleviate struggling families living in poverty, in Pakistan. It remains the largest support program in Pakistan — distributing approximately 90 billion PKR to 5 million low-income Pakistanis. The program uses tools such as its BISP debit cards to make cash transfers convenient. The program notably helps women and low-income Pakistanis from minority groups gain access to financial assistance.
  3. The Kamyab Jawan Program is the first of its kind in Pakistan. Launched by Prime Minister Imran Khan and his government, it is a program to provide assistance and resources to youth, on a national level. This platform provides opportunities to the country’s youth, ages 15–29. Some of the schemes that are under the Kamyab Jawan Program include youth empowerment programs, loans for youth entrepreneurs and startups, youth legislations as well as youth councils. Through this program, Pakistani youth are finally experiencing integration into civil institutions and capturing opportunities designed to lift them out of poverty.

A Need for Non-Digital Solutions

Collectively, these digital solutions, as well as other solutions implemented by NGOs and separate companies, help many low-income Pakistanis gain access to the necessary resources and assistance they require. This assistance enables low-income Pakistanis to help themselves, specifically during this time of need. However, Pakistan cannot solely rely on digital solutions to combat their poverty crisis. Many of its population do not have access to the necessary digital devices to access these solutions. People who lack internet access, as well as computers and smartphones, are at an obvious disadvantage when it comes to accessing these digital resources. Therefore, Pakistan must also look toward digital-alternative solutions for people who are not able to access these digital ones.

Abbas Raza
Photo: Flickr

Poverty in Equatorial Guinea
Mariano Ebana Edu’s hit single, “Carta Al Presidente,” made big waves in 2013 for speaking up about poverty in Equatorial Guinea. In this passionate rap song, Edu, who performs under the name Negro Bey, criticizes President Teodoro Obiang Nguema Mbasogo’s oppressive government for keeping its citizens in poverty. Although the oil-rich country has experienced rapid economic growth since the 1990s, rampant corruption and wealth inequality prevent large populations from reaping the benefits. Here is some information about poverty in Equatorial Guinea.

Wealth Inequality

The Republic of Equatorial Guinea is a small country with a population of approximately 1.3 million located on the west coast of Central Africa. Although the country has become one of sub-Saharan Africa’s top five oil producers, poverty in Equatorial Guinea remains a major issue. Oil revenues have funded the luxurious lifestyle of President Obiang and his political elite while large populations still lack access to clean water and healthcare.

Human Development Report

Information about poverty in Equatorial Guinea can be difficult to find since Obiang’s government strictly controls the country’s media. In 2019, the United Nations Development Programme ranked Equatorial Guinea 144 out of 189 countries in its Human Development Report, combining life expectancy, education and per-capita income data. According to the U.N., more than half of Equatorial Guinea’s population still lacks access to clean water. UNICEF has found that 26% of the population uses unimproved drinking water sources, and only 66% have access to basic sanitation services.

Healthcare

Healthcare remains a major issue for people living in poverty in Equatorial Guinea, where diseases like malaria and HIV/AIDS continue to be a threat. UNICEF estimates that in 2019, there were approximately 900 new cases of HIV in people ages 0-19 and 1,200 new cases in adolescents and young adults ages 15-24. Insecticide-treated nets (ITNs) are protective gear to help prevent the spread of malaria, but only 38% of households in Equatorial Guinea have at least one ITN. Meanwhile, 20% of children born in Equatorial Guinea die before the age of 5.

Aid and Progress

Enterprise for Development (EfD) is a U.K.-based organization working to eliminate poverty in Equatorial Guinea. EfD provides grants to poor farmers to help improve irrigation and ultimately create sustainable local enterprises with pro-poor benefits. 

The Joint United Nations Programme on HIV/AIDS is a leader in global coordination and advocacy to help end AIDS as a public health threat. Data from UNAIDS shows that in 2019, 23,000 people living with HIV in Equatorial Guinea had access to antiretroviral therapy (ART), and hundreds of expecting parents received prevention of mother-to-child transmission services (PMTCT).

In 2019, the International Monetary Fund approved a $280 million bailout to Equatorial Guinea. However, after credible accusations of high-level corruption President Obiang and his senior officials must reveal their private assets before the country can receive the full amount. Equatorial Guinea must also join the Extractive Industries Transparency Initiative in an effort to fight corruption in its oil and gas industries. These reforms can help ensure that foreign aid goes directly to improving the lives of Equatorial Guinea’s poor.

