Tag Archives: MDGs

Some Notes on Eritrea’s Economy

According to the recently published Global Economic Prospects, a World Bank Group flagship report, the year 2016 was marked by stagnant global trade, subdued investment, and heightened policy uncertainty. For 2017, a subdued recovery is expected, with receding obstacles to activity in commodity exporters and solid domestic demand in commodity importers. Additionally, weak investment is weighing on medium-term prospects across many emerging markets and developing economies (EMDEs). Although fiscal stimulus in major economies, if implemented, may boost global growth above expectations, risks to growth forecasts remain tilted to the downside.

 

For Eritrea, GDP growth was slightly above 4% in 2016, outpacing the global average, as well as GDP growth in the advanced economies, developing economies, and Africa (see figure 1). As well, Eritrea’s projected growth for the next several years is expected to outpace global projections (see figure 2). Importantly, such economic growth can be central to poverty reduction and the realization of broader development goals. Moving forward, Eritrea can address several areas in order to sustain positive economic momentum and enhance overall development.

 

Manufacturing and skills development

 

An area Eritrea should prioritize is manufacturing and skills development. As Eritrea continues to grow and integrate into the broader regional and global economy, it is vital to raise and vary exports, moving away from low-value added and potentially unstable primary products. Manufacturing is essential to growth, and with rapid technical change and global economic integration, it is becoming important as a means of modernizing and diversifying the economic base.

 

Consequently, focusing on and investing in technical and vocational programs and human capital development are key since they can help build and refine the population’s skills and capabilities to compete within fiercely competitive markets. Notably, advanced skills are not just a requirement for “hi-tech” sectors; even supposedly “simple” areas such as apparel, footwear, and basic engineering products require a degree of skills to compete. Of further importance, a skilled, knowledgeable workforce dramatically improves the investment climate since trained, skilled workers create an attractive economic environment for investors.

 

Beyond their necessity for competing in regional or global markets, Eritrea should invest in technical and vocational skills programs and human capital development since they help in the fulfillment of a range of fundamental human rights, significantly contribute to social inclusion, can considerably raise productivity and earnings (particularly of the working poor), reduce unemployment, increase the efficiency of entrepreneurs, and play positive, influential roles in crime and poverty reduction (AfDB; BCG; World Bank 2014).

 

The importance of technical and vocational skills and human capital development is particularly apparent in relation to skills gaps. Skills gaps are prevalent across much of the developing world – such as in Eritrea – and they persist despite generally high unemployment rates. Potential workers, lacking the skills and training required by various industries, remain idle and unproductive. An insightful case is Sri Lanka; while the country has the most educated workforce in South Asia, with 87 percent of citizens completing secondary school, its workforce is not equipped with the right skills to be machine operators, technicians, sales associates, and managers (World Bank 2014). In this context, vocational and technical training programs can provide workers with the vital skills required by dynamic, evolving economies, and can ultimately help address problems of unemployment and lack of productivity (BCG).

 

Notably, skills acquired from or honed within technical and vocational programs are especially significant for youth. Young people frequently remain at the end of the job queue for the formal labor market because they lack adequate skills and experience (Boateng 2002). With little access to formal employment, youth may instead turn to the informal sector. While the informal sector can frequently offer certain tangible benefits, it can also be characterized by long, unpredictable hours and limited protections, returns, safety, or security. More problematically, youth unemployment can also potentially lead to emigration, or crime and other harmful or dangerous behaviors, such as sex work or illicit drug use.

 

Overall, vocational and technical programs and human capital development are critical elements in encouraging and accelerating development, inclusive growth, and poverty reduction through economic transformation and job creation (AfDB). Moving forward, Eritrea should continue to invest in vocational and technical programs, and seek to enhance their overall effectiveness and impact. Doing so will require firm political commitment, the ongoing participation and cooperation of local and international partners, sustainable financing (especially for infrastructure and equipment), and the foresight to ensure that expansion does not dilute the quality of training.

 

To augment impact, the potential for enterprise-based training should be explored, while technical and vocational programs should be carefully assessed, diversified, and matched with the skills required by the labor market, possibly with the active participation of employers (Kanyenze, Mhone and Spareboom 2000; World Bank 2014). An illustrative example is the system of productivity councils that was a fundamental component of the rapid growth and success of the East Asian economies. Specifically, the system involved the specific skills profile required by the private sector being fed directly into the curricula of the educational and technical sector.

