Inter Press ServiceTrade & Investment – Inter Press Service http://www.ipsnews.net News and Views from the Global South Sat, 18 Aug 2018 15:57:22 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.7 Demonizing State-Owned Enterpriseshttp://www.ipsnews.net/2018/08/demonizing-state-owned-enterprises/?utm_source=rss&utm_medium=rss&utm_campaign=demonizing-state-owned-enterprises http://www.ipsnews.net/2018/08/demonizing-state-owned-enterprises/#respond Tue, 14 Aug 2018 12:28:11 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=157208 To make the case for privatization from the 1980s, their real problems were often caricatured and exaggerated.

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Privatization has not provided the miracle cure for the problems (especially the inefficiencies) associated with the public sector. Credit: IPS

Privatization has not provided the miracle cure for the problems (especially the inefficiencies) associated with the public sector. Credit: IPS

By Jomo Kwame Sundaram
KUALA LUMPUR , Aug 14 2018 (IPS)

Historically, the private sector has been unable or unwilling to affordably provide needed services. Hence, meeting such needs could not be left to the market or private interests. Thus, state-owned enterprises (SOEs) emerged, often under colonial rule, due to such ‘market failure’ as the private sector could not meet the needs of colonial capitalist expansion.

Thus, the establishment of government departments, statutory bodies or even government-owned private companies were deemed essential for maintaining the status quo and to advance state and private, particularly powerful and influential commercial interests.

Jomo Kwame Sundaram. Credit: FAO

SOEs have also been established to advance national public policy priorities. Again, these emerged owing to ‘market failures’ to those who believe that markets would serve the national interest or purpose.

However, neoliberal or libertarian economists do not recognize the existence of national or public interests, characterizing all associated policies as mere subterfuges for advancing particular interests under such guises.

Nevertheless, regardless of their original rationale or intent, many SOEs have undoubtedly become problematic and often inefficient. Yet, privatization is not, and has never been a universal panacea for the myriad problems faced by SOEs.

 

Causes of inefficiency

Undoubtedly, the track records of SOEs are very mixed and often vary by sector, activity and performance, with different governance and accountability arrangements. While many SOEs may have been quite inefficient, it is crucial to recognize the causes of and address such inefficiencies, rather than simply expect improvements from privatization.

First, SOEs often suffer from unclear, or sometimes even contradictory objectives. Some SOEs may be expected to deliver services to the entire population or to reduce geographical imbalances.

Other SOEs may be expected to enhance growth, promote technological progress or generate jobs. Over-regulation may worsen such problems by imposing contradictory rules.

Privatization has never been a universal panacea. One has to understand the specific nature of a problem; sustainable solutions can only come from careful understanding of the specific problems to be addressed.

To be sure, unclear and contradictory objectives – e.g., to simultaneously maximize sales revenue, address disparities and generate employment — often mean ambiguous performance criteria, open to abuse.

Typically, SOE failure by one criterion (such as cost efficiency) could be excused by citing fulfillment of other objectives (such as employment generation). Importantly, such ambiguity of objectives is not due to public or state ownership per se.

Second, performance criteria for evaluating SOEs — and privatization — are often ambiguous. SOE inefficiencies have often been justified by public policy objectives, such as employment generation, industrial or agricultural development, accelerating technological progress, regional development, affirmative action, or other considerations.

Ineffective monitoring, poor transparency and ambiguous accountability typically compromise SOE performance. Inadequate accountability requirements were a major problem as some public sectors grew rapidly, with policy objectives very loosely and broadly interpreted.

Third, coordination problems have often been exacerbated by inter-ministerial, inter-agency or inter-departmental rivalries. Some consequences included ineffective monitoring, inadequate accountability, or alternatively, over-regulation.

 

Hazard

Moral hazard has also been a problem as many SOE managements expected sustained financial support from the government due to weak fiscal discipline or ‘soft budget constraints’. In many former state-socialist countries, such as the Soviet Union and Yugoslavia, SOEs continued to be financed regardless of performance.

Excessive regulation has not helped as it generally proves counter-productive and ultimately ineffective. The powers of SOEs are widely acknowledged to have been abused, but privatization would simply transfer such powers to private hands.

Very often, inadequate managerial and technical skills and experience have weakened SOE performance, especially in developing countries, where the problem has sometimes been exacerbated by efforts to ‘nationalize’ managerial personnel.

Often, SOE managements have lacked adequate or relevant skills, but have also been constrained from addressing them expeditiously. Privatization, however, does not automatically overcome poor managerial capacities and capabilities.

Similarly, the privatization of SOEs which are natural monopolies (such as public utilities) will not overcome inefficiencies due to the monopolistic or monopsonistic nature of the industry or market. The key remaining question is whether privatization is an adequate or appropriate response to address SOE problems.

 

Throwing baby out with bathwater

SOEs often enjoy monopolistic powers, which can be abused, and hence require appropriate checks and balances. In this regard, there are instances where privatization may well be best. Two examples from Britain and Hungary may be helpful.

The most successful case of privatization in the United Kingdom during the Thatcher period involved National Freight, through a successful Employee Stock Ownership Plan (ESOP). Thus, truck drivers and other staff co-owned National Freight and developed personal stakes in ensuring its success.

In Hungary, the state became involved in running small stores. Many were poorly run due to over-centralized control. After privatization, most were more successfully run by the new owners who were previously store managers.

Hence, there are circumstances when privatization can result in desirable outcomes, but a few such examples do not mean that privatization is the answer to all SOE problems.

Privatization has never been a universal panacea. One has to understand the specific nature of a problem; sustainable solutions can only come from careful understanding of the specific problems to be addressed.

 

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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Excerpt:

To make the case for privatization from the 1980s, their real problems were often caricatured and exaggerated.

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Which Way Now for Zimbabwe as Constitutional Court Receives Petition Against Election Results?http://www.ipsnews.net/2018/08/way-now-zimbabwe-constitutional-court-receives-petition-election-results/?utm_source=rss&utm_medium=rss&utm_campaign=way-now-zimbabwe-constitutional-court-receives-petition-election-results http://www.ipsnews.net/2018/08/way-now-zimbabwe-constitutional-court-receives-petition-election-results/#respond Mon, 13 Aug 2018 07:12:06 +0000 Busani Bafana http://www.ipsnews.net/?p=157186 Many in Zimbabwe are questioning whether the country can break with its horrid past or embrace a new future after a watershed election that saw Emmerson Mnangagwa win the presidential race by a narrow margin and the opposition lodge a formal petition challenging the results in the Constitutional Court. Mnangagwa–a trusted and past enforcer of […]

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Voters queuing ahead of Zimbabwe's Jul. 30 general elections. The election saw Emmerson Mnangagwa win the presidential race but the opposition has lodge a formal petition challenging the results. Courtesy: The Commonwealth/CC By 2.0

By Busani Bafana
BULAWAYO, Zimbabwe, Aug 13 2018 (IPS)

Many in Zimbabwe are questioning whether the country can break with its horrid past or embrace a new future after a watershed election that saw Emmerson Mnangagwa win the presidential race by a narrow margin and the opposition lodge a formal petition challenging the results in the Constitutional Court.

Mnangagwa–a trusted and past enforcer of former president Robert Mugabe–won the vote by 50.8 percent against the 44.9 percent garnered by Nelson Chamisa of the Movement for Democratic Change (MDC-Alliance).

Mnangagwa’s 2.46 million votes, against Chamisa’s 2.15 million, gave him the mandatory 50+1 percent required to be declared winner.

But the MDC-Alliance on Friday afternoon, Aug. 10, lodged a petition with the Constitutional Court of Zimbabwe challenging the results, halting the inauguration of Mnangagwa that had been slated for Sunday, Aug. 12.

The Constitutional Court will consider the matter over 14 days but political watchers say that what the ruling will be, remains unclear. The court could reject the MDC-Alliance petition and confirm Mnangagwa’s win, or it could confirm Chamisa’s presented evidence and rule in the opposition’s favour. The court could also order another election, which could be held within the next 60 days.“The future of Zimbabwe lies in a negotiated settlement now because of what the country stands to lose [rather] than gain if a political resolution is not found soon.” -- Political analyst and human rights activist, Effie Ncube.

Political analyst and human rights activist, Effie Ncube, says that should the court rule in favour of Chamisa and order a rerun, this could stoke tensions. He says that a preferred solution would be inclusive discussions out of court between Mnangagwa and Chamisa.

“Keeping away from a re-run is the best solution for Zimbabwe because the tension on the ground now is not ideal for an election without triggering violence,” Ncube tells IPS. “The future of Zimbabwe lies in a negotiated settlement now because of what the country stands to lose [rather] than gain if a political resolution is not found soon.”

Mugabe may have been ousted, but his brutal legacy lingers over a country desperate for a fresh start. Zimbabwe’s Jul. 30 elections–the first since Mugabe was toppled last November–did not disappoint on the dearth of harmony. Violence, in all its forms, has been emblematic of Mugabe’s rule and is something that president-elect Mnangagwa sought a clean break from.

But violence, intimidation, killings and disputed results soiled the elections.

Two weeks ago police clashed with opposition supporters who staged a demonstration outside the offices of the Zimbabwe Electoral Commission (ZEC) over the delayed announcement of the presidential election results. The army fired on protesting supporters, killing six people and injuring scores more. The tragedy stained the polls despite pleas from both the ruling Zimbabwe Africa National Union-Patriotic Front (Zanu PF) and the opposition MDC for a violence-free election.

“Mugabe’s legacy of brutality has returned to haunt us again but at least it was clear who was in charge,” Dumisani Nkomo, director of Habakkuk Trust, a civil rights advocacy organisation, notes. “Right now it is not clear who is charge and many centres of power seem to have emerged and even within the army there appears to be many centres of command as evidenced by the mystery of who deployed soldiers in Harare.”

Nkomo says the credibility of the electoral process has been severely eroded by issues around the voters roll, postal voting and election results.

“This is a really complex situation because contested election outcomes have been an issue since 1980 and more visibly in 2000, 2002 and 2013 and we seem to be moving in circles,” Nkomo tells IPS. “The election result cannot in all honesty be termed free and fair because of the uneven playing field and the clampdown on civil liberties after the announcement of the results.”

The elections had a semblance of being free on many fronts; the polls were relatively peaceful, there was a new biometric voters’ system, a well-organised and resourceful ZEC, and a plethora of candidates and parties vying for power.

While observers from the Southern African Development Community and African Union have endorsed the elections as free and fair, the European Union has pointed to irregularities.

Economist and lawmaker, Eddie Cross, says he expects the presidential ballot to stand up to the court challenge.

“Any legal challenge should therefore be short lived,” Cross said in post-election commentary on his website. “The big challenge facing Emmerson Mnangagwa is now to unite the country under his leadership and heal the wounds of past battles–the struggle for independence… the struggle against the MDC since 2000 with 5,000 abductees, tens of thousands beaten and tortured, hundreds of deaths and the near total destruction of the economy, all in the name of fighting the restoration of real democracy.”

Time to build bridges

Mnangagwa has scoffed at the idea of a government of national unity, an arrangement his predecessor, was forced to enter into in 2008 with the opposition MDC, which had been led at the time by the late Morgan Tsvangirai.

“I have two-thirds majority and you are talking about me abandoning my two-thirds majority to set a government of national unity?” Mnangagwa commented on Skye News television during an interview last week.

“Not that it’s a bad idea, but it doesn’t show that there is any need. I am saying politics should now take the back seat because the elections are behind us. We should now put our shoulders to the wheel for purposes of modernising our economy, growing our economy together. Those who have voted against me, those who voted for me, we say Zimbabwe is ours together.”

In spite of the violence that has marred the election outcomes, Zimbabwe was banking on a smooth assumption of power as a ticket into the fold of the international community.

However, in a move set to pile pressure on the new government to double its effort to reengage the international community and institute a raft of political and economic reforms, the United States last week renewed sanctions on Zimbabwe, which have been in place since 2001.

The economy remains a key challenge Mnangagwa has to address swiftly.

Mnangagwa has been on an international investment charm offensive, promoting Zimbabwe’s new open business approach.

The country needs an economic vision to ensure growth, unlock business opportunities, jobs, restore trust in the banking sector and hopefully bring back a local currency.

“Mnangagwa has the opportunity to turn the country round, he has made the right pronouncements on the economy that he needs to follow up with action. I think he wants to play a [Nelson] Mandela come in as a person who transforms the country and moves it to democracy and move away from the dictatorship,” says Ncube.

“Should the court confirm Mnangagwa as the winner, there could be less tension. But the credibility and legitimacy of the regime will be questioned and that will challenge its ability to organise international investment and undermine political stability.”

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Going Cashless, Led by Swedenhttp://www.ipsnews.net/2018/08/going-cashless-led-sweden/?utm_source=rss&utm_medium=rss&utm_campaign=going-cashless-led-sweden http://www.ipsnews.net/2018/08/going-cashless-led-sweden/#respond Fri, 03 Aug 2018 12:45:34 +0000 Stefan Ingves http://www.ipsnews.net/?p=157045 Stefan Ingves is the governor of Sveriges Riksbank, the central bank of Sweden, described as the world’s oldest central bank.

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Stefan Ingves is the governor of Sveriges Riksbank, the central bank of Sweden, described as the world’s oldest central bank.

By Stefan Ingves
STOCKHOLM, Aug 3 2018 (IPS)

Sweden is rapidly moving away from cash. Demand for cash has dropped by more than 50 percent over the past decade as a growing number of people rely on debit cards or a mobile phone application, Swish, which enables real-time payments between individuals.

More than half of all bank branches no longer handle cash. Seven out of ten consumers say they can manage without cash, while half of all merchants expect to stop accepting cash by 2025 (Arvidsson, Hedman, and Segendorf 2018). And cash now accounts for just 13 percent of payments in stores, according to a study of payment habits in Sweden (Riksbank 2018).

Stefan Ingves

Digital solutions for large payments between banks have existed for some time; the novelty is that they have filtered down to individuals making small payments. And my country isn’t alone in this regard.

In several Asian and African countries—for example, India, Pakistan, Kenya, and Tanzania—paying by mobile phone instead of cards or cash is commonplace.

Given that the role of a central bank is to manage the money supply, these developments potentially have wide-ranging consequences. Are central banks needed as issuers of a means of payment in a modern digital payments market?

Are banknotes and coins the only means of payment for retail payments that should be supplied by a central bank? Is there a risk of future concentration in the payments market infrastructure that central banks should be monitoring?

In Sweden, clearing and transfers between accounts are concentrated in one system, Bankgirot. Once the payments market infrastructure is in place, the marginal costs for payments are low and positive externalities are present. What do we mean by “positive externalities”?

A classic example is the telephone. Having the first telephone is not very valuable, as there would be no one to call. However, as more people eventually connect to the telephone network, the value of the phone increases.

The same is true for the payments market—the value of being connected to a payments system increases as more people join. Moreover, payments can also be regarded as collective utilities.

Considering this, my view is that the state does indeed have a role to fill in the payments market—namely, to regulate or provide the infrastructure needed to ensure smooth functioning and robustness.

