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How National Debt Negatively Affects Developing Nations

National Debt Between 2000 and 2023, global GDP has tripled, while global public debt has quintupled in the same period. This is a serious issue, yet the world’s $92 trillion in public debt remains far from a household discussion. National debt affects developing nations in an outsized way that is spoken of even less.    

While public debt affects the developed world, it is crippling the developing world’s ability to rise out of poverty. Global poverty cannot be solved without recognizing that public debt is a key part of the problem. Without addressing it, developing countries will remain mired in high-interest payments and an ever-growing debt burden that harms their citizens and steals their futures.

How Does National Debt Affect Developing Nations? 

Last year, 59 developing countries held national debt worth more than 60% of their GDP. These countries are already combatting many other hurdles to success, including food instability, poor health care and a lack of sanitation. Their high levels of debt prevent them from being able to fully address the issues impacting their people. 

The debt problem is so severe that, according to the UN, “3.3 billion people now live in countries where debt interest payments are greater than expenditure on health or education.” These countries are only managing to pay the high interest on their loans, not their actual debt burdens. Developing countries face an increasing need to divert life-saving funds to maintain debt. As a result, national debt affects developing nations in an extremely detrimental way.

National Debt Affects Developing Nations Differently 

Public debt affects developing and developed nations very differently. While developed nations have the stability and resilience to ride out their storms and debt mistakes, developing nations do not. They remain stuck in a perpetual cycle of debt that they cannot pay off, while interest payments keep them from lifting themselves out of poverty. The story of debt in these two types of countries is very different.

What is the Interest Rate Disparity and Why Does it Matter? 

There is significant disparity in interest rates between loans that developing nations take out as opposed to developed ones. Over the past 10 years, while developed countries have been paying around 1% interest on loans, developing countries have been charged 5-8% interest. It is far more expensive for a developing nation to have debt than it is for developed nations.

Why Do Developing Nations Take Out Loans?   

To better understand this massive problem, it is helpful to understand why developing nations take out debt in the first place. The reasons are myriad, but include:   

  • The unexpected cost of the COVID-19 pandemic   
  • External disasters that have an impact on the country   
  • Domestic disasters 
  • Other unforeseen economic issues that countries face 
  • Infrastructure development aimed toward economic growth 
  • The war in Ukraine 

Many developing nations faced multiple disasters in the last few years that, due to their financially vulnerable state, have left them without any recourse other than loans. This means that national debt affects developing nations now even more than it normally would. 

Who Do Developing Nations Borrow Money From? 

When a country decides to borrow, they have several possible sources, including:   

  • Internal loans that the government takes out by itself, for itself   
  • Bilateral loans borrowed from the governments of other nations    
  • Multilateral loans from international organizations, such as the World Bank and the International Monetary Fund (IMF)
  • Private creditors    

The institution that the country is indebted to has influence over that country and may change how easily the country can pay back the loans. For example, China has resisted the movement of international entities working to alleviate the debt burden on developing nations. That makes helping countries who are indebted to China much more difficult.  

Addressing the Debt Crisis 

While there is still a great deal of work to do, global awareness of this issue is increasing. The UN published a report on the global debt crisis in July 2023 titled “A World of Debt: A Growing Burden to Public Prosperity.”   

Additionally, the World Bank and the International Monetary Fund collaborate on the Heavily Indebted Poor Countries (HIPC) initiative, designed to give much-needed relief to developing countries that are overwhelmed with debt. This initiative began in 1996 and provides a road for indebted countries to receive 100% relief on eligible debts. Before a country can receive this aid, it must meet certain criteria — one of which is that the country must “face an unsustainable debt burden that cannot be addressed through traditional debt-relief mechanisms.” There are 36 countries receiving relief through this initiative.

Conclusion   

Global public debt has skyrocketed over the last two years, and developing nations have faced heavy impacts. National debt affects developing nations in a way that developed nations are not subject to, which makes it extremely difficult for developing nations to pay off their debt. Efforts by developed nations are necessary to help developing nations rise out of the depths of public debt. When public debt is no longer a concern, these countries can focus on sustainable development to improve the quality of life among their citizens.

– Abigail Leland
Photo: Pixabay

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How Lebanon’s Economic Crisis Is Affecting Its People

Lebanon’s Economic Crisis
Lebanon has been suffering through a brutal economic crisis for more than a year; the resulting financial insecurity has thrown an estimated 1.4 million people into high levels of food insecurity. However, efforts are underway to combat Lebanon’s economic crisis.

Hyperinflation

As of May 2023, inflation rates in the nation reached a shocking 260%, and since July 2022, the Lebanese currency has lost 70% of its value. This has contributed to the food Survival Minimum Expenditure Basket (SMEB) increasing by 230% in the same period. The IPC defines the SMEB as “a benchmark to estimate the cost of food and other basic needs of a refugee family in Lebanon.” Thus, it is becoming progressively more difficult for the people of Lebanon to sustain themselves. 

