A Letter for Stephano

author-portrait_memory-champiti-quality-communications-coordinator Memory Champiti

Quality Communications Coordinator

Save the Children Malawi

September 20, 2016

The rain poured on endlessly, hammering on the rooftops and turning the sidewalks and roads into vast oceans. Soaked men and women sold goods on the sides of the road. Young girls and boys skipped rope in the rain with resounding, joyful voices. Something about this day made me feel hopeful.

As we slowly drove up to the entrance of the school we planned to visit that day, I could not help but enjoy the beautiful faces of the children outside, clad in their uniforms of emerald green shirts and charcoal grey shorts and skirts. This was how my ninth day at Save the Children had started. I have recently joined the team as the new Quality Communications Coordinator, to ensure the stories and letters our sponsors receive help them understand the great work their donations support.

Stephano in his green school uniform.
Stephano in his green school uniform.

I had been looking forward to this day, as I would see firsthand one of the communities in which Sponsorship works. We would be delivering a letter for Stephano, a 13-year-old boy who attends grade 6 here, from his sponsors.

In the company of Henry, our liaison for Stephano’s community, we got out of the car and were welcomed enthusiastically by the Deputy Headmaster of the local school, Mr. Jonazi, who led us to the staff-room. Just moments after a jubilant young boy showed up beside me. Mr. Jonazi, in his soft spoken voice said, “This is Stephano.” My face quickly lit up. Immediately, we went back outside to retrieve Stephano’s small package from abroad.

As I handed him his letter, the joy could not be concealed from his face. He grinned from ear to ear like a Cheshire Cat. He carefully poured over every word of his letter before settling down on a plastic chair outside the school to compose his response, under the now clear and calm skies.

“I am very grateful for my sponsors,” he said earnestly as he finished his letter for them. I carefully tucked his letter away, to be transported back to our main office before making its long journey to the hands of his sponsors.

Stephano sharing his story with Memory.
Stephano sharing his story with Memory.

The days experience truly melted my heart. I now know that I am a part of making a profound difference in the lives of children in this community. Small things, like having a letter to call your own, can help a child feel fulfilled and empowered. As I look forward to my career ahead with Save the Children in Malawi, I am excited to witness more powerful visits with children like this one.

 

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Death and Taxes in Central America

By Andrew Wainer, Director of Policy Research at Save the Children U.S.

The Panama Papers revealed global elites’ maneuvering wealth around – and through – a porous international tax infrastructure. While international tax malfeasance is not always strictly illegal, it also isn’t necessarily victimless, particularly in the developing world.

The impact of tax avoidance is particularly stark in the Northern Triangle – Guatemala, Honduras, and El Salvador – where regressive taxation and the lack of the rule-of-law are grimly intertwined.

Global Financial Integrity (GFI) estimates that illicit financial flows (IFFs) – international, illegal movements of money – cost developing nations $1.1 trillion in 2013. According to GFI, these cash outflows from the developing world, “Have a terrible, subversive impact on governments, victims of crime, and society.”

Latin America remains the most unequal region in the world and the Northern Triangle is notoriously poor at taxing and spending equitably. While some Latin American nations employed progressive taxation to reduce income inequality during the 2000s, regressive tax policy in Central America exacerbated its already severe inequality.

In recent years, Guatemala had the lowest (12%) tax-to-GDP-ratio of any country in Latin America and Honduras and El Salvador were only slightly better. By comparison, Brazil’s tax-to-GDP rate was 36% and Denmark’s was 48%.

“The World’s Epicenter for Extortion”

In addition to regressive tax structures, Central America is also plagued by some of the world’s highest crime rates, including extortion. InSight Crime, an organization that analyzes organized crime in Latin America, calls the Northern Triangle, “The world’s epicenter for extortion.”

And poor communities are disproportionately its victims. According to, La Prensa newspaper Salvadorans pay $400 million annually in extortion, Hondurans pay $200 million, and Guatemalans pay $61 million.

Poor Central Americans caught in the middle of formal, legal tax structures that privilege the rich and illegal practices that target the poor. Small businesses are typically more vulnerable to extortion because they often can’t pay for private security services. El Salvador’s small business association states that small business owners pay $30 million per month and that 10 small business close each month due to extortion.

But the economic impact of extortion is comparatively mild compared to the violence that surrounds it. Poor Central Americans can risk their lives if they refuse to pay the region’s gangs: La Prensa states that more than 300 bus drivers were killed in recent years due to extortion.

Taxation Critical to the Citizen-State Compact

Strengthening the citizen-state compact and the rule of law will take years, but in recent months there have been promising initial steps – within Northern Triangle itself and with U.S. assistance to the region – toward redirecting the tax system to the benefit the region’s most vulnerable citizens:

 

  • The “Plan of the Alliance for Prosperity in the Northern Triangle” – developed by the Northern Triangle nations with the support of the United States – includes strengthening financial management as one of the plan’s four pillars. It states, “Public spending must be transparent, efficient and effective.”

 

  • In 2015, the Millennium Challenge Corporation signed a $28 million agreement with the government of Guatemala to, “Support efforts to increase revenues and reduce opportunities for corruption in tax and customs administration.”

The emphasis on the fair collection and spending of public revenues is crucial to strengthening the rule-of-law and reducing the violence that has driven tens of thousands of children from the Northern Triangle. Given the myriad socioeconomic challenges facing the region and the resources needed to address them, the growing focus of US foreign assistance on strengthening tax systems is timely and encouraging.