Yet, on the other hand, the world has never been more unequal. Inequality is increasingly becoming a worldwide problem. For any development plan, the problem of the gap between the rich and the poor widening needs must be fully addressed if poverty is to be eradicated.
The rise in inequality is linked to the growth paradox: even where wealth creation at the national level has occurred, this has not necessarily led to poverty reduction. In Tanzania for instance, we have noted an average of 6 per cent economic growth for several years but poverty is still far from eliminated.
Global economic corruption mutated in relations between corporations and countries is sharpening the concentration of wealth for a few. So-called investors in Africa – be they from China, the EU or the US – take advantage of poorer nations by making unfair deals that do not benefit the people but only the investors.
The international aid charity Oxfam gave the following illustration regarding this: the world’s wealthiest people are not known for travelling by bus, but if they fancied a change of scene, the richest 85 people on the globe – who between them control as much wealth as the poorest half of the global population put together – could squeeze onto a single double-decker.
The extent to which so much global wealth has become corralled by a virtual handful of the so-called global elite is exposed in a new report by Oxfam. It warns that those richest 85 people across the globe share a combined wealth of £1tn, which is as much as the poorest 3.5 billion of the world’s population.
If this inequality is not addressed between and within nations, one wonders whether poverty and ecological injustice will ever be addressed fully and sufficiently.
In 2000, during the Millennium Summit, the United Nations created the eight Millennium Development Goals (MDGs). These were meant to halve poverty by 2015. At the outset, critics were skeptical about the envisaged success because those goals were based on palliative economics, which in essence sought to throw sand in the wheels of poverty instead of eliminating it.
Indeed, 15 years of diverse efforts to meet the MDGs by the governments of various countries led to minimal achievement, particularly in sub-Saharan Africa. China was exceptional in raising over 200 million people out of poverty, but this was based on efforts by the state rather than the market.
The eighth MDG was in a way the mother of all goals as it focused on trade and international cooperation. Yet, it was the least detailed. Its success would have been absolutely essential for the success of the other goals, but it was never fully implemented.
Instead, we witnessed Africa under pressure to sign Economic Partnership Agreements (EPAs) with the EU, which did not benefit Africa but are entirely in favour of Europe.
In order to eradicate poverty in Africa, several experiments took place. These included projects such as the “millennium development villages” spearheaded by American economist Jeffrey Sachs, whose book – The End of Poverty – outlines his vision on how to deal with poverty in Africa.
Here, the underlying economic assumption is that poverty is like a disease that can be cured by targeted development aid. For instance, more money is supposed to be used to buy mosquito nets for impoverished villages to keep malaria at bay and children need to be given meals in schools to encourage them to attend classes with a full stomach.
According to Sachs, efforts to increase development aid are the solution to the perceived problem of “underdevelopment”. Such aid is doubtless helpful in the short term, but its sustainability is questioned – with critics arguing that aid cannot be sustainable.
While the first generation of development goals were expected to be achieved by enhanced neoliberal economic growth in each country, the second 17 generation of goals given the term “sustainable” – Sustainable Development Goals (SDGs) – is still based on the same assumption.
But as various commentators on the failure of the MDGs have noted, the neoliberal economic growth – which is based on the concept of trickle-down – does not address economic injustice and inequality and therefore cannot eradicate poverty.
At the national level, an economy that is already only enriching the rich is designed to provide incentives for the elite by providing them with tax cuts in order to create jobs for the rest of the population.
In many African countries the rich avoid taxes and invest their money outside the continent. In other words, it is expected that as they become increasingly rich, their wealth will trickle down and reach those languishing in poverty – by creating jobs and by subsidising grants.
At the global level, this means that rich countries provide development aid to poor countries. Poverty is in both cases viewed as a problem that can be solved by throwing money at it.
When one looks at the current report by the Washington-based Global Financial Integrity group regarding wealth outflows from developing countries to rich ones, it becomes clear that during the time span of implementing the MDGs, 6.6 trillion dollars that could have contributed to inclusive sustainable economic growth in developing countries was illicitly drained from these same (poor) countries.
According to Global Financial Integrity, this comes to nearly 4 per cent of the entire global economy. The group observes that illicit financial flows around the world grew at the rate of 9.4 per cent a year in the decade to reach in 2012, or nearly double the pace of economic growth, draining funds especially from poor countries.
The main way the money flows out of developing countries is through mis-invoicing in trade transactions, which allows exporters and importers to keep money out of the country.
If the second generation of SDGs is to succeed, it has to embark on a new understanding of seeing injustice as the main cause of poverty – and addressing these outflows. Individual countries and the UN will have to look at injustice and inequality as the main causes of poverty.
Africa has been a laboratory for testing many development models since the independence era. Efforts have been to integrate the continent to global capitalism but they have never succeeded, the reason being that the experiments never took people’s knowledge systems seriously.
The experiments were not home-grown; the economies were designed to meet foreign investors’ needs instead of the needs of the suffering people in Africa.
Economy of life in Africa is another novel approach of beginning with the people of Africa instead of focusing on foreign investors. Basically, Africa does not need aid; rather, it needs economic justice.
It is also about evoking people’s knowledge on the economy and ecology that was in place before the destruction by the current so-called modern development.
This is more than just having in place “sustainable development goals” that are still hinged on the neo-liberal capitalist ideology that has caused the current economic exploitation and ecological destruction of Africa.
But just what is the notion of Economy of Life? Economy of Life is a new paradigm being proposed by the ecumenical movement. At the World Council of Churches’ Busan Assembly, which attracted more than 5,000 participants in October 2013, this kind of Economy was discussed.
Economy of Life is an economy that is not only based on economic growth; rather, it addresses poverty, inequality and ecological destruction. It is an economy opposed to mere speculation of finance without linking it with real economy where production, consumption and distribution take place.
