Welcome to CENFACS’ Online Diary!
02 February 2022
Post No. 233
The Week’s Contents
• Sustainable Development Month with Debt Sustainability For Highly Indebted Poor Households
• African Children’s Climate and Sustainable Development Goals (Generation Global Goals Project): Generational Impact Analysis of COVID-19 and its Variants on Children
• Knowledge Year/Project and the Global Knowledge Index
… And much more!
Key Messages
• Sustainable Development Month with Debt Sustainability For Highly Indebted Poor Households
February is the month of Sustainable Development, according to CENFACS development calendar or planner. It is the month during which we revisit our works relating to sustainable development. In particular, we try to look at again the United Nations (1) Seventeen Sustainable Development Goals (SDGs) and their related 169 targets. We normally select one of the topics within the set of SGDs and targets; and try to work on it.
Since the coronavirus pandemic and its variants have led to a soaring debt for many people, especially for the poorest ones, we have selected Goal 17 of the United Nations SDGs and 2030 Agenda in order to tackle the month of sustainability. Within this goal, we have chosen Target 4.
The Goal 17 is to strengthen the means of implementation and revitalize the global partnership for sustainable development.
The Target 4 of Goal 17 is to assist developing countries in attaining long-term debt sustainability through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring, as appropriate, and address the external debt of highly indebted poor countries to reduce debt distress.
Although this target speaks about countries, countries are made of people. Thus, this target is about people. In the context of our Month of Sustainability, we are going to look at how this target can be applied to poor people, particularly the people that make up CENFACS‘ noble cause of poverty reduction. To do that we have organised a plan of work on debt sustainability as shown under the Main Development section of this post. Under the same section, we have provided more details about the theme of Debt Sustainability as well.
• African Children’s Climate and Sustainable Development Goals (Generation Global Goals Project): Generational Impact Analysis of COVID-19 and its Variants on Children
Normally, the project that carries this month of Sustainable Development is African Children’s Climate and Sustainable Development Goals (ACSDGs). It is also known as Generation Global Goals (3G) project.
3G project is the impact level in CENFACS’ process of advocating that global goals (like the United Nations Sustainable Development Goals) work for children and not way around. It is indeed the testing of the gains that global goals claim to achieve and of their impact on the welfare and well-being of children. This is regardless whether these children are in spaces and times of peace or lack of peace (like conditions of wars, areas stricken by viruses or epidemics and time of natural disasters). Unsurprisingly, these gains should be materialised even in time of health crisis like the coronavirus pandemic.
For this year, our 3G project will continue to focus on the Generational Impact Analysis of COVID-19 and its Variants on Children. The current focus will be a second-round work after the one we carried out last year. But, what do mean by ‘generational impact analysis’?
• • Children generation of global goals
The children generation of global goals are those two generations of children relating to two sets of global goals: Millennium Development Goals (MDGs) and Sustainable Development Goals (SDGs). The generation of Millennium Development Goals will be those children or persons born and live between 2000 and 2015, whereas the generation of Sustainable Development Goals will be referred to those born and live from 2015 until now (ideally between 2015 and 2030). The two generations are relating to the lifespan of these two sets of goals.
These generations relating to global goals have to be differentiated from the conventional definition of generations which classified them as follows: Gen Alpha (2013 – 2025), iGen/Generation Z (1995 -2012), Millennials/Generation Y (1980 – 1994), Xennials (1975 – 1985), Generation X/Baby Bust (1965 – 1979) and Baby Boomers (1946 – 1964).
• • Impact analysis
We are going to use the definition of impact analysis as given by the Organisation for Economic Cooperation and Development (OECD). The OECD (2) differentiates ex ante impact analysis from ex post impact assessment. According to the OECD, ex ante impact analysis is
“Part of the needs analysis and planning activity of the policy cycle. It involves doing a prospective analysis of what the impact of an intervention might be, so as to inform policymaking – the policymaker’s equivalent of business planning”.
From the above clarification of children generation of global goals and impact analysis, it is possible to speak about generational impact analysis.
• • Generational impact analysis
The generational impact analysis would be a set of tasks that we will perform to identify children generation of sustainable development goals; generation that has been impacted by a change/disruption brought the coronavirus pandemic and its variants.
