Posts

Overfishing in West AfricaWest African people rely on fish as a primary protein source and a form of income, supporting the livelihoods of close to seven million people. Due to overfishing and illegal fishing, fish stocks are dropping, and as a result, the West African population risks food insecurity and increased poverty. Roughly 40% of the region’s fish is caught illegally. Overfishing in West Africa threatens to permanently hobble the economies of many developing countries in the region and destroy fish stocks for generations. In order to curb this threat, organizations are taking action.

Something Fishy

In West African countries, artisanal fishing has been a dominant career for generations. However, industrial fishing operations, mostly from China and the EU, threaten artisanal fishing. These countries use massive ships to trawl fish from the West African seas at a rate that could permanently wipe out the stock of fish in the region if left unchecked. In addition to depleting one of the region’s key food supplies, illegal overfishing in West Africa steals an estimated $1.3 billion in revenue from the region each year.

Local fishers try their best to compete but continue to struggle. According to a study, boats from the EU and China fish 11 times more efficiently than local artisanal fishers in West Africa. Even when foreign nations fish legally, they hardly pay their fair share. The EU, for example, pays West African nations just 8% of the value of fish it catches. As a result of these practices, West Africa loses out on an extremely valuable resource with very little compensation in return.

Not Enough Fish in the Sea

While the long-term environmental and economic impacts of overfishing are very concerning, the immediate hunger of people in West Africa is more pressing. The region faces an all-time high level of food insecurity due to the COVID-19 pandemic and ongoing conflict in the region. The Africa Center for Strategic Studies estimates that 23.6 million people in West Africa will face crisis levels of food insecurity in 2021.

Increased food insecurity goes hand-in-hand with other economic problems. Hundreds of thousands of people from West Africa migrate to European countries in hopes of finding work, a number that continues to grow. Many of these migrants cite lack of job opportunities and inadequate access to food and other essential services as reasons for leaving.

It is imperative for West African countries to crackdown on illegal fishing in order to address the problem. Researchers from the Sea Around Us project argue that policymakers should focus on supporting artisanal fishing as it creates more jobs and is better for the environment. Furthermore, placing limits on the industrial fleet operations of other countries will return control back to the region and ensure sustainable fishing.

The World Bank’s Solution

While the problem of overfishing in West Africa is daunting, organizations have mobilized to help solve the issue. The West Africa Regional Fisheries Program (WARF-P) is a three-phase initiative with a $170 million investment in the region’s fisheries. According to the World Bank, the program focuses specifically on reducing poverty and food insecurity by ending overfishing.

Phase one of WARF-P saw commendable success in Cabo Verde, Guinea-Bissau, Liberia, Senegal and Sierra Leone. The program has helped shape new laws regarding overfishing and has given local fishers access to more resources. In Cabo Verde, Liberia, Senegal and Sierra Leone, the project helped register 34,000 small-scale fishing vessels in order to better monitor fishing activity. The project began in 2010 and ended in 2019.  WARF-P positively reported that illegal fishing has reduced in all beneficiary countries.

While these investments in the region are helpful for local communities, the investments fall short of compensating for the multi-billion dollar losses from overfishing in West Africa. It is vital to spread awareness on the issue and urge local governments to take action to prevent future losses. At the end of the day, proper management of these oceans falls on the shoulders of West African leaders.

Reeling it in

West Africa is a region that is very susceptible to the impacts of poverty, especially in the wake of COVID-19. Overfishing in West Africa will potentially haunt the region forever if local governments do not comprehensively address the issue. West Africa’s fish belong to the people of the region first and foremost. On the bright side, the benefits of solving the problem are immense and immediate. Food insecurity will drop while local employment rises, reducing poverty in West Africa.

– Jeremy Long
Photo: Flickr

Globalism Reduces PovertySeveral factions surround globalism, some cite statistical reduction in poverty, while others decry effects on local communities. As in all reductive thinking, oversimplification misstates the complexity, succumbing to the facility of a universal perspective. What is absolutely clear, however, is the initial decades of global trade created categorical winners and losers — the most impoverished 5% gained $.07 in daily income, while the top 1% averaged $70. The theory that globalism reduces poverty is multifaceted, and such, globalism is best described as a “two-way street.”

Global Inequality

As the global pool of wealth undeniably grows, financial resources are increasingly concentrated among a powerful economic cadre, actually increasing global inequality. Subsequently, inter-national economies are seeing more parity, but intra-national wealth distribution is increasingly unequal.

Absent the economic investment from global trade, however, developing nations struggle to modernize. Lacking foreign capital investment to create sustainable industries, an estimated 95% of Indian youth are forced into informal child labor. In the nation-state equivalent of “Sophie’s Choice,” governments are forced to participate while the premise that globalism reduces poverty remains dubious.

