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Economic Inclusion Programs Now Benefit 92 Million People Worldwide

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Economic inclusion programs, which help boost income and assets of the world’s poorest, are on the rise in 75 countries, reaching approximately 20 million poor and vulnerable households, and benefitting nearly 92 million individuals. This surge comes at a crucial time, as more than 700 million people around the world face extreme poverty, a number on the rise for the first time in two decades.

According to the World Bank’s newly published “State of Economic Inclusion (SEI) Report 2020: The Potential to Scale,” economic inclusion programs —usually a combination of cash or in-kind transfers, skills training or coaching, access to finance, and links to market support— are fast becoming a critical instrument in many governments’ large-scale anti-poverty strategies. And they are likely to continue, especially in areas affected by conflict, climate change, and shocks, due to the COVID-19 pandemic.

“One of the most stubborn challenges we face in development is positively transforming the lives of the extreme poor and vulnerable— a problem exacerbated by the COVID-19 pandemic,” saidMari Pangestu, World Bank Group Managing Director. “This report presents—for the first time—a systematic review of economic inclusion programs around the world, and sheds light on how governments can best invest in social protection, jobs, and financial inclusion, to help the poor build a better future for themselves.”

The SEI Report is a result of a unique collaboration under the Partnership for Economic Inclusion (PEI). PEI is a dedicated platform to support the adoption and adaptation of national economic inclusion programs working with a variety of stakeholders, including national governments and bilateral, multilateral, non-governmental, research, and private sector organizations.

“Partnership is integral for program success given the multidimensional nature of program delivery.  BRAC’s engagement with PEI reflects our collective commitment to ensuring program approaches and delivery are informed by community needs, ground realities and local partner expertise,” said Shameran Abed, Director BRAC, an international development organization based in Bangladesh.  

The report examines over 200 programs, across 75 countries. It finds that governments around the world are increasingly scaling up economic inclusion initiatives through social safety nets. In-depth case studies covering the Sahel, Bangladesh, Peru and India highlight the evolution of economic inclusion programs, and how they are addressing challenges such as urbanization, gaps in human capital accumulation, adaptations to shock, and technological change.

The implications of COVID-19 feature broadly in the report, which looks at the fallout of the pandemic at the household as well as institutional level. Economic inclusion programs for the poorest show strong potential to improve livelihoods as part of integrated policy responses focused on containing the pandemic, ensuring food security and supporting medium term recovery. Experiences in Egypt, Ethiopia, Ghana, Zambia and other countries, show how economic inclusion programs can build on – rather than replace – social assistance programs.

“The Covid-19 pandemic has put a spotlight on the importance of linking social protection and economic inclusion when it comes to protecting people against shocks. We continue to provide significant funding for social protection and jobs. But there is a strong potential for economic inclusion programs to build on pre-existing government social protection systems, and this may prove critical in the long-term recovery from the COVID-19 fallout,” said Birgit Pickel, Director for Global Health; Pandemic Prevention; One Health, in the German Ministry for Economic Cooperation and Development, BMZ.

The report reveals women’s economic empowerment is a key driver of interventions, with nearly 90 percent of programs surveyed having a gender focus. This is critical given findings from the report and other work from PEI which show that women make up the majority of workers in sectors such as education, retail travel, hospitality and domestic services, which have been most affected by COVID-19. Lessons from previous crises highlight the importance of this gender focus to avoid declining opportunities for women, de-prioritization of female health services, and increased gender-based violence.

“Economic inclusion packages are well positioned to support women to address the plurality of COVID-19 related impacts. In particular, the pandemic has highlighted the need to strengthen national systems, and to make sure that they are inclusive and equitable by design, so that women and others who have been historically marginalized are not left out,” said Olivia Leland, Founder and CEO of Co-Impact, a global collaborative focused on improving the lives of millions of people across the world.