Political Uncertainty

Since the end of the presidential term in October 2022, there have been multiple failed attempts to elect a new leader. This has dropped the nation into a state of dramatic institutional uncertainty. Lebanese politics’ current chaotic state makes it extremely difficult for the government to deal with the economic issues they are facing and is the catalyst for the continuation of this crisis. The International Monetary Fund (IMF) has claimed that if the political situation is not resolved and drastic reforms are not made in the near future, Lebanon could fall into a perpetual crisis.

Unemployment in Lebanon

Unemployment in the nation is decreasing but still stands at one-quarter of the population. These figures are much higher for certain groups, with women and young people facing almost 40% unemployment.

The nation is also harboring a large number of Syrian refugees. Accessing formal employment for these groups is incredibly difficult leading them to fall into more informal work that often leads to them suffering through extremely exploitative working conditions. Nearly 30% of Syrian refugee households in Lebanon have no working members and temporary labor in agriculture and construction is the primary source of income for these groups, behind humanitarian assistance.

The effects of the crisis are by no means even and universal for the entire country. Certain regions are feeling the strain to a far greater extent than others. In El Hermel, 82% of Syrian refugees cited humanitarian aid as their main source of income.

Food Insecurity

According to the World Food Programme (WFP), an estimated 37% of the Lebanese population is in a state of acute food insecurity. The WFP goes on to state that due to hyperinflation, reduced access to basic services and increasing social tensions, the difficulty of finding a sufficient source of food will only increase.

Humanitarian Food Assistance (HFA)

Currently, 28% of all Lebanese residents and 75% of all Syrian refugees in the country are receiving Humanitarian Food Assistance (HFA). In April 2023, the number of people receiving HFA in the nation reached 1.12 million. Although this is going a long way to limit the suffering the people of Lebanon are facing as a result of the crisis, more action is necessary to find a real long-term solution. 

Recommended Actions

The IPC Acute Food Insecurity Analysis gives multiple recommendations for potential solutions to Lebanon’s economic crisis. It suggests there needs to be an expansion and standardization of the social safety nets that the Lebanese government has provided to ensure security for the nation’s poorest citizens.

Livelihood support programs need to be scaled up, particularly in the agricultural sector to provide stable sources of income and to mitigate the resulting loss of purchasing power that the nation’s extreme levels of inflation have caused. There needs to be an increase in asset creation, again mainly in the agricultural sector, to allow citizens to not only make a livelihood but also to allow people in poorer areas to support themselves through personal food production. However, to achieve reforms this substantial, increased political stability is necessary.

Conclusion

Although Lebanon’s economic crisis is ongoing, the continued support from HFA and a clear plan of action that the IPC Acute Food Insecurity Analysis has laid out presents a sliver of hope for a brighter future. 

– Henry Tuppen
Photo: Flickr

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Fragility and Rule of Law in Guinea-Bissau

Rule of Law in Guinea Bissau
Violence and instability on a structural level severely hinder the application of poverty reduction plans and can even lead to poverty increasing in the affected region. A clear example of this is the Sahel region in West Africa. Civil unrest, military plots and the expansion of Islamic terrorist groups in the region have made it one of the world’s only places with an increasing poverty level according to the World Bank. Guinea-Bissau lies just south of this region, but it is still at risk of falling to the same threats besetting its northern neighbors. Helping solidify the rule of law in Guinea-Bissau can make a regional leader in the fight against poverty.

History of Guinea-Bissau

Guinea-Bissau declared independence from Portugal in 1973. The young republic soon faced the political instability characteristic of post-colonial Africa. A coup in 1980, a civil war in 1999 and a further coup in 2012 provoked high legal insecurity and ensured that the country’s economy would stagnate.

However, after a transition to democracy in 2014, the country has been able to prosper relative to its neighbors. Despite a coup attempt in 2022, Guinea-Bissau has stood as one of the main democracies in West Africa. Guinea-Bissau’s government has since focused on addressing corruption, economic development and law enforcement in collaboration with international institutions such as the International Monetary Fund (IMF) or the United Nations Development Program (UNDP).

The Challenge

As the Fragile State Index identified, Guinea-Bissau faces great issues with socioeconomic instability. Slow economic growth following the COVID-19 pandemic combined with increased political polarization and the prominence of Islamic fundamentalist groups and drug trafficking have led to high social unrest. Furthermore, a lack of inclusive dialogue and state reach to rural areas has created a challenge for the continuation of the democratic system. In turn, this perpetuates the situation of poverty in the country, as violent flare-ups and a fragile rule of law scare off investment, slow job creation and eliminate entrepreneurship opportunities. Yet, in spite of the monumental challenges to the rule of law in Guinea-Bissau, the government has not stood idle, and the international community has taken steps to improve the situation.