Relative and Absolute Poverty

Early returns from globalism showed a reduction in extreme poverty from 36% to 19% between 1990-2008 and capitalists trumpeted imminent eradication of poverty by the benevolent “invisible hand” of market forces. Undoubtedly a monumental achievement, millions have benefited from access to foreign markets.

As always, the devil is in the details. Poverty is an indiscriminate measure, a theoretical categorization defines the powers that be. For the World Bank, poverty is a function of daily income. But, between 1990-2018, the threshold indicating extreme poverty has preposterously risen a mere $0.90 while global GDP grew by $60 trillion during the same period. Given such disproportionality, it is difficult to see how globalism reduces poverty.

Global Poverty or Global Inequality

Ambiguous poverty metrics belie a true consequence of globalism, that the top percentile claimed more than 60% of growth. To retain these substantial gains, it is the providence of influential international corporations and institutions to promote globalism. Exceedingly fungible, poverty metrics become a prism through which various interests and policymakers justify exploitative agendas, often accompanied by stifling conditionalities.

As the International Monetary Fund and European Union counsel draconian measures to fledgling economies, local “governments often find it politically easier to cut the public expenditures for the voiceless” impoverished as connected wealthy classes are “disinclined to share in the necessary fiscal austerity.”

Equally as true in developing nations, entrenched hegemonies have little incentive to shoulder the burden of globalism and frequently siphon economic growth for personal enrichment. Irresponsible stewardship of finances and resources, as always, disproportionately affects voiceless and impoverished communities.

Generations after the ouster of foreign monopoly United Fruit Company from Latin America, indigenous farmers’ share of profit is essentially stagnant as corrupt domestic entities pocket revenue. Globalism reduces poverty only when sufficient protection is guaranteed to populations most at risk of exploitation and achieved only when international, federal, corporate and municipal institutions communicate with disenfranchised communities.

Paternalism in South Africa

Under the best of circumstances, sudden inundation of investment and foreign influence is devastating. For countries without robust legislative institutions, it is cataclysmic. The hyper-racialized-apartheid bureaucracy of South Africa was particularly ill-prepared for the rapid modernization required by globalism.

Despite democratic revolution, political bodies could not address the dual responsibilities of erasing paternalistic and racist policies while simultaneously reentering international trade. After centuries of protectionism and isolation, South African society was a manicured house of cards temperamentally opposed to foreign influence.

The draconian society, which enslaved the Black majority, created a delicate homeostasis and the post-apartheid government was manifestly incapable of protecting the citizenry as globalism began in earnest. A systematically underprivileged class was ripe for exploitation.

Skills-Based Bias

During apartheid, underpaid, low-skill labor provided the engine for economic growth in South Africa. Known as “lumpenproletariat,” these peri-urban shantytown workers relied on the largesse of landed aristocracy for survival.

As a matter of course, economic opportunities through education represented an existential threat to White hegemonies. Because “it is surely the lack of opportunities of the less advantaged that is the real concern” in reducing poverty, undereducated South Africans were dispositionally unable to profit from economic growth.

Compounded by exclusion from land ownership, Black South Africans possessed neither the capital nor the skills for socio-economic gain. Various policy initiatives for Black Economic Empowerment (BEE) have targeted inequality, but generations of subjugation cannot be erased during the short lifespan of South African democracy.

Case Study: South African Winemakers

Overregulation and heavy subsidies throughout the 20th century created an extremely inefficient South African wine industry. Traditional focus on bulk production for domestic markets encouraged widespread plantation of high-yield, low-quality cultivars that were antithetical to international demand for higher quality. With a contorted supply chain entirely unfit for global competition, South African winemakers responded by replanting 50% of vineyards between 1990 and 2005.

To finance these changes, producers required foreign investment. At the behest of multinational distributors, conglomeration through a spate of mergers destabilized traditional market structures — the consolidation of Distillers and Stellenbosch Farmers Winery eliminated 2,000 jobs alone.

Moreover, a weak currency forced producers to rely on foreign capital for infrastructure improvements to replace apartheid-era slave labor. As South African winemakers became increasingly dependent on external financing, mechanization reduced permanent employment by 60%.

The Unequal Distribution of Benefits

Nonetheless, foreign investment allowed the wine industry to grow. Exports increased tenfold during the 90s, and by 2002, South Africa was the fastest-growing sector in the all-important British market. Representing 45% of domestic exports, the fortunes of South African winemakers were existentially linked to unpredictable foreign markets.

