Credit Access in TajikistanTajikistan, located in Central Asia, has a population of over 8 million people. Tajikistan has borders to Afghanistan, Uzbekistan, Kyrgyzstan and China. Although Tajikistan’s financial sector has made significant progress since 2000, many new advancements such as credit access are still in need of improvement. In 2017, almost 30 percent of Tajiks were living below the poverty line. Finding a solution to increase credit access in Tajikistan has become an important task for the government of Tajikistan.

Tajikistan’s Reliance on Remittances

Due to Tajikistan’s limited employment opportunities, about 90 percent of Tajiks travel out of the country for work. They often travel to the Russian Federation in search of employment. Many migrant workers send remittances back to their friends and family in Tajikistan. More than 60 percent of Tajik households reported that half of their income comes from remittances with 30 percent of Tajik households reporting that 100 percent of their income comes from remittances.

A 2010 Labor Organization study reported on how Tajik households save their income and remittances. The study found that only 23 percent of people were able to save their remittances with only 9 percent able to save at a partial amount of 21 to 40 percent of the money. When the money can be saved, it is not often for long. In fact, only 11 percent of the people were able to save their remittances for more than six months.

Income savings did slightly better. At least 63 percent reported being able to save part of their income. For example, 51 percent saved about 20 percent of their income. However, only 3 percent could save between 41-60 percent of their income. Since remittances are the main source of income in many Tajik households, money is spent on immediate needs, which results in low percentages in income saving.

Credit Access in Tajikistan

According to a 2010 International Labor Organization study, 95 percent of Tajik households do not keep their savings in financial institutions. Due to Tajikistan’s remote and unique mountainous terrain, 95 percent of Tajik households are not aware of the savings products available to them or know where financial institutions are located. Credit access in Tajikistan isn’t seen as a necessity in many Tajik households because it is very common and traditional for Tajiks to keep their savings at home. There also seems to be “a general distrust” of financial institutions.

In April 2010, the World Bank Group, with the help of the Government of Switzerland, launched the IFC Azerbaijan-Central Asia Financial Markets Infrastructure Advisory Services Project. This three-phase project is aimed at improving the financial infrastructure of Tajikistan and expanding credit for people and small businesses. This would allow for the creation of more jobs.

The project also provided financial literacy training to more than 100,000 Tajiks, which allowed Tajiks to become knowledgable about where their savings go. As a result of the IFC Azerbaijan-Central Asia Financial Markets Infrastructure Advisory Services Project, Tajikistan’s financial sector was able to establish the first private Credit Information Bureau with the help of IFC and the National Bank of Tajikistan.

These crucial advancements have led Tajikistan’s financial sector in the right direction toward improving credit access in Tajikistan as well as addressing the needs of the people of Tajikistan. With impoved credit access comes financial security, an increase in small businesses and a better economic standing.

Jocelyn Aguilar
Photo: Flickr

World Bank Group President
On September 24, 2016, it was announced that World Bank Group’s President Jim Yong Kim had been selected for a second term. Starting July 2017, Kim will continue leading The World Bank’s ongoing efforts to alleviate global poverty.

Founded in 1944, The World Bank began as an institution facilitating post-war reconstruction and development. At that time, The World Bank took on infrastructure projects to physically rebuild communities. Today, however, the organization has expanded its work to include myriad social projects.

Now, the multifaceted institution is comprised of economists, experts in public policy, social scientists and sector experts and has a portfolio of projects in agriculture, health, education and other areas of the social sector. Although reconstruction is still a focus, the group’s overlying goal is to reduce global poverty through sustainable and inclusive global prosperity.

When Jim Yong Kim, a South Korean-American physician and anthropologist, was originally elected to the presidency in 2012, The World Bank had set two bold goals: to eradicate global poverty by 2030 and to promote shared prosperity by boosting the income growth of the bottom 40 percent of the population in every developing country.

During his first term, Kim brought more structure, accountability and focus to The World Bank with clearer policies and targets, and efforts to meet those targets have been successful. Some of his greatest accomplishments came from dispersing the bank’s power and reallocating large amounts of its resources to combating climate change, addressing the Syrian refugee crisis and undertaking other initiatives that have not traditionally been within The World Bank’s scope.

He also gained much praise for his leadership in the Ebola outbreak, during which he allocated $400 million to combat the deadly virus in West Africa. Additionally, he implored the rest of the international community to invest in containing Ebola, even criticizing the World Health Organization (WHO) for its lax response.