– Stephanie Williams
Photo: Flickr

9 Facts About the Informal Economy in Latin America
The informal economy is a fluid area of work that people may drift in and out of. Certain companies may live in both the formal and informal job sector as well. The International Labor Organization (ILO) distinguishes between the informal sector and informal employment, stating that the former is an “enterprise-based concept and is defined by the characteristics of the enterprise in which workers are engaged” while the latter occurs on a case-by-case basis regarding the employee’s relationship to the enterprise. For example, some companies operate within the formal sector but hire certain employees “informally.”  In other words, one can define the informal economy as “firms and workers that stand outside a country’s tax and regulatory systems.

It is important to note that the informal economy is not synonymous with the black market or the underground economy. Additionally, the informal market is not necessarily illegal. However, many countries do not mandate the social benefits and protections included in the formal economy. Informal work can include a variety of jobs including street vendors, subsistence farmers, seasonal workers, industrial workers and others. Given this characterization, below are nine facts about the informal economy in Latin America.

9 Facts About the Informal Economy in Latin America

  1. A total of 140 million people work in occupations involving social vulnerability, limited rights and precarious conditions. According to the ILO, this number translates to roughly 50 percent of total employment in the region. It is a little less than the global average but more than double for the developed region.
  2. The percent of informally employed workers varies greatly across the region. Costa Rica had the lowest rate of informally employed workers as of 2013 at 30.7 percent. In addition, Guatemala had the highest at 73.6 percent.
  3. An International Monetary Fund study found four main contributing factors to the expansive informal economy in Latin America. Some of these factors include the heavy tax burden on corporations and individuals as well as minimum wage constraints. Another factor is the importance of agriculture because informal employment is much higher in the agricultural sector.
  4. Although there are poor and non-poor alike across the informal and formal sectors, empirical research has displayed that those working in the informal economy may be at a higher risk of poverty than those employed in the formal economy. The exact relationship between the informal economy and poverty is difficult to determine. This is due to a variety of circumstances that can affect poor households. For instance, the income an individual brings home may not technically be below the poverty line, however, it may not be sufficient to support five people. Regardless, informal employment is often unstable due to inconsistent wage earnings and a lack of social protection.
  5. The informal economy affects youth in Latin America. According to the International Labor Organization, there are an estimated 56 million Latin Americans in the age range of 15 to 24 in the workforce. A little over 7 million are jobless and 27 million are working informal jobs. Many quit without much of a choice as six out of the 10 jobs available to them are in the informal economy.
  6. In 2013, 44.5 percent of the non-agricultural informal employment in Latin America was male while 49.7 percent was female. However, globally males make up a higher percentage because they make up a larger portion of the workforce. In contrast, when looking across developing countries, 92 percent of all women have informal employment compared to 87 percent of all men.
  7. The informal economy in Latin America represented 34 percent of its average gross domestic product (GDP) from 2010-2017, which is higher than any other region in the world. This is true despite Latin America being in possession of one of the lower percentages of informal work, 40 percent compared to the 85.8 percent of employment in Africa.
  8. The informal economy has been reducing in Latin America and the rest of the world for the past 30 years. This could partly be due to a reduction in the challenges to register a business.
  9. Improving transit infrastructure and access to education can reduce the size of a country’s informal economy. A case study of Mexico City found that high transit costs can lead to an increase in the percentage of workers on the outskirts of cities choosing informal work. Furthermore, by improving access to cheaper and more efficient transit services, informal employment can decrease. Meanwhile, a case study in Peru showed that it is easier to obtain formal employment if one has higher education. This was true even for indigenous groups in the country who often face discrimination when entering the formal sector.

Informal work remains an ambiguous topic requiring more research. Nonetheless, it is important to keep in mind that the informal economy is not inherently bad. While many struggle because of their informal work, they often cannot afford the costs of transitioning to the formal sector. For instance, one may deem small businesses that have under 10 workers as informal, and therefore, they would not have to pay social benefits, thus saving them money. In other words, in some circumstances, informal workers may require additional support, but would not necessarily benefit from transitioning into the formal sector.

Scott Boyce
Photo: Wikimedia Commons

Bolivia's Poverty Reduction
Bolivia is a South American country that continues to reduce its high poverty rate. Poverty lowered substantially from 66 percent in 2000 to 35 percent in 2018. The government of Bolivia took direct action to develop its economy, reduce its poverty and income inequality and increase foreign investment. The Latin American country still has a high poverty rate, yet its progress in the past 20 years shows promise that Bolivia’s poverty reduction and economic development will continue.