But, native producers have seen little benefit. As of 2018, the average return on investment for those costly infrastructure upgrades is an abysmal 2%. And after three decades of democratic rule and countless land reforms, Black ownership in the wine industry is 3%. However, a goal of 20% by 2025 was established in 2007.

A Two-Way Street

In the hyper-competitive wine trade, “survival is not made any easier by the fact that globalization is a two-way street.” The South African wine industry is just one example of countless local communities at the mercy of free markets.

Nonetheless, increased trade and economic growth from globalism affect poverty. The 21st century will be judged by how well the fruits of international wealth are distributed to the most vulnerable populations. As early growing pains subside, poverty eradication is within grasp if the world so chooses.

Kit Krajeski
Photo: Flickr

educational and cultural development
Africa is a continent rich in natural resources, accompanied by a vibrant culture that educates the youth in many ways. The oral storytelling, artwork and scientific advancements within Africa are why a new crop of rising African scholars see a brighter Africa for the educational and cultural development of the African future. Yet the previous generations of Africans, especially from the sub-Saharan countries, have faced a tough battle in attaining educational progress. Only two-thirds of children in sub-Saharan countries complete primary education, according to the Global Partnership for Education.

Studies from the World Bank showcased the correlation between educational attainment and overall lower unemployment and social outreach: a child who finishes primary school is more likely to finish secondary school and pursue university. Community centers and resources aimed at increasing education create a better array of job-ready individuals who will be able to create a new economy for countries in dire need of infrastructural change.

Giants of Africa

Giants of Africa is a nonprofit, pro-sport and pro-educational program that focuses on helping children around Africa with the opportunity of achieving high educational and athletic development. With annual inclusive camps, the founder and president of basketball operations for the Toronto Raptors, Masai Ujiri, has been working since 2003 to educate and cultivate physical, psychological and emotional development for underdeveloped communities. These camps have helped many exceptional African youth players find a pathway way into the NBA and the African National Leagues around the continent. However, more importantly, they have uplifted the educational and cultural development in Africa.

Ujiri has worked vigorously to do two things. First, he wants to find a new crop of African talent, both female and male, to a direct pipeline into the NBA and WNBA, or even collegiate programs. The basketball camps have been a safe place for many African youths to take shelter in. Second, he wants to establish a network of camps that help in the educational and cultural development of the youth in Africa. Ujiri’s specialization in sub-Saharan countries coincides with their growing population.

There has been an establishment of different basketball camps across Africa, mainly those around the most impoverished communities. One of the largest camps is in Somalia, where Giants of Africa works with girls who are in danger of sex trafficking. Partnering with the Elman Peace Centre, Giants of Africa created camps that invited more than 50 girls in 2019 to participate. Here are the areas where Giants of Africa created the camps.

Giants of Africa’s Camps

  1. South Sudan: The establishment of a community center in South Sudan’s capital has been instrumental in giving more than 53 young children rigorous educational lessons. This occurred through a partnership between Giants of Africa and the Luol Deng Foundation.
  2. Kenya: In Kenya, Giants of Africa have teamed up with The Mully’s Children Family organization that focuses on helping displaced women and children who have HIV/AIDS, children stuck in child labor and victims of sex trafficking. Giants of Africa has been instrumental in funding food, education, shelter, educational training, healthcare and counseling resources.
  3. Nigeria: In Nigeria, which is also where Ujiri is originally from, funds went toward making a permanent community center after the annual camps took place. There, Giants of Africa partnered with Little Saints Orphanage in Lagos to establish a community system for the orphaned youth. Ujiri has used Giants of Africa’s sponsorship with Nike to donate Nike apparel and equipment as well as organized funding for the orphanage.

The combined average unemployment rate of South Sudan, Kenya and Nigeria is more than 25% and faces an unprecedented future without the investment of the rest of the world. Africa is an entirely different world with so much potential to blossom.

Educational Performance with the Necessary Tools

Research from a recent World Bank study demonstrates just how important youth development can be towards educational performance, cultural development and social mobility. These camps helped more than thousands of susceptible young children who are the future of Africa.

These results are more relevant now than ever with Africa housing a population in which more than 63% are under the age of 25. Inhabitants within sub-Saharan Africa make up the largest growing youth in the world. The attainment of formal education along with formal events of communal work services could impact the world on a global scale. A recent study that Richard Reeves, a British economist from the Brookings Institution, conducted, found that sub-Saharan countries do revere educational attainment and the social mobility that goes along with it. This goes hand in hand with the results of community outreach and higher-income status.

The lack of research on how community centers and funding have helped Africa grow economically and educationally is a testament to the lack of resources available to them. With the largest growing population in the world, the key to global porosity lies in sub-Saharan Africa.

