Latest News Editor's Choice


Opinion / Columnist

There is no trickle down, comrades

08 Feb 2015 at 09:26hrs | Views
Zim-Asset recognises human resources as one of the key drivers of the economy and postulates that socio-economic transformation will be largely propelled through the "judicious exploitation of our human and natural resources".

Professor Guy Mhone defines the economic problem in Southern Africa as one of underemployment and unemployment. He submits that the analysis of this economic problem lies in an understanding of historical factors and how these economies are structured.

The Zhuwao Institute is an economic, development and research think tank focused on integrating socio-political dimensions into business and economic decision and policymaking.

Unfortunately of late, the Zhuwao Brief has been involved in conducting analyses that are of a more political nature as opposed to being economic and developmental.

The Zhuwao Brief will be taking a decidedly more economic and developmental outlook henceforth by initiating this fourth series of discourses on "Dialogues for an empowered society and a growing economy".

The Zimbabwean economy is currently experiencing challenges which the Zhuwao Brief believes are surmountable provided the correct diagnosis is conducted.

The discourse is focused at addressing what needs to be done to be able to fulfil the Zim-Asset vision of an empowered society and a growing economy.

The Zhuwao Brief has chosen to unpack and interrogate the late Professor Guy Mhone's seminal contribution in 2000 on "Enclavity and the Constrained Labour Absorptive Capacity of Southern African Economies".

It is hoped this will popularise the work of this lecturer at two of my former schools - the Department of Economics at the University of Zimbabwe and the Wits School of Public and Development Management - where he served as director.

Prof Mhone's treatise appears to have received acceptance across the political divide with Ledriz, the ZCTU and MDC-aligned think tank, using it as the basis for its 2011 book "Beyond the Enclave: Towards a Pro-Poor and Inclusive Development Strategy for Zimbabwe".

Zanu-PF is already implementing measures consistent with the themes of Mhone's thesis.

Unfortunately, the polarised nature of our discourses in Zimbabwe may have resulted in Prof Mhone's submissions being misunderstood and ignored in some quarters.

The Zhuwao Brief hopes to decontaminate the intellectual and academic content of his thesis in a manner that facilitates for its effective use as a basis on which Zimbabwe can fulfil her economic transformational and developmental aspirations.

The current series on "Dialogues for an Empowered Society and a Growing Economy" will unpack the concept of enclavity by firstly summarising Prof Mhone's thesis.

The next article will interrogate the concepts of underemployment and unemployment and relate them to the current reality of the Zimbabwean economy.

The third in the series will explore in more detail the concept of enclavity and the dual nature of Zimbabwe's economy.

Article four will describe models of the enclave economy and how enclavity and economic dualism has been further entrenched by the opening up and liberalisation of our economy.

The fifth article will highlight how the post-Independence conflation of the dual economies in Zimbabwe resulted in flawed analyses and erroneous economic prescriptions.

Article six will consider how Prof Mhone proposed to resolve enclavity and enhance labour absorptive capacity.

The series will conclude by questioning what Zimbabwe has done in resolving enclavity and the low labour absorptive capacity of its economy.

Prof Mhone defines the economic problem in Southern Africa as one of underemployment and unemployment.

He submits that the analysis of this economic problem lies in an understanding of historical factors and how these economies are structured.

Prof Mhone posits that the solution to the economic problem of underemployment should be premised on a paradigm shift that abandons the traditional and conservative economic theories of trickle down, and replaces them with strategies that seek to restructure productive bases to make them more inclusive.

Underemployment or capacity underutilisation?

Prof Mhone defines the problem of the economies of Southern Africa as being underemployment and unemployment.

He contends that this problem is double faceted in that, first, the majority of the labour force in African countries continues to be unemployed or underemployed; and, second, despite increases in GDP and investment, the response of employment still remains low.

Prof Mhone terms this as the problem of low labour absorptive capacity of African economies.

He conducted his analysis for the International Labour Organisation as part of the Southern African Multi-disciplinary Advisory Team (SAMAT), based in Harare.

