debt relief
debt relief
Call for Microcredit Legislation for the Poor
Grameen Bank founder, Mohammad Yunus, says a lack of microcredit laws in many African countries is denying millions of the continent's poor access to loans.
Yunus, who won a Nobel prize in 2006 for championing tiny microcredit loans to the poor in Bangladesh, is now pioneering an idea he calls ‘social business’ as a way to fight poverty - business not for profit, but to solve social problems.
"To create a new kind of bank, which works with the poor people, we need new legislation but in most of the countries in Africa that legislation has not taken place, so we have left the microcredit scenario to the NGOs," explained Yunus, on the sidelines of an annual microcredit summit in Kenya.
To read the article titled, “Africa needs microcredit legislation for poor – Yunus,” click here.Source:Independent OnlineUN Criticises US of Delaying Aid
The United Nations (UN) says it is running out of food for millions of starving Somalis in part because the United States is delaying aid amid fears it could be intercepted by militants linked to al-Qaeda.
Starting October, the UN World Food Programme (WFP) says it cut rations by up to half for some people in the lawless, impoverished east African nation and will run out of supplies in December.
WFP spokesperson in Nairobi, Peter Smerdon, points out that, "WFP's food assistance supply line to Somalia is effectively broken. The pipeline break is partly because (the US government) has delayed US assistance to Somalia."
To read the article titled, “UN accuses US of delaying aid,” click here.
Source:<br /> News24Financial Crisis: Will Donors Deliver on Aid Commitments or Buckle?
It is that time of the year again when reports about how well donors have performed in meeting their aid commitments are released. This year is unique because of the devastating effects of the global financial crisis. What is on everyone’s mind is: will donors sustain their commitments or will they buckle under the heavy weight of the global financial crisis?
African Monitor along with others has issued its 2008/9 report -Development Support Monitor. There is general agreement that donors made more progress in 2008 in terms of increasing aid to Sub-Saharan Africa than in 2006/7. While in 2007 the G8 countries were significantly off track, the encouraging performance in 2008 demonstrates that if performance is maintained at the same level, most countries will meet the targets set for 2010, 2011 and 2013. However there are some, notably Italy and France who will not. Italy has so far delivered about three percent of the US$8 billion it pledged in additional funding. Worse still, Italy may actually be planning cuts, not increased aid in the coming years.
As we push the Group of Eight (G8) most industrialised countries to make good their promises, we must prepare for the worst even as we hope for the best. The global financial crisis forces us to focus on the need for donors to meet their targets as well as ensuring that available resources are optimised; that the priorities for expenditure are right; and that we look at ways of saving money and at neglected sources of financing. As is the practice in many African cultures, if your fire burns out, you fetch some from the neighbours.
Consequently, African Monitor has noted the emergence of new donors; namely China, India and Brazil. In this league are neighbours who are much closer to home - South Africa, Nigeria, Libya and other oil-rich countries are providing aid. In fact, South Africa, Libya and Nigeria are providing increasingly significant resources to their neighbours, particularly through their regional economic communities such as the Southern Africa Development Community (SADC) and Economic Community of West African States (ECOWAS). However, like the aid that comes from China, Brazil and India, this ‘fire-giving’ to neighbours is not well captured in international aid records.
Yet according to a 2006 South African National Treasury study, overall transfers and assistance to African countries including the SADC was at R15.2 billion in 2004, up from R9.5 billion in 2002. By 2007 this had increased to R19 billion (nearly US$3 billion). At a time when G8 countries such as Italy and France are getting cold feet and contemplating cutting aid to Africa, this neighbourly assistance needs to be acknowledged.
In addition to fire-giving by neighbours, there is much that developed countries can do to assist developing countries. Firstly, they can fast track the process of debt relief under the Highly Indebted Poor Country Initiative (HIPC) Initiative. Launched more than 10 years ago, it is unacceptable that 13 countries still have not yet reached completion point. This means that they continue to lose out on bilateral debt relief and the most recent initiative known as Multi-Lateral Debt Relief (MDRI) which is contingent upon reaching completion point under the HIPC initiative. Even more worrying is the fact that these are the countries, such as DRC, Liberia, Central African Republic, to name a few, that need assistance the most. Since we know that debt relief is really a bookkeeping exercise, we call for a review of the process to facilitate faster progress of these countries towards completion point.
Secondly, for the first time, at US$40 billion, remittances from the African diaspora have exceeded both aid flows at US$ 38 billion as well as direct foreign investment at US$31.36 billion. Donors can ensure that those in the African diaspora are protected from attacks and discrimination. If arrangements are made to facilitate these remittances and encourage them to be channeled to productive investments, this will be a big boost to social and economic development of many African countries.