 

Finally, the Eritrean government and relevant stakeholders can further develop awareness campaigns illustrating that technical and vocational programs are an important means of empowering individuals to fully develop their capabilities and tangibly improve their lives. Importantly, these campaigns will help garner greater attention and participation, while counteracting potential obstacles related to perceptions of the alleged low prestige of technical and vocational programs.

 

Fisheries

 

Eritrea’s coastline on the Red Sea is approximately 1200 kilometers, making it one of the longest in the world, with approximately 1000 kilometers more coming from its numerous islands on the Red Sea. Notably, the waters of the southern part of the Red Sea are highly productive and rich in biodiversity, with substantial populations of over 1000 species of fish. Commercially valuable fish include groupers, snappers, emperors, lizardfish, breams, jacks, trevallies, mackerels, tunas, sharks, sardines, and anchovies.

 

However, while the region, which includes hundreds of islands as well as the major ports of Massawa in central Eritrea and Assab in the south, has a potential yield of 80000 metric tons of fish per year, Eritrea’s annual total capture production remains quite low. Thus, not only can the fisheries sector play an important role for poverty reduction, employment, income generation, food security (e.g. through reducing the need to depend on food imports to fill gaps), and nutrition (e.g. fish products are an important source of animal protein and essential micronutrients for balanced nutrition and good health), it also holds the potential to be a significant export industry and thus contribute to overall development and growth.

 

It is imperative, however, that Eritrea develop this sector in environmentally-friendly, sustainable ways. Proper management can avoid pollution and destructive fishing practices, ultimately ensuring the continued productivity of coastal waters and future growth, food security and jobs for coastal communities.

 

Tourism

Globally, the tourism industry accounts for about 10% of global GDP and one out of every 11 jobs. Tourism is an important foreign exchange earner, and many countries encourage tourism to help promote development and economic growth. The conclusion that tourism benefits nations’ economies applies both to developed nations and developing countries, although the effect may be stronger for less-developed countries with a relatively simple economy – such as Eritrea (Sahli and Carey 2013).

For Eritrea, a country blessed with a warm, hospitable climate, rich cultural heritage, and great natural assets, the tourism sector holds enormous potential to reduce poverty and enhance economic growth. However, the country must remain committed to the continued development of basic infrastructure (e.g. roads and airport facilities). Furthermore, the experience of countries that have developed successful tourism sectors (e.g. the Association of Southeast Asian Nations [ASEAN]) can offer important lessons for Eritrea, particularly in terms of improving connectivity, visa facilitation, and services. While tourism can promote growth and development, Eritrea must also make efforts to minimize or avoid potential adverse effects (e.g. on environment, cultural heritage, or local communities).

 

Figure 1

2016-gdp-growth

Source: World Bank 2017

Note: GDP Growth, Constant 2010 USD

Figure 2

economic-prospects

Source: World Bank 2017

Note: GDP Growth, Constant 2010 USD


Foreign Investment: Eritrea, Mining, Development, and the Resource Curse

Several days ago, the Fraser Institute released its annual Survey of Mining and Exploration Companies. Since 1997, the Institute, headquartered in Vancouver and ranked by a University of Pennsylvania study as “the top think tank in Canada,” has conducted an annual survey of mining and exploration companies to assess how mineral endowments and public policy factors such as taxation and regulation affect exploration investment. Survey results represent the opinions of executives and exploration managers in mining and mining consulting companies operating around the world. Notably, the survey has expanded to include data on 122 jurisdictions worldwide, on every continent except Antarctica, and including sub-national jurisdictions in Canada, Australia, the United States, and Argentina.

It is noteworthy that Eritrea, often simplistically labeled as the “North Korea of Africa” or regarded as lacking the “characteristics” and “environment” to make it a sound investment destination, has tended to score within the middle of the pack. For example, on the Investment Attractiveness Index, the country scored 46.7 for 2014 and 57.5 for 2013, ranking it 77 (out of 122) and 48 (out of 112) respectively. For comparison, this places it ahead of Angola, Egypt, Ethiopia, Nigeria, Sudan and South Sudan, Malaysia, the Philippines, Bolivia, Venezuela, China, Bulgaria, and Turkey, to name a few. Yet again, Botswana, which has experienced decades of sound economic growth, ranked as the top African country. The survey’s Investment Attractiveness Index is an especially useful measure since it combines several indicators and thus provides a thorough, holistic, multidimensional gauge of mining and exploration within a country or jurisdiction.

