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7 Things to Know About Poverty in the Middle East and North Africa (MENA)

Man in Yemen, one of many countries affected by poverty in MENA
The Middle East and North African region, commonly referred to as MENA, is traditionally considered to include the geographical area from Morocco in northwest Africa to Iran in southwest Asia. Rich in history, culture and natural resources, this region consists of approximately 20 nations. As a result of vast reserves of oil, natural gas and petroleum, MENA has quickly grown in geopolitical importance. However, the region is also afflicted by persistent conflict and poverty. Here are seven recent trends in the rates of poverty in MENA.

7 Facts About Poverty in MENA

  1. MENA is the only region that has seen significant increases in extreme poverty. Between 2011 and 2015, extreme poverty in MENA has nearly doubled, rising from 2.1% of the population to 5%. As of 2018, an estimated 18.6 million people in the region are living on less than $1.90 per day. Additionally, studies have shown that the region’s population is particularly vulnerable to poverty. MENA’s poverty rates further increase when multidimensional poverty is included, which is an index of several poverty indicators including, among others, lack of education, poor health, standard of living and levels of violence. In 2017, the Arab Multidimensional Poverty Report estimated the total number of multidimensional poor at approximately 116.1 million – nearly 40% of the region’s population. Factored into the previous figures of poverty in the region, recent studies suggest that about 20% of the region is extremely poor, with an additional two-thirds of the region poor or vulnerable to extreme poverty.
  2. Class mobility is incredibly limited. Once a family falls into poverty, they are increasingly likely to remain poor for several generations. Largely due to insufficient job growth, much of the MENA population relies heavily on informal labor, such as unofficial taxi services or in-home services like cleaning or childcare. These forms of labor tend to be erratic, with low pay and minimal protections, yielding a larger population vulnerable to poverty with very few resources to pull themselves out of it.
  3. Recent studies suggest that MENA is the most unequal region in the world. Throughout the region, the top 10% of the population holds 61% of the wealth, compared to 47% in the United States and 36% in Western Europe. Many political and economic commentators in the region further suggest that this inequality has become deeply ingrained in the value system of the society as a whole, rather than just being the current condition.
  4. The increases in poverty are linked to conflict. The aforementioned increase in poverty between 2011 and 2015 was concentrated very heavily in Syria and Yemen, two nations that are experiencing intense conflict. The rate of extreme poverty in Syria has increased from nearly zero to about 20% over the course of its civil war. Similarly, extreme poverty in Yemen has doubled over the past decade, in line with its continued conflict. Despite the increasing number of people in poverty, these findings do indicate that major improvements in poverty in the region may not be too far off, considering the root cause is well known.
  5. Conflict has done severe damage to the region’s employment sectors. Even outside of the main crisis states, such as Syria, Libya and Yemen, the job market across the region has suffered greatly — either directly due to conflict or indirectly through sanctions, disrupted trade or population displacement. Throughout the early 20th century, the region relied heavily on its tourism, industrial, service and agriculture sectors. However, many aspects of these industries have been seriously impeded by persistent conflict. The International Monetary Fund estimated that the region needs to create between 60 and 100 million jobs by 2030, 27 million in the next five years, in order to significantly reduce unemployment and poverty.
  6. While it has undoubtedly created additional economic problems, the COVID-19 crisis has also inspired steps towards progress. Governments throughout the region took very cohesive and divisive steps from the beginning of the pandemic, restricting movement across borders and even within cities. Despite varied levels of outbreak preparedness, the MENA region has been notably effective in limiting the spread of COVID-19, with many countries beginning to ease travel restrictions and turn their attention toward phasing out of quarantine. The pandemic has had a major economic impact, particularly with the sudden collapse of oil prices. However, many in the region have been rather optimistic, considering this to be an opportunity for nations to begin addressing the systemic issues in the region, such as private sector development and social protections. Governments have been surprisingly receptive, with several states already mobilizing to protect both the public and private sectors.
  7. Governments have been largely ineffectual in dealing with economic problems, but the tides are turning. Largely due to persistent conflict, MENA regimes are typically focused on minimizing violence and war, allowing poverty to grow rapidly without policy changes. This has made the population especially vulnerable to recruitment by radical religious, ethnic or sectarian groups, such as Hezbollah and the Muslim Brotherhood. However, more recently we have seen an influx of civilians beginning to demand more from their governments — a call that political leaders are beginning to answer. Since the onset of Lebanon’s current economic crisis and subsequent protests, the Lebanese government has approved sweeping economic reform being referred to as a “financial coup.”  The World Bank has also projected modest continued growth in the economy of the MENA region overall.

