‘Curse’ of the three Cousins: The
Triple Burden of Poverty, Inequality
and Unemployment and search for
Alternatives in Southern Africa
Deprose Muchena
OSISA
‫‪Update from Egypt‬‬
‫ما هو عليه مع القادة األفارقة‪ ،‬والتشبث والتمسك دائما على "‬
‫‪.‬السلطة‬
‫إعطاء اآلخرين فرصة من فضلك‪ ،‬هل أنت ال يمل من الوظيفة‬
‫‪.".‬سنوات‪ ،‬اعطاء اآلخرين فرصة أأ ‪30‬من ألكثر‬
Global Outlook
• 2009 experienced a wrenching recession
which deepened global poverty; widened the
inequality gap between rich and poor.
• 2010 was a year of stimulus- driven recovery
• 2011 will discover how the economy fares
once artificial support is removed but
prospects for growth are still conservative
• Growth firmed up at 2.7% in 2010 and is
expected to hit the 3.2% mark for 2011
Global Outlook
• Poverty and inequality forecasts remain bleakbased on latest projections
• 5 million additional children to suffer severe
malnutrition
• 50 million more people entered the poverty
bracket in 2009 as a result of the global
economic crisis
• Some 64 million more people were expected
to enter the poverty bracket by end of 2010
Key issues: Poverty and inequality
• Unemployment is rising, the gulf between the “resource rich” and
the “resource poor” is widening and poverty is growing .
• This has far reaching implications on human development, welfare
indicators and on programmes to eradicate poverty in particular.
• Literature suggests that anti-poverty measures have been more
successful in areas where there existed less inequalities prior to
reforms.
• Literature also suggests that to be successful inequality busting and
anti poverty measures require good governance and democratic
economic policy making to thrive.
• State and civil society programmers must show an understanding
the origins and underlying causes of inequality.
• Interventions should focus on initiatives that tackle the structural
causes of poverty and inequality in the region.
State of inequality in Southern Africa
Distribution of income or consumption, 2010 World Development
Country(Year)
Percentage share of income or consumption
Gini Index Lowest 10 percent (%)
Highest 10 percent (%)
Botswana(2005-06)
61.0
1.3
51.2
Congo, Dem. Rep(2005-06) 44.4
2.3
34.7
Lesotho (2002-03)
52.5
1.0
39.4
Malawi (2004-05)
39.0
2.9
31.7
Mozambique (2002-03)
47.1
2.1
39.2
Namibia (1993)
74.3
0.6
65.0
South Africa (2000)
57.8
1.3
44.9
Swaziland (2000-01)
50.7
1.8
40.8
Zambia ( 2004-05)
50.7
1.3
38.9
Inequality between illustrated
• Belgium= 10 million people (2006)
• Belgian GDP in 2006= US$467.3 billion
• SADC= 250 million people ( 2006)
• SADC GDP $374.2 billion- (2006)
Therefore
• The Gini coefficient, a measure of the level of inequality in the distribution of
income is extremely high in the region. In a society where everyone is equal,
the coefficient is 0, and if one person holds all resources, it will be 1. Thus,
its value is between 0 and 1. The higher the figure, the greater the level of
inequality.
• Most industrialised countries have Gini coefficients of between 0.24 and
0.36 but the USA has a coefficient of 0.4. Countries with the highest
coefficient (and thus the highest levels of inequality) include Brazil, Namibia,
South Africa and Botswana.
• When analysing the social and economic performance in Southern Africa,
we need to keep in mind that national statistics hide the actual inequalities
that exist within countries. The indicators for countries like South Africa,
Namibia and Botswana hide the poverty of the majority behind the enormous
wealth of a small minority of the population.
•
Poverty levels in Southern Africa worsened during the implementation of neoliberal policies. Botswana for example had average economic growth rates of
13% between 1970 and 1990 but could not eradicate the high levels of poverty.
What matters is not the quantity of growth but its quality. Only inclusive, broadbased growth promotes sustainable human development.
