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Decent employment-based poverty reduction
2006-03-15 10:26:01
By Mireny John
The national enigma is that poverty and joblessness continue to rise even though economic growth is at a 10-year high.
If populations were to enjoy the significant improvement in the growth of the gross domestic product (GDP) in recent years, then its share of people living on less than a single dollar a day would have improved beyond 46 percent.
The economic growth figures often rattled by the Bank of Tanzania (BoT), the World Bank and its cousin IMF, seem to bear little relation to the living standards of ordinary Tanzanians.
Some critics are of the view that the rosy economic trend figures are best suited to appease the minds of donors when begging for aid.
The anomaly implies the following: poverty has been unresponsive to economic growth.
A new report prepared by the UN’s Economic Commission for Africa, Economic Report for Africa 2005, laments that the current 6 percent growth rate is inadequate, and we will need to grow by an estimated 7 percent a year to reduce poverty.
The good story about Tanzania is that we have sustained growth over the years, though below the 7 percent critical threshold.
The glaring dilemma is the low labour absorption rate in the lead sectors like agriculture.
Though agriculture remains to date the major employer, it is still characterized by low productivity growth.
In the upshot, it has not provided enough real employment and income security to the population the rural areas.
Of late, it is self-evident that the emergency of inequality in the distribution of opportunities created by economic growth cripples poor peoples’ ability to participate in the economy in a more meaningful way.
A plethora of interventions could be suggested, with the primary goal of creating decent employment.
Top on the list is the transformation of the national economy from low productivity traditional agriculture to labour-intensive high-value agriculture and agro-processing.
A parallel strategy has to focus on the growing industrial and service sectors, with a view to taking advantage of the opportunities made available by globalisation .
The poor have no access to productive resources, especially micro-financing windows that would allow, say, the informal sector to enhance productivity.
The enhancement of public-private sectors’ initiatives in the provision of micro-finance services is equally an important strategy for creating employment.
Aggressive investment in human capita will likewise generate the requisite skills that would share in the benefits of growth.
Equally important, we need to minimize the regulatory obstacles to private investment, domestic and foreign, as well as striving to provide productive infrastructure to make domestic firms competitive in a globalising world.
Principled political governance is definitely needed to sustain economic growth and to facilitate the equitable distribution of income and other economic opportunities.
The various interventions will only succeed if we engage in empirical analyses to guide policy.
The assumption that growth automatically creates more jobs is, unfortunately, false.
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