Government’s Direct Involvement in Poverty Reduction

The Bolivian government approved the National Economic and Social Development Plan 2016-2020 to bring about change in its country. Former President Evo Morales fought for income equality and higher wages as Bolivia’s president, and the country is still fighting for his goals. The country intends to help its people live a prosperous life without worrying about the effects of poverty, such as hunger and an inability to afford health care. The main objectives of the plan include eliminating extreme poverty, granting basic services to the entire population and diversifying its economy. The plan set forth a continuation of Bolivia’s poverty reduction progress since 2000 while also lowering income inequality.

Poverty almost reduced by half from 2000 to 2018, which economic growth partly drove after Bolivia transitioned into a democratic society during the 1990s. Income inequality lowered as the Gini coefficient demonstrated. If the Gini coefficient is zero, then income inequality is zero. This income inequality indicator showed a reduction from .62 in 2000 to .49 in 2014. For reference, the U.S. Gini coefficient in 2017 was .39. The 2016-2020 plan sought to continue its efforts in reducing income inequality. Although the Gini coefficient lowered, income inequality still remains an issue in Bolivia.

Poverty Reduction Through Economic Growth

Economic growth is another factor that helped with Bolivia’s poverty reduction efforts. Bolivia’s GDP growth hovered around 4 percent since the early 2000s. From 2000 to 2012, Bolivia increased its exports that consisted mainly of minerals and hydrocarbons. Although hydrocarbons grew controversial in Bolivia, hydrocarbons and minerals accounted for 81 percent of all exports in 2014. In 2000, its exports accounted for only 18 percent of GDP, yet exports grew to 47 percent in 2012. Bolivia’s decision to focus on exports helped grow its economy, add jobs and reduce income inequality. In time, Bolivia may transition to cleaner sources of energy for its future.

Economic growth led to wage increases for many Bolivians, which expressed the idea of poverty reduction through economic growth. Bolivia’s GDP grew by a massive 80 percent from 2000 to 2014, and there were various positive side effects of this growth. Salaries increased after the government took direct involvement in income inequality. The real minimum wage increased by 122 percent in the years 2000-2015. The average labor income also increased by 36 percent during 2000-2013.

The International Monetary Fund (IMF) came to the conclusion that labor income was the number one factor that led to reductions in poverty and income inequality from 2007 to 2013. Nonlabor income such as remittances, rents and transfers contributed a small amount to these reductions. Nonlabor income was an important aid for the elderly though.

Bolivia’s Progress in Income Inequality and Economic Development

Bolivia is an excellent model for what is possible through a government’s direct involvement in poverty reduction. Economic growth helped fuel Bolivia’s objectives in reducing poverty and bringing income equality to its people. Although poverty remains high, Bolivia’s progress in the past 20 years shows promise that poverty will continue to lower. Income inequality remains an issue, and as shown from the IMF’s research, wage increases are key to Bolivia’s poverty reduction.

Lucas Schmidt
Photo: Flickr

economic growth in Guyana
Guyana discovered oil off its coast in 2015 and is on the brink of major economic growth. According to the International Monetary Fund (IMF), the projected economic growth in Guyana for 2020 is 86 percent. The projected growth rate is high for 2020 due to ExxonMobil’s oil find in the Caribbean Sea in 2015, which brought hope for change to poor Guyanese. For 2019, GDP growth was 4.4 percent, almost double from the previous year, and the 86 percent projected growth by the IMF shows an increased interest in the development of Guyana. Oil production in 2020 and in the future could bring economic growth in Guyana and add thousands of jobs.

A Potential Future in Oil

Guyana found an estimated 3.2 billion barrels of oil off its coast, with oil production beginning in late December 2019. More than 1,700 Exxon employees are working on extracting oil from Stabroek Block, the oil reservoir, and transporting oil to the Liza Destiny, a storage and offloading vessel. About 50 percent of the 1,700 workers are Guyanese. Exxon expects to produce 120,000 barrels of oil a day in 2020 and estimates 750,000 barrels a day by 2025. The 2025 estimated production would position the South American country in the top 30 countries for oil production. The 750,000 barrels a day estimate would be more oil than India produced daily in 2018. This is one reason for the IMF’s projection of a high growth rate for Guyana, as oil could transform the economy.

Uses of Future Revenue

Oil production in 2020 is exciting Guyanese about the possibilities of changing the country and its people. President David Granger commented, “Every Guyanese will benefit from petroleum production. No one will be left behind.” Guyana’s GDP per capita is about $8,100, which ranks among the lowest in the world. With oil now in production, there is potential to improve its lagging infrastructure and low income. Guyana only has about 500 miles of paved roads, yet almost 2,000 miles of unpaved roads. The President stated that oil could transform the developing country and improve life for hundreds of thousands of Guyanese.