Citizens can expect a payments market to meet a few basic requirements. First, its services should be broadly available. Second, its infrastructure should be safe and secure. Sellers and buyers should be convinced that the payment order will be carried out—a necessary condition for people to be willing to use the system. Third, it should be efficient: payments should be settled fast, at the lowest possible cost, and the system should be perceived as simple and easy to use.

Do we fulfill these requirements? I am becoming increasingly uncertain whether we can respond with an unequivocal yes.

If banknotes and coins have had their day, then in the near future, the general public will no longer have access to a state-guaranteed means of payment, and the private sector will to a greater extent control accessibility, technological developments, and pricing of the available payment methods.

It is difficult to say at present what consequences this might have, but it will likely further limit financial access for groups in society that currently lack any means of payment other than cash. Competition and redundancy in the payments infrastructure will likely be reduced if the state is no longer a participant. Today, cash has a natural place as the only legal tender. But in a cashless society, what would legal tender mean?

In this regard, one might ask whether central banks should start issuing digital currency to the public. This is a complex issue and one central banks will likely struggle with for years to come. I approach the question as a practical, not a hypothetical, matter.

I am convinced that within 10 years we will almost exclusively be paying digitally, both in Sweden and in many parts of the world. Even today, young people, at least in Sweden, use practically no cash at all.

This demographic dimension is also why I believe that cash’s decline can be neither stopped nor reversed. While the Nordic countries are at the forefront, we are not alone. It is interesting to see how quickly the Chinese payments market, for instance, is changing.

And then there is the emergence of crypto assets. I do not consider these so-called currencies to be money, as they do not fulfill the three essential functions of money—to serve as a means of payment, a unit of account, and a store of value. This view is shared by most of my colleagues.

Crypto assets’ main contribution is to show that financial infrastructure can be built in a new way with blockchain technology, smart contracts, and crypto solutions. Although the new technology is interesting and can probably create value added in the long run, it is important that central banks make it clear that cryptocurrencies are generally not currencies but rather assets and high-risk investments.

The clearer we are in communicating this, the greater the chance that we can prevent unnecessary bubbles from arising in the future. We may also want to review the need for regulatory frameworks and supervision for this relatively new phenomenon.

It is worth mentioning that digitalization, technical improvements, and globalization are positive developments that increase our collective economic welfare. We can only speculate on what new payments services may be developed in the future. But there are several challenges ahead.

One key issue we face is whether central banks can stop supplying a state-guaranteed means of payment to the general public. Another is whether the infrastructure for retail payments should be transferred to a purely private market. The state cannot entirely withdraw from its social responsibility in these areas. But exactly what its new role will become remains to be seen.

The link to the original article follows:
http://www.imf.org/external/pubs/ft/fandd/2018/06/central-banks-and-digital-currencies/point.htm?utm_medium=email&utm_source=govdelivery

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Stefan Ingves is the governor of Sveriges Riksbank, the central bank of Sweden, described as the world’s oldest central bank.

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Global Economy Vulnerable a Decade Afterhttp://www.ipsnews.net/2018/07/global-economy-vulnerable-decade/?utm_source=rss&utm_medium=rss&utm_campaign=global-economy-vulnerable-decade http://www.ipsnews.net/2018/07/global-economy-vulnerable-decade/#respond Mon, 30 Jul 2018 14:32:37 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=156954 Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis (GFC). The 2008 meltdown exposed the extent of finance-led international economic integration, with countries more vulnerable to financial contagion and […]

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By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR, Jul 30 2018 (IPS)

Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis (GFC).

The 2008 meltdown exposed the extent of finance-led international economic integration, with countries more vulnerable to financial contagion and related policy ‘spillovers’ exacerbating real economic volatility. It also revealed some vulnerabilities of the post-Second World War (WW2) US-centred international financial ‘architecture’ – the Bretton Woods system – modified after its breakdown in the early 1970s.

Jomo Kwame Sundaram

Robert Triffin, the leading international monetary economist of his generation, had long expressed concerns about the use of a national currency as the major reserve currency. International liquidity provision using the greenback required the US to run balance-of-payments deficits, ensuring US monetary policy spillovers to the world economy while eroding confidence in the greenback.

The Bretton Woods system was under increasing strain from the late 1960s, as US President Johnson funded the increasingly unpopular Vietnam War by issuing debt, rather than through higher taxes. The system finally broke down when the Nixon administration unilaterally cancelled the US commitment to dollar (gold) convertibility in August 1971.

What emerged was a ‘non-system’ for Triffin. Since then, the US dollar, issued by fiat, has relied on the greenback’s own credibility and legitimacy to continue as de facto world currency.

Current ‘non-system’
In 1985, Triffin identified three systemic problems of the international financial ‘non-system’. First, “its fantastic inflationary proclivities, leading to world reserve increases eight times as large over a brief span of fifteen years” since the breakdown of the Bretton Woods system.

Second, “skewed investment pattern of world reserves, making the poorer and less capitalized countries of the Third World the main reserve lenders, and the richer and more capitalized industrial countries the main reserve borrowers of the system”.

Anis Chowdhury

Third, “crisis-prone propensities reflected in the amplitude” and frequency of financial crises such as the 1980s’ debt crisis causing developing countries’ ‘lost decades’. Other critics have identified further flaws.

First is the ‘recessionary bias’, due to the asymmetric burden of adjustment to payments imbalances. While deficit countries are under great pressure to adjust, especially when financing dries out during crises, surplus countries do not face corresponding pressures to correct their own imbalances.

Second is the cost of the perceived need of emerging and developing countries to ‘self-insure’ against the strong boom-bust cycles of global finance by building up large foreign exchange reserves and fiscal resources, especially after the 1997-1998 Asian financial crisis.

Such precautionary measures enabled emerging market economies to undertake strong counter-cyclical measures during the GFC. But they have huge opportunity costs as such reserves are generally held as presumably safe, liquid, low-yielding assets, such as US Treasury bonds.

Hence, Triffin complained that “the richest, most developed, and most heavily capitalized country in the world should not import, but export, capital, in order to increase productive investment in poorer, less developed, and less capitalized countries… [The] international monetary system is at the root of this absurdity.”

Reform appeals
There were renewed calls for reform of global economic governance in the wake of the GFC, especially by the 2009 UN Conference on the World Financial and Economic Crisis and Its Impact on Development.

Governance reform of the IMF and World Bank should ensure fairer, more equitable representation of developing countries. This should improve the accountability and credibility of the Bretton Woods institutions, enabling them to better address current financial and economic challenges in the world.

The UN also called for a “multilateral legal framework for sovereign debt restructuring”. Without a fair, legally binding, multilateral sovereign debt work-out mechanism, developing countries remain vulnerable to private creditors, including vulture funds.

There were renewed hopes for trade multilateralism and early successful completion of the Doha Development Round of the World Trade Organisation (WTO), giving developing countries better access to external markets, seen as vital for balanced global recovery and development. The promise to keep international trade open echoed G20 leaders’ unfulfilled commitment to eschew protectionism.

However, only a few of the modest promised reforms have been implemented, with limited changes in international financial governance, still dominated by G7 economies. After all, every financial crisis is followed by appeals for reforms, with complacency setting in with hints of recovery.

Less coping capability
Most developed country governments are now more heavily indebted than in 2008, when they bailed out large financial institutions, but failed to sustainably revive the world economy. Major monetary authorities do not have much policy space left after long pursuing unconventional expansionary policies.

Meanwhile, developing countries have been subject to increasing international integration, e.g., through global value chains, foreign financial institutional investments and increased short-term capital flows induced by the unconventional monetary policies of the US Fed, ECB and Bank of Japan, while debt-sustainability concerns for some are growing again.

These vulnerabilities have been compounded by growing trade protectionism, and dwindling precautionary reserve holdings of many developing economies as global trade has slowed. Even before President Trump’s election, developed countries had effectively killed the Doha Development Round, not least by opting for bilateral and plurilateral, instead of multilateral free trade deals.

Trump’s more explicit rejection of multilateralism in his efforts to eliminate major US bilateral trade deficits are now expected to further set back prospects for world economic recovery. Despite pious declarations to the contrary, most national policymakers typically turn from rhetoric about international cooperation to focus on domestic issues.

It has not been different this last time. A decade after the worst economic downturn since the 1930s’ Great Depression, the world economy remains vulnerable.

Anis Chowdhury, Adjunct Professor at Western Sydney University (Australia), held senior United Nations positions in New York and Bangkok.
Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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Globalization, Inequality, Convergence, Divergencehttp://www.ipsnews.net/2018/07/globalization-inequality-convergence-divergence/?utm_source=rss&utm_medium=rss&utm_campaign=globalization-inequality-convergence-divergence http://www.ipsnews.net/2018/07/globalization-inequality-convergence-divergence/#comments Thu, 26 Jul 2018 09:52:49 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=156886 Economic divergence among countries and regions was never pre-ordained. According to the late cliometrician Angus Madison and other economic historians, the great divergence between the global North and South, between developed and developing countries, began around five centuries ago, from the beginning of the European, particularly Iberian colonial conquests. From about two centuries ago, around […]

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Indonesia has one of the highest rates of income inequality in Southeast Asia, according to the World Bank. Credit: Sandra Siagian/IPS

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jul 26 2018 (IPS)

Economic divergence among countries and regions was never pre-ordained. According to the late cliometrician Angus Madison and other economic historians, the great divergence between the global North and South, between developed and developing countries, began around five centuries ago, from the beginning of the European, particularly Iberian colonial conquests.

From about two centuries ago, around the time of the Industrial Revolution, divergence accelerated with uneven productivity advances. During the 20th century, national level inequalities went down in many developed countries in the period after the First World War until around the 1970s with the rise of labour, peasant and other popular mobilizations.

Inequality, not only at the national level, but also at the international level, seems to affect the pattern of aggregate demand, particularly in developing countries, which in turn influences future investment and growth prospects and patterns.

Thus, the immediate post-Second World War period saw relatively high growth during what some Anglophone economists call the ‘Golden Age’, due to a combination of Keynesian policies at the national level in developed economies, and partially successful development policies in many newly-independent countries of Asia and Africa. However, this eventually came to an end in the 1970s for a variety of reasons.

Recent trends
Since then, inequalities have begun to grow again at the national level in many countries, but international divergence has declined in more recent decades. This recent convergence is due to significantly accelerated growth in some developing countries as expansion in some developed countries slowed. Among developing countries, growth was initially largely confined to East Asia and, to a lesser extent, South Asia, bypassing much of the rest of Asia, Africa and Latin America.

Africa suffered a quarter-century of stagnation from the late 1970s until the beginning of this century when commodity prices rose once again and China began investing in the continent. There was at least one lost decade in Latin America in the 1980s, and arguably, a second one for many on the continent in the following decade.

Such variation needs to be recognized. The recent convergence overall obscures very mixed phenomena of greater national-level inequalities in many economies, but also some international convergence due to more rapid growth in some major developing economies.

However, this convergence has begun to slow again, following the collapse of commodity prices since late 2014. This initially began with petroleum, but eventually affected almost all other commodities, especially mineral prices, slowing the decade of growth in Africa.

Divergence
The recent phenomena which many term globalization are often linked to international economic liberalization, but the strengthening of property rights has also been important. This has not only consolidated traditional property rights, but also extended property rights in novel ways, e.g., ostensibly to clarify supposedly ambiguous entitlements.

These have involved not only national legislation, but also free trade agreements and investment treaties at the international level, e.g., to consolidate ostensible asset-related entitlements, including so called intellectual property rights.

While few economic commentators may openly advocate increasing inequality, or blatantly espouse divergence, the consequences of many policies and positions associated with the conventional wisdom tend to increase divergence. For example, agricultural trade liberalization has undermined productive potential as only rich countries can afford subsidies, which most developing countries cannot afford.

For a long time, Africa used to be a net food exporter until the 1980s. Since then, it has become a net food importer. With trade liberalization, Africa was supposed to realize its true potential. Instead, Africa has lost much of its existing productive potential, not only in manufacturing, but also in agriculture.

To make matters worse, African farmers cannot compete with subsidized food imports from the EU and the USA. For example, as US consumers have a strong preference for chicken breasts, wings and legs from the US are not only flooding the Americas, but increasingly, Africa and Asia.

Convergence prospects
It is also important to consider the prospects for possible convergence in the long term due to the increased availability and affordability of capital. Besides recent Chinese international financing initiatives, quantitative easing, other unconventional monetary policies, recycling of petrodollars and private East Asian capital, as well as novel, and often illicit international financial flows may transform the horizon of possibilities.

Not unlike the Cold War and the aftermath of 9/11, the resurgence of European ethno-populism in reaction to growing economically and politically driven immigration into developed Western economies has reminded the world of the squalid conditions still prevailing in much of the global South, especially in Africa.

Perhaps more importantly, geography, rather than class, is increasingly viewed by many as the major determinant of income and welfare levels, with vastly different living standards associated with location rather than educational qualifications, occupation or productivity.

Thus, without the prospect of rapid convergence, not only nationally between wealth classes, but also internationally between rich and poor nations, the failure of economic globalization to deliver on its implicit promise of liberalizing cross-border human migration will haunt international relations, human rights and political liberalism for some time to come.

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Trade War – Developing Countries Should Respondhttp://www.ipsnews.net/2018/07/trade-war-developing-countries-respond/?utm_source=rss&utm_medium=rss&utm_campaign=trade-war-developing-countries-respond http://www.ipsnews.net/2018/07/trade-war-developing-countries-respond/#respond Tue, 24 Jul 2018 13:43:23 +0000 Martin Khor http://www.ipsnews.net/?p=156853 Martin Khor is Advisor to the Third World Network, and a former Executive Director of the South Centre

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Developing countries cannot afford to be mere spectators of a US-China trade war. They should assess how their countries will be affected, and prepare for the effects. More importantly, they should examine who is at fault, speak out and act.

Credit: Bigstock

By Martin Khor
PENANG, Malaysia, Jul 24 2018 (IPS)

The escalating trade war initiated by United States President Donald Trump is a major threat to world trade and the global economy.  The developing countries will be among those most affected. It is time for them to respond and speak out.

The trade war is a very dangerous game that will engulf the whole world if it is prolonged.  The country most directly affected by the US trade attack is China. But it is not just a tit-for-tat fight between two giants, the US and China.

Many developing countries are among the most vulnerable to a trade war. Taiwan, Korea, Singapore, Hungary, Malaysia Thailand, Vietnam, Chile, and the Philippines are among the most dependent on global supply chains and would thus be susceptible to a breakdown in trade
The US has also increased tariffs against European countries, Mexico, Canada and others with regards to steel and aluminium.  Additional US tariffs on automobiles and their components are now imminent, and if implemented this will take the conflict to a much higher level, with US versus Europe as the centre.

But many countries that are integrated in the regional and global supply chains will also be affected.  Some could even suffer more damage than the direct protagonists.

