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JK: Davos appeal ties up with business climate pending issues

29th January 2012
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President Jakaya Kikwete

President Jakaya Kikwete was speaking for many people when he told a gathering of statesmen and business people in a World Economic Forum session in Davos, that  there has been a change of mindsets in Africa and on the whole it is ready to become a hub of business like other emerging economies or developing zones.

In part this need is driven by demand in various parts of the world, whether it is for commodities based on farming, biofuels or minerals especially to cater for expanding local demand. The old export model on which the Asian Tiger economies were built has been clipped, but not ended.

The matter at hand was the manner in which a newfound sentiment in world business circles that Africa is the continent of the future whose time has come can be properly put to effect, and not remain another soothing wisdom for popular or elite consumption.

It is important that this maxim be put to effect so that ‘the widening gap between the rich and the poor’ which is threatening peace in most African countries can be healed, or curbed. The way towards this isn’t via Julius Malema redistribution drives, but more investments.

One feature about poverty which has been been sufficiently emphasized is that it doesn’t arise out of being poorly paid, but rather when one is sidelined from the market. It is usual phenomenon where in a family of five adults, the labor market needs one person, or two, or no one at all, among those US sociologists describe as an ‘underclass,’ that is, a permanently unemployed, and unemployable, residue of society. Among them there is a striving stratum or breadth of strata, who constitute the more informal of local informal sectors, and there are those who have surrendered – they take to drugs, delinquency, etc.

What is significant about different countries is their levels of employment and sizes of those who are unemployable, and that is where the old thesis of Prof. Hernando de Sotto comes to mind, that rights to property is the magic that has enabled capitalism to succeed in the West while other people languish in poverty.

On the basis of his explanation, even if one spreads tomatoes on .tarmac along a busy street, if he or she can get a certificate that she will stay the place undisturbed for six months, she can get a loan on that basis. This was the premise of formalization of petty business, as recognition eases credit flows.

Most public sentiment has now forgotten those days of formalization of the businesses of the poor, despite that it is still in the books.

What took place, by a confluence of urban legislation and public outcries on disturbances or annoyance arising from informal sector trading, was a near eradication of much of informal sector trading joints on road sidelines mid -2006. In their place arose formal sector trading spaces, licence-bearing, tax number holding frames where the revenue authorities or municipal inspectors check compliance.

This see-saw has continued cahin caha in urban areas, with many petty traders moving to formal trade in registered frames, while many are still in startup trading that is hard to register, and whose space is hard, culturally speaking, to formalize.

The main problem though is in rural areas, where much of the sort of investments that President Kikwete was discussing would be directed, especially for extraction of commodities.

This process has been enshrined in policy terms in ‘Kilimo Kwanza,’ but there is still a lag in the law regime attending the policy, which has to be cleared out so that the policy is a success.

While it is true as the president was saying that plenty has changed in the traditional African mindset, of whose eulogy in Mwalimu’s Kivukoni College opening address in 1962 we just marked its 50 years lately – Ujamaa, the Basis of African Socialism, of farming together and sharing what they obtained, without forming classes – it is time to make more in depth changes. 

The president is of course aware that virtually each new investment transaction involving land is greeted by new conflicts and new gains of the opposition, showing such transaction as indubitable evidence of the rot in CCM, etc.

What the government needs to do so that both ‘Kilimo Kwanza’ and other investment needs are properly conducted is to reduce bureaucratic privileges in relation to land ownership, and to an extent, housing that dates 40 years or more and the same occupants have been at the place.

In all these areas, so long as what is known as a public facility has private occupants that are recognized by the law and have rights of occupancy, their right needs to be upgraded so that they become the focus of transfer negotiation and payment or compensation. That way investors will be paying those they replace, and curb disputes.

This is specifically what is underlined in ‘ease of doing business,’ but in its own stubborn mentality government officials and policy makers in general have interpreted ‘ease of doing business’ in terms of ‘e-government’ and ‘client services charter’ of no real value to investors or citizens.

These pacts between parastatals and ministries serve only to account for using World Bank project funds used for such purposes but make no difference in day to day encumbrances to both local and foreign investors. That is why the government needs to change tact and privilege occupancy rights in urban and rural areas, to upgrade them to ownership rights for matters of transfer of title for investors.

As a matter of fact it isn’t just a change in legislation that is needed now and then it starts applying in future investments but it needs to be made retroactive, so that errors and even deliberate miscarriage of land justice since 1996 are rectified.

The problem with most such demands at the moment, those conducted by non-governmental organizations that wish to represent farmers, cattle herders, women or ‘the marginalized,’ is that they seek a restoration of communal land rights, and explicit policy to uplift the small farmer. They wish to hear nothing of investors, and in that case cripple the drive for investment flows.

This movement is animated by a permanent ideality of village life – which Karl Marx in The Communist Manifesto described, as one major achievement of the bourgeoisie, the eradication of ‘the idiocy of rural life.’ If the president would be made to interpret a change of mindsets in this context, he would be in a position to reaffirm the need to modernize agriculture, but by uprooting people as his government is now doing but by extending rights to them, and paying them for their land, at its value, not just ‘reasonable compensation.’ So the problem of mindsets isn’t just on the part of a traditional population and its activist NGOs but also on the part of the government, as indeed it is government affirmation of public land, and then allocate it to investors, that raises hell.

When this anomaly is corrected, and the government duly changes its mindset to accept that the days of village land are over and it is time that land was individual in terms of user and transfer right .Thus when an investor needs to be given the use of that land he pays for it at its value, plenty of contentions against investments would be resolved, as these protests are misplaced in the first place, fighting an investor while the problem is a government which has never recognized their right to the value of the land – and which they have never demanded in the first place.

They limit their quarrel to the need to use the land for food at the village and clan level, while the foresighted government seeks foreign investors, but is incapable, or it is reluctant pecuniary considerations, to acknowledge the rights of those who already live and work on the land. If that doesn’t change, expressions of optimism in investment forums will remain a delusion, as each transaction is a curse.

SOURCE: GUARDIAN ON SUNDAY
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