We are going to establish a chain of causation or theory from COVID-19 shock waves and its variants to impact as well as to measure or describe the changes induced along that chain. Briefly, we are going to refer to cause-and-effect approach and to the theory of change.
• • Early inference of the effects of COVID-19 and its variants on Poor Children
Our work on generational economics and the intergenerational transmission of poverty continues with the study/analysis of the generational impact of COVID-19 and its variants on children and future generations. We started this impact analysis two years ago by looking at how COVID-19 may have delayed the realisation of several aspects of the United Nations Climate and Sustainable Development Goals for children.
We are continuing our work where we left it by searching on the way in which COVID-19 may have impacted different generations of children. This generational impact analysis of COVID-19 shock waves and their variants will be on children we can call as the generation of sustainable development goals (SDGs) or the generation of children thought to be the beneficiaries of the implementation of SDGs.
Although we are using the word impact, it is clear that the real impact of COVID-19 will be known in the long term as there are still data to be collected and treated quantitatively and qualitatively. This may take sometimes. This is why United Nations Children’s Fund (3) argue the following:
“COVID’s legacy will take several years to definitively quantify, but it is already possible to infer some aspects that are especially salient for children” (p. 10)
It is possible to start inferring the effects of COVID-19 and its variants on poor children. So far, a number of agencies and individuals have tried to do it.
In this second round of work, we are trying to seize the early outputs or effects of COVID-19 on the realisation of SDGs linked to children’s health, well-being and welfare. However, one needs to be cautious in interpreting what we may have found since we are carrying on studying and learning more from COVID-19 scarring and lingering effects.
• • Generational impact of COVID-19 on children generation of SDGs
It is without doubt that COVID-19 has left and will leave some scars and fractures in the realisation of SDGs, particularly but not exclusively those aspects of these goals relating to children. The study on the following six selected SDGs will help to speculate on how COVID-19 is impacting or can impact the realisation of SDGs for children (particularly but not exclusively African children):
Ensure access to affordable, reliable, sustainable and modern energy for all (Goal 7), Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all (Goal 8), Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation (Goal 9), Reduce inequality within and among countries (Goal 10), Make cities and human settlements inclusive, safe, resilient and sustainable (Goal 11), and Ensure sustainable consumption and production patterns (Goal 12).
In this study, we have not included the climate impact as this will be a matter of another advocacy which we will deal with at a different time during this year.
• • Possible effects of COVID-19 for children regarding the realisation of SDGs
We have considered the above selected goals (goal 7 to goal 12) out of 17 United Nations SDGs for dealing with the COVID-19 effects.
For those who would like to know more about our findings from this second round work and the stories of poverty reduction happening in Africa from CENFACS’ Africa-based Sister Organisations working with children, they should not hesitate to contact CENFACS.
• Knowledge Year/Project and the Global Knowledge Index
Our Knowledge Year/Project kicked off last month with the first activity, which was about the Knowledge on the Consumption Needs of Those in Need. This month, we are continuing the application/implementation of the ‘K’ Project through the Global Knowledge Index. Before going any further, let us try to understand the Global Knowledge Index.
• • What is the Global Knowledge Index (GKI)?
The United Nations Development Programme and Mohammed Bin Rashid Al Maktoum Knowledge Foundation (4) argue that
“The Global Knowledge Index consists of seven sub-indices which are:
pre-university education; technical and vocational education and training; higher education; information and communications technology; research development and innovation; knowledge-based economy; and enabling environment”.
The authors of the Global Knowledge Index (GKI) argue that the GKI, which covers 232 indicators, serves as a vital tool to monitor the knowledge status of countries in key areas including education, innovation and information and communications technology.
• • The Global Knowledge Index and CENFACS’ Knowledge Year
The GKI can help us to understand the needs of those in need. By using some of the sub-indices of the GKI (e.g. technical and vocational education and training about sustainable development), it is possible to know and assess the needs of those in need as well as explore solutions to the issue of poverty they are facing.
Briefly, the GKI can help to identify how, where and on who to invest for poverty reduction and sustainable development. It can lead us to the kind of support that is appropriate to address poverty stemming from knowledge gaps.