Current Projects and Solutions

As previously mentioned, Guinea-Bissau does not stand alone in its fight to preserve the rule of law. The government together with the United Nations Industrial Development Organization devised a $4.2 million plan to boost its private sector competitiveness with a special focus on the agricultural sector implementing more productive methods.

Furthermore, the UNDP has set out a program to end political isolation and polarization in the country. It is developing platforms for inclusive dialogue and ideas exchange, namely the “Na No Mon” initiative, which is Creole for “in your hands.”

Through initiatives like Na No Mon, Guinea-Bissau aspires to mend the rift that has split its society and the first results are starting to show. More than 4,000 people have gained access to justice services from the state. Furthermore, through collaboration with the UNDP, Guinea-Bissau has improved the capabilities of law enforcement in rural areas and has provided 149 health care facilities with malaria monitoring equipment. The Fragile States Index reflects all this, where Guinea-Bissau has significantly improved its score. Through these improvements, the Guinea-Bissau government aims to restore investor confidence in the country and to set its people on a route to ending poverty in the country and maybe even being a role model for other countries in the region for attracting investors and improving living conditions.

Prospects for the Future

The challenges Guinea-Bissau faces are many, but the country has seen steady progress in the past few years. The upcoming elections in 2024 and the stability of the ensuing government will be crucial to solidify the country’s progress and set Guinea Bissau on a road to stability and economic growth. Until then, the international community can but celebrate the great strides society has taken towards reinforcing the rule of law in Guinea-Bissau.

– Daniel Pereda
Photo: Flickr

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How the HIPC Initiative Provides Debt Relief

The HIPC InitiativeThe HIPC debt relief program plays a critical role in alleviating unsustainable debt burdens in impoverished nations. This article explores its multifaceted impact, challenges and the way forward for sustainable development.

Understanding the HIPC initiative 

The HIPC initiative, formally known as the Heavily Indebted Poor Countries Initiative, was initiated in 1996 by the International Monetary Fund (IMF) and the World Bank and marked a pivotal moment in global efforts to alleviate the overwhelming debt burdens afflicting impoverished nations. Its primary mission was unambiguous: to ensure that no impoverished country would be ensnared by an unmanageable debt load, a situation that often hindered economic development, social progress and the attainment of critical Sustainable Development Goals (SDGs).

In 2005, acknowledging the pressing need to expedite progress toward the United Nations’ SDGs, the HIPC Initiative received a significant boost through the introduction of the Multilateral Debt Relief Initiative (MDRI). This complementary framework provided countries successfully completing the HIPC process with an exceptional opportunity to receive full, 100% debt relief on eligible debts from the IMF, the World Bank and the African Development Fund. 

At the core of the HIPC Initiative’s effectiveness lies the concept of the “decision point.” At this juncture, the Executive Boards of the IMF and the World Bank formally assess a country’s eligibility for debt relief. Simultaneously, the international community commits to reducing the country’s debt to a sustainable level, marking a critical stride towards economic rejuvenation and stability. Upon reaching the decision point, the beneficiary country becomes eligible for interim debt relief, providing immediate relief from the suffocating weight of debt.

Nevertheless, securing full debt reduction under the HIPC Initiative demands the fulfillment of specific criteria:

  • Developing a history of excellent performance in programs funded by the World Bank and IMF financing.
  • Successfully carrying out important reforms determined at the decision point.
  • Adopting and successfully carrying out a Poverty Reduction Strategy Paper (PRSP) for at least a year.

Meeting these rigorous criteria represents a significant achievement, as it designates a country’s attainment of its “completion point,” entitling the nation to receive the full debt relief commitments made at the decision point. Impressively, among the 39 countries initially eligible or potentially eligible for HIPC Initiative assistance, an outstanding 36 have successfully reached their completion points, thereby securing comprehensive debt relief from the IMF and other creditors.

The Multi-Faceted Impact of Debt Relief 

The HIPC initiative, with its comprehensive approach, exerts a multi-faceted impact on heavily indebted poor countries (HIPCs) that extends well beyond the realm of alleviating financial burdens. It serves as a potent catalyst for comprehensive socio-economic transformation within heavily indebted poor countries (HIPCs). By attaining debt sustainability, these nations can redirect their focus towards vital structural adjustments, effectively laying the groundwork for sustainable, long-term development.

In a world where achieving Sustainable Development Goals (SDGs) — and therefore an equitable and sustainable future — necessitates significant investments in infrastructure, human capital and resilience regarding changing weather, debt relief stands as an indispensable instrument. 

To date, 37 countries, notably 31 of them in Africa, have successfully accessed debt relief through the HIPC Initiative and the MDRI, reaffirming their pivotal role in promoting global development. 