The past 50 years have been incredibly tumultuous for the MENA region, characterized by an abundance of violence and poverty. As recent data has confirmed, the region’s poverty is not subsiding anytime soon and the succession of Western-backed conflicts is not helping. Despite these difficulties, the region is very quickly evolving into a state of uniform solidarity. With more regimes beginning to reject foreign intervention and more civilians addressing their governments directly, particularly in the cases of Egypt and Lebanon, structural change could come to the region soon. However, this area of the world continues to be a prime example of just how dangerous extreme poverty can be when mixed with conflict, both for the host state and the international system.

– Angie Bittar
Photo: Flickr

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The Rise of Income Inequality in Russia 

Income Inequality in Russia
In 2015, 111 people controlled 19 percent of all household wealth in Russia. Russia’s wealth and income inequalities have drastically increased in recent years, surpassing the U.S. Historically, income inequality in Russia has fluctuated. Towards the end of Tsarist Russia, the top 10 percent of earners made about 45 to 50 percent of the national income. During the Soviet period, this dropped to about 20 to 15 percent. However, it rose back up to about 45 to 50 percent in 1990 with the fall of the Soviet Union.

Income Inequality in Russia

Recently, income inequality in Russia has risen so that the top 1 percent of earners’ combined income is as high as 20-25 percent of the national income. This is comparatively much higher than Eastern European countries, where the top 1 percent income shares of wealth make about 10 to 14 percent of income. Since the fall of the Soviet Union, socioeconomic stratification has exceeded that of other formerly socialist economies, including China. Wealth inequality is even more drastic, with the richest 10 percent of Russians owning 87 percent of the country’s wealth, making it the most unequal of the world’s major economies.

Causes of Income Inequality

The transition from communism to capitalism after 1990 is the primary cause of increased income inequality. Specifically, housing played an important role in the rise of private wealth and increased from less than 50 percent of national income in 1990 to 200 percent of national income in 2015. This results from housing privatization and the rise of real estate prices. In turn, these shifts in housing prices significantly increased rents for a large fraction of the population. Their income didn’t increase to help account for the raised costs, exacerbating socioeconomic inequality in Russia.

The rise of the oligarchs, a group of individuals who control most of the productive assets and the capital in Russia, also contributed to the severe inequalities in income and wealth. Oligarchs formed ties with political figures, giving them a foothold in politics. This, combined with their economic power, allowed them to influence governmental and market structures.

Oligarchs have contributed to development and economic growth, but they also play a critical role in increasing inequality in Russia. The political and economic power of the Russian oligarchs enables corruption. Oligarchs want to lower competition, avoid taxation and keep wages low. Because of their political influence, they are able to support policies that will further their own interests. These interests maximize their profits while keeping taxes and wages low and preventing redistribution, which increases inequality.

Resistance to Corruption

In 2017, about 60,000 people protested inequality on the streets of almost 80 different cities. This isn’t a large percent of the population but does show people’s anger with the current socioeconomic inequalities. Alexei Navalny, who has been the face of Russian opposition to President Vladimir Putin, called these anti-corruption protests. Over 1,000 protesters were detained as a result and Navalny was sentenced to 30 days in jail. While many people are scared to protest in Russia, a significant number of young people were among the demonstrators who turned out for the anti-corruption protests, showing promise for intensified anti-corruption activism in the future.