For any queries or enquiries about the Knowledge Year/Project and its relationships with the month of Sustainable Development within CENFACS, please read our next posts in this month.
Extra Messages
• Triple Value Initiatives, All Year Round Projects: Extra Support
Last week, we announced the kick off for our Triple Value Initiatives, initially known as All Year-round Projects. For those who are interested in engaging with these initiatives, we would like to highlight the following three points: start-up, fundamentals and goals.
• • Triple-Value-Initiatives Start up
It is better to start up early, although people can always join at any time. The earlier you start the better. This is because everybody is busy with their lives and has other things to do. Also, the earlier you start, the earlier CENFACS can help if one encounters any problems. Briefly, the message is start up early.
• • Triple-Value-Initiatives Fundamentals
You need to get the fundamentals about All Year-round Projects right from the beginning. You need to clearly sort out the basic principles and bases of these projects so that you move to the right direction early without being forced to change course as you progress or repeat from scratch. Briefly, the message is get the fundamentals right.
• • Triple-Value-Initiatives Goals
Whether you play or run or vote for poverty reduction and sustainable development, the all exercise is for you to reach your goal of delivering the objectives you set up from the onset. It means you need to be clear in your mind set about what you want to achieve. Again, if you have any problems in setting up clear goals (aim or purpose) and objectives, CENFACS can be of help. Briefly, the message is be clear about what you want to achieve.
You can select a theme to run, create your play station game and watch people to vote. This is what Triple Value Initiatives or All Year Round Projects are all about. Good luck!
• Zero Income Deficit Campaign 2022 with a Double Focus on Balance Sheet and Cash Flow
What are the net worth and net cash flows of my family/household accounts?
We can help you to find out the net worth and net cash flows of your accounts.
Last week, we concentrated on the key activity of reducing the excess of liabilities over assets as we were trying to work out the net worth from members’/users’ individual balance sheet.
This week, we are continuing with the balance sheet and net worth activities. While we are doing these activities, we are taking enquiries about household cash flow. In other words, we are working on cash inflows (that is; income deriving from labour income and capital income) and cash outflows (i.e. expenses as a total of consumption plus debt service plus other expenses).
• • Working with the Community on Balance Sheet and Cash Flow
We are taking on enquiries about ways of improving community members’ fixed assets and working capital. We can advise them on their liabilities. This advice will help them to find ways of increasing their assets while reducing their liabilities. We are also advising on household cash flow, how to increase household cash inflows and decrease household cash outflows in order to generate a positive net cash flow.
We can advise you to increase your cash inflows and to decrease your cash outflows.
For those members of our community who are struggling to create net worth or who are having balance sheet problems with their household accounts, they are free to work with us so that together we can explore steps forward or ways out to these problems.
We can help you to increase your assets while reducing your liabilities.
We can provide the same assistance regarding for cash flow statements or projections.
To ask or get support to sort out the balance sheet, net worth and net cash flows for your family/household accounts, please contact CENFACS. Also, to support Zero Income Deficit Campaign 2022, please contact CENFACS.
• Coronavirus-affected Children of Sub-Saharan Africa Desperately Need Your Help Right NOW
This Winter 2022 Halving Poverty campaign is still running.
You can donate £9 to halve poverty in Sub-Saharan Africa.
You can halve health poverty for and with children at risk of loosing their life because of COVID-19.
To donate, gift aid and or support differently this life-saving campaign, please contact CENFACS:
*over phone
*via email
*through text
*by filling the contact form on this site
For further details about this project, please go to: cenfacs.org.uk.supporting-us/
Dédicace de l’année 2022:
L’année 2022 a été déclarée comme l’Année de Connaissances sur les personnes nécessiteuses ou celles qui sont dans le besoin.
Pour réaliser cette déclaration ou dédicace au sein du CENFACS, nous avons mis en place un projet d’accompagnement, qui est le Projet ‘Connaissances’.
Le Projet ‘Connaissances’ est un ensemble de tâches interdépendantes qui ont pour objectif commun de mettre en œuvre l’engagement du CENFACS de l’année 2022 en tant qu’Année de la Connaissance des personnes dans le besoin.