Another interesting area within the 2014 report is the Comments section. Here, global executives and managers are able to comment freely (since they retain confidentiality) on the mining and exploration environments of various countries and jurisdictions. In addition to other points, Eritrea was described as being “free from corruption” and possessing a “clearly set-out legal framework which is followed to the letter.”

Ultimately, the survey’s comments and indicators offer some cautious encouragement for Eritrea’s ongoing mining and development initiatives. Dating back to its initial days of independence, Eritrea has been aware of the need for a holistic, multi-level approach towards development, while being alert to the pitfalls of the resource curse. The stagnation – if not outright regression in development – of many countries with great natural resource endowments serve as clear, sobering lessons of the possible consequences of mismanagement. For Eritrea, this has meant that its own approach to development and resources has been cautious, pragmatic, and one where the nation’s resources represent only one variable within the larger equation towards holistic development, rather than a simple panacea. This is most clearly spelled out in a statement to the UN Security Council’s Thematic Open Debate on Conflict Prevention and Natural Resources (June 19, 2013), where Ambassador Araya Desta notes that “[t]he cardinal principle of Eritrea’s mining policy [is that]…all mineral resources are a public property, and that the conservation and development of these resources must be ensured for Eritrea’s present and future generations.”[1]

Amongst the most tangible outcomes of Eritrean developmental efforts are its successes within health and education, especially in regards to the United Nations Millennium Development Goals.[2] It is within this broader developmental context that Eritrea’s natural resources and mining activities may prove useful; not only to accrue foreign capital and strengthen the economy, but also to promote continued national development.

Overall, Eritrea has witnessed several tangible developmental outcomes, especially within the socio-economic, health, and educational sectors, and the country’s natural resources hold the potential to augment these outcomes. At the same time, Eritrea is unquestionably faced with tremendous developmental concerns within a broad range of sectors. Challenges such as poverty are immediate areas the country continues to focus on, while the prolonged illegal military occupation of Eritrean land by Ethiopia represents an unnecessary, harmful distraction from broader development goals.[3] Moving forward, Eritrea should continue to promote investment and sound management of resources, while the international community should remain constructively involved in and supportive of Eritrea’s developmental efforts and promote the respect of the country’s sovereignty and territorial integrity.

~~Figure 1~~

Investment Attractiveness Index 2014

Untitled

*Source: Fraser Institute 2014

References

[1] http://www.dehai.org/archives/dehai_news_archive/2013/jun/att-0201/Statement_by_H.E._Araya_Desta_on_Conflict_Prevention_and_Natural_Resources..pdf

[2] http://www.un.org/millenniumgoals/

[3] http://www.pca-cpa.org/showpage.asp?pag_id=1150

Further reading:

Fraser Institute: https://www.fraserinstitute.org/default.aspx

Fraser Institute Survey of Mining Companies 2014: https://www.fraserinstitute.org/research-news/display.aspx?id=22259

 


Multidimensional Poverty – important data from the OPHI

According to former United Nations Secretary-General Kofi Annan, “wherever we lift one soul from a life of poverty, we are defending human rights. And whenever we fail in this mission, we are failing human rights.”[1] However, in order to combat poverty (and thus fulfill rights), we must understand it. In this context, the Oxford Poverty & Human Development Initiative (OPHI) represents a useful step forward. The OPHI aims to build and advance a more systematic methodological and economic framework for reducing multidimensional poverty in several ways, including: improving data, building capacity, and impacting policy.[2] Amongst the OPHI’s key contributions is its Multidimensional Poverty Index (MPI). The MPI provides multidimensional measures of poverty, well-being and inequality, going far beyond traditional one-dimensional approaches to incorporate dimensions such as health, education, living standards, quality of work and more innovative dimensions.[3]

The latest edition of the MPI covers 110 developing countries (a total of approximately 5.4 billion people), and 803 regions in 72 of these countries. The 10 countries with the lowest scores on the MPI were (in descending order, and with MPI figures in brackets),[4]

  • Burundi (0.454)
  • Mali (0.457)
  • Guinea (0.459)
  • Guinea-Bissau (0.462)
  • Sierra Leone (0.464)
  • Somalia (0.514)
  • Burkina Faso (0.535)
  • Chad (0.554)
  • Ethiopia (0.564)
  • Niger (0.605)