Conclusion

The continent of Africa is now facing a period of educational advancement for the youth. This has occurred not only through the extravagant work of Masai Ujiri but also through the action of many grassroots organizations that see the potential in Africa. Countries like Ghana, Nigeria, Cameroon and Somalia are at a crossroads with the future of global society. Not only has Giants for Africa established a pipeline for extraordinary young basketball players to forge their journey into a better professional and educational future, but it is also helping the children who are also at a higher risk of not continuing their education.

– Mario Perales
Photo: Unsplash

Digitization in AfricaLiquid Intelligent Technologies (LIT) is “a pan-African technology group.” The group was established in 2005 and spans 14 countries, with a focus on sub-Saharan Africa. LIT provides custom digital solutions to private and public businesses across Africa. LIT hopes to utilize its fiber infrastructure to accelerate the accessibility of new innovative technologies and propel digitization in Africa.

LIT’s Impact

Digitization in Africa is vital for the continent’s economic growth. LIT’s extended expansion across 14 countries provides connectivity to small businesses, enterprises and government entities. This enables productivity through several digital solutions that cater to each of their needs.

LIT’s fiber infrastructure reaches more than 100 million people across the continent. This complex network creates new, innovative opportunities by providing accessibility to businesses and individuals across Africa and accelerating the continent’s digital transformation.

In 2021, LIT succeeded in deploying 100,000 kilometers (around 62,000 miles) of fiber infrastructure across Africa. This milestone makes LIT the “largest independent fiber network provider in emerging markets globally.” LIT plans to further accelerate digitization in Africa and create unique opportunities through digital inclusion.

LIT’s Other Achievements

  • LIT has provided a high-speed fiber network connection in the city of Mbuji-Mayi in the Democratic Republic of Congo, allowing access to three million people for the very first time.
  • LIT has enabled 4G connectivity through “1,500 new mobile network operator tower connections.” It is currently preparing to implement 5G technology, which can reach a speed of up to 100 times more than 4G.
  • High-speed internet has basically been absent in the Democratic Republic of Congo in the past decade. The country’s internet access is so limited that it ranked 145th in the world for internet access. LIT’s new extensive fiber infrastructure will allow the DRC to digitally transform along with the rest of Africa.

Broadband Access is a Basic Necessity

Broadband (high-speed) internet access is considered “a basic necessity for economic and human development in both developed and developing countries.” However, only about 35% of people in developing nations have access to the internet in stark contrast to 80% of people in developed economies. The goal is to provide high-speed internet access to all, particularly in rural areas.

The “digital divide” in internet and technology access disproportionately impacts rural areas and the impoverished. Higher internet access in cities compared to developing rural communities hinders shared prosperity and blocks “pathways out of poverty.”

Solving this problem could provide “millions of jobs and billions of dollars in revenue” in the years to come. According to the World Bank, increasing internet access from 35% to 75% in developing nations could add up to $2 trillion to their “collective gross domestic product (GDP).” Furthermore, this increase in internet penetration could establish more than 140 million jobs globally.

Access to high-speed internet boosts the economy. It is an essential tool for basic services such as education and healthcare. Further, it provides more opportunities for women’s development and enhances “government transparency and accountability.”

Bringing High-Speed Internet to Africa

The internet plays a vital role in allowing access to educational resources and providing knowledge sharing for students and their teachers. Africa only has a 20% internet penetration and LIT’s mission is to increase this by providing opportunities with its extensive fiber network and accelerating digitization in Africa.

Nic Rudnick, group CEO of LIT, tells Gadget magazine that “By providing access to information, connecting people to businesses everywhere and opening up new markets, the internet can act as an enabler of economic activity and an engine for information sharing.”

With the power of high-speed internet, LIT has helped address the most crucial challenges within “high-potential countries” such as the Democratic Republic of Congo and South Sudan. Digitization in Africa has never been more crucial in what is now a digital era. High-speed internet brings the promise of “peace, state-building, job creation and improved livelihoods.”

Addison Franklin
Photo: Flickr

Healthcare in LiberiaThe 2014-2016 Ebola outbreak in West Africa killed more than 4,800 people in Liberia and infected thousands of others. However, these data points only scratch the surface of Ebola’s effect on healthcare in Liberia. Ebola’s devastation affected the provision of healthcare services in West Africa and caused an additional 10,600 deaths due to HIV, tuberculosis and malaria. In countries such as Liberia, more medical training and equipment means healthcare in Liberia has strengthened since the Ebola outbreak. Ebola exposed the weaknesses in the healthcare system of Liberia and showed the Liberian government and international aid organizations particular areas needing improvement and reform.

