AN amazing feat from China’s development success story has been the high poverty-reducing impact of their economic growth.Since the early 1970s, the Chinese economy has grown by an average 9% per annum. This stupendous economic growth has resulted in millions of Chinese citizens being delivered from the shackles of absolute poverty. Out of the 1,4 billion citizens, only about 20 million still remain in absolute poverty. Their development vision is to eliminate absolute poverty by 2020.
In most African countries, economic growth has been happening but the number of poor Africans has also been on the rise. For instance, in its 2016 publication Poverty in a Rising Africa, the World Bank estimated that Africa had at least 50 million more poor people in 2013 compared to 1990, and two renowned scholars, namely Homi Kharas and Wolfgang Fengler, estimate that at least 2,4 million of new poor were added in 2017 alone.
Zimbabwe aspires to be an upper middle-income status country by 2030. It is important to highlight the fact that attaining upper middle-income status and attaining pro-poor, inclusive, employment-intensive and sustainable development are not the same. Indeed, the country can attain upper middle-income status by 2030 without necessarily reducing absolute poverty and ensuring that economic growth is pro-poor, inclusive, employment-intensive and sustainable.
The development experiences of most poor countries have shown that countries can actually attain stellar economic growth without creating decent and productive employment opportunities, a phenomenon known as “jobless” growth and/or without reducing poverty, a phenomenon known as “ruthless” growth. Productive and decent employment creation and poverty eradication must be strategically, pro-actively and directly promoted and not rely on “trickle-down”.
Ideally, therefore, the vision of the country must be explicitly and unequivocally about eradicating poverty. While the Transitional Stabilisation Programme (TSP) has clear economic growth targets, there are no clear and explicit targets on employment creation and poverty reduction.
The TSP is therefore not based on a holistic approach to sustainable development that integrates economic, social and environmental imperatives and considerations.
It is therefore vital to ensure that explicit employment and poverty targets are mainstreamed in all the macroeconomic and development policies. Importantly, employment creation must also be an explicit monetary policy objective alongside price stability. Employment creation is very important in the fight against poverty as it provides an important link between economic growth and poverty reduction.
Another vital stylised fact in development is that nations must assume full financial responsibility and autonomy over their own development process. Countries that have successfully developed have seized their economic destiny with their own hands. We need to realise that our fate is in our own hands and not in the hands of the International Monetary Fund and/or the World Bank.
No country or organisation or investor is responsible for the development of another country. Most poor countries have relied too much on donor (development/cooperating partner) funding to finance their development. Zimbabwe is a classic example.
According to the 2020 National Budget, cumulative support from development partners in 2019 is projected at US$610,4 million, with bilateral partners contributing US$449,1 million and multilateral partners US$161,3 million. While in 2020, development partners’ support is projected at US$677,6 million, with bilateral partners contributing US$506,7 million and multilateral partners US$170,9 million. Development assistance towards the health sector is projected at US$360 million in 2020 up from US$316 million in 2019.
A country that relies on donor funding is like a father who relies on a father next door to feed and clothe his family whilst he is around. This is an error under the sun and highly unsustainable. Donor funding is meant to ensure countries remain in servitude and never prosper. Even from a Biblical perspective, the blessing is never to the receiver but to the giver as the Lord Jesus Christ taught us that it is more blessed to give than to receive (Acts 20:35).
The major problem with many developing countries, especially in Africa (including Zimbabwe), is not a lack of financial resources per se, but rather poor stewardship, mismanagement and misprioritisation of the available resources. Africa is the richest continent in terms of natural resource endowments and yet Africa is the poorest continent in terms of development. We must also come up with our own home-grown macroeconomic and development policies that are bottom-up and not top-down or dictated by the IMF and the World Bank.
Importantly, government policies must be the result of a process that involves the much-needed broad-based participation of all key stakeholders, especially the working class and civil society.
The government has come up with the mantra “Zimbabwe is open for business”. While foreign direct investment is good, it must supplement domestic investment. We must not view foreign investors as our economic messiahs. Also, international investors do not come into a country to develop; hence the country needs to look inwards.
We must not put too much faith in foreign investors, but rather invest in building and strengthening the capacity of local industry. The country is currently overtaxed and overregulated, but underdeveloped. Developed countries focus on lowering and lessening economic regulations and income taxes to make it easier for citizens and organisations to thrive.
Another important development lesson is that any country can develop no matter the odds against it — whether sanctions or geographical barriers, any country can develop. We have wasted too much time crying about the effects of sanctions without innovatively coming up with effective sanctions-busting measures like other countries did. Development economics is filled with case studies of countries that have successfully busted economic sanctions and trade embargoes.
For instance, following the Unilateral Declaration of Independence (UDI) by Ian Smith on November 11, 1965, Great Britain immediately announced the imposition of sanctions, including the freezing of Rhodesian assets. Shortly thereafter, the UN passed a resolution urging member states to withhold recognition of the new regime, break economic relations, and embargo oil exports. Eventually, the sanctions were broadened, culminating in a 1968 UN resolution requiring mandatory sanctions against Rhodesia. This economic embargo ran from 1965 to 1979.
A study by the Harvard Centre for International Affairs, reveals that between 1965 and 1974 Rhodesia’s real output actually increased 6% per year “despite the depressing effect of sanctions”; the value of exports more than doubled between 1968 and 1974 and continued to rise afterward, although much more slowly.
The embargo did have important effects on the Rhodesian economy, of course. It led mainly to Rhodesia becoming more self-sufficient through import substitution industrialisation (ISI) strategy. In the decade from 1965 to 1975 the Rhodesian economy was transformed from virtually total dependence on the importation of manufactured goods in exchange for raw materials to a remarkable degree of self-sufficiency in most areas except oil and industrial plant and machinery. The Rhodesian sanctions were far more comprehensive and punitive than the targeted sanctions that Zimbabwe is currently under.
Ultimately, the greatest and most punitive sanctions have been the sanctions that we have collectively imposed on ourselves through our own acts of commission and omission. For the most part, we have allowed sectarian and selfish interests to override the national interests. The choices we have made as a country have gotten us where we are and we need to urgently change course by making different and bold choices to get us out of the rut we are in.
Dr Chitambara is a Harare-based scholar. These weekly New Perspectives articles are co-ordinated by Lovemore Kadenge, immediate past-president of the Zimbabwe Economics Society — email@example.com and mobile: +263 772 382 852.