Think of poverty alleviation plan

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Almost three quarters of Zimbabweans are surviving beneath the poverty line. In 2017 up to 4,1 million were left “food insecure” as a result of drought.

Financial Matters Tinashe Kaduwo

THE government should urgently formulate a poverty alleviation plan and take steps that show compassion to the poor.

There is carnage in all markets and those at the periphery of the society in terms of income levels are succumbing to the ravages of these economic misdemeanours. Austerity comes with pain and that is expected, but the government needs to find ways to balance its austerity and protection of the poor.

A broader policy that encourages development without leaving anyone behind is required. In the broader policy, there should be programmes that protect the poor and the marginalised who are facing the real danger of being left behind.

This can be done through the provision of micro-level interventions by the state with the support of private sector entities in a coordinated manner that facilitates the vulnerable to protect their interests, in terms of both making available financial assistance and also services.

The main purpose is to assist people in both dealing with their vulnerabilities and getting them out of their poverty in a sustainable way. There is a worrying trend in most African economies in which the protection of the poor is left to non-governmental organisations (NGOs) and to some extent micro-finance institutions.

Initiatives of these institutions are all laudable, but they are very limited in enabling the people to escape poverty and vulnerability.

There have been many NGO-based interventions and yet the poverty levels remained quite stubborn over the years.

The poverty levels have also been worsened by the inordinate growth in levels of inequality. Research shows that high levels of inequality do not allow sustained economic growth, as has been evidenced in many countries quite regularly.

What is happening in the country is a situation where — through collusion — the political and economic elites have used their respective power bases to complement each other in evolving institutions.

They have done this through steps, such as differentiating health and education institutions for the rich and the poor, inordinate access to capital, incorrect pricing of factors of production, disenfranchisement of the electorate from public policy and inefficient practice of governance and judicial institutions.

All these are extractive in nature — taking away the rightful opportunity to excel and to earn incomes from the poor and vulnerable — all of which has led to the perpetuation of poverty and vulnerability, in turn by increasing the income inequality gap. In attaining their goal, they took advantage of neo-liberal policies, both through public policies that are working in favour of the capitalist class in getting richer, and with little social safety nets and institutional reform.

Rising prices must be attended to. The same applies to the commotion we have witnessed in spaces such as tobacco auction floors, where low-income earners are trying to earn a living.

They need to be addressed with urgency. To deal with poverty and inequality, the government needs to bring in reforms that dismantle this extractive institutional design, which is evident in both the financial and real sector markets.

Before the government can build on any initiatives of the poverty alleviation plan, the institutional environment needs to improve. Scandinavian countries, Asian Tigers, China, among others, could only move out of poverty sustainably by first fixing the institutions.

Institutional reform brings both equality of means to attain opportunity, and the availability of a whole spectrum of opportunity to all.

At the same time, such reform will fix the prices of means of production, cost of labour, capital, and land, and transaction costs for entrepreneurship such that the ability of consumption could match the price of production and factors that lead to it.

So far, it is sad to note that the government has not shown enough acumen, focus and resolve to understand the sources of poverty and vulnerability, in terms of the role of elites and their institutionally perpetuated extractive designs. The government, in its pursuit of austerity, is also sadly turning a blind eye to the damaging effects of neo-liberal policy, the wrong pricing of real and financial sector markets, and the decrepit power of regulators to correct misalignments in the private sector.

Kaduwo is a researcher and an economist. — kaduwot@gmail.com

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