Challenges and the Way Forward

Challenges and the way forward for the HIPC initiative underscore the complexities inherent in addressing the debt crises faced by heavily indebted poor countries (HIPCs). While the Initiative plays a vital role in debt relief and development assistance, it operates within financial limitations and confronts the formidable constraints imposed by HIPC governments’ policies and institutions. These realities must temper expectations for the Initiative to yield transformative outcomes. 

To achieve its multifaceted objectives, HIPCs must adopt sound policy frameworks and pursue balanced development strategies. This necessitates commitment and action on the part of the HIPC governments themselves. 

Donors, on the other hand, must confront the challenge of ensuring adequate resources are available to finance the development priorities of HIPCs and other impoverished nations. It is imperative that HIPC debt relief supplements, rather than substitutes for, existing aid flows. 

Moreover, the limited coverage of the HIPC Initiative, initially targeting only 40 out of approximately 51 eligible countries, points to the pressing need for a more inclusive approach. Many countries remain in dire need of debt remission. 

Addressing these challenges requires a concerted effort from both HIPCs and the international community. It calls for an expanded and flexible approach that adapts to evolving circumstances while maintaining a focus on alleviating the debt burdens that hinder sustainable development and poverty reduction in these nations.

Looking Ahead

The HIPC initiative serves as a testament to international collaboration and solidarity in the battle against the pernicious cycle of poverty and debt. By affording vulnerable nations the opportunity to liberate themselves from the shackles of unsustainable debt, it paves the way for a brighter and more equitable future, wherein economies can flourish, and societies can thrive, one debt at a time.

– Hannah Klifa
Photo: Unsplash

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The Blended Finance Fund Shaping African Health Care

African Health CareThe Transform Health Fund announced at the U.S.-Africa Leaders Summit in December 2022 heralds a new age of private and public investment in African health care systems. A wide range of institutions has pledged either grant or private equity funding, including USAID, the U.S. International Development Finance Corporation (DFC), AfricInvest, private foundations, multinational corporations and the International Finance Corporation (IFC). The fund’s total commitments now amount to $50 million, capital which will go toward improving supply chains, health care delivery and the availability of digital tools to serve the unmet health care needs across sub-Saharan Africa.

The Financing Gap

Africa is home to 16% of the world’s population and bears 23% of the global disease burden, yet 1% of global health spending ends up in the continent, according to the Health Finance Coalition (HFC). Compared to their international counterparts, the Brookings Institute reports that Africans pay high out-of-pocket costs for health care — while also living in countries with some of the worst poverty rates in the world. Half of all Africans, according to DFC, currently lack access to modern medical facilities.

One challenge to building system resilience, exposed during the coronavirus pandemic, is the lack of African-made health care products: the continent imports more than 90% of pharmaceutical equipment and supplies to meet its health needs, according to Brookings. During the pandemic, Africa established local production firms and intra-governmental funds and partnerships, such as the African Medical Supplies Platform. Yet, there remain ample opportunities for improvements in disease prevention and treatment, pandemic preparedness and health commodity production throughout Africa. The IFC estimates that $25-$30 billion is necessary to ensure African health care systems can meet the continent’s rising demand.

Bridging Public and Private Financing

The Transform Health Fund is one example of an increasingly popular strategy of resilience-building in Africa’s health care system known as blended financing, or a capital stack approach. The primary feature of this model is public-private partnerships, where institutions, including government institutions like the DFC, nonprofit organizations and investment firms, leverage their resources to make an impact on a shared goal.

Virtues of the approach, according to agencies like Wilton Park, the International Monetary Fund (IMF) and IFC, lie in its distribution of risk among funders and its ability to achieve a balance between donor and commercial investments in the face of dramatic need. While donor institutions can help bolster emerging industries, health systems in capitalist, globalized economies require private sector buy-in to decrease dependency upon aid and strained state budgets.

Toward Universal Health Coverage

HFC and AfricInvest, key contributors to the Fund, state that the ultimate goal of the Transform Health Fund is to achieve Universal Health Coverage (UHC). The role of public-private partnerships in achieving this social impact is unique and complex. A Health and Human Rights Journal article warns of possible conflicts between the goals and priorities of private and public health care institutions, particularly as related to human rights-based conceptions of health care. Such conflicts are more likely to be avoided if collaborators can ensure African leadership of the initiative and both strong coordination, according to Wilton Park and effective regulation, according to Brookings, of Africa’s blossoming health care sector.

Given the widely documented link between health and poverty, stakeholders of the Fund hope that industries serving populations in need can also prove to be sustainable and profitable. With a target amount of $100 million, the Fund will primarily inject investments into eight countries in sub-Saharan Africa, including Kenya, Uganda, South Africa and Nigeria, according to the DFC report. However, with a diverse set of stakeholders and a strong focus on transformation, as its name suggests, the Transform Health Fund ushers a new future for the broader African health care landscape and, if successful, the well-being of all African people.