Inequality between illustrated
• Belgium= 10 million people (2006)
• Belgian GDP in 2006= US$467.3 billion
• SADC= 250 million people ( 2006)
• SADC GDP $374.2 billion- (2006)
A regional economic overview :
i) Settler based economies such as Zimbabwe, South Africa and to
some extent Namibia. Productive forces there are developed to
some degree in the formal sector, due to import substitution
strategies before independence. But inequality is massive.
ii) South Africa’s periphery economies such as Botswana,
Namibia, Lesotho Swaziland (BLNS). They depend on South
Africa for imports and employment an remittances.
iii) Mineral rentier economies such as Angola, Zambia, Botswana,
Namibia and the Democratic Republic of Congo. They depend
on a single or small number of rich export commodities like
minerals or oil.
iv) Agrarian economies like Malawi, Mozambique and Tanzania
depend on a narrow range of export agricultural products.
They are among the poorest countries in the region, depend on
rain fed agriculture and are thus vulnerable to food security in
changing climate context.
Regional Paradox - rich but poor!
• Mozambique – still depend of 50% of national budget support
directly from development aid ( Donors). (Polana vs Machaken)
• Lesotho, Malawi and Zambia- 35 % annual budget support
• Botswana- recipient of 1, 5 billion from the ABD in the last year
for the first time in many years.
• Angola- even though not entirely dependent on ODA, it is starting
to receive money from the IMF and more from China. (Beware of
debt trap)---- Poverty and Inequalities are high- Miramar vs Boa
vista)
• Zimbabwe waiting for donor resources to take off recovery
US$8bn- Structural, historical and systematic. (Borrowdale vs DZ)
• Economic growth has not led to human development ( Jobless,
ruthless, futureless, rootless and voiceless growth patterns are
evident)
Structural problem
• Region inherited structural legacies that continue to
shape, produce and reproduce underdevelopment
which leads to a developmental crisis.
• The Problem of grafted capitalism:
• After colonisation, the region, like the rest of the
developing world inherited special type of social
formation where the capitalist sector of the economy
was grafted onto a pre-capitalist form of production in
a distorted manner.
• This kind of capitalism did not transform the economy
as a whole, thus failing to produce dynamic growth and
development. It was totally dependant on external
factors such as markets in, and capital from Europe.
Inherited underdevelopment.....
• Africa was thus shaped by a grafted capitalism rather
than an endogenously (internally) evolved capitalism.
• The legacy of Dualism and Enclavity: Consequent upon
a grafted capitalism, enclave development followedin which a developed and diversified formal economy
sits alongside an underdeveloped peasant-based
subsistence rural economy.
• This structure created three conceptual sectors of the
Southern African economy which feed on each other
but remain structurally problematic in the main.
Producing three less than optimally
developed sectors of the economy
• Formal Sector: which consists of capitalists and wage workers,
catering for less than 20% of the labour force. This sector
consists of enterprises of various sizes (either state-owned or
privately owned) and is relatively productive compared to the
other sectors. External forces such as Africa’s trading partners
and foreign investors shape output and production methods
• Urban Informal sector: This is a residual factor which has
come to have a high degree of permanence. Characterised by
easy entry and exit, linked to both formal and rural sectors &
driven by self employment activities & ingenuity of individuals.
About a third of labour force are here.
• Communal sector: This is the original traditional or precapitalist sector with all the variations this entails in the
African context. It is highly differentiated with a number of
linkages to the formal and informal economy .
Leading to Distortions
Where Africa’s continued underdevelopment is perpetuated by a number
of factors including :
• External dependency (shown in trade, technology, information,
human resource and capital flows), which maintains the enclave
economy.
• Distributive inefficiencies resulting in the non-formal sectors having
unequal access to productive assets and markets.
• Allocative inefficiencies which make the formal sector unnecessarily
capital and technology intensive (thus reducing its requirements for
labour) while the non-formal sectors tend to be without capital and
technology, thus making productivity increases almost impossible.
