Thursday, April 07, 2011

Poverty amidst economic growth raises concerns

COMMENT - We need three things: 1) massive taxation or nationalisastion of the mines to finance economic diversification; 2) decentralisation of government to local coucnil level; and 3) a switch to Demand Side Economics, away from Supply Side Economics (neoliberalism - privatisation, deregulation and free markets for transnational capital).

Poverty amidst economic growth raises concerns
By Masuzyo Chakwe
Thu 07 Apr. 2011, 04:00 CAT

REAL economic growth should translate into improved health care services, increased employment levels and improved infrastructure, says Professor Mubiana Macwan’gi.

Prof Macwan’gi, who is a research professor of public health and director of the Institute of Economic and Social Research at the University of Zambia, said the benefits of the economic growth were not trickling down, as evidenced by glaring inequalities in almost all the sectors and the obvious rural deprivation.

She said this was also evidenced by the large population of the urban poor against a small clique of middle class.

“The benefits are not trickling down to the majority of people in Zambia especially in those areas where the mining is actually taking place. However, to some extent, we are seeing the emergence of a ‘middle class’ in Zambia who are benefitting from the economic growth, though the majority of Zambians are not benefitting,” she said.

Prof Macwan’gi said poverty and unemployment had increased during the period of steady growth as could be seen by the deplorable or non-existence of infrastructure especially in the rural areas.

She said the majority of the population remained poor or become poorer, implying that only a small proportion of the population and few privileged ones had benefited.

“Poverty levels are increasing as reflected in poor housing, unemployment (especially among the youth), poor infrastructure and poor access to social services such as health and safe water. Rural poverty also remains high making it difficult for poor people to move out of the poverty cycle,” she said.

Prof Macwan’gi said the growth had been lop-sided toward the mining industry, and was not felt in other sectors like education, health and roads.

She said there was need to review incentives given to foreign companies in terms of tax breaks and by creating an environment which would encourage Zambians to get more interested in diverse business opportunities which would benefit from the economic growth.

Prof Macwan’gi said access to finance also needed to be encouraged and regulated because microfinance institutions had prohibitive interest rates for their loans.

She said there was need to undertake studies that would shed light into how correct the inflation figures were or how appropriate the indicators used were.

Prof Macwan’gi said this would explain why inflation was reported to be falling while prices of general goods were rising.

She said to increase benefits of growing economy to the public, the state must take a centre role in re-distribution of national income.

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