– Hannah Carrigan
Photo: Wikipedia Commons

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Poverty Reduction in the Democratic Republic of Congo

Poverty Reduction in the Democratic Republic of Congo
The largest country in Africa, the Democratic Republic of Congo (DRC) is “among the five poorest nations in the world.” Political instability, humanitarian crises, and conflict have aided the fact that 64% of all Congolese lived under the poverty line in 2021. With the population growing, along with unemployment, the Democratic Republic of Congo’s government, joined with international aid, has been making efforts toward poverty reduction in the Democratic Republic of Congo.

Socioeconomic Issues

According to data from the Democratic Republic of Congo’s government and the International Monetary Fund’s country reports, unemployment impacts 30% of young citizens, which the COVID-19 crisis has only impacted more. Within the workforce, there is a gap between genders. In 2021, Congolese women only made up 23% of the government, 14% of the parliament and 24% of communal councils. Unemployment is higher among women, at 10.2% juxtaposed to 9% for men.

The country is one of the highest in sub-Saharan Africa in levels of morbidity and mortality, along with having a maternity mortality ratio of 378 deaths per 100,000 live births, according to the International Monetary Fund (IMF) Poverty Reduction and Growth Strategy for the Republic of Congo report. When it comes to education, the Democratic Republic of Congo has seen a shortage of qualified teachers, a high student-to-teacher ratio and poor school infrastructure.

Poverty is the main issue within the country, as estimates have stated that the poverty rate rose between the years 2019 and 2020 by 4%, according to IMF. This is in large part due to the outbreak of COVID-19, which aggravated an economic recession and made it hard for Congolese people to afford rent, electricity and water bills, food and health care.

National Development Plan

The IMF report outlines the country’s National Development Plan 2022-2026. The goal of the plan is to “build a strong, diversified and resilient economy.” To do so, the government plans on focusing on agriculture, industry, tourism, real estate, technology and economic zones. This plan to regrow the economy comes with the prospect of an agreement with the IMF that could provide monetary aid.

Agriculture is an essential employer within the DRC, making it the first priority in the plan. By focusing on it, the country believes it can “fight effectively against unemployment, poverty, uncontrolled urbanization, the disarticulation of the national territory, food insecurity, and the foreign aid deficit.” The development of industry could bring modernization to the country and create jobs. In a similar vein, developing economic zones can create a “new national economy” and open them up to globalization. Tourism is a potential new market for the country to open up to, along with digitalization.

Following a visit to the DRC on February 15, 2023, the IMF released a statement reviewing the country’s recent economic data, saying that the agency “looks forward to continuing engagement in support of the Democratic Republic of the Congo.”

The World Bank

In 2022, the World Bank endorsed a Country Partnership Framework for the DRC that “promotes the stabilization and development of DRC, supporting strategic priorities and critical reforms to improve governance and deepen stabilization efforts.” The World Bank focuses on supporting the country’s developments in education, health and social protection.

As of June 2022, the World Bank aided poverty reduction in the Democratic Republic of Congo with $7.27 billion that financially supported 21 national projects and four regional projects. One of these projects is the Emergency Equity and System Strengthening in Education, which supports the country’s free primary education and lessens the burden of education costs on Congolese families. This project saw 2.5 million additional students enroll in school within 2021-2022 and allowed for around 60,000 teachers to receive regular salaries, the World Bank reports. The World Bank Urban Drinking Water Supply Project saw the installation of more than 450 community waterpoints, and the STEP-KIN project, launched in March 2021, is targeted to help 250,000 in its next phase.

The Human Rights Council

Recently, the United Nations Human Rights Council has been holding hearings with the Presidents of nations such as the DRC regarding peace plans. The speakers at this panel said that “human rights were at the centre of all global issues the world confronted today” and that “international financial institutions needed to undertake special measures to support developing countries in protecting basic rights to food, livelihood and a decent living.”

Félix-Antione Tshisekedi Tshilombo, the president of the DRC, spoke about political and military conflict within the country, a factor that can worsen poverty. The Human Rights Council and the Assistant Secretary-General for Human Rights recently addressed this conflict, reiterating a call for peace in Africa, along with assuring that “the U.N. Human Rights Office stands ready to continue our work to support the country in its efforts to overcome the human rights challenges that remain.”

As poverty reduction in the Democratic Republic of Congo continues, it is important to keep in mind how valuable foreign aid is to the rebuilding and restructuring of communities and countries.

– Audrey Gaines
Photo: Flickr

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Affordable Maternal Care in India

Maternal Care in India
In India, the infant mortality rate in 2020 stood at 27 deaths per 1,000 live births. Although this number is still striking, India has noted a steady decline in infant mortality rates over the years. In 2000, India’s infant mortality rate stood at 53 deaths per 1,000 live births, meaning the rate has halved over the past 20 years. This positive trend may be explained on a macro-level by increased standards of living in the country. On a micro-level, local initiatives are helping to provide affordable maternal care in India for women from lower-income backgrounds.

