Editorial
Analysis
Economic development without
employment opportunities
It is said that the economic development in Tanzania since the mid-1990s has
risen more steadily thus overtaking the population growth rate, yet unemployment
among women and the youth is rising.
Neither the ongoing trade liberalization which has ushered in foreign investment
including the introduction of Export Processing Zones (EPZ) nor privatisation
should be seen as a solution to unemployment and poverty reduction.
The Third Progress Report (2002/03) of the country’s Poverty Reduction Strategy
Paper (PSRP) reveals that in 2002, the GDP growth rate registered 6.2 per cent,
surpassing the PSRP target of 6.0 per cent.
According to the Report, in 2003 the rate slid back to 5.5 per cent. This is in
contrast to the early 1990s when the GDP annual growth rates were often lower
than the population growth.
The overall performance is said to reflect a positive impact of the economic and
fiscal reforms undertaken since the 1990s, but unemployment in the country was
higher amongst women and the youth than men in urban areas.
The government is addressing unemployment through policy development in the
private sector, small and medium enterprises, agriculture, micro financing and
EPZs.
The efforts by the government include measures of enhancing productivity through
job and business skills, access to flexible loans and market support for poor
women. But the biggest question remains how far the recorded growth can be
translated into poverty reduction over the coming years.
Time has come for the government to ensure that whenever the economic growth is
pronounced, it should be measured through the degree of poverty reduced and the
availability of employment, particularly for women and the youth.
KMC must improve market
infrastructures
A few days ago Dar es Salaam was gripped with heavy downpours which affected not
only residential areas but business premises, especially at the Kariakoo market.
Registered businessmen who conduct their activities within the vicinity of the
market had a very difficult time during the rainfall; to the extent that their
daily sales were greatly affected because no customers could visit them.
The businessmen were reportedly complaining that despite the heavy fees they are
obliged to pay to the Kariakoo Market Corporation, the market infrastructure is
not very conducive for them especially during downpours as the area is often
flooded with water.
The traders went on saying that there are no tents to protect their commodities
which are mostly agricultural in nature; as a result they are forced to suffer
unnecessarily.
It should be remembered that the Corporation doubled its revenue from Tsh. 63
million to 81 million in the first quarter of 2003/4 fiscal year, and vowed it
would embark on correct strategies to improve the infrastructures including the
outside market facilities.
It is true that the Corporation endeavoured to make the environment for small
scale business rather favourable. A total of 210 structures were made making the
total structures 1,119. But there were no deliberate efforts to put tents
surrounding the market which is important.
It is however incredible to hear businessmen complaining of things which the
management maintain has already been done. According to the KMC General Manager,
Kuboja Ng’ungu the work to put tents to protect the businessmen against intense
sun and rainfall was done through a contractor.
It is our sincere hope that the management will pull up its socks and formulate
a solution to the problems that the traders face. It is necessary to do so for
the sake of development.
Analysis
Food security step up in the
SADC region: More efforts needed
By Timothy Kitundu
Food insecurity is on the increase in the Southern African Development Community
(SADC) Region. Despite the remarkable improvements and efforts made in
aggregating production in some member countries, and the fluctuations stemming
from the erratic rainfall patterns, there remains an underlying food crisis.
SADC statistics indicate that while the Region’s cereal production has remained
stagnant at around 22,000 tonnes during the last decade, the Region’s population
grew from 152 million to about 212 million, which poses a threat.
Experts say that, excluding South Africa, the number of food-insecure people in
the region for the period under review is estimated at 39 million.
For the same period, at least four countries (Angola, Malawi, Mozambique and
Zambia) had a per capita calorie consumption of below 2,000 per day, the crude
average daily requirement per individual.
Moreover, about one out of every four child under the age of five is
undernourished, thus indicating that hunger is and will remain a primary
challenge in Southern Africa.
With a rapidly increasing population, as cited before, even with the
satisfactory economic growth, the Sub-Saharan region was estimated to have 300
million undernourished people by 2000, nearly half of the world’s total.
Poverty is the underlying cause of hunger and malnutrition, and about half of
the population in the region live in poverty. More than 75 per cent of the poor
are rural people earning their livelihoods from agricultural activities or from
non-farm activities that depend mostly on agriculture.
For this group, the production of food staples relative to the self-sufficiency
level indicates an overall declining trend. As the growing urban population and
a significant portion of the rural population are net buyers, growth in income
and sustained low inflation rates are key determinants of the purchasing power.
Agriculture on the other hand is the major economic sector in the SADC region,
accounting for an average 35 per cent of GDP. Agricultural produce is a dominant
export in most member countries averaging about 26 per cent.
In mineral-poor countries like Malawi, agricultural produce account for over 60
per cent of export earnings. Of the gross available land base of 477 million
hectares (excluding DRC and Seychelles) five per cent is under crops, 41 per
cent is range land, 33 per cent is forest and woodland and 21 per cent is
classified as unsuitable for agricultural use.
Despite all the important facts that attribute for agricultural activities to be
given its due priority, not much has been done practically. Most programmes and
strategies drawn to counter food shortages are either not implemented or are
long overdue.
But putting the blame on the member state governments only does make little
sense. The SADC member countries have outlined a number of strategies aimed at
freeing the region from food shortage. A good example is the recently launched
Dar es Salaam Declaration on Agriculture and Food Security.
At the heart of the declaration is that member states have vowed to ensure the
availability of key agricultural inputs, namely improved seed varieties,
fertilizers, agro-chemicals and farm implements. But again, only concerted
efforts can make implementation of this initiative a success.
Moreover, under the Special Programme for Food Security (SPFS) in the SADC
region, it is expected that, in keeping with their commitments for halving the
number of hungry people by 2015, most countries of the sub-region will seek to
progressively extend the SPFS to cover a larger number of sites.