The World Bank’s Involvement

After recognizing the struggles of Liberia’s healthcare system during the Ebola epidemic, the World Bank devised specific ways to assist Liberia. For example, in May 2020, the World Bank approved the Institutional Foundations to Improve Service for Health Project for Liberia (IFISH). The four-component program focuses specifically on improving health services and outcomes for women, children and adolescents. The six-year program costs $84 million, of which $54 million of funding comes from the United States. Roughly 50% of the budget will be dedicated to health facilities and construction in Liberia. The program also attempts to lay the groundwork for future Liberian healthcare officials. The program includes training health workers and financing certain undergraduate and postgraduate faculties.

The Yale Capstone Project

For multiple years, the Yale Jackson Institute for Global Affairs has worked alongside the Yale Global Health Institute to create a project-based global health course for Yale seniors. The program allows students to explore the intersection of public health and policy. The students of this program have contributed to recovery efforts in Liberia. The program has assisted in establishing proof to encourage partners and policymakers to undertake significant changes in Liberia’s main medical school. The 2015 class conducted case studies on Rwanda and Ethiopia to generate targeted policy solutions in Liberia. Overall, the partnership was deemed a “win-win” for Liberia and the students involved.

CDC Field Epidemiology Training Program

The Centers for Disease Control and Prevention (CDC) has been actively aiding healthcare in Liberia since 2007. However, it did not expand its Liberian focus until the Ebola outbreak. Accompanied by more traditional CDC programs such as malaria intervention and the provision of vaccines, Liberia receives assistance through the CDC’s Field Epidemiology Training Program (FETP). The three-tiered educational initiative aims to equip Liberian healthcare workers with the knowledge and tools to investigate and respond to disease outbreaks. At the close of 2016, Liberia had 115 FETP-trained staff. The FETP graduates will go on to provide field support in response to disease outbreaks across Liberia. With graduates from all 15 counties and 92 health districts in Liberia, fellows of FETP work to contain outbreaks and prevent them from turning into local or global epidemics.

Room for Improvement

Healthcare in Liberia is improving due to Liberia’s coordinated recovery efforts with multiple organizations. Nevertheless, Liberia still battles with increasing civilian access to healthcare and the funding of critical health institutions. For example, two-thirds of rural families need to travel for more than an hour to access a health center. These extended travel times can significantly impact the healthcare outcomes of Liberians. Moreover, hospitals are struggling to survive because funding from donors has slowed since the Ebola outbreak. In Liberia’s health system, primary healthcare facilities are largely underfunded.

While these struggles persist, they should not overshadow the significant improvements made since the Ebola outbreak. With aid, commitment and effort, healthcare in Liberia can improve further.

– Kendall Carll
Photo: Flickr

SMS App in TanzaniaIn low-to-middle-income countries, there are employers and workers who lack a central area to place job postings or find jobs with ease. In Tanzania, this lack of communication causes employers to hire workers from within their own villages, limiting the reach of their network. This limitation, along with unclear instructions and expensive job search costs, ultimately leads to a broad pay range for similar work. To resolve this issue, a researcher tested how an SMS-based messaging app can be effective when people search for a job in rural Tanzania. The findings were that the creation of this SMS app in Tanzania more easily allowed employees to connect with employers and reduced the wage gap.

No Internet Needed

While the SMS app is similar to online job search websites, it does not rely on internet access. The app simply asks a few important questions about their searches. For example, the app asks employers and workers to identify how much they are willing to pay or how much they wish employers to pay them. The intention of this feature is to lower business deal costs, but it may persuade users to bargain and alter the wages. However, the SMS app can also assist in updating the dispersal of wage offerings in the labor market.

When an employer posts a job, the job listing provides answers to frequently asked questions such as the wage, job type and date the job starts. Once qualified workers receive the advertisement, employers can immediately contact them, thereby lowering the costs it would take to meet in person. The advertisement includes a specific job code, so the workers text the correct code to the employers to apply for the position. After the employer receives the application, they exchange phone numbers and names with potential employees in order to further discuss the details of the job.

How the App Works

Employers can announce job descriptions through an SMS that all listed workers in the neighboring areas receive. This enables employers to extend their offer to more workers instantly. When a worker responds to the job advertisement, the app immediately directs the worker’s application to the employer. After experimenting with the app for one agricultural season, the research found that a large number of villagers began to use the SMS app and were finding success in connecting workers and employees. While the app does not increase the number of jobs available, it does decrease the wage spread.

