Editorial
Analysis
Banks should target salaried
employees as borrowers
Many banks in Tanzania received good news lately when the banks’ performances
were presented. Almost all major banks’ performance was good. Almost all banks
made profits.
Following from this, it is said that total deposits now amount to US$ two
billion about Tsh. two trillion.
But experts say that the accumulation of deposits should go abreast with
investing; one means of this is through lending.
If banks accumulate deposits and the money stays idle, then it is regarded as
being useless as it cannot generate further income to the banks in terms of
interest from borrowers.
Similarly, if the money stays idle, the productive sectors namely SMEs and other
players such as private and public sector employees cannot contribute to the
growth of the economy as they have no capital bases.
Again, most banks prefer sitting on the deposits because they have tough lending
conditions, claiming that they operate in a risky market and that most potential
borrowers either do not have collateral or lack the culture of loan repayments.
Although the banks avoid bad and doubtful debts, bulk accumulation of deposits
is a financial hazard.
However, there are banks that are willing to change. Twiga Bancorp has initiated
a product that facilitates loans to employees. This is welcomed as employees
need to access credit facilities in a bid to improve their economic abilities.
Most banks should stop investing solely in government securities but should
device ways whereby they can establish products that can enable employees to
borrow from them.
The time has come for small holders and employees to be considered for credit
facilities. Let banks now change their operation modes by designing special
products to cater for this group.
Breaking records
For most people, in most other circumstances, profit is a mark of success, and
in most countries corporate profits are currently booming. Last year, America’s
after-tax profits rose to their highest as a proportion of GDP for 75 years; the
shares of profit in the euro area and Japan are also close to their highest for
at least 25 years. UBS, a Swiss bank, estimates that in the G7 economies as a
whole, the share of profits in national income has never been higher. The flip
side is that labour’s share of the cake has never been lower. So are current
profit margins (and hence equity values) sustainable? Are they fair?
If the share of wages in GDP continues to slide, there could be a backlash from
workers who feel short-changed. Yet the chances of this are lower than before.
The old divide between “them” and “us” is becoming blurred: many workers also
own shares directly or through pension funds, which sooner or later will give
them a slice of profits. In any case, there are good reasons to believe that
profits growth will soon slow sharply and that workers will make up some of
their lost ground.
The usual explanation for why profits are booming is that productivity growth
has increased thanks to the computer revolution and tougher management. Thus,
goes the argument, increased productivity and hence lower production costs mean
fatter profit margins. History suggests otherwise. It is normal for the share of
profits in national income to rise during the early stages of a technological
revolution, but then those extra profits tend to be competed away.
However, there is another factor that might have raised the return on capital
relative to labour in a lasting way, namely the integration of China and India
into the world economy, along with their vast supply of cheap labour. To the
extent that this increases the global ratio of labour to capital, it will lift
the relative return to capital. Outsourcing may not have destroyed many jobs in
developed economies, but the threat that firms could produce offshore helps to
keep a lid on wages.
Stockmarket investors seem to think otherwise: current share valuations appear
to assume that profits will continue to outpace GDP growth. Most analysts still
expect American profits to grow by an annual 10% over the next couple of years.
But this looks unlikely, and if so, share prices are overvalued. Both economic
theory and historical experience argue that, in the long run, profits grow at
the same pace as GDP. Such long-standing rules deserve more respect.
Analysis
Tough
challenge ahead for CHODAWU in fight against child labour
The reasons for why children
start working at a tender age are many: poverty, lack of sufficient education
opportunities, unstable family backgrounds and not the least the attraction of
city life, spurring the dream of ‘how to make it’ in towns. CHODAWU has embarked
on a mission to prevent children from becoming victims of the Worst Form of
Child Labour. But as Timothy Kitundu explains, it is an uphill task.
There is no doubt that the Conservation, Hotels Domestic and Allied Workers
Union (CHODAWU) have a long and cumbersome journey ahead in its course of
fighting the Worst Forms of Child Labour (WFCL) in some Tanzanian districts. The
fight is part of its Time Bound Programme (TBP).