– Maia Cullen
Photo: Flickr

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Startup Companies in India are Fighting Poverty

Startup Companies in India
With a booming population and competitive economy, India has made a mark in the global playing field. However, nearly 60 percent of India’s population lives on $3.10 per day and 21 percent (250 million people) live on $2 per day. The uneven spread of wealth leaves many people in poor living conditions. The top 1 percent of Indians own 58 percent of India’s wealth, meaning 16 people own the wealth of 600 million people. Unfortunately, over 70 percent of the population still lives in rural villages and work labor-intensive jobs with minimal profits.

The extremely high growth rate of the population leads to a strain on resources. This leads to growing illiteracy and a lack of health care facilities and services. Some expect the total Indian population to reach 1.5 billion by 2026 which means the country will require 20 million new jobs to sustain its people. There is now a desperate need for a better solution to pull people and their families out of poverty.

The Nature of Startup Companies in India

The economy in India continues to compete on a global scale as highly intellectual individuals are progressing with new businesses and startups. In fact, India is the home of 48 million new businesses, which is more than twice the number in the United States at 23 million. The startup companies in India have unlimited access to software and intelligence, making it a competitive playing field. Due to the startups, India has the fastest growing economy and market place in the entire world, taking over China and the United States.

The number of startup companies in India is continuing to grow from 3,100 companies in 2014 to an expected number of 11,500 companies by 2020. The current day and age make India an ideal place of startups as entrepreneurs have access to the internet, educational initiatives and experienced mentors. All of these factors improve the success of startup companies. India has the third-largest startup ecosystem in the world, which was worth over $32 billion in market valuation in 2017. The ever-growing field has drawn in numerous foreign investors leading to a 167 percent growth in 2016 alone.

How Startup Companies Create Jobs

The Indian government has recognized the growing startup companies and has created a plan for ‘New India.’ This involves encouraging employment among the youth. The millennials in India can take advantage of the possible employment ventures as startups create an open atmosphere for innovation. With new information trends every year, these creative companies are creating jobs for people and reducing poverty as people can better support themselves and their families. The startups alone create one billion jobs for millennials. Companies such as Flipkart, Ola and PayTM have an equity of $1 billion, inspiring young entrepreneurs to take risks and start companies. In 2016, India had the most job creation of all countries in the Asia and Pacific Region.

What Now?

Despite the high poverty rates in India, there are new opportunities emerging for people to improve their living conditions. The startup companies in India are extremely successful and allow for families to improve their financial standings. The nature of the startup ecosystem makes it easier for people to start new businesses and become successful. Startup companies in India are changing lives and the same could happen in other countries.

– Haarika Gurivireddygari
Photo: Flickr

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How Wealth Inequality and Poverty Connect

Wealth Inequality and Poverty
Wealth inequality is an issue that plagues many developing nations, causing a widening distance between the wealthy and the poor in those nations. When a country distributes income among its people in an unequal manner, even a country with a growing economy can advance slower. Impoverished people are often unable to improve their situation due to the number of barriers they face, and some people may even be more prone to falling below the poverty line when a country’s economy advances without them. Here are examples of how severe wealth inequality contributes to poverty and how these issues can be corrected.

The Challenges of Inequality

The country the United Nations Development Program (UNDP) lists as having the highest wealth inequality is South Africa, according to its GINI index of 63 percent (a measure of inequality, with zero percent representing perfect equality and 100 percent being maximum inequality). Though South Africa has a high GDP compared to the world average, it still has a large number of people below the poverty line. In 2014, 18.9 percent of the population was living on less than $1.90 per day. In many cases, the poorest workers in South Africa are living on wages of $50 per month. Many of these issues are due to the country’s history of apartheid, which entrenched economic differences between different groups of people. Though South Africa removed that system 25 years ago, its legacy still impacts the country today.

Brazil is another country where wealth inequality contributes to poverty in a significant capacity. Despite others earmarking the country as one quickly moving towards becoming a developed nation, 10 percent of the population still lives in extreme poverty. Though the country’s economic growth is significant, 61 percent of that growth from 2001 to 2015 has gone directly to the richest 10 percent of the country. This means that the majority of Brazil’s population has only seen 39 percent of all of its economic progress.