For example, many Asian countries like South Korea, Vietnam and Malaysia export components to China, such as electronics.  The components are used to make products such as mobile phones and computers, some of which are exported to the US. If the extra US tariffs reduce Chinese production, there will be less demand for components exported by these countries to China.

Moreover, a decline in economic growth in China and the US will depress their demand for commodities and other products, thus affecting many developing countries including in Africa and Latin America.

A study done by Pictet Asset Management of 45 countries shows that many developing countries are among the most vulnerable to a trade war.  Taiwan, Korea, Singapore, Hungary, Malaysia Thailand, Vietnam, Chile, and the Philippines are among the most dependent on global supply chains and would thus be susceptible to a breakdown in trade.  For example, Malaysian exports are about 60% dependent on global supply chains, while the rates are about 48% for China and 40% for the US.

A Reuters report using OECD data to calculate value-added embodied in Chinese exports by its source countries shows that the most exposed Asian countries to a reduction of Chinese exports would be Taiwan (8% of its GDP value is embodied in Chinese exports), Malaysia (6%), South Korea, Hong Kong and Singapore (4-5%).

Another study by the Development Bank of Singapore found that in Asia,  South Korea, Malaysia, Taiwan and Singapore are most at risk from a trade war, based on trade openness and exposure to supply chains.  A trade war would reduce economic growth in 2018 by 0.4 percentage point for Korea, 0.6% for Malaysia and Taiwan, and 0.8% for Singapore, and double these rates in 2019.

These are significant losses indeed.  Thus, developing countries cannot afford to be mere spectators of a US-China trade war.  They should assess how their countries will be affected, and prepare for the effects. More importantly, they should examine who is at fault, speak out and act.

It is clear that the US is the initiator and provocateur of the trade conflict.  Its tariff hikes are unilateral actions, against the rules of the World Trade Organisation and the global trading system.  Complaints have been filed against the US at the WTO, including by China, the EU, Russia and India. Other countries should join in as complainants.

The US actions threaten the very survival of the trade system.  If moves and counter-moves keep taking place, there will no longer be any predictability for any country’s exports.  The EU remarked at the WTO recently that the trading system is facing now acute “stress and uncertainty.” The uncertainty and the reduction of trade will hit the whole world, but most affected will be export-dependent countries.

This is also the worst time for a trade war.  It comes on top of the increasing shakiness of the world financial system, now on the verge of a new crisis.  Already foreign funds are moving out of developing economies, and their currencies are weakening, thus increasing inflationary pressures and making it more expensive to service external loans.

Trump and his advisors have been planning a trade war for some time and now they are putting it into action.  It started in January with an extra 30% tariff on solar panels and components, and 20% tariff on washing machines.

There are increasing warnings of an imminent new financial crisis, not only from the billionaire investor George Soros, but also from eminent economists associated with the Bank of International Settlements, the bank of central banks.

Martin Khor

Then came US tariffs of 25% on steel and 10% on aluminium on all countries, except some that are exempted.  The US used Section 232 of its Trade Expansion Act 1962, which allows the President to impose extra tariffs to counter threats to national security threat.  This section has been rarely used and until now never invoked since the World Trade Organisation was established in 1995.

Using “national security” as a reason is clearly a disguise for what is a commercially-motivated move, as the imported metals are hardly a security threat, and most countries affected are close US allies.

There are well-founded concerns that the use of the “national security” factor by the US will undermine the world trading order, since it will also open the door for other countries to cite the same reason to take similar unilateral actions.   Although there is a clause in the WTO rules allowing trade measures to ensure national security, it has been hardly used as there is a fear it can be abused.

China in April and the EU in June initiated complaints at the WTO against the US action.  Retaliatory actions in the form of tariffs on imported goods from the US with equivalent value have been taken by China on 128 US products worth $3 billion;  by Canada on 299 products valued at $13 billion; by the EU on 180 products valued at over $3 billion; and by Mexico on $3 billion of US goods.

On 6 July the US imposed an extra 25% tariff on US$34 bil worth of Chinese goods, with similar action coming soon on another UD$16 bil of imports.  This time the US invoked Section 301 of its Trade Act 1974, accusing China of violating intellectual property rights of US companies, and of pressuring American firms in China to transfer their technology.  Section 301 is deemed by almost all countries and experts to violate WTO rules.

China immediately retaliated with tariffs on US$34 bil of imports from the US. It accused the US of launching the “largest trade war in economic history.”

US tariffs will hit China’s exports of electrical, telecom and transport equipment, engines and motors, farm machines.  Chinese actions will affect US agriculture goods, especially soybeans, autos and aquatic products.

Responding to China’s retaliation, the US on 10 July announced it would slap a 10% tariff on another US$200 billion of Chinese imports, again invoking Section 301.  China said it is shocked by the US’ behaviour and vowed to retaliate.

Trump has calculated the US will win a trade war because in 2017 the US imported US$506 bil from China, while China imported US$130 billion of US goods.  He thinks China would soon run out of retaliation capacity as it does not have much more US imports to slap tariffs on.

The Chinese however could still retaliate by taking other measures, such as setting more conditions for US firms based in China, not giving access for US companies in various sectors, or not implementing WTO obligations on intellectual property.

Trump will probably go into a rage and raise more tariffs against China, thus escalating the war further.   This will provoke even more actions from China, which has vowed to stick to its rights and not to retreat.

The US is also examining imposing tariffs on automobiles and parts. Trump has threatened to place a 20% tariff on all European cars.  This would have dire consequences, warned German leader Angela Merkel.

In short, the world is on the brink of a Trump-induced global trade crisis.  It will have spill-over effects on exports and GNP growth in developing countries, and secondary effects on policies of banks (which may increase the price and volume of credit) and on the financial markets (with effects on stock prices and the outward flow of funds).

The developing countries should now strongly speak up against the unilateral measures of the US at many venues, and to take or join other initiatives to stop the trade war from escalating into a very big crisis that the world cannot afford to have.

The post Trade War – Developing Countries Should Respond appeared first on Inter Press Service.

Excerpt:

Martin Khor is Advisor to the Third World Network, and a former Executive Director of the South Centre

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Balancing Trade Warshttp://www.ipsnews.net/2018/07/balancing-trade-wars/?utm_source=rss&utm_medium=rss&utm_campaign=balancing-trade-wars http://www.ipsnews.net/2018/07/balancing-trade-wars/#respond Fri, 20 Jul 2018 13:53:52 +0000 Sunita Narain http://www.ipsnews.net/?p=156804 Sunita Narain* is Director-General of the Centre for Science and Environment (CSE) & Editor of Down to Earth magazine

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Sunita Narain* is Director-General of the Centre for Science and Environment (CSE) & Editor of Down to Earth magazine

By Sunita Narain
NEW DELHI, Jul 20 2018 (IPS)

A global trade war has broken out. The United States fired the first salvo and there has been retaliation by the European Union, Canada, China and even India. Tariffs on certain imported goods have been increased in a tit-for-tat reaction.

Sunita Narain

Analysts see it as a limited war in the understanding that Donald Trump is all for “free-trade”. But this view denies the fact that a tectonic shift is taking place in the world. It is a war for ascendency to global leadership; a contest between the US and China.

China is heaving its might on the world. President Xi Jinping’s Belt and Road Initiative is an open call for its global influence. In July 2017, China launched the ambitious plan to invest in the technology of the future—artificial intelligence.

There are dark (unconfirmed) whispers about how it is going about acquiring many new-age technologies by rolling over western companies operating in vast markets.

The last century belonged to the US and Europe with Russia as the communist outlier. China became mighty all because of the emergence of the free trade regime in the world. Just some 35-odd years ago, it was behind the iron curtain.

But then the World Trade Organization (WTO) was born in January 1995. China’s trade boomed. It took over the world’s manufacturing jobs. India, too, found its place by servicing outsourced businesses like telemarketing. “Shanghaied” and “Bangalored” entered the lexicon—as jobs (and pollution) moved continents.

This way, globalisation fulfilled its purpose to usher in a new era of world prosperity. Or so, we thought.

Instead, globalisation has made the world more complicated and convoluted. In early 1990s, when the discussions on the General Agreement on Tariffs and Trade (GATT) were at its peak, there was a clear North-South divide.

The then-developed world pushed for opening up of trade. It wanted markets and protection through rules on “fair” trade and intellectual property. The then developing world was worried what the free trade regime would do to its nascent and weak industrial economies.

More importantly, there were fears of what these new open trade rules would do to its farmers, who would have to compete with the disproportionately subsidised farmers of the developed world.

In 1999 tensions flared up at the WTO ministerial meet in Seattle. By this time, reality of globalisation had dawned and so it was citizens of the rich world who protested for labour rights, worried about outsourcing of their jobs and environmental abuses.

But these violent protests were crushed. The next decade was lost in the financial crisis. The new winners told the old losers that “all was well”.

Today Trump has joined the ranks of the Leftist Seattle protesters, while India and China are the new defenders of free trade. The latter in fact want more, much more of it.

But again, is it so straightforward? All these arrangements are built on the refusal to acknowledge the crisis of employment. The first phase of globalisation led to some displacement of labour and this is what Trump is griping about.

But the fact is that this phase of globalisation has only meant war between the old elite (middle-classes in the world of trade and consumerism) and the new elite. It has not been long enough or deep enough to destroy the foundations of the livelihoods of the vast majority of the poor engaged in farming. But it is getting there.

But this is where the real impact of globalisation will be felt. Global agricultural trade remains distorted and deeply contentious. The trade agreements targeted basics like procurement of foodgrains by governments to withstand scarcity and the offer of minimum support price to farmers.

Right now, the Indian government is making the right noises that it will stand by its farmers. But we will not be able to balance this highly imbalanced trade regime if we don’t recognise that employment is the real crisis.

It is time that this round of trade war should be on the need for livelihood opportunities. Global trade talks must discuss employment not just industry. It must value labour and not goods.

This is what is at the core of the insecurity in the world. It is not about trade or finance. It is about the biggest losers: us, the people and the planet.

The link to the original article follows:
https://www.downtoearth.org.in/

The post Balancing Trade Wars appeared first on Inter Press Service.

Excerpt:

Sunita Narain* is Director-General of the Centre for Science and Environment (CSE) & Editor of Down to Earth magazine

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Greening the Way for Thailand’s First Green and Smart Cityhttp://www.ipsnews.net/2018/07/greening-way-thailands-first-green-smart-city/?utm_source=rss&utm_medium=rss&utm_campaign=greening-way-thailands-first-green-smart-city http://www.ipsnews.net/2018/07/greening-way-thailands-first-green-smart-city/#respond Mon, 16 Jul 2018 15:29:00 +0000 Sinsiri Tiwutanond http://www.ipsnews.net/?p=156704 Thailand’s industrial sector must focus on sustainable and green development to remain competitive in the region. “It is more expensive to operate in Thailand than other neighbouring countries. If we don’t develop smart cities, it will be more difficult for us to attract foreign investors,” Global Green Growth Initiative (GGGI) programme manager for Thailand Khan […]

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The country has seen an increase in awareness for green growth from public and private sectors in recent years. Credit: Irwin Loy/IPS

By Sinsiri Tiwutanond
BANGKOK , Jul 16 2018 (IPS)

Thailand’s industrial sector must focus on sustainable and green development to remain competitive in the region.

“It is more expensive to operate in Thailand than other neighbouring countries. If we don’t develop smart cities, it will be more difficult for us to attract foreign investors,” Global Green Growth Initiative (GGGI) programme manager for Thailand Khan Ram-Indra told IPS. GGGI is an international organisation that works with developing and emerging countries to create programmes according to a sustainable green growth model.

Thailand has seen an increase in awareness of green growth from public and private sectors in recent years under the government’s Thailand 4.0 initiative — an economic strategy that seeks to transform the nation’s economy from one reliant on manufacturing to a value-based economy focused on innovation, higher technologies and green industries.

At the heart of this ambitious endeavour is Thailand’s industrial sector. As the second-largest economy in Southeast Asia, the industrial sector accounts for almost 40 percent of the country’s GDP. It also happens to be a significant contributor to pollution and reduced energy security within the country.

The sector alone accounts for 37.1 percent of the country’s total energy consumption, while 27.9 percent of greenhouse gas (GHG) emissions are attributed to its operations. According to GGGI’s study to support the government’s climate change master plan, it finds that this translates to a net economic loss of roughly USD900 million to the Thai economy.

“This issue is quite new and the industry might not have a clear idea on how to approach it. This is where GGGI can come in to help guide them. The other thing is that we can help to identify bankable projects to achieve their green vision. This is where GGGI plays a critical role in mobilising private finance and developmental projects,” Ram-Indra said.

The industry has also experienced difficulties, with an economic slowdown between 2015 to 2016, labour shortages and depleting natural resources. However, the investment outlook is more positive this year thanks to a boost in investment in industrial estates through the government’s approval of the new Eastern Economic Corridor (EEC) law in late February.

The USD45 billion EEC project in the country’s industrial east is the latest in a series of measures rolled out to stimulate investment in the Thai economy and is projected to generate USD39 billion over the next decade.

Ram-Indra believes the EEC will provide significant potential and growth for the sector, but also warns that to maintain its competitive edge, the industry needs to look towards green investments.
Ram-Indra sees the creation of more sustainable industrial parks as an enhancement to the bottomline.

“This green investment will help people on the ground, including the owners and investors to save costs through energy efficiency and higher productivity from the workforce because they are able to enjoy a better quality of living.”

GGGI estimated in their roadmap to support Thailand’s climate change master plan that the Thai economy can potentially save about USD100 million if the manufacturing sector implements GHG reduction projects. The sector’s potential for green improvements is one of the main reasons why the organisation chose to work closely with industrial estates, Ram-Indra explained. Furthermore, the policy is also in line with working towards Thailand’s commitment to the Paris Agreement by cutting its GHG emission by 20 to 25 percent by 2030.

Dr. Frank Rijsberman, GGGI’s Director-General, and Vikrom Kromadit, CEO of AMATA Corporation PCL at the MoU signing ceremony for Green and Smart Industrial Town Development. Credit: Sinsiri Tiwutanond/IPS

In its most recent effort on Jul. 12, GGGI signed a memorandum of understanding with one of Thailand’s largest industrial estate operator’s, AMATA Corporation PCL. Under the MoU signed by GGGI’s Director-General Dr. Frank Rijsberman and AMATA’s CEO Vikrom Kromadit, AMATA will be GGGI’s first partner from the private sector in implementing its green city development programme.

“With AMATA, we want to demonstrate that industrial estates can be very different. The Industrial Estate Authority of Thailand (IEAT) is doing some interesting developments to improve the quality of these places and certain environmentally projects. But we think the vision for the industrial estates can be radically different. They could be zero-carbon or zero-waste. There are great places to cut down the commuting time,” Rijsberman told IPS.

He added that AMATA employed a large number of people “and if they all spend two hours commuting each way, you can cut down that [with] a better public transport system.”

“Not only is the environment improved, but the quality of life for those people. We think these industrial estates can be model smart cities. We want to demonstrate that they can still be commercially attractive investments but have a radically different impact on the people’s quality of life and environment,” he said.