During the extension of phase 1, as planned in Tanzania, activities are being
broadened to include agricultural marketing, rural finance credit, support
services skills and capacity amongst farmers.
As the pilot programmes are extended to an increasing number of sites,
governments may wish to build on this and other relevant experiences and
formulate a second phase programme at national level with three main components.
These are agricultural policy reforms, a medium term investment programme and
the identification of bankable projects to expand projects initiated in phase 1.
Perhaps one of the biggest challenges facing the region in terms of food
security is the structural adjustment programmes (SAPs), which the majority of
the member countries are at various stages of implementing.
In some countries, for example Zambia, the state has withdrawn from agricultural
and food markets save for the maintenance of strategic grain reserves. In
others, the role of the state marketing institutions is rather vague, or the
state is acting as a buyer and seller of last resort players in the open grain
market.
The long term success or otherwise of SAPs in the predominantly
agriculturally-based economies of the region is debatable, although they have
resulted in short-term adverse effects particularly for vulnerable groups like
rural communities in marginal areas and the urban poor.
Critics of orthodox SAPs maintain that the reforms make sense at the macro
level, but have high social costs which hurt mostly the poor. These adverse
effects are exacerbated by lack of or poorly designed and implemented safety
nets within the reform programmes.
There is growing evidence that in dual agricultural production systems, reforms
have benefited large scale commercial farmers, who are exporters.
The position of smallholders and those producing staple food crops has worsened
compared to the large cash crop producers.
Therefore, when looking at the issue of food security in the SADC region, it is
advisable to focus on the various strategies established without forgetting to
place the strategies against external programmes such as SAPs and acknowledge
their impact.
It may happen that as more efforts are made to implement the strategies, SAPs
may be indirectly de-railing the end-products of these efforts.
We have now to borrow a leaf from countries like India and China which have
populations of over one billion people, yet they have achieved self sufficiency
in food production. Why not the SADC region?
How not to spend it
JAPAN’S captains of industry slide anonymously through the Tokyo traffic in
chauffeured black limousines. America’s bosses hurtle importantly about in
powerful Mercedes, Ferraris and BMWs. Azim Premji, the chief executive of Wipro,
an Indian technology company, navigates the murderous traffic in Bangalore, his
company’s home city, in an ancient Ford Escort. The car is so decrepit that Mr
Premji has had to seek assurances from Ford that the company will continue to
service it.
Mr Premji’s old banger says much about the man who has helped Wipro fight its
way to the front of India’s IT-export boom. Wipro is one of the country’s
biggest, fastest-growing and most valuable information technology firms. Since
2000, Mr Premji has tripled his firm’s profits, to $230m, and more than doubled
sales, to US $1.2 billion. On a good day in the stockmarket, the 84 Percent of
Wipro that Mr Premji owns is worth $13 billion. If any of this has gone to his
head, however, Mr Premji hides it well. Modest and quietly spoken, he seems
vaguely embarrassed by his status as India’s richest man. His conspicuous
under-consumption says something about the status of his company, too.
Financially, Wipro goes from strength to strength. Politically, however, the
firm may not be on quite such a sound footing.
The politics that have most alarmed Wipro’s shareholders this year have been
taking place in America. The company specialises in taking IT work done in
America (as well as in Britain and other rich countries) and moving it to
low-cost India. Such “outsourcing” has boomed through America’s IT recession,
and beyond. This has fed suspicions that the growth of Indian IT firms like
Wipro, Infosys and Tata Consultancy Services (TCS) has destroyed American jobs,
creating a political backlash. Those fears have faded as the job market in
America has recovered, and as American firms have found ways to manage the
politics of outsourcing more skilfully. Confirming this, on October 15th Wipro
reported strong results for its second quarter, including a 47Percent rise in
sales over the same quarter in 2003, and a 67 percent increase in profits.
Potentially, American and European firms could outsource far more IT work to
India, if the political climate permits it. Since March, Wipro’s shares have
risen by about 50 Percent.
Somewhat neglected in this happy analysis, however, is the politics at home.
Indian politicians seek Premji’s counsel. The local press celebrates him as a
symbol of India’s emerging global competitiveness. But to Indian businessmen,
Premji belongs to a pampered and resented elite. Firms operating out of
technology parks, such as the one Wipro occupies in Electronics City in the
suburbs of Bangalore, pay no income taxes on export profits for ten years.
More galling is the preferential treatment India’s high-tech businessmen get
when land is dished out. Finding good land with clean title is one of the most
challenging tasks a small business faces in India. Feted companies like Wipro
get a free pass. Every state wants its own IT champions. Last month, the state
of Tamil Nadu announced it was reserving 85 acres of land for Wipro on its
planned “Knowledge Industry Township” on the outskirts of Chennai. Wipro,
Infosys, TCS and others get the pick of whatever land the state government has
to dole out.
Then there are the fat salaries that Wipro pays. By American standards, Premji
hardly feeds at the trough: he paid himself a wage of US$48,000 last year, along
with a commission (based on 0.1Percent of net profits) of US $258,000 and perks
worth US $65,000. But by the standards of India, where the average annual income
is US $540, Wipro’s boss collects a king’s ransom. Vivek Paul, Wipro’s
vice-chairman, is based in America and earns over $1m. As its share price has
soared, Wipro’s local rival, Infosys, has created nearly 100 millionaires in
dollar terms. Amid the grinding poverty along Bangalore’s Hosur Road, which
leads to Electronics City, a BMW dealership has sprouted recently—and not
everyone is choosing to stick with the old Ford Escort. New money is regarded
with suspicion everywhere.
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