Economic inequality has dominated international economic debate recently, and with good reason. Developmental charity organisation Oxfam International made headlines not too long ago with its report which noted that the 85 richest people in the world own the wealth of half of the world`s population. The report further suggests that this is no accident either, as more often than not; these wealthy elites “co-opt the political process to rig the rules of the economic system in their favour.”
In America, the top 1 % of the population
earns 95% of the total income. Yet even in the world’s largest economy, this is
a very topical issue, and could yet be the flashpoint of the next Presidential
election amongst the America`s electorate.
Sub-Saharan Africa sees, nearly 50% of its population live on less than
US$1 a day: the world`s highest rate of extreme poverty according to the
African Development Bank. What truly drives economic growth is a thriving
middle class that spends on goods and services, which in turn stimulates
businesses. This ultimately leads to a robust economy, with solid growth
prospects going forward.
Be that as it may, here in Africa,
increasingly we are seeing the emergence of an elite obscenely rich section of
society; “A few big men” with virtually all control of the economic factors of
production. Perhaps unlike in the developed lands of Europe or America, in
Africa, usually these wealthy elites have risen to prominence not because of
the noble virtues of hard work and innovation. Of course to be fair, this is a
broad generalisation which may not hold true for all the continent`s rich. However
evidence would seem to suggest that they have leveraged off their political
connections to climb up the economic ladder. Nowhere else is this fact clearer,
than in South Africa which undisputedly, is economically to Africa what America
is to the world. Tokyo Sexwale, Cyril Ramaphosa, Mathews Phosa among a host of
other ANC ‘cadres’ have emerged to be leaders of the pack; enjoying a greater
piece of the economic pie.
China`s Deng Xiaoping, leader of
People`s Republic of China after Chairman Mao`s death is still famous among
other things for preaching the gospel of, “Let some people get rich first.”
Ironically more than three decades later China still has to contend with the
burden of massive income disparities among its population. For the first time
in some 12 years, the Chinese government released its Gini coefficient (a
measure of income inequality with 0 being perfect equality and 1 being perfect inequality)
which stood at 0,474 in 2012. This underscoring the great schism between
China`s haves and have not`s, more so after following a model that pushes one
particular class to get rich at the expense of another.
What is fundamentally wrong with
an approach that allows a select few individuals to get rich first and get
ahead of the curve as it were, is that it breeds a sense of entitlement among
the wealthy elites which can be particularly hard to get rid of in the long
run. Inevitably, the incidences of corruption and graft tend to become
commonplace as the politically connected wealthy elite seek to consolidate
their hold on the economy. Wealth will therefore never be equitably distributed
in the economy.
Equitable growth, which sees a
thriving middle class also enjoying a larger cut of the pie, would be most
desirable. After all, it is this class that creates sustained demand for goods
and services produced in an economy. Their financial well-being or lack thereof
has a direct bearing on any economy as it is the middle class in essence, which
creates a ready market. However, evidence on the ground would seem to suggest
that this elementary tenet of political economy is increasingly being
overlooked today. In Zimbabwe for instance, there has been scandalous
revelations of CEOs of quasi government organisations like ZBC (the country’s
sole broadcaster), PSMAS (a medical insurance society to which most civil
servants are signed up to) awarding themselves hefty salaries when workers of
the same organisations have gone for months on end without pay, or as in the
case of PSMAS, members being denied medical service as the society fails to
settle claims.
As a result, economic activity at
the lower base of the pyramid, which by the way accommodates a significant
portion of the population, is stifled, as with no money, there is no spending power.
This invariably fans a self- perpetuating economic system dominated by a few
wealthy elites at the expense of the greater masses. Growth therefore will
never be sustainable as it is not at all inclusive. These “few big men” can
never drive real economic growth and whatever growth that may be seen in the
short term is only but a mirage as not every member of society is catered for.
“Africa grew at a faster rate in
the last decade than most other regions, but the impact on poverty is much less
than we would`ve liked. Africa`s growth has not been as powerful in reducing
poverty as it could have been because of the high levels of inequality ,” says
Francisco Ferreira, acting Chief Economist, World Bank Africa Region in ‘Africa`s Pulse’, a bi-annual analysis of the
continent`s economic prospects.
A shift in the mind-set of
policymakers and responsible authorities is thus critical, to effect economic
structural reforms that would ensure inclusive growth with less income
inequalities, if economies particularly those in Sub-Saharan Africa where
statistics show most of the world`s poor will live in by 2030 according to the
World bank, are to develop. The current model of a few wealthy elites enriching
themselves while the masses suffer under the vagaries of poverty will curtail
growth in the long run.
Renowned political commentator
Moeletsi Mbeki makes this point in his book ‘Architects of Poverty’, “If the
African sub-continent is to develop, it needs a new type of democracy that will
empower not only the political elites but also the region`s private sector
producer`s most of whom are peasants. The new democracy should be able to
restore the growth of an independent and productive middle class too.” Hence the
reality facing Africa of the elite nouveau riche has to be transformed to that
of a growing and empowered middle class.
Comments
Post a Comment