GGGI has assisted Indonesia set up 12 special economic zones or SEZs. According to a GGGI report, the “policy interventions to enable green projects in these four sectors would yield sufficient returns and create USD870 Million in potential net economic benefits.”

“AMATA is interesting to us because we also have states in Vietnam where there are about 230 of these special economic zones. They are just starting in Laos and Myanmar. Our intent is that once we demonstrate to AMATA how this can work, it should have an impact on industrial estates in Thailand and throughout the region.

“We are doing other projects along the same line in Vietnam, our green investment specialist is working with a company to install solar roofing in the park and helping them to work with banks and working out the best business model. The idea is if one is successful, then it can really scale,” Rijsberman said.

For Kromadit, the future of the country’s development depends on having a smarter and better facility environment. He hopes the MoU will help push future developments to see environmental issues including access to greener spaces on top of reducing pollution as incentives for investment in the EEC.

GGGI’s work also considers the societal aspect affecting the community and workforce in and around the industrial estate. “We are looking to improve the quality of life for those people including cleaner air, lessening their transportation time and overall improving the standards of living,” Ram-Indra said.

Thai manufacturers and industrial estate operators should take confidence in the transition towards eco-industrial developments by looking towards one of its biggest competitors, Indonesia. A recent study by consulting firm Solidiance showed Indonesia’s top five green industrial parks have produced encouraging results.

Companies that have reused their water were able to decrease 10 to 15 percent from costs for purchasing new water and lowering their production costs. Cost saving on energy maintenance can reach up to 7 to 15 percent by employing green technology such as solar cells and LED lights. The study also projected that green space could generate a higher return for the company in the long run (over 50 years). One industrial city marketing manager noted that in addition to continued engagement between stakeholders and the local community, the community benefitted from better housing.

IEAT has implemented a similar programme with the Map Ta Phut Industrial Estate. The programme reported an improvement in public sentiment towards the industrial sector and enhanced cooperation between communities and more companies adopting environmentally and socially responsible mechanisms in their businesses.

Tara Buakamsri, Country Director, Greenpeace Southeast Asia, told IPS he would like to see greater community engagement in the IEAT programmes.
“To ask whether the idea of eco-industrial estates can be sustainable, it has to be in the context of a framework for good governance that require transparency and check and balances between all the stakeholders involved. We need to involve the local communities that live around the estates as well.”

Ram-Indra hoped the success of the AMATA partnership and other sustainable industrial parks would not only signal other companies to follow suit, but also act as a model for other countries especially those in the Southeast Asia region.

“My concern is that the change is not happening fast enough. There needs to be a bigger push from all the stakeholders involved,” he said.

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Africa Could be Next Frontier for Cryptocurrencyhttp://www.ipsnews.net/2018/07/africa-next-frontier-cryptocurrency/?utm_source=rss&utm_medium=rss&utm_campaign=africa-next-frontier-cryptocurrency http://www.ipsnews.net/2018/07/africa-next-frontier-cryptocurrency/#respond Mon, 16 Jul 2018 14:55:49 +0000 Pavithra Rao http://www.ipsnews.net/?p=156721 Pavithra Rao, Africa Renewal*

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Interest in cryptocurrency, a form of digital currency, is growing steadily in Africa. Some economists say it is a disruptive innovation that will blossom on the continent.

By Pavithra Rao
UNITED NATIONS, Jul 16 2018 (IPS)

Cryptocurrency is not bound by geography because it is internet based; its transactions are stored in a database called blockchain, which is a group of connected computers that record transactions in a ledger in real time.

The difference between cryptocurrency and, say, Visa or Mastercard, is that a cryptocurrency is not now regulated by government and doesn’t need middlemen, and transactions rely on the internet, which means they can happen anywhere in the world.

The big cryptocurrency global brands include Bitcoin, Litecoin, XRP, Dash, Lisk and Monero, but Bitcoin leads the pack in Africa. Created in 2009 by a person or people with the alias Satoshi Nakamoto, investors hope Bitcoin becomes the new mode of financial transaction in the digital age.

“Africa is rarely mentioned among the largest markets for cryptocurrency, but it may be set to steal a march over other markets,” says Rakesh Sharma, a business and technology journalist.

Sharma says that citizens of countries battling high inflation are likely to opt for cryptocurrency, because “with their paradigm of decentralization, cryptocurrencies offer an alternative to disastrous central bank policies.”

Stealing a march

South Sudan’s inflation rate was 102% between September 2016 and September 2017, according to the World Bank. Other countries with double-digit inflation rates include Egypt, Ghana, Malawi, Mozambique, Nigeria, Zambia and Zimbabwe. It is no surprise that some of these countries are among the main Bitcoin economies in Africa.

The main Bitcoin countries are Botswana, Ghana, Kenya, Nigeria, South Africa and Zimbabwe, according to gobitcoin.io, a website dedicated to Bitcoin news in Africa. The BBC adds that cryptocurrency is gaining ground in Uganda.

When Zimbabwe’s inflation skyrocketed in 2015, forcing authorities to print $100 trillion notes (each worth just $40), some Zimbabweans turned to Bitcoin.

Zimbabweans and citizens of other African countries transact in Bitcoin “as opposed to their local currencies, which are plagued with hyperinflation,” comments Emmanuel Tokunbo Darko, vice president of marketing for ICOWatchlist.com, a platform that hosts cryptocurrency tokens.

There will be 725 million mobile phone subscribers in Africa by 2020, according to the GSM Association, which represents the interests of mobile operators globally. That means more Africans will have the tools to plug into the cryptocurrency ecosystem, says Sharma.

“I check my Bitcoin every day [on my mobile phone] and any chance I can get. Any minute, any hour, anytime, as often as I can,” Peace Akware, a Ugandan millennial, told the BBC.

Bitcoin spreads
That African governments are not now regulating cryptocurrency may be a factor spurring its growth on the continent; however, there is no guarantee that governments will not change their current mindset.

Rather than simply not wanting to, governments may be powerless to regulate cryptocurrency, the Nigerian central bank indicated recently. Currently tackling the country’s 12% inflation rate, the Nigerian apex bank announced that it could not control or regulate Bitcoin, “just the same way no one is going to control or regulate the internet. We don’t own it.”

Fearing a collapse of the banking industry or arbitrary appropriation of money by the government, Africans without access to banks and who live in politically unstable countries could be attracted to cryptocurrency. “Bitcoin transactions help to eliminate the procedural bottlenecks that plague traditional banking and financial services,” Darko explains.

Some 15 cryptocurrency-related operations began in Africa in the past year alone, reports Sharma. But South Africa–based Luno Exchange, established in 2013 and now boasting 1.5 million customers in over 40 countries worldwide, is the first to be based in Africa.

Others, particularly cryptocurrency-based remittance services, are popping up in various countries. These services include Abra, which operates in Malawi and Morocco, GeoPay in South Africa, BitMari in Zimbabwe and London-based Kobocoin, which was launched by Nigerian entrepreneur Felix Onyemechi Ugoji.

The Plaas Application is a mobile app that enables farmers to manage their stock on the blockchain.

Launched in 2013, Kenya’s BitPesa facilitates virtual remittances transfers to both African and international locations, to and from individuals’ mobile wallets, where cryptocurrency is stored. LocalBitcoins.com in Kenya reported trading volumes in excess of $1.8 million as of December 2017, underlining the lucrativeness of the business.

“I started mining Bitcoin [in Nairobi, Kenya] in September 2017 and, so far, this is the best business I have ever tried,” Gladys Laboi told Africa Renewal, adding: “Under six months, I earned $800 after investing in $700.”

Not to be left out, some governments are moving into the virtual currency terrain. Tunisia’s eDinar is a government-issued digital currency. Senegal is in the process of creating eCFA, which, if successful, could be emulated by other Francophone countries in Africa.

There will be government-issued cryptocurrencies in Africa in the near future, predicts Shireen Ramjoo, ceo of Liquid Crypto-Money, a South Africa-based cryptocurrency consulting firm.

Industry experts believe that cryptocurrency will be around for years. That Bitcoin users can send money to just about anywhere there is an internet connection for relatively small fees and with no third-party interference is an advantage that standard government-issued currencies cannot offer.

“Every single computer device on the surface of the planet with an internet connection can access information on the blockchain and make ‘transactional’ inputs onto it. The information cannot be distorted, deleted, modified or destroyed, and [the] computer device has the same information as everybody,” says Darko.

Another recommendation is that transactions are anonymous, and users’ information is private and safe; there is little possibility of identity theft, which is common with other forms of digital payment.

As of December 2017, the global demand for cryptocurrency had increased to the extent that a Bitcoin sold for $20,000. Its value had been $1,000 one year prior.

Ponzi scheme
Nevertheless, some industry watchers refer to cryptocurrency as a risky and temperamental scheme, citing the crash to $8,700 in the value of Bitcoin last February, from a high of $20,000 in December 2017.

Without regulations, cryptocurrency is a double-edged sword; there may be gains from time to time, but any precipitous crash in price could leave investors with no escape route. Manasseh Egedegbe, an investment manager based in Nigeria, says that Bitcoin’s frenzied price surge seems like the dot-com bubble at the turn of the millennium.

There is also the fact that cryptocurrency can be used by criminals to funnel funds. In 2011 Bitcoin was a currency of choice for drug peddlers, according to the US Justice Department, which seized almost $48 million worth of illegal contrabands that year, and discovered that the criminals involved had made transactions totaling 150,000 Bitcoins (approximately $130 million.

Countries such as Bangladesh, Ecuador and Kyrgyzstan believe the risks outweigh the gains and have banned Bitcoin as well as initial coin offerings or ICOs, which are used by start-ups to evade the demand for capital by banks and other financing institutions.

Quartz Africa, an online business news publication, reported last December that a similar scheme, Mavrodi Mundial Moneybox (MMM), once had over two million users in Nigeria, while also operating in Ghana, Kenya, South Africa and Zimbabwe.

There are reports that South Africa’s central bank is actively studying cryptocurrency and may institute guidelines to foster innovation. Those guidelines could be a slippery slope to regulation. The Sunday Times of South Africa reported in March that 27,500 individuals, including South Africans, lost more than $50 million when they were duped into transferring their Bitcoins into an online wallet. The publication called it “one of the biggest scams to hit South Africa.”

At 22% (the world average is 48%), Africa has the lowest rate of Internet usage of any region, according to a 2017 report by the International Communications Union, which may undercut optimistic projections of cryptocurrency and blockchain technology on the continent. Also, poor power supply in many countries continues to impede the internet access on which cryptocurrency largely depends.

Despite some analysts likening Bitcoin and other cryptocurrencies to a Ponzi scheme, many Africans are taking the risk to invest in them.

Other experts, such as Darko, believe Africa should warmly embrace the innovation. “Truth be told, Africa needs blockchain technology and its resultant cryptocurrencies more than any part of the world,” he says

*Africa Renewal is published by the UN’s Department of Public Information. The link to the original article follows: https://www.un.org/africarenewal/magazine/april-2018-july-2018/africa-could-be-next-frontier-cryptocurrency

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Excerpt:

Pavithra Rao, Africa Renewal*

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Will Trump’s Trade War Make America Great Again?http://www.ipsnews.net/2018/07/will-trumps-trade-war-make-america-great/?utm_source=rss&utm_medium=rss&utm_campaign=will-trumps-trade-war-make-america-great http://www.ipsnews.net/2018/07/will-trumps-trade-war-make-america-great/#comments Mon, 16 Jul 2018 14:26:11 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=156713 The United States has had the world’s largest trade deficit for almost half a century. In 2017, the US trade deficit in goods and services was $566 billion; without services, the merchandise account deficit was $810 billion. The largest US trade deficit is with China, amounting to $375 billion, rising dramatically from an average of […]

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By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR, Jul 16 2018 (IPS)

The United States has had the world’s largest trade deficit for almost half a century. In 2017, the US trade deficit in goods and services was $566 billion; without services, the merchandise account deficit was $810 billion.

The largest US trade deficit is with China, amounting to $375 billion, rising dramatically from an average of $34 billion in the 1990s. In 2017, its trade deficit with Japan was $69 billion, and with Germany, $65 billion. The US also has trade deficits with both its NAFTA partners, including $71 billion with Mexico.

President Trump wants to reduce these deficits with protectionist measures. In March 2018, he imposed a 25% tariff on steel imports and a 10% tariff on aluminium, a month after imposing tariffs and quotas on imported solar panels and washing machines. On 10 July, the US listed Chinese imports worth $200 billion annually that will face 10% tariffs, probably from September, following 25% tariffs on $34 billion of such imports from 7 July.

 

Do US trade deficits reflect weakness?

The usual explanation for bilateral trade deficits is price differentials. However, the US accuses such countries of ‘unfair’ trade practices, such as currency manipulation, wage suppression and government subsidies to boost exports, besides blocking US imports.

Trump views most trade deals such as NAFTA as unfair. His team insists that renegotiating trade deals, ‘buying American’, a strong dollar and confronting China will shrink US trade deficits.

Anis Chowdhury

But the country’s overall trade deficit, offset by capital inflows, is related to the gap between its savings and investments. The US spends more than it produces, thus importing foreign goods and services. Cheap credit fuels debt-financed consumption, increasing the trade deficit.

Total US household debt rose to $13.2 trillion in the first quarter of 2018, the 15th consecutive quarter of growth in the mortgage, student, auto and credit card loan categories. American consumer debt was more than double GDP in 2017.

US government budget deficits have also been growing. From 67.7% of GDP in 2008, US government debt rose to 105.4% in 2017. The federal budget deficit was $665 billion in FY2017, rising 14% from $585 billion in FY2016.

The US budget deficit was 3.5% of GDP in 2017. According to the US Congressional Budget Office, it will surpass $1 trillion by 2020, two years sooner than previously projected, due to Trump tax cuts and spending increases.

The growing US economy may also increase the trade deficit, as consumers spend more on imported goods and services. The stronger dollar has made foreign products cheaper for American consumers while making US exports more expensive for foreigners.

Jomo Kwame Sundaram. Credit: FAO

These underlying economic forces have become more important than policies in raising the overall trade deficit, while bilateral deficits reflect specific commercial relations with particular countries. Thus, disrupting bilateral trade relations may only shift the trade deficit to others.

 

Have the cake and eat it?

So, why does the US have a structural trade deficit? As the de facto international ‘reserve currency’ after the Second World War, the US has provided the rest of the world with liquidity. Its perceived military strength means it is seen as a safe place to keep financial assets. Of about $10 trillion in global reserves in 2016, for example, around three fifths were held in US dollars.

US supply of international liquidity by issuing the global reserve currency offers several economic advantages. It also earns seigniorage from issuing the main currency used around the world, due to the difference between the face value of a currency note and the cost of issuing it.

With growing foreign demand for dollars, the US can run deficits almost indefinitely by creating more debt or selling assets. Demand for dollar-denominated assets, e.g., US Treasury bonds, raises their prices, lowering interest rates, to finance both consumption and investment.