Guyana’s government expects oil revenue of $300 million in 2020 and $5 billion for 2025. This could further enhance economic growth in Guyana and bring the possibility of distributing the money to lagging sectors. In 2019, the government spent $2 billion in its infrastructure. This included constructing or upgrading roads, bridges, highway lights and drains. The East Coast of Demerara Road Widening Project affects more than 100,000 of Guyana’s 777,000 population. Guyana approved about $500 million for the project that focuses on upgrading roadways along the coast. Most of the population resides near the coast and along the Demerara River. Guyana could not only use oil revenue to further develop Guyana but also to add jobs, as the ExxonMobil operation is already showing.

The Impact of Guyanese Oil Revenue

There is steady economic growth in Guyana, as one can witness from its GDP rising from 2.1 percent in 2018 to 4.4 percent in 2019. The IMF’s projected 86 percent growth rate for Guyana in 2020 expresses big expectations for the South American country. Although Guyana’s potential future wealth is good news, the developing country will need support in transforming its newfound wealth into positive change for its people. Every poor country that strikes oil does not always manage natural resources well, yet with the right tools and guidance, Guyana could reduce its 35 percent poverty rate by adding jobs and transforming into a developed economy.

– Lucas Schmidt
Photo: Wikipedia Commons

Living Conditions in Angola
Angola, the seventh-largest country in Africa, has one of the fastest-growing economies in the world. Since 2013, its economy has been booming and both international and domestic investments have been on the rise. Although Angola’s economy has the potential to become an economic powerhouse in Africa, the international community has become concerned with the poverty rates and overall income inequality in Angola. Despite Angola’s rapidly growing economy, it has a 26 percent unemployment rate and 36 percent of the Angolan population lives below the poverty line. The living conditions in Angola are indicative of an economy that is not yet diversified and a country with extreme income inequality. Here are 10 facts about the living conditions in Angola.

10 Facts About Living Conditions in Angola

  1. Low Life Expectancy and Causes: Angola has a very low life expectancy. The life expectancy in Angola is one of the lowest in the world, and Angola has the 12th highest number of infant mortalities every year. The leading causes of death revealed that the low life expectancy is a result of preventable causes like diarrhoeal diseases, malaria, neonatal disorders and influenza.
  2. Literacy: A third of all Angolans are illiterate. Although primary education is compulsory in Angola, 33.97 percent of Angolans are illiterate and literacy rates have been on a steady decline since 2001. Very few individuals go on to college, leaving their economy stagnated with a brain drain and a lack of available employees for white-collar jobs that require a deep understanding of their field.
  3. Clean Water Availability: Angola has a lack of clean water resources. Forty-four percent of Angolans do not have access to clean water, according to the United Nations Children’s Agency. The Public Water Company in the capital of Angola, Luanda, reports that although the daily need for water is well over a million cubic meters of clean water per day, the public water company EPAL can only supply 540,000 cubic meters of clean water per day. This leaves many without clean water. Even if EPAL were to have the capacity to supply all residents with clean water, it does not have the infrastructure to do so.
  4. Access to Electricity: Few Angolans have access to electricity. In rural areas, only 6 percent of Angolans have access to electricity. In urban areas, 34 percent of Angolans have electricity, leaving 3.4 million homes without power.
  5. Income Inequality: There is a severe gap between wealth in urban and rural areas. Income inequality in Angola is one of the highest in the world at 28.9 percent. Poverty is highest in rural areas where 94 percent of the population qualifies as poor. This is contrasted by the fact that only 29.9 percent of the urban population qualifies as poor.
  6. Public School Enrollment: There is low enrollment in public schools and UNESCO reports that enrollment has been on a steady decline since 2009. The low enrollment rate may be because many schools and roads suffered during Angola’s civil war and because many schools are located in inconvenient and rural locations with poor sanitation and untrained teachers.
  7. Unemployment: Unemployment is very high in Angola. Angolan unemployment has increased by 1.7 percent since 2018, growing to 30.7 percent. The youth unemployment rate is at an all-time high of 56.1 percent.
  8. Oil-based Economy: The economy is not very diversified. Angola is an oil-rich country and as such, more than one-third of the Angolan economy comes from oil and over 90 percent of Angolan exports are oil. Because the oil sector has been public for so long, the economy was prone to contractions and inflations along with global fluctuation in oil prices. This has left the stability of the Angolan economy at the mercy of oil prices, which have been rapidly fluctuating, destabilizing the economy.
  9. Food Insecurity: Many Angolans suffer from severe food insecurity. In fact, 2.3 million Angolan citizens are food insecure, and over 1 million of those individuals are children under 5 years old. Because of government redistribution of land, many farmers have lost their best grazing land and their arable land for crops, leading to a lack of meat and produce.
  10. Unpaid Debts: Unpaid debts threaten to dampen economic growth. After a long economic slump, the Angolan economy has further suffered due to unpaid loans. Twenty-seven percent of total Angolan credits are loans that are defaulted or close to being defaulted, and 16 percent of the largest bank in Angola, BIA, are not being reimbursed.