Table 1

OPHI: Multidimensional Poverty Index 2014/15*

Untitled

Further exploring the MPI reveals what percentage of the population are both MPI poor and are deprived within each particular indicator. For example, the region with the highest rates of people who are multidimensionally poor and simultaneously deprived in nutrition is Affar, Ethiopia, while the region with the most child mortality is Nord-Ouest, Cote d’Ivoire. The region most deprived in sanitation is Karamoja, Uganda, while Wad Fira, Chad is most deprived in drinking water, electricity, and years of schooling. Examining sub-national regions and inequality, Nigeria has the most extreme regional differences in multidimensional poverty: in Lagos, 8.5 percent of people are multidimensionally poor, whereas in Zamfara, the figure is 91.9 percent. It is also noteworthy that nearly 60 percent of people living in the world’s poorest regions are actually not in the least developed countries.[5]

Overall, poverty remains the gravest human rights challenge facing the world today.[6] In combating poverty, the world has “a moral obligation to look more deeply at the issues of poverty so the most marginalised groups or regions [are] not left behind.”[7] The OPHI’s Multidimensional Poverty Index shows not only who is poor but also in what ways, ultimately helping to better understand poverty and shape more effective policies and reduction measures.

 

REFERENCES

[1] LINK

[2] http://www.ophi.org.uk/

[3] The MPI figure given as the percentage of the population in multidimensional poverty multiplied by the intensity of deprivation among the poor.

[4] The MPI figure given as the percentage of the population in multidimensional poverty multiplied by the intensity of deprivation among the poor.

[5] http://www.ophi.org.uk/multidimensional-poverty-index/mpi-2014-2015/

http://oxfamblogs.org/fp2p/big-new-databank-on-multidimensional-poverty-launched-today/?utm_content=buffer48ab2&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

[6] http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CDAQFjAC&url=http%3A%2F%2Fwww.ohchr.org%2FDocuments%2FPublications%2FPovertyStrategiesen.pdf&ei=7qC6VNuMHISfggT5pYBo&usg=AFQjCNEVWu9sEZ4nM_K_BEIpGxhQGtulvQ&sig2=maQRjwqrl3-OEjsYzKFbXw&bvm=bv.83829542,d.eXY

[7] LINK

* *Note that MPI ranges from 0-1. However, the scale in Table 1 runs from 0-100.

Explore the OPHI and MPI: http://www.ophi.org.uk/multidimensional-poverty-index/mpi-2014-2015/


World Bank Global Economic Prospects Report: Quick note on Eritrea’s 2015-2017 Outlook

The World Bank cut its forecast for global growth this year. According to its semiannual Global Economic Prospects report,[i] released today in Washington, the world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June.[ii]

Developing economies are expected to see an increase in growth from 4.4 percent in 2014 to 4.8 percent and 5.3 percent in 2015 and 2016, respectively. For Sub-Saharan Africa (SSA) specifically, the period 2015-2017 is expected to see real GDP growth (from previous year) of 4.6, 4.9, and 5.1 percent. Influential factors include infrastructure investment, increased agriculture production, and buoyant services, however the positive outlook is subject to downside risks arising from a renewed spread of the Ebola epidemic, violent insurgencies, lower commodity prices, and volatile global financial conditions.

For Eritrea, the next 3 years, according to the report, are projected to produce real GDP growth of 3.0, 4.0, and 4.3 percent. These projections are slightly lower than those by the United Nations Department of Economic and Social Affairs, which projects Eritrea’s growth to be 7.3 and 6.8 percent in 2015 and 2016.[iii] However, even with the discrepancy, the sharp global oil price decline will support improvements in Eritrea’s trade balance (since it is an oil- importer). Specifically, across 2014-2017, the changes in its trade balance due to terms of trade effects are expected to improve by approximately 3 percent of GDP, amongst the largest in SSA (on the whole, SSA is expected to be adversely affected by the sustained decline in commodity prices).

Overall, for Eritrea, as well as other low-income, developing countries, such economic growth can be central to poverty reduction and broader development goals. For example, between 1970 and 2010, growth in average per capita income accounted for three- quarters of the income growth of the poor.3 In particular, a significant part of poverty reduction was attributed to growth in labor income.[iv] Increases in labor income are associated with a reduction in poverty through at least two channels. First, growth in the agricultural sector, the primary source of income for the poor, raises incomes more than growth in less labor-intensive sectors, in particular the natural resource sector. Second, the movement of labor from the low-productivity agriculture sector to the higher-productivity manufacturing and service sectors raises labor incomes, including of those of the poor.[v]

REFERENCES

[i] http://www.worldbank.org/en/publication/global-economic-prospects

[ii] http://www.bloomberg.com/news/2015-01-13/world-bank-cuts-global-growth-outlook-with-u-s-lone-bright-spot.html?hootPostID=67b113847d7c95651fe373d6cfe324d7