While foreign investors buy low-yielding, short-term US assets, Americans can invest abroad in higher-yielding, long-term assets. The US usually reaps higher returns on such investments than it pays for debt, labelled America’s ‘exorbitant privilege’.

Thus, for the US to enjoy the ‘exorbitant privilege’ of the dollar’s role as the major reserve currency, it must run a chronic trade deficit. Therefore, giving up the dollar’s global reserve currency status will have major implications for the US economy, finances and living standards.

 

Can the US win Trump’s trade war?

Barry Eichengreen noted that countries in military alliances with reserve-currency issuing countries hold about 30% more of the partner’s currency in their foreign-exchange reserves than countries not in such alliances. Instead, Trump has prioritized reducing trade deficits to strengthen the US dollar and dominance while disrupting some old political alliances.

As the US retreats from the global diplomatic stage, use of other reserve currencies, including China’s renminbi, has been growing, especially in Europe and Africa. Thus, ironically, as Trump wages trade wars on both foes and friends, China will probably gain, both geopolitically and economically.

The resulting global economic shift will not only hurt the US dollar and economy through the exchange rate and borrowing costs, but also its geopolitical dominance.


Anis Chowdhury
, Adjunct Professor at Western Sydney University (Australia), held senior United Nations positions in New York and Bangkok.
Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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War, High Tariffs and Nationalisation – their Cost to Africa’s Climatehttp://www.ipsnews.net/2018/07/war-high-tariffs-nationalisation-cost-africas-climate/?utm_source=rss&utm_medium=rss&utm_campaign=war-high-tariffs-nationalisation-cost-africas-climate http://www.ipsnews.net/2018/07/war-high-tariffs-nationalisation-cost-africas-climate/#comments Thu, 05 Jul 2018 15:04:15 +0000 Issa Sikiti da Silva http://www.ipsnews.net/?p=156557 Africa’s political instability, its armed conflicts and regulatory issues are placing at risk investment needed to tackle climate change and reduce greenhouse gas (GHG) emissions on the continent.  “A renewable energy developer or investor faces increased risk that their returns and earnings could decline as a result of political change, such as terrorism, expropriation (dispossession […]

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In this dated picture, a child collects bullets from the ground in Rounyn, a village in North Darfur, Sudan. Armed conflict on the African continent poses huge risk on any potential investments to address climate change. Credit: Albert Gonzalez Farran / UNAMID

By Issa Sikiti da Silva
KINSHASA, Jul 5 2018 (IPS)

Africa’s political instability, its armed conflicts and regulatory issues are placing at risk investment needed to tackle climate change and reduce greenhouse gas (GHG) emissions on the continent. 

“A renewable energy developer or investor faces increased risk that their returns and earnings could decline as a result of political change, such as terrorism, expropriation (dispossession of property for public use), and sovereign breach of contract,” Dereje Senshaw, the principal specialist at Global Green Growth Institute (GGGI), told IPS. He added that credit, market and technological risks were also obstacles towards reducing GHG emissions.

According to International Monetary Fund and Organisation for Economic Co-operation and Development papers, green investment refers to the investment necessary to reduce GHG and air pollutant emissions without significantly reducing the production and consumption of non-energy goods. It covers both public and private investment.

Senshaw’s explanations come against the backdrop of several armed conflicts that are tearing the resource-rich continent apart. Millions of people have been uprooted from their homes and the instability has dealt a blow to development projects and poverty-eradication programmes.

This month, the Norwegian Refugee Council listed the world’s 10-most neglected crises. Six were from Africa. In the Central African Republic, conflict began in 2013 after a coup. The country held elections three years later but peace has been elusive. The Democratic Republic of Congo is listed as having the world’s second-most neglected crisis as the central African nation has experienced almost two decades of conflict. Sudan, South Sudan, Nigeria and Somalia are also on the list.

Tariffs too high

Apart from political risks, green investments could also be compromised by regulatory issues or tariffs, Senshaw said.

“Some African countries set tariffs at very high rates, making it very unattractive to investors as they may not have the chance to recover their incurred costs in the future,” he explained.

Another major risk is the delay of utility contracts. Circumstances could change during the lifetime of a project in many sub-Saharan Africa countries and even essential services, like the provision of electricity, may stop. In addition, risk arises when regulatory agencies start to interfere with the operations of private companies.

“Similarly, there is the risk of the nationalisation of utilities and policy changes. In addition there are various regulatory risks related to biddings, procurements and hiring, and contracts,” Senshaw said, explaining that bids are frequently cancelled, postponed or disputed. “This discourages interested private actors from spending time and money on these bids. Also, some African countries put in place bureaucratic procurements and hiring procedures that hamper operations of private energy companies,” he said.

He added that corruption was another risk.

“However, I think corruption has not been overlooked by investors, rather it is still considered as one of the potential investment risks,” he said.

Senshaw said African governments needed to establish an enabling environment for private investors in renewable projects, which he described as the main driver for accelerating the deployment of renewable energy in Africa.

USD225 billion by 2030

The search for money to fund these green projects continues unabated.

Toshiaki Nagata, an expert from the International Renewable Energy Agency (IRENA), said recently that Africa would need USD225 billion by 2030 to implement energy targets set out in national determined contributions (NDCs), of which 44 percent are for unconditional targets. In the Paris Agreement, a global agreement to tackle climate change, countries declared their NDCs, which are outlines of the actions they propose to undertake in order to limit the rise in average global temperatures to below 2°C.

Unconditional targets, Nagata explained, are the targets that countries are committed to meet without international support, while conditional targets are the ones that countries would only be able to meet with international support in areas of finance and technology, among others.

Nagata, who made the announcement in Burkina Faso’s capital, Ouagadougou, at a GGGI capacity building summit, told IPS that the amount applied to African countries that have quantified renewable energy targets.

Virtually all African countries mention renewables in their NDCs and 85 percent of them include quantified renewable energy targets, Nagata said. He said 23 countries in Africa have renewable energy action under adaptation, while 15 have targets with off-grid renewables.

USD470 billion to fund NDCs

Currently, USD470 billion is available to fund the implementation of NDCs globally, according to IRENA. However, the agency warned that barriers to investment could come in the form of insufficient or contradictory incentives, limited experience and institutional capacity and immature financial systems.

NDCs, Nagata pointed out, provided an opportunity to capture the benefits renewables offer for climate resilient infrastructure. 

“Some renewables, especially solar, can bring electricity in a cost-effective manner to those areas where electricity cannot be brought otherwise. This will enhance their resilience. In many cases, remote areas use diesel for power,” he said, adding that it was costly and therefore not environmentally sustainable.

While the commitment of African governments plays a role in countries reaching their NDCs, the major investment driver for establishing renewable energy projects remains the attractiveness of financial returns, says Senshaw.

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Bamboo, A Sustainability Powerhousehttp://www.ipsnews.net/2018/06/bamboo-sustainability-powerhouse/?utm_source=rss&utm_medium=rss&utm_campaign=bamboo-sustainability-powerhouse http://www.ipsnews.net/2018/06/bamboo-sustainability-powerhouse/#respond Fri, 29 Jun 2018 11:30:32 +0000 Ed Holt http://www.ipsnews.net/?p=156466 A landmark conference bringing more than 1,200 people from across the world together to promote and explain the importance of bamboo and rattan to global sustainable development and tackling climate change has ended with a raft of agreements and project launches. The three-day Global Bamboo and Rattan Congress in Beijing this week, organised by multilateral […]

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Bamboo is stronger than concrete or steel but is a renewable resource, providing refuge and food for wildlife as well as biomass. Credit: CC by 2.0

Bamboo is stronger than concrete or steel but is a renewable resource, providing refuge and food for wildlife as well as biomass. Credit: CC by 2.0

By Ed Holt
VIENNA, Jun 29 2018 (IPS)

A landmark conference bringing more than 1,200 people from across the world together to promote and explain the importance of bamboo and rattan to global sustainable development and tackling climate change has ended with a raft of agreements and project launches.

The three-day Global Bamboo and Rattan Congress in Beijing this week, organised by multilateral development group the International Bamboo and Rattan Organisation (INBAR) and China’s National Forestry and Grassland Administration (NFGA), was the first international, policy-focused conference on the use of bamboo and rattan to help sustainable development.“Bamboo is not a climate change silver bullet, but we want people to realise that it is a ‘forgotten opportunity’ in helping mitigate the effects of climate change." --INBAR Director General Dr Hans Friedrich

Organisers had pledged to ensure that the event would not be “simply a talking shop”, instead making real progress on raising awareness of the potential role of bamboo and rattan in helping solve major global problems.

As it closed, it appeared that goal had been met with the announcement of a number of agreements, including a major project to develop bamboo sectors across Africa and an agreement between INBAR members to further develop bamboo and rattan sectors in other parts of the world.

Speaking at the end of the conference, INBAR Director General Dr Hans Friedrich said: “We have made some real steps forward for the development of bamboo and rattan.”

Bamboo and rattan have long been championed by environmental organisations and groups promoting sustainable development, especially in the world’s poorest countries.

A grass, bamboo is a native plant on all continents except Antarctica and Europe, although the majority of its natural habitat is in the tropical belts.

It is stronger than concrete or steel but is a renewable resource, providing refuge and food for wildlife as well as biomass. It captures higher amounts of CO2 than most other plants and can be harvested significantly faster than wood – over a period of 20 years it can produce almost 12 times as much material as wood.

It can be used for shelter as well as, in some cases, transport, and provides sustainable, ecologically-friendly economic and commercial opportunities to people, especially in poorer communities.

Groups like INBAR point out that bamboo use can play a significant part in helping countries meet many of the UN’s sustainable development goals.

But awareness of the potential of bamboo and rattan is generally low in many countries, especially in the more developed world and particularly at senior levels of government and industry.

Dr Friedrich told IPS: “A large part of the reason for this conference is about awareness. We want to tell people who don’t yet realise it that bamboo and rattan can help them reach their sustainable development goals.

“The potential is immense. It is understood by people in, for example, the forestry industry, and others, but not really by politicians. At this conference we want to help them realise this by giving them examples.”

Bringing together ministers, industry leaders, scientists and entrepreneurs, the conference used examples of innovative bamboo use – from a thirty-foot bamboo wind turbine blade to bamboo diapers – and real-life stories from individuals of bamboo and rattan helping create sustainable livelihoods to underline to decision-makers and senior industry figures the potential.

One of the key aims of the meeting, said organisers, was to try and push those decision-makers into setting up the institutional, regulatory, policy, and business frameworks necessary to kick-start a new sustainable development paradigm.

“In the last few years I have met a number of ministers and they always start off being sceptical about bamboo but after they see everything they realise its potential.

“We want governments to think about bamboo when they think about their plans for climate change, sustainable development and green policies,” Dr Friedrich told IPS.

INBAR also used the conference to talk to representatives from large private sector firms about how to build global value chains, as well as how to set up international standards which support international bamboo and rattan trade.

Its proponents have pointed out the economic potential, particularly in poorer countries, of the bamboo industry. In China, which Dr Friedrich says has until now been the “only country taking bamboo really seriously [as an industry]”, the bamboo industry employs 10 million people and is valued at USD 30 billion per year.

“People are beginning to realise the economic potential and opportunities for bamboo,” Friedrich told IPS.

The conference also highlighted the impact bamboo and rattan could have on climate change.

Speakers from various countries, including politicians, spoke about how bamboo and rattan was being used to help combat the effects of climate change and help the environment.

Experts outlined its potential and current use in areas like forest protection, restoration of degraded land, and carbon capture as well as a replacement for more carbon-intensive materials such as cement and steel in construction and industry.

An INBAR report released ahead of the conference gave an analysis of the carbon which is saved by substituting more emissions-intensive products for bamboo. It found the carbon emissions reduction potential of a managed giant bamboo species forest is potentially significantly higher than for certain types of trees under the same conditions.

Combining bamboo’s potential displacement factor with bamboo’s carbon storage rate, bamboo can sequester enormous sums of CO2 – from 200 to almost 400 tonnes of carbon per hectare. In China alone, the plant is projected to store more than one million tons of carbon by 2050.

Bamboo can also be used in durable products, including furniture, flooring, housing and pipes, replacing emissions-intensive materials including timber, plastics, cement and metals.
It can also be used as a substitute for fossil fuel-based energy sources – research by INBAR has shown that substituting electricity from the Chinese grid with electricity from bamboo gasification would reduce CO2 emissions by almost 7 tonnes of CO2 per year.

Bamboo can also help communities adapt to the effects of climate change, serving as a strong but flexible building material for shelter, as well as helping restore degraded land and combat desertification.

Patricia Espinosa, the Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), said at the conference: “In short, bamboo and rattan represent an important part of reducing net emissions. And this is exactly what the world needs right now.”

Speaking to IPS on the eve of the conference, Dr Friedrich said he hoped that policymakers would realise the potential for bamboo as part of solutions for dealing with climate change.

“Bamboo is not a climate change silver bullet, but we want people to realise that it is a ‘forgotten opportunity’ in helping mitigate the effects of climate change,” he said.

INBAR officials readily admit that it is likely to take time to raise awareness of the potential of bamboo and rattan, but they are encouraged by the fact that more countries are starting to look at it seriously as an industry, including in Africa and South America.

But Dr Friedrich was keen to stress that the conference was just a beginning and that, with international agreements on important projects being signed, he was hopeful of real change in the future use and awareness of the potential of bamboo and rattan.

“I hope this conference is going to be a landmark moment. I want it to be the catalyst and inspiration for real change,” he told IPS.

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Fight Against Drug Consumption Needs Gender Specific Treatmentshttp://www.ipsnews.net/2018/06/fight-drug-consumption-needs-gender-specific-treatments/?utm_source=rss&utm_medium=rss&utm_campaign=fight-drug-consumption-needs-gender-specific-treatments http://www.ipsnews.net/2018/06/fight-drug-consumption-needs-gender-specific-treatments/#respond Fri, 29 Jun 2018 06:38:06 +0000 Carmen Arroyo and Emily Thampoe http://www.ipsnews.net/?p=156461 The World Drug Report 2018, launched this week by the United Nations Office on Drugs and Crime (UNODC), highlighted the importance of gender in drug consumption and behaviour, suggesting it is essential to provide different types of health-care and legal solutions. As Marie Nougier, Head of Research and Communications at the International Drug Policy Consortium […]

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By Carmen Arroyo and Emily Thampoe
UNITED NATIONS, Jun 29 2018 (IPS)

The World Drug Report 2018, launched this week by the United Nations Office on Drugs and Crime (UNODC), highlighted the importance of gender in drug consumption and behaviour, suggesting it is essential to provide different types of health-care and legal solutions.

Only one in five women addicts seeks treatment for drug abuse, the president of the International Narcotics Board (INCB) has warned. Credit: UN Photo/D. Gair

As Marie Nougier, Head of Research and Communications at the International Drug Policy Consortium (IDPC) told IPS: “There is certainly no one-size-fits-all strategy towards drug use – there should be a range of evidence-based prevention, harm reduction, treatment and other health and social support services that are able to respond to the many problems women may face when using drugs”.