Decreasing the Wage Gap

The agricultural production of Tanzania is self-reliant, and while Tanzanian families typically carry out their own farming responsibilities, farmers still hire some daily laborers to help. The payments for these workers range from $1.20 to $6.50 per day. However, the outcomes of the assessment established that the SMS-based messaging app lowered the wage gap in the villages, which means employers paid workers wages that matched the average payment for that job. High-paying employers contributed to this reduction by lowering the amount they paid workers, while the low-paying employers raised wages. These results suggest that the app could successfully cause a more permanent reduction in the wage gap and job search costs and create a more efficient labor market.

Increasing Communication

An SMS app that announces obtainable jobs and offers simple job applications through the short messaging system has the capability to upgrade the performance of the agricultural labor business. It will be much easier for workers and employers to look for each other because workers will have access to new job openings, and employers will be able to consider potential hires who are not accessible in their current labor network. This system of hiring is necessary because employers routinely have trouble finding new and professional workers, so they have to resort to rehiring previous employees. This lack of communication between villages results in the workers obtaining contrasting wages for comparatively similar agricultural work. Therefore, the SMS app is necessary to enhance the networking of employers and workers.

The SMS app in Tanzania is accessible because about 93% of the Tanzanian population owns quality phones, and 84% are highly literate. The app lowers the cost of job searching, makes wage rates more comparable and announces available jobs to instantly connect employees with employers. This networking expands the possibilities for employers and employees, especially in Tanzania’s agricultural industry.

– Shalman Ahmed
Photo: Flickr

Expanding Financial Access in MexicoA good indicator of a country’s overall inequality is the percentage of the population that has access to financial services. Countries lacking financial inclusion suffer from decreased growth and increased income inequality. One of the countries with the poorest financial inclusion for income classification is Mexico. Few Mexican citizens have financial resources at their disposal. This disparity perpetuates rampant economic inequalities in the country’s most impoverished regions. The government has implemented several programs in the past five years aimed at expanding financial access in Mexico.

The Problem

Mexico is a nation burdened by inequalities. With a Gini coefficient hovering around 0.5, Mexico is one of the most unequal upper-middle-income countries in the world. Contributing to the high income and wealth inequality are the massive gaps in access to financial services.

There is an undeniable correlation between financial access and inequality. For example, countries with extensive access to financial services broaden the economic opportunities for both individuals and firms. The World Bank’s Systematic Country Diagnostic for Mexico in 2019 found that expanding financial inclusion can significantly increase income for low-income individuals and populations.

The report also found that low financial inclusion negatively impacts economic inequality, productivity, growth and employment of micro, small and medium enterprises (MSMEs). Mexico is a stark example of a country with low financial inclusion. Only 37% of Mexican adults have bank accounts, which is a much lower number than the average percentage for upper-middle-income countries.

The poor level of financial access in Mexico sinks even lower for rural citizens. Although more than 20% of Mexico’s population live in rural areas, only 7% of rural residents borrowed from a financial institution in 2016. Another demographic hindered by financial access inequality is MSMEs, which provide about 70% of the employment in Mexico. Just 11% of these enterprises use bank credit due to the cost and access issues.

The Programs

To address the troubling lack of financial access in Mexico, the nation’s authorities have introduced several reform programs in the past five years. The Expanding Rural Finance Project received supplemental support from the World Bank. This allowed for greater oversight and more available resources. The Expanding Rural Finance Project authorized 192 participating financial intermediaries to supply 174,000 credits to 140,000 rural producers and MSMEs between 2016 and 2020. The average loans of $1,850 have helped ease rural poverty by providing funds for workers and employers in the area. Furthermore, more than 80% of these credit recipients were women, exceeding the set target of 60%.

In addition, the Financial Inclusion DPF, supports a comprehensive legal and regulatory framework for Fintech in Mexico. Financial institutions that adopt Fintech use technology to enhance financial services and make banking more accessible and effortless. Automated transfers, mobile payments and flexible loan management are some of the many benefits offered by Fintech-associated institutions. The newly implemented framework in Mexico is groundbreaking in the global picture and will increase financial inclusion by expanding convenient financial services.

The Results

Mexico’s programs addressing inequality in financial access have shown several signs of progress. Between 2016 and 2020, the Expanding Rural Finance Project widened financial access in Mexico for impoverished citizens, rural populations, MSMEs, women and youth. It provided hundreds of thousands of credits extending to participating producers. The project particularly helped Mexican workers on the disadvantaged end of income inequality. Of people who received credits, 17% live in communities classified as marginalized by the National Council for Population. The program distributed approximately 76% of all sub-loans in the Mexican states with the highest levels of poverty. About 12% of credit recipients had never borrowed from formal financial institutions. As gender inequality permeates income inequality, 81% of credit recipients from the project were women.