SAMAT was providing services to nine Southern Africa countries and published a series of discussion papers on labour and social issues. SAMAT sought to create on-going dialogues with governments, workers and employers by promoting ratification and application of ILO conventions in a regional context, presenting ideas for new labour and social policy directions, and providing regional statistical data and comparative analyses which enable the member states to learn from others' experiences.

So, to what extent is that analysis relevant and valid to Zimbabwe? How does Prof Mhone's thesis relate to the quest for an empowered society and a growing economy?

Zim-Asset recognises human resources as one of the key drivers of the economy and postulates that socio-economic transformation will be largely propelled through the "judicious exploitation of our human and natural resources".

Underemployment of human resources has the direct implication that there will be less production, and the knock-on effect of delaying the realisation of an empowered society and a growing economy.

The dual economy legacy

Prof Mhone postulates that an analysis of underemployment will return a result that is firmly rooted in the Southern Africa's economic history.

He submits that Southern African economies developed along two separate tracks resulting in a dual economy.

On one track was what he referred to an "exogenous implanted grafted economy" designed to serve the interests of colonialists.

The grafted economy was formally recognised and operated according to capitalist tenets of capital accumulation.

The other track was an economy that served the wider indigenous population and was characterised by high levels of underemployment.

This parallel economy was largely unrecorded and normally referred to as the informal economy.

Its preoccupation was subsistence as opposed to capital accumulation.

Prof Mhone argued that independent African governments uncritically accepted the enclave formal sector as the growth engine.

This was reinforced by an erroneous belief that trickle-down effects from formal sector growth would eventually absorb the rest of the labour force into productive activities.

As a result, the problem of underemployment has persisted.

Economic development

paradigm shift

Prof Mhone argues for a shift from the paradigms that assume there will be trickle-down benefits from the formal enclave economy.

Evidence shows there has been no trickle-down effect, especially if one recognises that the Economic Structural Adjustment Programme of 1991 was launched the year after Zimbabwe experienced her largest post-independence economic growth rate of 9,1 percent.

There was a growing pool of school-leavers joining the job market and not finding employment.

Prof Mhone proposed changes to the prevailing conventional economic policy regimes to policy regimes that are informed by the structural limits of the enclave model of growth and guided by the need to proactively restructure the legacy of the colonial economy in order to launch a basis for more inclusive development.

He submitted that the state needs to institute proactive measures which are necessary to restructure the productive base of the economy by making it more inclusive of the majority of the labour force. This could be accomplished through a number of interventions that broaden the asset and income entitlements of the majority of the labour force, in particular through policies that are decidedly biased toward those activities that would absorb such people more.

This has been the case in Zimbabwe with the land reform programme.

The provision of land is one such asset entitlement which enables society to be more fully employed.

This has been augmented, in the tobacco production sector, by the provision of contract farming arrangements which bolster the asset entitlements of land with income entitlements out of full production and employment.

However, to what extent have we as a nation unpacked the success of the tobacco production story within the context of Prof Mhone's treatise?

Why do we still continue to operate within a framework that assumes that foreign direct investment will lead to trickle-down effects that will materially affect our society when evidence is abundant to the contrary?

Our policymakers need to review the basic fundamentals that shape and inform their approach to economic policy.

Zanu-PF's aims and objectives are consistent with Prof Mhone's thesis. Its actions in terms of empowerment are such that Zimbabwe can realise its vision of an empowered society and a growing economy.

The Zhuwao Brief will be expanding on these issues in detail in this series on "Dialogues for an Empowered Society and a Growing Economy".

Icho!


-------------------------
Honourable Patrick Zhuwao is chair of Zhuwao Institute, an economics, development and research think tank focused on integrating socio-political dimensions into business and economic decision making, particularly strategic planning. Zhuwao is the holder of a BSc (Honours) degree in Computer Systems Engineering and an MBA in Information Technology Management (City University, London). He also holds BSc (Honours) and MSc degrees in Economics (University of Zimbabwe), as well as a Master of Management (with distinction) degree in Public and Development Management (University of the Witwatersrand, Johannesburg). He can be reached at patrickzhuwao@gmail.com or visit the website patrickzhuwao@zhuwaoinstitute.org for more information.


Source - sundaymail
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.