This inequality contributes significantly to the problem of poverty and prevents the poorest of the country from improving. Progress in Brazil on this issue with regards to specific groups of people is slow. By current projections, women in Brazil will not close the wage gap until 2047. As for black Brazilians, estimates determine that they will not earn as much as white Brazilians until 2089 by the current rate.

What Can Countries Do?

One should note that while wealth inequality contributes to poverty, the exact causes behind wealth inequality can vary greatly and come about as a result of many different social, political and economic factors. South Africa’s inequality as a result of historical institutions may be an issue more difficult to tackle. According to experts, however, a good start would be to offer more opportunities to those who those institutions have systematically excluded.

In Brazil, access to education remains seriously dependent on one’s family income. As a result, the majority of Brazilian adults have no secondary education. Expanding access to more education opportunities may be key to alleviating income inequality and poverty in Brazil.

Inequality is a serious issue in countries like South Africa and Brazil, and the issues that connect with it contribute to poverty’s continued existence and expansion. According to a study published by members of the U.N., there is a strong link between income inequality and poverty. In order to reduce poverty, it follows that countries must also correct inequality. With more legislation and NGOs assisting individuals severely disadvantaged by income inequality, ending poverty seems a lot more accomplishable.

– Jade Follette
Photo: Flickr

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10 Facts About Poverty in Italy That Everyone Should Know

Facts About Poverty in Italy

In 2017 the number of individuals in Italy living in “absolute poverty” rose to 5.1 million people, or 8.4 percent of Italy’s population. That number is up from the 7.9 percent reported back in 2016. Absolute poverty refers to a condition where a person does not have the minimum amount of income needed to meet the minimum requirements for one or more basic living needs over an extended period of time. With such a great amount of people unable to support themselves on a day to day basis and the overall region experiencing a rise in poverty levels each year, it is time to take another look at the facts about poverty in Italy.

10 Facts About Poverty in Italy

  1. Poverty is a threat in southern Italy. Southern Italy’s economy has grown slowly compared to northern Italy and its economy contracted by 13 percent from 2008 to 2013, almost twice as fast as the North’s at seven percent. Between 2007 and 2014, 70 percent of people in Italy who were in poverty were from southern Italy. The threat of poverty has caused some individuals to join the mafia in order to escaped the harshness of absolute poverty. Today, 47 percent of people still live at risk of poverty in southern Italy.
  2. The average household income in Italy rose in 2015, around €2,500 per month, but this was heavily concentrated in the richest fifth of Italy’s population. Think tank Censis reported that more than 87 percent of working-class Italians say it is difficult to climb the social scale, along with 83 percent of the middle class and 71 percent of the affluent.
  3. Italy’s debt is one of the worst in the E.U., with a national debt of $2.6 trillion, roughly 120 percent of its GDP. The debt was not as bad in the 1990s due to smart budgeting tactics, but after the global recession hit, the debt crisis began. Italy may not be able to sell its new debt to cover its old debt, indicating why these facts about poverty in Italy are so important to understand.
  4. Corruption within Italy has halted economic growth. More than 15 percent of Italy’s economy occurs on the black market and other underground avenues. With a past filled with tax evasion charges among others, Italy has seen its good government standing decrease over the years. Bad government leads to bad decision making which ultimately leads to the downfall of a good economic plan.
  5. Minors also face the brunt of poverty. In 2017, 1.208 million minors were living in absolute poverty. Children growing up in poverty leads to many problems down the road. Many may drop out of school to support their families or find other methods to garner a decent living. Italy’s poverty problem is so deep that not even children can escape it.
  6. With the establishment of new leadership in government, Italy is looking at a hopeful start to fixing its economy. Italy’s GDP rose 1.5 percent last year, the highest since 2010. While growth has been slow, the government is now actively trying to combat poverty.
  7. Recently the Italian government passed a bill that allocates €1.6 billion to help families in need as well as minors in need. The bill focuses on tackling poverty through welfare packages and anything else that can help people get by.
  8. The proposed bill gives families in need up to €400 each month. The estimate is that around 400,000 families will benefit from this new bill. The country’s Labour Minister Giuliano Poletti stated that the bill “fills a long-standing gap in the Italian system of protecting individuals on a low income, and is the sign of a new approach to social policy.”
  9. The grand plan to end poverty in Italy centers around the idea of social development, or establishing the means in which the foundation of Italy is secure and no one is at risk of being in poverty. Social development has been what the U.N. has cited as the most efficient way of reducing poverty.
  10. Italy looks to improve its economy each year at around one percent and continues to be optimistic about its chances of reducing poverty. Job growth is the priority of the current government and many steps are being made to accomplish that goal.

