Latest news with #economiccrisis
Mail & Guardian
3 days ago
- Business
- Mail & Guardian
Lesotho at risk of economic collapse after aid cuts and Trump's tariffs
The famous Basotho hat building along Kingsway Road in central Maseru. Photo: Sechaba Mokhethi Lesotho is facing economic and public health crises triggered by cuts in foreign aid and harsh US trade tariffs. The small, landlocked kingdom is struggling with high unemployment and fresh job losses. According to an African Development Bank (AfDB) Country Focus The report says the slowdown is driven by declining Southern African Customs Union revenues, a decrease in foreign aid, and rising trade-related risks (notably the new, prohibitively high US trade tariffs), and the cancellation of the $300-million Millennium Challenge Corporation second five-year compact. Aid cuts have hit Lesotho's health sector hard. The sudden termination of US aid programs has resulted in the loss of about 1,500 healthcare jobs, according to the report, and has severely undermined efforts in prevention, treatment, and outreach for HIV. Lesotho has one of the highest HIV prevalence rates globally, with over 20% of the adult population living with the virus. What makes these cuts even more damaging is Lesotho's already underfunded health system. The report says Lesotho now has only 21 health workers per 10,000 people, far below the World Health Organisation's recommended minimum of 44. At the same time, Lesotho's key export sector — textiles and apparel — is under threat. The US has imposed a 50% tariff on Lesotho, temporarily reduced to 10% until 1 August. While this reduction offers some relief, AfDB warns that the long-term consequences could be severe. Lesotho's textile industry has long depended on duty-free access to US markets, which make up 47% of its shipments, valued at over $200-million annually, and account for nearly 13% of GDP. The AfDB warns that the tariffs could lead to a 20 to 30% decline in orders, a loss of over R1-billion in exports. 'This could push GDP growth below 1%, especially if factory closures or layoffs increase,' the report says. 'Lesotho may face further declines in investment, factory relocations, and job losses in its already fragile manufacturing sector, which could reduce tax revenue.' The AfDB warns of increased rates of poverty, which, together with inequality, are major issues in Lesotho. Action needed The report warns that without quick and coordinated policy actions, Lesotho could face a surge in social unrest and poverty. The AfDB urges Lesotho to act swiftly. Economic diversification, investing in skills and infrastructure, and expanding regional trade, especially through the African Continental Free Trade Area (AfCFTA), are essential. Tax reform and debt management programmes, supported by AfDB, are already underway. But more action is urgently needed. To keep the textile sector viable, the report recommends improving quality standards, logistics, and worker skills to meet changing global market demands. It also calls for accelerating regional trade efforts under AfCFTA and encouraging entrepreneurship in non-textile industries. 'Lesotho could reorient its production towards regional markets and gradually reduce its exposure to US policy shocks,' the report suggests. This article was first published on
The Guardian
5 days ago
- Business
- The Guardian
Samaritans closures show brutal reality of financial crisis for UK charities
A week ago the voluntary sector was being love-bombed by ministers at launch of the civil society covenant, an agreement designed to cement the role of charities in the government's economic growth plans and social renewal mission At one level, it was a heady moment of optimism for a sector used to being patronised and ignored. A few days later, news that the mental health charity Samaritans is to close about half of its 200 branches over the next few years was a reminder of the cold, hard economic reality gripping much of the sector. Samaritans is just the latest household name UK charity to take drastic action to stave off financial crisis. In recent months Macmillan Cancer Support has axed a quarter of its staff and cut millions in hardship grants; the disability charity Scope has cut a fifth of its workforce; at Oxfam GB 265 roles are at risk; 550 jobs will go at the National Trust; and the counselling charity Relate was rescued from administration having cut a third of its staff. This is just the most visible tip of the iceberg: thousands of less high-profile charities are shedding jobs and cutting back services, considering mergers, or in some cases shutting their doors. The prime minister paid tribute last week to the 'incredible work of charities' but much of that work exists on fragile ground. At the root of the crisis in the voluntary sector is what commentators call a 'perfect storm' – a brutal confluence of negative economic and social factors. A decade of austerity cuts merged into the pandemic, followed rapidly by the still lingering cost of living crisis with its high inflation and soaring energy prices. Demand rose for charities as a result – in simple terms, there were vastly more people coming to them for help whether for a food parcel, a hostel bed for the night or to get mental health advice and therapy. At the same time income has shrunk: state funding has fallen away, donations have flatlined, and national insurance bills rocketed. Even Macmillan, with one of the slickest fundraising machines in the business, raising over £230m a year, could not keep up with demand. For several years it rode out the crisis by drawing down tens of millions of pounds a year from reserves to fix the holes in its balance sheet – a practice it has now declared unsustainable. Samaritans is tight lipped about the cash savings it wants to make but its published accounts show that spending has exceeded income for each of the last three years and it has struggled to bring costs down. At the same time, its income from state-funded grants and contracts, and from its charitable activities, has fallen. A conventional business might see rationalising the charity's 201 branches across the UK and Ireland as a no-brainer. Lower overheads, and perhaps a windfall from asset sales. Couple this with the rise in mobile technology and AI – with more people working from home since the Covid pandemic – and why keep all this costly bricks and mortar? Charities are not conventional businesses, however: Samaritans is largely run by passionate volunteers, their focus often hyper-local, immersed in community cameraderie, support networks and face-to-face relationships. The prospect of speaking to suicidal callers in remote call centres or at home appalls. As one Samaritans volunteer who contacted the Guardian put it: 'It's a funny organisation, like a cross between an emergency service and the WI [women's institute): life and death and ginger biscuits.' Volunteers were understandably upset, they added: 'If you run a service which callers use because they're dying of lack of human contact, closing and automating it seems a little odd.' In this environment staff and volunteerscan feel abandoned by what they see as the out-of-touch corporate centres of large charities. Ire is directed against big managerial salaries, expensive rebrands, fancy HQs, and a spreadsheet culture perceived to be out of step with core charity values. In charity boardrooms, the harsh reality is expenditure cannot exceed income for too long. Charities continue to be overwhelmed by overflow of demand from decaying public services and rising poverty. As ever, the people most at risk are charities' beneficiaries: the poor and desperate relying on charity to survive.