• Technical inefficiencies result in low technological capabilities, thus
limiting the adaptations that can be made to production techniques
and the nature of products and services produced. This in turn
prevents the establishment of value chains. Thus, levels of
productivity of labour, capital and land tend to be low compared to
optimal methods of production.
Natural resources extraction reinforces
the problem.
• Extractive industry has fuelled the inequality and poverty: As the EI
gains prominence as a basis for economic development so does the
negative indicators of human development.
• EI takes place in the context of enclave developments where the
extractive zones become enclaves, and become the centre of
government and private sector attention and not the basis of
diversification:
• So, while oil, copper, gold, diamonds, chrome, gas, bauxite, fisheries,
platinum are in plentiful supply in the region, unemployment is
increasing, poverty is deepening and inequality between and within
countries is widening.
• Growth rates are often very high in Mozambique , in Angola, Malawi,
they are particularly very high- but that has not translated into
human development. IN FACT the opposite takes place---
Study reveals worsening social indicators......
• More than 60% of the population in SADC lacks access to an adequate supply of
safe water –which means they bare vulnerable to disease.
• About a third of the SADC population lives in abject poverty and about 40% of the
labour force is unemployed or underemployed. Poverty levels have not
only increased, but have also become more pronounced in urban areas and
amongst female-headed households in particular.
• Levels of income inequality in the region are amongst the highest in
the world, with most countries having a Gini co-efficient of more than
0,5.
• The distribution of resources and income is highly skewed and in some cases
racially biased, for example in South Africa where white nationals
constitute around 5% of the population and own over 80% of the
land.
• When measured against the Human Development Index (HDI) ---life
expectancy, education and standards of living, seven SADC countries fall in the
medium category while six are in the low HDI group.
Way Forward
• Fighting poverty , creating employment and reducing inequality
require a development strategy that recognizes three factors:
• The “social factor”, meaning how people’s basic human rights are
safeguarded and how vulnerable people are protected against
poverty and exploitation by elites and other vampire elements of
society.
• The “democratic factor”, meaning how the political system
functions, how decisions are made and implemented, how
resources and opportunities are distributed and how justice and
fairness is achieved.
• The “global factor”, meaning how the system works at global level,
how decisions are taken and implemented, how global resources
are controlled and distributed and how this global system affects
Africa.
Towards a Human Rights Approach to
Development
• Development is not just about economics. It includes human
rights, community rights and the right to national or regional
self-determination. It also deals with issues of equity and
fairness in the distribution of resources at local, national,
regional and global levels.
• The provision of social services such as water, energy, health
and education cannot be guaranteed for all if they are left to
market forces. Social services are not matters to be privatised
as they are part of basic human rights and states have the
responsibility to secure them for all their people.
• The state must therefore be developmental as well as ethical,
responsible and accountable to the people.
Developmental Consensus Needed
• New developmental compact premised on a new
developmental governance framework which sees
development as a right for people
• Rights based development fundamentals must be the
anchor of social policy
• Development must lead to a better life for ordinary
people and eradicate poverty. This can only be
achieved if development is based on the promotion
and protection of human rights, which include:
• Civil and political, socioeconomic and cultural rights
A new developmental paradigm is needed!
• Bold measures of transformation – not marginal programmes and social
protection projects.
• The state must take the lead to transform the legacy of underdevelopment
towards inclusive and equitable development.
• This calls for presence of democratic developmental states.
• Developmental states must be planning organisations that appreciate and
encourage active stakeholder participation and growth that leads to human
development . Areas to be addressed are:
• A developmental vision for a country with appropriate participation of
people the economy and in its attainment.
• A comprehensive development strategy developed.
• Co-ordination of activities of various economic agents.
• Setting a legal and regulatory framework; and
• Promoting economic restructuring and upgrading as a public good.
• More importantly, developmental states are democratic and accountablethey are not attractive autocracies.