About 5.6% of the global population between 15 and 64 years old -275 million people- used drugs during 2016, according to the report. From those, 31 million suffer from drug disorders, which means that they need treatment.

However, drug treatments are only reaching one sixth of drug consumers. The consequences are terrible, with 450,000 people dying in 2015 due to drug consumption. What’s more, global opium production increased by 65% from 2016 to 2017, which is the highest estimate so far.

The report has been separated into five sections, the fifth being about the effect that gender has on drug usage, especially in terms of women. The others include information such as an executive summary, drug demand and supply, drug markets, and drugs and age.

The fifth report states that while women consume opioids and tranquilizers more often than men, they use more cannabis and cocaine. Despite women starting to consume substances later in life than men, they increase their intake of related drugs -alcohol, opioids and cocaine- faster than them.

Whereas women mostly associate drug consumption with an intimate partner, men tend to consume substances with other male friends. And while women tend to suffer more from depression, anxiety, or other mental health conditions, men suffer from externalized problems like conduct disorder, such as “attention-deficit hyperactivity disorder and antisocial personality disorder”.

These are some of the gender-based differences in drug consumption that the report points out, but what stands out most in terms of finding long-term solutions is that women “may also have experienced childhood adversity such as physical neglect, abuse or sexual abuse”.

When this is coupled with strong drug policies, the result is a higher proportion of women sentenced for drug-related offences. Women are also shown to be more affected by post traumatic stress disorder.

Nougier from IDPC told IPS: “Drug policies focusing on punishing people for drug use have greatly contributed to drug-related health issues, including the spread of HIV and hepatitis C and overdose deaths, as the fear of arrest and punishment deters people from accessing the harm reduction and treatment services they may need”.

She added: “Punitive approaches have also increased the levels of stigma and discrimination against people who use drugs”.

Additionally, according Nougier, punitive approaches tend to affect women more, as there are no treatment programs that include a gender approach. Their needs -due to their background and consumption behavior- are different.

Also “because of the gender inequalities that continue to prevail in our societies, with women facing significant stigma for breaking with the role of the ‘good woman’ or the ‘good mother’ for using drugs. In some countries, using drugs during pregnancy is a criminal offence, which acts as a serious barrier for women to seek prenatal healthcare support or drug services”.

Kamran Niaz, epidemiologist at the United Nations Office on Drugs and Crime, told IPS that “women have better long-term outcomes when they receive treatments that focus on the issues more commonly found in women with drug use disorders compared to treatments that lack such a women-centred focus”.

Gender specific treatments

Asked about gender-specific treatments, Niaz added: “Prevention of drug use among girls/women requires investing in family-based prevention addressing vulnerabilities that appear to be unique to girls”. He continued: “in order to address the issues of drug use disorders among women, treatment services and programmes should be tailored to the needs of women and pregnant women”.

Some of the programmes that Niaz found specific for girls included: “dealing with stress, depression, social assertiveness, body image and improving relations and communication with parents and other significant others”.

Pamela Kent, Associate Director of Research at the Canadian Centre on Substance Use and Addiction (CCSA), told IPS: “A more informed and empathetic approach to women’s substance use is required—one that also considers various aspects such as reproductive health, perinatal service and child welfare. It’s important to note that not a one-size fits all—society needs to provide women-centered prevention and treatment resources and responses”.

Regarding the relation between drug use and abuse, Niaz said: “As women with drug use disorders are more vulnerable to domestic violence and sexual abuse, and their children may also be at risk of abuse, a liaison with social agencies protecting women and children is helpful”.

He added: “In addition in the case of child abuse we need programmes to prevent such abuse and, particularly, to support the victims and to address post-traumatic stress disorders among them”.

Kent agreed that abuse is a primary concern: “[The 2017 Life in Recovery from Addiction in Canada survey] showed that females reported greater family violence and untreated mental health concerns during addiction compared to males. In additional, for informal support, females more likely to use technology, connect with an animal, or use art, poetry, writing and yoga compared to males”.

However, not many programs have been implemented that include this gender-based approach. The report adds that the criminal justice system is designed for male offenders and thus forgets any nuances that relate to women.

Nougier said: “We continue to see a concerning lack of access to treatment by women dependent on drugs, both in the community and in prison. Available services are generally designed by and for men, and are often unable to tailor to the specific needs faced by women. In closed settings, most harm reduction and treatment services are only available in male prisons”.

Some facilities are starting to adapt themselves to these proven needs, according to Nougier. “Dome harm reduction and treatment facilities have adapted their services to better engage with women with specific opening hours for women only, a space for children while women come to the centre, and the provision gender-specific services (e.g. legal aid or support to respond to domestic violence, sexual and reproductive health support, etc.)”, she said.

Niaz agreed that “the programmes need to manage the myriad of issues such patients face, and should encompass broader health, learning, and social welfare context in collaboration with family, schools and social services”.

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West Africa Moves Ahead with Renewable Energy Despite Unpredictable Challenges http://www.ipsnews.net/2018/06/west-africa-moves-ahead-renewable-energy-despite-unpredictable-challenges/?utm_source=rss&utm_medium=rss&utm_campaign=west-africa-moves-ahead-renewable-energy-despite-unpredictable-challenges http://www.ipsnews.net/2018/06/west-africa-moves-ahead-renewable-energy-despite-unpredictable-challenges/#respond Tue, 26 Jun 2018 18:22:03 +0000 Issa Sikiti da Silva http://www.ipsnews.net/?p=156416 The West African nation of Guinea may be a signatory of the Paris Agreement, a global undertaking by countries around the world to reduce climate change, but as it tries to provide electricity to some three quarters of its 12 million people who are without, the commitment is proving a struggle. Mamadou Bangoura, head of […]

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Forested hills in Guinea’s Kintampo area. Credit: CC by 3.0

Forested hills in Guinea’s Kintampo area. Barely a quarter of the population has access to electricity. Credit: CC by 3.0

By Issa Sikiti da Silva
KINSHASA, Democratic Republic of Congo, Jun 26 2018 (IPS)

The West African nation of Guinea may be a signatory of the Paris Agreement, a global undertaking by countries around the world to reduce climate change, but as it tries to provide electricity to some three quarters of its 12 million people who are without, the commitment is proving a struggle.

Mamadou Bangoura, head of planning and energy management at Guinea’s Ministry of Energy, told IPS that his country faced a major challenge implementing its programme for the development and provision of energy resources to all citizens at a lower cost. According to the United Nations Environment Programme, only 26 percent of the population has access to electricity. “Our main concern is to find a balance between the implementation of this programme and the protection of biodiversity." --Mamadou Bangoura of Guinea’s Ministry of Energy

“Our main concern is to find a balance between the implementation of this programme and the protection of biodiversity. This is further compounded by a requirement to take into rigorous account the environmental and social aspects in the framework of the realisation of any infrastructure project,” Bangoura explained.

According to conservation organisation Fauna and Flora International, Guinea’s wildlife is already under threat. “Conservation solutions need to be found that enable people to make a living while protecting their natural assets into the future,” the organisation reports.

Unlike other African nations that are heavily reliant on fossil fuels, only 43 percent of Guinea’s electricity is generated from this as more than half (55 percent) is produced by hydropower.

The country’s potential for hydropower is significant. Guinea is regarded as West Africa’s water tower because 22 of the region’s rivers originate there, including Africa’s third-longest river, the Niger.

Bangoura added that despite the challenges, his country was making progress and several hydropower projects were being constructed. The Kaléta project, which will produce 204MW, is already completed. However, the Souapiti (459MW) and Amaria (300MW) hydropower plants “are still work in progress.”

He said negotiations were also underway for the construction of a 40MW solar power and a 40MW power plant. “Concession and power purchase agreements are being finalised,” he added.

In the Gambia, challenges in implementing renewable energy exist also. The small West African nation of only 1.8 million people is considered to be rare in its ambitious commitment to reduce greenhouse gas (GHG) emissions — it pledged a 44 percent reduction below its business-as-usual emission level. It’s a big task as currently around 96 percent of all electricity produced in the country comes from fossil fuels.  

Sidat Yaffa, an agronomist with expertise in climate change at the University of The Gambia, told IPS there were barriers to renewable energy programmes because the sector was still new to the Gambia.

“Therefore, a better understanding of the technology is still a challenge, securing adequate funding for implementation is a gap, and availability of trained human resources using the technology is also a gap,” Yaffa said.

He added that the Gambia’s renewable energy programmes included a wind energy pilot project at Nema Kunku village in West Coast Region.

“The agriculture sector’s GHG could be drastically reduced in the next five years in the Gambia if adequate solar panel water irrigation technologies are implemented,” Yaffa added.

Cote d’Ivoire also has strong ambitions for the development of reliable and profitable renewable energies, a cabinet minister said last year, adding that the country is committed to produce 42 percent of its energy through renewable energy.

This week representatives from Burkina Faso, Cote d’Ivoire, the Gambia, Guinea and Senegal will meet in Burkina Faso’s capital Ouagadougou to discuss both the challenges and successes they have had in reaching their nationally determined contributions (NDCs). NDCs are blueprints or outlines by countries on how they plan to cut GHG emissions.

The regional workshop, the first of its kind, is hosted by the Global Green Growth Institute in association with the International Renewable Energy Agency and the Green Climate Fund.

It aims to enhance capacity for NDC implementation, share experiences and best practices, and discuss renewable energy opportunities and associated challenges in the region.

Rural electrification headache

This regional cooperation is a significant step forward as 60 percent of the West African population living in the rural areas continue to depend on firewood as their primary source of energy.

In the Gambia and Senegal a quarter of the rural population has access to electricity, while the number is slightly higher in Cote d’Ivoire with about 29 percent having access.

But in Guinea and Burkina Faso only three and one percent of the respective rural populations have electricity.

Last year, Smart Villages Initiatives (SVI) conducted energy workshops in West Africa and it attributes poor electricity access in the region to insufficient generation, high prices of petroleum, lack of financing and transmission and distribution losses.

The World Bank’s 2017 State of Electricity Access Report makes the link that energy is inextricably linked to every other critical sustainable development challenge, including health, education, food security, gender equality, poverty reduction, employment and climate change, among others.

The Agence Française de Développement acknowledged the benefits of rural electrification programmes, stating, “(they) have the opportunity to reach more poor households and have larger impacts in the lives of the rural poor by providing new opportunities and enhancing the synergies between the agricultural and non-agricultural sector,”

Bangoura has acknowledged his country’s challenge to electrify rural areas. He said his government has just created the Guinean Rural Electrification Agency and launched a couple of projects, including a collaboration with the Electricity of Guinea, that will pave the way for the electrification of rural areas.

However, SVI said while most governments had set up rural electrification agencies or funds, the impact of such organisations may be hampered by a lack of financial and technical expertise. Hence the need to turn to international institutions and experts for capacity building and green energy finance.

Bangoura agreed that one of the problems his country is struggling with is implementation. “The problems at this level lies in the adaptation of the texts of the country to those governing the Paris Agreement…Hence the importance of this workshop that is focusing on capacity building.”

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Food Sustainability, Migration, Nutrition and Womenhttp://www.ipsnews.net/2018/06/food-sustainability-migration-nutrition-women/?utm_source=rss&utm_medium=rss&utm_campaign=food-sustainability-migration-nutrition-women http://www.ipsnews.net/2018/06/food-sustainability-migration-nutrition-women/#respond Tue, 19 Jun 2018 18:02:14 +0000 Enrique Yeves http://www.ipsnews.net/?p=156293 We worry about how we can continue to put food on our tables; and yet one-third of food is never eaten, instead being lost or wasted. We worry about eating properly, and yet in many countries, poor nutrition, obesity and micronutrient deficiencies are increasingly common. This trend is taking place in the Americas, Oceania, Asia, […]

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Credit: Manipadma Jena/IPS

Credit: Manipadma Jena/IPS

By Enrique Yeves
ROME, Jun 19 2018 (IPS)

We worry about how we can continue to put food on our tables; and yet one-third of food is never eaten, instead being lost or wasted.

We worry about eating properly, and yet in many countries, poor nutrition, obesity and micronutrient deficiencies are increasingly common. This trend is taking place in the Americas, Oceania, Asia, Africa and in Europe.

Enrique Yeves

We want to empower women and girls, yet in every sector we still see serious disparities in terms of equal pay for equal wages and getting more women into senior management positions. We worry about the mass movement of people, many of them disenfranchised, and yet fail to stop the exploitation and even death that too often awaits those who try to migrate.

What is to be done? First, we must understand how each of these issues is interlinked and how they can be alleviated using an integrated approach involving agriculture, education, social services, health and infrastructure. If we channel development assistance in an integrated way, rather than towards specific sectors, we are more likely to achieve sustainable changes – these in turn can ease the burden of coordination and enhance our ability to help governments to achieve more effective and long term improvements.

For this to happen, we need the political will of governments to achieve change, coupled with adequate resources.

These issues are critical to achieving the Sustainable Development Goals (SDGs). Governments committed to the SDGs in 2015, pledging to end hunger, extreme poverty, and other social, environmental and health evils that have left over 815 million people undernourished, and in many areas barely surviving in squalid and inhumane conditions.

The role of governments is central. Only they can exert the political will to enforce the required changes and to set aside the critically needed resources.

The role of development organizations, including the UN, non-governmental organizations and international and regional financial institutions, is also critical. They exist to support governments determined to achieve the SDGs and in so doing to improve their overall social, economic and political wellbeing.

The Food and Agriculture Organization of the United Nations (FAO) has been working for over 70 years on both the policy front and on the ground, doing so globally, regionally, nationally and at the community level. We have been documenting the state of food insecurity in the world, exploring and emphasizing the all-important role of small producers in achieving food security. Small-scale farmers, fishers and foresters, constituting a vast number of the rural poor, are vulnerable to environmental and market forces often beyond their control.

Yet it is they who, using tried and tested traditional systems enhanced where possible by improved technologies adapted to their needs, hold the keys to a world without hunger. As FAO has documented, family farmers produce more than two-thirds of the world’s food, with smallholders producing more per unit of land.

In the long run, tackling the direct relationship between mass migration and poverty and instability entails addressing basic challenges in the countries that people are leaving, and by providing more integrated assistance to refugees to improve their health and capacity to earn livelihoods in the receiving countries.

An important but frequently underplayed aspect for governments in developing countries is their need for assistance in defining and quantifying their present situation through internationally accepted benchmarks. Reliable statistics are crucial in order to measure progress towards attainment of the SDGs and general progress in development.

FAO delivers a lot of services to its members in this regard. And the effort produces globally relevant information, some of it alarming. Right now, for example, the global number of undernourished people is estimated at 815 million and that figure is rising for the first time in more than a decade. The number of countries reliant on external food assistance is now 39, the highest it’s ever been since FAO started tracking.

Eradicating hunger is a lynchpin for the entire 2030 Agenda, and governments must raise awareness about why achieving the SDGs is critical. This effort will both enable and benefit from women’s empowerment.