Thirdly, trade should be further liberalised in favour of the products of poor countries so that there can be compensation for any loss of aid. In other words, aid for trade and just and fair trading regimes would cushion poor countries against the most adverse effects of the global financial crisis. At this year’s World Economic Forum (WEF) on Africa the key messages that emanated from the discussions were that Africa is open for business and there are opportunities for high return investment and further economic growth. But this means that both donors and the continent should ensure that Africa benefits from the opportunity presented by the global financial crisis and use it to reshape its policies and practices in order to feature more prominently in the inevitable resultant new world order and new global financial architecture.
Fourthly, the available resources should be invested in the most productive sectors to gain the highest return. In most African countries, it now evident that this is in smallholder sgriculture, specifically investments in staple food crops such as maize, cassava, sorghum, millet rice and grain legumes. Evidence shows that a one percent gain in agricultural GDP yields a six percent expenditure gain for the poorest population. If the limited resources were focused on this kind of agriculture, which is dominated by women, chronic hunger would be reduced from the current high levels of nearly 300 million people; poverty would be cut from the 51 percent of Africans who live on less than 1.25 USD a day and political stability would be improved since it is estimated that more than 33 African countries are in danger of being destabilised by food price inflation.
We also know that rich countries without adequate arable land and water are rushing to Africa in search of land for producing food for their people. In 2008, Qatar concluded a deal with Kenya for leasing 40 000ha of land for fruit and vegetable cultivation; Saudi Arabia has acquired 10 000 ha in Sudan for wheat and vegetables; United Arab Emirates has leased 30 000ha also in the Sudan for corn, wheat, potatoes and beans. Other countries involved in land deals with foreign countries and companies are Tanzania, Zambia, Ethiopia, Malawi and Mali, to mention a few. These deals are worth billions of US dollars. Three-hundred million of people in Africa may be suffering from chronic hunger, but other countries see food in Africa. This means that Africa could use this period of great financial uncertainty to position itself to become the bread basket for these very countries by properly targeting agriculture and putting in place proper safeguards to ensure that Africans are the primary beneficiaries of their own resources.
Everybody is calling for something radical to be done to revitalise agriculture on the continent. Some are calling for a revolution in agriculture, others for an agricultural renaissance and yet others for a decade for agriculture. But political commitments have already been made by both African governments and their donor partners to boost growth in agriculture to six percent pa by investing at least 10 percent of the national budgets in agriculture. The science and technologies have been developed by African scientists and entrepreneurs; good practices are in place in countries such as Malawi and Burkina Faso to show that where political will is made operational miracles happen. What is now needed is to stop the talking and get on with it so as to move Africa from being a basket case to being the bread basket- the writing is on the wall - it is do or die.
- Archbishop Njongo Ndungane is the Founder and President of African Monitor. Find out more about their work at www.africanmonitor.org.Author(s):Archbishop Njongo NdunganeSABC Interim Board Examining Finances
The newly appointed South African Broadcasting Corporation (SABC) interim board is examining the costs of each of the beleaguered broadcaster's departments "line by line", chairperson Irene Charnley said on Tuesday.
"We need to stabilise the SABC at all levels. The situation is not normal. Financially the organisation is in dire straits."
The SABC reported a financial loss of R839-million for the 2008/09 financial year. The broadcaster had asked the government for a R2-billion bailout.
The interim board included Charnley, Philip Mtimkulu, Libby Lloyd, Leslie Sedibe, Suzanne Vos, Gab Mampone, Robin Nicholson and Charlotte Mampane.
To read the article titled, “New SABC board 'looking to cut costs',” click here.
Source:<br /> Mail and GuardianWorld Bank Warning on Recession
The World Bank has delivered both a stern warning on the impact of the recession for Africa and a sunny outlook for income and economic growth if actionable steps are taken now.
Chief economist and senior vice-president of the World Bank, Justin Lin who introduced the World Development Report entitled 'Reshaping Economic Geography', said research shows that if infrastructure in Africa can reach just the level achieved by Mauritius, then two percentage points can be added to per capita income.
He warned that Africans must brace for a global economy dropping 2.9 percent this year, catapulting 53 million more people below the poverty line and 30 million into the jobless queues.
To read the article titled, “African incomes can double,” click here.
Source:<br /> Independent OnlineArticle link:Zim Economy Shows Signs of Recovery – IMF
Improved economic policies in Zimbabwe have led to a "nascent" recovery in the economy. This is according to the International Monetary Fund (IMF).
The IMF, however, is of the view that the country must clear more than US$1.1 billion in arrears to creditors before it can qualify for IMF financial aid.
IMF mission chief to Zimbabwe, Vitaliy Kramarenko, noted that Zimbabwe will need to pay its arrears to the IMF, World Bank and African Development Bank, in order to get help from the donors.
Kramarenko says that public finances have benefited from the recovery in economic activity and consumption, and the government matched expenditure to revenue during January to May 2009.