As one of the key implementing agencies, CHODAWU is currently spearheading the
implementation of the action programme entitled ‘Withdrawn Rehabilitation and
Prevention’ of 7,500 children from abusive domestic child labour in six TPB
districts.
The concerned districts are: Temeke, Ilala, Kinondoni, Arusha, Iringa, and
Kondoa.
A progress report compiled by CHODAWU reveals that despite the challenges and
constraints faced in the course of implementation, CHODAWU proceeded with the
implementation accordingly.
During the reporting period, a number of lessons and practices have been
observed at the community level.
According to Vicky Kanyoka CHODAWU Programme Coordinator, specifically, the
project aims at preventing the recruitment of 7,500 child domestic workers in
the mentioned districts.
Furthermore, the project seeks to identify, withdraw, rehabilitate and prevent
from abusive domestic child labour about 2,500 children and provide support
services such as counselling, skills training and educational alternatives.
The other objective is to identify 1,200 poor parents and households at risk and
provide small scale grants for income generating activities in the six districts
targeted.
The CHODAWU concept here falls under two strategies which are aimed to wage war
against abusive domestic child labour. The first strategy is to prevent the
recruitment of children and the second is to withdraw those already in the
force.
To two strategies coupled a third strategy is added that aims at identifying,
withdrawing and rehabilitating children who have already fallen victim to the
malpractice of abusive domestic child labour in the mentioned areas.
During the period under review (January to April 2004) CHODAWU had carried out a
number of activities including sensitisation, mobilization and planning
workshops in Ilala and Kondoa districts.
The activity that followed was physical and social mapping, identification,
withdrawal and prevention of children from the exploitative and abusive services
and strengthening of child labour committees.
This was followed by the establishment of drop-in-centres and provision of
counselling services to children at risk and those withdrawn from hazardous
domestic work.
The seminars involved various stakeholders that clarified on the WFCL and the
way it differentates between child labour and child work, which presented an
important entry point. In Kondoa for example, it was quite a new concept.
The seminar also outlined the effects of WFCL on children, society and the
nation which was followed by strategies and actions to be taken in the
prevention and withdrawal of children from the districts targeted.
However, during the seminars, some startling revelations were made by
participants. The following is a typical example by participants from Mchafukoge
and Jangwani Wards in Ilala District.
Domestic workers were sexually abused;
Majority of the house girls who work under exploitative and abusive manner are
afraid of revealing of what is done to them for fear of losing their jobs;
Most children engage themselves in WFCL in order to make ends meet as a result
of poverty;
Unconducive environment in the villages and lack of recreational facilities and
tools lead these children to WFCL;
Child abandonment, marriage breakages, death of HIV/AIDS and extended families
contribute to sending children into WFCL;
The participants bitterly blamed the central government for not supporting
children who involve themselves in WFCL.
As for Kondoa District, WFCL occurred as a result of absenteeism of children
from schools. Walking long distances to schools in most cases lead children to
abscond from classes and involve themselves in WFCL.
The rural-urban child migration was rampant due to the success stories told by
friends that urban centres were the solution for rural poor as they provided
them with employment.
The Sandawe zone provided a good case study for reasons why children abscond
classes and involve themselves in WFCL. The zone experiences hunger and
prolonged droughts depriving people of food prompting the children to drop out
of school.
As the zone has no secondary school centres, children who complete standard
seven do not have any other alternative except to opt for WFCL or become
pastoralists. In general, although CHDAWU still needs support particularly from
stakeholders, it realized a number of achievements.
Already, according to Kanyoka, for example in Kondoa District, all wards have
come up with action plans involving all important activities and strategies. All
seven wards in the two districts laid down the strategies and action plans to be
undertaken to reduce WFCL.
The work which is being spearheaded by CHODAWU is commendable. In other words,
CHODAWU has shown the way, what remains is for all stakeholders to face the
challenge posed.
Most crucial, participants pronounced that the central government does not
support children involved in WFCL.
The central government should take this challenge and start supporting
organizations such as CHODAWU who are engaged in the war against WFCL.
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