Maternal Care in India

Although the International Monetary Fund considers India to be “the fastest-growing major economy in the world,”  this economic growth does not necessarily translate into increased standards of living for all as many people still live in poverty and struggle to support themselves financially.

Maternal care in India is unequal, with private hospitals offering higher quality care than public hospitals. However, the cost of delivery in private hospitals is hefty. An article published in 2012 by Knowledge at Wharton staff placed the average cost of delivery in a private hospital in Hyderabad city at around $500.

While this cost is not representative of all private hospitals in India, the average cost of private hospital deliveries is out of reach for most lower-income women, considering that Indian female casual workers earned an average monthly income of approximately $69 in 2020. As a result, many Indian women rely on public hospitals, which often lack resources, trained professionals and equipment to provide adequate maternal care.

LifeSpring Hospitals: A Social Enterprise

The LifeSpring chain of hospitals was founded in 2008 by Anant Kumar as a joint venture between HLL Lifecare Limited (an Indian government enterprise) and Acumen Fund (a U.S. social venture capital firm). Their goal is to offer lower-income women low-cost but high-quality maternity care.

LifeSpring hospitals charge considerably lower rates than private hospitals, with a normal delivery costing $80 and a C-section costing $180, according to the 2012 article by Knowledge at Wharton. By focusing on para-skilling, specialization, flexible staffing and high-asset use, the enterprise is able to offer affordable services that are not out of reach for lower-income individuals.

According to the LifeSpring Hospitals website, the hospital chain currently has 10 hospitals running out of Hyderabad. The hospitals provide affordable maternal care in India “at approximately 30-50% lower than the market prices.” Additionally, the services the hospitals provide are “backed up by experience gained from 70,000+ deliveries over a period of 13 years,” the website says.

Helping India’s Impoverished

“LifeSpring seeks to lessen the burden of rising health costs on the nation’s low-income communities thereby increasing their disposable income,” the HLL Lifecare Limited website says. Furthermore, “the mandate of the company is to operate small-sized (20 bed) maternity hospitals in the proximity of urban slums, catering to pregnant women whose husbands work in the informal sector and who have no health coverage,” HLL Lifecare highlights. On top of maternal care, the hospitals offer pediatric care, laboratory testing, pharmacy services and community health care education, among other services.

By 2012, the hospitals delivered an average of 6,000 babies per year and performed better than other hospitals of similar sizes, delivering three to four times more babies on average per month. LifeSpring has goals to open up at least 100 more hospitals offering high-quality, affordable maternal care to disadvantaged women. This low-cost service is changing the lives of thousands of women every year by ensuring accessible and high-quality maternal care, thereby reducing maternal mortality rates in India.

– Alexandra Piat
Photo: Flickr

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What to Know about the World Bank’s Mission

World Bank's Mission
The resignation of World Bank president David Malpass on February 16, 2023, has placed a spotlight on the World Bank. Throughout the years, the World Bank’s endeavors have brought both victory and controversy. However, overall, the World Bank’s mission to end poverty has seen significant success across all regions of the world.

The Founding of the World Bank

About 12 months before the conclusion of World War II, the United Nations Monetary and Financial Conference resulted in the creation of two institutions aimed at igniting economic growth and reducing poverty: the World Bank and the International Monetary Fund (IMF). The World Bank’s endeavors originally focused on “rebuilding the economies of countries devastated by war and increasing the economic development of developing countries,” but now, the institution works on all types of development.

According to the World Bank’s website, the World Bank’s mission is to “end extreme poverty” and “promote shared prosperity.” Made up of five institutions, the International Bank for Reconstruction and Development; the International Development Association; the International Finance Corporation; the Multilateral Investment Guarantee Agency and the International Centre for Settlement of Investment Disputes, the World Bank partners with governments and private sectors to provide funding and assistance for poverty reduction initiatives. Since its founding in 1947, the World Bank has aided 189 member nations with $45.9 billion worth of financial assistance support for at least 12,000 development projects.

World Bank Projects in Africa

The World Bank’s website breaks down its own results into regions, starting with Africa. Its strategy for the continent aims to address extreme weather events, reduce hunger, create employment opportunities, increase resilience, safeguard the most vulnerable people and improve human capital.

In Somalia, the World Bank partnered with the Federal Government of Somalia to implement “social safety net provisions.” Within the first two years of support, more than 1 million Somalians received funding for “basic consumption needs.”

The World Bank has supported the Niger government for close to a decade to help establish an adequate social safety net. The Adaptive Safety Net Project 2 “Wadata Talaka” (PFSA 2), which launched on June 20, 2019, has provided direct support to more than 3 million Nigerien people.