The World Bank Group president also made a number of allies during his term, according to Africa News. When he voiced his intention to run for a second term, he gained endorsements from many countries, including South Korea, the Netherlands, Kenya, Rwanda, Togo and others.

Recognized worldwide for his invaluable experience and accomplishments prior to his election in 2012, Kim worked as an advisor to the director-general of WHO. He later rose to the position of director in WHO’s renowned HIV/AIDS department.

As he finishes his first term and looks forward to his second, one of Kim’s main focuses is making more progress toward the goal of eradicating global poverty by 2030.

-Alex Fidler

Photo: Flickr

World Bank Chief Economist Poverty Reduction
The World Bank Group (WBG) announced on July 18 that it had appointed Paul Romer as the next World Bank Chief Economist.

WBG President Jim Yong Kim has high hopes for Romer. “We’re most excited about his deep commitment to tackling poverty and inequality and finding innovative solutions that we can take to scale,” Kim said. Romer replaces Indian economist Kaushik Basu, who retired on July 31.

Romer is a professor of economics at the Stern School of Business at New York University (NYU). He also serves as Director of NYU’s Marron Institute of Urban Management and is a research associate at the National Bureau of Economic Research.

Several new organizations praised the pick for the new World Bank Chief Economist and predicted that Romer would bring about real change at the 72-year-old international financial institution.

The Economist described Romer as a formidable and often contrarian figure in the field of economics. He has criticized his profession for its obsession with obscure models and equations, which he terms “mathiness.”

“For me, the most exciting part about economics is going beyond knowledge that is only potentially useful to knowledge that is actually useful, and doing so on a scale that touches millions or billions of lives,” Romer explained in the World Bank press release.

Romer has also done impressive work both as an academic and an entrepreneur, according to Noah Smith of Bloomberg View. In the 1980s, he was one of the first economists to champion the endogenous growth theory. Technological change, according to his model, occurs as a result of investment in research and development, which creates growth within the economy at large (hence the term “endogenous growth”).

It is important to spend money on innovation because ideas, once created, are disseminated at little or no cost. Romer led by example through his education-technology start-up Aplia, which he founded in 2000.

Among one of Romer’s more unorthodox ideas is the concept of “charter cities.” In line with the endogenous growth theory, he believes developing countries should spend money to build new cities as sites for policy and economic experimentation. He cited Hong Kong and Shenzhen in China’s Pearl River Delta as success stories and a model for these charter cities to follow.

As World Bank Chief Economist, Romer will provide intellectual guidance to the President and the senior management. His staunch support for financing innovation and testing new approaches in order to reduce poverty brings new life to the World Bank’s development goals.

Philip Katz

Photo: Flickr

Brick Kilns in BangladeshIn South Asia, traditional brick kilns are known for both labor exploitation and the massive amount of pollutants they spew. A project sponsored by the World Bank Group is introducing new Hybrid Hoffman Kiln (HHK) technology into brick kilns in Bangladesh. The cleaner, more efficient kilns produce less pollution, better labor conditions and more stable income for workers.

Poor children who drop out of school to feed their families become a source of cheap labor for kiln owners in the northwestern Indian state of Jammu and Kashmir. These children often develop health problems as a result of long-term exposure to smoke and coal dust.

Along the same lines, an openDemocracy article published on July 21, 2016, revealed the cycle of debt and poverty generated by brick kilns in Pakistani Punjab.

Traditional fixed chimney kilns are also an environmental concern. According to the World Bank Group, an estimated 8,000 traditional kilns emit 10 million tons of carbon dioxide every year in Bangladesh alone.

The Bangladeshi HHK project, which began in 2008, has sought to address the many problems associated with traditional kilns. Thanks to financing and support from the World Bank Group and the Industrial and Infrastructure Development Finance Company Limited (IIDFC), there are now nine HHK brick kilns in Bangladesh.

HHK technology originated in Germany but has been modified to fit local needs. By recycling waste heat from the kiln and using a greener mix of coal and clay to burn the bricks, HHKs use only half as much coal as fixed chimney kilns, reducing pollution by 50 percent.

In addition to being environmentally friendly, the new brick kilns also have incredible economic benefits; their technology allows them to operate year-round. An HHK kiln can produce an average of 11 million more bricks per year than can a fixed chimney kiln. More efficient production means higher income for kiln workers.

Reduced pollution becomes an additional source of revenue for HHK kiln operators. By cutting carbon emissions, they receive certified carbon credits (CERs), which the World Bank Group’s Community Development Carbon Fund (CDCF) and the Danish government then purchase from them. Kiln owners must spend some of the money they earn from carbon credits on healthcare, better facilities and new safety measures.