A travers ce projet, nous essaierons autant que possible d’apprendre, de connaître et de comprendre les besoins et les attentes en matière de solutions pour ceux qui ont besoin d’aide et de soutien pour sortir de la pauvreté.
Pour connaître les besoins et les attentes des gens, nous allons travailler avec eux sur un certain nombre d’activités.
Pour plus d’informations sur l’Année de Connaissances et son projet d’accompagnement, veuillez contacter le CENFACS.
Main Development
• Debt Sustainability For Highly Indebted Poor Households
To approach the theme of Debt Sustainability of our Sustainable Development Month, we are going to deal with the following: the key concepts shaping our theme and its notes, our plan of work on debt sustainability and the first notes to kick off our theme for the month.
• • Key Concepts
Let us briefly clarify the following four key concepts: Highly indebted poor households, household debt, debt sustainability and debt ratio.
• • • Highly indebted poor households
We are going to refer to over-indebted households instead of highly indebted households. We put and kept the words ‘highly indebted households’ in framing the title of our theme because they are part of the working of the United Nations Sustainable Development Goal 17 and Target 4.
We know that there is a difference between highly and over. We have chosen over-indebted households as its definition matches with the kind of work we would like to do with our users and the message we are going to share with our audiences. Then, what is an over-indebted household?
The European Commission (5) argues
“An over-indebted household is one whose existing and foreseeable resources are insufficient to meet its financial commitments without lowering its living standards, which has both social and policy implications if this means reducing them below what is regarded as the minimum acceptable in the country concerned”.
Although this definition could be disputable, it can be a working one in the context of dealing with poverty linked to household indebtedness. So, we are going to refer to this definition when dealing with highly indebted poor households.
• • • Household debt
Household debt is an amount of money owed by an household; owing which could be related to home mortgages, home equity loans, car loans, student loan, and credit card/consumer credit. In case of poor households, it can be related to the amount owed as a result of the inability to meet basic life-sustaining needs. This means that the only way for those poor households to meet their basic needs is to be indebted.
The problem here is not about debt itself. The problem is when the combined debt of all people making a household becomes unsustainable, either in terms of liabilities compared to its assets (when looking at the household’s balance sheet), or in terms of its expenses (that is, consumption plus debt service plus other expenses) compared to its income (i.e. labour income and capital income) when considering the household’s cash flow, or both.
When this happens indebted households may need support for debt sustainability.
• • • Debt sustainability
Debt sustainability makes up the Target 4 of the Goal 17 of the United Nations (op. cit.) Sustainable Development Goals and 2030 Agenda. According the International Monetary Fund (6), a country’s public debt is considered sustainable if
“The government is able to meet all its current and future payment obligations without exceptional financial assistance or going into default”.
Although this macro-economic definition of debt sustainability relates to countries, it can however be applicable at the meso- and micro-economic levels to include individuals, families and households.
If this definition is applied at the level of poor people, it could suggest that debt sustainability occurs when an indebted household can honour its payment obligations towards debt without defaults and bankruptcies.
Debt sustainability will equally happen when this indebted household has liquidity to pay debt and or is solvent (that is; likely to be able to pay it at any points of time).
To get a good understand of debt sustainability, households may need to have something to guide them in the form of quantitative measures or metrics. One of the metrics or indicators could be debt ratio.
• • • Debt ratio
It is simply a measure expressed as a proportion, which shows the relative proportion of debt to total assets.
For example, if an ordinary household has a debt ratio of 0.50, it means that there is a balance between the ordinary household’s liabilities and its assets. However, if this ratio is more than 0.50, this could mean that this household has more financial risk.
A highly indebted poor household would have this ratio significantly above 0.50; meaning it is unable to meet its current expenses. This type of households whose most of spending goes to borrowing repayments will be living below the poverty line.
The requirements of debt sustainability and having a good debt ratio can be extended to the area of poverty reduction.
• • Debt Sustainability and Poverty Reduction
Any debt to be sustainable, it should not jeopardise the stability and integrity of any household. It also needs not to put at risk or threaten any efforts that household is making to navigate its way out of poverty, especially intergenerational poverty. In other words, a sustainable debt should not lead to the transmission or transfer of poverty to future generations.