Initiatives in East and Pacific Asia

Since the outbreak of COVID-19, the World Bank has implemented emergency projects in many East and Pacific Asian countries, a few being the Philippines, Cambodia and Papua New Guinea. The emergency funding allows these countries to “purchase medical and laboratory supplies, train medical staff and strengthen national public health systems,” the World Bank website says.

In Vietnam, the World Bank’s endeavors have improved access to quality health care services for 13.7 million Vietnamese people in mostly remote areas in Northern Vietnam. Through the Northeast and Red River Delta Regions Health System Support Project, the World Bank “improved the treatment capacity of 74 public hospitals at the district and provincial levels by investing in upgrading the medical infrastructure and training health workers.”

These hospitals can now provide specialized health care services in the areas of “cardiology, obstetrics/gynecology, pediatrics, oncology and trauma (surgery).” This means patients no longer need to travel very far to seek this care.

To reduce Indonesia’s national stunting rate, the World Bank established the Investing in Nutrition and Early Years Program in 2018 to support Indonesia’s national strategy. The project managed to decrease the national rate of stunting by 6.4% in three years.

World Bank Programs in Latin America and the Caribbean

In April 2020, at the start of the COVID-19 pandemic, the World Bank committed $29.1 billion to Latin America and the Caribbean to combat the crisis till June 2022. Within this region, the World Bank has been focusing on “promoting inclusive growth,” “investing in human capital” and “supporting countries’ development goals” while “fostering a green and sustainable recovery.” The World Bank has provided funding to countries such as Costa Rica, Colombia, Argentina, Ecuador and Peru, with support ranging from reformation, stability efforts, education expansion, sustainability and economic recovery.

Supporting South Asia

South Asia has received $31 billion in funding from the World Bank since March 2020. More than 857 million disadvantaged South Asians received support through $2.73 billion of funding provided by 10 initiatives supporting social safety nets. These finances provided social assistance to the most impoverished households to help them meet their basic needs. This funding has also supported health projects that have equipped health care centers, bolstered education programs and increased vaccine availability.

World Bank Projects in MENA

The World Bank’s mission in the Middle East and North Africa is to “eliminate poverty and promote shared prosperity through strengthening human capital, supporting jobs and economic transformation, advancing gender equity, addressing fragility and enabling green growth,” its website says. World Bank projects in the MENA equate to about $23.2 billion. Since April 2020, the bank has devoted $5.4 billion as of October 2021 to address the pandemic’s impacts and “protect the most vulnerable, support sustainable business growth and job creation and strengthen institutions to rebuild.”

The World Bank’s endeavors have supported the distribution of vaccines in Tunisia, Iraq, Jordan and Yemen. In 2021, the World Bank detailed its strategies for the Middle East, including efforts toward transparency and trust, improving human capital and strengthening gender equality.

The World Bank is one of the leading institutions in the fight against poverty. Its mission and impact highlight the importance of the global organization in the progress and development of developing countries.

– Audrey Gaines
Photo: Flickr

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The Benefits of Investing in Developing Countries

Investing in Developing Countries
Investing in developing countries holds the power to enhance the lives of its citizens significantly. The right investments can improve infrastructure, provide access to essential services, increase amenities and boost overall human development. These investments positively impact health, education and economic opportunities.

Sustainable Energy Fund for Africa (SEFA)

The Sustainable Energy Fund for Africa (SEFA), which the African Development Bank (ADB) manages, serves as a prime example of the benefits of investing in developing countries. Established in partnership with the government of Denmark in 2011, SEFA provides catalytic finance to unlock private sector investments in renewable energy and energy efficiency, striving to increase access to affordable, reliable, sustainable and modern energy services in Africa.

High-income governments and organizations have made contributions to SEFA. Through its efforts to develop green mini-grids, finance green energy programs and establish blended-finance initiatives for small-scale renewables, SEFA actively contributes to the growth of renewable energy in Africa.

This investment in renewable energy projects not only enhances access to energy and stimulates economic growth, but also generates job opportunities in developing countries. This helps raise living standards and reduce poverty, while also advancing the achievement of the Sustainable Development Goals of “No Poverty” and “Affordable and Clean Energy.”

Increasing Efforts

High-income countries should increase efforts towards promoting economic growth, reducing poverty and inequality and closing the gap in achieving the Sustainable Development Goals (SDGs) by investing in developing countries. Despite the growth of sustainable finance, most of it remains in high-income countries, leaving lower-income countries in need of funding. To bridge this gap, high-income countries should remove barriers to financing access in developing countries and allocate more financing towards SDG investments.

The U.N. Conference on Trade and Development and the International Monetary Fund (IMF) predict that the “SDG financing gap could reach $4.3 trillion per year from 2020 to 2025,” a significant increase from previous estimates, according to OECD.