While Italy has one of the worst economies in the E.U., the nation is working to improve its conditions. These 10 facts about poverty in Italy demonstrate both the breadth and depth of the problem as well as the steps the country is taking to resolve its issues.

– Michael Huang
Photo: Flickr

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Inequality in South Africa is Still Being Perpetuated Today

Inequality in South Africa
South Africa has long been known as one of the most unequal societies in the world. In the 1990s, South Africa’s Gini coefficient–a measure that reflects inequality, where zero is absolute equality and one is absolute inequality–was, at 0.66, the highest in all the 57 countries for which this data was available. That measure, as of 2015, has remained the same. The top 10 percent of South Africans earn roughly 60 percent of all income and own 95 percent of all the country’s assets, whereas 80 percent own no wealth at all. Inequality in South Africa continues to be a major issue as the country moves to distance itself from its apartheid- era exclusionary style.

The root causes of South Africa’s severe inequality can be traced back to the establishment of Cape Town, a Dutch shipping port in the 1650s. Over the next two centuries, “military conquest and political exclusion, which took a colonial and racial form,” expanded into the interior.

After the British took over in the early nineteenth century, the defeated indigenous groups were never fully incorporated into the economic and political model. The twentieth century brought the neighboring counties under British rule, culminating in a peace settlement which “inscribed racial discrimination in the foundations of the new South African state.” The framework for inequality in South Africa had already been laid by the time the National Party came to power in 1948 and enforced its apartheid legislation.

South Africa continues a system of socioeconomic exclusion. However, whereas historically the exclusionary practices were racially-based, today the extent and depth of inequality in South Africa is increasingly intersectional. Although it continues to impact black South Africans the most, it strikes at race, gender, class and age. Over 55 percent of South Africans continue to live in poverty and unemployment sits at 25 percent.

All hope is not lost, however. The University of Witwatersrand in Johannesburg has founded a new center, the Southern Centre for Inequality Studies, that will drive a five-year-long, interdisciplinary project. It will include approximately 80 researchers from across the country: economists, historians, legal academics, healthcare experts, sociologist and other disciplines.

The most promising hope yet for combating inequality in South Africa comes from the implementation of the National Development Plan. The plan seeks to reduce inequality and eliminate poverty by 2030 by “drawing on the energies of the country’s people.” Some of the key points include: increasing employment to 24 million, ensuring all children can read and write by the third grade and providing affordable healthcare and a public transit system. It also aims to strengthen the criminal justice system, including governmental accountability. “Progress over the next two decades means doing things differently,” the plan states.

In detail, the plan calls for:

  • infrastructure investment set at 10 percent of the country’s global domestic product (GDP).
  • raising rural incomes.
  • strengthening social wages.
  • professional public service.
  • private investment to boost labor.
  • housing market gaps to be closed.
  • informal settlements to be upgraded.

After handing over the plan to President Jacob Zuma, Minister Trevor Manuel stated that “social cohesion needs to anchor the strategy.”

South Africa’s apartheid era formally came to an end in April of 1994. Less than a month later, in May of 1994, Nelson Mandela became the first black, democratically elected president. The exclusionary system that Mandela grew up in is still widely overreaching within the country, but as the nine provinces continue to work together, there will be hope. Inequality in South Africa does not have to be a perpetuation.

– Aaron Stein

Photo: Flickr

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On the Micronesia Poverty Rate

Micronesia Poverty Rate

According to the Asian Development Bank, the Micronesia poverty rate has reached 41.2 percent this year. Out of the Asian Pacific countries, it has the second highest poverty rate.

