LENDING INSTITUTIONS, HEALTHCARE AND HUMAN CAPITAL 6
LendingInstitutions, Health Care and Human Capital
TheDemocratic Republic of Congo, DRC, is a developing nation thatdepends on loans from lending institutions. Lending institutions suchas the IMF and World Bank, offer loans to fund programs intended ateliminating poverty and reducing international economic crisis. Humancapital and health care are the key focus for the assistancerequired. Proper health care is relevant in making sure that theresidents of developing nations stay healthy. Human capital driveseconomic development for the nations.
TheWorld Bank is a large source of funds, which assists the nations inproviding resources like electricity, environmental conservation andclean water to health care and learning institutions. In addition,the IMF assists developing nations in similar measures however, itconcentrates on safeguarding global trade (Kuditshini, 2008). It isexpected that with such lending assistance, developing nations shouldbe able to eradicate poverty. Contrary, lending institutions seem tohinder than help in DRC’s development. DRC is a low-earning nationwith massive capability, yet has been incapable of transforming thisinto wide-ranging development to tackle soaring poverty. The economyis sustained by natural resources making DRC susceptible to food andmonetary shocks (Newsand Broadcast, 2013).
Lendinginstitutions hinder economic development by acting as a means ofresources for corrupt government officials (Kuditshini, 2008). Thepoor seldom benefit from loans intended at economic growth projects.DRC has a weak government, resonating to poor resource management. Anillustration is the Inga Dam plan. The dam was supposed to become theglobe’s biggest hydropower. The investment was worth billions andformulated to advance a power grid all over Africa. The power gridcould in turn prompt Africa’s industry economic growth. The projectfailed because of political disagreements and corruption in themanagement of funds (Kuditshini, 2008). It portrays that a majorprecondition to economic development, is political accountability,which can only be ensured via institutions and rules governing use ofloans (Kuditshini, 2008). Lending institutions seem to pay littleconsideration to the need for political accountability in DRC. Theyprogress to lend through non-project lending, which is subject torestricted social regulations. The lack of a robust protection torestrict the use of loans means that DRC can employ the funds as itwills. Thus, explaining why despite continued lending for projects,the nation is still economically undeveloped (Kuditshini, 2008).
Socialdevelopment is hindered by the huge interest rates DRC has to pay tolending institutions. The institutions mandate the nation to repayloans in order to get more funding for projects. The effecting ofStructural Adjustment Programs (SAPs) is an illustration of thehindrance of loans to social growth in DRC (Bruce, 2013). SAPsrequire debtor nations to pay back their loans via hard currency. Theresult is an export policy, as exports are the sole manner for adeveloping nation to acquire hard currency. The country is alsocompelled to borrow more loans to repay its debt (Bruce, 2013). Thismeans that DRC progresses to depend on lending institutions. Due toSAPs, the nation is compelled to minimize spending on social issuessuch as development, health and educating its nation, as debt refundand differing economic policies take precedence (Bruce, 2013). As aresult, lending institutions indirectly demand DRC to reduce theliving standards of its civilians.
SubstantiveWays a Healthy Population Strengthens the Economy
Ahealthy population guarantees economic development. Four substantiveways through which economic growth is achieved arise from improvementof health care. First, in DRC, an enhancement in life expectancy fora one-year period has been linked with increased productivity, aswell as economic output by 4% (Bloom, Sevilla & Canning, 2004).The reason is that healthy persons are more industrious, generatemore income, save, invest and labor for longer hours. These actionshave a positive effect on the GDP, gross domestic product of thecountry. Research demonstrates that the impact of enhanced health onthe economy is specifically great amid low-earning nations like DRC(Bloom, Sevilla & Canning, 2004).
Second,similar to other developing nations, DRC still struggles with highfertility and mortality. Funds have been invested in ensuring thatcivilians are educated on family planning, while maternities havebeen made more accessible (Bloom, Sevilla & Canning, 2004). Atriumphant demographic change from high to low fertility relies onhealth enhancement. A decline in child mortality leads to reducedfertility. Parents that have lesser children are able to invest morein the schooling of every child. Enhancing life expectancies impliesthat there is a greater period to reap the gains of investments inschooling. Hence, increasing life expectancy works by improvingeconomic development (Bloom, Sevilla & Canning, 2004).
Third,a healthy population is a productive asset for the country’sprospect economic growth. Malaria is a major challenge in DRC,especially affecting school going children (Kuditshini, 2008). Thegovernment in association with international organizationprogressively endeavors to ensure that malaria is curbed. Thus,healthy children are capable of learning better. Children’sschooling is less probable to be affected when families livehealthily (Kuditshini, 2008). Their education improves and as theybecome adults are able to work and become productive. They securejobs and venture into businesses that enable them to invest in theircountry thus, improving the economy of DRC (Kuditshini, 2008).
Fourth,when civilians are healthy, it reduces poverty, which in turnimproves the economy. Spending on health directs populations topoverty (Bloom, Sevilla & Canning, 2004). By enhancing populationhealth in DRC, it draws overseas direct investment. Investors investin a healthy population because they are guaranteed of moreproductivity. Foreign investment opens up more jobs for thepopulation in turn improving DRC’s economy (Bloom, Sevilla &Canning, 2004).
Leadershipand Use of Foreign Aid
Despitebeing one of the poorest African nations, the World Bank acknowledgesthat DRC’s leadership has employed foreign assistance in enhancingthe health care system. Leadership has focused on the need for humandevelopment in areas concerning service delivery, as a result,improving health access (Newsand Broadcast, 2013).Research demonstrates that IDA support, through the help of DRC’sleadership, was availed in 83 health centers. Health related projectshave concentrated on enhancing immunization within project regions bya 20% rise in DPT3 exposure (Newsand Broadcast, 2013).Stock-outs have declined by 20% while deliveries from competentemployees have improved through 33% (Newsand Broadcast, 2013).The health improvements have been made probable via the building,rehabilitation and stocking of health centers (Newsand Broadcast, 2013).The government has also concentrated on training of thousands ofhealth employees. More households have been provided with durable bednets as a move to curb malaria (Seban & Thuilliez, 2013).
Lendinginstitutions aim at poverty eradication in developing nations.However, they seem to hinder social and economic development throughtheir lending policies. Corruption in developing nations is also toblame. Loans should be employed to improve health care, which resultsin economic growth. A healthy nation is one that is productive andattracts foreign investment.
Bloom,D. E., Sevilla, J & Canning, D. (2004). The Effect of Health onEconomic Growth: a Production Function Approach. WorldDevelopment,32(1), 1-13.
Bruce,R. (2013). Foreclosingthe Future? The World Bank and the Politics of Environmental Destruction.Island Press: Washington DC.
Kuditshini,J. T. (2008). Global Governance and Local Government in the Congo:The Role of the IMF, World Bank, the multinationals and politicalelites. InternationalReview of Administrative Sciences,74(2), 195-216.
Newsand Broadcast.(2013). Democratic Republic of Congo: Country Results Profile, The World Bank. Retrieved from:http://go.worldbank.org/4BAEV3EML2
Seban,J & Thuilliez, J. (2013). Possession of Bed Nets in Haut-Katanga(DRC). Healthand Place,24, 275-285.