The ecumenical movement concluded that the belief that growth alone can bring prosperity has now brought intertwined crises, and it is now essential to learn to do something different.
This paradigm has failed. This current neo-liberal economic paradigm is based on the fact that the free market, when left alone without state intervention, can bring prosperity for all.
Examples of the financial crisis have revealed clearly that regulatory measures are imperative and that a democratic state has a role to play when markets fail. So-called free markets and growth alone cannot eradicate poverty and inequality.
This myth has already been analysed and reflected upon by global economic and financial policy makers but free market pundits are still influential in the world today, while global corporations have not abandoned this paradigm.
The new so-called emerging economies are also enforcing this paradigm. Cutting-edge research, the work of the United Nations Development Programme, The New Economic Foundation and many civil society organisations have clearly shown the need to transform the current economic thinking.
Evidence shows that between 1990 and 2001, for every $100 worth of growth in the world’s per person income, only a paltry $0.60 found its target and contributed to reducing poverty below the $1-a-day line.
As a result, to achieve a single dollar of poverty reduction, $166 of extra global production and consumption is needed, with enormous environmental impacts – and this counter-productively hurts the poorest most.
The New Economic Foundation declared: “We need to move decisively from the inefficiency of relying on global growth for poverty reduction towards a system in which policies are designed explicitly and directly to achieve our social and environmental objectives, treating growth as a byproduct.”
The thinking for an Economy of Life is an acknowledgement that humanity cannot solve the current intertwined crises by solely believing in growth through unregulated markets –without limits.
Under the Economy of Life, policies are essentially to be designed in a way that will eliminate these three challenging problems faced by humanity today. It is also a paradigm that begins with the knowledge of the people about their environments, not markets first.
People living in poverty are deprived of basic human rights by social systems designed to benefit the few at the expense of the many. Changing this condition makes imperatively calls for serious work on Economy of Life.
Billions of people come from countries that experience grinding poverty and hunger. People are dying daily simply they cannot lay their hands on food.
We are all aware of alarming global and national statistics on these problems. We all know that the MDGs, which sought to halve poverty by last year, were far from met.
After the 2008 financial crisis, many people around the world, particularly the youth and women, fell into poverty and unemployment. Yet huge amounts of money were spent on bailouts for failing banks, armaments and other “priorities” while hardly any attention was being paid to the millions upon millions of suffering people.
Our concern today is that those responsible for formulating national and global economic, financial and ecological policies have not addressed the real root cause of the problem. The concept of growth without limits is still the mantra of most policy makers, instead of the goal of eradicating poverty by intentionally investing in people.
In other words, we need pro-poor growth policies that begin with the people. African countries really need qualitative and inclusive growth. The issue of prolonged concentration of wealth in the hands of a few, as the majority barely survive, has not been adequately addressed. Goals for an Economy of Life must be based on how to deal with this problem.
As confirmed by the UN’s Stiglitz Commission and most of the over 8,000 social movements composing the World Social Forum – as well as by ecumenical studies and consultations – the experience of impoverishment is shaped by a financial and economic architecture that is addressing neither poverty nor ecological destruction.
The all-important question again is: Do the UN’s 17 SDGs include the issue of resolving the link between finance and “real” economy as a way of eradicating poverty?
Those regions of Africa with extractive industries are left with gaping holes and mountains of “barren” soil after the oil and minerals are gone. Very little or no benefit is left for the development of the regions and their inhabitants. Such practices must end.
There are actors who have raised their voices against this blatant injustice. One example is the case of gold mining in Tanzania, where an interfaith council comprising Muslims and Christians has visited gold mining areas and challenged the government to ensure that local communities evicted from those areas be compensated.
The argument is that gold, diamonds and all other natural resources Tanzania is blessed with should be for the benefit of the people.
Without appropriately addressing this issue of equitable production, consumption and distribution of goods and services at various levels, issues like gender injustice, poverty, marginalisation, climate change, indebtedness and economic bubbles and crashes will persist.
We need to work together to experience justice and peace as a way of putting in place economies of life and ecological justice. We have spoken so many times about the need to eradicate poverty, but pronouncements have not been sufficiently followed by actions.
We need to engage ourselves a lot more in crusading for poverty eradication by investing in our people. Finance must serve the people and should not be detached from the “real” economy, meaning an economy not based on speculation.
The vision of an Economy of Life in the service of life, where poverty is eradicated, social justice is embraced and ecological justice is promoted, must be the essence of the next generation of SDGs and beyond.
There is urgent need to outline goals for an Economy of Life in Africa. Such an economy should invest in the people of Africa, address poverty eradication and inequality on the one hand, while investing in energy technology including solar, biogas and small hydro electricity power stations on the other.
For example, the use of charcoal in Africa is largely due to the lack of access to handy and appropriate energy for the majority of the population. The environmental disasters due to tree felling in Africa are well known.
The issue of industrialisation in Africa must be an integral part of the goals of an Economy of Life. Africa must industrialise itself – or it will never eradicate poverty. A non-industrial country will remain poor forever.
Accordingly, President John Magufuli’s focus of industrial development in Tanzania is in the right direction. Clive Thomas experts tackled this issue in the 1970s.
In the 1960s Africa was expected to industrialise, but plans to that effect were abandoned – while they were implemented in Asia. By no means strangely, Africa has remained a producer of commodities and raw materials for industrial countries until today – with little say on what it produces and sells.
The goals for the Economy of Life in Africa must focus on investing in people and industrialising the continent in the 21st century and beyond.
•Dr Rogate R. Mshana is an economist with EcolifeCentre of Arusha, Tanzania. Contacts – email: rogatemshana@ecolifecenter.org or rogatemshana@hotmail.com.
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