[iii] www.un.org/en/development/desa/…/geo201410.pdf

[iv]a) Inchauste, G. J.P. Azevedo, B. Essama-Nssah, S. Olivieri, T. Van Nguyen, J. Saavedra-Chanduvi, and H. Winkler. 2014. “Understanding Changes in Poverty.” World Bank, Washington, DC.

b) Inchauste, G., and J. Saavedra-Chanduvi. 2013. “Opportunity Knocks: Deepening Our Understanding of Poverty Reduc- tion,” In Understanding Changes in Poverty, ed. Gabriela Inchauste, João Pedro Azevedo, B. Essama-Nssah, Sergio Olivieri, Trang Van Nguyen, Jaime Saavedra-Chanduvi, and Hernan Winkler, 1–12. Washington, DC: World Bank.

[v]a) Kuznets, S. 1955. “Economic Growth and Income Inequality.” American Economic Review 45 (1): 1–28.

b) Chenery, H. 1979. Structural Change and Development Policy. New York: Oxford University Press.

c) Ngai, L. R., and C. Pissarides. 2008. “Employment Outcomes in the Welfare State.” CEP Discussion Papers 0856, Centre for Economic Performance, London School of Economics.

 


Mendefera Factory: Menstrual Pads, Education, and Empowerment

It was nice to see Dr. Sleemi’s photo of a factory in Mendefera, Eritrea. The factory manufactures menstrual pads which are distributed to girls in middle and high school. This initiative is important since it promotes equality, empowerment, and general development.

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Throughout Sub-Saharan Africa (SSA) and the developing world, millions of girls either skip school during menstruation or drop out entirely because of a lack of hygiene solutions – thus ultimately harming their (and the community’s or the nation’s) potential. According to the United Nations Children’s Fund (UNICEF), 10% of African girls skipped school during menstruation, with many girls missing up to 25% of the academic year or simply dropping out. Girls failing to complete secondary school are more likely to get HIV or become pregnant when they are young, and they are also more likely to have a greater number of children and earn lower wages. As well, studies have found that girls with access to menstrual pads report benefits to their self-esteem. Furthermore, girls with access to menstrual pads are able to concentrate better in school, witness increases in their self confidence, and they are able to fully participate in more daily activities while on their period. At the same time, they report that feelings of shame, isolation, and embarrassment improved.

As Eritrea continues to focus on a variety of national development challenges (including literacy, enrolment, and educational disparities), programs and initiatives like the Mendefera factory should be augmented and receive support.

web-St-Joe-Keren-girls-300x255

More materials:

Dr. A. Sleemi (MD, MP): @globalgyno

https://fiqre4eri.wordpress.com/category/education/

http://www.path.org/projects/sanitary-pads.php

http://www.ipsnews.net/2014/08/east-africa-breaks-the-silence-on-menstruation-to-keep-girls-in-school/

http://www.care2.com/causes/monthly-joy-access-to-sanitary-products-may-lead-to-better-education-for-kenyan-girls.html


Hunger, Africa, Indices, and the need for Accuracy

Today, the 2014 Global Hunger Index (GHI) was released. The GHI is put together by the The International Food Policy Research Institute (IFPRI), who seek sustainable solutions for ending hunger and poverty. The GHI, as well as IFPRI’s work in general, are important because high quality research can “shape policies, investments, and programs, contributing to a productive, sustainable and resilient agricultural and food system.”
That said, one concern with the GHI is the data utilized. Specifically, the GHI uses “the most recent country-level data available for the three component indicators”:

-Prevalence of underweight children (under five years of age, as a %)
-Under-five mortality rate (as a %)
-Proportion of undernourished in the population (as a %).

While some countries may have indicators that are current, other countries may only reflect outdated, likely now-inaccurate figures. Consequently, the GHI for the latter countries may offer a skewed, incorrect assessment of hunger. For example, in calculating Eritrea’s overall GHI for 2014, data used for “prevalence of underweight children (under five years of age, as a %)” come from the WHO’s figures – from 2002. Considering Eritrea’s general success in the UN MDGs – it is amongst the only countries to achieve the large majority of them – its figures for prevalence of underweight children will likely have reduced.

Ultimately, poor, inaccurate data or unreliable estimates frequently lead to ineffective, inefficient policies or solutions to developmental challenges and issues. With global hunger such a pressing issue, it is important to offer clear, accurate estimates that can support evidence-based decision making for hunger reduction or other dimensions of socio-economic development.


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