Additionally, while the percentage of the population that lived on less than $1.90 a day in 2000 was 46 percent, it declined to 17.4 in 2013, according to The World Bank. While the Micronesia poverty rate is seemingly high, the middle class has been expanding in recent years.

As of 2000, the richest 20 percent owned 65.9 percent of the wealth, while the middle classes owned about 27 percent of the wealth. In contrast, in 2013, the richest 20 percent owned about 48 percent of the wealth, while the middle class owned 37 percent. The poorest 20 percent have also increased their earnings from 1.4 percent of the wealth in 2000 to 5 percent in 2013.

The wealth inequality trend has also decreased in Micronesia in recent years. At 63.3 percent in 2000, the trend dropped to 42.5 percent in 2013. The Gross National Income (GNI) has increased around $100 from 2015 to 2016.

However, the GDP growth has slowed from 3.8 percent to around 2 percent in the past year. The decrease in growth was due to a drought in 2016, which led to water rationing, emergency shipments of water and increased health concerns. El Niño caused the drought itself.

Earning around $20 million annually, the fishing industry is the main source of income for Micronesia. The market value of tuna in the region is around $200 million per year, but Micronesians don’t take advantage of this resource. As of right now, agriculture is a vital component to the economy because of the contributions it makes to per capita income, export earnings and subsistence production. The agriculture and fishing industries make up 42 percent of the GDP for Micronesia.

To decrease the Micronesia poverty rate, there is promise in the tourism industry especially considering the abundance of marine and natural beauty. What is currently hindering the tourism industry, however, is the limited air transportation, land-use issues, and competition with surrounding islands of similar atmosphere.

– Sydney Roeder

Photo: Flickr

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Wealth Inequality: On the Causes of Poverty in Mexico

Cause of Poverty in Mexico
The definition of wealth inequality is the unequal distribution of household or individual income across the various participants in an economy. Wealth inequality is a daunting social issue persisting in many countries. It is one of the main causes of poverty in Mexico.

Wealth inequality in Mexico is extremely high. Although Mexico is among the top 14 richest countries as calculated by GDP, over half the population lives in poverty. The gap between the wealthy and the poor in Mexico continues to expand.

Consuelo Lopez-Zuriaga, the Oxfam Mexico Executive Director states that “while the wealth of Mexican multimillionaires is multiplied by five, 48 percent of state schools have no access to sewage, 31 percent have no drinking water, 12.8 percent have no bathrooms or toilets and 11.2 percent have no access to electricity.”

Just one percent of the population owns about half of the country’s wealth. While their wealth increases, the poverty rate in Mexico has not decreased by much, leaving an estimated 53.3 million people living below the poverty line. From 2012 to 2014, the poverty rate in Mexico only fell by 0.3 percent. This implies that efforts to confront the issue have been unsuccessful.

President Peña Nieto recognizes that inequality along with corruption and global economic turmoil are the primary challenges that Mexico’s economy faces. Under President Peña Nieto, the poverty rate has only increased, and many criticize him for a lack of dedication to combating poverty. In fact, some say that encouraging large-scale private and foreign investment is the primary focus of the administration.

Though there are small successes in developmental programs aimed at combatting poverty in Mexico, it is not enough to resolve the underlying issues. Wealth inequality is one the worst causes of poverty in Mexico that is unsolved as it continues to increase the poverty rates. Strategization by those in power will need to be rethought in order to better distribute wealth to Mexico’s citizens in the future.

– Danyel Harrigan

Photo: Flickr

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Inequality and Poverty in Namibia: A Gaping Wealth Gap

Poverty in Namibia
Namibia is one of just nine countries in Africa categorized by the World Bank as “upper middle income.” Poverty in Namibia, however, is still prevalent, and the country is rife with extreme wealth imbalances.

The Namibian economy boasts relatively high growth, with an average growth rate of 4.3 percent between 2010 and 2015. The economy is heavily based on the country’s mining industry, which accounts for 50 percent of foreign exchange earnings.