To read the article titled, “Zim economy shows signs of recovery, says IMF,” click here.
Source:<br /> Mail and GuardianMore Aid for Zimbabwe - Nkoana-Mashabane
The Minister of International Relations and Cooperation, Maite Nkoana-Mashabane, has urged for an increase in assistance for Zimbabwe so that the country can reconstruct itself.
Nkoana-Mashabane says South Africa is committed to developing normal diplomatic relations with Zimbabwe.“We shall continue to work with the people of Zimbabwe for the full implementation of the Global Political Agreement," she says.
Her call comes at the time when rights group, Amnesty International secretary-general, Irene Khan, reported that “persistent and serious human rights violations continue” in Zimbabwe.
To read the article titled, “SA pleads for aid for Zimbabwe despite human rights,” click here.
Source:<br /> Business DayEconomic recession need not discourage donations
Comments have been made recently regarding the current global economic recession and its possible effects on non-profit organisations (NPOs). Economists urge organisations to look to corporate funding to bridge the economic slump that may lie ahead, while those already relying on this funding have been advised to brace themselves for a reduction in funds over the next two years. This suggests that more effort should be made to attract corporate and individual funding, especially as the South African Revenue Service (SARS) actively encourages funding to the NPO sector by allowing donations to the sector to be tax deductible, subject to certain restrictions.
Section 18A of the Income Tax Act No 58 of 1962 (the Act) allows donors to deduct donations made to registered Section 18A organisations from their taxable income (limiting such deductions to 10% of the taxable income of both corporate entities and individuals - whose taxable income is determined before the deduction of medical expenses and donations). In order for donors to be able to utilise the deduction, valid section 18A certificates must be issued.
Through the process of application for income tax exemption, the income of public benefit organisations (PBOs) is tax exempt (subject to certain conditions). However, not all PBO’s qualify for section 18A status. Organisations conducting activities relating to religion, belief or philosophy, cultural activities, research and consumer rights, sport and the general provision of funds, assets or other resources, would not qualify to register as section 18A organisations as they do not conduct the activities as contemplated in Part II of the Ninth Schedule, which details the activities that qualify for section 18A status. Thus, donations to organisations that carry out these activities will not be deductible for tax purposes.
Practically, an organisation that carries out activities that qualify for section 18A status would apply to the Tax Exemption Unit (TEU) of the SARS by completing the form EI1 provided on the SARS website (the same form used to apply to be registered as a PBO). The form contains a specific section dealing with PBOs that qualify and wish to register as section 18A organisations and PBOs simultaneously. Once the PBO has obtained section 18A status, it must issue certificates to donors that comply with stringent requirements determined by the law and that contain specific details, namely:
- the exempt entity tax reference number of the PBO, as issued by the TEU;
- the date of the receipt of the donation;
- the name of the PBO, together with an address to which enquiries may be directed;
- the name and address of the donor;
- the amount of the donation, or the nature of the donation (if not made in cash); and
- certification to the effect that the receipt is issued for the purposes of section 18A, and that the donation has been, or will be, used exclusively for the object of the PBO.
Last year, section 18A was amended to provide that an employer operating payroll giving programmes (a way to encourage employees to make donations to PBO’s) may obtain a section 18A certificate on behalf of its employees from recipient organisations and reflect the donation made on the IRP 5 certificates of relevant employees.
The amendment was enacted in order to ease the logistical problems previously experienced by employers, where it was required that a certificate was issued to each individual employee, in order to enable the employee to claim the deduction. Previously, the employee was also subject to the deduction of employees’ tax on the donation and would only receive the tax benefit of the donation after the end of the tax year. To prevent over-deductions, however, the deductible amount is limited to 5% of remuneration of the employee.
In summary, although NPO’s may experience the effects of the global economic recession, there are tax benefits in place which should be used, as far as possible, to entice local individual and corporate donors to partner with their organisation during this critical period.
Fiona O’Brien is a tax consultant at KPMG (Services) Pty Ltd. This article is published with permission of CMDS - Accounting for Management and Development in the Non-Profit Sector. For more information go to: www.cmds.org.zaAuthor(s):Fiona O’BrienSudan to Welcome New International NGOs
The Sudanese government has announced that it will allow applications from new international NGOs to operate in the western Darfur region, filling the gap left when the government expelled 13 agencies.
The announcement comes as the UN’s Undersecretary-General for Humanitarian Affairs John Holmes, continued a trip to the country, meeting leaders in the semi-autonomous southern region.
The 13 international NGOs were expelled from Darfur in March, following the International Criminal Court's decision to issue an arrest warrant for the country’s president Omar al-Bashir.
Sudanese Humanitarian Affairs Minister, Haroun Loual, says that while the expelled NGOs will not be allowed to return to Darfur, new international NGOs will be invited.