Programmes such as food for work, food stamps or a mix of both – especially in situations where conflict or natural disaster have impacted local production – are all part of the toolkit and are demonstrably efficient in fostering women’s power and interests. Increasing access to food is a building block to goals ranging from nutrition to women’s rights and assuring resilient livelihoods for producers.

What is essential is to find synergies – not only to avoid wasteful duplication but to forge the basis for sustainable solutions. Otherwise our worries are in vain.

Enrique Yeves is Director of Communications, Food and Agriculture Organization of the United Nations

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Closing Africa’s Wealth Gaphttp://www.ipsnews.net/2018/06/closing-africas-wealth-gap/?utm_source=rss&utm_medium=rss&utm_campaign=closing-africas-wealth-gap http://www.ipsnews.net/2018/06/closing-africas-wealth-gap/#respond Tue, 19 Jun 2018 15:15:32 +0000 Kingsley Ighobor http://www.ipsnews.net/?p=156288 Kingsley Ighobor, Africa Renewal*

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South African youths protest outside the Cape Town Convention Centre against inequalities. Credit: AMO/ Esa Alexander

By Kingsley Ighobor
UNITED NATIONS, Jun 19 2018 (IPS)

From “Africa Reeling” to “Africa Rising,” there’s a new narrative for the African continent, now showing promising signs of sustainable growth under more stable governments.

McKinsey & Company, a global management consulting firm, predicts that Africa’s combined GDP will be $2.6 trillion by 2020 and that “Africa’s consumer spending by 128 million households with discretionary income is expected to be around $1.4 trillion.”

Among the countries attracting investors are Côte d’Ivoire, Benin, Morocco, Rwanda, Senegal and Togo.

But a new report from the United Nations Development Programme (UNDP) finds that Africa’s new wealth is increasingly concentrated in a few hands. Disappointingly, 10 of the world’s 19 most unequal countries are in sub-Saharan Africa.

Economic inequality, sometimes referred to as income inequality, is the unequal distribution of a country’s wealth. In highly unequal societies, such as South Africa, most people live in poverty while a minority amasses enormous wealth.

South Africa, the continent’s most developed economy, is also the world’s most unequal. Botswana, Namibia and Zambia are also among the top 19.

While Ethiopia’s economy is growing at 8%, it is impossible to miss its impoverished citizens in the streets of its capital, pulling on donkeys to transport goods while the rich and famous drive around in luxury cars.

Inequality drivers

In Nigeria “the scale of inequality has reached extreme levels,” reports Oxfam, a UK-based charity, in a study published in May 2017. Five of Nigeria’s wealthiest people, including Africa’s richest man, Aliko Dangote, have a combined wealth of $29.9 billion—more than the country’s entire 2017 budget. About 60% of Nigerians live on less than $1.25 a day, the threshold for absolute poverty.

“Everything [in South Africa is] was skewed racially—education, access to finance, and access to land,” maintains Haroon Bhorat, an economics professor at the University of Cape Town.

Several factors drive inequality in Africa, according to the group of economists who authored the UNDP report “Income Inequality Trends in Sub-Saharan Africa: Divergence, Determinants and Consequences”.

First, under Africa’s two-track economic structure, growth often occurs in sectors characterized by low absorption of unskilled labour, high earnings inequality and high capital share in total income.

The authors note that growth in those sectors may spur GDP headline growth but will also exacerbate inequality. It’s a rising tide that doesn’t lift all boats.

Second, infrastructure, human labour and land are highly concentrated in Eastern and Southern Africa. Third, authors of the report make reference to the “natural resource curse, an urban bias of public policy and ethnic and gender inequalities.” It appears, they note, that countries with abundant natural resources, such as Botswana and Zambia, are also some of the most unequal.

Inequality also results from regressive taxes [tax rate decreases when taxable income increases], unresponsive wage structures and inadequate investments in education, health and social protection for vulnerable and marginalized groups.

In the 1980s and 1990s, many African countries buckled under pressure from the International Monetary Fund, the World Bank and Western nations to implement structural adjustment programmes (SAPs), which led to cuts in subsidies for health, education, transportation and other sectors that help poor citizens.

Some historians and economists now say those cuts fostered inequality. “Under the influence of Western donors, austerity became African leaders’ default coping mechanism for periods of economic stress,” writes Nicholas William Stephenson Smith, a freelance researcher and historian.

Social unrest

For many countries SAPs widened the wealth gap rather than providing macroeconomic stability, argues Said Adejumobi, director of Southern Africa’s subregional office for the UN Economic Commission for Africa.

Adejumobi adds that structural adjustment stalled mobility, frayed communities and sharpened divisions along socioeconomic lines. Currently “a tiny group of 4% captures a large chunk of the income and wealth in Africa’s changing tide of capitalist progress,” he says.

Inequality now threatens social cohesion on the continent. In recent months thousands of Ethiopians have been on the streets protesting harsh economic conditions, forcing factories, hospitals and public transportation to shut down operations.

Economic inequality is fueling conflicts in the Central African Republic, Libya, Nigeria and South Sudan, says Adejumobi. “The warped motive of Boko Haram insurgency may not relate to inequality but…ignorance and deprivation are two factors that may have made it possible for the terrorist group to recruit young people to kill and maim their fellow citizens.”

Expect deprived people to push back against inequality at some point, says renowned French economist Thomas Piketty, because the rich will always try to protect the status quo and resist efforts to achieve an egalitarian society.

Piketty’s book “Capital in the Twenty-First Century” makes a moral argument against excessive wealth accumulation, describing it as unfair and unjust and something to be resisted.

Countries adopted the Millennium Development Goals (2000–2015) to, among other targets, halve the number of people living in absolute poverty. Globally, after 15 years, some 50% of participating countries had met that target, 30% had made progress and 20%, mostly developing countries, had not made significant progress.

The Gambia and Ghana met the target, but Ethiopia was among the countries that did not.

The authors of Income Inequality Trends in sub-Saharan Africa argued that poverty reduction efforts do not necessarily bridge the inequality gap, which was a conceptual underpinning of the MDGs.

To achieve the 2030 Agenda for Sustainable Development, an offshoot of the MDGs, experts hope countries will embrace a range of policies that tackle various forms of inequalities, not just poverty.

“Policies that help reduce poverty are not necessarily the same as those that help reduce income inequality,” writes Abdoulaye Dieye, director of UNDP’s regional bureau for Africa, in the preface to the report.

Closing the gap

Quality education may dent poverty but will not close the inequality gap unless accompanied by “progressive taxation [tax rate increases with increases in taxable amount] and well-targeted social protection,” Dieye further explains.

Also, countries need to focus on growth pattern rather than growth rate, because inequality falls when growth is in labour-intensive sectors, such as agriculture, manufacturing, and construction, and it rises when growth is in sectors high in capital and the use of skilled labour, such as mining, finance, insurance and real estate, according to the UNDP economists.

Currently most African countries allocate a significant share of their national budgets to recurrent overheads and/or debts, leaving little or nothing for other projects.

Corruption, mismanagement and illicit financial flows (IFFs) also deplete state coffers.

According to a 2015 report by a high-level African Union panel on IFFs headed by former South African president Thabo Mbeki, Africa loses up to $50 billion annually to illicit financial flows. Mr. Mbeki urges countries to punish multinational companies that are over-invoicing, underpricing or funneling money to tax havens.

“Gender inequality is costing sub-Saharan Africa “on average $US95 billion a year, peaking at US$105 billion in 2014—or six percent of the region’s GDP—jeopardizing the continent’s efforts for inclusive human development and economic growth,” according to the UNDP publication Africa Human Development Report 2016: Advancing Gender Equality and Women’s Empowerment in Africa.

The authors of the UNDP report highlight that in sub-Saharan Africa, household income disproportionately favours adult males and “gender discrimination is acute and endemic.”

The UNDP correlates gender equality with human development. Mauritius and Tunisia Mauritius have low levels of gender equality and high levels of human development. Conversely, Chad, Mali and Niger have high levels of gender inequality but low levels of human development.

Former vice president of the World Bank’s Africa division Obiageli Ezekwesili said last November that men are mostly to blame for Africa’s economic problems. “When many more women are at the decision-making level, there is less corruption. Nobody does any favour to women by involving them in governance.”

Ayodele Odusola, the lead author of the UNDP report, maintains that no single solution can address inequalities on the continent. “You have to take countries’ context into consideration,” he says, advising countries to adopt progressive taxation, invest in education and agriculture, increase direct taxation and institute efficient tax administration.

*Africa Renewal is published by the UN’s Department of Public Information.

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Excerpt:

Kingsley Ighobor, Africa Renewal*

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Greece: SDGs a Way to End Economic Crisis?http://www.ipsnews.net/2018/06/greece-sdgs-way-end-economic-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=greece-sdgs-way-end-economic-crisis http://www.ipsnews.net/2018/06/greece-sdgs-way-end-economic-crisis/#respond Fri, 08 Jun 2018 16:50:43 +0000 Maged Srour http://www.ipsnews.net/?p=156119 Seven years after being on the verge of a financial collapse, Greece is now seeing better times. Its economic accounts have clearly improved but what is not under the spotlight is how the Greek people are still paying for the effects of the crisis. During these past years, the country has achieved some partial gains. […]

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Greece is now seeing better times: its economic accounts have clearly improved but the Greek people are still paying for the effects of the crisis

A Greek flag waving in the locality of Oia, Greece. Credit: Matt Artz on Unsplash

By Maged Srour
ROME, Jun 8 2018 (IPS)

Seven years after being on the verge of a financial collapse, Greece is now seeing better times. Its economic accounts have clearly improved but what is not under the spotlight is how the Greek people are still paying for the effects of the crisis.

During these past years, the country has achieved some partial gains. It is the first time, since 2011, that economic accounts of Greece are so encouraging that the country is looking with some optimism to the month of August 2018 when the last phase of European aid will be over definitely.

The purchasing power of the people has fallen by approximately 29% and unemployment has reached 23% for adult workers and, a stunning 40% for young people

The surplus during the first nine months of 2017 was 2.2% higher related to the 1.75% imposed by the European Union. The GDP growth was 1.9% in 2017 and estimates show it will reach 2.5% in 2018.

Among the most significant levers of the Greek recovery is the increase of its exports. In particular, the production and sale of liqueurs, as well as the car industry are both stimulating growth. Tourism remains a pillar of the Greek economy. In 2017, it was 17% higher than the year before.

However, despite these positive signs, the reality on the ground is bitter sweet. The purchasing power of the people has fallen by approximately 29% and unemployment has reached 23% for adult workers and, a stunning 40% for young people. Greece might not risk that default that was feared a few years ago but the ordinary people are facing tough challenges even to meet some basic needs such as covering rents and paying bills.

The people in general are far from being out of the crisis. However, while living this situation of high unemployment and uncertainty about their future, the Greeks have started, during these past few years, to turn back to the land in order to earn money.

Agriculture is the main sector that has not suffered in a substantial way and, has been constantly showing (relatively) positive signs. According to the Panhellenic Confederation of Unions of Agricultural Cooperatives, during the first years of the crisis, between 2008 and 2010, agriculture created 32,000 new jobs and the majority of these jobs were taken up by Greek nationals.

Those who owned a plot of land, in some cases inherited, on a small island or in the countryside, decided to leave the dramatic situation in Athens and return to their lands to work on ecotourism or farming.

Greece is now seeing better times: its economic accounts have clearly improved but the Greek people are still paying for the effects of the crisis

Credit: Vesela Vaclavikova on Unsplash

Additionally, many young people started to show interest in the faculties of agriculture, as applications for such courses tripled in the past few years. However, among those who decided to abandon the urban areas to live and work in the rural ones, the majority are aged between 40 and 60 years old. The majority of these people had lost their jobs just before retirement, waiting to receive their pension.

According to the Food Sustainability Index (FSI) 2017, which was developed in collaboration between the Barilla Center for Food and Nutrition (BCFN) and the Economist Intelligence Unit with the objective to “promote knowledge on food sustainability”, Greece earned a positive score in sustainable agriculture.

The FSI ranks 34 countries according to their food system sustainability. It aims to highlight issues across three pillars: food loss and waste, sustainable agriculture and nutritional challenges. Despite having only a mid-level score for food loss and waste, and minimal scores for the policy response to food loss, “Greece earned a high score for sustainable agriculture, with a strong performance for the air category (GHG emissions), and for sub-indicators such as diversification of agricultural system, land ownership and sustainability of water withdrawal serving to bring up the score in the land and water categories”.

When considered in conjunction with the water scarcity situation of the country, this high score in the agricultural sector gains an additional prize. Indeed, according to the FSI, the average number of months of freshwater scarcity in Greece is six and despite that, the country has been able to maintain a high level of performance in the sector.

Not surprisingly, Greece has recently showed interest in sharing its high expertise and level of innovations in agro-technology with Qatar in a bid to develop and support the tiny Gulf country’s agriculture sector and self-sufficiency initiatives.

Greece’s third bailout is due to expire in August 2018 and the Hellenic country aims to return to a path of growth after years of crisis and uncertainty. During the Fourth Agricultural Business Summit, which took place in Larissa on May 3, 2018, organized by The Economist under the auspices of the Greek Ministry of Rural Development and Food, experts and policymakers gathered to discuss the priorities and challenges that need to be resolved as of 2018 and beyond in the field of agriculture in relation to business.

The analysts discussed if Greece could play a leading role in South-East Europe and whether the Greek Agribusiness sector will be able to transform uncertainty into stability, competitiveness and growth.

It is hard to forecast with accuracy the outcome of the next following months and years but, the fact that the Greek establishment (academia, businesses, policymakers, etc.) is showing its willingness to act and implement a concrete roadmap to end the crisis through the SDG Agenda, means that the country strongly believes in Agenda 2030which is the driving force to start growing again.

In addition, a study, published by SEV Business Council for Sustainable Development and conducted by the Climate Change and Sustainability Services Practice of Ernst & Young in Greece highlighted “to identify the current status in Greece, regarding the level of awareness, readiness and willingness of Greek companies towards integrating the SDGs in their strategy”. One of the key findings of the study brings some optimism for the future of Greece.

For example, regarding awareness and readiness on SDGs among Greek companies, the study revealed that “senior executives, regardless of company size, have a high level of knowledge of sustainable development issues related to the Goals. The engagement and awareness of middle management executives on sustainable development issues related to the Goals constitute a crucial factor for their successful implementation”.

Beginning in August 2018, the economic system of Greece will once again have to walk on its own legs. Many analysts believe that the commitment of Greek authorities in the past few years in planning and implementing a sustainable agenda will help Athens to develop in the next future without the support of the EU and IMF.

By the end of 2018, we will undoubtedly have the first answers to this dilemma and the 2019 elections will also tell us if the Greek people view the government’s efforts of the past few years as the best it could do and achieve.