The Mexico Financial Inclusion DPF program also contributed to the expansion of financial access in Mexico. Only slightly more than a year after the program’s initiation, 93 businesses have already requested authorization to operate as Fintech institutions. About 59 of the businesses are electronic payment fund institutions and 34 are crowdfunding institutions. The quick adjustment to Fintech suggests an overarching trend for Mexican enterprises. Many want to benefit from the ease of access and innovation promoted by the Fintech model. The transition will benefit non-financial enterprises and average citizens as well. This is because the Fintech framework provides for faster payment transfers, easier loan processes and more convenient services available for remote residents.

Looking Ahead

Mexico’s glaring discrepancies in financial inclusion have supported ongoing economic inequalities for decades. However, programs administered by the government in the past several years have made strides in the right direction as financial access is widening for disenfranchised groups all over the country. If Mexico continues to expand financial access through credit programs and Fintech innovation, the country will likely see a decrease in economic inequality and reap the benefits of a more egalitarian society.

Calvin Melloh
Photo: Flickr

Job Shortage in IraqGetting a college degree in Iraq doesn’t mean that you have a guaranteed job in your field after graduating, let alone a job in any field. The job shortage in Iraq has led to an increase in poverty and has destroyed the dreams of many graduates. This job shortage is an ongoing conflict that impacts the goals of the young generations in Iraq. According to the World Bank, 22% of men and almost 64% of women between 15-24 years are unemployed in Iraq.

Iraq’s Economy

With billions going yearly to its public service, the nation is in an economic vise. It has been estimated that public employees get about 17 minutes of work done every day. Currently, Iraq is the seventh-largest country producing oil, but oil revenue has been decreasing. The nation spends little of the income it generates on potential economic development of the implementation of projects. Iraq is unable to pay its bills due to a lack of funds. This led to a financial meltdown, which resulted in the fall of the government after widespread movements against corruption and unemployment. The marches were centered against high state officials in a community where unemployment hovers about 15% and one in every four people lives in poverty, earning as little as $2.20 per day.

Youth Unemployment

Approximately 700,000 young Iraqis join the employment market every year. A primer published for the World Bank on job development in Iraq listed the youth unemployment rate at 36%. There is no noticeable difference in the rate of unemployment between young people with primary education and those with higher degrees. Because of this, Iraqi youth have been at the frontline of occupation riots in Iraq. Similar to Iran, the country’s poor budget management and corruption have been central to their outrage.

Iraq’s prosperity is largely dependent on its ability to build employment for the young population. This is particularly true of university-educated young people. A study by the World Bank estimates that Iraq needs to increase the number of jobs by 100 to 180% to address its workforce needs sufficiently.

Decent Work Country Programmes (DWCPs)

The International Labor Organization (ILO), together with the Ministry of Labour and Social Affairs of Iraq (MOLSA), is implementing DWCPs in Iraq. DWCPs are systems for financial guidance that focus on creating jobs through the growth of the private sector. They also assist with the expansion of social security coverage, freedom of association and National Employment Policy design and implementation. In March 2020, in response to a request by MOLSA, the ILO formed the first cooperation department for Iraqi counties in the city of Baghdad. With a budget of $17.5 million, the program is implementing five projects to encourage quality work and increase job opportunities. These projects will help Iraq’s government, employees and employers.

Overall, there are high hopes for the country’s future. The youth are not going to stop demanding change until they get it. With big changes the government is hoping to make in the next decade, there could be a possible decrease in the rate of unemployment.

– Rand Lateef
Photo: Flickr

Economic Expansion and Poverty Reduction Over the past half-century, Asia has become the world’s standard-bearer for both economic expansion and poverty reduction. Asia has made tremendous growth that accompanies poverty reduction.

Asia’s Economic Profile

In 2020, the Gross Domestic Product (GDP) of Asia was greater than the GDP of the rest of the world combined. Experts estimate that by 2030, the Asia-Pacific region will account for 60% of the world’s economic growth.

Tremendous economic growth is not a new phenomenon in Asia. In fact, since 1960, Asia’s economy has grown at a higher rate than any other continent. East Asia’s economy, specifically, has exceeded the rest of the world over the same time frame. Japan kickstarted Asia’s period of growth after World War II. Soon after, the “four dragons” —  Taiwan, Singapore, Korea and Hong Kong, emerged. The dragons each experienced tremendous and sustained economic growth in the latter half of the 20th century. In 1978, China opened its economy to the world, marking a huge leap forward for Asia’s economy.

With economic growth comes an increase in prosperity as the Asia-Pacific region is home to 90% of the world’s new members of the middle-class. While Asia’s economic prospects are tremendously promising, economic growth does not always translate into advancements in quality of life. Poverty reduction is an essential component of improving living standards and poverty reduction in Asia has been an important focus for Asian governments.