OECD expects the government revenue of developing countries to decrease in 2022 and 2023, especially for middle-income countries, resulting in a yearly decline of $95 billion and its recovery will likely be slow, potentially not reaching pre-pandemic levels before 2030.

Companies could reap numerous benefits from foreign investment in developing countries, such as increased competitiveness, favorable productivity spillovers, access to new technology, market expansion and improved workforce training and qualifications leading to higher wages and employment.

Investments in job creation and training could provide an economic boost to communities by creating jobs, driving demand for goods and services and enhancing the skills of the workforce. Furthermore, foreign investments could lead to improved infrastructure, access to basic services and amenities and overall human development.

Boosting the Integration

Investing in developing countries opens the possibility of boosting their integration into the global economy through the enhancement of foreign trade flows. The growth of international networks of affiliated enterprises and the growing significance of foreign subsidiaries in multinational companies’ strategies provide greater access to import and export activities. Thus, developing countries that embrace international trade are more likely to reap the benefits of foreign direct investment (FDI).

In today’s interconnected and globalized world, it is crucial for countries to take advantage of the potential of foreign investments in developing countries. By investing in these countries, companies can reap the benefits of economic growth and development while promoting sustainability for all. These investments provide access to new markets, resources, technologies and capabilities that drive economic growth, create jobs and build local infrastructure. Additionally, foreign investments are a key source of financing for sustainable development initiatives such as renewable energy projects or environmental protection programs.

By investing in developing countries, companies not only benefit from increased economic growth but also play a crucial role in global sustainability efforts.

– Nkechi First
Photo: Flickr

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The Recent Energy Crisis in Pakistan

Energy Crisis in Pakistan
On January 23, 2023, the nation of Pakistan, home to almost 220 million people, fell prey to yet another consequence of its ongoing energy crises. The recent energy crisis in Pakistan left almost all of the population in a complete blackout for more than 20 hours. This is the second major blackout within the last few months and it is another indicator of the poor management of energy crises in Pakistan. At the offset of the crises, the cause of the blackout remains clouded and a major cause for concern.

The Ministry of Energy reported that all energy grids in Pakistan went down at around 7:30 AM on Monday. The Energy Minister of Pakistan, Khurram Dastgir Khan, reported that the major breakdown was due to a voltage fluctuation that occurred in the Sindh province, between the cities of Jamshoro and Dadu, Al Jazeera reported. As a result of this fluctuation, all the power grids in the country shut down one by one, although the Minister still maintained that it “was not a major crisis.” The restoration took almost 24 hours for all 1,112 grid stations, but by then the brunt of the damage had impacted schools, hospitals, businesses and offices nationwide.

Previous Energy Crisis

According to Al Jazeera, the last time an energy crisis in Pakistan occurred to this extent was back in January 2021. Since then there has not been any major improvement when it comes to handling blackouts of this sort. Pakistan is still heavily reliant on oil and natural gas, both of which are its primary sources of energy. There have been recent inroads into the development of sustainable and renewable sources of energy, such as wind and solar PV, however, more than 40 million Pakistanis still lack access to any sort of electricity.

Alongside the overreliance on the poorly managed oil and natural gas industries, Pakistan is also in the midst of a historic economic crisis that is devasting the nation’s infrastructure. The practice of “load-shedding,” periodic electricity cuts by the government, is something the people of Pakistan are well accustomed to however this recent blackout is a testament to the disastrous financial state the country is in. The current government of Pakistan has faced accusations of poor management of the country’s financial situation, one that experts predict may lead to the nation defaulting on its massive foreign debt.

The Lack of Investment

The blame for the recent energy crises in Pakistan also fell on the lack of investment put into the nation’s power grid. The energy minister blamed the previous government for failing to upgrade the power grid. However, due to the ongoing economic crises, funding has seemingly dried up. The International Monetary Fund (IMF) has already bailed Pakistan out five times in the previous 20 years. In addition, as part of China’s Belt and Road Initiative, there have been investments of almost $60 billion in the energy sector, yet the impact of this is unpredictable. This combination of factors is exacerbating an already heightened energy crisis in Pakistan that affects millions of people daily. Many Pakistani residents do not have access to electricity for hours and it is especially devastating for hospitals and schools.

The future of the energy crises in Pakistan remains bleak. The government relies on foreign fuel supplies and is losing more money than it makes. The effect on people is devastating. In Peshawar, with a population of more than 2 million residents, many residents reported not having access to clean water as pumps require electricity to work. Many hospitals nationwide had to switch to backup generators. Going forward, reports have indicated that Pakistan and Russia are cooperating on the oil and gas supply to the country on a large scale. Claims are that it will be a long-term operation, however, only time will tell if the government will be able to rectify the mistakes of the recent energy crises in Pakistan.

– Saad Haque
Photo: Flickr