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China Generates Energy and Controversy in Argentinahttp://www.ipsnews.net/2018/06/china-generates-energy-controversy-argentina/?utm_source=rss&utm_medium=rss&utm_campaign=china-generates-energy-controversy-argentina http://www.ipsnews.net/2018/06/china-generates-energy-controversy-argentina/#comments Fri, 08 Jun 2018 08:04:43 +0000 Daniel Gutman http://www.ipsnews.net/?p=156109 As in other Latin American countries, in recent years China has been a strong investor in Argentina. The environmental impact and economic benefits of this phenomenon, however, are a subject of discussion among local stakeholders. One of the key areas is energy. A study by the non-governmental Environment and Natural Resources Foundation (FARN) states that […]

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Demonstrators protest the construction of two mega hydroelectric power plants on the Santa Cruz River in Argentine Patagonia, with Chinese investment of five billion dollars. Despite concerns about environmental impacts, the government of Mauricio Macri decided to go ahead with the projects. Credit: Courtesy of FARN

Demonstrators protest the construction of two mega hydroelectric power plants on the Santa Cruz River in Argentine Patagonia, with Chinese investment of five billion dollars. Despite concerns about environmental impacts, the government of Mauricio Macri decided to go ahead with the projects. Credit: Courtesy of FARN

By Daniel Gutman
BUENOS AIRES, Jun 8 2018 (IPS)

As in other Latin American countries, in recent years China has been a strong investor in Argentina. The environmental impact and economic benefits of this phenomenon, however, are a subject of discussion among local stakeholders.

One of the key areas is energy. A study by the non-governmental Environment and Natural Resources Foundation (FARN) states that China has mainly been financing hydroelectric, nuclear and hydrocarbon projects.

Just four percent of these investments are in renewable energies, which is precisely the sector where the country is clearly lagging.

“China’s main objective is to export its technology and inputs. And it has highly developed hydraulic, nuclear and oil sectors. There are no more rivers in China where dams can be built and this is why they are so interested in the dams on the Santa Cruz River,” María Marta Di Paola, FARN’s director of research, told IPS."What we attributed in the past to U.S. pressure we are now experiencing with China….The dams are a clear example of how this pressure for economic reasons could be trampling over the nation's environmental sovereignty.” -- Hernán Casañas

China is behind a controversial project to build two giant dams in Patagonia, on the Santa Cruz River, which was approved during the administration of Cristina Kirchner (2007-2015) and ratified by President Mauricio Macri, despite strong environmental concerns.

The dams would cost some five billion dollars, with a foreseen a capacity of 1,310 MW.

However, expert Gustavo Girado said that it is not China that refuses to get involved in renewable energy projects, but Argentina that has not yet made a firm commitment to the energy transition towards clean and unconventional renewable sources.

“Like any country with a lot of capital, China is interested in all possible businesses and takes what it is offered. In fact, in Argentina it also has a high level of participation in the RenovAr Plan,” explained Girado, an economist and director of a postgraduate course on contemporary China at the public National University of Lanús, based in Buenos Aires.

He was referring to the initiative launched by the Argentine government to develop renewable energies and revert the current scenario, in which fossil fuels account for 87 percent of the country’s primary energy mix.

Also participating in this industry are Chinese companies, which during the period January-September 2017 produced 25 percent of the total oil and 14 percent of the natural gas extracted in the country.

Since 2016, the Ministry of Energy has signed 147 contracts for renewable energy projects that would contribute a total of 4,466 MW to the electric grid, most of them involving solar and wind power, which are currently under development.

The goal is to comply with the law enacted in 2015, which establishes that by 2025 renewables must contribute at least 20 percent of the capacity of the electric grid, which today is around 30,000 MW.

In this sense, 15 percent of the power allocated through the RenovAr Plan has been to Chinese capital.

One mega project in renewable energies is the Caucharí solar park, in the northern province of Jujuy, which is to consist of the installation of 1,200,000 solar panels built in China, on a 700-hectare site.

The project has a budget of 390 million dollars, of which 330 million will be financed by the state-owned Export-Import Bank of China.

China is also behind Argentina’s intention to develop nuclear energy, since in 2017 it was agreed that it would finance the fourth and fifth nuclear power plants in this South American country, at a total cost of 14 billion dollars.

However, the Macri administration announced this month that it would indefinitely postpone the start of construction of at least the first of these plants, to avoid further indebtedness and reduce the country’s high fiscal deficit.

The decision is aimed at facilitating the granting of a loan from the International Monetary Fund (IMF), after the crisis of confidence that resulted in a massive outflow of capital and which put the local economy in serious trouble.

On the other hand, other energy projects funded by Chinese capital are going ahead, including four other hydroelectric power plants and thermal plants powered by natural gas.

So far, the investments already committed by Beijing in the energy sector in Latin America’s third-largest economy total 30 billion dollars, in addition to projects in other areas, such as infrastructure, agribusiness or mining.

“The Chinese looked first at their continent, then at Africa, and for some years now they have their eyes on Latin America. First of all, they were interested in agricultural and mineral products, and today they are not only the region’s second largest trading partner, but also a good investor,” Jorge Taiana, Argentine foreign minister between 2005 and 2010, told IPS.

The veteran diplomat recalled a point made by then U.S. President George W. Bush at the 2005 Summit of the Americas (SOA) in the Argentine city of Mar del Plata, where the region refused to form the Free Trade Area of the Americas (FTAA).

“He (Bush) told us,’I don’t know why they care so much about the FTAA, when what we need to discuss is how we defend ourselves against China’,” Taiana said.

He maintains that it depends on the decisions of Argentina and the rest of the countries in the region whether they will benefit from or be victims of China’s aggressive economic expansion.

“Foreign direct investment is always beneficial. The secret lies in what conditions the recipients put in place and what their development plan is,” he said.

“Argentina, for example, built its railways with English capital, and all the tracks converge in Buenos Aires because the English were only interested in getting the agricultural products to to the port. Those are the things that shouldn’t happen,” he added.

Environmental organisations are particularly critical of the dams on the Santa Cruz River, which begins in the magnificent Los Glaciares National Park and could affect the water level in Lake Argentino, home to the Perito Moreno Glacier, one of the country’s major tourist attractions.

However, the dam contract has a cross default clause whereby, if not built, Chinese banks could also cut off financing for railway infrastructure projects they are carrying out in Argentina.

“What we attributed in the past to U.S. pressure we are now experiencing with China,” said Hernán Casañas, director of Aves Argentinas, the country’s oldest environmental organisation.

“The dams are a clear example of how this pressure for economic reasons could be trampling over the nation’s environmental sovereignty,” he told IPS.

In this regard, Di Paola said that “China has occupied in Latin America the place previously occupied primarily by traditional financial institutions such as the World Bank and the Inter-American Development Bank.”

“The problem is that it does not have the same framework of safeguards, so they are able to start infrastructure works without complying with environmental requirements,” he said.

But Girado sees things differently, saying “the financial institutions impose conditions on the countries that receive the credits, which China does not do. In that sense it is more advantageous.”

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It Takes More Than Two to Tango: Platform to Achieve SDGshttp://www.ipsnews.net/2018/06/takes-two-tango-platform-achieve-sdgs/?utm_source=rss&utm_medium=rss&utm_campaign=takes-two-tango-platform-achieve-sdgs http://www.ipsnews.net/2018/06/takes-two-tango-platform-achieve-sdgs/#respond Thu, 07 Jun 2018 14:16:16 +0000 Silvia Morimoto http://www.ipsnews.net/?p=156103 Silvia Morimoto is Country Director UNDP Argentina

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Argentina is in a need of a new development paradigm, to combat a slew of development challenges. Photo: Wikimedia Commons

By Silvia Morimoto
BUENOS AIRES, Argentina, Jun 7 2018 (IPS)

Buenos Aires is a charming city; rich with history, magnificent architecture, and a soul and music that can pull you to tango in a heartbeat.

But the city’s staggering beauty and its abundant culture struggles with challenges. Argentina’s average poverty rate stands at 25.7% today. Hard-core poverty has averaged around 20% in the last few decades unequally distributed along the country and concentrated in urban areas.

Argentina is in a need of a new development paradigm, to combat a slew of development challenges. The UN Development Programme (UNDP) believes those development challenges require a platform approach, using technology and innovation, to hack development challenges, even faster.

One of the favorite maxims of development experts is that everything is complex and interconnected. The Sustainable Development Goals (SDGs) that were adopted by all nations manifest those strong linkages.

To contend with those complex linkages, we are developing a platform in Argentina to mediate connections between an unprecedented range of actors, to help the country achieve the SDGs.

The objective of such a platform is to intensify support to the government in dealing with development challenges, while providing space for building relationships beyond traditional partners.

The idea is to partner with so called ‘unusual suspects’ to convene, connect, engage in co-creating innovative solutions, and raising much needed resources to finance those solutions.

This will foster active collaboration between UN agencies, as well as a range of institutions including government agencies, the private sector, international financial institutions, academia, unions, faith-based institutions and civil society organizations.

Rene Mauricio Valdez, UN Resident Coordinator in Argentina, sees UNDP as a platform that allows to interconnect different actors, sectors and even other platforms to generate sounder policies and programs.

In the world of digital economies, speed and flexibility in decision making are imperative. Mobile technologies have enabled millions to live their lives online. A platform approach is vital if we are to keep up with this ever-shifting development landscape.

Our vision is to try to focus on so called ‘wicked problems’ – problems that seem impossible to resolve. In Argentina, this means for example taking on the challenge of Matanza-Riachueloriver that meanders around the southern edge of Buenos Aires.

That once sleepy and muddy river -as the Argentine writer Jorge Luis Borges described it- on whose banks more than five million people reside is now a toxic waterway, contaminated by factories, tanneries, and sewage. It has high levels of arsenic, cadmium and other pollutants that are affecting the lives of hundreds of thousands of people, especially children who live along the riverbanks. They have lead in their bloodstreams, and suffer from a host of respiratory and gastrointestinal problems.

UNDP is willing to support the government to transform the lives of the people living by the river.

It is the kind of problem that befits platform thinking. It requires giving up control and opening-up the space for creative processes to thrive. This will mean moving away from business as usual in an organization steeped in traditions and processes, which allows for unprecedented openness and freedom, to harness integrated responses to economic, social and environmental issues.

We are up for that challenge, as adapting and innovating to a shifting development landscape has long been part of our raison d’etre. A platform approach to our work represents that evolution.

It would ensure that programmes and projects are implemented more efficiently, and with greater transparency and accountability. And it would spawn a growing archive of knowledge, experience, and best practices from across the world, but especially between MERCOSUR states.

UNDP’s new Strategic Plan sets out a vision for UNDP’s ambitions over the next four years, reflecting the people centred nature of the 2030 Agenda. UNDP Argentina has already contributed to mapping available information on sustainable development through the country’s 2017 National Development Report 2017, and developed an online platform with statistical information on baselines and targets for select indicators.

Assessments of the country’s resources to meet SDGs targets will allow for identification of funding gaps for prioritized goals and help raise resources to bridge those gaps.

This will further strengthen and accelerate the process of integrating the 2030 Agenda into Argentina’s plan’s and policies. The aim is to create a more prosperous Argentina at every level. Argentina is showing that it takes more than two to tango, “To leave no one behind.”

The post It Takes More Than Two to Tango: Platform to Achieve SDGs appeared first on Inter Press Service.

Excerpt:

Silvia Morimoto is Country Director UNDP Argentina

The post It Takes More Than Two to Tango: Platform to Achieve SDGs appeared first on Inter Press Service.

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Valuing the Food Systemhttp://www.ipsnews.net/2018/05/are-you-paying-enough-for-your-food/?utm_source=rss&utm_medium=rss&utm_campaign=are-you-paying-enough-for-your-food http://www.ipsnews.net/2018/05/are-you-paying-enough-for-your-food/#respond Tue, 29 May 2018 17:48:25 +0000 Danielle Nierenberg and Emily Payne http://www.ipsnews.net/?p=155959 Danielle Nierenberg is Founder and President of Food Tank. Emily Payne is a food and agriculture writer based in New York

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Are You Paying Enough for Your Food?

Credit: Bigstock

By Danielle Nierenberg and Emily Payne
NEW ORLEANS, United States, May 29 2018 (IPS)

Many factors contribute to the cost of a tomato. For example, what inputs were used (water, soil, fertilizer, pesticides, as well as machinery and/or labor) to grow it? What kind of energy and materials were used to process and package it? Or how much did transportation cost to get it to the shelf?

But that price doesn’t always reflect how the plant was grown—overuse and misuse of antibiotics, water pollution from pesticide runoff, or whether or not farm workers harvesting the tomatoes were paid a fair wage. It turns out cheap food often comes with an enormously expensive cost to human and planetary health.

Danielle Nierenberg

Agricultural production, from clearing forests to producing fertilizer to packaging foods, contributes 43 to 57 percent of global greenhouse gas emissions (GHG). And almost 40 percent of all food that is produced is lost or wasted. As that food decomposes in landfills, it releases methane, which is 25-times more potent of a GHG than carbon dioxide—in fact, landfills are the third-largest source of human-related methane emissions in the U.S.

Often, today’s food systems are incentivized to favor low-cost, processed foods. Corporations and large-scale producers are often subsidized to grow select staple crops, which are typically grown in monocultures using practices that strip soils of nutrients. And it’s becoming increasingly clear that poor diets have produced a global public health crisis.

Six of the top eleven risk factors driving disease worldwide are diet-related, and the World Health Organization estimates the global direct costs of diabetes to be more than US$827 billion per year.

To feed 10 billion people by 2050, we need to start thinking of food production, health care, and climate change as interconnected. As the world’s population grows, so does the need for more resilient food and agricultural systems that address human need while minimizing environmental damage and further biodiversity loss.

Emily Payne

In a recent report by The Economics of Ecosystems and Biodiversity for Agriculture & Food (TEEBAgriFood), a new framework was developed to look at all the impacts of the value chain, from farm to fork to disposal. The framework hopes to give policymakers, researchers, and citizens more reliable information on the real and unaccounted for costs of our whole food system—not just parts of it.

This type of systems thinking supports a shift away from measuring the success of food production by metrics like yield per hectare, which fails to provide a complete picture of the true, often invisible costs of the entire system.

Changemakers across the globe are rising to this challenge and bringing sustainable and regenerative practices into the farming of the future. Recognizing that farming is in a period of transition, they are helping build a system that increases food production to meet a growing population while reducing harm on the environment and feeding those in need.

It’s now easier than ever to access resources and learn how our everyday decisions impact not just ourselves, but our environment and public health. The Barilla Center for Food & Nutrition developing the Double Pyramid to help people make food choices which are both healthy for people and sustainable for the planet. And recognizing carbon footprints and water footprints allow individuals to better understand how deeply intertwined the food system and climate change are.

No one person or organization will be able to fix this food system. Businesses, policymakers, farmers, and, of course, eaters have a responsibility to help protect natural resources, improve social equity, and create a more sustainable food system through more informed decisions and responsible consumption.

 

 

The post Valuing the Food System appeared first on Inter Press Service.

Excerpt:

Danielle Nierenberg is Founder and President of Food Tank. Emily Payne is a food and agriculture writer based in New York

The post Valuing the Food System appeared first on Inter Press Service.

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