The biggest problem with HHKs is the price tag. Building an HHK kiln costs 15 times as much as building a traditional one. It will take an estimated $3 billion to construct 1000 HHKs. However, their many environmental and economic benefits make these improved brick kilns a worthwhile investment.

Philip Katz

Photo: Flickr

Honduras 2020

Multiple growth and development plans for Honduras 2020 are going into effect this year. Although poverty in Honduras has decreased since 2012, 62.8 percent of the population is still living below the poverty line, according to the World Bank.

Honduran President, Juan Orlando Hernandez, announced a five year growth and development plan dubbed “Honduras 2020.” The two major focuses of the plan are to reduce poverty levels and decrease child migration to the U.S.

In order to benefit both of these areas the plan is looking to generate 600,000 new jobs by expanding textile, manufacturing, tourism and business service industries.

Nearly 200,000 of the new jobs are expected to come from boosting apparel exports to the U.S.

“One of the things I like the most about the 2020 plan is the job generation component because that is the main reason why people go to the U.S.,” said Hernandez in a Fox News Latino article.

Honduras’ net migration rate is -1.22 migrant(s)/1,000 population, resulting in more people leaving the country than coming in.

Compared to the other developing nations in Latin and the Caribbean who receive less than two percent, Honduras receives 18.2 percent of their GDP from personal remittances.

The 2020 plan aims to cut child migration to the U.S. by 50 percent in order to combat these challenges.

The Honduran government is not alone in working to promote economic stability and reduce poverty rates.

In December 2015, the World Bank Group endorsed a partnership strategy with the Honduran government for 2016-2020. The strategy, the Country Partnership Framework, aims to strengthen conditions for growth, reduce the country’s vulnerabilities and promote social inclusion.

Three of the seven major objectives of the Country Partnership Framework are:

  1. Improving key infrastructure, such as energy and road networks, beneficial to both national and international trade. According to the World Bank, on a scale of one to five (1=low and 5=high) the quality of trade and transport-related infrastructure in Honduras is only 2.24 and decreasing.
  2. Increasing access to financing for both companies and individuals. Only 32 percent of Honduran adults have a bank account, while barely 31 percent of companies in Honduras have access to credit.
  3. Enhancing rural production in order to improve conditions for Hondurans living in poverty and depending primarily on agriculture. 65 percent of rural Hondurans live below the poverty line, as reported by the World Bank.

Both the World Bank and Honduran government’s growth and development plans will go into effect this year.

Kristyn Rohrer

Photo: AHM

international poverty line

Pinning down the definition of poverty is essential for the multitude of global organizations looking to improve the well-being of the global population. Measuring just income can leave out information about a community’s environment.

The World Bank’s International Poverty Line

The World Bank’s International Poverty Line is one of the most popular measures of poverty for all kinds of relief organizations. Between 2008 and 2015, this measure was defined as those individuals living on less than $1.25 a day. By this measure, “just over 900 million people globally lived under this line in 2012” and projections for 2015 pin the amount as  over 700 million.

Last year September, the International Poverty Line was moved up to $1.90 a day to account for inflation and the cost of goods in various countries.

When an organization redefines the way poverty is assessed, it can change the people whom it targets and the scope of its operations. In that way, adjusting the parameters needs to be a careful, precise process in which the target population is not misrepresented.

How Is It Used?

The World Bank uses an International Poverty Line measuring an individual’s daily purchase power so that it can gauge the population who can meet their “minimum nutritional, clothing and shelter needs” in their country. Using an average of various national poverty lines, the international financial group generates its International Poverty Line from calculations involving purchasing power parity exchange rates.

A Project Syndicate article, however, reported on the Spring Meetings in Washington D.C. in which the World Bank would begin “[recommending] additional metrics.” The establishment of the Commission on Global Poverty will research new ways to assess the quality of life that look beyond income.

The author of the article mentions an analysis done at Fundacion Paraguaya, a Paraguayan organization which spearheads “Poverty Spotlight.”

This initiative uses the power of data to help “families self-assess their level of poverty in 50 indicators grouped into 6 dimensions of poverty which are: Income & Employment, Health & Environment, Housing & Infrastructure, Education & Culture, Organization & Participation and Interiority & Motivational.”

Poverty Spotlight’s approach allows for a customized solution to the specific situation in which a family might find themselves. In addition, Fundacion Paraguaya says that the method “breaks down the often ‘overwhelm’ concept of poverty into a series of smaller manageable poverty problems.” In more ways than one, relief becomes more of a system of change than a cash donation.