To read the article titled, “Sudan says it will welcome new international NGOs,” click here.
Source:<br /> VOA NewsArticle link:Poverty Remains the priority for SA
As the 2009 South African elections came to a close in April, it should not be forgotten that poverty alleviation remains one of the most important concerns for the country. South Africa has seen waves of social unrest from its poorest and most marginalised citizens over the past 18 months, some of these demonstrations resulting in violence.
In the current climate it is perhaps a good time to present a broad analysis of South Africa’s poverty situation. A recent study by the University of Stellenbosch’s Department of Economics analysed the data of two surveys recently conducted by Statistics South Africa – the Income and Expenditure Survey of Households (IES) 2005/06 and the General Household Survey 2006.
The report shows that there are several distinct aspects to poverty in South Africa.
The analysis indicates that 47.1% of South Africa’s population consumed less than the "lower-bound" poverty line proposed by Statistics South Africa in 2007 – which means 47.1% of the population did not have R322 (in 2000 prices) for essential food and non-food items.
The poverty rates of South Africa's nine provinces differ significantly, as do those of the urban and rural areas of the country. In 2005/06 the poverty rates ranged from 24.9% in Gauteng and 28.8% in the Western Cape to 57.6% in the Eastern Cape and 64.6% in Limpopo.
The three provinces with the highest poverty rates (KwaZulu-Natal, the Eastern Cape and Limpopo) are also relatively populous – at the time of IES2005, they housed 47.4% of the South African population. It should come as no surprise then that fully 60.1% of poor individuals lived in these three provinces.
The incidence of poverty, however, was much higher in the rural areas of South Africa – 59.3% of poor individuals were rural dwellers despite the fact that the rural areas housed well below one-half of the South African population.
It is well known that South Africa’s apartheid past imparted a strong and stubborn racial character to the country’s poverty level and distributions of income and wealth. In 2005/06 - more than a decade after democratisation - the incidence of poverty among black and coloured individuals remained dramatically higher than that among whites.
There was also a major difference in the poverty rate according to gender: 45% of all female-headed households lived below the "lower-bound" poverty line, compared to only 25% of male-headed households.
The incidence of poverty generally increased with the age of the head of the household. The only exception is the group of households headed by 15-to-24 year olds - an indication of the extent of youth unemployment in South Africa. The relatively high poverty rates among households headed by individuals aged 65 and older reflected the clustering of the destitute around the recipients of state old-age grants.
Living conditions and access to services are areas in which considerable disparities also exist - the lack of access to services experienced by the poor often contributes to the difficulty entailed in moving out of a state of poverty. A large proportion of the poorest households continue to live in informal and traditional dwellings. While two-thirds of South Africa’s poorest have electricity, less than half of all poor households have piped water.
As many poor households live in rural areas, these areas are often remote, making it expensive and time-consuming for poor people to reach various important facilities. This exacerbates other time burdens on poor households alluded to earlier, such as those related to collecting water. About half of the poorest lived more than 30 minutes from the nearest clinic and post office.
As for education, the relationship is as one would expect: persons with low levels of educational attainment were much more likely to be poor than well-educated ones. Poverty affected 66.3% of those who had no schooling and 59.9% of those who had not completed primary schooling. By contrast, poverty was rare among those who had obtained a post-matric certificate or diploma/degree: in these groups the poverty rates were 4.6% and 1.2%, respectively.
South Africa has an exceptionally well-developed system of social assistance grants and social assistance expanded dramatically in recent years: government spending on such grants increased from 1.9% of GDP in 2000/01 to an estimated 3.3% in 2007/08, while the number of beneficiaries increased from 3 million to an estimated 12.4 million.
A comparison of the actual incidence of poverty in 2005 with the incidence that would have obtained if all survey respondents had reported zero income from grants, shows that grant income reduced poverty among individuals by 15%. Clearly, social grants markedly reduce poverty by augmenting the income of poor households.
While the expansion of social grants has brought much-needed relief for many trapped in poverty, lasting progress in the battle against poverty and its manifestations, however, requires accelerated economic growth and fundamental reform of the South African education system – the negative correlation between educational attainment and poverty reflects the positive influence that education has on employment opportunities and wages.
A recent editorial in one of South Africa’s dailies pointed out that a deeper look at the various political party manifestos revealed similarities among those contesting the elections. “Just how they plan to make these necessary reforms if given a chance, is the detail that appears to be lacking,” it said. Clear and well-crafted strategies that pay careful attention to poverty reduction and the education system in particular would be advised if leaders are to make promises a reality.
Paula Armstrong, Bongisa Lekezwa and Krige Siebrits are based at the University of Stellenbosch Department of Economics and authors of the working paper Poverty in South Africa: A profile based on recent household surveys.
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