The report also discusses key debates on program impact and costs, as these are critical factors affecting the sustainability of economic inclusion programs at scale. For example, the report sheds light on major lessons learnt from initiatives supported under the Sahel Adaptive Social Protection Program (SASPP), which was launched in 2014 to design and implement adaptive social protection programs aimed to help poor and vulnerable households become more resilient to the effects of climate change. One important lesson from that experience was the need to expand reach in a systematic and rapid manner.

Leveraging digital technology will be critical to leapfrog capacity constraints and to strengthen program management. Many programs are already utilizing government social registries, beneficiary registries, and other government databases to identify potential participants,” saidMichal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

Alongside the SEI, the PEI is also launching an online and open-access PEI Data Portal The data portal underscores a commitment to open access to support global learning and program implementation.

The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. It is supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. The WBG is making available up to $160 billion over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.

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Albania Has Opportunity to Build a More Sustainable Growth Model

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Albania’s economy, like other countries in the region, is recovering faster than expected after the historic recession created by the COVID-19 pandemic. Following the contraction of the economy by 4 percent in 2020, GDP growth is projected to reach 7.2 percent in 2021, one of the highest among Western Balkans countries, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The strong recovery is supported by consumption, tourism, and construction. Going forward, growth is expected to moderate at 3.8 percent in 2022 and 3.7 percent in 2023.

Albania’s poverty rate is projected to fall below its pre-pandemic level by end-2021. Employment and labor force participation is also recovering, albeit with a lag, and real wages are increasing.

The recovery is contributing to fiscal revenue collection. Macroeconomic policies have supported the recovery, but higher spending has led to a further rise in the debt-to-GDP ratio. Economic uncertainty remains high, as the COVID-19 pandemic continues worldwide.

“The Albanian economy has shown encouraging signs of recovery in 2021,” said Emanuel Salinas, World Bank Country Manager for Albania. “As growth rebounds, Albania has the opportunity to strengthen the sustainability of its economic model and implement reforms that further support sustainable and shared growth, while preserving macroeconomic stability.”

The report shows that the Western Balkans region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment in the region rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Country Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

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Montenegro on Course for Stronger Economic Recovery in 2021

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The Western Balkans region is rebounding from the COVID-19-induced recession of 2020, thanks to a faster-than-expected recovery in 2021, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The outlook for the region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

Driven by a rapid recovery in tourism, Montenegro’s economy is projected to rebound strongly by an estimated 10.8 percent in 2021, the highest rate among the six Western Balkan countries. Strong peak summer season has supported a rebound in tourism revenues, which are likely to reach close to 75 percent of their 2019 levels, from 55 percent previously estimated.

The rebound of economic activity has boosted government revenues, which coupled with careful fiscal management have led to a reduction in fiscal deficit from 11 percent of GDP in 2020 to an estimated 4 percent in 2021. Maintaining fiscal prudence in the medium term will be critical, as uncertainties loom.

“The economic crisis brought on by the COVID-19 pandemic continues to be a source of uncertainty, but also presents an opportunity for Montenegro to ensure a resilient, inclusive, and green post-pandemic recovery,” says Christopher Sheldon, World Bank Country Manager for Bosnia and Herzegovina and Montenegro. “The World Bank is committed to helping Montenegro implement reforms that can help ensure macroeconomic stability, create economic opportunities, and spur strong private-sector led growth”.

The report finds that unemployment in Montenegro remains high as the recovery has not ignited the labor market yet, which limits the pace of resumed poverty reduction. Poverty is projected to decline slowly in 2021, but it remains higher than its 2019 level.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Country Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

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North Macedonia’s Growth Projected Higher, but Economy Still Faces Risks

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macedonia

The Western Balkans region is rebounding from the COVID-19-induced recession of 2020, thanks to a faster-than-expected recovery in 2021, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The outlook for the region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

For North Macedonia, this translates into a growth projection of 4.6 percent for 2021, much higher than the forecast in spring. “This positive outlook is still surrounded by downside risks, with the pace of immunization low and supply chains still disrupted, while financial conditions have started tightening,” said Massimiliano Paolucci, World Bank Country Manager for North Macedonia and Kosovo.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Regional Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

Continue Reading

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