Despite its high income, Namibia has a poverty rate of 26.9 percent, an unemployment rate of 29.6 percent and an HIV prevalence rate of 16.9 percent. Poverty in Namibia is acute in the northern regions of Kavango, Oshikoto, Zambezi, Kunene and Ohangwena, where upwards of one-third of the population lives in poverty. Furthermore, the country’s status as upper middle income makes its poor ineligible for aid from the UNDP and other development groups.

The apparent imbalance between Namibia’s high income and simultaneous extreme prevalence of poverty can be traced to enduring income inequalities. Globally, Namibia has the third highest levels of income inequality, according to the World Bank. One study by the National Bureau of Economic Research showed Namibia as having the highest levels of wealth inequality in the world in 2000.

Even though poverty in Namibia has declined significantly in recent years, down about 10 percent since 2003, the U.N. and other advocacy groups have pressured the Namibian government to do more to tackle the large wealth gap.

In 2012, U.N. human rights expert Magdalena Sepúlveda warned that “poor Namibians cannot wait any longer for benefits of economic growth ‘to trickle down.’ The Government must address the critical needs of the poorest and most marginalized as a matter of priority.”

Namibian President Hage Geighob has expressed similar sentiments about eradicating poverty. In March 2015, Geingob “declared war” on poverty in Namibia, with his first focus on the problem of hunger. He pledged to create a food bank with branches across the entire country.

– John English

Photo: Flickr

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Services Addressing Wealth Inequality in Africa

Services Addressing Wealth Inequality in AfricaMore mobile phones than ever before have been making their way to countries in need and enabling financial inclusion, which is so essential to eliminating poverty.

In Africa, periods of drought can take a significant toll on communities that depend on their agricultural workers and cause widespread wealth inequality. Thanks to the distribution of mobile technologies, farmers can now open accounts.

Wired’s Marguerite McNeal reports, “In Kenya, a whopping 59 percent of the adult population actively uses mobile money services, with transactions of $2.2 billion per month”.

Also, out of the 89 countries in the world where money services are available, the greatest impact is being made in Africa where roughly 12 percent of adults now have mobile bank accounts creating greater financial stability.

World Remit

This money transfer company was the brainchild of Ismail Ahmed. The idea of World Remit came to him while at university. He was always having to travel long distances and pay fees to send money to his family in Africa. In 2010, World Remit became a reality.

“Subscribers send and receive payments directly on their phones, and pay far less in transfer fees — about 4 percent, compared to as much as 12 percent through a traditional service like Western Union.” This system allows for better transfer services and gives families greater income stability.

Tigo Wekeza

The 3.5 million customers that rely on Tigo Pesa money services can now receive interest on their funds through Tigo Wekeza. “Customers do not need to register separately in order to benefit and any returns due are paid directly into their Tigo Pesa wallet.

If a customer so chooses, they can nominate a nonprofit beneficiary instead.” Customers are offered interest rates between 7 and 9 percent, and no other financial authority has offered like provisions. President and CEO of Millicom, Hans-Holger Albrecht, commended the company on its extension of financial inclusion.

EcoFarmer

Since its 10 year recession, 70 percent of residents of Zimbabwe depend on agricultural workers for economic recovery. EcoFarmer is the first micro-insurance policy in Zimbabwe, and it ensures inputs against both drought and high rainfall.

“Using mobile money, subscribers pay 8 cents a day for 125 days and are guaranteed a harvest or at least $100 for every 10 kilograms of seed they plant, regardless of weather conditions.” Farmers also receive tips, such as technical information, market information, weather conditions, and so much more that they can use in order to produce the greatest yield.

Bima

Based in Stockholm, this insurance provider allows its customers in Ghana to register for life insurance at 2 cents a day and also manage risk to prevent financial instability all from mobile devices. Bima provides family care, hospital stays and more recently, telemedicine services.

“We believe that every consumer deserves choice, value and quality of service, regardless of their income level.” Also, this company doesn’t run on just technology. It also provides essential education for consumers, and more than 90 percent of registrations are made in person in order to prevent error.

– Anna Brailow

Sources: BIMA, Econet Wireless Zimbabwe, Millicom, Wired, World Remit
Photo: Flickr