Reshaping Poverty Relief Campaigns

The World Bank’s efforts to research assessment methods using multidimensional analysis could reshape poverty relief campaigns across the globe. Adopting an indicator like the Social Progress Index could change how societies are viewed. According to this measurement, the United States is ranked 16th in the world while Norway and Sweden are ranked 1st and 2nd.

The International Poverty Line will be reevaluated this month by the Commission on Global Poverty. No matter what is deemed important in rating living conditions, the goal of reducing the resulting number will prevail.

Jacob Hess

Photo: Flickr


Digital Divide
A report released by the World Bank shows that while technology has expanded, more people have remained poor. This phenomenon is often referred to as the digital divide.

The World Bank finds that more households in developing countries own a mobile phone than have access to electricity or clean water, according to “Digital Dividends,” its 2016 World Development Report.

The digital divide is created because most benefits for private enterprises arrive instantly, such as streamlined communication and information, online convenience and social connectivity throughout the global community.

The investments from these enterprises would ideally generate employment growth and services for those in the developing world — but progress there is more stagnant.

According to the World Bank report, digital dividends have not grown at the same rate as digital technologies because 60 percent of the world’s population does not have Internet access and are therefore unable to participate in the digital economy.

There are also emerging risks – such as polarized labor markets and inequality – that contribute to the digital divide. Routine jobs are replaced when technological advancements are made, which means more unskilled individuals compete for fewer low-wage jobs.

To combat these effects, solutions include infrastructure investment, providing worldwide Internet access and monitoring offline factors of technologies by region.

“While technology can be extremely helpful in many ways, it’s not going to help us circumvent the failures of development over the last couple of decades. You still have to get the basics right: education, business climate and accountability in government,” said Digital Dividends Co-Director Uwe Deichmann.

Education in the developing world can provide people with the skills needed to utilize digital technologies and become more productive in the workplace, which reduces polarity within the job market, according to the World Bank.

Accountable government agencies should implement policies and regulations that create a competitive digital market so that information costs go down and societies have the opportunity to become more inclusive.

Though growth has slowed in the developing world, organizations have found ways for the poor to benefit from the information and communication technology sector.

Question Box exists as a telecommunications network that provides populations suffering from high illiteracy rates and social or technical barriers with access to information.

According to the Guardian, Question Box has installed a series of ‘call boxes’ in areas of Uganda, that connect disconnected communities to someone with Internet access who can relay answers to questions regarding health, employment or other related issues.

Otherwise disconnected communities have the ability to create successful societies if given access to the digital information many of us take for granted.

Kelsey Lay

Sources: The Guardian, Question Box, World Bank 1, World Bank 2
Photo: Google Images

Economic PotentialThe U.N. and the International Labor Organization (ILO) have announced that they are spearheading a new program to jump-start employment opportunities and economic potential for young people across developing countries over the coming years.

The U.N. Global Initiative for Decent Jobs for Youth is a joint undertaking by 19 international organizations to increase access to decent work in agriculture and the rural economy for young adults under 24.

According to a recent report from ILO, this cohort accounted for 37 percent of the 200 million globally unemployed population in 2014. U.N. officials say filling this productivity gap will be critical to achieving the goals of the 2030 Agenda.

“This is a historic step forward to recognizing the role and potential of young people in the world today,” said U.N. Deputy Secretary-General Jan Eliasson. “Employment, decent work, particularly for young people, is the backbone of development and stable societies.”

Through the initiative, the ILO will work with experts to come up with innovative solutions to youth unemployment. It will bring together world and industry leaders to turn these ideas into improved national and regional policies. It will mobilize new and existing financial resources to turn these policies into action across developing regions.

Across sub-Saharan Africa, the agricultural sector employs nearly 60 percent of the total labor force but contributes only 25 percent of the region’s GDP. Experts say this shortfall in productivity is actually an area of great economic potential for young people.

“Although farming is now often done by the elderly, the profession’s requirements for energy, innovation, and physical strength make it ideally suited for those in the 15 to 34-year-old age range,” the World Bank said in its report: “Agriculture as a Sector of Opportunity for Young People in Africa.” With proper investment in training and technology, the rice industry alone could have the capacity to employ 17 million young people each year.

The World Bank estimates that if the employment initiatives are successful, the agricultural sector in sub-Saharan Africa could be worth $1 trillion by 2030. If similar improvements to economic potential can be made in other developing regions, the 2030 Agenda may well be achieved.

Ron Minard

Sources: ILO, FAO, UN 1, UN 2, UN 3
Photo: Flickr