Reuters
7 days ago
- Business
- Reuters
India resists EU's oversight proposal on capital flows citing sovereignty concerns, sources say
July 24 (Reuters) - India has pushed back against a proposal by the European Union as part of free trade agreement talks which would give the 27-nation bloc a say in decisions related to capital flows, two Indian government sources said. The proposal, unusual in most free trade agreements, has raised concerns in New Delhi over limiting its ability to act unilaterally during crises, as both sides aim to conclude the deal by the end of 2025. India has in the past imposed restrictions on outflows, including during a currency crisis in 2013. In its proposal to India, the EU has suggested an oversight committee on trade in services and investment policies which would review policy actions, including those taken during financial or balance of payments crises. "India fears such oversight could allow the committee to question or reverse crisis-time policy measures taken by it, which compromises a sovereign's decision-making powers," one of the sources said. India, which trades $190 billion in goods annually with the EU, has also sought clarity on whether decisions taken during emergencies, such as restrictions on capital flows, could be overturned if the committee finds them inappropriate. While trying to limit India's control over capital account decisions, the EU proposes it would have the right to impose temporary restrictions on capital outflows during serious economic difficulties. India argues this creates an imbalance in safeguard powers and deviates from the EU's own practice in FTAs with Vietnam, Singapore, and South Korea, where both sides can apply such measures in exceptional circumstances, the source said. Both sources declined to be identified as they are not authorised to the media. Emails sent to the Reserve Bank of India, Ministries of Finance and Commerce and to the Prime Minister's Office requesting comment did not receive a response. India's opposition to the EU's proposal comes as it negotiates deals with other trading partners including the U.S. and Australia. Accepting oversight or unequal safeguards could limit India's powers on domestic policies and may weaken its push for balanced trade pacts in the future, the sources said. "India has not had an agreement on the FTA so far because of issues such as every country in the bloc wants their point of view or interest to be included," a source from the Ministry of External Affairs said. The European Commission, in its report, opens new tab following the July round of negotiations in Brussels, said "good progress" had been made on capital movements, payments, and transfers, with discussions focused on remaining areas of divergence. India-EU trade talks have faced hurdles over the EU's push to cut import taxes on cars and dairy while seeking stricter climate and labour rules. India wants to protect local farmers, avoid rigid green rules, and keep control over legal disputes.
Bloomberg
7 days ago
- Business
- Bloomberg
Lavish Homes Left by Fleeing Guptas Up for Sale in South Africa
South Africa is selling off three multimillion rand mansions owned by the Gupta brothers, a trio of influential Indian-born businessmen at the center of a corruption scandal that triggered the country's worst political and economic crisis since the end of Apartheid. Atul, Rajesh and Ajay Gupta began buying the properties in Thursday's auction in 2006. There, in Saxonwold, one of Johannesburg's oldest and most affluent neighborhoods, they entertained top politicians and businessmen for at least a decade.
Bloomberg
23-07-2025
- Business
- Bloomberg
Turkey Poised For First Rate Cut Since Political Crisis in March
Turkey's central bank is expected to make its first interest-rate cut since a political crisis in March, which caused policymakers to reverse an easing cycle. The Monetary Policy Committee led by Governor Fatih Karahan is poised to agree to a reduction of 250 basis points to 43.5%, according to the median forecast of 20 economists surveyed by Bloomberg. There are two notable dissenters: Goldman Sachs Group Inc. is predicting a bigger cut of 350 basis points while Capital Economics Ltd.'s Liam Peach penciled in a smaller one of 200 basis points.