• • Work with the Community on Debt Sustainability
During this month of February 2022, CENFACS is going to work with the community members or households who need some advice or support regarding any debt sustainability issue. This advice or support has to be placed within the two contexts of CENFACS’ Zero Income Deficit Campaign 2022 and Month of Sustainable Development.
The following working plan provides a glimpse of the way in which we are going to both carry out the Month of Sustainable Development and support the community’s households on the matter of debt sustainability.
• • February 2022 Working Plan on Debt Sustainability
From every Wednesday of this month, we will be dealing with each of the four elements making Target 4 of the United Nations SDG 17 as follows:
Wednesdays/Dates Notes/Sub-themes
1st Wednesday / 02/02/2022: Debt financing
2nd Wednesday / 09/02/2022: Debt relief
3rd Wednesday / 16/02/2022: Debt restructuring
4th Wednesday / 23/02/2022: Debt distress
Our work will be about the above issues in the relation to COVID-19 and poverty with respect to poor people.
• • First Wednesday (02/02/2022), In Focus: Debt Financing
Target 4 of the United Nations Sustainable Development Goal 17 is to Assist developing countries in attaining long-term debt sustainability through coordinated policies. Fostering debt financing is among these policies aim at. But, what is debt financing?
• • • Understanding debt financing
From the literature review on debt financing, we have selected the definition of the online dictionary ‘financial-dictionary.thefreedictionary.com’ (7) which states that debt financing is
“The act of a business raising operating capital or other capital by borrowing. Most often, this refers to the issuance of a bond, debenture, or other debt security. In exchange for lending the money, bond holders and others become creditors of the business and are entitled to the payment of interest and to have their loan redeemed at the end of a given period”.
Although this definition applies to businesses, individuals and households can also try to raise their household capital by borrowing. However, those of them who are poor may find it difficult.
• • • Debt financing options for poor households
Generally, debt financing will be challenging for indebted poor households since many of them do not possess collateral security or just are not in a position to issue promissory note or bond.
Those who will try can resort to the following means:
∝ Community loans
∝ Pawnbrokers (if households are able to pawn some of their belongings)
∝ Families and friends
∝ Charities and not-for-profit organisations
∝ Crowdfunding
Etc.
• • • How CENFACS can work with those in need to finance their debts
Working with those in need to finance their debts is both part of this Month of Sustainable Development and our Zero Income Deficit Campaign 2022. In our work with the community, we shall proceed the following:
√ Conduct debt sustainability analysis with indebted users (this will imply the calculation of Debt-to-Assets Ratio)
√ Analyse vulnerability to debt
√ Carry out anatomy and composition of household debt
√ Assess household capital requirement and cash flow
√ Establish and check of indebted users’ balance sheets and cash flows
√ Advise on debt financing affordable options
√ Lead them to debt financing providers and resources (e.g. debt calculator and monitor)
Etc.
The ultimate aim of this work with those in need is not help them finance their debts. Instead, it is about helping them to avoid intergenerational poverty via the debt financing mechanics or approach.
For those members of our community who need advisory support regarding their debt financing problems, they are free to contact CENFACS.
For any queries or enquiries about Sustainable Development Month and Household Debt Sustainability, please contact CENFACS.
• References
(1) https://sdgs.un.org (accessed in January 2022)
(2) ttps://www.oecd.org/sti/inno/what-is-impact-assessment-OECDImpact.pdf (accessed in January 2022)
(3) https://unicef.org/globalinsight/media/1516/file/UNICEF-Global-Insight-5year-Outlook-2021pdf
(4) United Nations Development Programme and Mohammed Bin Rashid Al Maktoum Knowledge Foundation (2021), Global Knowledge Index @UNDP and MBRF 2021
(5) European Commission (2010), Over-indebtedness: New evidence from the EU-SILC Special module, Research note 4/2010
(6) https://www.imf.org/external/pubs/ft/fandd/2020/09/what-is-debt-sustainability-basics.htm# (accessed in January 2022)
(7) https://financial-dictionary.thefreedictionary.com/Debt+Financing (accessed in January 2022)
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Thank you for visiting CENFACS website and reading this post.
Thank you as well to those who made or make comments about our weekly posts.
We look forward to receiving your regular visits and continuing support throughout 2022 and beyond.
With many thanks.