Although Angola has a multiplicity of problems related to poverty to solve, the country is not beyond help. Angola’s new President has secured loans from China, garnered aid from the International Monetary Fund and promised to allow local businesses to partner with international customers and trade partners to increase macroeconomic growth. As Angola diversifies its economy in 2020, the President of Angola states that economic growth and stability is on the horizon. Angola’s economy is receiving aid from a number of nations, including China, the International Monetary Fund, the World Bank and the African Development Bank, which will no doubt prove to be a successful investment.

Denise Sprimont
Photo: Flickr

The World Economic Forum and Global Poverty
In the realm of international relations, there are countless organizations that have complex acronyms and unclear operations. The biggest and best-known organizations are the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO) and Organization for Economic Cooperation and Development (OECD) which often obfuscate lesser-known organizations, such as the World Economic Forum. The World Economic Forum and global poverty link which this article will explore while addressing the organization’s purpose.

What is The World Economic Forum?

The World Economic Forum is an international organization that emerged in 1971, congregating leaders in politics, business, culture and society to address issues and facilitate solutions on a global, regional and industrial scale. The pinnacle of the organization occurs every January in the form of an annual meeting in Davos, Switzerland at the organization’s headquarters. Global elites gather at the Swiss ski resort and discuss all manner of topics, ranging from the latest in technology and innovation to critical issues like rising global income inequality and global poverty generally.

Despite its standing as an independent nonprofit, people often confuse or associate the World Economic Forum with the United Nations, partially due to its focus on the U.N.’s Sustainable Development Goals (SDGs). These ambitious objectives range from broad, borderline idealistic ones such as No Poverty and End Hunger to Industry, Innovation and Infrastructure and Reduced Inequalities.

What Does The World Economic Forum Do?

In places like the World Economic Forum, world leaders and officials access the progress of the SDGs and evaluate what their statuses are and what they need for the future. For instance, a September 2018 article emphasized the success of the World Economic Forum’s initiative in reducing poverty, reducing the total amount of people living on less than $1.90 a day to 655 million people, or about 9 percent of the world’s population. The article cautions against too much hope, however, forecasting that the goal of ending poverty by 2030 will fall 480 million people short, or about 6 percent of the population. These figures come from a World Bank report portioning some of the blame on many countries failing to meet a U.N. target of 0.7 percent of economic output on aid, a sentiment that the London-based Overseas Development Institute supports.

How does the World Economic Forum intend to combat this shortcoming? In an October 2019 announcement, the forum proclaimed a theme for the January 21-24, 2020 meeting: Stakeholders in a Cohesive and Sustainable World. Reinforcing its commitment to the SDGs and the Paris agreement of 2015, participants will solidify a meaning to ‘stakeholder capitalism,’ a principle that companies should meet the needs and requirements of all of its stakeholders, including the general public. The World Economic Forum will emphasize six areas including Ecology, Economy, Technology, Society, Geopolitics and Industry, in an application of this philosophy. All of this will align with the forthcoming Davos Manifesto 2020, mirroring the Davos Manifesto of 1973, which founder and Chairman Klaus Schwab believes will “reimagine the purpose and scorecards for governments and businesses.”

Conclusion

Some criticize the World Economic Forum for being an aloof, exclusive assortment of billionaires and powerful people, exactly the kind of people global inequality directly benefited. Participants at Davos do seem to be aware of this, identifying rising inequality, protectionism and nationalism as byproducts of the globalization that they supported. Klaus Schwab, The World Economic Forum’s founder, realizes that globalization created many winners, himself included, but that the losers now need recognition and assistance. It can be difficult to attribute any direct action to the World Economic Forum, as its participants act mostly independently of it, though informed by discussions and insights gained at it. However, given the overall rhetoric and specific support of the Paris Agreement and Sustainable Development Goals, the World Economic Forum and global poverty clearly intertwine as the organization positions itself as a beneficial actor for the entire globe.

– Alex Meyers
Photo: Flickr