Poverty Reduction in Asia

Since the beginning of Asia’s period of tremendous economic growth, the region has seen similarly tremendous progress in poverty reduction. Asia continues to lead the world in poverty reduction.

No single country is more responsible for this achievement than China. In the last 30 years, more than 700 million people in China have made it out of extreme poverty. On a shorter time scale, China’s efforts to reduce poverty have yielded similarly promising results. From 2015 to 2019, China reduced poverty from 5.7% to 0.6% of the total population. In February 2021, China officially celebrated the end of absolute poverty, defined as the level at which a person cannot afford to meet their basic needs like food, water, healthcare, education and more.

Room for Improvement

Economic growth is not solely responsible for the successes of poverty reduction in Asia. In fact, as economic growth has progressed, Asia has actually experienced diminishing marginal returns in poverty reduction. In other words, as Asian economies have continued to grow, the growth has had a reduced effect on poverty reduction rates. Economic expansion and poverty reduction do not always happen equally. Policy is still needed to ensure poverty does not become a hidden issue. Despite all the expansion of the past 50 years, poverty in Asia is still a significant problem.

Asia’s progress in reducing poverty has been substantial but continued efforts are needed to truly eradicate poverty with further progress. There are still more than 320 million people in Asia who live in extreme poverty, defined as less than $1.90 a day. Furthermore, the COVID-19 pandemic has negatively affected poverty reduction in Asia. A World Bank report in September 2020 estimated that for the first time in 20 years, poverty could rise in East Asia. It estimated that as many as 38 million East Asian people could fall below the $5.50 poverty line. As such, continued focus on poverty reduction efforts is crucial, now more than ever.

Leo Ratté
Photo: Flickr

Refugee familyThe World Bank predicts that by 2030,  up to two-thirds of the world’s extreme poor could live in fragility, conflict and violence (FCV) affected areas. Global poverty rates are escalating at a shocking rate, especially in countries experiencing FCV. World Bank estimates show that an additional 18 to 27 million people would be pushed into poverty in 2020 in countries affected by FCV. The world’s most vulnerable and impoverished countries experience the interconnected issues of FCV.

Fragility

The International Development Association (IDA) reports that ½ of the world’s poor live in “fragile, conflict-affected states.” The World Bank defines fragile states as those meeting three different criteria: unstable institutional and political settings, the introduction of peacekeeping forces, international acknowledgment of instability and at least 2,000 per 100,000 migrants moving across borders. These criteria illuminate a political security crisis and forecast conflict.

Conflict

Along with fragility, conflict is a significant predictor of poverty and instability. The World Bank states that conflict accounts for “80% of all humanitarian needs.” Conflict also greatly contributes to the refugee crisis, inflating the number of displaced people around the world. FCV-afflicted countries account for 82% of forcibly displaced people. The addition of refugees limits the development of the host country even further and exacerbates issues of economic equality.

Conflict-affected states are home to half of the global poor. Conflict is identified by the World Bank as, “countries having 10 per 100,000 of their population experiencing conflict related deaths.” Countries on this list include Afghanistan, Syria, Somalia and South Sudan. Unsurprisingly, these countries are also among the top 5 contributors to the world’s refugee crisis.

Violence

In the last ten years, there has been a noticeable spike in intrastate violence. Poverty levels in countries with protracted conflict have increased, along with the levels of both internal and external displacement. Factors of political instability, intrastate conflict and corruption contribute to a cycle of poverty. Violent settings are likely to have high numbers of refugees fleeing those areas. The Global Citizen wrote, “By the end of 2019, 79.5 million individuals were forcibly displaced worldwide as a result of persecution, conflict, violence or human rights violations.”

Resulting from the outbreak of the Syrian Civil War, Syria is the world’s largest contributor to the global refugee crisis. Many flee country borders and are unable to attain asylum. Rather than return to a homeland of FCV, refugees remain in camps with limited access to work, education and commodities.

The Good News

In an effort to advocate and assist those most affected by FCV, the IDA has provided consistent and significant aid to the world’s poorest countries predisposed to experiencing poverty. One example of an IDA success story is Afghanistan. The IDA has endorsed 45,751 democratic community development councils throughout Afghanistan and has provided laborers 66 million days of work. The organization also helps provide vaccinations and central infrastructure to areas in need. With the help from other NGOs and nonprofit organizations, The World Bank is attacking these issues head-on through means of prevention, engagement, assistance and litigation to ensure further development in countries most affected by fragility, conflict and violence.

 

– Allyson Reeder
Photo: Flickr